The FCA – Transformation to Assertive Supervision
The Prime Minister, Theresa May MP, and the Secretary of State for Exiting the European Union, David Davis MP, have both recently announced that the next Queen’s Speech will include a “Great Repeal Bill” (the “Bill”). The primary purpose of the Bill will be to provide for the repeal of the European Communities Act 1972, the Act through which European Union (“EU”) law is given supremacy in the UK. The Bill is therefore meant to give effect to the outcome of the June 2016 referendum result. As explained by Mr Davis to the Commons on 10 October 2016, the Bill will “end the authority of [EU] law” and “return sovereignty to the institutions of this United Kingdom”.
As many have noted, the short title of the proposed Bill is somewhat misleading. In fact, the Bill, once enacted, will not actually “repeal” any EU law. Rather, the Bill would freeze the existing corpus of EU law that applied in the UK on the day the UK formally exits the EU (so-called “Brexit day”), likely to be at some point in early 2019. Such EU law would then take effect through domestic law. It is envisaged that the UK Government would post-Brexit day then start the process of amending, repealing, or indeed continuing with, this body of EU law. Although there are as yet few details about how this sifting process will be undertaken, it is likely that the Bill would provide the Government with so-called “Henry VIII” powers to carry out the task.
A “Henry VIII” clause was defined by the House of Lords Select Committee on the Scrutiny of Delegated Powers as “a provision in a Bill which enables primary legislation to be amended or repealed by subordinate legislation, with or without further Parliamentary scrutiny”. In public law terms, Parliament is sovereign and omni-competent. This means that there is no limit to Parliament’s legislative power (the constitutional scholar Ivor Jennings famously quipped that Parliament could legally ban smoking on the streets of Paris if it so wished). Accordingly, Parliament can delegate a power to ministers to amend its own Acts.
The Great Repeal Bill, following enactment, is likely to contain Henry VIII provisions providing Ministers with the power to, by way of secondary legislation, amend primary Acts of Parliament. Given the likely size of “frozen” EU law, Ministers are likely to use this power frequently. What does this mean for public law challenges?
Unlike primary legislation, which cannot under domestic law be dis-applied by a court, secondary legislation is subject to review by the court further to its supervisory jurisdiction. As explained by Lord Neuberger PSC in R (on the application of The Public Law Project) v Lord Chancellor  UKSC 39 (at paras.  to ):
“Subordinate legislation consists of legislation made by members of the Executive (often, as in this case, by Government ministers), almost always pursuant to an authority given by Parliament in primary legislation …. Some statutory instruments are subject to the negative resolution procedure - ie they will become law unless, within a specified period, they are debated and voted down. Other statutory instruments … are subject to the affirmative resolution procedure - ie they can only become law if they are formally approved by Parliament”.
“Although they can be said to have been approved by Parliament, draft statutory instruments, even those subject to the affirmative resolution procedure, are not subject to the same legislative scrutiny as bills; and, unlike bills, they cannot be amended by Parliament. Accordingly, it is well established that, unlike statutes, the lawfulness of statutory instruments (like other subordinate legislation) can be challenged in court”.
In broad terms, the court will void secondary legislation when it finds such legislation to be “ultra vires” or “beyond the powers”. As noted by Neuberger PSC in The Public Law Project case at para.  of his judgment:
“Subordinate legislation will be held by a court to be invalid if it has an effect, or is made for a purpose, which is ultra vires, that is, outside the scope of the statutory power pursuant to which it was purportedly made. In declaring subordinate legislation to be invalid in such a case, the court is upholding the supremacy of Parliament over the Executive. That is because the court is preventing a member of the Executive from making an order which is outside the scope of the power which Parliament has given him or her by means of the statute concerned. Accordingly, when, as in this case, it is contended that actual or intended subordinate legislation is ultra vires, it is necessary for a court to determine the scope of the statutorily conferred power to make that legislation”.
When interpreting secondary legislation the normal principles of statutory interpretation will apply. However, in the case of a measure made further to a Henry VIII power the court will normally adopt a restrictive approach. In his judgment, Neuberger PSC cited the practitioner’s textbook Craies on Legislation (10th ed. (2015)) which notes that:
“…as with all delegated powers the only rule for construction is to test each proposed exercise by reference to whether or not it is within the class of action that Parliament must have contemplated when delegating. Although Henry VIII powers are often cast in very wide terms, the more general the words by Parliament to delegate a power, the more likely it is that an exercise within the literal meaning of the words will nevertheless be outside the legislature's contemplation”.
More generally, secondary legislation is amenable to review by the court and all grounds of review may be invoked against such legislation. Thus subordinate legislation can be subject to judicial review on the grounds of illegality, procedural impropriety or Wednesbury unreasonableness (see R (on the application of Javed) v Secretary of State for the Home Department  EWCA Civ 789). This reflects a more general principle whereby the High Court will not readily abandon its supervisory jurisdiction.
Over the past few decades, EU derived law has become an integral part of the UK’s legal landscape. Clearly, following Brexit, the corpus of EU law will have to be reviewed. Nevertheless, it is hard to see how Parliament can, in sufficiently precise terms, delegate Henry VIII powers to Ministers to undertake this task so as to insulate Great Repeal Act secondary measures from challenge. Such challenges are likely to be irritating to the government. However, Ministers might want to remember that restoring the sovereignty of Parliament was a key aim of the Brexit campaign. Before questioning such challenges, Ministers ought therefore to note the point made by Lord Neuberger PSC in his judgment “[w]hen a court is considering the validity of a statutory instrument made under a Henry VIII power, its role in upholding Parliamentary supremacy is particularly striking, as the statutory instrument will be purporting to vary primary legislation passed into law by Parliament” (at para. 25).
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