The UK’s compliance with its European Union (EU) obligations is supervised by the European Commission and the EU agencies. They monitor how, and how promptly, EU legislation is converted into domestic law, and the compatibility of laws passed by Parliament with the EU treaties. They also keep an eye on the actions of government, individuals and businesses, to ensure that they are following EU law. If the Commission suspects non-compliance, it can take enforcement action, writing letters, putting public authorities on notice and, ultimately, bringing legal proceedings at the European Court of Justice.
The UK has proposed that its long-term relationship with the EU be overseen by a governing body and a joint committee with representatives of both sides. This setup would be normal for a free trade agreement. However, the UK is proposing a much closer future relationship, particularly on goods, and the EU is seeking commitments to maintain standards in so-called ‘level playing-field’ areas such as the environment, social protection, competition and state aid.
The EU will offer deep market access to the UK only if it is confident that the UK is playing by the rules. In particular, the EU will want to be sure that the UK is keeping its statute book in line with whatever commitments it has made, and the rules of the agreement are properly enforced. So far, the Government has not said much about who should do that enforcement after Brexit. This remains a big gap in its proposals.
In this paper, first we explain what the Government has said so far about supervision, then set out the seven questions that the Government still needs to answer to fill the gaps in its plans. Ministers will then have to take these proposals to the EU, as one part of a wider plan for the governance of the relationship, to establish what is negotiable.
1. Does the UK want its compliance to be supervised by EU, European Free Trade Association or UK institutions?
In some areas of law, or for some types of supervision, the UK may be happy to submit to some supervision by the European Commission, as Switzerland, Ukraine and other third countries do. Alternatively, the UK could attempt to ‘dock’ to the European Free Trade Association (EFTA) Surveillance Authority, which does a similar job for the European Economic Area (EEA)–EFTA states. If it does not want to do either of these, the Government could propose ‘beefing up’ the Joint Committee with a secretariat, enabling it to act as a UK–EU supervisory body in Brussels, although the EU is likely to resist any proposal that appears to put the two sides on an equal footing. Or, the UK might want to do its own supervision.
The Government’s statements so far indicate that – at least as far as the domestic application of rules is concerned – it prefers the latter approach, and wants to ‘take back control’ of supervision. If the Government does bring these functions from Brussels to the UK, then several other questions about the design of the new regime arise.
2. Does the UK want to establish a single, central authority to keep tabs on government bodies’ compliance, or rely on a more decentralised network of specialised supervisory bodies?
If the UK wants to do its own supervision, and the EU is willing to discuss this, then the Government faces a further choice. It could create a single, centralised, supervisory authority (a UK supervisory authority) to fill the gap left by the European Commission. Or it could rely on a decentralised network of specialised supervisory bodies, some of them reporting to the devolved governments rather than the UK government. Many specialist bodies already exist for particular areas of regulation. Some of them would need to change their remits, and it is likely that the Government would have to create some new bodies to fill the gaps left behind by the Commission too.
A single authority has some advantages. It would:
- have a catch-all remit, so that nothing could fall through the cracks
- provide an extra layer of assurance for economic operators and the EU allow existing public bodies to get on with their jobs, without changes to their remit or governance
- be able to ensure consistency between UK government bodies and the responsible bodies in the devolved administrations.
However, this also presents some challenges. It would be difficult to design, cost more and be easily outgunned in terms of expertise, both by the bodies it was overseeing in the UK and by the Commission.
3. How can the Government ensure that domestic supervisory authorities are able to hold government to account effectively?
If a supervisory authority – either a single central one or one that forms part of a network – has its chair and board appointed by ministers, its budget set by ministers and is accountable through ministers to Parliament, it may struggle to convince the EU or businesses that it is credibly independent of government and able to take enforcement action against government departments.
Therefore, the Government needs to work out how it will guarantee UK bodies’ independence from ministerial influence or interference. This could involve:
- making them accountable to parliamentary committees, rather than government departments
- giving them their own budget lines, rather than having their funding sliced out of other departments
- giving parliamentary committees a role in the appointment of senior officers.
The Government will also need to consider what powers to give to any new bodies, ranging from the power to request information and make reports to Parliament, to the powers to issue binding notices, levy fines or bring court cases against public bodies.
Neither are the bodies likely to be sufficiently effective if they face the threat of abolition, particularly when they need to take controversial or politically sensitive enforcement decisions. Therefore, the Government needs to consider how to entrench any authorities: for example, by undertaking an international law obligation, in a UK–EU agreement, to create, maintain and adequately resource them.
4. How will the UK provide assurances to the EU that the UK government is not ‘marking its own homework’?
Even a UK supervisory body that is robustly independent of central government is still a UK body. Given that the UK is effectively asking to participate in the Single Market for goods, governments and businesses across the Channel will want to know that the rules of that market are being applied in the same way, and with the same vigour, in the UK as in the EU.
There are various ways in which the UK could involve the EU in supervision, and so offer European partners some assurance. These tools vary in their intrusiveness. Relatively unintrusive tools include:
- informal confidence-building measures, such as secondment programmes
- duties on the authorities of each side to co-operate and exchange information with one another
- duties to work towards the good functioning of the agreement
- duties to report regularly to a joint committee of UK and EU officials.
More intrusive measures include: offering the EU the right to send an observer to meetings of the boards of relevant supervisory authorities; or even giving some role to the Joint Committee of ministers and diplomats from the UK and EU in taking supervisory decisions.
5. What are the supervisory arrangements for commitments outside the ‘common rulebook’?
Although supervision will be most important for regulations inside the ‘common rulebook’, where the UK proposes to align fully with the EU, the Government needs to consider whether other obligations in the agreement will be covered by the same governance arrangements.
The supervision of so-called ‘level playing-field’ obligations in areas such as the environment and labour will need particular attention, as the UK and EU are proposing clauses for the future relationship that go significantly beyond those in most trade agreements – and in the past, such commitments have been difficult to enforce. Many of these will, as now, fall within the powers of the devolved governments. Commitments on goods that fall outside the ‘common rulebook’ – the ‘enhanced equivalence’ regime for financial services, mutual recognition arrangements for other services, thematic co-operation in areas such as data and research – will also need supervision of some kind.
6. Will the same arrangements apply to supervision of transposition as to supervision of application?
Although a UK government body could be given powers to take enforcement action against other government bodies for failing to apply EU law properly, it is harder to imagine it taking enforcement action against a sovereign Parliament for failing to transpose a treaty obligation on to the statute book in the first place, as the Commission can do now.
Yet if the ‘common rulebook’ is to evolve over time, with new rules incorporated into it as the EU’s own rulebook changes, then some institution will need to monitor the UK’s transposition of those new obligations. Any disputes about whether the UK has properly transposed new rules into its domestic law would have to be dealt with in joint committee and, ultimately, by the dispute resolution mechanism.
The practical work of monitoring the UK’s progress on transposition might be done by a UK supervisory authority which would report to the Joint Committee, but take no action itself. Another option would be to ask the European Commission to continue to do that work. Finally, the parties could task the Joint Committee with carrying out this technical work, but this would mean creating and resourcing a bureaucracy or secretariat to sit underneath the committee.
7. Will the Government introduce extra elements of domestic assurance to stop Parliament from legislating in breach of the UK’s obligations?
Supervision is about more than supervisory institutions. The Government might also want to put in place systems to stop future parliaments from legislating in a manner inconsistent with the UK’s obligations under the future relationship treaty. For example, ministers could be obliged to explain why they believe proposed domestic measures are compatible with the UK’s obligations under the agreement, as they are obliged to do with respect to the European Convention on Human Rights under the Human Rights Act 1998, and as Switzerland does to maintain compliance with its EU obligations. Alternatively, the courts could be empowered to set aside any government decisions or legislation that are incompatible with the UK’s obligations under the UK–EU treaty, or to issue a ‘declaration of incompatibility’ as a prompt for Parliament to think again.
In specific areas of regulation – such as state aid, the environment and citizens’ rights – the Government has begun to think about the design of a supervisory regime. However, ministers’ proposals so far have been piecemeal. The Government needs to fill in the gaps if it is to get the deep access to the European market that it seeks.