On 2 February 2021, the government published a very short policy paper regarding the “Taskforce on Innovation, Growth and Regulatory Reform” or TIGRR for short. The policy paper introduces TIGRR as a way to: “consider all the options available…to stimulate business dynamism and innovation, ensure that our markets are open and competitive and that businesses can scale up unencumbered by any unnecessary administrative burdens”. TIGRR will be chaired by Iain Duncan Smith MP.
What will TIGRR do?
When A.A. Milne wrote “…that icky, sticky stuff is only fit for heffalumps and woozles”, Tigger was not commenting on (excessive) regulation being the favourite fodder of the EU institutions. However, since the creation of TIGRR is explicitly founded on the premise that being outside the ambit of EU law presents the UK with opportunities to amend the current regulatory landscape and “reignite the economy to help it recover from the impacts of Covid”, TIGRR’s foundation does bear analogy with Milne’s famously bouncy character. The choice of acronym, unlikely to be lost on the Prime Minister Boris Johnson, might raise some eyebrows; after all, Tigger was positive and optimistic in outlook without foundation but, ultimately, unfocused and had no real reason to be so.
TIGRR’s terms of reference are to “propose options for how the UK can take advantage of our newfound regulatory freedoms to deliver” on its aims. The paper identifies an indicative list of four particular categories of “opportunity” which its proposals might focus on: stimulation of innovation and commercialisation of new technologies; reduction of barriers to entry; reduction of administrative barriers; improvement of the regulatory experience for small businesses. TIGRR is also tasked with identifying sectors or regulatory frameworks to be prioritised for further consideration. However, the policy paper also talks about what TIGRR will not do: its remit does not extend to the government’s broader economic growth and regulatory agenda, its approach to better regulation generally or departmental responsibilities in respect of regulation.
Otherwise, we are told TIGRR can be contacted at email@example.com; it will report to the Prime Minister in April; and it welcomes submissions on opportunities to drive growth and innovation through regulatory reform. That, for now, is it. A big job, with not much time to carry it out; TIGRR needs to be very bouncy indeed, or as Milne wrote, it has: “got a lot of bouncing to do! Hoo-hoo-hoo-hoo!”
In some respects, we have been here before. To give only a sample of the initiatives by successive UK governments in these areas over the last four decades (in roughly reverse chronological order):
- Early in 2020, the Regulatory Horizons Council was set up to advise government on “the implications of technological innovation, and…regulatory reform required to support its rapid and safe introduction”. In December 2020, it produced a Briefing Note on potential priority areas for its work, including unmanned aircraft, fusion energy and 3D printing.
- At about the same time, the Competition and Markets Authority produced a report on regulation and competition that recommended the development of: “regulation that supports innovation and disruption”; updating the guidance for assessing the impact of regulation; and enhancing the oversight of Regulatory Impact Assessments.
- BEIS has produced a number of reports on regulation and innovation in recent years (see for example here and here). There has also been a fair amount of official thinking about the need to update some sectoral regulatory models (see, for example, the National Infrastructure Commission’s 2019 report on utilities regulation).
- The Coalition Government had a Red Tape Challenge from 2011 to 2014. All departments reviewed their regulation to see what could be removed/improved, and a new principle of “one in one out” applied to the introduction of new regulatory measures. In its report to the OECD, the government claimed that “3,095 regulations were scrapped or improved and thereof 1,376 changes [had] a material benefit” – apparently amounting to more than £1.2 billion. The Deregulation Act 2015 enacted many of the reforms identified by this exercise.
- The New Labour years saw the rise of Regulatory Impact Assessments for new legislation and policies (later increasingly known as Impact Assessments), and the ascendancy of the Better Regulation Executive and Regulatory Policy Committee. This tendency might have been thought to have reached its apogee when the one-time Department of Trade and Industry (now the Department of Business, Energy and Industrial Strategy) became the Department for Business, Enterprise and Regulatory Reform. However, it was under the Coalition Government that the Small Business, Enterprise and Employment Act 2015 introduced a statutory obligation on government to set and report annually on: “a target…in respect of the economic impact on business activities of qualifying regulatory provisions which come into force or cease to be in force” during each Parliament .
- More recently (in December 2020), the current government has indicated that it believes the current impact assessment regime, which has been refreshed a number of times over the years and on which “interim” guidance was last published in March 2020, is not fit for purpose. The government “will consult with business to ensure the impact of regulation is reflected more effectively, so as to continue to provide necessary protections without placing unnecessary burdens on business”. It is certainly the case that the current regime can sometimes feel like a series of hoops to be jumped through once a policy is already decided on (or “gamed” on the basis of sometimes slightly creative assumptions), rather than a rigorous tool for policy development and improvement. Moreover, policies with a strong political head of steam behind them are sometimes simply exempted from the process. It is useful to try to curb both these inevitable tendencies of human nature from time to time.
- Another idea that has appealed to more than one government is the creation of devices for removing or improving “unhelpful” legislation without having to pass an Act of Parliament. Examples include the Deregulation and Contracting Out Act 1994 (or at least parts of it), the Regulatory Reform Act 2001 and the Legislative and Regulatory Reform Act 2006 – each of which created special forms of ministerial orders (statutory instruments) for this purpose.
- Each of these attracted criticism in its time as an infringement on the legislative role of Parliament, on the basis that no Parliamentary scrutiny of a statutory instrument (which is ultimately always done more or less on a take-it-or-leave-it basis) can match the process of primary legislation for thoroughness and flexibility (given the ability to amend any Bill at multiple stages in its passage). However, the order-making powers of the 1994, 2001 and 2006 Acts put together have not been used with anything like the frequency or impact of the regulation-making powers under the European Union (Withdrawal) Act 2018.
- Ministers can use regulations under the 2018 Act to make changes to and in respect of “retained EU law” (the legacy to the UK statute book of almost 50 years in the EU). Hundreds of such regulations have been made in the run-up to and immediate aftermath of Brexit. It remains to be seen what use will be made of the fairly far-reaching powers in the European Union (Future Relationship) Act 2020 that allow UK ministers and devolved governments to implement the EU-UK Trade and Cooperation Agreement (amongst others) in domestic law.
- Both these sets of powers to make subordinate legislation (and those in the European Union (Withdrawal Agreement) Act 2020 relating to various aspects of the implementation of the EU-UK Withdrawal Agreement) are, of course, in a sense the successors to, and in key respects modelled on, the broad power in section 2(2) of the European Communities Act 1972 under which many EU law measures were implemented by statutory instrument in the UK. The ability inherent in that power to go beyond the strict letter of the underlying EU measures gave rise to a number of investigations into the perceived problem of “gold-plating” between 1993 and 2013 (which was more than once found to be less prevalent than some had supposed), and the promulgation of associated guidance for future use of the power.
- Another aspect of the burden of regulation that has attracted legislative attention has been the ways and means in and by which it is enforced. Statutory reforms in this area include the Regulatory Enforcement and Sanctions Act 2008 (which included an expansion of “civil penalties”, following on from the Macrory Review of 2006); Part 5 of the Enterprise and Regulatory Reform Act 2015; and some provisions of the Enterprise Act 2016.
- Finally, the wave of privatisation of formerly nationalised utility industries that began with the Telecommunications Act of 1984 and ended with the Railways Act 1993 created whole new areas of regulation which have continued to evolve in response to new policy thinking (at UK or EU level) about the sectors concerned. In the case of downstream gas and electricity, and railways, in particular, there are now thousands of pages of what may be called “tertiary legislation”. This is widely recognised as a barrier to innovation, but the task of simplification – which is on the government’s list of things to do (soon, but not quite yet) is daunting. As a result, efforts to encourage innovation in the energy sector tend to rely a lot on the regulator constructing “sandboxes” in which certain rules have been “switched off” to trial new business models. Virtually all of the regulatory bodies with responsibilities for particular economic sectors or areas of activity have undergone at least one major restructuring in the last 30 years, and significant changes to their powers, duties or degree of independence from government (usually becoming more independent, which of course means that government feels the need to legislate more specifically for how they are to behave).
A Brexit bonus?
Of course, what the above resumé of previous regulatory reform efforts ignores is that TIGRR is distinguished from them by the moment when it has come into being. In every previous large-scale search for regulatory dead wood, obligations that were thought to impose burdens on business but which flowed from EU law were off-limits. As the policy paper quoted above makes clear, TIGRR comes on the scene just at the point when the perceived strait-jacket of EU law has been removed.
The most recent publication to be entitled The Red Tape Challenge was not a government drive for better regulation, but the CBI’s wish-list for the outcome of the negotiations between the EU and UK on their future relationship. However, the immediate post-Brexit transition period experience of many businesses has been one of dealing with more, rather than less bureaucracy. Much of this is the inevitable result of the fact that the UK is now in the EU’s eyes a “third country”, and there was little that an agreement of the kind the TCA was set up to be could do to address this. On the other hand, the negotiations that took place in 2020 undoubtedly did not deliver a number of significant items that were on the CBI’s list, and that could, at least in principle, have formed part of the TCA.
Although the TCA is in some respects the beginning, rather than the end, of post-Brexit agreements between the EU and UK, in several cases there is no immediate prospect that further negotiations will deliver what the CBI was looking for (notably in relation to the services economy). With respect to the increased administrative barriers, despite the government’s headline TCA claim of “tariff-free trade” between the UK and EU, even here there are additional barriers. In time, familiarity with export and import requirements will improve, and, as the political sensitivity of Brexit fades, the UK and EU may agree to some further flexibilities. However, in the meantime, businesses will have little chance but to make the best of it – TIGRR’s remit does not extend to recommending re-opening the TCA agreement. TIGRR may be able to identify some possible regulatory improvements within GB, although the government will be acutely aware that any variance from EU standards may merely add to the difficulties for EU importers and UK exporters.
Politically, the need to show that a UK unbound from EU law can achieve “better regulation” gains is clearly acute. The pressure on government to demonstrate its willingness to exercise its new-found “regulatory freedom” is amplified by the fact that the ability to do things differently (after so many years of having to follow EU regulatory norms) was put forward as an argument in favour of Brexit by some of its supporters. Indeed, the UK government’s negotiating objective of being free from EU law after 31 December 2020 has come at a price, namely increased friction in trade between UK and EU.
Hence the importance of TIGRR’s quest – and, for that matter, of the missions of those bits of government with which TIGRR’s work might overlap, but which we are told that TIGRR is not duplicating. The challenge that the Taskforce faces is to identify areas of potential reform that:
- genuinely make a material difference to business (the TIGRR bounce needs to be meaningful). Now is probably not the time to be searching for possibly worthy but essentially minor reforms. These are unlikely to make much of a difference, unless there are a lot of them; and it is perhaps unlikely that there are many still to be found given the scale of recent previous efforts in this area. The “aggregation of marginal gains” is never to be despised, but TIGRR needs to make a bigger splash more quickly;
- are politically palatable (uncontrolled bouncing not a good plan). Of course, if you make a splash, somebody will get wet. Piglet famously did in the Pooh stories. The concerns raised about the erosion of workers’ rights when a post-Brexit review of UK employment law was announced in January 2021 are a small example of the potential for political controversy inherent in some more radical reforms that have previously been aired in the context of Brexit;
- fit with other important initiatives (consistency of bouncing). An obvious point, but any cross-cutting initiative carries with it a risk of tripping up on equally well-intentioned initiatives in particular policy areas that happen to be pointing in exactly the opposite direction. For example:
- Financial services is an area in which regulators have long talked of re-writing the rules to make it easier for new market entrants and reduce onerous ongoing compliance costs. Equally, those who worked in the industry during the financial crisis or read any of the public commentary/enquiries, will recall that the former “principles-based” approach to regulation did not fare well. There have been a whole host of well-publicised areas (including sales of PPI and handling of client money), where it appears detailed rules are preferable to the years of expensive litigation that ensued. Until we have more clarity about exactly how equivalence decisions will operate, and in particular whether they will be able to be appealed, it would seem extremely risky and short-sighted to look to de-regulate for de-regulation’s sake.
- A key aim of the proposed regulatory reform is to help emerging tech businesses thrive. However, reconciling this with the direction of regulatory travel developing regarding technology and data-driven services will be a challenge. The reality is that the search for policy answers to recent topical issues have usually dictated a need for further pieces of legislation, not fewer. Daily, we read headlines reporting damage caused by online discrimination or harassment over social media, urging the government to regulate. The UK has responded accordingly, expediting measures to deal with online harms. It recently outlined comprehensive proposals. These will require companies to prevent illegal content and activity online, and ensure children are not exposed to harmful content. Sanctions for non-compliance are set to be as high as £18 million or 10% of global annual turnover. In short: more regulation is on its way, with the Online Harms Bill promised in early 2021. And the UK’s Competition and Markets Authority has recently completed its market study into online platforms and the digital advertising market in the UK. Somewhat unsurprisingly, it reported that competition is not working well in these markets, leading to substantial harm for consumers and society as a whole. The recommendation? Greater regulatory intervention;
- do not lay themselves open to too high a risk of successful challenge on domestic administrative law grounds (bouncing can infringe rights). Wide-ranging though the various existing powers to legislate for regulatory reform by means of secondary legislation are (both those mentioned above and some others), their scope is not limitless, and none has actually been designed with open-ended, innovation-focused reform of retained EU law in mind. Accordingly, whilst it is difficult to generalise, making use of them in this context may carry a heightened risk of legal challenge. It may be that a useful starting point would be to carry out a gap analysis on the existing powers and consider whether it would make sense to create a new statutory framework for the kind of reforms that TIGRR has been set up to promote. A new power to make secondary legislation is not necessarily the (whole) answer here. There is considerable force in some of the criticisms that have been levelled at the increasing use of secondary legislation. Something along the following lines may be preferable:
- The government’s legislative programme for each Parliamentary session would contain sufficient allocation of Parliamentary time for at least one Regulatory Reform, Innovation (RRI) Bill to be passed in each calendar year, and for it to be of substantial length.
- Government would maintain a standing invitation for regulatory reform proposals. Proposals would be submitted transparently on a public portal (with a summary in a set form). The portal would include space for third party feedback. Legislation would set parameters around the kind of proposal that could be submitted. Government would also use the portal to give notice of any proposal it intended to implement using an RRI Bill.
- With two months of each proposal being submitted, government would be obliged to give a preliminary indication (with reasons) on the portal as to whether it sees merit in it.
- At a set point in each year, government would be required to indicate which proposals it means to carry forward into the next RRI Bill. Such Bills would be permitted to be carried over if the timing of Parliamentary sessions would otherwise interfere with the objective of passing at least one such Bill in each calendar year; and
- do not come with too high a risk of provoking a dispute under the TCA or the Withdrawal Agreement; of prejudicing ongoing or future negotiations with the EU or other potential sovereign trading partners; or of provoking a dispute between the UK government and the devolved governments in Wales, Scotland or Northern Ireland (bouncing can alienate one’s friends or jeopardise the possibility for making new friends and is not, in fact, completely unconstrained). Obviously, the calculation of what constitutes “too high” a risk for these purposes is not exclusively a legal one. However, from a legal point of view, the following points may be noted:
- The UK/EU Withdrawal Agreement is perhaps the area of least risk here, in the sense that TIGRR’s kind of regulatory reform initiatives are less likely to overlap with its subject matter – except in so far as they touch on areas where the Ireland/Northern Ireland Protocol provides that specified EU legislation applies “to and in the UK in respect of Northern Ireland”. However, a dispute which involved the interpretation of EU law would trigger a reference to the CJEU.
- The TCA includes (Article GRP.8) an intention to ensure that the EU and UK carry out “impact assessments for any major regulatory measures” – a requirement to which the UK was not previously subject as a matter of general EU law. It is not expressed in particularly onerous terms, but it includes a requirement to assess impacts on trade, and will need to be considered in the proposed rejigging of the impact assessment process.
- Title XI of Heading One of Part Two of the TCA sets out the much-debated “level playing field” rules. It focuses on competition policy, subsidy control, rules on state-owned or statutory monopolies, taxation, labour and social standards, environmental and climate change policy, trade and sustainability. The UK succeeded in avoiding an obligation to be “dynamically aligned” with EU legal norms in these areas going forward. However, each set of provisions in Title XI seeks (from the EU perspective) to peg the UK to a regulatory baseline from which it must not regress (and which is set by reference – explicitly or implicitly – to EU law, or to an external standard – such as OECD principles on taxation). Although the TCA also contains provisions that recognise the parties’ autonomy in some of these areas, it is not hard to imagine areas in which the boundaries between such areas and those where the TCA imposes limitations could become contested. The disputes settlement provisions of the TCA (both generally and for Title XI specifically) are complex but there is considerable potential for breach of obligations in one area to trigger retaliation in another. It should be stressed that, although Title XI undoubtedly imposes some constraints on the potential for UK regulatory reform in those areas in respect of which it makes provision, there are plenty of areas of retained EU law it does not cover.
- Many areas covered by EU (now “retained EU”) law fall within the legislative competence of the devolved administrations. In different ways, the 2018 Act, the United Kingdom Internal Market Act 2020 and the devolution statutes all seek to reduce the risk of Westminster and devolved legislatures taking divergent approaches to post-Brexit regulatory changes in areas where they were previously all obliged to follow EU law. Many of these mechanisms are, as yet untested.
It is also worth bearing in mind that, even if the UK seeks to reduce regulation, that will not relieve UK operators who are targeting EU markets. For example, in the tech field, the Digital Markets Act and Digital Services Act are currently trundling their way through the European legislative process. These are comprehensive regulatory reforms for digital platforms. These new pieces of legislation cannot have direct effect in the UK. However, UK online service providers and digital platforms need to comply where services are being provided to users within the EU, irrespective of the service provider’s place of establishment. To avoid increasing the burden on UK service providers, it seems inevitable that the UK’s framework will align with the EU’s.
And reduction in data regulation seems unlikely. The recently-published National Data Strategy states clearly that the government is committed to maintaining high levels of data protection in the UK. This does not mean there will not be some elements of regulatory reform, with certain areas under consideration for review and simplification. However, the UK can only go so far. This is because the UK needs to ensure it obtains an adequacy decision from the EU Commission to make sure data can continue to flow from the EU to the UK unhindered. In doing so, UK data laws cannot diverge significantly from those set by EU law. This is a particularly sensitive issue. The Taskforce is due to report back to the Prime Minister in April – precisely when the EU is likely to be reaching a final decision on the UK’s data adequacy post-Brexit.
A happy ending?
TIGRR has a mission that has long been a twinkle in ministerial eyes. It has much previous work to draw upon but very little time to report – by April – on concrete proposals that can be implemented safely, do not clash with the rights of citizens and businesses, trade partners’ requirements or other government policy, and make a difference. That is a tall order or, as Milne wrote, would be quite “Some bouncing, huh?”. It remains to be seen whether the results are lauded for unblocking some “icky sticky stuff” or greeted with a loud chorus of “Don’t be ridikkerous!”.
- Milne’s character Tigger famously did not like the honey which was beloved of Pooh Bear. It may be that this and some of the other Tiggerisms quoted in this article are Milne through the filter of Larry Clemmons or one of the other scriptwriters of the 1977 Walt Disney version of Milne’s stories.
- In Pooh-speak, T-I-guh-double-er!
- The current target, set on a “holding” basis, and with a number of exclusions, is effectively one of no net gain in regulatory burdens as a result of regulatory changes over the current Parliament.
- Industry-drafted and usually sector regulator-approved agreements, codes and related documents whose authority may be traced back to provisions in the licences issued under the Gas Act 1986, the Electricity Act 1989 and the Railways Act 1993.
- The same is true in the financial services sector. The FCA Handbook stands several feet tall and is regularly cited as a barrier to new market entrants. It has long been viewed as needing an overhaul but this has not happened. The FCA has also made use of regulatory sandboxes to try to stimulate innovation.
- Published in February 2020, just as negotiations were beginning.
- There have been numerous examples of barriers applying since 1 Jan 2021 where none existed previously, often catching under-prepared importers, exporters and hauliers by surprise. Prominent examples include the need for additional paperwork (export and import declarations etc), and inspections, on trade between GB and both the EU and Northern Ireland, further specific restrictions in relation to certain categories of product such as sanitary and phytosanitary products, and those that require (for example) a CE marking or a UK REACH registration.
- Or trading between GB and Northern Ireland, which is, for the moment, treated in much the same way for customs purposes.
- Notably the need to assess and satisfy the rules of origin to qualify for preferential origin in GB trade with the EU. Many importers are finding that their products do not meet the origin criteria and, as such, will not qualify for tariff-free trade. For services, the situation is different – in many cases the service is not only more cumbersome, but simply cannot lawfully be provided to or in the EU, or may only be provided in certain ways.
- An objective broadly achieved except in respect of Northern Ireland and participation in EU research programmes.
- The same is likely to be true in other sectors (see, for example, the government’s recent Energy White Paper). In sectors where the market itself is a creature of regulation, and the commercial relationships are becoming more complex, any systemic change will inevitably complicate the regulatory picture, at least to begin with. And, where no market exists, for example for the deployment of expensive first-of-a-kind, carbon-busting industrial technology, new regulation will be essential to create one.
- “Crowdsourcing” of regulatory reform ideas did play a part in the Coalition Government’s efforts, and no doubt there are some lessons to be learned from that experience. However, an important part of the value of what we propose here would be that it would be a regular fixture rather than a one-off.
- Principally, equalities/employment, customs, VAT, product standards, energy, environmental protection, SPS checks and state aid.
- This is one of the reasons that the UK’s preferred approach to the negotiations was to have a larger number of separate agreements on specific sectors: the TCA’s dispute settlement provisions also apply to subsequent EU-UK agreements (Articles COMPROV.2 and INST.10).
- The Supreme Court has already indicated that the supposed codification in the Scotland Act 2016 and Wales Act 2017 of the Sewel Convention (the principle that Westminster will not legislate in an area of devolved competence without the devolved legislature’s consent) does not give it material legal bite. However, it is possible to imagine a devolved authority seeking to use the codified Sewel convention provisions to restrain Westminster-led regulatory reform in an area covered by Title XI of the TCA. It could, for example, find its position was strengthened by the broadly drafted s.29(1) of the European Union (Future Relationship) Act 2020, which states: “Existing domestic law has effect…with such modifications as are required for the purposes of implementing in that law [the TCA] so far as [it] is not otherwise so implemented and so far as such implementation is necessary for the purposes of complying with the international obligations of the United Kingdom under [it]”.
— to www.jdsupra.com