Most of us would agree that regulation in some form is essential to the functioning of an economy. If crafted effectively, it can help to foster growth and innovation. And in many instances, regulation can play a crucial role in supporting desirable societal outcomes such as protecting the environment or ensuring health and safety.

But poorly designed regulation can lead to an additional cost and bureaucratic burden for business – particularly smaller businesses, who may lack the in-house capacity to deal with it. According to a recent IoD survey, 13% of members highlighted regulatory burden as one of the three most important issues that they face, and a priority that should be addressed by policy makers.[2]

In January 2022, government ministers outlined some of their plans for the future of regulation.[3] Most controversially, they set a target to cut £1 billion of business costs from retained EU red tape. A relatively large body of ‘retained’ EU law has been kept on the UK statute book since Brexit to preserve legal continuity. It remains critical to large areas of business regulation, including workplace protections and environmental standards.

In September 2022, during the tenure of Jacob Rees-Mogg at the Business Department, the government published the Retained EU Law (Revocation and Reform) Bill, which stipulates that all law derived from the UK’s 40-year membership of the EU must be reviewed and either transferred into UK law or scrapped (‘sunsetted’) by the end of 2023.

During its passage through the House of Commons, the government was warned by business organisations like the IoD that this Bill, if enacted, would create significant business costs and uncertainty. At a time when business is facing many other challenges (e.g., high inflation and the prospect of recession), it is not seen as a business priority. Such a large scale legal ‘cleansing’ process would absorb an inordinate amount of civil service time and resources when officials should be focusing on other things. It would also create a huge job for enterprises as they sought to respond and adapt to any changes that might arise from the process.

There has also been lack of clarity concerning the number of pieces of legislation that will need to be reviewed. Only this week, the goalposts shifted further when it was announced that another 1,000 pieces of legislation had been identified as falling within the scope of the Bill. There are now 400 unique policy areas and 3,700 pieces of legislation that must be reviewed, reformed or abolished by the end of this year. The risk of unintended consequences arising from this process must surely be substantial. Despite efforts by a cross-party group of parliamentarians to amend the Bill, it has now navigated through the House of Commons and is currently being evaluated by the House of Lords.