Reforming the Framework for Better Regulation

The proposal to scrap legislative frameworks and give regulators greater discretion is an assault on democracy.

This proposal would mean that much detailed legislation would be scrapped and responsibility for setting standards passed to regulators. 

Under this plan, regulators could become responsible for setting labour market standards. We believe it is inappropriate for staff of such bodies, whose are unelected and less accountable than government ministers and Parliament, to determine minimum labour standards and how to enforce them.

We are concerned by the statement in the associated engagement slides that regulators could “elect only to keep or replace the retained EU legislation that is necessary as part of their own rules”.  This suggests that QUANGOs would be able to rip up EU-derived employment protections without being accountable for these decisions.

EU-derived protections have democratic legitimacy.  When the EU-retained law in question came into being, the UK government negotiated the legislation via participation in the relevant Council of Ministers of the EU; directly elected British MEPs shaped the legislation through their role as co-legislators; and UK parliament had scrutiny over it as the law was being transposed into UK law.

Such an approach also overlooks the important role of Parliament. Legislators undertake vital examination of new measures. They are also accountable for their decisions to the electorate, providing an important mechanism for alerting decision-makers to rules that are not operating as they are or gaps in regulation.

To give unelected regulators the disproportionate power to delete EU-retained law runs counter to the idea that Parliament is sovereign and that the law of this country should be made by it.

Making regulators responsible for setting and enforcing standards weakens government accountability for upholding standards in the labour market

Under these proposals the government “would no longer set out detailed legislation relating to business”, according to the engagement slides.  If the government ripped up the framework of employment rights and gave regulators discretion on how they regulate the employment relationship, it would mean that MPs and ministers would no longer be fully accountable for ensuring there is a decent level of worker protection.

This is extremely concerning.  If problems emerged in the labour market, then worker and business representatives would find it more difficult to hold the government to account.  For example, if the TUC becomes aware of exploitation in the labour market, we can raise the issue with ministers at the Department for Business, Energy and Industrial Strategy (BEIS) and through democratic channels. If BEIS were no longer to be responsible for setting labour market standards, stakeholders would have to deal directly with regulators instead, who have a very different relationship with civil society.  These deregulatory proposals would also destroy and reconfigure working relationships that exist to maintain good industrial relations.

Moving from statute to a “common law approach to regulation” would create great uncertainty for workers.

Proposals to move to a “less codified approach to regulation” would have negative consequences for workers.  If regulators could determine and change their own priorities, workers would have less certainty of their employment rights.

Awareness of existing employment rights is already low. Despite the resources at their disposal, government departments find it difficult to disseminate information about employment rights. Greater change or less clarity about rights would lead to many more workers being unaware of their employment protections

There could also be greater uncertainty about the state’s enforcement functions, prompting more reticence among workers to alert them to problems.

These deregulatory proposals have the potential to dismantle the prevailing framework of employment rights and undermine the trust that workers have in government institutions to enforce their rights.

The deregulatory proposals are a clear indication of the intention to water down EU-derived employment protections, which could be a potential breach of the TCA.

We note the government’s intention to pursue a “sovereign approach…. to use our new freedoms to follow a distinctive approach based on UK law”.  This suggests a desire to water down vital EU-derived employment protections. 

However, weakening EU-derived (and UK) protections could be a potential breach of the Trade and Cooperation Agreement:[1] 

• Firstly, the parties have committed to ensuring there is a level playing field to enable open and fair competition.[2] 
• Secondly, the parties agreed not to weaken or reduce, in a manner affecting trade or investment between the parties, its labour and social levels of protection below the levels in place at the end of the transition period, including by failing to effectively enforce its law and standards. 
• And thirdly, the parties have a duty to act in good faith and take all appropriate measures, whether general or particular, to ensure the fulfilment of the obligations arising from the agreement (including the specific provisions above which commit the government to maintaining labour protections and the level playing field).[3]

The wide scope of deregulation which is being hinted at in the consultation document suggests that the UK would create a legislative environment which would materially affect the trade and investment interests of the parties to the agreement.  For example, creating a deregulated labour market may have a significant impact on decisions relating to foreign direct investment.

The shift to a deregulatory agenda would also mean that vital UK-derived employment rights will be under threat.  This is contrary to the promise made in the Conservative Party’s 2019 manifesto that the government “would legislate to ensure high standards of workers’ rights”.[4]

New technologies create extra risk for workers and regulatory safeguards are needed. 

Supporting the development of new technologies must go hand in hand with creating a regulatory environment that protects workers from these technologies. 

New types of work, such as that found in the platform economy, and emerging technologies mean that workforce data is increasingly used to determine pay rates, set workloads and monitor workers.

There is huge potential for employers to misuse workforce data to make unfair, unsafe and discriminatory decisions.  Workers’ privacy rights are at risk because employers are obtaining more ways to gather information about them.  For example, during the pandemic we’ve seen a greater use of software to monitor working from home.[5]  More effective regulation is needed to protect the privacy rights of workers and their families.

We note that this consultation has framed the need for deregulation because the government wants to “support the development of new technologies”.  But effective regulation doesn’t hinder the development of new technologies.  It ensures that new technologies don’t lead to worker exploitation and that they have a long term, viable future.  New technologies must not develop in a regulatory vacuum.

We note that in the current Department for Culture, Media and Sport (DCMS) consultation, “Data: a new direction”, the proposals reflect the deregulatory approach set out in the Better Regulation document.  For example, there are proposals to remove vital safeguards such as data protection impact assessments and to reduce the powers of the Information Commissioner’s Office (ICO).  We believe these changes are in contravention of our EU data adequacy statement, a further indication that a deregulatory approach could breach our international commitments.

A ‘proportionate approach’ to implementing new legislation could exacerbate the exploitation of the most precarious workers.

We have concerns about the government shifting from a precautionary approach to a proportionate approach when considering whether to implement legislation.  We can foresee a situation where vital legislation needed to protect the most exploited workers is not introduced.

For example, arguments could be put forward that because most employers in a sector comply with existing laws, new employment legislation is not “proportionate”.  It’s also reasonably foreseeable, under a proportionate approach, that small businesses would be exempted from employment legislation due to the argument that it wouldn’t be “proportionate” to impose regulations on firms with fewer resources.

A deregulatory approach will cause businesses unnecessary costs and bureaucracy.

It should not be assumed that deregulation is good for business. Businesses need relative stability, especially as they seek to recover after the coronavirus pandemic and Brexit.  Deregulation could lead to substantial adaptation costs, particularly for smaller businesses forced to rely on expensive consultants to remain compliant. This is particularly the case if a shift to regulatory discretion creates uncertainty about what the new rules actually are.

Unnecessary divergence from global market standards, such as EU-derived rules, is also undesirable for many businesses. It is often more cost effective for companies to work consistently to the highest regulatory standards applicable, than to have different standards in different operating zones.

Finally, it damages those firms seeking to operate to decent standards of worker treatment if deregulation allows them to be undercut by unscrupulous operators.

Impact Assessment process should not be streamlined and should take into account wider considerations

We don’t believe that the Impact Assessment process should be “streamlined”.  The consultation suggests that impact assessments should be restricted, so their focus is on the “economic case for intervention and on the expected outcomes of the regulation”.  This would mean overlooking the wider impacts of legislation on society and workers. 

As the consultation flags up, departments are required to consider how regulatory proposals might impact on international trade and investment, UK international commitments, the Public Sector Equality Duty and on the environment.  Failure to take these considerations into account would leave the government at risk of breaching domestic and international legal obligations.

The proposals also suggest that government departments be given the discretion to run impact assessments on the wider effects of a measure in parallel to impact assessments.  We believe that this function should continue to be carried out by an independent body responsible for regulatory scrutiny.  Giving government departments discretion to complete wider assessments in parallel to impact assessments, may result in these assessments not being carried out at all.

We also believe that the proposal to streamline impact assessments would be in breach of our international commitments under the TCA.  Please see highlighted section below.

Article GRP.8: Impact assessment 1. Each Party affirms its intention to ensure that its regulatory authority carries out, in accordance with its respective rules and procedures, impact assessments for any major regulatory measures it prepares. Such rules and procedures may provide for exceptions. 2. When carrying out an impact assessment, each Party shall ensure that its regulatory authority has processes and mechanisms in place that promote the consideration of the following factors: (a) the need for the regulatory measure, including the nature and the significance of the problem that the regulatory measure intends to address; (b) any feasible and appropriate regulatory or non-regulatory options that would achieve the Party's public policy objectives, including the option of not regulating; (c) to the extent possible and relevant, the potential social, economic and environmental impact of those options, including the impact on international trade and investment and, in accordance with its respective rules and procedures, the impact on small and medium-sized enterprises; and (d) where appropriate, how the options under consideration relate to relevant international standards, including the reasons for any divergence.

Finally, the consultation recognises “The process of producing an IA is recognised internationally as a standard of good policy making that helps ensure government understands the real-world impacts of its policies.” Why change this?

Continued independent oversight and scrutiny of government regulation

The consultation appears to be proposing to scrap the Regulatory Policy Committee. The TUC is firmly opposed to this proposal. We believe that an independent body should continue to provide a scrutiny function.  This should operate independently from the government and provide scrutiny of regulatory proposals and their impacts to government departments directly.

Regulatory offsetting could lead to vital legislation being revoked, or not implemented, for the sake of a bureaucratic process.

The TUC firmly opposes the “One in, X out” (regulatory offsetting) proposal.  There is no sound reasoning for this proposal.  Rather, it betrays a purely ideological drive to deregulate.  If legislation is needed to tackle systemic exploitation in the labour market, for example to end the exploitative use of zero hours contracts, then this much needed legislation should not be dependent on revoking multiple other pieces of legislation.  The consultation suggests that regulatory offsetting would enable the government to clear out “decades of redundant legislation”.  Regulatory offsetting does not “enable” the government to revoke obsolete legislation.  It can already do that.  Furthermore, ironically, the process of regulatory offsetting actually increases bureaucracy and extends the process related to introducing new legislation.  This is confirmed in the consultation document:

“Central to achieving the objectives of regulatory offsetting are robust internal arrangements for oversight, scrutiny, challenge, validation, and reporting. This could also include accountable Board level departmental champions to promote and manage regulatory offsetting and burdens reduction as well as providing robust guidance and training to officials engaged in policy design and implementation.”