Speaking on Friday, Professor Hussein Kassim, one of the report’s authors, said the EU’s status as a “standard-setter”, and the fact that businesses are already “invested in existing regulatory systems” were several of the reasons why the UK faced a “formidable challenge”.
Although Boris Johnson’s government repeatedly stressed the importance of UK sovereignty and the need to “take back control” during the talks on the Withdrawal Agreement and subsequent trade pact, there is little sign in many sectors that regulation will diverge from EU standards.
It is only on immigration policy, where free movement has been replaced with a points-based system, and in agriculture, where a national subsidy scheme replaces the EU’s Common Agricultural Policy, that new laws, radically altering the legal landscape, have been passed.
Kassim pointed out that, with the Trade and Cooperation Agreement (TCA) less than two months, these are still “early days”.
“In some domains, business remains unfinished and, in this sense, the new regulatory settlement is incomplete”, the report said. That includes sectors such as financial services and digital policy which are not covered by the TCA.
On state aid, where the UK has refused to be bound by EU rules, the government is currently conducting a consultation. However, last week, business minister Kwarsi Kwarteng ruled out the prospect of a review of EU employment laws, despite calls from some Brexiteers to scrap EU legislation on temporary agency workers and working time.
Referring to this, Professor Catherine Barnard, the deputy director of the think tank, pointed out that “workers’ rights is the dog that hasn’t barked”. She added that, under the trade deal with the EU, “if there is regression from existing standards, that triggers remedies provisions including the imposition of tariffs against the UK.”
In many cases, the UK has rolled EU regulations into domestic law with little change – often simply replacing references to the EU regulator with the names of UK bodies, the report added.
That has resulted in new regulatory agencies being hurriedly set up.
The report, written by a group of specialist academics, warned that “there is also a question mark over whether UK authorities are well enough equipped to carry out their responsibilities, either because they have lost access to EU instruments, databases or regulatory networks, or because the appropriate infrastructure is not yet in place.”
It also pointed out that there could be a ‘governance gap’ in sectors where new national regulatory agencies, such as the Environmental Protection Office, have not yet been established.
Businesses have already complained about the additional bureaucracy created by the UK’s exit from the single market. The fishing industry has blamed its losses of £11 million since 1 January on new paperwork requirements, while hauliers have reported delays and lower export volumes.
More complaints about new costs are likely to emerge because of the need to duplicate regulation and adapt to both UK and EU regimes. Kassim described chemical regulation as “an example of the ill-preparedness of the UK”, noting that firms will have to comply with UK and EU regimes at an estimated additional cost of £1 billion.
“if the aim of Brexit was to ‘de-Europeanise’ UK regulation, the findings show that that ambition has only been partly realised,” the report concluded.