Please find below Bill Cash’s letter to the Prime Minister:

European Scrutiny Committee
House of Commons London SW1A 0AA
Tel (020) 7219 3292 Email escom@parliament.uk Website www.parliament.uk/escom

From: Sir William Cash MP

15 May 2023

Rt Hon. Rishi Sunak MP
Prime Minister
10 Downing Street
London SW1A 2AA

Change in Government policy on Retained EU Law and the Retained EU Law (Revocation and Reform) Bill

Dear Prime Minister

On 21 July last year, after a five month inquiry, my Committee reported on the future of Retained EU Law (REUL). During our inquiry, we heard in evidence from 13 expert witnesses and the (then) Secretary of State for Business, Energy and Industrial Strategy, Rt Hon. Jacob Rees-Mogg MP.1 Shortly after we reported, the Government published the Retained EU Law (Revocation and Reform) Bill (REUL(R&R) Bill). The Government engaged with our work and we were pleased to see a number of our recommendations
given effect in the REUL(R&R) Bill.

Recent Government engagement and the Secretary of State for Business and Trade’s non-attendance before the Committee

This experience stands in stark contrast to our more recent engagement with the Government on the Bill. On 24 February, we invited the Secretary of State for Business and Trade, Rt Hon. Kemi Badenoch MP, to give evidence to us on the Government’s progress on the REUL(R&R) Bill and its ‘Brexit opportunities’ work.2 We have written twice since, requesting her attendance before the Committee. On Thursday 11 May, I asked her on the floor of the House if she would appear before us, as did Rt Hon. David Jones M.

The Secretary of State is yet to commit to appear before the Committee. This state of affairs is unacceptable: Select Committees are vital to effective scrutiny and good law- and policy-making. A Select Committee should not be put in the position where it has asked a Secretary of State to appear five times to give evidence, over three months, without a clear commitment being forthcoming. The Secretary of State’s failure to appear has frustrated our work on REUL and Brexit opportunities, and is not an issue I would ever have expected to be raising with a Prime Minister.

This situation has taken on a more concerning hue in recent days. As you are aware, on Wednesday the Government tabled amendments in the Lords to the REUL(R&R) Bill. These amendments signal a significant change in the Government’s policy on REUL. The House was informed of this change in a Written Ministerial Statement on Wednesday afternoon and adequate explanatory materials, such as a White Paper, have not yet been forthcoming. This series of events was deemed so serious by Mr Speaker that he granted my Urgent Question (UQ) on the matter on Thursday morning. Save for my UQ, Members would not have had an opportunity to question the Secretary of State on the Government’s plans ahead of Lords Report Stage, which starts today. This approach to scrutiny is deeply concerning and a worrying parallel can be drawn with how the Government handled the Windsor Framework: a major policy announcement accompanied by artificially set deadlines with no meaningful opportunity for input by Members. We hope this is not a trend that will continue. Parliament and the scrutiny function entrusted to us by the electorate are too important to ride over roughshod.

On the content of the Government’s amendments to the REUL(R&R) Bill, we have serious concerns about: (i) the removal of the ‘sunset Clause’; (ii) the Schedule of REUL to be revoked; and (iii) the Government’s policy on REUL and its Brexit opportunities work. i. The removal of the ‘sunset Clause’ Clause 1 of the REUL(R&R) Bill, as introduced, would ‘sunset’ EU-derived domestic subordinate legislation and retained direct EU legislation on 31 December 2023. It would ensure that the majority of REUL would cease to exist on the domestic statute book as of the end of the year (unless specifically retained). The December 2023 sunset was justified by the Government as necessary to “accelerate reform and planning for future regulatory changes, benefitting both UK businesses and consumers sooner”. The Government also said upon the Bill’s publication:  HCWS764 [on Regulatory Reform Update], 10 May 2023 6 Explanatory Notes to the Retained EU Law (Revocation and Reform) Bill [Bill 156 (2022-23)—EN], para 17.

The sunset will increase business certainty by setting the date by which a new domestic statute book, tailored to the UK’s needs and regulatory regime will come into effect. Clause 2 of the Bill would allow the sunset to be extended beyond 31 December 2023 “ensuring the efficiency of the REUL revocation process should a lack of parliamentary time, or external factors, hinder progress towards reform of retained EU law prior to the 2023 sunset date”. The Government amendment tabled in the Lords on Wednesday would remove the default sunset clause and, by virtue of this change, also remove the ability for it to be extended. Instead, only legislation listed in the Schedule would be revoked.

In a letter to the Committee on 10 May, the Secretary of State stated that the removal of the Bill’s sunset would “provide certainty for business by making it clear which regulations will be removed from our statue book”. This argument and that justifying the sunset clause on the introduction of the Bill are mutually contradictory.

The Secretary of State has referred to the Bill as pursuing a policy of ‘preservation’ of REUL. This is wrong. The Bill, as drafted, would revoke all EU-derived subordinate legislation and retained direct EU legislation on 31 December, apart from that explicitly singled out to be saved. The Government’s amendments on Report in the Lords would preserve all 4,000
plus instances of REUL identified, minus those covered in the proposed new Schedule (600) and those instances to be dealt with elsewhere (e.g. the under the Financial Services and Markets Bill). A well-resourced REUL identification programme, which was promised by the Government in January last year, coupled with effective Ministerial oversight, would deliver the certainty business rightly demand and the effective and nimble post-Brexit statute book they have been promised. Clause 2 of the Bill was a sensible inclusion that could be exercised should progress towards the reform of REUL not be as quick as anticipated. It is unclear why this safety net is now deemed insufficient.

Letter from Rt Hon. Kemi Badenoch MP to Sir William Cash MP, 10 May 2023

ii. The Schedule of REUL to be revoked
The Government amendment tabled in the Lords would replace the clause 1 sunset mechanism with a Schedule of around 600 pieces of REUL to be revoked at the end of December this year. It is important to remember the reasons why the Bill was introduced. In its ‘Benefits of Brexit’ policy paper, the Government said “[we] will now prioritise areas where reform of retained EU law can deliver the greatest economic gain”.10 In her letter of 10 May, the Secretary of State says “the Government are committed to lightening the regulatory burden for businesses and helping to spur economic growth”. It is clear that the vast majority of instances of REUL to be revoked under the Schedule would do no such thing.

Our initial assessment shows that, almost without exception, the REUL detailed in the Schedule relates to matters that are trivial, obsolete and are not legally and/or politically important. Revocation of this REUL cannot be construed as lightening the regulatory burden for businesses or spurring economic growth. This is a worrying mischaracterisation and begs the question as to what the real purpose of the Schedule is. Examples of REUL that would be revoked under the Schedule include:
• temporary exemptions to repealed EU rules on limits to working hours for drivers during the 2001 foot-and-mouth outbreak;
• authorisation for EU Member States to ratify the 2006 Maritime Labour Convention;
• quota rules for the import of 8,000 tonnes of wheat bran originating in the ACP States into the French overseas territory of Réunion;
• rules on the allocation of fishing opportunities for the Democratic Republic of São Tomé and Príncipe; and
• the setting of fishing opportunities for anchovy in the Bay of Biscay for the 2011/2012 fishing season (it is worth noting that in excess of 150 instances of REUL included in the Schedule relate to fishing).
iii. The Government’s policy on REUL and Brexit opportunities
The Government’s Benefits of Brexit paper was also clear that REUL would be reviewed to meet the UK’s priorities, with a view to “unlocking growth” and making sure it is “tailor-made for the UK market”.

The policy paper was published in January 2022—almost a year and a half ago—and states “the Government will now prioritise areas where reform of retained EU law can deliver the greatest economic gain.”13 This task was deemed sufficiently important by the Government that a dedicated ‘Brexit opportunities unit’ was setup working out of the Department of Business, Energy and Industrial Strategy and charged with coordinating and setting the methodology for the identification of REUL across Whitehall. The REUL(R&R) Bill is the mechanism through which the Government’s Brexit opportunities work was to be delivered. We have been concerned since the start of the year that the Government’s Brexit opportunities work, including that identifying REUL, has not been progressing as promised. I restate our suggestion, which I made to the Secretary of State on 24 February, that the Government should appoint a REUL ‘Tsar’, tasked with ensuring the Government delivers on its commitments.

The Government must restate its plans for the substantive reform of REUL. This is necessary in light of the aforementioned uncertainty, the broad powers the Bill provides Ministers to amend REUL and the Government’s desire to provide clarity and certainty to businesses moving forward. We request a full update on the status of the Government’s Brexit opportunities work, the areas it is prioritising for reform through the Bill, and when these changes are now scheduled to take place. We also ask you to ensure the appearance of the Secretary of State before the Committee in good time.

I request a response to this letter as a matter of urgency, owing to the Government scheduling Report Stage of the REUL(R&R) Bill in the Lords for today and Wednesday.

I am copying this letter to the Secretary of State for Business and Trade, Rt Hon. Kemi Badenoch MP.

Regards

Chair

Department for Energy Security and Net Zero provided the following answer to your written parliamentary question (184254):

Question:

To ask the Secretary of State for Energy Security and Net Zero, what steps he plans to take to use smart meters to reduce peak time electricity demands. (184254)
Tabled on: 10 May 2023

Answer:
Amanda Solloway:

Smart meters are making our energy system more efficient and flexible, helping us manage electricity demand at peak times. The half-hourly energy consumption information from smart meters is enabling innovative products and services for consumers such as ‘time of use’ tariffs, which offer cheaper rates when demand is low or when there is excess clean electricity available.

Smart meters have enabled National Grid ESO’s Demand Flexibility Service. This had positive results through savings to households in the form of reduced energy bills, and reduced energy usage during peak times which helped to balance the electricity network last winter. The ESO is currently undertaking a review to inform the future evolution of the Demand Flexibility Service.

The answer was submitted on 16 May 2023 at 15:46.

Please find below my interview with Times Radio where we discussed the need for tighter controls on immigration and a focus on economic growth.

You can find it between 2:10:06-2:16:47.

https://www.thetimes.co.uk/radio/show/20230516-16757/2023-05-16

I  now have a letter following my question to the Minister. This confirms that taxpayers will put up £20bn, there will be a new tax added, and levies on customer bills. Will all our competitors do the same? The problem with this “investment” is it entails doing something no-one wants to pay for. It needs more taxes to deliver. It will help make the UK less competitive, speeding the transfer of jobs in energy intensive areas to other countries.

 

Dear John,
Thank you for your question in the House of Commons on 30 March, and for your written
questions tabled on 14 April, regarding the source of the recently announced £20 billion
in Carbon Capture, Usage and Storage (CCUS) funding.
In the Spring Budget the Chancellor announced £20 billion in funding to store carbon and
create jobs through Track-1 CCUS clusters and beyond. This is an unprecedented
investment in the early development of CCUS to help meet the Government’s climate
commitments.
The announced funding will come from levy and Exchequer sources. We expect it to
crowd-in billions of pounds of additional private capital, creating jobs and bringing
investment to our industrial heartlands.
The Government will use Exchequer funding to support industrial carbon capture business
models and the Carbon Capture and Storage Infrastructure Fund (CIF). A dispatchable power
agreement for power generation with CCUS will be funded through consumer levies. Support
for CCUS-enabled hydrogen projects will be funded by a new hydrogen levy on energy bills,
subject to consultation and legislation. As currently proposed, the Revenue Support
Agreement (RSA) for transport and storage will use both taxpayer and consumer funding.
Thank you again for your questions.

Please find below the link to my interview with Justin Webb of BBC Radio 4. We discussed the need for tighter control on immigration, given that the Centre for Policy Studies today announced that net migration for this year is expected to surpass 700,000.

You can find it between 1:36:07-1:41-21.

Today – 15/05/2023 – BBC Sounds

Apparently people want me to go over this again. Here’s a few of the proposals I have put to government

1 Legislate to remove the NI Protocol by resuming the Bill in The Lords which passed the Commons with a majority of 71. That will remove EU laws from NI.

2. Abolish VAT on domestic fuel

3 Abolish permanently VAT on green products

4 Repeal The Ports Directive

5. Replace product specifications with a strong general duty on product safety and a merchandise quality rule

6. Suspend the emissions trading and carbon tax scheme which makes the UK very uncompetitive leading to more imports of energy intensive goods with no CO 2 savings

7. Remove the ban on making petrol and diesel cars after 2030

8. Change rules and taxes governing UK auction houses to match New York, removing EU imposed charges and taxes which lost us market share

9. Amend General Data Protection Regulation to cut costs and bureaucracy  to small charities and businesses whilst keeping suitable protections for individuals

10. Change fishing regulations to give priority to UK vessels and landings in UK ports

 

Some  of the ones from the Duncan Smith report:

.
1.5. Use digital sandboxes to test innovations more quickly and ensure regulation
is based on evidence of impact.
1.7. Give regulators statutory objectives to promote competition and innovation in
the markets they regulate.
1.8. Delegate greater flexibility to regulators to put the principles of agile regulation
into practice, allowing more to be done through decisions, guidance and rules
rather than legislation.
1.14. Set a UK standards strategy to promote the use of British standards
internationally as a way to boost UK influence and promote trade and exports.
SECTOR PROPOSALS
UK START-UP AND SCALE-UP FINANCE
3. Amend the Seed Enterprise Investment Scheme (SEIS) and the Enterprise
Investment Scheme (EIS) to maximise Private Equity and Venture Capital
investment in growth industries.
3.1. Amend the age eligibility requirements for companies to access investment
through EIS and SEIS to ensure businesses outside London and the south
east benefit equally.
3.2. Increase the maximum level of SEIS investment.
3.3. Commit to the continuation of EIS beyond 2025.
DATA
7. Replace the UK General Data Protection Regulation 2018 with a new, more
proportionate, UK Framework of Citizen Data Rights to give people greater
control of their data while allowing it to flow more freely and drive growth
across healthcare, public services and the digital economy.
7.1. Reform GDPR to give people meaningful control of their data.
7.2. Reform GDPR for artificial intelligence, including by removing Article 22 of
GDPR and focussing instead on the legitimacy of automated
decision-making.
11.6. Streamline clinical trial set up by HRA adopting automated AI or digital
processing of ethical and trials approvals.
11.7. The MHRA and HRA should accelerate the adoption of novel clinical trial
processes through better digitising of trials applications and data and use of
novel models like UK Trials Acceleration Programme (TAP) and IMPACT with
the capacity to deliver registration level trials.
11.8. Replace the Caldicott data guardians with a HRA Single Data Controller
˜One-stop shop€™ for Health Research Information Governance with
harmonised committees to reduce bureaucracy and standardise processes.
11.9. Establish a centralised health dataspine, where all data is stored for ease of
access by approved users across the health network, with standardised
format and approval routes for data collection and curation.
11.11. Accelerate Access to innovation by establishing clear digital framework for
Conditional Approvals and Adaptive Licensing of new therapies like gene
therapies based on data including from the new Electronic Patient Recorded
Outcomes Measure (EPROMs) dataspine.
11.12. Expand the MHRA remit and Innovation Team to include promotion of UK
leadership in innovative trial design, new accelerated access regulatory
pathways, standardising format and approval routes for data collecting,
curating and collation, and use of novel clinical and digital biomarkers and AI.

11.14. MHRA to work with stakeholders to establish a UK Regulatory Innovation Hub
on the same model as the US Centers of Excellence in Regulatory Science14. MHRA to work with stakeholders to establish a UK Regulatory Innovation Hub
and Innovation (CERSIs).
11.15. Regulation of medical cannabinoids and medicinal CBD should move from
the Home Office to DHSC / MHRA to create a regulatory pathway for
assessment and approval based on patient benefit.

AGRI-ENVIRONMENT
13. Replace EU rules with an integrated agri-environment framework which better
supports the development of more environmentally sustainable agriculture,
with more proportionate and evidence-based, outcomes-focussed regulation…
13.6. Deliver a common-sense solution to transitioning chemical registrations from
EU to the UK REACH.
13.10. Remove burdensome EU regulation on the animal feed industry, whilst
maintaining rigorous safety standards.
AGRICULTURAL GENOMICS
14. The UK Government should actively support research into and commercial
adoption by UK farmers and growers of gene edited crops, particularly those
which help the transition away from agrochemicals to naturally occurring
biological resilience.
14.1. Interpret current GM rules on a case-by-case basis, to permit specific crops
with proven benefits and which are consistent with the UK s rigorous
standards on food safety and environmental protection.
SPACE AND SATELLITES
15. Through reform of the Space Industry Act, the Government should address the
indemnity and liability issues currently holding back investor confidence in the
UK as a satellite launch and operations hub.
15.1. Amend the Space Industry Act 2018 to cap liability and indemnity
requirements for licence applicants to launch and operate satellites from the
UK.
(EO) data regulatory policy framework.
NUTRACEUTICALS
OTHER TARGETED REFORMS
17.1. Amend the Weights and Measures Act 1985 to allow traders to use imperial
measurements without the equivalent metric measurement.
17.2. Develop an optional e-labelling system for devices with screens or that can be
connected to a screen, to display compliance information.
17.3. Repeal the Port Services Regulation 2019 (SI 2019 No. 575) to remove
unnecessary, EU-derived regulatory burdens on UK ports.
17.4. Liberalise parallel import laws to reduce prices and increase choice for
consumers.
17.5. Urgently review guidance on hand sanitisers so that tested, effective
non-alcohol based sanitisers can be used

 

 

Kemi Badenoch in her Telegraph article implies she had to back down over removing a lot of needless or damaging EU law because the civil service were unable or unwilling to do the work to sort out the good from the bad amongst the 4000 laws they had identified and transferred to the UK from the EU. Her critics will say it is for Ministers to decide. She could have insisted that this was her priority and could have ensured enough resource to do the job. Her friends will say she was victim of a civil service that intends to defend every EU law, wishing to keep the UK aligned with Europe as closely as possible, and working with the EU and Opposition parties that never wanted the UK to leave. She certainly did not  herself identify some of the more obvious ones and make the  case for their repeal in public as you would  have hoped she might do.

I do not buy the line that the civil service could not read and understand all the EU law in the seven years that have passed since the vote and offer sensible advice over the merits and demerits of the inherited laws. There is plenty of evidence that the civil service is alive to the EU legislative inheritance, and many cases where they have been keen to save it in  case Ministers wanted to amend or remove it. The latest Energy Bill has a big chunk of draft UK legislation confirming EU laws and schemes and putting it into UK law. The civil service note providers were kind enough to tell us they are doing that in case the EU Retained Law Bill otherwise dropped these laws! The civil service was particularly keen to keep us aligned with EU data rules, so Ministers were persuaded to put all that into directly acting UK laws as well as transferring it as part of inherited EU law. There are other cases from finance to environment.

Conspiracy theorists will say the UK gave in to all the EU demands over the Northern Ireland  Protocol. These always included stopping the NI Protocol Bill in the UK which would have resolved matters unilaterally and might have also included a secret promise to dump the EU retained Law Bill. Others will think this is just another example of weak Ministers giving in to officials who did not want to lose any EU law and who therefore decided to make it more difficult for any Minister wishing to do so.

We are offered a list claiming to be 600 measures which will go. Most of the items on the list have already time expired or relate to EU international agreements which clearly no longer affect the UK as we are not members covered by them. There are items relating to 1990s agricultural settlements long gone, to Olympics special measures for the London games, and a range of temporary controls for things like BSE which have passed. It is tidy to clear them up but makes no difference to the costs of doing business or the freedoms in our daily lives.

For this policy to work there needs to clear areas where unhelpful rules and charges disappear, so people and businesses can do more more easily. So Kemi should include getting rid of the  carbon taxes and emission trading, the complex product specifications, many of the VAT impositions, simplify the data regime, abolish the Ports Directive, and many others often mentioned on this site. She should revisit Iain Duncan Smith’s Report on repealing EU laws which sits unimplemented.

 

There is something badly wrong with the Bank of England’s forecasts for inflation. The absence of money and credit from their thinking seems to guarantee they get it wrong. Because they get the forecasts wrong they get the policy wrong.

Their aim is to show inflation will be around the target of 2% in two years time. Quite reasonably they allow themselves some shorter term flexibility around this longer term target. Their problem includes an overwhelming tendency to lurch based on what has just happened to inflation. I call it rear view mirror driving, when what they need is a better view of the road ahead to avoid a crash.

Let us take the last two years. In May 2021 the Bank concluded that inflation in two years time would reach 2%. Because immediate past inflation was below target they decided to carry on with an interest rate of 0.1% and with printing more money to buy up bonds. The more bonds they bought the higher the prices went so the lower the longer term interest rates went. It was an invitation to a credit party where the credit was so cheap. Some of us at the time warned against more money printing and further lowering of longer term rates, pointing to the already visible recovery in the economy and the increases in money and credit. “I see no inflation coming” meant they were looking the wrong way.

By May 2022 the inflation was already well set. It hit 5.5% before the invasion of Ukraine, and then went higher as the energy and food price consequences of that came in. The Bank set an interest rate of just 1% and said rates might in future need to get up to 2.5%. On that basis they forecast inflation would be back down to 2% by 2024 and below target at 1.3% in 2025. Some hope.

This May they decided to hike interest rates by an additional  25bp or 0.25% to 4.5% and continue with a large bond selling programme designed to cut money and credit further and drive rates higher. On that basis they forecast 2% inflation by 2025 which may be nearer the mark. Unfortunately it comes with the price of overdoing the tightening meaning a bigger real income squeeze and a big slowdown in growth. They are  now mesmerised by the inflation they have created and unable to see that the dramatic money tightening they have undertaken will come through. So they now want to do too much too late. The rear view mirror tells them to slam on the brakes when the  vehicle is scarcely moving.

I am told grown ups follow Treasury orthodoxy and admire the Bank of England with its independence. The governments that have followed these luminaries have usually put the economy through a boom/bust cycle and have invariably lost if they own the bust.

Edward Heath accepted advice to introduce competition and credit control in the early 1970s when the dollar went off the gold standard. A big inflation was created, to be followed by a sharp collapse just in time for the 1974 elections which Heath lost. There was a secondary banking crisis and property slump. The Labour government which followed i chose an inflation prone high borrowing high tax strategy of its own which ended in a further bust when it collided with financial reality.

John Major adopted Treasury and Bank advice by joining the European Exchange Rate Mechanism. Some of us warned this would be damaging and destabilising but the grown ups knew best. They brought on an inflation by printing too much money to keep the pound down, then a savage recession by slashing money to try to rescue a tumbling sterling. The Conservatives went down to a huge defeat even though Labour , the CBI and TUC had all backed the failed policy.

Gordon Brown and Tony Blair in the period 2005-9 accepted Treasury and Bank advice that they could allow a major expansion of banking credit and debt because there had been a new model of global banks that would magically smooth away the risks of excessive leverage. Indeed Gordon Brown didn’t just accept this woeful official advice but was part of the world foolishness that generated the idea. The Parliamentary opposition warned against so much state debt and private borrowing. The official advice shifted to demanding a deep recession to wipe out the inflation and some of the debts. Gordon Brown as PM agreed and was thrown out of office as a result.

Today it is possible to avoid the bust. The official advice has already given us the big inflation. According to government and Opposition the Bank is independent and is responsible for enforcing the 2% inflation target. It has lamentably failed, allowing inflation to hit 11%. It blames external events beyond its control, yet it did not warn us of the big inflation coming and fails to explain how Japanese, Swiss and Chinese inflation stayed down if it was just a matter of high international energy prices.

As constitutionally the government is responsible for the huge balance sheet the Bank of England has created by borrowing to buy up a load of bonds, the government should tell the Bank to stop selling these bonds back into the market at large losses as they are currently doing. taxpayers should not have to take the hit. Money and credit are tight. To avoid the recession action is needed now. The Bank has done too much too late to conquer inflation. Its inflation forecasts yo yo around  undermining the credibility of its actions.  How can anyone admire a Bank which deliberately bought too many bonds at crazily high prices and then wants to sell them at much lower prices to make the taxpayers pay for the losses?

John Redwood, Wokingham, Conservative: 
I agree with the Secretary of State that we need more energy independence and more domestic energy, so why does the Bill propose a 140% increase in imported energy through interconnectors, which will make us more dependent and very vulnerable?

Grant Shapps, Minister of State for Energy Security and Net Zero:
My right hon. Friend makes an excellent comment, as ever, on interconnectors, but I would point out that with the growing number of interconnectors, particularly electricity interconnectors, last winter, for example, we were able to export 10 TW to France through interconnectors, providing us with income. The answer is that they work in both directions, and in some cases, they provide the reliability of, for example, France’s vast nuclear fleet of 56 reactors. When whose reactors were down last winter—because even nuclear power sometimes has to come offline—we have been able to export our power to France, and it has been a net export. Our mission is to secure the clean and inexpensive energy that Britain needs to prosper.