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Regulating after EU Exit

Some UK regulators have taken on significant new roles following EU Exit. However, the work they are doing now to build their capability and manage operational challenges may not align with long-term ambitions or responsibilities, according to the National Audit Office (NAO).

The government uses regulation to deliver a wide range of policies, such as to ensure food safety, protect the environment, and promote competition in the economy. Following EU Exit, many UK regulators have taken on functions previously carried out by the EU. Today’s NAO report assesses how regulators have managed this transition, focusing on three regulators whose work has been significantly affected by EU Exit – the Food Standards Agency (FSA), the Competition and Markets Authority (CMA) and the Health and Safety Executive’s (HSE’s) role in chemicals regulation.

All three regulators have expanded roles following EU Exit. HSE is now the main regulator for chemicals in the UK and the FSA has more responsibility for assessing food and animal feed safety risks. The CMA has established the Office for the Internal Market1 and is setting up a unit to provide advice to public bodies on state subsidies. The regulators have received funding for their new responsibilities.

The regulators implemented measures aimed at ensuring continuity after the end of the transition period on 31 December 2020. In some cases this involved delaying new regulatory requirements or extending deadlines. For example, the government extended the deadlines for companies to meet the full data requirements for chemicals registrations. The three regulators’ plans to move from interim arrangements to fully functional regulatory regimes are still in progress.

All three regulators are finding it challenging to recruit the specialist skills they need in some key areas, and there is a risk that capacity constraints may delay regulatory decisions. Several factors have also made it difficult for regulators to plan their workloads and plan their capacity to meet it. For example, the CMA has seen fewer merger cases than it planned for in 2020-21 because of the economic impact of the COVID-19 pandemic.

All three regulators have lost access to data and information sharing arrangements with EU regulators, which they say has negatively impacted their ability to assess risks and carry out their work. For example, the FSA has lost full access to the Rapid Alert System for Food and Feed, which it used to exchange information about food safety risks and responses across the EU. The regulators are seeking to mitigate the impact on their work by using other international systems, publicly available data, or by setting up data sharing arrangements on a case-by-case basis.

There has been limited progress on regulatory co-operation with the EU following EU Exit, despite the willingness of the regulators and policy makers that the NAO spoke to. The UK has stated that it is ready to progress co-operation on both chemicals regulation and competition enforcement, but discussions have not yet begun with the EU.

Policy makers and the three regulators are at an early stage in setting the strategic direction for their areas following EU Exit. For example, the FSA has recently published a long-term strategy which set out broad ambitions but has not yet made public detail on how regulation may change in practice.

All three regulators have taken steps to strengthen their international relationships to improve the effectiveness of their work and increase their influence outside the UK. In September 2020, the CMA signed the Multilateral Mutual Assistance and Cooperation Framework with its counterparts in four countries to strengthen co-operation. The FSA is increasing its engagement with the International Food Safety Authorities Network and sits on its advisory group.

The NAO recommends that regulators should review the plans they developed before EU Exit now that there is greater clarity about their capacity and their workload. They should test the realism of their plans and assess if they can increase the effectiveness of their work and find efficiencies. Regulators should also ensure that as soon as they are able, they provide clarity to stakeholders on their direction of travel and timelines for any planned changes.

“EU Exit has had a major impact on many UK regulators. They need to overcome many challenges if they are to manage the transition successfully, including recruiting the right specialist skills. It is essential that regulators and policy-makers develop their future strategies as soon as possible to avoid wasting effort on short-term work and to ensure the decisions they make now meet their longer-term goals.”

Gareth Davies, the head of the NAO

Notes for Editors

1. In December 2020, the government passed the UK Internal Market Act to prevent trade barriers to goods and services within the UK and established an Office for the Internal Market to monitor and report on the UK internal market

2. Press notices and reports are available from the date of publication on the NAO website. Hard copies can be obtained by using the relevant links on our website.

About the NAO

The National Audit Office (NAO) scrutinises public spending for Parliament and is independent of government and the civil service. It helps Parliament hold government to account and it uses its insights to help people who manage and govern public bodies improve public services.

The Comptroller and Auditor General (C&AG), Gareth Davies, is an Officer of the House of Commons and leads the NAO. The NAO audits the financial accounts of departments and other public bodies. It also examines and reports on the value for money of how public money has been spent.

In 2020, the NAO’s work led to a positive financial impact through reduced costs, improved service delivery, or other benefits to citizens, of £926 million.

Contact

NAO Press Office
+44 (0)20 7798 7400 or email pressoffice@nao.org.uk