EXPLANATORY MEMORANDUM TO
THE COMPETITIVENESS OF ENTERPRISES AND SMALL AND MEDIUM-SIZED
ENTERPRISES (REVOCATION) (EU EXIT) REGULATIONS 2019
2019 No. XXXX
1. Introduction
This explanatory memorandum has been prepared by the Department for Business,
Energy and Industrial Strategy and is laid before Parliament by Act.
2. Purpose of the instrument
This instrument revokes Regulation (EU) No 1287/2013 establishing a Programme for
the Competitiveness of Enterprises and small and medium-sized enterprises
(COSME), in order to address failures of retained EU law as provided for by the
European Union (Withdrawal) Act 2018.
Explanations
What did any relevant EU law do before exit day?
2.1 The COSME Regulation relates to an EU Programme to support small and medium
sized enterprises (SMEs). The Regulation sets out the obligations of the European
Commission to Member States and vice versa, as well as actions that seek to: (i)
improve access to finance; (ii) enhance access to markets; (iii) improve framework
conditions for enterprises; and (iv) promote entrepreneurship and entrepreneurial
culture.
2.2 Funding for COSME is allocated to financial intermediaries in Member States on a
competitive basis to stimulate extra lending to SMEs. UK participation in COSME
has been mainly focused on the access to markets component, which is delivered
through the Enterprise Europe Network (EEN) by UK Research and Innovation
(UKRI) in England, Wales and Northern Ireland, and by Scottish Enterprise in
Scotland. The UK also participates in the smaller elements of COSME (framework
conditions and promoting entrepreneurship), though the access to finance element
(Loan Guarantee Facility and Equity Facility for Growth) has not been heavily used in
the UK, since UK SMEs already enjoy relatively well-developed access to finance.
Why is it being changed?
2.3 The COSME Regulation will be retained UK law as a result of the UK’s withdrawal
from the EU. On exit the Regulation will be redundant, as the obligations it imposes
are relevant only between Member States and the European Commission.
What will it now do?
2.4 This instrument will revoke the COSME Regulation in its entirety under the negative
resolution procedure. This revocation will address failures of retained law and will
maintain a coherent statute book to avoid any unnecessary confusion as to the
application of that Regulation.
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3. Matters of special interest to Parliament
Matters of special interest to the Joint Committee on Statutory
3.1 None.
Matters relevant to Standing Orders Nos. 83P and 83T of the Standing Orders of the House
of Commons relating to Public Business (English Votes for English Laws)
3.2 As the instrument is subject to negative resolution procedure there are no matters
relevant to Standing Orders Nos. 83P and 83T of the Standing Orders of the House of
Commons relating to Public Business at this stage.
4. Extent and Territorial Application
4.1 The territorial extent of this instrument is all of the United Kingdom.
4.2 The territorial application of this instrument is all of the United Kingdom.
5. European Convention on Human Rights
5.1 Kelly Tolhurst, Minister for Small Business, Consumers and Corporate Responsibility
has made the following statement regarding Human Rights:
“In my view the provisions of The Competitiveness of Enterprises and Small and
Medium-sized Enterprises (Revocation) (EU Exit) Regulations 2019 are compatible
with the Convention rights.”
6. Legislative Context
6.1 Section 8(1) of the European Union (Withdrawal) Act 2018 provides for the Secretary
of State to deal with deficiencies arising from the withdrawal of the UK from the EU.
This includes law which continues to form part of domestic law under sections 2 and
3 of that Act (namely, saving for EU-derived domestic legislation and the
incorporation of direct EU legislation).
7. Policy background
What is being done and why?
7.1 The EU Regulation for COSME is designed to support SMEs across the Union. The
Regulation will no longer be applicable following the UK’s withdrawal from the EU.
The appropriate action is to revoke the Regulation under the negative resolution
procedure in order to ensure a coherent statute book. This instrument does not
implement new policy. Not proceeding with this instrument preserves legislation
which no longer applies to the UK on exit, as the UK will no longer be a Member
State. This could lead to misunderstanding over whether the COSME Regulation
continues to have effect in the UK.
7.2 The subject matter of the Regulation is devolved to Scotland, Wales and Northern
Ireland, hence this instrument is being made on behalf of and with the consent of the
Devolved Administrations.
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8. European Union (Withdrawal) Act/Withdrawal of the United Kingdom from the
European Union
8.1 This instrument is being made using the power in section 8 of the European Union
(Withdrawal) Act 2018 in order to address failures of retained EU law to operate
effectively or other deficiencies arising from the withdrawal of the United Kingdom
from the European Union. In accordance with the requirements of that Act the
Minister has made the relevant statements as detailed in Part 2 of the Annex to this
Explanatory Memorandum.
9. Consolidation
9.1 Not applicable.
10. Consultation outcome
10.1 Consultation was not viewed as necessary because this instrument makes purely
technical changes to revoke redundant retained EU law. Officials have engaged with
Devolved Administrations in the preparation of this instrument.
11. Guidance
11.1 Not applicable.
12. Impact
12.1 There is no, or no significant, impact on business, charities or voluntary bodies from
the revocation of the COSME Regulation.
12.2 There is no, or no significant, impact on the public sector from the revocation of the
COSME Regulation.
12.3 There are no wider impacts or transfer across wider sectors arising from this
instrument and it will not affect consumers, wider society, the environment or the rest
of the economy.
12.4 A De Minimis Self Certification has been prepared for this instrument and not a full
Impact Assessment because of the reasons given at 12.1, 12.2 and 12.3.
13. Regulating small business
13.1 The legislation applies to activities that are undertaken by small businesses but this
instrument does not represent a change in policy.
13.2 In the event the Withdrawal Agreement is implemented, UK SMEs will continue to
participate in COSME until the programme end. In August and October 2016, the
Chancellor stated that, in the event of a No Deal, the Government would guarantee
funding for certain EU projects that were successful in securing EU funding before
exit day. Funding for such ongoing COSME projects is to be provided in accordance
with those statements.
14. Monitoring & review
14.1 As this instrument is made under the EU Withdrawal Act 2018, no review clause is
required.
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15. Contact
15.1 William Kerr at the Department for Business, Energy and Industrial Strategy
Telephone: 020 7215 4238 or email: William.Kerr@beis.gov.uk can be contacted
with any queries regarding the instrument.
15.2 Nick French, Deputy Director for EU Funding and SME Policy, at the Department for
Business, Energy and Industrial Strategy can confirm that this Explanatory
Memorandum meets the required standard.
15.3 Kelly Tolhurst, Minister for Small Business, Consumers and Corporate Responsibility
at the Department for Business, Energy and Industrial Strategy can confirm that this
Explanatory Memorandum meets the required standard.
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Annex
Statements under the European Union (Withdrawal) Act
2018
Part 1
Table of Statements under the 2018 Act
This table sets out the statements that may be required under the 2018 Act.
Statement Where the requirement sits To whom it applies What it requires
Sifting Paragraphs 3(3), 3(7) and
17(3) and 17(7) of Schedule
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Ministers of the Crown
exercising sections 8(1), 9 and
23(1) to make a Negative SI
Explain why the instrument should be
subject to the negative procedure and, if
applicable, why they disagree with the
recommendation(s) of the SLSC/Sifting
Committees
Appropriateness
Sub-paragraph (2) of
paragraph 28, Schedule 7
Ministers of the Crown
exercising sections 8(1), 9 and
23(1) or jointly exercising
powers in Schedule 2
A statement that the SI does no more than
is appropriate.
Good Reasons Sub-paragraph (3) of
paragraph 28, Schedule 7
Ministers of the Crown
exercising sections 8(1), 9 and
23(1) or jointly exercising
powers in Schedule 2
Explain the good reasons for making the
instrument and that what is being done is a
reasonable course of action.
Equalities Sub-paragraphs (4) and (5)
of paragraph 28, Schedule 7
Ministers of the Crown
exercising sections 8(1), 9 and
23(1) or jointly exercising
powers in Schedule 2
Explain what, if any, amendment, repeals
or revocations are being made to the
Equalities Acts 2006 and 2010 and
legislation made under them.
State that the Minister has had due regard
to the need to eliminate discrimination and
other conduct prohibited under the
Equality Act 2010.
Explanations Sub-paragraph (6) of
paragraph 28, Schedule 7
Ministers of the Crown
exercising sections 8(1), 9 and
23(1) or jointly exercising
powers in Schedule 2
In addition to the statutory
obligation the Government has
made a political commitment
to include these statements
alongside all EUWA SIs
Explain the instrument, identify the
relevant law before exit day, explain the
instrument’s effect on retained EU law and
give information about the purpose of the
instrument, e.g., whether minor or
technical changes only are intended to the
EU retained law.
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Criminal
offences
Sub-paragraphs (3) and (7)
of paragraph 28, Schedule 7
Ministers of the Crown
exercising sections 8(1), 9, and
23(1) or jointly exercising
powers in Schedule 2 to create
a criminal offence
Set out the ‘good reasons’ for creating a
criminal offence, and the penalty attached.
Subdelegation
Paragraph 30, Schedule 7 Ministers of the Crown
exercising sections 10(1), 12
and part 1 of Schedule 4 to
create a legislative power
exercisable not by a Minister
of the Crown or a Devolved
Authority by Statutory
Instrument.
State why it is appropriate to create such a
sub-delegated power.
Urgency Paragraph 34, Schedule 7 Ministers of the Crown using
the urgent procedure in
paragraphs 4 or 14, Schedule
7.
Statement of the reasons for the Minister’s
opinion that the SI is urgent.
Explanations
where
amending
regulations
under 2(2)
ECA 1972
Paragraph 13, Schedule 8 Anybody making an SI after
exit day under powers outside
the European Union
(Withdrawal) Act 2018 which
modifies subordinate
legislation made under s. 2(2)
ECA
Statement explaining the good reasons for
modifying the instrument made under s.
2(2) ECA, identifying the relevant law
before exit day, and explaining the
instrument’s effect on retained EU law.
Scrutiny
statement
where
amending
regulations
under 2(2)
ECA 1972
Paragraph 16, Schedule 8 Anybody making an SI after
exit day under powers outside
the European Union
(Withdrawal) Act 2018 which
modifies subordinate
legislation made under s. 2(2)
ECA
Statement setting out:
a) the steps which the relevant authority
has taken to make the draft instrument
published in accordance with paragraph
16(2), Schedule 8 available to each House
of Parliament,
b) containing information about the
relevant authority’s response to—
(i) any recommendations made by a
committee of either House of Parliament
about the published draft instrument, and
(ii) any other representations made to the
relevant authority about the published draft
instrument, and,
c) containing any other information that
the relevant authority considers appropriate
in relation to the scrutiny of the instrument
or draft instrument which is to be laid.
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Part 2
Statements required when using enabling powers
under the European Union (Withdrawal) 2018 Act
1. Sifting statements
1.1 The Minister for Small Business, Consumers and Corporate Responsibility, Kelly
Tolhurst, has made the following statement regarding use of legislative powers in the
European Union (Withdrawal) Act 2018:
“In my view The Competitiveness of Enterprises and Small and Medium-sized
Enterprises (Revocation) (EU Exit) Regulations 2019 should be subject to annulment
in pursuance of a resolution of either House of Parliament (i.e. the negative
procedure).”
1.2 This is the case because, in addressing deficiencies in retained EU law, the instrument
makes changes of a technical nature in that it revokes redundant provisions which
operate only between Members States and the European Commission.
2. Appropriateness statement
2.1 The Minister for Small Business, Consumers and Corporate Responsibility, Kelly
Tolhurst, has made the following statement regarding use of legislative powers in the
European Union (Withdrawal) Act 2018:
“In my view The Competitiveness of Enterprises and Small and Medium-sized
Enterprises (Revocation) (EU Exit) Regulations 2019 do no more than is appropriate
to prevent, remedy or mitigate deficiencies in retained EU law arising from the
withdrawal of the UK from the EU.”
2.2 This is the case because, in addressing deficiencies in retained EU law, the instrument
makes changes of a technical nature in that it revokes redundant provisions which
operate only between Members States and the European Commission. If the COSME
Regulation were left on the statute books, this could cause confusion as to whether the
COSME Regulation applies in the UK post exit.
3. Good reasons
3.1 The Minister for Small Business, Consumers and Corporate Responsibility, Kelly
Tolhurst, has made the following statement regarding use of legislative powers in the
European Union (Withdrawal) Act 2018:
“In my view there are good reasons for the provisions in this instrument, and I have
concluded they are a reasonable course of action.”
3.2 This is the case because, in addressing deficiencies in retained EU law, the instrument
makes changes of a technical nature in that it revokes redundant provisions which
operate only between Members States and the European Commission. If the COSME
Regulation were left on the statute books, this could cause confusion as to whether the
COSME Regulation applies in the UK post exit.
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4. Equalities
4.1 The Minister for Small Business, Consumers and Corporate Responsibility, Kelly
Tolhurst, has made the following statements regarding use of legislative powers in the
European Union (Withdrawal) Act 2018:
“The instrument does not amend, repeal or revoke a provision or provisions in the
Equality Act 2006 or the Equality Act 2010 or subordinate legislation made under
those Acts.”
“In relation to the instrument, I, Kelly Tolhurst, have had due regard to the need to
eliminate discrimination, harassment, victimisation and any other conduct that is
prohibited by or under the Equality Act 2010.”
5. Explanations
5.1 The explanations statement has been made in section 2 of the main body of this
explanatory memorandum.

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