Chapter Four: Further Devolution and the Constitutional Consequences of Brexit
172. In this chapter we demonstrate that a consequence of the EU referendum is the need for a fundamental review of the UK's constitutional arrangements and the powers of the Scottish Parliament to avoid excessive concentration of power at Westminster. As part of this, further devolution will be necessary to ensure that Scotland can meet the requirements of the differentiated position we have set out. The chapter covers:
a) Matters which are no longer subject to EU law and that currently sit within Scottish Parliament competence, for instance agriculture, fisheries and education. These must remain the responsibility of the Scottish Parliament.
b) Other areas of EU competence where devolution would allow the Scottish Parliament to protect key rights, for example employment law, and health and safety.
c) The need for devolution, beyond areas of "repatriated" EU competence, to protect Scotland's interests, including those necessary to support the differentiated solutions for Scotland proposed in this paper, for example through powers over immigration or to conclude international agreements.
173. Whatever the final terms of the UK's exit from the EU, the effect on Scotland's constitutional position will be profound. The Scottish Parliament was established in 1999 to enable the government and laws of Scotland to reflect the values, needs and priorities of the people of Scotland in a context underpinned by EU law. As a result of the EU referendum the assumptions underlying devolution no longer hold  . The economic, social and democratic benefits that Scotland enjoys as a result of its place in the EU are all now at risk. A fundamental reconsideration of the UK's constitutional arrangements is therefore required  . As part of this, the powers of the Scottish Parliament need to be increased not just to give effect to the new relationship with Europe set out earlier in this paper, but also to enable it to protect Scotland's interests in a context where the protection provided by EU law has been removed.
174. The Scottish Government continues to believe that independence offers the best long-term future for Scotland. If we were an independent country we would not be facing the prospect of being taken out of the EU against our will. However, Scotland will only become independent when a majority of people in Scotland choose that future in a democratic referendum. The proposals in this paper reflect the mandate given to the Scottish Government by the Scottish Parliament in the days following the EU referendum to explore all options for protecting our relationship with the EU.
175. Our starting point is that it is the sovereign right of the Scottish people, in the words of the Claim of Right, " to determine the form of government best suited to their needs"  and that it should be for the Scottish Parliament to represent their views. While we believe that many of the considerations set out below will have resonance in other parts of the UK, the governance and constitutional arrangements of England, Wales and Northern Ireland are matters for the people of those countries.
176. If Scotland is to remain part of the UK, we need to look at three broad categories of powers:
a) "Repatriated" competences in devolved areas. Matters no longer subject to EU law are the responsibility of the Scottish Parliament where they concern devolved areas such as agriculture, fisheries, education, health, justice and environmental protection. In these areas decisions on the replacement of the rights and protections provided by EU law to Scottish citizens will be for the Scottish Parliament. There must be no attempt to reserve these matters, which would in any case require the consent of the Scottish Parliament. Exit from the EU must not result in centralisation of control at Westminster. Any provisions in the UK Government's so-called "Great Repeal Bill" about matters within devolved competence, or altering the competence of the Scottish Parliament or Government, will also require the consent of the Scottish Parliament.
b) "Repatriated" competences in reserved area. Matters no longer subject to EU law which are not within current devolved competence should be devolved to enable the Scottish Parliament to protect citizens' rights. These should include areas such as employment law and health and safety legislation.
c) Additional powers to protect Scotland's interests. Beyond repatriated powers, the current division of responsibilities between the Scottish Parliament and Westminster must be reconsidered to reflect the change that will be effected to the UK's constitutional settlement by leaving the EU. New powers to secure any differentiated relationship with Europe should be part of this, but additional devolution is necessary in any case to ensure that the Parliament is able to protect Scotland's interests in this new context.
177. The rest of this chapter considers these issues in more detail. As a number of commentators have observed  , they point to the need for a fundamental reconsideration of the nature of the UK state, with different relationships between its constituent parts as well as changes to the detail of their powers.
Devolved powers and the replacement of EU law
178. EU law affects devolved areas through the rights, freedoms and duties that flow from the EU treaties and through EU legislation (directives and regulations). Under the Scotland Act 1998, the Scottish Parliament and Government are responsible for implementing EU law where it applies within devolved competence, for example by designing and passing the Scottish laws to put EU legislation into effect.
179. If Scotland remains in a UK outside the EU, it will be for the Scottish Parliament and Government to put in place the laws and administrative systems to replace EU law in devolved areas. Any proposal to take back powers from Scotland to the UK Parliament and Government on leaving the EU would require the consent of the Scottish Parliament under the Sewel Convention  and the Scottish Government would not recommend consent  . Where there may be a need to devise a cross-border framework within the UK to replace that provided by EU law, for example in relation to animal health, that should be a matter for negotiation and agreement between the governments concerned, not for imposition from Westminster.
180. Some of the major devolved areas that will be affected include:
a) Agriculture, food and drink , in areas covered by the EU Common Agricultural Policy and EU law on food and drink, animal health and welfare, plant health, seeds, potatoes, pesticides and genetically modified organisms.
b) Fisheries, aquaculture and the marine environment , which are subject to the EU Common Fisheries Policy and marine environment and planning laws.
c) Environmental protection , including laws on pollution, waste and recycling.
d) Civil law , in areas such as family law where the institutional and administrative arrangements which currently shape Scottish and European co-operation risk being undermined by the UK leaving the EU.
e) Criminal law and law enforcement , particularly in relation to information sharing and co-operation, the European Arrest Warrant, prisoner-transfer agreements and counter-terrorism measures.
f) Health , where for example protections afforded under the European Health Insurance Card scheme are at risk.
g) Higher education and research , where Scotland has benefited from EU mechanisms for collaboration and funding.
181. Across the UK, dealing with the legal and policy consequences of leaving the EU will be a major undertaking. The UK Government has announced a "Great Repeal Bill" intended to address these issues, at least initially. The Scottish Government will discuss the plans with the UK Government as they develop, in line with well-established practice for Westminster legislation  . If, in the light of that and our discussions on the proposals in this paper, the Scottish Government agrees that the Bill should include areas within devolved competence or changes to the powers of the Scottish Parliament or Scottish Minsters, the legislative consent of the Parliament will need to be sought in the normal way. The alternative would be to legislate for these matters in the Scottish Parliament.
Devolution to protect key rights
182. The implications of "repatriation" of EU competences also need to be considered for matters not currently devolved to the Scottish Parliament. In these areas, as in those already mentioned, key rights and protections under EU law will be removed. Devolution of additional responsibilities to the Scottish Parliament would enable it to reflect Scottish priorities in safeguarding and enhancing the rights of people in Scotland. Key areas where additional devolution should be considered in this context include:
a) employment law, including that on trade union rights
c) health and safety at work
d) consumer protection.
183. In these areas, too, the UK Government and the Devolved Administrations would need to work together to consider proposals for UK-wide frameworks, whether the matters to be covered are formally reserved in a country's devolution settlement or not, to ensure they meet each country's priorities and needs, or to allow administrations to make other national arrangements where appropriate.
Additional powers to protect Scotland's interests
184. The need for further devolution and a reshaping of the UK constitution goes beyond repatriated powers. The UK's current constitutional arrangements are rooted in membership of the EU. The EU is a source of laws, policy and funding based on decisions agreed between 28 countries. Leaving the EU requires a rethinking of the nature of the UK as a state to ensure an appropriate balance of balance of powers and responsibilities to replace that previously shaped with reference to EU law and institutions, and to avoid a further concentration of power at Westminster. This needs to cover both the devolution of powers, and the arrangements for devolved institutions to have a say in decisions on reserved matters affecting the countries concerned  .
185. Our proposals for a differentiated relationship for Scotland with the EU would require the Scottish Parliament to have a range of new powers, but additional devolution is needed in any case to enable the Parliament to protect Scotland's key interests in relation to the economy, democracy, social protection, solidarity and influence that we set out in this paper. For example, powers over immigration are increasingly vital for the protection of Scotland's interests. Indeed, there is a growing view in different parts of the UK, for example London, that a one-size-fits-all approach to immigration is no longer appropriate.
186. Key areas to be considered for further devolution should include:
Freedom of movement of people, goods, services and capital . There will need to be arrangements to enable Scottish law and regulatory regimes to be consistent with the requirements of the European Single Market, and to protect Scotland's economic, social protection and solidarity interests. The main areas in which there will need to be additional devolution, or arrangements to secure flexibility in reserved policies, include:
a) import and export control
c) competition, product standards and intellectual property
d) company law and insolvency
e) social security, including to enable reciprocal arrangements with other states
f) professional regulation (for example to enable recognition of professional qualifications)
g) energy regulation
h) financial services, telecommunications, postal services and reserved aspects of transport.
187. International engagement. The Scottish Government will need to take part in trade negotiations that impact on devolved competences. It will also need the ability to speak in international forums and to secure agreements with other countries. This could be achieved either through an arrangement with UK Government or by virtue of an independent international legal personality. To a significant extent the co‑operation that Scotland will need to develop with other countries will be concerned with existing devolved areas, such as such as research, education and training and environmental policy. However, it will also need to encompass currently reserved matters listed above.
188. The exact approach to ensuring that the Scottish Parliament and Government have the necessary powers will need detailed consideration and a constructive approach from both the UK and Scottish Governments.
189. Consideration of the constitutional implications of the UK leaving the EU must take place as part of the overall process now under way. The Scottish Government will pursue these proposals in its current discussions with the other Devolved Administrations and other interested bodies, such at the London Assembly, and in negotiations with the UK Government.