The Benefits of Brexit: Policy Paper Summary

07/02/2022

Overview

On Monday 31st January, the Cabinet Office published its policy paper ‘The Benefits of Brexit’. The document outlines how the UK is capitalising on the benefits of Brexit, and how the government will use its new freedoms to transform the UK into the best regulated economy in the world. It focuses broadly on what’s changed so far, reform and a vision for moving forward. The publication of the document coincides with the second anniversary of the UK leaving the EU. 

The document focuses on five key areas:

• Science, Data & Technology
• Business & Industry

• Infrastructure & Levelling Up
• Climate, the Environment & Agriculture
• Global Britain

Science, Data & Technology

Research and Development 

The Government are investing record levels of funding in research and development, with public spending on research and development rising to £20 billion in 2024–25.

They are planning on creating a world-class research and development ecosystem, including by establishing the UK Advanced Research and Invention Agency and commissioning independent reviews of research bureaucracy, UK Research and Investment and the research, development and innovation organisational landscape to secure a UK research system that is fit for the future.

The plan states that the Government will implement the Research and Development People and Culture Strategy which set out how the UK will attract, develop and retain talented people within research and innovation and develop the research workforce it needs and make the UK the most exciting place for innovation and research talent.

Digital Economy 

The Government had promised to ensure the UK has agile and adaptable data protection laws that enhance its global reputation as a hub for responsible data-driven business that respects high standards of data protection.

The UK’s new pro-competition regime for digital markets will help to deliver a more innovative and fairer digital economy in the interests of consumers and businesses.

The Government are bringing forward reforms that strengthen the UK’s Artificial Intelligence sector and drive prosperity across the whole of the UK while building trust in the use of AI. They will look to the specific applications of AI to avoid the mistakes of the past, where overregulation stifled new ideas and hamstrung innovation.

Digital Technology in Trade

The Government have promised to digitise trade documents to drastically reduce the cost of global exportation for UK businesses by between £1.7 billion and £7.4 billion. 

They will seek to strike new data adequacy partnerships with some of the world’s fastest growing economies and our closest partners, such as Australia, the United States, Singapore and the Republic of Korea, and free zones in the UAE. As it is estimated that widespread use of digital identity products would be worth around £800 million per year to the UK economy. 

Cyber Security and Product Security 

The Government have set out proposals to amend the Network and Information Systems Regulations, which help ensure the security of critical UK infrastructure from cyber-attacks and failures, to ensure that they remain appropriate for the UK economy.

As the UK has now left the EU, the Government will not have to implement the EU’s proposed changes which would significantly increase costs on industry, and expansion of Network and Information Systems to many new sectors, which would significantly increase the number of regulated organisations.

The Product Security and Telecommunications Infrastructure Bill going through Parliament will provide assurance to consumers that the everyday connectable products they are using, such as smartphones, are secure at the time they are purchased.

Business & Industry 

The report discusses the promotion and improvement of the following industries:

• Financial Services

• Professional Business Services
• Legal Services
• Automotive
• Aerospace
• Retail and Consumer Goods

• Hospitality
• Food and Drink
• Culture

Financial services

The Government has aimed to create an open, green and technologically advanced financial services sector that is globally competitive, achieved by being an open and global financial hub, a competitive marketplace promoting effective use of capital, at the forefront of technology and innovation and a world leader in green finance. The Government has launched a programme of reforms that will set forth the agenda on financial services regulation for HM Treasury, the FCA and the Prudential Regulation Authority for the next few years. The Government is promoting international standard setting to encourage the global financial system to promote openness through consistently high standards, including through financial services provisions in Free Trade Agreements (FTAs) and negotiating a Mutual Recognition Agreement with Switzerland.

The Government is undertaking a “once-in-a-generation" review including through:

• Future Regulatory Framework Review

• Wholesale Markets Review 
• Prospectus Regime Review
• Financial Markets Infrastructure Sandbox
• Long-Term Asset Fund
• Solvency II and Securitisation regulation

Professional business services

In 2020, the professional and business services sector accounted for £211.4 billion in Gross Value Added (GVA), making up 11% of US GVA and representing 13% of the UK workforce. The UK was the second largest exporter of businesses services in 2020, with the US ranked the largest exporter. The Government proposes maintaining its lead in professional business services and ensuring that the sector remains a national success story through a global outlook to professional qualifications, trusted audit and corporate governance, and unleashing innovation in architecture with greener, safer buildings. 

The Professional Qualification Bill currently in Parliament would allow Government to revoke retained EU law on the system for recognition of professional qualification and replacing with is more global and gives greater autonomy to regulators. This would put applicants from around the world on equal footing with their EEA and Swiss counterparts.

The Government plans to restore public trust in the way British companies are run and scrutinised, the governing of corporate entities and legal frameworks for major businesses, HM Government's White Paper: ‘Restoring trust in audit and corporate governance’ outlines the plans to strengthen audit, company reporting and corporate governance framework. 

Aerospace

In the aerospace industry, the Government hopes to anchor major high value commercial aircraft programmes and capture production for the next generation of aircraft and new modes of flight. The strategy is to support a range of collaborative research and development in sustainable technology that could be selected by large passenger aircraft companies such as Airbus and Boeing and mitigate risk on smaller platforms like subregional hydrogen aircraft and electric flying taxis. The Government’s plans to develop more UK-focused policy and regulation to develop low and zero-carbon aerospace products, as well as boost private investment and support high-value jobs in the UK. Government plans to achieve this with a more innovative and tailored approach to aviation regulation, more flexible and targeted support to aerospace and a global aerospace outlook. This will entail more a progressive regulatory framework, subsidies through new or existing Strategic Partnering Agreements and Aerospace Technology Institute, and the new points-based immigration system that will allow highly skilled individuals, such as aerospace engineers, to live and work in the UK.

Retail and Consumer Goods

The Government envisions a profitable and resilient retail and consumer goods sector that is both socially and environmentally responsible. In supporting the sector, comprised primarily of SMEs, it will contribute to Levelling Up and Net Zero initiatives and improve supply chains following the Covid pandemic. This will be achieved with a competitive advantage in UK-made, niche and heritage products and by building talent domestically. 

Food and Drink

A major area of concern following Brexit and the Covid pandemic has been on the food supply chain. The Government plans to build a highly resilient food supply chain with a food system that empowers people, which will be addressed in the upcoming Food Strategy White Paper, support for the agri-food sector, research and innovation, review of novel food regulations to support innovation in the sustainable protein sector and removal of burdensome EU regulation on the wine sector.

Infrastructure & Levelling Up 

The Future of Transport

The government wants to introduce a new regulatory landscape that is both flexible and forward facing to help trends such as electric and self-driving vehicles, drones and new mobility and freight business models. They also want to make sure urban and rural transport options are more varied around the UK, and that new technologies such as driverless cars and drones will make transportation and shipping easier. Finally, they want new technologies and greener methodologies to be incorporated at every possible stage of UK transport networks. To support these aims, the Government will modernise vehicle standards and amend the Energy Act to allow recycled carbon fuels to claim support under the Renewable Transport Fuel Obligation Scheme.

Aviation

The Government wants to enhance protections for UK travellers, utilising its autonomy to develop safety regulations that meet UK needs and comply with global standards. They are looking at how to improve the slot allocation system to make the best use of airport capacity and reform the Public Service Obligation route eligibility requirements to align with the Levelling Up agenda.

Space

The UK intends to be the first country in Europe to launch a small satellite into space, and to become the leading provider of commercial satellite launches in Europe by 2030. Investing in spaceports in England, Scotland and Wales and establishing a modern regulatory framework and licensing regime are some of the steps the Government is taking to become a serious player in the space market.

Rail

The Government seeks to overturn the EU rail law which they claim has left British railways fragmented between the owners of the trains and those who run the tracks. The Government wants to increase accountability and collaboration to ensure a joined-up approach, streamlining and improving regulations by creating a new British model of standardisation.

Roads

The UK wants to lead the world in zero-carbon and self-driving vehicles, increase the efficiency and safety of the HGV sector and trial new technologies and innovative approaches to avoid unnecessary burdens. It intends to implement a new Road Safety Strategic Framework.

Maritime

The Government wants to streamline the regulation of ports to make them more globally competitive and to introduce eight freeports in England and at least one in Scotland, Wales and Northern Ireland. It also aims to repeal the EU Port Services Regulation to facilitate cost savings to ports and subsequent consumers.

Nuclear

The Government will publish a Nuclear Roadmap in 2022 to outline civil nuclear’s path to 2050. They aim to inform investment decisions the Government will take during the next Parliament on new projects, creating a more resilient nuclear pipeline, driving down costs and mobilising private investment. They aim to pass the Nuclear Energy (Financing) Bill and enable the use of the Regulated Asset Base funding model, establish the Radiological Safety Group to influence international nuclear standards, and reassess the Office of Nuclear Regulation.

Housing and Construction

The Government wants to build safer, greener and higher quality homes around the UK by investing £12 billion in affordable housing, unlocking a further £38 billion in public and private investment, improving the planning system and the National Infrastructure Strategy and supporting the UK workforce on labour and skills issues.

Local Government

In line with the Levelling Up agenda, the Government wants to enable local control of policy and funds by using the UK Shared Prosperity Fund as the successor to the European Regional Development Fund and the European Social Fund. They want to streamline the funding landscape and change procurement laws to speed up and simplify processes so that councils can boost growth and create jobs.

Education

The Government will continue to fund the Turing, increase education exports to £35 billion per year and host at least 600,000 international higher education students in the UK per year. It will also launch a new, international teaching qualification from September 2022 to export English-style teacher training across the globe. The Government is also moving funds from the EU Structural Fund and student finance payments which previously went to EU students.

Health

The Government wants to help more people lose weight and quit smoking, while adopting a global approach to reciprocal healthcare arrangements with countries outside the EU, planning to put legislation in place from late 2022. They are also implementing a Global Health Insurance Card to replace the EHIC.

Climate, the Environment & Agriculture

Net Zero 

In the policy paper, the Government stated that in the UK the green economy could support up to two million jobs, including in our industrial heartlands – helping the manufacturing industry.

In 2022 the UK will publish a 2030 Strategic Framework, which will establish a common vision and clear priorities to guide UK international climate and nature action over the next decade that deliver on the areas set out in the Integrated Review.

The Government will use the new UK Emissions Trading Scheme to incentivise cost-effective abatement in industry, power and aviation at the pace and scale required to deliver net zero; and are using the independent trade policy, including the UK’s seat at the World Trade Organization, to promote global trade rules that are aligned to net zero and the Paris Agreement.

The Government will continue to explore options to mitigate carbon leakage, with emphasis on an international multilateral effort to tackle carbon leakage at source through global action on industrial decarbonisation and climate regulation, with continued monitoring of related global policy developments.

Global Britain 

The UK Border 

The Government are investing over £1 billion over the next three years in transforming border technology and operations to accomplish this and supporting industry to invest by making innovation at the border easier. 

The Government are investing £180 million in the creation of a single digital gateway through which traders can complete all border processes, radically streamlining the processes of importing and exporting. 

From 1 July 2022, the UK will receive advanced data on goods entering the country from the EU, enabling Border Force to target its interventions against those consignments most likely to be harmful, while facilitating the flow of legitimate goods. 

International Trade

The Government will continue to support businesses in tackling trade barriers, as well as working with partners to strengthen the international trading system and update the global trading rules in support of free and fair trade. 

The Department for International Trade is supporting businesses to take full advantage of the UK’s Free Trade Agreement programme to export to new markets and access a greater range of products at competitive prices. 

In 2022 we will start updating FTAs with Israel, Canada and Mexico so they are tailored to the UK’s economic strengths and launch negotiations with the 6 Gulf Cooperation Council countries. 

All businesses are encouraged to use the Export Support Service, which the Government are planning on expanding. The service currently focuses on questions businesses have about trading with Europe but will expand to cover more global markets this year. 

International Relations and Diplomacy 

The UK Government is committed to strengthening security, bolstering alliances and shaping the open international order of the future. In order to achieve this vision, they will:

• Support open societies and defend human rights, as a force for good in the world 

• Shape an open, resilient global economy, restoring trust in free and fair trade as we build back better from the COVID-19 pandemic. 
• Shape the international order as it develops in future frontiers. The Government promises to be active in ensuring effective accountability and oversight of state control.
• Standing for freedom, democracy and free enterprise.
• Leveraging the country’s strengths in investment, trade and development. The Government promises to continue to further bilateral trade agreements and speak as an independent, progressive voice within the World Trade Organisation. 
• Redefining the country’s place in the world with global allies and new partnerships. The UK will build a “network of liberty” to advance the frontiers of freedom and democracy at a time when those values are under real threat from authoritarian influence. 

• Defence and deterrence through collective security. The Government has promised to help build the UK’s partners’ cyber resilience and capability and a broader international alliance that is willing and able to impose more meaningful consequences on UK’s adversaries who undertake malign activities in cyberspace. 

Next Steps

The document is broad in detail across all sectors and there is not a solid timeline of when the actions will take place. It is therefore much broader than just a list of where the UK wants to diverge from the EU. There is still a lot of detail to come from the Government’s plans to reform EU law and on the new Better Regulation Framework. For further information on how Atticus can help you engage with the Government’s levelling up agenda, please email info@atticuscomms.com.