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After a period in which the Brexit process has remained largely stagnant there appears, at least superficially, to be a degree of progress in the United Kingdom.

 On Monday 11th September 2017, the European Union (Withdrawal) Bill passed second reading by 326 votes to 290. The purpose of the Bill, otherwise coined the ‘Great Repeal Bill’, is to overturn the 1972 European Communities Act and subsequently ensure that the supremacy of EU law over UK law ceases.

In conjunction with this, if the Bill is enacted, all EU law will be converted into domestic UK law.

This will essentially provide a degree of certainty for businesses in the post-Brexit period by ensuring that rules will not suddenly change overnight and, as such, companies will be subject to the same rights and obligations unless there are subsequent changes made in the law by Parliament.

However, there remains uncertainty as to the longevity of the Bill in its current form due largely to the proposal to incorporate controversial “Henry VIII” powers in order to remedy any deficiencies caused by the transposition of EU law into domestic UK law.

The “Henry VIII” powers would ensure that Ministers could use secondary legislation to amend the text of primary legislation – and this without prior Parliamentary scrutiny.

Albeit a pragmatic approach to the sheer scale of the potential alterations that would need to be made in order to ensure that EU legislation can be transposed effectively into UK law, it is easy to see an inherent irony in investing such powers in the executive [the UK government ministers] considering that the Leave campaign was fought so vigorously on the mandate of Parliamentary sovereignty. As Judge L.J. made clear in a recent speech at King’s College London entitled ‘Ceding Power to the Executive; the Resurrection of Henry VIII’, [u]nless strictly incidental to primary legislation, every Henry VIII clause, every vague skeleton bill, is a blow to the sovereignty of Parliament.”

What is the scope of these proposed “Henry VIII” powers?

The European Union (Withdrawal Bill) outlines a number of circumstances in which powers will be available for Ministers of the Crown to make secondary legislation:

  • Clause 7 enables a Minister of the Crown to deal with deficiencies that arise by virtue of withdrawal such as where a provision no longer has practical application after the UK has left the EU.
  • Clause 8 enables a Minister of the Crown to make regulations containing such provision as that Minister deems appropriate to prevent or remedy a breach, arising from the withdrawal of the UK from the EU, of the international obligations of the United Kingdom.
  • Clause 9 enables a Minister of the Crown to make such provision as they deem appropriate for the purpose of implementing the withdrawal agreement if the Minister considers that such provision should be in force on or before the date in which the UK formally withdraws from the European Union.  

As such, the Bill has been subjected to a degree of criticism and sceptics remain amongst the Conservative backbench including Dominic Grieve QC who has made clear that he believes the Bill to be ineffective in its pursuit of incorporating EU law into UK statute books in its current form.

In doing so, he has called for greater Parliamentary scrutiny as regards to the use of “Henry VIII” powers, along with ensuring that these powers are more tightly defined in scope.

It is important to acknowledge that the approval of the Bill at second reading is merely an assent to it in principle. The Bill will now have to be debated in a Committee of the Whole House due to its significance as a piece of constitutional legislation over a period of 64 hours in total. It appears to be unlikely that the Bill will pass through unscathed given the slim majority that the current government holds combined with the fact that critics remain amongst the Conservative backbench.

As such, uncertainty continues to reign as to how the process will be implemented internally in an efficient manner, without compromising the very ideals that were so fundamental in the pursuit of Brexit in the first place.

When one considers that this is combined with the fact that the United Kingdom has yet to crystallise its stance with regards to its view on how it sees its relationship with the European Union post-Brexit, with fundamental elements such as United Kingdom’s stance with regards to its membership in the single market continuing to remain in a state of flux, there remains a great deal of uncertainty currently as to what Brexit means and what a post-Brexit Britain will look like.

This uncertainty has, and will most likely continue to lead to substantive, structural business changes.

For example, nearly half of companies surveyed in a recent survey conducted by Reuters on the impact of Brexit on the financial sector made clear that they would have to move staff or restructure their business as a result of Brexit and it was suggested that around 10,000 finance jobs will be moved out of the United Kingdom if the UK is denied access to the single market.

With the degree of uncertainty that continues to be prevalent in all aspects of Brexit, it appears to be clear that many businesses are currently continuing to assess their options as to how to move forward in a post-Brexit world. With even aspects of the process that were meant to ensure continuity and stability, such as the “Great Repeal Bill” itself, continuing to manufacture considerable debate and controversy, it appears that the calm before the storm will remain for now; at least in the business world.

What can businesses do?

  • Plan ahead – there has been, and continues to be, a lot of noise associated with the Brexit process and a great deal of uncertainty. As such, the best way to mitigate this uncertainty is to plan ahead based on what is already known. For example, the UK have consistently made it abundantly clear that free movement of persons between itself and the EU will end in March 2019. As such, for those companies based in the UK, an effective way of preparing for this would be to review the nationalities of those in their workforce and assess how the end of free movement may impact the status of such workers.
  • Assess the worst-case scenario impact – with the relationship that the United Kingdom will hold with the European Union post-Brexit remaining unclear, companies should assess issues that may arise such as the ramifications of the UK leaving the Single Market and the potential impact of a “Hard Brexit” in which no deal is reached before the UK exit the European Union.
  • Consider how Brexit may impact existing and future commercial contracts –companies should be mindful of the contractual impact of changes in the law such as those which may arise out of the conversion of EU law into UK law. It may be good practice to commence a review of all contracts that may be impacted.


Related People: Tina Ravn, Frederick Carter

Related Service Areas: Banking and Finance, Commercial, Corporate and M&A, Employment, EU and Competition, Intellectual Property, Tax

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