42.The Government has made it clear that while it is the sole responsibility of the UK Government to trigger Article 50, the future deal with the EU will be based on consultation with all of the devolved nations and regions of the UK. It aims to negotiate a deal on the future relationship of the UK with the EU, that “secures the specific interests of Scotland, Wales and Northern Ireland as well as those of all parts of England” and “that works for the whole of the UK”. The Prime Minister stated that she would not trigger Article 50 “until I think that we have a UK approach and objectives for negotiations”. It says that it has ensured that, since the referendum, “the devolved administrations are fully engaged in our preparations to leave the EU”. Each of the three devolved administrations has published a document setting out its priorities for the negotiations, and has endorsed the Government’s commitment to ensure that they are fully engaged in developing plans for the UK’s future relationship with the EU.
43.Prior to the recent elections, the then First and Deputy First Ministers of Northern Ireland noted a number of particular concerns for Northern Ireland in a letter to the Prime Minister, stating that the full involvement and representation of Northern Ireland in negotiations on the terms of the UK’s future relationship with the EU will be “a fundamental prerequisite of a meaningful and inclusive negotiation process”. The White Paper published by the Welsh Government and Plaid Cymru supports the Government’s objective of negotiating an outcome that works for the UK as a whole and states that “We are working with the UK Government, Northern Ireland Executive and the Scottish Government with the intention of helping shape a viable and consensual UK negotiating position”.
44.The Scottish Government has adopted a different position, saying that its priority is for Scotland to maintain its current position in the European Single Market, whether or not the rest of the UK decides to leave. The First Minister has stated that the best way of achieving this would be for Scotland to become a full member of the EU as an independent country. However, the Scottish White Paper also set out two other options for meeting its objective: either through the UK as a whole remaining in the Single Market through membership of the European Economic Area; or through a differentiated deal with the EU which enabled Scotland to maintain its current position in the Single Market. This last option would require the devolution of a significant range of additional powers for Scotland.
45.The First Minister announced on 13 March that she wishes to hold a second Scottish independence referendum “within a timeframe to allow an informed choice to be made–when the terms of Brexit are clear but before the UK leaves the European Union or shortly afterwards”, citing as her reason a failure by the UK Government to respond to or engage with the Scottish Government’s proposals.
46.The Secretary of State, however, said that:
The Scottish Government have already had a detailed response [to its paper] in the meeting. One part of it that is still ongoing is the technical work that we are doing in conjunction with the Scottish Government, over their proposal for single market status for Scotland alone. That is not complete yet. I am not going to give any further commentary on how we are going to respond to that. We have done a great deal of response already.
47.Professor Nicola McEwen told us that the Scottish Government’s White Paper was “a credible proposal that merits examination. Sir Ivan Rogers told us that, although he had not gone through the Scottish Government’s proposal in detail, his instinct was that some Member States would:
be extremely worried about the precedent. You can start with Spain, but you would probably also have Belgium and Italy worried about the implications for their jurisdictions and the unity of their jurisdictions if you ever get into differentiation.
48.At this stage, there are clearly key differences in the priorities identified by the devolved administrations and the exit plan set out by the UK Government.
49.The Secretary of State said that the Government would do everything it could to ensure that the people of Scotland, Wales and Northern Ireland got a good deal from leaving the EU. There were already some areas of agreement between the UK Government and the devolved administrations, and other areas which were still being debated and where solutions were being sought.
50.The Supreme Court ruled on 24 January 2017 that the Sewel Convention did not give rise to a legally enforceable obligation and that the devolved legislatures did not have a veto on the UK’s decision to withdraw from the EU and on the process of triggering Article 50. It noted that the UK Parliament did not normally exercise its right to legislate with regard to devolved matters without the agreement of the devolved legislatures, but stated that the policing of the scope and operation of the Sewel Convention was not within the constitutional remit of the courts. However, the Supreme Court did say that the removal of the EU constraints on withdrawal from the EU Treaties will alter the competence of the devolved institutions unless new legislative constraints are introduced. In the absence of such new constraints, withdrawal from the EU will enhance the devolved competence. They also noted that they did not underestimate the importance of constitutional conventions, some of which play a fundamental role in the operation of our constitution and that the Sewel Convention was important for the “harmonious relationship” between the UK and devolved legislatures. It is not yet clear how the Sewel Convention will be engaged during the legal process of UK withdrawal from the UK, and at what stage the UK Government might seek the consent of the devolved administrations.
51.Both the proposed “Great Repeal Bill” and any amendments to the Devolution Acts will almost certainly either legislate in devolved areas or affect the competences of the devolved administrations and therefore engage the Sewel Convention. The “Great Repeal Bill” will remove the requirement for the UK as a whole to comply with EU law after exit, by repealing the European Communities Act 1972. It could also be the vehicle for the necessary removal of the requirement in each of the devolution settlements that devolved competence must be exercised in compatibility with EU law. It will also provide that existing EU law will continue to be given effect in the UK until fuller consideration can be given to the question of whether it should be replaced, amended or retained. Other legislation will also be required, and it is likely that at least some of this too will affect devolved competences.
52.The Institute of Government has claimed there would be a “full-blown constitutional crisis” unless all nations of the UK are involved in negotiations around leaving the EU. Dr Hannah White, Director of Research, Institute for Government told us that, whilst it was clear that it was for the UK Government to lead the Brexit process,
It would be almost unprecedented, given the history of what we have seen so far, for one of those legislatures to express concern and refuse to pass a legislative consent motion, and for the UK Government to go ahead. It has happened, but the basis of the constitutional settlement we have at the moment is that the UK Government take on the concerns of the legislatures.
53.The expectation of the devolved administrations is that the UK Government will need to secure legislative consent from them for the “Great Repeal Bill” and other legislation implementing UK withdrawal. Mark Drakeford said that the Welsh Government’s view was that “We certainly believe that we will need legislative consent motions [ … ] and we are beginning to see signs that we will need to take very substantial amounts of secondary legislation through the National Assembly for Wales, to regularise some of the acquis, as it is called, and make it operable.” The Welsh Government had a very early discussion of the “Great Repeal Bill” and “would wish to be more engaged in some of the detailed preparations of it.”
54.The Scottish Government has made clear that it expects the “Great Repeal Bill” to be subject to a legislative consent motion. The Secretary of State for Scotland, Rt Hon David Mundell MP, has acknowledged that the Government was likely to seek consent from the Scottish Parliament for the “Great Repeal Bill”:
given the Great Repeal Bill will both impact on the responsibilities of this Parliament and on the responsibilities of Scottish Ministers, it’s fair to anticipate that it would be the subject of a legislative consent process.
55.All three devolution settlements currently set out that the devolved competence must be exercised compatibly with EU law. The effect of this is that, for a devolved policy such as agriculture, devolved administrations have the power to legislate and determine policies, but only within the framework provided by EU legislation. The Government will need to remove this requirement, assuming there are no relevant regulatory equivalence clauses in the final deal, from the Devolution Acts when the UK leaves the EU and EU powers are repatriated to the UK. However, for some policy areas there is likely to be a need to create a new UK framework, for example so as to ensure compatibility with wider UK trade policies and to ensure that there are no new barriers to living and doing business within the UK. The policy area discussed most often in evidence was agriculture, but we were told that there would also be questions raised around fisheries, the environment, and potentially also specific parts of some other policy areas.
56.There may also be a need to define the role and responsibilities of other regional bodies. For example, the Mayor of London suggested that London would need powers and resources to enforce environmental protection regulations, and suggested that a new Environment Act would need to be drawn up to replace what the EU currently provided.
57.The UK Government’s White Paper raises the possibility that some of the EU powers for devolved policy areas could be returned to the UK Government, rather than to the devolved administrations, so that it has the ability to create a UK policy framework. It explains that:
As the powers to make these rules are repatriated to the UK from the EU, we have an opportunity to determine the level best placed to make new laws and policies on these issues, ensuring power sits closer to the people of the UK than ever before. We have already committed that no decisions currently taken by the devolved administrations will be removed from them and we will use the opportunity of bringing decision making back to the UK to ensure that more decisions are devolved.
[ … ] our guiding principle will be to ensure that—as we leave the EU—no new barriers to living and doing business within our own Union are created. We will maintain the necessary common standards and frameworks for our own domestic market, empowering the UK as an open, trading nation to strike the best trade deals around the world and protecting our common resources.
On the basis of these principles we will work with the devolved administrations on an approach to returning powers from the EU that works for the whole of the UK and reflects the interests of Scotland, Wales and Northern Ireland.
We note that the devolved settlements are based on the general principle that a subject matter falls within devolved legislative competence unless it is “reserved” to the UK government (“excepted” in the case of Northern Ireland). Matters such as agriculture and fisheries fall within devolved legislative competence.
58.Witnesses from Scotland and Wales explained that they had a clear expectation that EU competences in devolved policy areas would be allocated to the devolved administrations. The Scottish Government’s White Paper comments that leaving the EU must not result in greater concentration of powers at Westminster. Nicola McEwan, Professor of Politics, Edinburgh University, described the Government’s explanation of repatriation of competences as “ambiguous” and “an obvious source of tension as the negotiations get under way”. Professor Alan Page told us that he was surprised by suggestions that there would be a need to be flexible about which powers went where in respect of agriculture, given that agriculture is a devolved competence, and that “there was general agreement that devolved powers would remain where they are”. He suggested that a new intergovernmental decision-making process would be necessary to protect the interests of the devolved administrations, saying that:
[ … ] whilst there is a lot of emphasis on the powers that will go to Edinburgh, Cardiff and Belfast, the powers that will come to London are infinitely more significant. They are far more important. There is a real issue therefore of the protection of the position of the devolved nations in relation to decisions taken in London, which will require, at the very least, a much more thoroughgoing system of intergovernmental relations, extending possibly so far as shared decision-making.
59.From the Welsh perspective, Roger Scully, Professor of Political Science, Cardiff University, called the UK Government’s approach “a model of vagueness” and said that the wording of the White Paper could include a situation where all EU powers for agriculture were repatriated to the UK Government. This would mean that, whereas at present Wales has an opportunity to feed into the decision-making processes, in future most responsibility would be shifted from a devolved to a UK level. Mark Drakeford confirmed that the Welsh Government shared this concern:
There are matters that are devolved to the Welsh Government today, as they are devolved to Scotland and Northern Ireland, but which we choose to operationalise through our membership of the European Union. When the European Union is no longer there, those competencies are where they are today: at the devolved level. They are not free-floating or capable of being grabbed by the UK Government. They are here now. They remain here after we leave the European Union, and suggestions to the contrary are very unhelpful.
60.Mr Drakeford agreed with Professor Page’s suggestion that the participation of the devolved nations would be a necessary part of developing UK-wide policies, and that this could not be done centrally by the UK Government:
From a Welsh perspective, in agriculture, for example, we recognise freely that, without the European Union being there, we would like to come to the table in a very constructive way to shape UK-wide frameworks, so we can continue to have a UK Single Market as far as agriculture is concerned.
[ … ] However, there is a really fundamentally important point from our point of view here, which is that that has to be done by agreement. It has to be done by recognising the responsibilities that we have, and which we will want to bring to the table, to create a new set of frameworks across the United Kingdom. It cannot be done at the UK level by saying, “Actually, we are just going to take that from you, and we will tell you what the result will be”.
He believed that primary legislation would be required to change the devolution settlement for Scotland or Wales in this way.
61.Another factor to be taken into account when developing a UK framework for agriculture, is the mechanism by which devolved administrations will be able to seek to influence UK trade decisions which will have an impact on their nations. Trade deals will be a reserved matter, but may include aspects that have significant impact on one or more of the devolved nations, even if those aspects are a lower priority for the UK as a whole. Professor Morgan explained the possible problems if the UK Government were to negotiate trade deals with new partners such as Australia, New Zealand and the United States:
I see that as a big problem area, because as we move towards free trade, we will be negotiating across different sectors, and if we want people to open up their markets to our cars, for example, we might well be—erroneously, in my view—agreeing to open up our market to their agricultural produce. That type of increased competition in the short run would be devastating for Welsh farmers.
62.Scotland, Wales and Northern Ireland have all received EU funding to support areas such as agriculture, fisheries and regional development. Scotland has benefitted from both pre-allocated and competitive European funds over the last four decades and has also been successful in accessing competitive funding, including Horizon 2020 research programmes. Wales has had access to considerable funding opportunities from the EU, in particular CAP and structural funds, but also others such as Horizon 2020. Northern Ireland benefits significantly from EU funding, including regional development and social fund programmes, and funds for the community and voluntary sectors and for peace-building and cross-community programmes. It should be noted that there is a cross-border dimension to some of the EU funding for Northern Ireland and that funding programmes are overseen by the special EU Programmes Body, one of the implementation bodies established under the Good Friday Agreement. The UK Government has given some guarantees to the devolved administrations to fund projects which were signed up to prior to leaving the EU, but it is not clear exactly what funding the UK Government will give in practice and what arrangements will be made in the longer-term.
63.Mark Drakeford pointed out that Wales would have continued being a beneficiary of EU funding well after 2020, and that attention now needed to be given to questions of what would happen beyond the guarantees that the Chancellor has provided so far. Brian Morgan, Professor of Entrepreneurship, Cardiff Metropolitan University said that there was “a big worry in Wales that if [EU funds] are replaced through the Barnett formula, that would not be the best way to use the money” because of the risk that funds would not then be used for the highest priority needs. He suggested that the money should be ring-fenced for regional policies and delivered through some form of executive agency. Professor Page noted that there were questions around how UK agriculture would be funded after the UK had left the EU.
64.Other witnesses commented on the resources and skills that the devolved administrations and legislatures would need to deal with the consequences of leaving the EU. Michael Clancy, Director of Law Reform, Law Society of Scotland said that “We are about to enter an unprecedented epoch of policy development and law reform, and not only the UK Parliament but the Parliament in Edinburgh and the Assemblies in Belfast and Cardiff will have to be adequately skilled for that.” Professor Scully made similar points in relation to Wales:
I think the Assembly is being put in essentially an impossible position, being given a level of responsibility that it does not have remotely the capacity to properly fulfil. The Welsh Government, if we look at the executive side, I think are also going to be very hard-pressed because, as everyone in this room I think will know, Brexit inevitably will have many, often fundamental, implications for many areas of responsibility.
65.The Government has established a Joint Ministerial Committee for EU Negotiations (JMC (EN)) for consulting the devolved administrations on their priorities for Brexit. The role of the Committee is “to seek to agree a UK approach to, and objectives for, negotiations, and to consider proposals put forward by the devolved administrations”. The Committee met for the first time on 9 November 2016, and subsequently on 7 December, 19 January and 8 February. The planned March meeting was postponed because of the Northern Ireland elections. When we asked how the Committee would handle the conflicting aims of the devolved administrations, the Secretary of State told us that the role of the JMC (EN) would be to debate them and make a decision, saying that “we will have to resolve them as best we can in the overall national interest”.
66.Professor Michael Keating, Chair in Scottish Politics, University of Aberdeen, has suggested that consensus and “mutual understanding” will not easily be found in that Committee, saying that:
The Scottish Government has a list of demands, based on Scotland’s vote to remain and on staying within the Single Market. Wales voted No but Welsh Ministers are also concerned about market access and funding implications. Northern Ireland voted to remain and its Ministers are divided but there is consensus on keeping an ‘open border’. Yet it is clear that neither Scotland nor Northern Ireland can be in the Single Market, while the rest of the UK is outside, without creating new internal borders within the United Kingdom. It also seems, from what UK Ministers have been saying, that there is little scope for comprehensive and distinct Brexit packages for the nations and regions, nor for whole economic sectors.
67.The Scottish Government presented its paper, Scotland’s Place in Europe, at the January JMC (EN) meeting, and the Committee agreed to undertake bilateral official-level discussions on the proposals in that paper. However, Mike Russell MSP, Minister for UK Negotiations on Scotland’s Place in Europe, told us that the Scottish Government felt frustration that the devolved administrations “do not seem to be treated with either respect or concern”. In terms of the extent to which the JMC (EN) meetings had provided an effective way of involving Scotland in the Government’s planning for leaving the EU, Mr Russell told us that he had only learned that the UK planned to leave the European Single Market from listening to the Prime Minister’s Lancaster House speech, 48 hours before a JMC (EN) meeting. He said “I regret the way in which it was announced” and added that the JMC (EN) “was due to consider the matter; at least perhaps we could have been told”. He also told us that the Scottish Government had had no input into the UK Government White Paper, and had only been provided with a copy of it 40 minutes before publication, and that, as at 8 February 2017, there had been no discussion at JMC (EN) about the content of the Government’s proposed Article 50 letter. Mr Russell confirmed that the Scottish Government has received no formal reply to its position paper which has been with the UK Government since December 2016. The Committee notes that no formal response has been given as of the date of this Report.
68.From the Welsh perspective, Dr Jo Hunt, Cardiff University, pointed out that statements in the Lancaster House speech about the UK coming out of the customs union and out of the Single Market conflicted with the priorities set out in the Welsh White Paper which was published only a day or two later. Mark Drakeford said that “the JMC has so far been a frustrating experience, probably for all participants around that table” and that “to date, it has failed to give confidence to devolved administrations that [their] views are making a genuine impact on the thinking of the UK Government”. He confirmed that the Welsh Government had not had advance sight of the UK Government’s White Paper or the Prime Minister’s earlier 12-point plan before they were formally announced. However, Mr Drakeford said that there had been “a very genuine discussion” of the ideas in the Welsh White Paper at the February JMC (EN) meeting, and that there was a continuing discussion between the UK and Welsh governments. In terms of consultation about the content of the Article 50 letter, he said he would not expect it to be discussed at a JMC meeting if “it is a very short, simple, ‘triggering of a process’ letter”, but if the letter “tries to create the parameters within which those negotiations will begin, that is a very different matter”.
69.Mr Drakeford suggested “four relatively straightforward ways in which the functioning of the JMC (EN) could be improved”:
70.The Government says that it wants the deal between the UK and the EU to work for the whole of the UK, and that it will be developed with the full engagement of the devolved administrations. There are clearly significant differences in the negotiating priorities of the different parts of the UK. If the future deal is to be acceptable to the whole of the UK, then these differences will need to be discussed, negotiated and common ground agreed upon. Differing priorities reflect, in part, differences in the economies and demography of different parts of the UK. The Government must ensure that it understands these differences and takes them into account when it begins its negotiations with the EU.
71.We recommend that the UK Government respond formally to the Welsh, Scottish and Northern Ireland legislatures regarding each of their options papers. It must do so as a matter of urgency given that negotiations to leave the EU will start imminently.
72.The legislation required to implement the UK’s exit from the EU will affect the competences of the devolved administrations and it is expected that it will require their legislative consent. We note the Supreme Court’s statement that “the Sewel Convention has an important role in facilitating harmonious relationships between the UK and devolved legislatures.” The devolved administrations will require adequate time to conduct the appropriate scrutiny and consultation required before consent can be given. It is likely that the devolved administrations will need to pass their own additional legislation, in turn requiring time for proper consideration in the devolved legislatures. The Government will need to take account of the timescales of the devolved legislatures in its planning.
73.The repatriation of EU powers to the UK raises questions about how the framework for devolved policy areas will evolve. The Welsh and Scottish governments are clear that any future UK framework for devolved policies should be a matter for consultation and intergovernmental negotiations. Notwithstanding the Government’s commitment that “no decisions currently taken by the devolved administrations will be removed from them”, the devolved administrations will be looking to ensure that legislative competences which are currently held by the EU which relate to matters which have been devolved are repatriated as devolved competences.
74.The Government has established a Joint Ministerial Committee for EU Negotiations (JMC (EN)) for consulting the devolved administrations on their priorities for Brexit and it aims to use this forum to agree a UK approach to, and objectives for, negotiations, and to consider proposals put forward by the devolved administrations. The evidence we heard indicated that these meetings have not been effective from the point of view of the devolved administrations. The Government must establish a more effective process for engaging the devolved administrations in developing the UK’s negotiating position. If the Government’s asserted wish to fully engage the devolved administrations is to be credible, it must share more information and discuss options before decisions are reached. A successful exit from the EU will be measured not just in terms of achieving a good deal with the EU but also whether it “works for the whole of the UK”.
75.Gibraltar is the only UK Overseas Territory that is also a member of the EU. It joined the then-European Economic Community along with the rest of the United Kingdom, under what is now Article 355(3) TFEU which declares that “The provisions of the Treaties shall apply to the European territories for whose external relations a Member State is responsible”. However, Gibraltar is exempt from several aspects of the Treaties, including the customs union, the Common Commercial Policy and the Common Agricultural Policy. Like the rest of the UK, Gibraltar is also exempt from the single currency and the Schengen area. In recognition of Gibraltar’s unique position, the Government has established a Joint Ministerial Council (Gibraltar EU Negotiations) as a forum bringing together the UK Government and the Government of Gibraltar to discuss specific issues relating to Gibraltar.
76.In the referendum, 96 per cent of the Gibraltarian electorate voted in favour of remaining in the EU. The Chief Minister of Gibraltar, the Hon. Fabian Picardo QC MP, told us that:
the people of Gibraltar did not vote on the basis of whether we liked the European Union or whether the European Union was faultless. I think we could all understand many of the issues that were being put in argument by those who were arguing to leave the European Union. Many of the frustrations that people felt with the European Union are equally felt in Gibraltar, as they might be felt in the United Kingdom and elsewhere throughout the EU. The people of Gibraltar were voting because we were very clear that the minute the result came in, if it was to leave, Spain would be putting the issue of Gibraltar’s sovereignty on the table.
77.Despite the results of the vote in Gibraltar, the Chief Minister told us that Gibraltar would be unwilling to trade British sovereignty for continuing access to the EU. He said:
The view in Gibraltar held almost unanimously to a man, woman and child is that Brexit does not represent any change whatever in Gibraltar’s attitude to continued perpetual British sovereignty over the Rock in partnership with the people of Gibraltar. I have seen it said just this week in the Spanish press that they consider the offer of joint sovereignty to Gibraltar to be a generous offer that would allow us to remain in the European Union through Spain. Well, the people of Gibraltar left the referendum on leaving or remaining in the European Union behind them on the 24 June. We are not looking to remain in the European Union and be partly Spanish.
78.Gibraltar’s Government has expressed particular concern about the prospect of Spain raising the issue of sovereignty over Gibraltar as part of the Brexit negotiations. In written evidence to this Committee, the Government of Gibraltar said:
There is a risk that Spain will raise the Gibraltar question in its preliminary internal discussions with the other Member States as they seek to agree a common position for the EU/UK negotiations. Indeed, the previous acting Spanish Foreign Minister has written to all the other EU capitals in order to put across his views on shared sovereignty over Gibraltar, as the price to pay for maintaining a relationship with the EU.
Spain cannot be allowed to use her obsession with Gibraltar as a bargaining chip in the negotiations between the UK and the EU. However, it is important to be aware that this is an unnecessary and opportunistic challenge that the negotiating process may face.
79.In addition to the sovereignty question, the Chief Minister raised particular concerns around preserving a relatively free-flowing land border. Since Gibraltar is not in Schengen or the customs union, it already has what its Chief Minister called a “hard frontier” with Spain, with customs and ID checks—but one that allows for between 10,000 and 14,000 workers to cross from Spain to their jobs in Gibraltar, and back, every day. According to the Chief Minister, when Spain co-operates, the border functions “in an absolutely fluid fashion that does not interfere with anybody’s life and enables people to move across that frontier, and goods to move across that frontier, without more control than is necessary”. He told us that those workers, and the industries that employ them:
[ … ] will have the challenge of wanting to ensure that those of their key workers who live in Spain are able to continue to access their workplaces every day, even if by being British they become non-EU citizens resident within the EU, coming out of the EU every day and then going back every evening.
80.The Chief Minister also said that Gibraltar was keen to retain as much access as possible to the EU’s services market. He noted that about 90 per cent of Gibraltarian services are sold into the UK market, with the rest going to the EU27. He told us:
We still consider that access to the single market is hugely important for us. You ask anybody whether they are prepared to lop off 10 per cent of their business and obviously they will say that they don’t want to do that, and of course some who are established in Gibraltar selling services into the United Kingdom are also established there to sell services into the rest of the single market. If they lose that, they may look at somewhere else that they may be able to establish themselves to sell their services into the single market.
81.In general, the Chief Minister was optimistic about Gibraltar’s prospects, and the ability and willingness of the UK to find solutions to Gibraltar’s particular concerns. He told us:
The Prime Minister has skilfully set out the 12 headings of the areas that the United Kingdom is going to be seeking to negotiate on. As I told you before, I do not think that any of those contradict the key issues for Gibraltar. I sincerely believe that you will be able to discern from what I am telling you that the only potential issue is whether Spain might like to use the opportunity to restrict somehow Gibraltar’s access to those parts of the European Union that the United Kingdom might have access to in services in the future under a new deal.
Literally, this is about Spain singling out Gibraltar and seeking to exclude Gibraltar either throughout the process or at the last minute. That is the biggest concern that I have; I have no concerns that anything I have heard the Prime Minister say would have a seriously detrimental effect on Gibraltar’s operating model going forward, given that there is good will on the other side of the negotiating table, and I do not identify anything that suggests that anyone is coming at this with any bad faith in respect of Gibraltar, other than the issue that I have highlighted of Spain’s attitude.
82.The Chief Minister also expressed confidence that Gibraltar’s concerns were being heard by the UK Government:
The United Kingdom has been clear that it stands steadfastly with the people of Gibraltar in our right of self-determination and to remain British entirely, if we wish to do so. The Foreign Secretary was, as usual, very clear in the way that he expressed the need for Britain to be seen to be in marmoreal support of the people of Gibraltar. He left no room for doubt about what the British Government’s position is going to be.
Later, he added that he had faith in the Prime Minister’s willingness and ability to defend Gibraltar’s interests:
As long as the United Kingdom has the stomach to take Spain on and to play the aces that it has up its sleeve in the context of that negotiation, there will be no issue. Having worked with Theresa May when she was in the Home Office, and having seen her on the day that she became Prime Minister, when she gave Gibraltar an hour of her time, I can tell you that I have absolutely no concerns whatever about her having the stomach for this fight. She will stand by the people of Gibraltar.
83.We welcome the UK Government’s recognition of Gibraltar’s specific concerns, expressed in the White Paper and through the establishment of the Joint Ministerial Council (Gibraltar EU Negotiations). We were encouraged by the Chief Minister’s confidence that Gibraltar’s views were being heard and that the UK Government would find solutions to the challenges that leaving the EU presents for Gibraltar. This will be very important to avoid any damaging consequences for Gibraltar. We encourage the UK Government to maintain a high level of dialogue and engagement with the Government of Gibraltar throughout the Article 50 negotiation process.
84.The Government’s White Paper includes the objective of maintaining the UK’s strong links with Ireland and comments that the relationship between the two countries has never been better or more settled. The Prime Minister visited Dublin in January 2017 and both the Chancellor and the Secretary of State for Northern Ireland have visited Dublin in 2017. The Secretary of State for Exiting the EU told us that there had been many other meetings between Irish and UK Ministers and senior officials since the referendum.
85.The Government notes that the UK and Irish economies are deeply integrated, through trade and cross-border investments, as well as the free flow of goods, utilities, services and people. It estimates that annual trade between the UK and Ireland stands at over £43 billion, while around 60 per cent of Northern Ireland’s goods exports to the EU are to Ireland. Ireland experienced rapid economic growth from the early 1990s, but went through a severe recession from late 2007. After receiving EU and IMF funding, the Irish economy is now recovering and is currently Europe’s fastest growing economy. Ireland remains the UK’s fourth largest export market in the EU and fifth largest in the world (after the US, Germany, Netherlands and France).
86.We discussed these strong economic ties with Irish politicians whom we met on our visit to Dublin on 23 February 2017. During that visit we had informal meetings with members of the Oireachtas Committees for Foreign Affairs, European Affairs and Implementation of the Good Friday Agreement; with Frances Fitzgerald TD, Tánaiste and Minister for Justice, Dara Murphy, Minister for Europe and Data Protection; Michael Creed, Minister for Agriculture as well as business representatives.
87.We were told on our visit of the profound regret in Ireland that Brexit was going to happen but a determination that strong business and trade links should continue and that the UK should retain a close relationship with the EU. However, we were told of concern that the Government’s plan for the UK to leave the Single Market and the customs union would hit trade and jobs in Ireland, and that Brexit represented Ireland’s biggest economic challenge for many years.
88.A particular area of concern in Ireland was the likely return of customs checks at the border with Northern Ireland, and their implications for the movement of goods throughout the island of Ireland once the UK has left the customs union. Much of Ireland’s business, particularly its agri-food sector, was closely integrated between north and south, and operated on the basis of seamless cross border movement; several business and political leaders told us that over a million litres of milk crossed the border in both directions each day. There was a fear that any customs requirements would introduce costs and delays and disrupt this business.
89.The UK Government’s aspiration for a “seamless and frictionless” border was welcomed, but neither politicians nor business leaders that we met were optimistic about this being achieved in practice. Ireland will have obligations as an EU Member State to protect the EU border with a third country, and the people that we met were sceptical that a solution would be found that would not resemble the re-emergence of a hard border but would be acceptable to the EU27 as the Northern Ireland border became one of the EU’s external borders.
90.Another concern for Ireland is the potential change to its trading relationship with the UK. Firstly, in the event of no UK–EU deal, the UK would revert to trading on WTO terms, which would include the imposition of tariffs. Whilst the average EU tariff under WTO terms is only 3.5 per cent, the tariffs on dairy and agricultural produce are substantially higher. The Secretary of State confirmed in evidence to us that producers of dairy and meat produce on either side of the border would be facing tariffs of 30 per cent to 40 per cent in cross-border trade. We were told that failure to reach a deal on tariffs with the EU would be “mutually assured damage and destruction”. Concerns about the potential for disruption of trade between the Republic of Ireland and the UK were raised during our visit to Swansea. There could also be implications for trade in goods exported from the Republic of Ireland to the rest of the EU that transit the UK.
91.Secondly, much of the ambition behind the decision of the UK to leave the EU was to secure new trade deals with other countries, and there was a concern expressed to us in Dublin that new trading partners could take the place of Ireland in some of the UK’s existing import markets. For example, Irish beef products could lose out to cheaper products, subject to fewer environmental and health controls, for example from the USA or South America. A big decrease in Irish beef exports to the UK, and similar instability in other sectors, could have a serious and negative impact on the Irish economy, which Irish politicians believed they would have little scope to offset.
92.We were also told that the future of the energy market in Northern Ireland and the Republic would need careful monitoring, and that longer term planning would be necessary to ensure that any UK divergence from EU policy, or any threats to long term investment, did not put future energy supply at risk. Security of energy supply was one of the five Brexit priorities for Northern Ireland, identified by the then First Minister and Deputy First Minister of Northern Ireland in their letter to the Prime Minister. In that letter, the Ministers pointed out that energy supply is vital to the economy, but Northern Ireland is a small, isolated market, and so has inherent cost and supply challenges. In its report on Northern Ireland and the EU referendum, the Northern Ireland Affairs Committee judged that whilst Brexit need not necessarily have an immediate detrimental impact on the existing Northern Ireland electricity sector, problems could arise in the longer term if the UK did not continue to participate in electricity market integration.
93.The House of Lords EU Committee also examined this issue in its report Brexit: UK–Irish relations. John Bruton, former Taoiseach, in evidence to the Committee, pointed out that the Republic of Ireland was a net importer of electricity from the UK. If the UK were to leave the European internal energy market then Ireland’s energy security could be put at risk, potentially forcing Ireland to invest in a direct connection to the EU grid, at substantial cost.
94.One of the Government’s key objectives on leaving the EU is to exercise greater control over the number of EU migrants coming to work and settle in the UK. However, the UK has a particularly close relationship with Ireland, and there are specific factors relating to the movement of people across the border between Ireland and the UK. The Government notes that “for the people of Northern Ireland and Ireland, the ability to move freely across the border is an essential part of daily life”.
95.The Common Travel Area (CTA) is a special travel zone for the movement of people between the UK, Ireland, the Isle of Man and the Channel Islands. The Government notes that it was formed long before the UK and Ireland were members of the EU and that it is committed to protecting this arrangement:
Protocol 22 of the EU Treaties provides that the UK and Ireland may continue to make arrangements between themselves relating to the movement of people within the CTA. Nationals of CTA members can travel freely within the CTA to the UK without being subject to routine passport controls.
[ … ] We want to protect the ability to move freely between the UK and Ireland, north–south and east–west, recognising the special importance of this to people in their daily lives. We will work with the Northern Ireland Executive, the Irish Government and the Crown Dependencies to deliver a practical solution that allows for the maintenance of the CTA, while protecting the integrity of the UK’s immigration system.
96.In addition, UK and Irish citizens have reciprocal rights to live and work in each other’s countries which are underpinned by domestic law. In addition, under the Good Friday Agreement, the people of Northern Ireland have the right to identify as British, Irish or both, and to claim citizenship accordingly. Those who claim Irish citizenship would, by extension, be able to claim EU citizenship.
97.David Anderson QC has suggested that, whilst the CTA has been in existence for some time, it has depended for its survival on significant policy coordination and practical cooperation between the UK and Ireland where non-UK and Irish nationals are concerned. He contends that, where EU nationals are concerned, the free movement rules in the Treaty have rendered such coordination largely automatic, but this will change after Brexit if the UK wishes to impose barriers to the entry of non-Irish EU citizens. He argues that the options of introducing immigration checks at either the border between the Republic of Ireland and Northern Ireland or between Northern Ireland and Great Britain are unlikely to be acceptable, in which case it would be necessary to resort to in-country immigration checks, possibly involving the cooperation of employers, landlords, medical and educational professionals.
98.The Irish politicians that we met in Dublin, told us that the current freedom of movement arrangements between Ireland and the UK were particularly important for those people living and working close to the border, and to businesses which operated on both sides of the border. They said that about 50,000 people crossed the border every day and that freedom of movement had been a key factor in promoting social, cultural and economic equality throughout the island of Ireland.
99.There was a clear desire to maintain cooperation on cross-border movement and policing and security issues but data protection restrictions on data sharing would require resolution once the UK was no longer subject to the relevant EU agreements. Transitional arrangements would also be likely to be required as we were unequivocally told that bespoke arrangements could not be put in place within the two-year Article 50 timescale.
100.The Secretary of State said that as far as he was concerned, maintaining the CTA was “non-negotiable”: it was the Government’s intention to maintain the CTA and he did not foresee this being a problem.
101.The Government’s White Paper does not specifically mention the peace process, other than to say that “no one wants to see a return to the borders of the past”, that “for the people of Northern Ireland and Ireland, the ability to move freely across the border is an essential part of daily life” and that the Government’s work on EU exit will “ensure that full account is taken of the particular circumstances of Northern Ireland”.
102.The UK and Irish Governments are co-guarantors of the Good Friday Agreement which refers to them both as “partners in the European Union”. During the process of resolving the conflict in Northern Ireland, both the Republic of Ireland and the UK were members of the EU, and the status of the two countries’ shared common membership of the EU is reflected throughout the Good Friday Agreement.
103.The issue of whether the Good Friday Agreement could be a legal obstacle to Northern Ireland’s exit from the EU was considered by the Supreme Court which ruled in January 2017 that: (a) withdrawal from the EU was a matter for the United Kingdom Government; (b) that the Northern Ireland Assembly (like the other devolved legislatures) did not have a parallel legislative competence in relation to the withdrawal from the European Union; and (c) that the Belfast Agreement gave the people of Northern Ireland the right to determine whether to remain part of the United Kingdom or to become part of a united Ireland. The Supreme Court held that the Agreement neither regulated any other change in the constitutional status of Northern Ireland nor required the consent of the majority of the people of Northern Ireland to the withdrawal of the UK from the EU. The latter point has raised the question as to whether any future exercise of the consent provisions of the Agreement in respect of a united Ireland would clearly and automatically guarantee its return to the EU in that context. We note the Taoiseach’s statement in Brussels on 23 February 2017 regarding the Irish Government’s concern to see this matter reflected in any new UK–EU agreement. The Secretary of State has said:
As is clearly set out in the Belfast Agreement, if a majority of the people of Northern Ireland were ever to vote to become part of a united Ireland, the UK Government will honour its commitment in the Belfast Agreement to enable that to happen. In that event, Northern Ireland would be in a position of becoming part of an existing EU Member State, rather than seeking to join the EU as a new independent state.
104.We were told in Dublin that since the peace agreement, life had improved in both the north and the south, but creating any new barriers at the border would represent a backward step, and could act as a “lightning rod” for dissidents and renewed violence. In the view of some we met, any border posts or physical control points could become a target, and the potential for the re-emergence of violence should not be underestimated. At present, the North–South policing arrangements were working very well; there was very successful cooperation and good relations and data sharing in an international European context, and Ireland was committed to continuing them but details would need time to work out.
105.There was a perception in Dublin that the UK Government was saying that it understood the importance of a “seamless and frictionless border” but was, meanwhile, setting out a strategy for leaving the EU which would inevitably require a border presence.
106.The Oireachtas EU Committee has met Michel Barnier and other EU representatives, and members told us that Mr Barnier “largely understood” Ireland’s concerns about the peace process. The Secretary of State for Exiting the EU also told us that Michel Barnier has “a strong emotional investment in the Northern Irish peace process”. He also reiterated the Government’s commitment to the Good Friday/Belfast Agreement and the Common Travel Area. We note that when offered the suggestion that the UK Government might indicate early in the Article 50 discussions that both the Belfast Agreement and the Common Travel Area should be named features in the “framework for future relationship” between the EU and the UK, he described this as “a good idea”. We encourage him to give further positive consideration to this suggestion.
107.Members of the Oireachtas EU Committee told us that, notwithstanding Michel Barnier’s personal sensitivity to the Northern Ireland peace process and the Belfast Agreement, a bilateral agreement between the UK and Ireland was unlikely to be acceptable to the EU Commission. We understand the sensitivities about any perception of the Irish Government negotiating separately from the EU27 in this whole process. However it would still be important to work together to identify options, given the facts of the Belfast Agreement, the Common Travel Area and the detailed issues at stake. The British–Irish Intergovernmental Conference might be considered as an established means of enabling appropriate and relevant dialogue, respecting the shared interests and responsibilities of both governments while also fully respecting the character of negotiations between the UK and the EU27.
108.The Secretary of State for Exiting the EU told us that “there is a border there now and there are excise duty differences across the border, which are collected and which are dealt with, but they are dealt with in a subtle and not highly visible way”. He explained that the Government would not do anything which might jeopardise the peace process and was well aware of the significance of the border. The Government is looking in detail at how it could use trusted trader electronic systems and other technology to make any additional checks as swift and transparent as possible. For example, one option it was looking at was extending the authorised economic operators scheme to smaller companies, so that fewer border crossings would be subject to a physical inspection. The Secretary of State was confident that Ireland, the UK and the EU would resolve these issues because each had a strong commitment to do so and understood the importance of what was at stake.
109.The UK and Irish economies are deeply integrated and mutually important. Disruption to the Irish economy would not only be damaging for Ireland itself, but would have consequential effects on the economy in Northern Ireland and the rest of the UK. Were the UK to exit the EU without a deal on tariff-free trade, the impact on the agri-food industry on both sides of the border in Ireland would be extremely serious and damaging.
110.The UK has deep and close historical, economic and cultural ties with the Republic of Ireland. The Government has a responsibility to consider how its future relationship with the EU will affect both Northern Ireland and the Republic. Politicians and businesses we met in Dublin were concerned about the UK’s future trading relationship with Ireland and the impact on trade of the re-introduction of customs checks on cross-border trade. Maintaining freedom of movement throughout the island of Ireland and the wider UK is also extremely important, both for many businesses and for many UK and Irish citizens. The border between Northern Ireland and the Republic will become one of the EU’s external borders when the UK leaves the EU. Ensuring that this change does not disrupt flows of trade and people will be a complex challenge.
111.Cross-border cooperation in combating crime is highly valued by both the UK and Irish Governments. With goodwill on both sides, it should be possible to work out a way of ensuring that this cooperation can continue. However, the Irish Government does not see this as a straightforward task and some arrangement would need to be reached to ensure that cooperation can continue the day after the UK leaves the EU even if no permanent deal had yet been reached.
112.It is important to ensure that in implementing Brexit everything is done to maintain and build upon the considerable progress made as a result of the peace process. The Good Friday Agreement was not just a single event but was a critical step in the normalisation of social and economic relations over a period of time. Many in Ireland are deeply concerned that the introduction of new and visible border check points would provide an opportunity and focal point for those who wish to disrupt the peace and feed a sense in some communities that the Good Friday Agreement was being undermined. Irish politicians welcome the Government’s aspiration of maintaining a seamless border, but, at present, do not understand how this can be achieved in practice, given the obligations which Ireland will have as an EU Member State bordering a third country. With the goodwill that currently exists on both sides of the border, we hope that a mutually acceptable solution can be found. This must be at the top of the list of the Government’s negotiating objectives.
41 The then First and Deputy First Ministers of Northern Ireland wrote to the Prime Minister on , setting out the priorities for Northern Ireland. The Scottish Government published its paper, , on 20 December 2016. The First Minister of Wales, Carwyn Jones, and leader of Plaid Cymru, Leanne Wood, published on 23 January 2017.
42 Letter from the then First and Deputy First Ministers of Northern Ireland to the Prime Minister.
44 “Referendum must be ‘made in Scotland’”, Scottish Government , 14 March 2017
45 “”, The Guardian, 13 March 2017
50 R (on the application of Miller and another) v Secretary of State for Exiting the European Union ,
51 R (on the application of Miller and another) v Secretary of State for Exiting the European Union , paras 130 and 151
52 “”, The Guardian, 24 October 2016, see also Institute for Government, , 24 October 2016
56 Scottish Government, December 2016, para 176
57 “”, BBC News, 26 January 2017
61 , section 29; , section 6; and (as amended by the Wales Act 2017), section 108A
78 , p.17
80 “” The UK in a changing Europe, 4 November 2016
81 , p18
94 The Committee also notes the response to the White Paper published by the Mayor of London, “”, March 2017
95 Treaty on the Functioning of the European Union,
97 HM Government of Gibraltar () Introduction
100 HM Government of Gibraltar () “Issues with Spain”
109 Foreign and Commonwealth Office Country Snapshot: Ireland, 22 February 2017
111 See Annex 6
112 Northern Ireland Affairs Committee, First Report of Session of 2016–17, , HC 48, para 98
113 , para 4.4
114 , p22
115 “”, Brexit Law Blog, 9 January 2017
116 Qq1437–1438, Q1471
117 Letter from the Secretary of State to Mark Durkan MP, 20 March 2017
3 April 2017