Examination of Witnesses

Retained EU Law (Revocation and Reform) Bill – in a Public Bill Committee am 10:24 am ar 8 Tachwedd 2022.

Danfonwch hysbysiad imi am ddadleuon fel hyn

Mark Fenhalls KC, George Peretz KC and Eleonor Duhs gave evidence.

Photo of Gary Streeter Gary Streeter Ceidwadwyr, South West Devon 10:54, 8 Tachwedd 2022

We will move on to our final group of witnesses for this morning. Of course, we have a long afternoon ahead of us. We will now hear oral evidence from Mark Fenhalls KC, chair of the Bar Council. I wonder whether he was listening to the previous panels.

Mark Fenhalls:

I was listening, Chair.

Mark Fenhalls:

I am very much looking forward to trying to do my best.

Photo of Gary Streeter Gary Streeter Ceidwadwyr, South West Devon

I am sure you will do a great job. George Peretz KC of the Bar Council’s working group on retained EU law is joining us via Zoom. We also have Eleonor Duhs, partner and head of data privacy at Bates Wells, here in person—I hope that was the correct pronunciation of your name.

Eleonor Duhs:

It was, yes.

Photo of Gary Streeter Gary Streeter Ceidwadwyr, South West Devon

For this session we have until 11.25 am. George Peretz is not here yet, but if he does appear we will ask him questions as well. We turn to Justin Madders to start.

Photo of Justin Madders Justin Madders Shadow Minister (Future of Work), Shadow Minister (Business and Industrial Strategy)

Q This is probably a question primarily for you, Mark. At the moment we are in a position where we know several thousand laws will be automatically sunsetted at the end of 2023. We do not know which ones they will be or why the Government will retain, remove or amend particular laws. As we have heard today, it appears that the Government do not even know themselves which laws will be covered by the Bill. Do you see any risks with this approach?

Mark Fenhalls:

There is nothing but risk. I will tell you one brief anecdote to illustrate this point. Last week I was at an international conference, working with the Ministry of Justice on selling legal services overseas, and talking to lawyers and Bar leaders from around the world. They asked me what this country’s intentions were around its laws following the departure from the European Union. I explained that I have no difficulty with change; change is a necessary thing. We all hope there is a sunlit upland where we can find better or fewer rules and regulations in the future. But when I explained about the inherent uncertainty and risks around this, they all looked and me in horror and said, “Why would we do any business with the UK”—until 2024 on the current timescales—“if we don’t know what the rules and regulations are going to be around all these issues?” There is a tremendous problem with this Bill, which was described by previous witnesses as a “framework Bill”, because we do not know what Ministers are going to do and Parliament does not have the opportunity to take control of the process or scrutinise it.

In our judgment, the Government should take the approach referred to in relation to the Financial Services and Markets Bill, where it looks as though considered, measured changes are being put forward, and there is an undertaking not to change the rules and regulations without consultation with the sector. We cannot understand why financial services are the subject of such a responsible, measured approach, which does not seem to apply to consumer protection, cosmetic and household cleaning product safety, water and air standards, and so forth. If the Government could take the same measured response, sector by sector, that would be a more sensible and less risky way to proceed.

Photo of Justin Madders Justin Madders Shadow Minister (Future of Work), Shadow Minister (Business and Industrial Strategy)

Q Following on from that, if the Government adopted the approach you are suggesting, how feasible would it be for there to be a considered and properly democratic approach to this before the end of 2023?

Mark Fenhalls:

I am no expert in how much civil service time exists, but I would be astonished if it were remotely possible to cover but a fraction of this. I do not know why it is set up as anything other than a political problem. The reality is that this is our law. It was passed over four decades of membership while we were a part of the European Union. The previous witnesses may not like the process of scrutiny that existed, but we were part of that. We had MEPs and a Parliament that dealt with that. There was a democratic process, like it or not.

We now have a different democratic process, but these laws are part of our laws, which our businesses operate by and which provide protection to our citizens. If I may say so, I think Parliament has a responsibility not to import uncertainty and change without showing there is something better—and certainly not by just having the power to let the laws lapse.

Eleonor Duhs:

Perhaps I could add something on the timeframes. In order to get the statute book ready for Brexit, which was in some ways a much more simple task than this, it took over two years and over 600 pieces of legislation. The reason I say it was a simpler task is that we were essentially making the statute book work without the co-operation framework of the EU. We were taking out references to the European Commission and replacing them with “Secretary of State”—that sort of thing. That was a much simpler task than what we have here, and that took over two and a half years.

A lot of areas also have several pieces of amending legislation. In data protection, which is the field that I work in, there are at least three pieces of legislation that amended and then re-amended the statute book—just to get it ready, from a technical perspective, for Brexit. There may be huge policy changes under this legislation, and the end of 2023 is simply not a realistic timeframe for the process.

Photo of Justin Madders Justin Madders Shadow Minister (Future of Work), Shadow Minister (Business and Industrial Strategy)

I see that George Peretz has joined us. I do not know whether he wanted to respond to any of the questions first of all.

Photo of Gary Streeter Gary Streeter Ceidwadwyr, South West Devon

Yes, Mr Peretz, welcome. Did you hear the questions that were asked?

George Peretz:

I had a slight technical hitch in joining. I was going to make a point about the effect of the sunset clause. Stephen Laws made the point that law reform is necessary and it happens, and one should not get stuck in defending the status quo. But there is every difference between a Government saying, “Here is the existing law, we propose to replace it with legislation, and here is the text of the proposed reform,” which is the normal process of law reform, and what is happening here. The Government are effectively saying to business and the wider world, “All of this law is open to change; we cannot tell you whether we will keep any of it. Some of it may just disappear, it may be replaced, and we cannot yet tell you what the replacement is. All of this is going to happen in 18 months.” That inevitably produces an enormous amount of uncertainty, and that is uncertainty above and beyond the inevitable uncertainty of law reform.

Photo of Justin Madders Justin Madders Shadow Minister (Future of Work), Shadow Minister (Business and Industrial Strategy)

Q I have one further question for Mark. There was correspondence between the previous Secretary of StateMr Rees-Mogg—and the Justice Committee over engagement with the judiciary in respect of the Bill, particularly the effect of clauses 7 to 9. Can you tell us what kind of dialogue there has been? Do you foresee any issues with the application of those clauses?

Mark Fenhalls:

I am not privy to any of that correspondence; I cannot help with that. I do not know whether either Ms Duhs or Mr Peretz is familiar with it.

Eleonor Duhs:

indicated dissent.

Photo of Nusrat Ghani Nusrat Ghani The Minister of State, Department for Business, Energy and Industrial Strategy

Q Good morning, Mr Fenhalls. You talked about scrutiny quite a bit. Most retained direct EU legislation has not been through a UK parliamentary scrutiny process, but you keep going on about scrutiny. How much oversight did the UK Parliament have over laws that came into effect under section 2(1) of the European Communities Act 1972?

Mark Fenhalls:

I am sorry if you think I am going on about it. All I am doing is saying that there was a democratic process, which we were party to for several decades: we were members of the European Union, and we followed the lawful processes. We now have this body of law, which Parliament owns, and we are all looking for an opportunity for Parliament to say, “Let’s now take advantage of our departure from the European Union, put aside the conflict of the past and work out a better way.” We are all delighted by that. None of us is hostile to change. We just want change in a measured and balanced way, so that we know what the alternatives are.

The effect of the Bill—I was thinking about it as I listened to the previous speakers—feels a bit like the uncertainty and the uncosted promises made by the former Chancellor, which so disrupted the bond market. [Interruption.] You asked the question, Minister. The difference between that and the Bill is that we are being told to trust Ministers to see what will happen, and we have no idea what they will do. We have no idea what is being left or what will be changed. There is conflict between current Bills before Parliament, such as the Levelling-up and Regeneration Bill, and the Bill we are discussing, and we do not know how the Government propose to address it.

Photo of Nusrat Ghani Nusrat Ghani The Minister of State, Department for Business, Energy and Industrial Strategy

Mr Fenhalls, you said you are not hostile to change, but you have been nothing but negative about the Bill. You also mentioned a democratic process. There was another democratic process in 2016—just for the record.

Photo of Peter Grant Peter Grant Shadow SNP Spokesperson (Europe), Shadow SNP Deputy Spokesperson (Treasury - Chief Secretary)

Q Good morning. In your submission from the Bar Council, Mr Fenhalls, you suggested that the Bill should be withdrawn. You have also accepted that we need to do something about the huge volume of retained EU law that we still have. What would be a better way to deal with all that law, rather than the way it is being dealt with in the Bill?

Mark Fenhalls:

I am not a parliamentarian or a politician. The short answer to that is that I do not know, but I do know that every single stakeholder and lawyer I have spoken to—who are simply thinking about their clients’ business interests and the rights of the people involved—wants to know what the alternative proposals are before they take a view. The difficulty with this Bill is not change, because change in itself is fine; it is the fact that we do not know what the proposals will be. We have suggested what we suggested in our submission and we have put in fall-back positions saying that if the Bill is to proceed, we should put in place scrutiny measures or duties on Ministers to come to the House and say, “This is what we propose to do,” and not run the risk, for example, of the sunset causing us to crash into the wall at the end of next year.

Photo of Peter Grant Peter Grant Shadow SNP Spokesperson (Europe), Shadow SNP Deputy Spokesperson (Treasury - Chief Secretary)

For the record, there are two lawyers sitting behind you who quite clearly do not share the view that you just expressed about the various lawyers you have spoken to. Some of us think that lawyers argue with lawyers all of the time; that is what they are there for.

Photo of Gary Streeter Gary Streeter Ceidwadwyr, South West Devon

Before we continue, I think Mr Peretz wanted to come in on that point.

George Peretz:

I wanted to come in in response to the Minister’s question about section 2(2) of the European Communities Act 1972. There are two points here. One is the point, developed by Martin Howe, that it considerably underestimates the degree of democratic scrutiny that EU law actually had, particularly in the European Parliament and on the reform of EU law. It also understates the mechanisms that Parliament had to scrutinise how Ministers acted in the Council of Ministers.

I suppose one is getting slightly political here, but perhaps the more important point is that one of the arguments for Brexit, as I understood it, was that it would strengthen democratic accountability for legislation. It is slightly disappointing that the argument put forward for the Bill is sometimes, “Well, the EU was undemocratic in this, so you cannot complain that this is equally undemocratic.” We can do rather better than that.

Photo of Peter Grant Peter Grant Shadow SNP Spokesperson (Europe), Shadow SNP Deputy Spokesperson (Treasury - Chief Secretary)

Q This question is for all three witnesses. Would the Bill be less of a concern if there was not a sunset clause, or if the sunset clause was later than the end of 2023? Are your concerns partly about how little time there is for the process to be completed?

Eleonor Duhs:

I would still have some concerns, because the end of 2026 is not far away and that is what people are saying would perhaps be the revised timeframe.

There are some really significant things in this Bill in terms of changing the way in which the law works. I will give an example from data protection law. Clause 4 would change the relationship between retained EU law and domestic law. To show what that might mean in practice, I will give the example of a conflict between the UK general data protection regulations and the Data Protection Act 2018. This is not addressed by the provisions that Mr Madders asked about; that is simply about how data protection legislation as a whole interacts with the domestic statute book and is not overridden by it. In a conflict between the UK GDPR and the Data Protection Act 2018, if we remove the principle of supremacy, for example—which is what the Bill seeks to do—we could end up reducing data protection standards in the UK. That could cost UK businesses up to £1.6 billion and significantly increase red tape, so this is really important.

Last year there was a case called the Open Rights Group case, which was to do with exemptions in the 2018 Act that were overly broad. The Court of Appeal said that the UK GDPR had precedence—so this was decided under the retained principle of the supremacy of EU law—and that the provision in the 2018 Act was unlawful. If we had not had that retention of the principle of supremacy of EU law, and had had this new section 5(A2), the 2018 Act would have had precedence and the broader exemption would have applied, which would have reduced rights in the UK.

Why is it helpful for rights in the UK to remain as they were before? Because our current standard of protection of personal data has been deemed by the EU to be essentially equivalent to their standards of protection. That allows a data adequacy decision and, at the moment, the free flow of data between the EU and the UK. If we did not have that—if we lost data adequacy, which could happen under proposed new section 5(A2) in clause 4—UK businesses would have to spend time putting in place contracts and would have to do transfer risk assessments.

The New Economics Foundation and University College London wrote a paper entitled “The cost of data inadequacy”, which they published in November 2020. It stated that losing the free flow of data could cost UK businesses up to £1.6 billion in extra red tape, and it would have other economic implications, including a reduction in UK-EU trade, especially digital trade; reduced domestic and international investment in the UK; and the relocation of business functions, infrastructure and personnel outside the UK. So the Bill could have really significant implications for trade.

Photo of Peter Grant Peter Grant Shadow SNP Spokesperson (Europe), Shadow SNP Deputy Spokesperson (Treasury - Chief Secretary)

Q Mr Peretz, do you want to comment on my previous question? How much of the concern about the Bill is simply down to the very short time provided by the sunset clause? If we moved that clause further back, would it ease your concerns?

George Peretz:

The short time is clearly a concern given the enormous work that will need to be done both in Whitehall and by Parliament if it intends to scrutinise any of this properly within a very short timeframe. A lot of this law is very important, a lot is very complicated, and quite a lot of it is both, so one should not underestimate the resource implications. Obviously, if you have a longer timeframe—until 2026, say—that resource could be spread over a longer period, and perhaps more efficiently.

There are other, wider concerns about the Bill and how it amends the application of some EU rules to retained EU law as it continues to operate, and about Ministers’ power to revoke and replace. Those are separate from the sunset clause concerns, but the sunset clause does interrelate with the question of Minister’s powers. One of the problems with the effectiveness of parliamentary scrutiny is that although one hears that Parliament has powers—in some cases via the negative or affirmative resolution procedures—the background against which it is being asked to approve legislation means that if it votes against that legislation, the sunset clause will apply and regulations disappear completely, rather weakening Parliament’s ability to do anything.

To take an example, if Ministers decided to keep the working time rules but rewrite them to make them less favourable to employees, and came up with the new regulations in November 2023, those rewritten regulations would probably be introduced under the affirmative procedure. However, when the House of Commons voted on them, Ministers would say, “You may not like these revised regulations very much, but if you do not vote for them, the alternative is that we will not have any regulations at all.” That weakens Parliament’s ability to control the exercise of ministerial power.

Photo of Alex Sobel Alex Sobel Shadow Minister (Environment, Food and Rural Affairs)

Q I will put this question to you, George, as it is something of a follow-up. You just gave a qualitative response about the sunset-clausing, but this is more of a quantitative question. I was not aware until Catherine Barnard and Professor Young pointed it out earlier that 1,400 additional pieces of legislation have been found. I have now found the article in the Financial Times, which states that

“A plan…to review or repeal all EU laws on the UK statute book by the end of 2023 has suffered another setback after the discovery of 1,400 additional pieces of legislation.”

We were aware of 2,100 pieces of legislation, but that is another 1,400, so we are now seemingly aware of 3,500, with a sunset clause at the end of 2023. Is that the end of it? Will it be 3,500 pieces of legislation or could there be more? How are we going to find and define all these pieces of legislation so that we know what law we are acting under? You have just described qualitatively how pieces of legislation will fall under the negative resolution procedure because they are going to be sunset-claused out. Quantitively, where do you think we are going to end up by December 2023?

George Peretz:

One does not know. On your point about the legislation being discovered, like you I have read the story in the Financial Times. I do not know the background to it, but we drew attention in the Bar Council paper to the risk of things simply being forgotten. As that story shows, that is not a hypothetical risk. That is one reason why we suggested as a possible amendment to the Bill that the Government add a schedule that simply lists all the regulations that are going to be affected and if it is not on the list, it does not fall. It is very difficult to see the argument against that. Presumably, the Government want to know what is being repealed. One does not want to repeal things one does not know about. What would be the good of not evaluating the risk? It is very difficult to see why there would be an objection to listing everything out. Then everyone would know precisely what goes and what stays. That was one suggestion we put forward.

It is very undesirable to have the sunset clause—for all the work that is going to have to be done to be done effectively with a gun pointed at everybody’s head saying, “Unless you’ve done all this analysis within a very restricted time period, the rules will fall.” There is just endless room for mistakes.

One of the points we discovered when we were rewriting a lot of EU rules for the purposes of the withdrawal Act—which Eleanor knows very well about and can speak about in more detail—was that, as the legislation was being rewritten, it was discovered that there were problems with it. If we look down any of the lists of amended rules, as one might experience in practice, one normally finds that over the 2018 and 2019 period there were frequent amendments. As one version was done, it was found that there was a problem with it or something needed to be added, and another amendment was made. There just is not time within the process of this Bill for that amendment process.

There is also a technical problem. It is not clear that there is the power once a regulation has been rewritten for Ministers then to say, “Oh dear—we realise that this regulation contains the following defects; we would quite like to amend it now.” I am not actually sure that the Bill contains a power for Ministers to do that. That is a bit of a problem.

Mark Fenhalls:

I agree with what George just said. You will know far better than we do the stresses and strains on you as individual constituency MPs attempting to deal with those issues, and what in truth MPs can do as individuals scrutinising material like this. Ministers will know how pressured their civil servants are. I know from my dealings with civil servants how afraid they are of the possible forthcoming cuts. It is very difficult as an outsider to contemplate how the civil service can begin to cope with an assessment of what all this law involves.

The concluding point would be that if you have the list that George spoke to, that is a foundation for a proper ministerial division of responsibility as to who is doing what—which regulations affect which ministries and therefore what should our plan be? By the time we get through the end of next year, we might have dealt with financial services, perhaps, and with regeneration and levelling up, perhaps, because that covers environment and habitat and planning, but with that list and that firm foundation, you can make sensible evidence-based decisions about what to do. The frightening thing about the FT story—again, I know nothing about where it has come from—is the thought as to the unintended consequences, which nobody can possibly want, of not knowing what is out there. That is why, in a sense, a framework Bill is so flawed in its approach, because we do not know what we are dealing with.

Photo of Gary Streeter Gary Streeter Ceidwadwyr, South West Devon

I have three questions to get in before 11.25 am, so let us have quick questions and quick answers, please.

Photo of Marcus Fysh Marcus Fysh Ceidwadwyr, Yeovil

Q Is it not the case that the people of the UK have given Ministers the responsibility to sort this legislation out now, in this Parliament? Are you not simply trying to frustrate that because you never voted for Brexit in the first place and you hate it with every fibre of your beings?

Mark Fenhalls:

That is a political accusation that could not be more unfair. That is not the case at all. The short answer to your question is no. Parliament, rather than Ministers, should be making the decisions. That is the democratic point, if I were to engage with you on a democratic level. It does not matter what I did or did not want; I have said to you, and I mean it, that I have no difficulty with change—absolutely none whatsoever.

Photo of Marcus Fysh Marcus Fysh Ceidwadwyr, Yeovil

Q You just do not want it to happen now.

Mark Fenhalls:

I want it to happen on the basis of evidence and—

Photo of Marcus Fysh Marcus Fysh Ceidwadwyr, Yeovil

Do you want to make it happen under a different Government?

Photo of Gary Streeter Gary Streeter Ceidwadwyr, South West Devon

Marcus, you have asked a question and now you are interrupting Mr Fenhalls. Let him finish.

Mark Fenhalls:

I want it to happen on the basis of evidence and with better proposals coming. What I do not want is to be lost in a world of uncertainty when we do not know what is coming, because, out of uncertainty, clients and people will stop doing business and they will not know where we stand.

Photo of David Jones David Jones Ceidwadwyr, Gorllewin Clwyd

Q I want to come back to Ms Duhs on her point about the supremacy of retained EU law. As a consequence of the referendum in 2016 and all the legislation that has been introduced since then, this country has recovered its sovereignty. Do you not think it repugnant to that sovereignty to have a state of affairs whereby the laws enunciated by a foreign jurisdiction and applied by a foreign court continue to have supremacy in this country?

Eleonor Duhs:

Retained EU law is domestic law. We domesticated the statute book, and we did that to provide certainty for businesses, for individuals, for the Government and for users of the law, so that they would know what the law was. That was a policy of maximum certainty. Of course, it is now for Parliament—this was in the White Paper on the European Union (Withdrawal) Act 2018—to look at the law and to decide how it should change. We should absolutely make the most of the opportunities that we have, but it must be done in a thoughtful way. It must not be done in a rush and in a way that gives rise to legal uncertainty, because this is our domestic statute book and it needs to work for all of us. It needs high standards, it needs to enable trade and it needs to be the best post-Brexit outcome that we could have.

George Peretz:

I can add something to that. It is slightly unfortunate that the EU withdrawal Act chose to continue what was called the principle of supremacy of EU law, because it is something of a misnomer. As Professor Barnard explained, it is actually a conflict-of-laws rule that gives priority to retained EU law over pre-Brexit statutes. You have to remember that pre-Brexit statutes were passed by Parliament, or made by Ministers, against an understood background that EU law was supreme, so you could say that when Parliament passed a pre-Brexit statute, it expected that statute to be inferior to EU law. It was the sea in which we were all swimming at that point, so I do not accept that there is anything constitutionally objectionable about having the conflict-of-laws rule.

Before you change the conflict-of-laws rule, you also have to think very carefully about its effect. One of the disappointments I have is that nobody in the Government or outside has produced any analysis at all of the concrete effect of removing the conflict-of-laws rule. I have likened it to pushing a very large button that says, “We do not know what happens if you push this button.” That is not a wise legislative technique.

Photo of Stella Creasy Stella Creasy Labour/Co-operative, Walthamstow

Q I will just say that we are all free to take advice from competing lawyers, but I do not think we are free in this place to treat our witnesses with contempt, regardless of whether we agree or disagree with what they have written.

All the lawyers have talked this morning about the approach of working with businesses and whether a regulatory burden could be created, which clause 15(5) is designed to avoid. We do not have any business witnesses coming forward, but we have heard that businesses are talking about risk being a drag on growth. Can you give us some examples of where you have worked with businesses with legal uncertainty? You have all talked about uncertainty, but can you explain what it could do to your clients?

Photo of Gary Streeter Gary Streeter Ceidwadwyr, South West Devon

I am afraid we have 40 seconds left.

Mark Fenhalls:

In 10 seconds, an organisation such as TheCityUK, which represents a range of financial services, accountancy, law and consultancy firms, will tell you that all its international clients are saying, “We don’t know what the rules are going to be; therefore, we are troubled.” There are business organisations out there from which you may choose to try to take evidence, and they may be useful to the Committee.

Eleonor Duhs:

That is exactly what I am hearing too. They want to invest, but you cannot invest if you do not know what the law is going to be.

George Peretz:

This is not my area of practice, but colleagues of mine at the Bar have made that point. If you are involved in a large development project—

Photo of Gary Streeter Gary Streeter Ceidwadwyr, South West Devon

Forgive me, Mr Peretz, but I have to cut you off because we have reached 11.25 am. It is an existing law that we have to honour. Thank you to our three excellent witnesses. We appreciate your time and thank you for being here in person and for contributing online. Colleagues, we will meet again at two o’clock this afternoon for more fun.

The Chair adjourned the Committee without Question put (Standing Order No. 88).

Adjourned till this day at Two o’clock.