Joël Reland | Oct 2021
Freedom from the ‘burdens’ of Brussels ‘red tape’ and the return of law-making powers to the UK was a priority for many Conservative Eurosceptics. Yet in the years following the Brexit vote, this issue has largely been absent from the debate.
That is starting to change. In recent weeks, Lord Frost has argued that a new ‘British renaissance’ will see ‘unnecessarily complex’ EU regulations repealed following the ‘long bad dream of our EU membership’. In their place will be a swathe of new regulatory regimes, all of which will be better suited the needs of UK businesses.
That’s the theory. But there are several reasons why this project may prove challenging for the government.
First, there is the political question. Boris Johnson’s despatches from Brussels – as a Telegraph journalist in the 1990s – about the overzealous EU regulation of bendy bananas convey one of the foundational bugbears of the Conservative Eurosceptic movement. But Brexit Britain in 2021 is a much wider coalition of attitudes, with less appetite for a slash-and-burn approach to regulation.
The Covid-19 pandemic has increased support for state intervention among British voters, and the government’s wider agenda (on issues from decarbonisation to economic redistribution) is predicated on an unusually dirigiste approach for a Conservative regime. The idea of looser food standards in exchange for liberalised global trade (the notorious US chlorinated chicken) is largely unpalatable. Taking back control does not necessarily mean jettisoning all standards.
Yet in most cases where the government is seeking to diverge from EU rules, it is seeking to lower standards (for example on data protection, medical devices and gene edited goods). In other cases, Brexit Britain has refused to align with increased EU standards (for example on emissions trading and chemicals regulation). Most plans for divergence remain in the early stages, but it remains to be seen whether this deregulatory agenda survives impact with the public at large.
But would businesses, at least, not appreciate lighter touch rules that promote innovation? This brings us to a second issue with divergence: the practical costs. Evidence so far suggests new UK regulatory regimes may mean businesses face more rather than less bureaucracy.
Take, for example, the introduction of the new ‘UKCA’ product marking, which replaces the EU’s ‘CE’ mark in certifying that a manufactured good meets its regulatory standards. UK manufacturers now have to ensure a range of goods are re-approved for a UKCA mark, denoting virtually identical standards to the CE one.
The result was a huge backlog as manufacturers rushed to get their products UKCA-marked in time, leading the government to extend the deadline, and there remain concerns that UK supply chains will lose access to key components should EU manufacturers not bother to get their products UKCA-marked.
The government may well find plenty of areas where a bespoke UK regime may – on paper – be better suited to the needs of UK businesses. But it should not underestimate the associated costs of introducing new regulatory architectures which demand entire industries make sudden and wholesale shifts to comply with new standards.
A final challenge is the risk of losing access to cutting-edge technology. The UK has earmarked medical device regulation (think: MRI scanners, pacemakers) as an area to create a bespoke, lighter-touch regime.
Yet divergence will mean that the manufacturer of a brilliant, new AI-based diagnostic technology is confronted with a choice: do we comply first with UK or EU standards? Even if the UK’s standards are easier to meet, manufacturers say they will prioritise the larger market: the EU represents 22% of global healthcare spending, the UK 3%. There will be a similar pattern in other areas.
One option would be for the UK simply to accept EU standards. But that would call into question the benefits of divergence in the first place. As the UK begins to diverge from EU rules, David Frost may well discover the practical limitations of the UK’s hard-won regulatory autonomy.
He does, however, have options. One solution would be to focus on a tighter set of policies with the clearest potential gains, such as on GDPR and gene editing, where good cases can be made about the benefits in terms of business innovation and consumer choice. There would still be pay-offs, but if divergence is kept to a well-defined set of priorities with clear purposes, these risks can be better managed.
A second option is to simply carry on with a wide-ranging but quixotic selection of areas for reform, where the practical benefits are often unclear. The main gain from this is the odd headline-grabbing opportunity – reintroducing imperial measures and crown stamps on pint glasses – and some red meat to throw to the crowd at the next party conference.
The coming months will reveal whether divergence is a serious political project, or a symbolic agenda designed mainly to appease the diehard Eurosceptic wing of the Conservative party.