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
Annex B: The development of the UK's state and market architecture

Annex B: The development of the UK's state and market architecture

The UK Government's White Paper on the Internal Market from July 2020 called the Acts' creation of a free market between Scotland and England "the bedrock of our shared prosperity".[52] This broad statement does not accurately reflect the complex realities of the 1707 union, and its implications for the early modern states of Scotland and England.

The Parliament of England passed the Act of Settlement in 1701, which provided that only protestant heirs could ascend to the English throne. Scotland held, through the Succession Act of 1681, that any legitimate heir could ascend to the Scottish Crown regardless of their personal religion; the English Act of Settlement was not valid in Scotland, which retained its own legal system. Therefore, when Queen Anne succeeded William of Orange to the English and Scottish Crowns in 1702, a formal Union was considered imperative by English Parliamentarians to secure their preferred mechanisms of succession. As Queen Anne had no children, the English selected a distant relative – Sophia, Electress of Hanover – as heir to the crown without consulting the Scottish Parliament.

As a result, and after a failed attempt to negotiate a political, economic, religious and trade deal with their English neighbours to settle the matter, the Scottish Parliament passed the Act of Security in 1704, in which it decided that should the Queen die without direct descendants, then the Scottish Crown would go to a protestant heir from the lines of the Scottish Kings. The English response was to pass the Alien Act of 1705, in which Scottish nationals, merchants, and goods were declared "alien" in English territories, unsettling inheritance claims and resulting on embargoes on Scottish goods.

As much as Scotland needed a free trade agreement with England, England also needed one with Scotland. In the second half of the seventeenth-century, the English Government had entered British forces into the costly Anglo-Dutch Wars for control of trade and shipping routes. Similarly, ongoing disputes with the French – which would last well into the eighteenth-century – created geopolitical imperatives for English politicians to pursue a union. Furthermore, whilst the UK Government's White Paper is keen to highlight Scotland's present trade arrangements with UK nations – calling attention to Scotland's robust domestic trade – the paper has little to say about England's own trading stakes in Scotland, which included Scotland's garrisoning of British forces which English politico-military disputes (such as the Anglo-Dutch Wars) made use of throughout the seventeenth- and eighteenth-centuries.

The UK Government's Internal Market White Paper states that, as a result of "the Act of Union",[53] there was 'an immediate boost in Scottish trade, through increased links with the Baltic and elsewhere for Scottish merchants'.[54] Scotland had already been a well-connected trading nation prior to the Acts of Union, including having well-established links with the Baltic countries, which were interrupted by war.

Early modern mercantilism's economic nationalism had raised enormous tariffs on Scottish goods, impacting Scotland's continental trade. England thus became Scotland's primary trading partner, and this "growing dependence upon a single market meant that the Scots were increasingly vulnerable to the decisions made by the English, who were equally anxious to protect and develop their own economic interests; inevitably, Scotland suffered."[55] As such, when the English Parliament declared Scottish goods "alien" in 1705, enormous financial pressure was placed on Scottish trade – pressure, indeed, to acquiesce to a Union.

That Union was completed in 1707, after the English Parliament passed the Union with Scotland Act (1706) and the Scottish Parliament passed the Union with England Act (1707). Both countries had collaborated on a Treaty of Union in 1706, the articles of which ensured that all subjects of the new state, the Kingdom of Great Britain, could trade and navigate all dominions of that new Kingdom, and were to be treated as equals by all constituent nations. Importantly, Article 4 of the Treaty established a new Parliament of Great Britain, to unify the previous English and Scottish Parliaments into one legislative body representing both previously independent nations, and Welsh interests, as one unitary state.

Ireland was incorporated into the Union in 1801, after the Parliament of Great Britain and the Parliament of Ireland passed further Acts of Union in 1800; this created a new state of the United Kingdom of Great Britain and Ireland. Ireland established the Irish Free State in 1922 after a period of rebellion, war, civil war and political upheaval. Following this, the United Kingdom of Great Britain and Northern Ireland included, for much of the twentieth-century, a devolved legislature at Stormont.

Whilst this iteration of our constitutional settlement resulted in the joint Parliament of the United Kingdom, which was supposed to arbitrate and represent the economic interests of all constituent nations of the UK, in practice there have been enduring challenges in ensuring this, given the UK's inbuilt constitutional, economic and demographic imbalances. There are 650 parliamentary constituencies across the UK: of these, 59 are in Scotland, 40 are in Wales, and 18 are in Northern Ireland. Combined, these three nations return only 117 MPs to the House of Commons. England, on the other hand, has 533 constituencies, which means that English interests are almost five times more represented than the rest of the UK's nations combined. Unlike the devolved administrations, England does not have its own "English" parliament, because the Westminster Houses are in effect England's parliament. As one Scottish commentator wrote, whilst arguing for a free trade deal with England just at the cusp of the Union, "let us look forward and seriously consider what is to be done, to rectify the disorders that may have crept into the constitution, and put us out of the hazard of falling under arbitrary power."[56]

It would be inaccurate to portray the 1707 Union straightforwardly as a catalyst for a new dispensation of political harmony and ever-increasing prosperity. Indeed, there was little discernible improvement in Scotland's economic fortunes in the first decades following 1707: it was the Seven Years' War and the subsequent project of global empire that drove economic growth in Scotland during the nineteenth century.[57] This period coincides with the high water mark of what Colin Kidd has described as "banal unionism"[58]: that far from a celebrated deliverance into prosperity, for most of its existence, the 1707 Union remained unquestioned and unexamined.


Contact

Email: Eilidh.Macdonald@gov.scot