The European Union (Withdrawal) Bill cleared the second reading stage in the House of Commons yesterday. Prime Minister Theresa May has described the Bill as "the single most important step we can take to prevent a cliff edge for people and businesses, because it transfers laws and provides legal continuity". There is much that can and will be said about the Bill, but thisarticle focuses on how it could affect the Scottish devolution settlement.

Giving legal effect to Brexit

The Bill's principal purpose is to ensure some degree of consistency for individuals and businesses when Brexit happens by ensuring the continuing effect of EU law as it currently applies within the UK.

Until the UK leaves the EU, EU law will continue to apply in Britain. On withdrawal from the EU, the UK will no longer be under a legal duty to observe EU law. However, it is recognised that chaos would result if, overnight, doubt was created about which, if any, EU laws continued to apply to the UK or had simply 'disappeared'.

The Bill provides for various things to happen on 'exit day'. We don't yet know when 'exit day' will occur. Although it might be expected to be the same day as the day on which the UK leaves the EU, it is at least possible that it could be a different day. Indeed it is acknowledged in the explanatory notes that accompany the Bill that there might be more than one 'exit day' _ with different days being chosen for different parts of the Bill to have effect.

The Bill provides for the repeal, on exit day, of the European Communities Act 1972 (the 1972 Act), which applies EU law in the UK's domestic legal systems.

EU legislation is estimated to consist of some 80,000 items spanning areas as diverse as environmental protection, worker rights and the regulation of fishing in UK waters. European law more generally includes the Treaties, rulings of the Court of Justice (CJEU), around 12,000 EU regulations, and about 7,900 British statutory instruments that implemented EU Directives and other obligations into UK law. If these were all to cease to apply on exit day there would be significant gaps in the UK statute book. There would simply not be time to fill those gaps with domestic legislation prior to Brexit.

The Bill will therefore provide for broadly the same rules to apply immediately after Brexit as before, by converting EU law into UK law on exit day. This body of law, referred to in the Bill as "retained EU law", is broken down by the Bill into several sub-categories. It includes UK (and Scottish, Welsh and Northern Irish) legislation and statutory instruments, as well as EU law that applies automatically in the UK without the need for any domestic implementation.

Many pieces of EU law will not, though, make sense in a post-Brexit environment. That problem is tackled by the Bill conferring wide, albeit time-restricted, powers on government ministers to make secondary legislation in order to "prevent, remedy or mitigate" deficiencies in retained EU law "as the minister considers appropriate". The expectation is that this will be used to amend or repeal aspects of retained EU law that would not function properly or appropriately in the absence of EU membership or access to EU institutions, or where the rules depend on reciprocal arrangements with other EU Member States that will not continue post-Brexit. These ministerial powers can be exercised by UK Government ministers and by ministers in the devolved governments, though in the latter case the rectification powers are more limited.

It is estimated that some 800-1,000 pieces of secondary legislation will be needed, including some that will amend or repeal existing primary legislation (of the UK and devolved legislatures). Concerns have been raised at the Bill giving governments these 'Henry VIII powers', though the limited time available would make it nigh impossible to carry out all the necessary amendments through Acts of Parliament.

Potential impact on Scottish devolution

The UK Government's intention is that all powers that are currently exercised at EU level will, at least initially, transfer from Brussels to Westminster. This includes powers in fields that are otherwise devolved to Scotland, Wales and/or Northern Ireland, such as the environment, agriculture and fisheries. This has prompted accusations by the Scottish and Welsh First Ministers that the Bill is a "naked power grab".

That dispute essentially concerns the interpretation of the devolution settlement. The devolved administrations look at policy areas that are currently devolved and take the view that all 'repatriated' powers in those areas should be exercisable by the relevant devolved institution, and that to do otherwise would be to place restrictions on the current devolution settlement. By contrast, the UK Government looks at the current responsibilities of the devolved institutions, as limited by EU law, and takes the view that there will be no reduction in the power of the devolved bodies if those issues currently dealt with by the EU are handled at UK level instead.

The Bill as currently drafted takes the latter approach, proposing to amend the Scotland Act 1998 (the 1998 Act) so that the Scottish Parliament, rather than being unable to legislate in a manner that is incompatible with EU law, will instead be forbidden from modifying "retained EU law". The UK Government would expect the effect of this to be maintenance of the existing limits on the devolved institutions' competence, by denying them the ability to depart from retained EU law (including UK and devolved legislation) even in subject areas that are not expressly reserved to Westminster.

Interestingly, "retained EU law" is defined to include not just EU-derived law as it stands on exit day, but also that body of law as it is "added to or otherwise modified by or under this Act or other domestic law from time to time". The UK Parliament or Government will be able to alter retained EU law in future, with the law as amended remaining outside the legislative competence of the Scottish Parliament. Essentially, the effect will be to ensure that things that are currently outside the competence of the devolved institutions because of EU law constraints will remain outside their competence, without the Bill taking the potentially more controversial step of expressly changing the list of reserved matters set out in Schedule 5 of the Scotland Act 1998.

The UK Government has nevertheless stated that it expects there to be a significant increase in the decision-making powers of the devolved institutions over time, though the Bill is silent on when and how a further devolution of 'repatriated' powers will take place, or which powers will be repatriated. The UK Government paper on Brexit and devolution does, however, say that decision-making powers returning from the EU should be allocated within the UK "in a way that works - ensuring that no new barriers to living and doing business within the UK are created" (concerns have also been expressed by Liam Fox, the Secretary of State for International Trade, that powers should not be devolved in a way that would hamper the UK's ability to enter into trade agreements). Subject to that overarching principle, the UK Government envisages "intensive discussion and consultation" with devolved authorities on where lasting common frameworks are or are not needed.

Legislative consent

The UK Parliament generally will not alter the competence of the devolved legislatures without their consent. The Explanatory Notes to the Bill state that the UK Government intends to seek consent from the devolved legislatures for those provisions of the Bill that impact on devolved competence, and at present there would certainly appear to be scope for that consent to be withheld by the Scottish Parliament at least. The recent UK Supreme Court decision in Miller made clear that such conventions (if indeed this particular practice has the status of a convention, on which Miller was unclear) are entirely political in nature and so are not legally enforceable in the courts. However, passing the Bill in the face of a refusal of consent from any of the devolved legislatures would, of course, have significant political ramifications.

On the horizon

The Bill itself still needs to make it through Parliament, and there are plenty of issues for debate; some legal, some political and all constitutional. Individuals and businesses will want to know as early as possible what legal and administrative frameworks they will be operating under, including knowing which regulators they will have to deal with and where they should focus any lobbying activity.

If you would like to discuss any of the issues raised above, please get in touch with one of the key contacts below.