Current Brexit State (UK and EU)

The UK will exit the EU bloc at 11pm on 29 March 2019.

As of 31 October 2018, both sides have made good progress in negotiations on both the Withdrawal Agreement (for an orderly departure) and the political declaration on the future relationship. On the political declaration on the future relationship, the UK has proposals, and the UK and the EU have discussed each element of these, including the future customs arrangement.

Both sides will continue to work to finalise the Withdrawal Agreement and the political declaration on the future relationship. This is widely termed “the Deal”.

As set out in the European Union (Withdrawal) Act 2018, the UK House of Commons must vote to approve the deal before the Withdrawal Agreement can be ratified. Member States of the EU27 must also ratify the deal, along with the European Parliament.

Brexit Preparedness planning and information continues. EU Notices were issued some time ago, and reported in this Blog. UK Technical Notices were issued more recently, and also reported in this Blog. The departure of the UK from the EU bloc is a substantive change, and there will be actions for business and individuals, and further Notices can be expected. Please read these Notices carefully and continue to follow this Blog closely.

New Carbon Emissions Tax (UK)

The recent Budget 2018 announced a new Carbon Emissions Tax would be introduced from 1April 2019 in the event the UK leaves the EU at the end of March 2019 without a deal.

If the UK secures a transition/implementation period, it would remain a member of the EU Emissions Trading System (EU ETS) during this period. The UK government is continuing to develop options for long term carbon pricing, including remaining in the EU ETS; establishing a UK ETS (linked to the EU ETS or standalone) or a carbon tax.

Already published Brexit Preparedness Notices confirm the UK would be excluded from participating in the EU ETS in a ‘no deal’ scenario. This means that current participants in the EU ETS who are UK operators of installations would no longer take part in the system.

The new Carbon Emissions Tax would apply to emissions of carbon dioxide (and other greenhouse gases on a carbon equivalent basis) from UK stationary installations currently in the EU ETS. The aviation sector would not be subject to the Carbon Emissions Tax.

Details of this New Carbon Emissions Tax are here.

Initial information is here.

Note in particular :

(1) The EU ETS requires participants to obtain permits to emit and then to submit a report annually with details of their activities across the previous calendar year, from which their emissions across the period are calculated. The UK would continue to operate a permitting and reporting regime after leaving the EU ETS. Permits issued for EU ETS compliance before 29 March 2019 would remain valid for compliance with the Carbon Emissions Tax although minor amendments to permits may be necessary.

(2) Any stationary EU ETS installation currently covered by the permitting system and the emissions reporting scheme (including those in a simplified reporting scheme for small emitters and certain hospitals) would remain subject to the reporting requirements and potentially become liable to pay the tax, as would any installation that became permitted after the start of the tax.

(3) There would be no requirement for installations to register for tax or send in a tax return – all information needed to calculate tax liability and to bill the installation would be taken by HMRC from the existing IT system known as ETSWAP. The tax year would cover the same calendar year period as under the existing monitoring, reporting and verification system, with installations continuing to use ETSWAP to submit independently verified data to environmental regulators on their activities covering the period 1 January to 31 December. They would continue to do this by 31 March each year. As a result, by 30 April each year, independently verified data would continue to be available on each installation’s greenhouse gas emissions covering the previous calendar year. HMRC would use these data to generate a tax bill, which would be sent to installations in May, with payment required within a specified period agreed following consultation. Transitional arrangements would apply in the first tax year as it would cover only 9 months as a result of the tax starting part way through the year.

(4) For permit holders outside the simplified reporting scheme the tax would be based on the amount by which reported emissions exceeded an emissions allowance set for tax purposes for each installation in advance of the tax year. For 2019 and 2020, the allowance would be set at the level of free allocation of EUAs under Phase 3 of EU ETS, with an installation paying tax only if its emissions exceeded its allowance, albeit that 2019 allowances would be set at 75% of the full year level.

For power generators who receive no free allocation of EUAs under EU ETS, the allowance would be set at zero.

Installations that became permitted after the UK left the EU ETS would have no EUAs on which to base their emissions allowance – their allowance would be set in a comparable way to existing EU ETS participants.

(5) Premises covered by the simplified reporting scheme would continue to operate as they do at present except that the tax (rather than the current civil penalty) would be payable on emissions above the allowance. The allowances would be set at equivalent levels to the targets that would have been set for them under the current simplified reporting scheme.

(6) HMRC would tax emissions in excess of the emissions allowance on a carbon equivalent basis per tonne. For 1 April to 31 December 2019 the rate would be £16 per tonne. The rate for years beyond 2019 would be set at future Budgets.

(7) As the tax would be introduced from April 2019, the arrangements for the first year would differ from the arrangements set out above. The first tax period would run for only 9 months and cover the period from 1 April to 31 December 2019. As indicated above, installations’ emissions allowances for 2019 would be set at 75% of the level that would have applied had the first tax period covered 12 months. Although they would still need to monitor their emissions for the full 12 months, installations would need to submit 9 months’ activity data by 31 March 2020 covering this first tax period. Payment details for the first tax year would be confirmed after the consultation planned for 2019 but it is possible that tax bills for 2019 would be sent out later than May 2020.

(8) Legislation will be introduced in Finance Bill 2018-19 to create a new Carbon Emissions Tax, setting the scope, rate and basic structure of the tax and establishing that it would be payable only on emissions above an emissions allowance set for each installation. The Finance Bill will provide for a statutory instrument or instruments which would be laid in early 2020 following a consultation in 2019. The instrument or instruments would be wide-ranging.

(9) The government currently sets a total carbon price, created by the price of allowances from the EU ETS and the Carbon Price Support (CPS) rate per tonne of carbon dioxide (t/CO2) which tops up the EU ETS price for electricity generators. The total carbon price is designed to provide an incentive to invest in low-carbon power generation. In a ‘no deal’ exit from the EU the CPS would remain in place.

FURTHER DETAIL IS IN THE LINKED NOTE (see earlier)

New Fisheries Bill (UK)

The UK Government lodged its Brexit Fisheries Bill at First Reading on 25th October 2018. The Bill and its Explanatory Notes are here.

The Fisheries Bill (the Bill) will provide the legal framework for the United Kingdom to operate as an independent coastal state under the United Nations Convention on the Law of the Sea 1982 (UNCLOS) after the UK has left the European Union (EU) and the Common Fisheries Policy (the CFP). The Bill creates common approaches to fisheries management between the UK government and the Devolved Administrations, known collectively as the Fisheries Administrations, and makes reforms to fisheries management in England.

A couple of aspects to note :

(1) The Bill replaces the sustainability objectives currently in Art. 2 of the Basic Regulation of the Common Fisheries Policy (Regulation (EU) 1380/2013), making them objectives for the Fisheries Administrations or the Secretary of State.

(2) The objectives include the objective of securing that all UK fishing boats have equal access to UK waters. This is new.

(3) The Fisheries Administrations are required to publish a statement setting out the policies which would achieve or contribute to the achievement of those objectives. In addition, the Secretary of State is required to publish a statement setting out the policies that apply to England that achieve or contribute to the achievement of a number of objectives that apply only to the Secretary of State.

(4) The Fisheries Administrations are required to pursue the policies contained in the statements unless relevant considerations indicate otherwise.

(5) As expected for a Brexit Bill, when the UK leaves the EU, any access for EU and other foreign vessels to UK waters will be a matter for negotiation. The Bill revokes the EU legislation which currently provides for automatic rights for vessels registered in the EU to access UK waters. By revoking provisions in the Fishery Limits Act 1976, it removes the need to designate which countries’ vessels are able to fish in UK waters and introduces a new requirement that foreign vessels fishing in UK waters must be authorised to be in UK waters under international agreements or arrangements or must have a licence issued by a Fisheries Administration.

(6) The Bill revokes, replaces and clarifies existing powers for the Fisheries Administrations to license fishing in UK waters. For the most part, this is a consolidation of existing powers but the Bill makes several significant changes. It provides for equal access for UK vessels in UK waters by clarifying that licences issued by any Fisheries Administration are effective throughout UK waters. It also requires for the first time that foreign vessels are prohibited from fishing in UK waters unless they have a licence issued by a Fisheries Administration.

(7) As expected for a Brexit Bill, the Bill revokes EU legislation which currently sets UK fishing opportunities (quotas) and gives the Secretary of State powers to determine the UK’s fishing opportunities. Before doing so he must consult the other Fisheries Administrations. He must also make certain notifications, including a notification to Parliament.

(8) The Bill also introduces powers to enable annual fishing opportunities (quotas), which the Secretary of State can allocate to the English industry, to be sold to those in the English industry (attached to named English ports). This is new.

New Healthcare (International Arrangements) Bill (UK)

UPDATE : second reading is today 14 November 2018. Research briefing is here.

The UK Government introduced yesterday (26th October 2018) a Brexit Bill on the matter of international arrangements for healthcare once the UK has left the EU. The Bill and its Explanatory Notes are here.

The Bill provides the Secretary of State with powers to fund and arrange healthcare outside the UK, to give effect to healthcare agreements between the UK and other countries, territories or international organisations, such as the European Union (EU), and make provision in relation to data processing, which is necessary to underpin these arrangements and agreements.

The Bill was introduced as a result of the decision to leave the EU and is intended to enable the Government to respond to the wider range of possible outcomes of EU Exit in relation to reciprocal healthcare including the implementation of new reciprocal healthcare agreements.

A couple of aspects to note :

(1) The EU (Withdrawal Agreement) Bill (not yet lodged, and dependent on a deal being reached between the UK and the EU) would allow the UK to continue reciprocal healthcare during the Implementation/Transition Period (as provided for by the Withdrawal Agreement) following Exit day (and after the implementation period for those people covered by the Withdrawal Agreement).

But, it does not support long-term arrangements covering the general UK population after the Implementation Period. Further, the powers in the EU (Withdrawal) Act would not be sufficient for the UK to make provision in the event the UK does not reach agreement with the EU, but wishes to arrange for healthcare overseas for UK citizens, either on a unilateral basis or by means of bilateral agreements with individual countries.

(2) So the Bill provides the Secretary of State with powers which are necessary to arrange for the provision of healthcare overseas and to fund this, after the UK leaves the EU. The powers are required both in a deal and in a no deal scenario, and go beyond the EU sphere, to allow the Secretary of State to implement any new agreements on reciprocal healthcare which the UK puts in place with both EU and non-EU states should this be part of a global strategy.

(3) The powers enable the Secretary of State to address the essential matters relating to healthcare overseas, including defining individual entitlements to healthcare, and operational and administrative matters, including data sharing where necessary to facilitate treatment. This also includes being able to reimburse other states for healthcare costs, and to recover health care costs from them.

Commercial Driving in the EU (UK Brexit Preparedness)

Today the UK Government published instructions on the actions commercial drivers must take (in the event of No Deal and no bilateral arrangements) in order to drive in the EU27 bloc after Brexit. This information is here.

The contents of any future EU-UK trade deal (or bilateral arrangements) may affect these instructions, so it’s essential to keep watching for updates (the information link in the first paragraph of this Blog post identifies ways to stay updated).

[A] Community licences and ECMT permits

Currently, UK lorry drivers carrying out international journeys must have a standard international operator’s licence along with a community licence for journeys to, from or through the EU and EEA.

Vehicles under 3.5 tonnes (including vans) and drivers operating on own account (carrying their own goods) do not need an international operator’s licence or Driver CPC.

ECMT permits will enable UK operators to drive in the EU and EEA (except Cyprus) if UK issued community licences are not recognised. ECMT permits are also recognised in 15 other countries.

Operators with a Northern Ireland operator’s licence will not be required to obtain an ECMT permit for a journey to the Republic of Ireland. Operators with a Great Britain operator’s licence should apply for an ECMT permit if they plan to drive in the Republic of Ireland from 29 March 2019.

Only limited numbers of ECMT permits will be available. Application will be online for ECMT permits from 26 November to 21 December 2018.

To apply for ECMT permits, a vehicle operator licence online account is required.

[B] Trailer registration (UK Brexit law)

From 28 March 2019, commercial trailers over 750kg and all trailers over 3,500kg must be registered before they can travel through countries that have ratified the 1968 Vienna Convention on Road Traffic.

This includes countries in the EU, EEA and Europe (listed in the Government Information, see link in the first paragraph of this Blog post).

Trailer registration is not required for trailers that are only used in the UK or only used for journeys between the UK and Ireland.

More details are in the Government Information, see link in the first paragraph of this Blog post).

New Contingency Planning Law (France Brexit Preparedness)

The draft law (which is not enacted, but could be enacted rapidly) is here. It’s subject is “reestablishment of checks of goods and passengers” & “restoration of veterinary, sanitary, phytosanitary, safety controls & customs formalities”.

1. UK citizens in France… in no deal

“In principle… this means requirement to present a visa” and requirement of residence document “without which British residents and their families would be staying illegally”.

The document also says France is watching the situation regarding the French in UK. Further information is here.

2. No Deal would involve “the reinstatement of veterinary and phytosanitary controls at the borders of the EU for live animals, plants and animal and plant products from the UK, or from other third countries transiting the UK…at dedicated installations, border inspection posts”.

3. “Community licenses” for haulage “would have no effect” after a No Deal Brexit leaving hauliers “unable to use them” and Cabotage “also prohibited”. [I reported this before under the EU Brexit Preparedness, I also reported the UK Technical Notice issued on this matter]

4. Preparations for “works for the construction of or emergency installation of premises, installations, or infrastructures, of ports, railways & airports, required by the establishment of checks of goods and passengers to and from the UK”.

5. Restoration of checks “will have to be put in place on the day of withdrawal in the case of exit without agreement”.

6. At present facilities for animal checks are not big enough for all required from UK at Dunkirk and Le Havre, Saint Malo and Brest, the document implies some will be required at Roscoff, Cherbourg, Caen, Calais and the Channel Tunnel “do not have border posts to date”.

[my thanks to Faisal Islam, Sky News Political Editor, for these numbered points to which I have added the ConnexionFrance link (point 1), and some other detail]

More Technical Notices (UK Brexit Preparedness)

Further Technical Notices are published today. The collection is found here.

I will be shortly adding the Brexit Law list to Cardinal Environment EHS Legislation Registers and Checklists. Please look out for the links appearing in both ENV and OHS. This Brexit Law list will be added to over the coming months.

The UK Technical Notices identify a large number of new systems, new consultations, and new processes that will be brought on stream. Please continue to follow this Blog closely.