Nineteenth Report - Regulation after EU exit

The regulators are struggling to recruit and retain the skills they need to regulate effectively after EU Exit. Having left the EU, the regulators need additional staff to deliver their new and expanded responsibilities. CMA is competing with the private … Read more The regulators are struggling to recruit and retain the skills they need to regulate effectively after EU Exit. Having left the EU, the regulators need additional staff to deliver their new and expanded responsibilities. CMA is competing with the private sector to recruit and retain competition lawyers and economists, while both FSA and HSE are struggling to recruit experienced toxicologists in sufficient numbers. A shortage of veterinarians to assure food safety and animal welfare in abattoirs is also a key risk for FSA, which in autumn 2021 had to put temporary measures in place to ensure it had enough veterinarians to deliver this critical role. The regulators are taking action to try to address these shortages, for example, investing in staff training in HSE, and reviewing the pay and conditions of veterinarians at FSA to make the career more attractive. However, the ability to recruit and retain the skilled staff they need remains a key risk to the future effectiveness of all three regulators. Recommendation: The regulators should work together to identify common skills shortages, and develop long-term strategies for recruiting, retaining, and training staff to ensure they have the skills they need in the future. Recommendation: The FSA should work with the Department for Education and relevant professional bodies to address the shortage in qualified veterinarians. Show less

View Details →

Potential large-scale reductions in staffing levels in regulators will not be achieved without fundamental changes in regulatory approaches. In the Spending Review 2021, the regulators received funding settlements they believed were sufficient to enable them to fulfil their post-EU Exit … Read more Potential large-scale reductions in staffing levels in regulators will not be achieved without fundamental changes in regulatory approaches. In the Spending Review 2021, the regulators received funding settlements they believed were sufficient to enable them to fulfil their post-EU Exit regulatory responsibilities. Since then, they have been asked (along with the rest of government) to model headcount reductions of 20%, 30% and 40%. Although it is not clear what cuts they may eventually be asked to make, all three regulators are clear that delivering their expanded responsibilities 6 Regulating after EU Exit with headcount reductions on this scale will be extremely challenging. For example, FSA’s SR21 settlement provided for a growth in staff numbers to fulfil its new responsibilities after EU Exit and to directly employ veterinarians. Any future requirement to reduce its number of veterinarians would have a significant impact on the meat industry which, under current regulations, cannot place meat on the market in the UK or export it without veterinary oversight. Regulatory reform to adopt a more risk-based approach could reduce the need for veterinarians, but this would require legislative change. Recommendation: The regulators and policy departments should identify the impact of potential cuts on regulatory risk and set out where significant changes in the regulatory model would be needed to balance the two. Show less

View Details →

The loss of access to EU systems and lack of progress in taking forward the regulatory cooperation provisions set out in the Trade and Cooperation Agreement increase regulatory risks and costs. On leaving the EU, the regulators lost access to … Read more The loss of access to EU systems and lack of progress in taking forward the regulatory cooperation provisions set out in the Trade and Cooperation Agreement increase regulatory risks and costs. On leaving the EU, the regulators lost access to EU data sharing and cooperation arrangements. CMA can no longer share confidential information with the European Commission or member states in merger, competition or consumer enforcement cases, impacting its ability to effectively enforce competition law. FSA has also lost full access to the EU’s Rapid Alert System on Food and Feed (RASFF) which provides member states with information on food safety incidents, increasing the time and effort it takes to deal with food safety incidents. HSE no longer has access to the chemical safety data underpinning the EU’s Registration, Evaluation, Authorisation and Restriction of Chemicals (REACH) regulations. Industry has estimated it will cost £800 million to replicate this data in the UK REACH system. The regulators are taking action to mitigate these issues, but in some instances the alternatives are more time consuming and are likely to increase costs over time. The EU-UK Trade and Cooperation Agreement (TCA) recognises the value of voluntary cooperation on chemical regulation and includes provisions to establish a separate agreement on competition enforcement cooperation (including the sharing of confidential data). We are disappointed that no progress has been made in taking these issues forward, despite the regulators willingness to do so. Recommendation: The regulators should work together to share good practice on mitigations to address the loss of regulatory cooperation arrangements with the EU and write to the Committee in six months setting out progress in taking forward the cooperation arrangements set out in the Trade and Cooperation Agreement. Show less

View Details →

Regulatory divergence between the UK and the EU and within the UK internal market risks increasing costs for businesses, but also offers opportunities depending on the approach taken. Following EU Exit there is already some divergence in regulatory approach between … Read more Regulatory divergence between the UK and the EU and within the UK internal market risks increasing costs for businesses, but also offers opportunities depending on the approach taken. Following EU Exit there is already some divergence in regulatory approach between the UK and EU. For example, the EU recently banned titanium dioxide as a food additive, while the UK has not introduced a ban and FSA is carrying out its own risk assessment. There will also be divergence because regulatory decisions are made at different times and will take into consideration UK risk profiles and usage, for example, in the authorisation of specific chemicals or regulated food products. Outside the EU single market, there is also greater scope for England, Wales and Scotland to reach different regulatory decisions in areas of devolved competence. The regulators are working with the Regulating after EU Exit 7 devolved administrations under a set of ‘common frameworks’ to reach an agreed way forward where possible and coordinate the timing of regulatory decisions and their implementation. However, in areas like gene editing for example, it is not yet clear whether a common approach will be agreed. There is a risk that over time regulatory divergence (both between the UK and the EU and between the four nations of the UK) may lead to increased costs for business and consumers through administrative burden and regulatory costs. We are concerned that these costs may have a disproportionate impact on smaller businesses. Recommendation: The regulators should put in place robust monitoring to keep track of regulatory divergence and its implications, particularly for small businesses. Show less

View Details →

It will be vital for regulators to continue to develop their engagement on the world stage. Outside the European Union, the regulators have taken steps to increase their international influence and engagement, recognising the importance of sharing good practice, increasing … Read more It will be vital for regulators to continue to develop their engagement on the world stage. Outside the European Union, the regulators have taken steps to increase their international influence and engagement, recognising the importance of sharing good practice, increasing cooperation in the global marketplace, and working to improve standards worldwide. For example, CMA has both continued its engagement with the International Competition Network and the International Consumer Protection and Enforcement Network, and also agreed a new mutual assistance and cooperation framework with the competition authorities in the United States, Canada, New Zealand and Australia. FSA is strengthening its engagement with Codex Alimentarius, the international standard-setting body for food and feed, and it is investing in its work with the International Food Safety Authorities Network (INFOSAN) that supports international cooperation on the management of food safety incidents. HSE is also representing the UK at the UN globally harmonised system of classification and labelling of chemicals. Recommendation: The regulators should write to the Committee in six months setting out their plans for further international engagement including their objectives and timescales for action. 8 Regulating after EU Exit 1 Regulatory strategy, capacity and capability post EU Exit Show less

View Details →

In the Spending Review 2021 (SR21), the regulators received funding settlements they believed were sufficient to enable them to fulfil their post-EU Exit regulatory responsibilities. FSA, for example, agreed a £122 million budget covering its work in England and committed to maintaining its 2019 headcount levels, with the exception of …

View Details →

Outside the EU single market, there is also greater scope for England, Wales and Scotland to reach different regulatory decisions in areas of devolved competence, which include food and environmental protect. The regulators are working with the devolved administrations under a set of ‘common frameworks’ to reach an agreed way …

View Details →