This is a longish poist, though not that long, and there seems some problem posting it - so I'll try doing it in a couple of sections:

Not an attempt at humour, Richard, if that implies that it isn't meant seriously. Of course it's absurd, but the law in question is absurd.

We have been told by local authorities following legal advice that moving rhythmically in time with the music counts as dancing. If it's folk music, that means it is folk dancing. Whether that similarity with other forms of folk dancing such as Morris is close enough for the exemption to kick in is something we still have to find out.

But Morris is not just ensemble dancing. Nor is it necessary for dancers to be in costume - it is common practice for teams who are short a few dancers to rope in dancers in street clothes. And scratch Morris sides all in street clothes are commonly seen in festivals and so forth.