The European Union (Withdrawal) Bill: The Impact on Scotland

The European Union (Withdrawal) Bill will have its second reading in the House of Commons tomorrow. 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 this blog focuses on how it could affect the Scottish devolution settlement.

Giving legal effect to Brexit

The Bill's principal purpose is to end the application of EU law in the UK at the point of Brexit, while ensuring some degree of consistency for individuals and businesses afterwards.

Until the UK leaves the EU, which the Bill defines as "exit day", all aspects of EU law will continue to apply in Britain. 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, including the principle of the supremacy of EU law over domestic legislation.

EU law 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, and includes Treaties, rulings of the Court of Justice (CJEU), around 12,000 EU regulations and 7,900 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 preserved body of law, referred to in the Bill as "retained EU law", includes EU-derived domestic legislation (both primary and secondary legislation, not just secondary legislation made under the 1972 Act) as well as directly effective EU Regulations and EU Treaty rights.

Not all of these instruments would make sense in a post-Brexit environment, however, and so the Bill would confer wide, albeit time-restricted, powers on UK 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.

It is estimated that some 800-1,000 pieces of secondary legislation will be needed for this purpose, including some that will amend or repeal existing UK primary legislation. Concerns have been raised at the Bill giving the Government such a power (referred to as a 'Henry VIII clause'), though the limited Parliamentary time available would make it nigh impossible to carry out all the necessary amendments through Acts of Parliament. There nevertheless remains a concern about the reduced level of scrutiny that secondary legislation receives, exacerbated by the likely substantial volume of measures that will have to be reviewed within the limited timeframe of the Brexit negotiations.

The potential impact on the Scottish Parliament

The UK Government's intention is that all powers which 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 to do otherwise would be to place restrictions on the current devolution settlement. This could be called the 'de jure' interpretation of devolution. By contrast, the UK Government looks at what responsibilities the devolved institutions currently have, as limited by EU law in those areas where the EU has competence, 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. One could call this the 'de facto' approach to devolution.

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", to the extent that the modification would not have been within competence pre-Brexit. The effect of this should be to maintain the existing de facto limits on the devolved institutions' competence, by denying them the ability to depart from retained EU law (including UK and devolved legislation) even in those areas that are not expressly reserved to Westminster.

Interestingly, "retained EU law" is defined to include not just EU-derived law as it stands at the point of Brexit, 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 intention there appears to be to ensure that the UK Parliament can amend aspects of retained EU law without that resulting in the devolved institutions gaining the power to legislate in respect of those aspects. 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, for example, the list of reserved matters set out in Schedule 5 of the Scotland Act 1998. This would appear consistent with the UK Government's strategy of focusing on devolved responsibilities as they currently exist in practice, rather than on devolved power as it is expressed in statute.

However, the current drafting could give rise to questions in the event that the UK Parliament legislates to completely replace an entire area of EU law. In such circumstances, would the new body of law be regarded as an addition to or modification of retained EU law, or could a radical departure from the previous EU rules qualify the new law as an entirely new creation? If there was scope to argue the latter, the devolved authorities might declare that the restriction on modifying retained EU law no longer applies in the relevant area, and to enact their own legislation accordingly. The Bill's approach may therefore lay the groundwork for significant legal disputes further down the line.

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 those will be. 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 Government envisages "intensive discussion and consultation" with devolved authorities on where lasting common frameworks are or are not needed. The Bill does include a mechanism to extend the Scottish Parliament's competence to include any issues in respect of which a common UK framework will not be required, but that may not become clear until there is more clarity on the UK's future commercial relationship with the EU.

Can the devolved institutions do anything to press their case?

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 from the Scottish Government 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 could still 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. Those details will become clearer as the Bill and other 'Brexit legislation' progresses through Parliament, but given the relatively short timeframe in which the Brexit process will have to play out it is never too soon to seek advice on the key issues.