This blog post, written by Professor Kenneth Armstrong (Professor of European Law, University of Cambridge), examines the Scottish Government’s new UK Withdrawal from the European Union (Continuity) (Scotland) Bill.
Until the end of 2020, the whole of the UK maintains alignment with EU rules coming into force during this ‘transition period’. Thereafter, EU and UK law could begin to diverge. Under the terms of a trade agreement currently being negotiated, limits could be placed on future regulatory divergence. For its part, the EU is keen to see UK rules remaining in ‘dynamic alignment’ with EU law and is seeking compliance with ‘level playing field’ obligations as part of a future EU-UK trade agreement. The UK Government, on the other hand, sees exiting the Single Market and the Customs Union as key to regaining ‘regulatory autonomy’ and the power to diverge from EU rules should it so wish. As the EU and the UK seek to protect their respective regulatory autonomy, there may be limited agreement on what degree of external control on regulatory divergence is acceptable to both sides.
But the dynamics of divergence and alignment are also internal to the UK. The Protocol on Ireland/Northern Ireland that forms part of the Withdrawal Agreement secures regulatory alignment in manufactured and agricultural goods between the EU and Northern Ireland from the end of transition. For the rest of the UK, in the absence of an equivalent external legal lever, the Scottish Government is seeking a power of ‘voluntary alignment’ to allow Scottish law to keep pace with future developments in EU law. To that end, on 18 June 2020, the Scottish Government introduced into the Scottish Parliament the UK Withdrawal from the European Union (Continuity) (Scotland) Bill. The purpose of Part 1 of the Bill is to empower Scottish Ministers to adapt Scottish law in line with developments in EU law from the end of transition (Part 2 of the Bill emulates EU environmental principles and makes provision for their enforcement in Scotland). Scottish Ministers would be able to make regulations equivalent to EU regulations or decisions, to implement an EU directive, or to modify retained EU law to enforce or implement new EU rules.
The focus here is on the interaction between Part I of the Bill and the European Union (Withdrawal) Act 2018 (as amended by the European Union (Withdrawal Agreement) Act 2020) in managing post-transition regulatory alignment and divergence. However, the wider constitutional context is important. An earlier ‘Continuity Bill’ passed its legislative stages, but was the subject of a reference from the Attorney General and the Advocate General for Scotland as to whether the Bill was within the legislative competence of the Scottish Parliament. In an important unanimous judgment of the Supreme Court in December 2018, while underscoring the breadth of the plenary legislative competence of the Scottish Parliament, the Court found particular conflicts between the Bill and the Scotland Act 1998 and the European Union (Withdrawal) Act 2018, which brought the Bill outside of legislative competence. These conflicts included the Bill’s conferral on Scottish Ministers of a parallel power to remedy deficiencies in retained EU law – similar to Section 8 of the 2018 Act – and the Bill’s insistence that the consent of Scottish Ministers be obtained before UK ministers modified retained EU (devolved) law.
The 2020 Continuity Bill is different. The central purpose of Part 1 of the Bill is to allow Scottish law to keep pace with developments in EU law after the expiry of the transition period. Clause 1 of the Bill gives Scottish Ministers a power that would replace the general power conferred by Section 2(2) of the European Communities Act 1972 (repealed as of exit day on 31 January 2020, but ‘saved’ until the end of transition by the European Union (Withdrawal Agreement) Act 2020). That power would include modifications of retained EU law as well as introducing novel features of any future changes in EU regulatory policy. There is no equivalent power in the 2018 Act. Indeed, as originally enacted, Section 19 of the 2018 Act provided that:
‘Nothing in this Act shall prevent the United Kingdom from— (a) replicating in domestic law any EU law made on or after exit day …‘
It was not entirely clear why this needed to be spelled out in the Act not least because it did not then create a power in primary law to align with EU law once the European Communities Act 1972 was repealed at exit day. But it did lay down a marker that the existence of such a power in the UK – and that would include its devolved entities – was not in conflict with the Act. The European Union (Withdrawal Agreement) Act 2020, however, repealed Section 19. That does not of itself create a conflict between the 2020 Continuity Bill and the 2018 Act; the repeal of a permission does not itself create a prohibition.
What remains significant is Section 12 of the 2018 Act. Section 12 makes a significant change to the rule-making competence of the Scottish Parliament and Scottish Government. The prohibition on legislating contrary to EU law previously contained in the Scotland Act 1998 is removed and replaced by a new prohibition inserted into Section 30A of the Scotland Act that provides:
‘An Act of the Scottish Parliament cannot modify, or confer power by subordinate legislation to modify, retained EU law so far as the modification is of a description specified in regulations made by a Minister of the Crown …‘
Clearly this is not a ban on modifying retained EU law, but rather a power for UK ministers to seek to control future changes to retained EU law by the actions of devolved administrations. In the absence of that power being exercised by UK ministers it would seem that the Scottish Government would be free to pursue the sort of voluntary alignment that is the purpose of the 2020 Bill.
The power of UK ministers to define impermissible modifications for the purposes of Section 30A of the Scotland Act can be exercised for a period of two years from exit day. Draft regulations must be presented to Scottish Ministers and draft statutory instruments cannot be laid for approval of the UK Parliament until either a consent decision is made by the Scottish Parliament, or 40 days have passed without a consent decision. A “consent decision” can be a decision to give consent, refuse consent or simply to decide to not agree a motion giving consent. However, the absence of consent does not prevent the regulations being made.
It is important to understand that the power now contained in Section 30A (and in parallel provisions for the other devolved nations) is intended to induce the devolved governments to collaborate with the UK Government over “arrangements” that would dispense with the need for provisions like Section 30A and the regulations made under them. Bargaining in the shadow of Whitehall regulation, work is being undertaken to facilitate intergovernmental cooperation between the devolved and UK governments to agree “common frameworks” as arrangements on how repatriated regulatory powers will be exercised. Across 162 policy areas where EU law intersects with devolved competences, the UK and devolved governments have developed a programme of work much of which will result in non-legislative arrangements to underpin the respective exercises of competence. But in 21 areas, legislation will be needed to implement common rules alongside non-legislative framework agreements. However, only a small number of fully developed common frameworks are likely to be in place by the end of 2020. In short, a mix of governance instruments is to be deployed to avoid the Section 30A regulations being made. But what if Scotland takes the high road and aligns with EU regulatory standards while the UK Government takes the low road and seeks competitive trade advantage by diverging from EU standards?
One of the principles that underpins the common frameworks is that they will “enable the functioning of the UK internal market, while acknowledging policy divergence”. Here lies the tension. And it is a familiar one to EU lawyers – how to reconcile policy divergence with the aspiration to create a functioning economic area that reduces regulatory friction in the provision of goods and services? The EU approach has emphasised centralised rule-making – harmonisation – and the legal control of decentralised decision-making – the direct application of binding free movement norms together with notification obligations where Member States wish to exercise regulatory autonomy.
Thus far, the approach in the UK has been to try and internalise the concept of an internal market in collaborative arrangements without the need for a more explicit internal market legal framework. What remains to be seen is whether exercises of devolved power such as those enshrined in the Continuity Bill will result in a different legal approach being sought once the shadow of Whitehall control under Section 30A of the Scotland Act is lifted.
The author is Adviser to the Finance and Constitution Committee of the Scottish Parliament in its enquiry into the UK Internal Market. The views expressed here are entirely personal and do not represent the views of the Committee or the Scottish Parliament. Comments welcome: kaa40@cam.ac.uk and on twitter: @profkaarmstrong.
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