Publication - Strategy/plan

After Brexit: The UK Internal Market Act and devolution

Published: 8 Mar 2021

Devolution has benefitted Scotland hugely, allowing decisions that matter to people in Scotland to be taken here. Developments since the Brexit vote put this at risk - culminating in the UK Internal Market Act, which directly constrains devolution. This paper explains why and the choice we now face.

After Brexit: The UK Internal Market Act and devolution
Part Three: The UK Government's Approach to Devolution Since the EU Referendum

Part Three: The UK Government's Approach to Devolution Since the EU Referendum

20. The UK Internal Market Act constitutes the most significant and far-reaching assault on devolution since 1999. It has prompted the Welsh Government to launch legal action, which the Scottish Government has supported, against what it calls an "attack" on the competence of the Senedd Cymru (the Welsh Parliament).[9] However, the Act sits within a wider set of developments since the 2016 referendum: the devolved administrations' involvement in the EU negotiations process, the EU Withdrawal Act, the first Scottish Continuity Bill, and the UK Government's approach to the constitutional convention that safeguards devolved parliaments' ability to protect devolution (the Sewel Convention).

The Brexit vote & subsequent negotiations process

21. In September 2016, in the EU exit referendum, the vote to leave won by a margin of 52% to 48%. Overall in Scotland, of votes counted, remain won by 62% to 38%, with every local authority area in Scotland voting by a majority to remain.

22. Despite the clear wishes of Scottish voters in the referendum, the UK Government, under successive Prime Ministers, has consistently pursued an approach to EU exit that does not recognise the clear position in Scotland of supporting EU membership.

23. The Scottish Government has sought to engage constructively with the UK Government on the terms of the UK's departure from the EU, to protect Scotland's interests whilst respecting, with regret, the result of the referendum in other parts of the UK.

24. Following negotiations and agreement between the then Prime Minister, Theresa May, and the heads of the devolved governments including the First Minister of Scotland, the Joint Ministerial Committee on EU Negotiations (JMC(EN)) was established in 2016 to provide a mechanism for the devolved administrations to be engaged in determining the UK's approach to EU exit. Its Terms of Reference are that,

"through the JMC(EN) the governments will work collaboratively to:

  • discuss each government's requirements for the future relationship with the EU;
  • seek to agree a UK approach to, and objectives for, Article 50 negotiations; and
  • provide oversight of negotiations with the EU, to ensure, as far as possible, that outcomes agreed by all four governments are secured from these negotiations; and,
  • discuss issues stemming from the negotiation process which may impact upon or have consequences for the UK Government, the Scottish Government, the Welsh Government or the Northern Ireland Executive."[10]

25. The JMC(EN) has met 28 times. Despite requests from the devolved administrations, the Committee did not work jointly on negotiating positions prior to the UK Government adopting its position on behalf of the whole UK. Devolved administrations were invited to express their views at various stages, but given no meaningful opportunity to influence the UK position which was decided by the UK Government alone. Information shared in the Committee by the UK Government has too often gone no further than that which was already available to the media and the general public.

26. As a consequence, JMC(EN) has been unable to fulfil its terms of reference. For example:

  • the Scottish Government was only made aware of the date on which the UK Government would trigger Article 50 (the process of leaving the EU) when it was reported in the media;
  • there was no meaningful attempt to engage with devolved administrations and incorporate their policy priorities ahead of the publication of the UK Government's negotiation principles which proved decisive in determining that the outcome of the negotiations would be the hardest possible Brexit short of no deal; and
  • the devolved administrations were not fully sighted on UK negotiators' negotiating mandate, or principal documents, including legal texts underpinning negotiations.

26. The Scottish Government has set out clear policy positions, with supporting rationales, on a wide range of specific policy consequences of EU exit. These issues include replacement EU funding (such as the replacement to European Structural Funds, the UK's "Shared Prosperity Fund" and Erasmus Plus); mobility and freedom of movement; policing; energy and climate change; international security; fisheries; science; consumer protection; air transport and road haulage; and governance issues impacting on the future relationship with the EU.[11] None of these were reflected in the UK Government's approach to negotiating EU exit.

27. Most recently in June 2020, the Scottish Government published a detailed paper setting out why it was essential to extend the EU exit transition period given the COVID pandemic and economic crisis.[12] The UK Government disregarded that evidence as well as the repeated calls to extend the transition period, at great cost to Scotland and the whole UK.

28. Despite significant work and consistent good faith from the devolved administrations, the JMC(EN) has not been a four-nations forum to discuss and work through issues related to EU negotiations. The process, which was intended to forge genuine collaboration across the UK's constituent nations, to reflect the views and needs of people across those nations, failed to recognise the legitimacy and value of devolved administration's voices in negotiating positions. The outcome is a damaging, hard Brexit that in no way reflects the democratic will of people in Scotland.

The European Union (Withdrawal) Act 2018

29. The European Union (Withdrawal) Bill was introduced in the House of Commons on 13 July 2017. The UK Government set out the principal purpose of the Bill as,

"[providing] a functioning statute book on the day the UK leaves the EU. As a general rule, the same rules and laws will apply on the day after exit as on the day before. It will then be for Parliament and, where appropriate, the devolved legislatures to make any future changes."[13]

30. To achieve this, the Bill provided for the repeal of the European Communities Act 1972, converting EU law into domestic law at the moment of withdrawal, delegated powers, including temporary powers for corrections to be made to the laws that would otherwise no longer operate appropriately once the UK left the EU, and to implement any future withdrawal agreement.

31. Clause 11 of the Bill as introduced contained a provision to place the modification of retained EU law outside the Scottish Parliament's competence in a way which would not have been compatible with EU law immediately before withdrawal - effectively freezing devolved competence for an extended period after EU exit, with the discretion to lift any restrictions lying solely with UK Ministers. This provision would have given the UK Parliament and UK Government the unilateral power to make decisions in devolved policy areas previously affected by EU law. Schedule 3 of the Bill made parallel provision in respect of the powers of Scottish Ministers.

32. The Scottish Government rejected in principle the proposition that devolved competence should be constrained in this way following EU exit, arguing that policy responsibility for matters within devolved competence lie with the Scottish Government, accountable to the Scottish Parliament. This underscored a wider principle: that on EU exit, the Scottish Parliament should be in the same position as the UK Parliament: able to act within its area of competence in the way it sees fit.

33. Following widespread criticism of Clause 11 (including the unanimous report of the Scottish Parliament's Finance and Constitution Committee[14]), the UK Government brought forward amendments now contained at Section 12 of the enacted legislation. This provision gives powers to UK Ministers to unilaterally impose constraints on devolved competence, without the consent of the Scottish Parliament.

34. One of the fundamental principles of the devolution settlement is that the powers and responsibilities of the Scottish Parliament, and in turn, the Scottish Government, cannot be changed without its consent. This is embodied in the statutory procedures under the Scotland Act 1998 which require the agreement of the Scottish Parliament, as well the House of Commons and the House of Lords, before such changes can be made by secondary legislation.[15] The Sewel Convention similarly provides that consent will normally be sought from the Scottish Parliament before changes can be made by primary legislation at Westminster.

35. The reasons for this requirement are clear: the doctrine of Westminster's sovereignty means that, without the need for consent from the Scottish Parliament, its functions and its powers are not protected in the UK's current constitutional system – but built on sand.

36. The power in section 12 of the EU (Withdrawal) Act 2018 ("EU Withdrawal Act") for UK Ministers to change that competence, unilaterally and without consent, overrides that fundamental constitutional principle of the devolution settlement, which is why it was rejected by both the Scottish Government and the Scottish Parliament.

37. Despite the refusal of legislative consent by the Scottish Parliament, the UK Government proceeded with the legislation, consciously and deliberately overriding the Sewel Convention for the first time since devolution in 1999. The Sewel Convention is considered further below.

38. It is noteworthy that the UK Government's insistence on this section and its override of the Sewel Convention has been unnecessary. The UK Government has a statutory duty to publish quarterly reports on any use of these Section 12 powers. These powers have not been used to date: the four governments of the UK have been able to work together through the common frameworks process.

39. The passage of the EU Withdrawal Act demonstrates two wider themes of the UK Government's approach to devolution during the process of leaving the EU, both of which have continued with the UK Internal Market Act.

40. First, the original Clause 11 and the subsequent section 12 demonstrated both a concern that devolved competence might be used in a way that diverged from the UK Government's preferred policy; and a desire for the UK Government to have power to override devolved decision making when it disagrees. The Bill therefore rejected an approach based on negotiation and agreement between different decision-making bodies in favour of centralisation of power in Whitehall and Westminster.

41. Second, the effect of the Bill was not fully captured. The Bill and the process of EU exit tended to be framed as returning powers the Scottish Parliament. In fact, these powers were vested in the Scottish Parliament by the Scotland Act 1998; the effect of EU exit was to remove the obligation to comply with EU law in their exercise (an obligation that the Westminster Parliament also had to follow). The actual effect of the Bill, in both its original and final forms, is to constrain existing devolved competence - not as a result of international obligations, but as a result of domestic UK law, including the unilateral exercise of powers by UK Ministers.

The First Scottish Continuity Bill

42. One of the constraints placed on the powers of the Scottish Parliament by the EU Withdrawal Act was to add the Act to the list of "entrenched" laws at Schedule 4 of the Scotland Act 1998 that cannot be modified by the Scottish Parliament.

43. The result was to undermine the competence of the Scottish Parliament to make its own provision for legal continuity on leaving the EU. This was done after the Scottish Parliament had passed the UK Withdrawal from the European Union (Legal Continuity) (Scotland) Bill. That Bill did not proceed to Royal Assent as it was referred to the UK Supreme Court by the UK Government in order to question the Scottish Parliament's competence to pass the legislation.

44. The UK Supreme Court decided that, for all but one minor provision, the Continuity Bill had been within competence when it was passed by the Scottish Parliament.[16] However, the effect of the EU Withdrawal Act coming into force before the Scottish Bill received Royal Assent was to constrain the Scottish Parliament's competence at the point the Court considered the case, as so many of its provisions had, retrospectively, been put beyond competence.

45. This sequence of events was succinctly described later by Lord Reed, now President of the UK Supreme Court:

"The consequence is that it is legally possible for the UK Government to react to the passage of a Bill in the Scottish Parliament by making a reference [to the Supreme Court] and then persuading the UK Parliament to amend the Scotland Act so as to render the Bill invalid."[17]

46. The UK Internal Market Act has similarly been included in Schedule 4 of the Scotland Act, further constraining devolved competence and again without the consent of the Scottish Parliament.

The Sewel Convention

47. The Sewel Convention stipulates that the UK Parliament should not normally legislate on a devolved matter, or adjust legislative competence, without the consent of the devolved legislatures.[18] It is named after the UK Government Minister, Lord Sewel, who set out the terms of the policy in the House of Lords during the passage of the Scotland Bill 1997-98 on 21 July 1998:

"Section 28 (7) of the Scotland Act 1998 makes it clear that the devolution of legislative competence to the Scottish parliament does not affect the ability of Westminster to legislate for Scotland even in relation to devolved matters. Indeed, as paragraph 4.4 of the White Paper explained, we envisage that there could be instances where it would be more convenient for legislation on devolved matters to be passed by the United Kingdom Parliament. However, … we would expect a convention to be established that Westminster would not normally legislate with regard to devolved matters in Scotland without the consent of the Scottish parliament." [emphasis added][19]

48. The Sewel Convention has been fundamental to the operation of devolution in the UK since 1999.[20] The doctrine of unlimited Parliamentary sovereignty of the Westminster Parliament (sometimes referred to as Diceyan sovereignty after the English jurist A.V. Dicey) means that it is not possible for Westminster to reduce or diminish its own sovereignty. It can therefore legally continue to legislate in devolved areas or to change or abolish the Scottish Parliament. The Sewel Convention recognises that there is little point in a Scottish Parliament that is overruled by legislation at Westminster and little stability in a Parliament that can have its powers changed against its will, or that can be abolished.

49. As Diceyan sovereignty remains the predominant view at Westminster, the only way of securing the power and role of the Scottish Parliament is therefore by a self-denying, binding rule that Westminster would not legislate in devolved areas or adjust devolved competence without the express consent of the Scottish Parliament. Hence the establishment of the Sewel Convention, which is known as a constitutional convention: a rule that while not legally enforceable, is binding on the actors in the system, and recognised to be so. Prior to the 2016 referendum, the Sewel Convention had been observed consistently and diligently by successive UK Governments.

50. Following the independence referendum of 2014, the all-party Smith Commission, established to consider further powers for the Scottish Parliament to strengthen its place in the UK, recommended that the Sewel Convention be placed on a statutory footing and its wording is now on the face of the Scotland Act.[21] While the UK Supreme Court has ruled that this legislative provision is not enforceable,[22] it is recognised as playing a fundamental role in the operation of the UK's constitution.[23] Until recent events, it was the sole guarantee that Westminster's exercise of its parliamentary sovereignty would respect of the powers and autonomy of the devolved legislatures.

51. However, the UK Government has chosen to override the Sewel Convention on a number of occasions since the Brexit vote:

  • The EU Withdrawal Act in 2018 – this marked the first time Westminster had legislated without the consent of the Scottish Parliament.
  • The EU (Withdrawal Agreement) Act 2020 - which was rejected by the Scottish Parliament, Senedd and the NI Assembly.
  • The UK Internal Market Act 2020 – despite both the Scottish Parliament and the Welsh Senedd refusing consent on grounds the Act fundamentally changes, and damages, the devolution settlement of the UK.
  • The European Union Future Relationship Act 2020 – the UK Government pressed ahead with legislation on the EU-UK deal without the consent of the Scottish Parliament.

52. The UK Government has sought to justify this on the grounds that the circumstances of EU exit were "not normal" and that, therefore, it could proceed with these pieces of legislation without consent. However, on each occasion the UK Government sought the consent of the Scottish Parliament, which indicates it was required for elements of each Bill. The exception to the Sewel Convention for circumstances that are "not normal" can have no meaning if it is only applied retrospectively once the Scottish Parliament has made its decision, and refused consent. This reasoning of the UK Government has therefore emptied the Convention of its force, and replaced a binding constitutional rule with a procedure that can be disregarded at UK Ministers' discretion.

53. The importance of these developments for the devolution settlement cannot be overstated. While the circumstances of EU exit are undoubtedly unprecedented, overriding the Sewel Convention was not justified, especially in the case of the UK Internal Market Act which was not necessary to implement an international treaty or to progress the process of EU exit. The effect is that the UK Government has shown it is willing to reshape the devolution settlement, unilaterally and in the most fundamental way, setting aside any rules of the UK constitutional system that it finds inconvenient.


Contact

Email: Eilidh.Macdonald@gov.scot