Brexit & Beyond newsletter

12 June 2023

Welcome to the 12 June 2023 Brexit & Beyond newsletter

The UK Government has published further details on the implementation of the Windsor Framework. Parliamentary ping-pong continues on the Retained EU Law Bill. Minister Kemi Badenoch has been questioned by the European Scrutiny Committee on her approach to Retained EU Law (REUL). Meanwhile, the Scottish and Welsh Parliaments have refused consent for the REUL Bill.

The Windsor Framework: Government publishes guidance and timelines

The UK Government has published further details on how the Windsor Framework will work in practice. It will be implemented in stages until 2025. The new publications set out the eligibility criteria and requirements for traders and hauliers using the new schemes, including the red and green lane system. The Government’s Command Paper on the Windsor Framework included some of these timelines and commitments, but businesses have raised concerns about the lack of operational detail.

• On 30 June 2023, as a part of a “longstanding commitment”, the Government will launch a new reimbursement scheme for EU duty paid on “at risk” goods which can be shown to not have entered the EU. It can apply to goods moved since 2021. The BBC reports on this issue. The Government has laid a statutory instrument for this purpose, the Customs (Northern Ireland: Repayment and Remission) (EU Exit) (Amendment) Regulations 2023.
• From 30 September 2023, a new UK Internal Market Scheme will replace the current UK Trader Scheme. A greater range of businesses will be able to use this scheme to declare goods ‘not at risk’ of entering the EU single market. Traders can now begin to register for the scheme, and existing users of the Trader Scheme will be contacted to transfer to the new scheme.
• From 30 September 2023, the new sanitary and phytosanitary arrangements will be in place. This includes the green lane for retail agri-food, implemented through a new Retail Movement Scheme (replacing STAMNI); new easements for the movement of plants; and arrangements to enable seed potatoes to move GB-NI.
• From January 2024, there will be greater support for businesses through the existing Customs Duty Waiver Scheme.
• From 30 September 2024, the green lane will take full effect. Eligible traders won’t pay customs duties, and can move goods by providing simplified data; they will not be subject to customs checks (“except where these are necessary as part of an intelligence-led, risk-based approach”) and will not be required to complete a supplementary declaration.
• From 30 September 2024, new arrangements for parcels moving GB-NI are to be in place. The Government states it is working with operators to develop these arrangements and will issue further guidance by 30 September this year.
• From 1 January 2025, the new arrangements commence for the supply of medicines to Northern Ireland.

The current grace periods and easements remain in place until the new arrangements are in force. The Government states it will continue to update its guidance and engage with industry and stakeholders.

The Government’s Trader Support Service (TSS), which helps businesses moving goods GB-NI, will continue. In February, the Secretary of State for Northern Ireland told the Commons that the Government has spent £340 million helping traders through the TSS.

The red and green lane system for movement of goods from Great Britain to Northern Ireland

The UK Government has also published the updated rules of procedure for the Joint Consultative Working Group (JCWG). In the Windsor Framework, the EU and UK agreed to set up “structured sub-groups” to support the work of the JCWG, where stakeholder input will inform discussions. The new Specialised Committee on the implementation on the Enhanced Coordination Mechanism on VAT and excise, established in the Windsor Framework, is meeting for the first time on Thursday.

The Government has laid a statutory instrument, the Windsor Framework (Disclosure of Revenue and Customs Information) Regulations 2023, which will allow HMRC to share information on goods movements with the EU, as required by the Windsor Framework.

State aid

The Government has published further guidance on the application of Article 10 i.e. EU state aid rules applying in the context of trade between NI and the EU. The European Commission has adopted a revised notice on these rules which apply to Northern Ireland. It specifies that “for a measure to be considered to have a genuine and direct link to Northern Ireland and, therefore, to have an effect on the relevant trade between Northern Ireland and the EU, that measure needs to have real foreseeable effects on that trade. These effects should be material, and not merely hypothetical or presumed.”

Kemi Badenoch questioned on the REUL Bill

On 6 June, the Secretary of State for Business and Trade Kemi Badenoch appeared before the Commons European Scrutiny Committee to discuss the Retained EU Law Bill. Badenoch explained to the committee the Government’s change in approach. Previously, at the end of this year most REUL would have fallen off the statute books unless preserved. The Government’s amendments replace this with a list or schedule of almost 600 laws which will be repealed at the end of the year. Badenoch said, “the law of unintended consequences had reared its head: the purpose of the Bill was to remove legislation that we did not need, but the way the Bill was drafted and the sunset meant that all the work was being done to look for things that needed to be kept.” She said this was not a good use of officials’ time; businesses were saying the process was creating uncertainty; and the schedule means there is transparency in the process.

Secretary of State for Business and Trade Kemi Badenoch giving evidence to the European Scrutiny Committee | Source: UK Parliament

David Jones called the Government’s amendment “a 180° turn”. Badenoch said she approached this as an engineer not a lawyer: “I saw a process that was doing the opposite of what was intended. The retained EU law Bill became a process of retaining EU law. That is not what we wanted. I do not agree that it is a 180° turn; I think it is a change in the process.” She told the committee, “I am certainly not an arsonist; I am a Conservative. I do not think a bonfire of regulations is what we wanted…Until I did this, no one knew what was happening; no one knew what was being revoked or reformed...I was not going to let that happen on my watch.”

Richard Drax stated, “Whenever I see or hear the EU, I smell a stitch-up” and asked whether the changes to the REUL Bill were part of securing the Windsor Framework. Badenoch insisted that this was not the case: “The Windsor Framework had nothing to do with it,” she said.

The Committee’s analysis of the schedule is that only five of the 587 pieces of legislation have a substantive policy reason for revocation. Greg Smith asked how that lightens the burden on business. Badenoch said, “There is good reform work coming…a lot of the reform work has not been done because everyone is spending their time drafting the SIs to keep.” Chris Carr, Director of the Brexit Opportunities Unit, explained that they are working with Departments on a three-year programme of reform. Badenoch noted the smarter regulation programme, reform on labour markets, such as the changes to working time regulations and holiday pay, and removing wine labelling. “A lot of it is about just removing bureaucracy”, she commented.

Pressed on what REUL the Government is keeping and why, Badenoch said, “The work I am looking at is reform…I am not allergic to EU law; some things are good and some things are no good... Is it helpful putting out our entire thinking on every single thing in a political debate, or should we focus on what it is that we are trying to do, which is reform?” Badenoch said her principles for reform are to reduce the burden on business, and to make life easier and less complicated for people. She said there would be some “lovely announcements” about reforms before December, some of these would be before recess.

Gavin Robinson (DUP) noted the Minister’s comments about transparency in the process but said “I scratch my head when I hear the sort of cavalier approach, if you will, to the Union in all its parts and to the implication of Brexit for the Union.” He said he cannot see the process to identify the impact that legislation revoked by the schedule would have on the UK internal market (UKIM). Badenoch suggested they had “gone through quite an extensive process on that. A lot of work has been done on consulting with devolved Administrations.” Pressed again, Badenoch said the interaction with the UK internal market is one of the things she would have expected representations on from the devolved Administrations or from the Secretaries of State for Scotland, Wales and Northern Ireland but that they have not raised this issue with her. She added, “This is something that was looked at” and said one of the reasons why certain things are not on the schedule is because of their impact on the UKIM. Robinson has requested the assessments of the schedule’s impact on the UK internal market.

Ping-pong continues on the Retained EU Law Bill

The Retained EU Law Bill returned to the Lords last week. Ping-pong (when the Bill is sent back and forth between the Commons and Lords as they try to agree a final version of the Bill) continues and the Bill returns to the House of Commons today. The Lords considered the Commons reasons for disagreeing with its amendments to the Bill, as well as suggesting other revisions. Peers inserted a new version of a clause on environmental protection into the Bill. The Lords also inserted a revised clause on increasing parliamentary scrutiny of changes to REUL: a House of Commons Committee (rather than Joint Committee of both Houses of Parliament) would have to consider the relevant regulations before the Government makes its changes.

Scotland refuses legislative consent

The Scottish Parliament voted on 8 June to withhold consent for the Retained EU Law Bill, having considered a Supplementary Legislative Consent Memorandum (sLCM), in light of the Government’s amendments.  The Scottish Government (SG) recommended that the Scottish Parliament withholds consent for all UK Government(UKG) amendments tabled on 10 May 2023, stating, “no amendment to this Bill can be viewed in isolation to the risks of the overall Bill or be sufficient in removing the dangers attached to it – and it is the SG’s view that it should be withdrawn entirely.” The SG argues that UKG has “taken the decision to bypass entirely the recognised processes for seeking consent from the devolved governments and legislatures”, noting the Minister in the Lords, stated on 22 May that the UKG “intends to proceed with the Bill” without the consent of the devolved governments.

The Scottish Government is scathing of the Bill and says despite “significant” Government amendments, their concerns about the Bill remain. It highlights the “significant undermining of devolution demonstrated by the refusal to seek consent from the Scottish Parliament and Scottish Government” and the “divergent and deregulatory intent of the Bill alongside the Scottish Government’s fundamental opposition to it”.

In the Scottish Government’s assessment, 139 of 587 laws set to be repealed make some devolved provision, but they are satisfied that these are obsolete. However, they oppose the inclusion of nine of these in the schedule and have alerted UKG officials to this.

Wales refuses legislative consent

On 6 June 2023, the Senedd also voted to withhold consent for the REUL Bill. The Welsh Government’s sLCM states the Government’s change in approach is a “positive development” but that “concerns about the overall rationale for the Bill remain”. It recommended that the Senedd withhold consent. The Welsh Government states, “the Bill still includes provisions Welsh Ministers consider unacceptable, including those that remove the established principles by which REUL is to be interpreted (‘the interpretive provisions’) and those giving Ministers of the Crown concurrent powers in devolved areas without a requirement on the face of the Bill to obtain the consent of the Welsh Minsters before those powers are exercised.”

Other news

• The Lords Sub-Committee on the Protocol on Ireland/Northern Ireland has written to the Minister for Immigration about the UK’s Electronic Travel Authorisation Scheme, citing a letter from the Northern Ireland Tourism Alliance, which sets out the case for an exemption to the scheme for tourists entering NI via the land border.
• The Public Administration and Constitutional Affairs Committee has launched an inquiry to examine how well the UK Government understands devolution. Committee Chair William Wragg said, “the devolution settlements fundamentally changed the governance of the United Kingdom…we have also seen the repatriation of powers to the UK after leaving the EU and further changes to the powers of the devolved institutions. It is crucial that ministers and civil servants in Whitehall fully understand the implications of the devolution settlements on the policymaking process and maintain the skills and knowledge necessary to deliver for every part of the UK.”
• The British-Irish Intergovernmental Conference (BIIGC) will take place in London next Monday, 19 June 2023.
• Professor Simon Usherwood writes for the UK in a Changing Europe that the Windsor Framework represents a “return to a more classic mode of British European policy: pragmatic, but somewhat rudderless.”
• Politico reports on tensions between Business and Trade Secretary Kemi Badenoch and Energy Secretary Grant Shapps over a potential carbon border adjustment mechanism (CBAM) for the UK, which would put tariffs on carbon-intensive imports from overseas. The EU is bringing in its own CBAM, which has implications for the UK, not only because it could apply in Northern Ireland, but it could also put UK manufacturing at a disadvantage.
• The Institute for Government’s James Kane writes that the Australia and New Zealand free trade deals coming into force “marks the end of an era” – the Government has achieved its goals of rolling over exiting EU free trade agreements (FTAs) and securing these new ones, as well as joining CPTPP. He states that the focus of the Department for Business and Trade should now be helping UK business to export and make use of FTAs.
• The UK in a Changing Europe has published its June 2023 trade tracker. It considers the UK’s post-Brexit mergers and acquisitions market.
• The Scottish Government has announced that it will delay its deposit return scheme (DRS) until October 2025 at the earliest. This would bring it in line with the UK Government’s planned DRS.
• The Financial Services and Markets Bill was considered at report stage in the House of Lords on 6 and 8 June. The Government says the Bill “seizes the opportunities of EU Exit, tailoring financial services regulation to UK markets to bolster the competitiveness of the UK as a global financial centre and deliver better outcomes for consumers and businesses.”