Chapter 2: Devolution, the UK and the EU
The devolution settlements: general principles
21.Within the UK constitution the Westminster Parliament is sovereign. But under the devolution settlements, certain powers are exercised by devolved administrations and their respective legislatures.
22.The way in which these powers have been devolved has evolved over time. The primary model today is the ‘reserved powers’ model. Under section 29 of the Scotland Act 19988, the Scottish Parliament may not legislate on the ‘reserved matters’ which are defined in Schedule 5. The presumption, therefore, is that the Scottish Parliament may legislate on any matter that is not explicitly reserved to Westminster.
23.In contrast, the Government of Wales Act 1998 devolved specific (and more limited) powers to the National Assembly for Wales: the presumption was that all powers not explicitly devolved remained with the UK Parliament. Only after the Silk Commission’s9 second report in 2014, implemented by means of the Wales Act 2017, did Wales follow Scotland in moving to a ‘reserved powers’ model.
24.The Northern Ireland devolution settlement, which is underpinned by the 1998 Belfast/Good Friday Agreement,10 follows a similar but not identical model. The Northern Ireland Assembly possesses full power to legislate on ‘transferred matters’, which are defined as all matters that are neither ‘excepted’ nor ‘reserved’. ‘Excepted matters’ are matters of national importance, such as defence, which can only be dealt with by the UK institutions. ‘Reserved matters’ (including a disparate range of matters such as civil aviation or financial services) generally rest with Westminster, but the Northern Ireland Assembly may legislate with the consent of the Secretary of State. Uniquely, the Northern Ireland Act 1998 also declares that “Northern Ireland in its entirety remains part of the United Kingdom”, and that it “shall not cease to be so without the consent of a majority of the people of Northern Ireland”, expressed in a referendum on Irish unification.11
25.There is thus a presumption, under all three devolution settlements, that the devolved legislatures may legislate on any matter not formally reserved to Westminster. Put starkly, this seems to imply a binary relationship between each of the devolved legislatures and the Westminster Parliament—as if the devolved legislatures are free to do anything they want, as long as it is not expressly forbidden. The reality is more complicated, for two main reasons.
26.The first complicating factor is that the three devolution settlements are framed in the context of the UK’s pre-existing EU membership, and reflect the supremacy of EU law: they reflect not a one-to-one relationship between the UK and devolved institutions, but a three-sided relationship, in which many key powers are exercised neither in Westminster, nor in Edinburgh, Cardiff and Belfast, but in Brussels. A common feature of all the devolved settlements is that the devolved legislatures are prohibited by statute from legislating contrary to EU law.12 Thus the EU has, in effect, been the glue holding together the United Kingdom’s single market. In the words of Dr Jo Hunt, Reader in Law, Cardiff University:
“Devolution post 1997, and the scope for regulatory divergence that could be there in the powers given to Scotland, Wales and Northern Ireland, have to be exercised within a framework of EU law that requires free movement of goods and persons. That does the work for the United Kingdom in its own economic union and internal markets.”13
Against this backdrop, the reservation or devolution of powers in areas such as agriculture, which may have had less significance up until 23 June 2016, will become highly significant after Brexit.
27.The second complicating factor is that, as Professor Adam Tomkins MSP, the Conservative Spokesperson for Constitutional Affairs in the Scottish Parliament, told us, there are also “shared powers”. The example he gave was of personal taxation: Schedule 5 of the Scotland Act 1998 reserves to Westminster the power to set fiscal, economic and monetary policy, including taxation rates, but this is qualified by Part 4A of the Act, as amended, which confers upon the Scottish Parliament the power to set specific ‘devolved taxes’ (including income tax). The effect, as Professor Tomkins described it, is that national insurance, income tax on non-earned income and the personal tax allowance are reserved, but “all the rates, thresholds and bands of income tax are devolved in full to the Scottish Parliament”.14
28.Such ‘shared competences’ increased substantially with the passage of the Scotland Act 2016, which implemented the recommendations of the Smith Commission,15 and the political commitments made ahead of the 2014 referendum on Scottish independence. In response, the House of Lords Constitution Committee highlighted the “increased complexities of the overlapping and shared competences that will result from the Scotland Act 2016”,16 echoing its earlier observation that “the hitherto fairly straightforward demarcation between reserved powers and those devolved to the Scottish Parliament” would be complicated by the extension of shared competences.17
29.A key feature of such ‘shared competences’ in the UK system is that they are set out in minute detail in legislation enacted by the Westminster Parliament: while powers may overlap in complex ways, there is a statutory basis for determining whether any particular exercise of devolved competences is lawful. The Westminster Parliament remains constitutionally supreme, and, as Dr Tobias Lock, Senior Lecturer, Edinburgh Law School, University of Edinburgh, reminded us, can and does set the rules: “The Scotland Act is itself subject to express repeal. If Westminster so decrees, it can do so.”18
30.‘Shared competences’, as they exist within the United Kingdom constitutional settlement, are thus very different from ‘shared competence’, as it is understood within the EU. Under EU law, the ‘principle of conferral’ means that the EU possesses only the competences conferred upon it by the treaties. Some of these competences are exclusive (such as the customs union, or the negotiation and conclusion of international trade agreements), so only the EU has the power to legislate, while others are shared between the EU and the Member States. In areas of shared competence (such as the environment, the regulation of the internal market, or agriculture) the EU may legislate, subject to the principles of subsidiarity and proportionality. Subsidiarity means that the EU legislates only where the objective cannot be sufficiently achieved by the EU Member States acting individually, but can be better achieved at EU level. Proportionality means that EU action should not go beyond what is necessary to achieve the objectives set out in the Treaties. Where these tests are met, EU law is supreme. But where the EU has not legislated the Member States are free to do so.
31.Professor Roger Scully, Professor of Political Science, Cardiff University, and acting Director of the Wales Governance Centre, argued that, underlying this different approach to shared competence, and the adherence in the UK to a highly prescriptive, binary model, was a reluctance in central Government to contemplate the sharing of sovereignty:
“There is a substantial understanding in London of the dimension of devolution that scholars would generally term self-rule … of the granting of powers to devolved Governments and Parliaments in Edinburgh, Cardiff, Northern Ireland and so on. There is very little understanding, let alone enthusiasm, for creating the dimension of what scholars call shared rule, where the individual constituent units would participate in their own right in the sharing of powers across the whole state.”19
32.Moreover, even though EU law is supreme, in many cases it takes the form of Directives, which are not directly applicable, but need to be implemented by means of national laws in the 28 Member States. Such Directives may allow Member States significant discretion: they may, for instance, set minimum standards, leaving the Member States to set higher standards if they so wish. This flexibility extends to the sub-national level: where a Directive relates to an area of devolved competence, its implementation is a matter for the devolved legislatures. Thus it is possible for, say, the National Assembly for Wales to implement EU Directives in a way that reflects the specific circumstances of Wales, which may differ from those in the other nations of the United Kingdom.
33.Finally, under the EU system of ‘shared competence’ there is an umpire, the Court of Justice of the European Union (CJEU), whose decision is final. The Court is responsible for determining not only whether EU legislative acts are lawful (whether they are consistent with the principles of conferral, subsidiarity, and proportionality), but whether the Member States (who are responsible, in turn, for the implementing acts of sub-national authorities) have implemented them properly.
34.It will be clear from this brief overview that the repatriation of powers following Brexit will have far-reaching constitutional consequences for the United Kingdom. The Prime Minister, in her Lancaster House speech on 17 January, promised “to deliver a Brexit that works for the whole of the United Kingdom”. This, she said, would mean “working very carefully to ensure that—as powers are repatriated from Brussels back to Britain—the right powers are returned to Westminster, and the right powers are passed to the devolved administrations of Scotland, Wales and Northern Ireland”. Her “guiding principle” would be “to ensure that … no new barriers to living and doing business within our own Union are created”. This would mean “maintaining the necessary common standards and frameworks for our own domestic market”.20
Conclusions
35.The devolution settlements affecting Northern Ireland, Wales and Scotland have developed incrementally and asymmetrically since 1997, as increasing powers have been conferred upon the devolved institutions over time. In the absence of any over-arching concept of ‘shared competence’, or of ‘subsidiarity’, as these are understood at EU level, these changes have been set out in a piecemeal series of Acts of Parliament, each amending its predecessors. This has led the House of Lords Constitution Committee to warn of the increasing complexity of “overlapping and shared competences”.
36.Against this backdrop, the European Union has been, in effect, part of the glue holding the United Kingdom together since 1997. The supremacy of EU law, and the interpretation of that law by the Court of Justice of the EU, have in many areas ensured consistency of legal and regulatory standards across the UK, including in devolved policy areas, such as environment, agriculture and fisheries. In practice, the UK internal market has been upheld by the rules of the EU internal market.
37.Brexit therefore presents a risk that the complex overlapping competences within the UK could become increasingly unstable. It is not for the European Union Committee to recommend answers to these essentially domestic constitutional questions. We note, however, that the UK Government, in its pre-election published statements on Brexit and on the Repeal Bill, did not address the fundamental constitutional challenges now facing the whole United Kingdom. The new Government must now do so, working in a spirit of partnership and cooperation with the devolved legislatures and governments.
8 Scotland Act 1998, section 29
9 The Commission on Devolution in Wales, established in 2011 to review the financial and constitutional arrangements in Wales, and chaired by Sir Paul Silk. See Commission on Devolution in Wales (2017): http://webarchive.nationalarchives.gov.uk/20140605075122/http://commissionondevolutioninwales.independent.gov.uk/ [accessed 22 June 2017]
10 We recognise the political sensitivities around certain phrases in the context of the politics of Northern Ireland. We have, wherever possible, sought to use what we understand to be politically neutral terminology, save where we cite evidence, where we adopt the terminology used by witnesses themselves.
12 For instance, Scotland Act 1998, section 29(2)(d)
15 The Smith Commission for further devolution of powers to the Scottish Parliament, chaired by Lord Smith of Kelvin, was established in September 2014, immediately after the Scottish independence referendum. The Smith Commission, Report of the Smith Commission for further devolution of powers to the Scottish Parliament (November 2014): http://webarchive.nationalarchives.gov.uk/20151202171017/http:/www.smith-commission.scot/wp-content/uploads/2014/11/The_Smith_Commission_Report-1.pdf [accessed 22 June 2017].
16 Constitution Committee, The Union and devolution (10th Report, Session 2015–16, HL Paper 149), para 304
17 Constitution Committee, Proposals for the devolution of further powers to Scotland (10th Report, Session 2014–15, HL Paper 145), para 20
20 Rt Hon Theresa May MP, speech on ‘The Government’s negotiating objectives for exiting the EU’, 17 January 2017: https://www.gov.uk/government/speeches/the-governments-negotiating-objectives-for-exiting-the-eu-pm-speech [accessed 12 April 2017]