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BREXIT – not too late for proper impact assessment?

12 Jul 2016

Amid concerns that the referendum was conducted without the public having full knowledge of the facts, there have been increasing clamours for a second referendum. Last week, Sir Richard Branson reportedly had discussions with Theresa May to request a second poll – see here.

In yesterday’s press, lawyers have requested the Government to carry out a legislative process informed by an “objective understanding as to the benefits, costs and risks of triggering Article 50”.

According to Mrs May “Brexit means Brexit”.

But what does Brexit mean?

The problem with the referendum questions was that, whilst the Remain option was clearly framed in favour of the status quo, the Leave option was left open-ended without any discussion of the various exit models that might apply. Nor has there been any real assessment of how the various options marry with the economic risks inherent in the UK’s departure.

As a matter of common law, a public body is under a duty to take reasonable steps to obtain relevant information to enable it to carry out its public functions so that decisions are taken on the best available evidence at the time. That Tameside duty applies unless it is overridden by statute and is subject to judicial review on rationality. Regardless of whether Article 50 is triggered by prerogative or parliament vote, it would be sensible for the Government to carry out a prior assessment of the impact of Brexit and various options available that might minimise any collateral damage.

Under s.7(1) of the Enterprise Act 2002 (EA02), with its area of competence, the Competition and Markets Authority (CMA) is charged with advising and/or providing information to any Minister(s) in relation to any aspect of the law or any proposed change in the law. It can also make recommendations about the effect of a legislative proposal on competition within a market(s) in the UK for particular goods and services. Similarly, under s7(2) a Minister of the Crown can request the CMA to make proposals or provide information and the CMA has to comply with that request.

The CMA has issued guidelines (the CMA50 guidelines – issued with input from the OECD) about the considerations it will consider as part of impact assessments and its assessment of alternative proposals in order to select the most appropriate regulatory measure in a particular case. Those guidelines are designed to achieve the Government’s principles of better regulation, to ensure that decision-making is transparent, accountable and proportionate. They also ensure that policy makers select the most appropriate solution to achieve their objectives whilst, at the same time, mitigate any adverse effects so far as possible. Although those guidelines apply to specific regulatory interventions that affect businesses within a particular market, they serve as a useful analogy for wider legislative change that has similar disruptive effects.

The UK’s withdrawal from the EU will undoubtedly affect competition in numerous markets for goods and services, including but not limited to financial services, legal services, scientific and academic research and online services that have a cross-border dimension. Oliver Letwin has recognised the need for the Article 50 trigger to be delayed so that the Cabinet Office can prepare a “multi-dimensional” bottom-up review of the options.  Perhaps he should “Phone a Friend” and call on the CMA’s independent expertise for input?

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