Regulation after Brexit in Scotland and Wales

October 6 2023, by Michael Keating FRSE

While the United Kingdom was a member of the EU, a number of regulatory competences were shared between the EU and devolved authorities. Where these should go after Brexit has been a matter of political contention. Attempts to centralise at UK level were successfully resisted but tensions remain. The UK Government wishes to make its own regulations while the Scottish Government has taken powers to maintain dynamic alignment with European rules. Common Frameworks dealing with shared competencies are inconsistent and work best with technical matters. The UK Internal Market Act* and legislation on subsidy control undermines the regulatory autonomy of Scotland and Wales.

Devolution and regulation

The devolution settlement created a fairly clear division of competences between the UK and devolved governments. Westminster can legislate in devolved matters but, under the Sewel Convention, will not ‘normally’ do so without the consent of the devolved legislatures. Statutory instruments are not generally subject to a consent provision but a several provisions on these have been inserted into post-Brexit legislation.

The devolved institutions of Scotland have wide regulatory responsibilities, including matters that, before Brexit, were subject to EU rules. The main relevant areas are: Agriculture, including sanitary and phytosanitary rules; Fisheries; Environment; and Professional qualifications but there are others. In these areas, Scotland had the same discretion to shape policy within EU directives as did Member States. In addition, the transversal rules of the single internal market and competition policy impinged on devolved powers.

In these fields, common standards across the United Kingdom were ensured by European, rather than domestic, provisions. The question that arose after Brexit was what would happen to these competences and how would necessary harmonisation be maintained.

Legislative measures

The first draft of the EU Withdrawal Bill proposed to take all EU competences back to Westminster, with powers then ‘released’ back to the devolved bodies where appropriate. The argument was that, because these were EU competences at the time of devolution, they were never devolved. The devolved governments insisted that, because they were not reserved in legislation, they must be devolved. The UK Government then retreated and amended the Bill. The default was that competences would remain with the devolved governments but could be taken back to Westminster on a time-limited basis where necessary. Ultimately, this power was never used and has since been repealed. Agreement was reached with the devolved governments that Common Frameworks should be negotiated to handle reserved EU law in devolved fields, with legislation as a last resort.

Scotland opted for its own Environment and Agriculture Acts. (See here for the most recent iteration).There were some arguments over the scope of the post-Brexit Environment and Agriculture Acts at Westminster on the grounds that these trespassed on devolved competences, but these were resolved, which allowed the Scottish Parliament to give its legislative consent. There was less argument over the UK Fisheries Act (2020), which gives powers to Scottish ministers.

The Welsh Government has tended, rather, to accept UK or GB-wide regulatory provisions, on condition that it has a role in setting them. Rather than adopting its own legislation, Wales had its own schedules inserted into the Agriculture Act 2020 allowing for detailed variations.

The devolution settlement retained the historic provision whereby some professions, such as the law and teaching, were regulated separately for Scotland, while others, including medicine, were regulated at UK level, except for those created after devolution. The Professional Qualifications Act (2022), however, gives the UK Secretary of State for Business, Energy and Industrial Strategy powers over mutual recognition of qualifications with other countries, irrespective of whether those professions are devolved or not. The devolved governments only need to be ‘consulted’.

Common frameworks

The main focus is now on negotiated Common Frameworks, which, it was promised, would give devolved governments at least as much discretion as they had within the EU. The devolved governments entered this process on the condition that no powers would be taken back without consent. An initial list of competences were identified and joint working groups established. By December 2021, 152 areas of intersection between former EU and devolved competences had been identified. By 2023, over 20 Common Frameworks had been agreed and provisionally put into effect.

Frameworks were intended as a practical measure to deal with a specific problem rather than a constitutional innovation, although they do in fact add to an already complex and crowded intergovernmental landscape. None of them has taken legislative form and they are to be implemented through cooperation, making reference to the existing practice of concordats and memorandums of understanding and to the system of inter-ministerial committees, itself recently reformed.

In principle, they could serve two purposes: to make policy cooperatively between the UK and devolved governments; or to allow for divergence. Most have concerned the latter although there is some evidence of joint policy-making, even going beyond retained EU law. The Frameworks tend to be highly technical, aimed at depoliticising policy making in a manner ironically similar to much EU regulation. There is some vagueness over the criteria used to decide whether divergence would be problematic. The Agricultural Support Framework refers to divergence which is ‘acceptable’ and divergence which is ‘problematic’, ‘harmful divergence’, divergence in ‘contravention of the common framework principles’ and divergence which has ‘unwanted impact’.

Transversal measures

Two broad, transversal measures cut across the division of regulatory competences. The first was the UK Internal Market Act (2021). This arose from a fear that, with the loss of the EU Internal Market, undesirable regulatory differences might arise among the parts of the United Kingdom. This is a politically charged matter, as the experience of the EU Internal Market has shown. The ‘UK Internal Market’ itself is a novel concept, referred to only in the Northern Ireland Act. Otherwise, it was implicitly secured only as part of the EU Internal Market.

The UK Internal Market Act sought to reproduce the EU Internal Market by providing for non-discrimination and mutual recognition among the four jurisdictions of the United Kingdom, with provisions to conform to the Protocol on Ireland and Northern Ireland. There are, however, two key differences from the EU model. There is no provision for subsidiarity and proportionality; and the rules are set unilaterally by the UK Government, with no equivalent to the European Commission or the Council of the EU at the UK level. Exceptions to the provisions are more narrowly conceived than in the corresponding EU regime. Both the Scottish and Welsh Parliaments refused legislative consent, but Westminster proceeded anyway.

Following an amendment in the House of Lords, the UK Internal Market Bill was amended so that matters coming within an agreed Framework could be excluded from its provisions. An exclusion was agreed for Scottish legislation on single-use plastics. While this was a rather uncontroversial matter and it is likely that the other UK territories will adopt similar regulations, its negotiation was quite prolonged and the Scottish Government was not satisfied with the narrow scope of the exception. Agreement could not be reached on an exception for the Scottish Deposit Return Scheme.

The effect of the UK Internal Market Act is not to take regulatory powers away from the devolved governments, but rather to undermine their exercise. If the UK Government, acting in respect of England, approves a good for sale in England (whether made there or imported) it is automatically allowed for sale in Scotland and Wales, irrespective of local regulations.

It is not clear how wide the scope of this provision will be in practice or how it will be used, as it is largely up to aggrieved vendors to take the matter to court. There is an Office for the Internal Market within the Competition and Markets Authority and, while it is to have members from the devolved territories, these are not nominated by the devolved governments themselves.

The second transversal matter concerns the control of subsidies (‘state aids’ in European language). There was a disagreement among the government about whether this was already reserved but this was resolved by the UK Parliament explicitly reserving it. The Subsidy Control Act (2022) reinforces this by making the UK authorities the ultimate authority on permissible subsidies.

A third provision was the Retained EU Law Bill, intended to repeal all EU-derived law, including in devolved areas, by the end of 2023. This was later amended to repeal only specified pieces of EU but it does give UK ministers wide powers to act by statutory instrument, even in devolved fields.

Whither regulatory divergence?

The story of regulatory control since Brexit has been one of attempts by the UK Government to centralise, curbed by resistance at the periphery and modifications to the original proposals. Brexit has been the occasion for multiple over-rides of the Sewel Convention, notably in the enactment of the European Union (Withdrawal Agreement) Act 2020, with all three devolved legislatures having refused consent. New consent provisions have been inserted in relation to statutory instruments in some of the legislation but they have become progressively weaker. The UK Government has increasingly used statutory instruments in devolved matters.

The UK Government has persistently argued for the need for unification or harmonisation of regulatory regimes in order to comply with international trade agreements, which are a reserved matter. Scottish and Welsh ministers are obliged to give effect to the UK’s international obligations and UK ministers can instruct them to present any implementing legislation to their legislature. Although their legislatures are not obliged to comply (unlike with EU law before Brexit) there is in practice very little scope to defy them, given the other powers available to UK ministers.

Conclusion

Regulatory policy may sometimes be the stuff of high politics and the UK and Scottish Governments have appeared to be heading in different directions. In practice, regulation is  often a matter of detailed, incremental and technical adjustment. It may be that EU, UK and Scottish regulatory regimes, facing similar technical and competitive challenges, will not drift far apart. The Trade and Cooperation Agreement does not commit the UK to European standards of regulation but there is a ‘non-regression’ provision allowing the EU to retaliate if the UK rows back on present standards.  The UK may in practice go along with European standards while insisting on autonomy. The decision to retain the European Quality Certificate is an example. The Scottish Government so far shows little evidence of keeping pace with European standards. The test will come if and when there is substantial pressure for divergence.

 The UK Government itself has been divided between those favouring radical deregulation and those committed to high standards. So far, there has been broad agreement on the general directions of policy on environment and climate change. In agriculture, there is a long tradition of Scottish management within broad UK lines, predating devolution and the policy communities are interlinked. The Scottish Agriculture Bill, published in September 2023, however, commits the Scottish Government to dynamic alignment with the Common Agricultural Policy, as the UK Government in respect of England moves in a different direction.

* The Scottish Parliament voted to “repeal” this on October 4.