UK Withdrawal from the European Union (Continuity) (Scotland) Bill: Business and Regulatory Impact Assessment
Purpose and intended effect
The purpose of introducing the Bill is to allow Scots law to 'keep pace' with EU law in devolved areas, where appropriate, and ensure that we maintain the role of the environmental principles of EU law as well as effective and proportionate environmental governance in Scots law once the United Kingdom exits the transition period.
The Bill covers a range of issues, which are as follows:
- Provision for a power to make provision in Scots law corresponding to EU law as appropriate following the end of the implementation period;
- Provision for the duration and extension of the keeping pace power and its scrutiny;
- Provision for explanatory statements on a range of topics to accompany any regulations made under the power to keep pace;
- The insertion into domestic law of the guiding principles of EU law;
- The duty of Scottish Ministers and other bodies to have regard to the principles;
- The requirement for Scottish Ministers to publish guidance on the principles and their related duties;
- The formation of Environmental Standards Scotland, including the appointment of members and staff and the organisation's structure; and
- The powers and functions of Environmental Standards Scotland.
The Bill follows on from the UK Withdrawal from the European Union (Legal Continuity) (Scotland) Bill ("the 2018 Bill"), which passed stage 3 in the Scottish Parliament but did not receive Royal Assent following its referral to the Supreme Court under section 33(1) of the Scotland Act 1998. Although only section 17 was found to be outside the legislative competence of the Scottish Parliament at the time the 2018 Bill was passed, the remainder of the Bill was held to be within the Scottish Parliament's legislative competence when the Bill was passed. Since the UK's EU (Withdrawal) Act 2018 amended the competence of the Scottish Parliament after the reference of the 2018 Bill to the Supreme Court, other aspects of the 2018 Bill were found to have become ultra vires in the period between the completion of the 2018 Bill's stage 3 vote and the court's judgment.
This Bill forms part of the Scottish Government's response to that decision. The Court affirmed the Scottish Parliament's power, subject to the limits on its competence, to prepare the statute book against the UK's withdrawal from the European Union.
The 2018 Bill included a power (similar to the 'keeping pace' power in this Bill) to enable Scottish Ministers to make provision that would correspond to provision in EU law following EU exit. That power was not held to be outwith competence by the Supreme Court.
Therefore, while no formal consultation regarding the keeping pace power has been undertaken for this Bill, officials have used the results of previous engagement and consultation.
It is the Scottish Government's view that the extent to which devolved law aligns itself with the law of the EU should be a decision for the Scottish Parliament to take, not the UK Government. The Scottish Government is committed to no regression in standards or protections, and the replacement of regulatory powers lost in consequence of EU exit will be essential to ensuring that this is achieved. It is therefore crucial to ensure that provision is made for the replacement of regulatory powers which will be lost in consequence of EU exit.
To achieve this, the Bill provides for:
- the introduction of a power to make provision in Scots law corresponding to EU law as appropriate after the end of the implementation period;
- the introduction of the guiding principles of the environment into Scots law;
- the formation of Environmental Standards Scotland.
Rationale for Government intervention
The Scottish Government considers that there will be fields where its policy will be to voluntarily maintain regulatory alignment with EU rules. Particularly where there is no other subordinate legislation-making power to regulate in an area, a power to permit such alignment with post-implementation period developments in EU law would help the Scottish Government maintain, as appropriate, continuity of law in certain areas after Implementation Period completion day. Therefore, the purpose of introducing the Bill is to allow Scots law to 'keep pace' with EU law in devolved areas, where appropriate, and ensure that we maintain the role of the environmental principles of EU law as well as effective and proportionate environmental governance in Scots law.
a) Within Government
As noted above, a provision similar to the keeping pace provision contained within the Bill previously completed three stages of parliamentary scrutiny as part of the 2018 Bill. For that reason, no formal consultation was carried out with regard to the keeping pace power in this Bill.
b) Public Consultation
The environmental provisions in the Bill were influenced by the analysis of responses to the public consultation.
The consultation paper invited responses to a series of questions covering the role of environmental principles in developing future policy and legislation and maintaining effective, appropriate and proportionate environmental governance in Scotland, following EU exit. The consultation received a strong response from 40 individuals and 59 organisations. The profile of respondent organisations featured environmental charities, membership organisations, private business, academic institutions, local authorities, and third sector organisations.
The responses have been published on the Scottish Government website, along with the results of an independent analysis of those responses.
The consultation received over 100 substantive responses from a range of individuals groups and organisations and over 12,000 responses following a Scottish Environment LINK campaign. There was a general agreement with the proposals set out for environmental principles, and a broad consensus that something should be done to fill a governance gap in the event of EU exit. Within the responses there was a richness of detail and comment, as well as significant ambition for additional measures, particularly from the membership organisations. There was general support for the introduction of a duty to consider the environmental principles and for a policy statement to guide the interpretation and application of the duty. There were a range of opinions, accompanied by substantial discussion about which bodies the duty should apply to how it should be expressed and which principles should be included within the duty. Most respondents believed that there will be significant governance gaps on leaving the EU with respect to scrutiny and assessment of the effectiveness of environmental policy. Concern was also expressed about the loss of an EU complaints function and that the loss of EU enforcement powers would have a negative impact on the environment. There was general agreement that a new function is required to receive complaints and a range of roles and models were suggested. Overall there was strong support for a body to oversee complaints, provide scrutiny on environmental policy and delivery, and provide oversight for environmental monitoring and reporting.
An analysis of the environmental consultation responses was taken into account in developing the relevant proposals in the present Bill. The purpose of environmental governance is to ensure the complete and effective implementation of environmental law. Any potential impacts of future environmental law will be considered when that legislation is developed
The keeping pace provisions in the Bill are about establishing a discretionary power to regulate in the future. The mere establishment of the power will not have any immediate impact on business therefore there was no need to consult specifically with businesses on this. Nevertheless, the Scottish Government will consult appropriately prior to the introduction of any new provisions under the terms of the Bill. Furthermore, the Bill contains provisions which require the Scottish Government to publish a series of statements whenever the power is used. These will include statements on: why the power is to be used; what impact it will have; rights and duties relating to employment; and matters relating to consumer protection. A number of businesses and business groups did respond to the public consultation on the environmental proposals. These included:
- Scottish Power
- SSE Ltd
- Energy UK
- Network Rail
- Oil and Gas Tarmac
- UK Chemical Association
- Confederation of Paper Industries
- Mineral Products Association
- National Farmers Union
Business interests strongly supported a duty on Scottish Ministers to have regard to the four core environmental principles. There was also a general consensus for a balanced and proportionate approach to be taken, particularly with regard to social and economic factors when the principles are applied in the development of policy and legislation. Some general concern was expressed should the principles be applied at the decision making level, with some respondents keen to see a continuation of the 'status quo' and therefore close alignment with EU practices. There was further support for robust governance arrangements to be put in place following EU exit. Respondents were supportive of arrangements that would be fully independent, provide scrutiny of government and uphold environmental law.
Options: Primary Legislation
The primary alternative to this Bill's provisions for a keeping pace power would be the introduction of primary legislation to create subject-matter-specific powers. However, this approach would consume a large amount of parliamentary time, limiting space for the remainder of the legislative agenda. It would also limit the Scottish Government's flexibility and introduce a significantly longer time-lag between the identification of an issue and its remedy than in the case of the keeping pace power being available.
Sectors and groups affected
The Bill proposes the introduction of a power for the Scottish Ministers to make changes to legislation, as appropriate, in devolved areas following the end of the implementation period. It cannot be predicted precisely the impact the Bill may have in future on specific sectors or groups but, as it noted above, the Scottish Government will consult appropriately on any proposed used of the keeping pace provisions. There should however be no immediate impact on the business community or other organisations.
As noted above, at this point it cannot be predicted what precise impact the Bill may have in future on specific sectors or groups.
The future costs associated with the keeping pace provisions of the Bill cannot be predicted at this point. No additional costs are expected to be placed on the business sector as a result of the environmental principles and environmental governance provisions in this Bill.
Scottish Firms Impact Test
As noted above, as a provision similar to the keeping pace provision contained within the Bill had previously completed three stages of parliamentary scrutiny, no formal consultation was carried out including with Scottish businesses.
The Scottish Government's policy is seek to remain aligned with the EU on an ongoing basis. Although exceptions to that approach may be necessary in certain areas, broadly the aim is to help to maintain - among other things - the regulatory equivalence likely to be necessary to allow Scottish companies to continue to trade with the EU Member states. As part of our approach to considering specific keeping pace provisions, policy teams will evaluate the impact on the competitive environment for Scottish firms overall, including in relation to the rest of the UK.
The Scottish Ministers take the view that maintaining regulatory alignment with EU rules as they develop, where appropriate, will help maintain the current levels of public health protection afforded to Scottish consumers.
Test run of business forms
There is no current need for the test run of business forms.
Digital Impact Test
The Bill's provisions do not give rise to any immediate or direct impact on technology or technological advances.
Legal Aid Impact Test
The Bill's provisions do not give rise to any immediate impact on the legal aid fund.
Enforcement, sanctions and monitoring
The power to keep pace with EU law is limited, providing structural safeguards on the Bill's use. Further, the Scottish Government considers that it is important that the Scottish Parliament has the ability to closely scrutinise the use of this power. As such, the Bill provides for the Scottish Parliament to use the affirmative procedure to approve instruments under the Bill where an instrument:
- Abolishes a function of an EU entity or public authority in a member State without providing for an equivalent function to be exercisable by any person, or provides for any function of an EU entity or public authority in a member State to be exercisable instead by a Scottish public authority or (as the case may be) to be conferred instead on another Scottish public authority;
- Imposes, or otherwise relates to, a fee or charge in respect of a function exercisable by a public authority in the United Kingdom (except where the alteration of the fee reflects changes in the value of money);
- Creates, or widens the scope of, a criminal offence; or
- Creates or amends a power to legislate.
Implementation and delivery plan
Although, as a result of the agreement ratified by the European Union (Withdrawal Agreement) Act 2020, the UK exited the European Union on 31 January 2020, a transition period is currently in place until 31 December 2020. The provisions of this Bill, therefore, are to come into force after Implementation Period completion day.
Due to the wide range of areas of competence to which the Bill may apply, it is necessary that, for the power to keep pace with EU law to operate effectively, there be a degree of flexibility in the power's duration of use. The Bill therefore provides that these powers expire ten years after the Bill comes into force, unless renewed (again for a period not exceeding five years) by regulations, subject to the affirmative procedure. Where a sufficient range of regulatory powers were taken in primary legislation after UK withdrawal to mean that the ability to keep pace with EU law was no longer required, the Scottish Ministers would not seek the renewal of this power.
The above provisions provide clarity and certainty to regulators and those impacted by regulations. The sunset period reflects the general intention that over time specific powers in particular fields will be taken - as opposed to the need for a general power.
Summary and recommendation
The purpose of the Bill is to allow Scottish Ministers to keep devolved law in line with EU law in devolved areas so far as appropriate after the end of the transition period following the UK's exit from the European Union. It also ensures that we maintain the role of the environmental principles of EU law as well as effective and proportionate environmental governance in Scots law once the United Kingdom exits the transition period.
While it is not possible to predict any future costs of the introduction of this Bill, as discussed above this option is considered less time-consuming and more flexible that the alternative which would be to introduce primary legislation to create subject-matter-specific powers.
There are likely to be further examples of cases in which it is necessary to use the keeping pace power that cannot currently be foreseen. The existence of the power gives the Scottish Government the necessary flexibility to ensure that Scotland can both continue to align itself with EU policy in devolved areas, where desirable, and administer and regulate a number of important aspects of Scottish governance.
Declaration and publication
I have read the Business and Regulatory Impact Assessment and I am satisfied that (a) it represents a fair and reasonable view of the expected costs, benefits and impact of the policy, and (b) that the benefits justify the costs.
Signed: Donald Cameron
Date: 02 June 2020