The most recent headlines on the UK-EU Brexit negotiations suggest progress on both transition and the future relationship, but agreement on the allocation of EU powers between the UK and Scottish Parliaments remains elusive. Businesses in Scotland, particularly those operating UK-wide, should be following those discussions at least as closely as the main Brexit negotiations.
The argument between the UK government and Scottish Government (backed by its Welsh counterpart) concerns matters currently outside devolved responsibility, because they are dealt with by the EU, but which are not otherwise reserved to the UK Parliament. The devolved governments want responsibility for these areas post-Brexit, and do not want Westminster limiting their powers without their agreement. They are therefore refusing consent to the European Union (Withdrawal) Bill, which would make EU law part of British law after Brexit.
While recent developments suggest ongoing deadlock, there does seem to have been progress on many of the areas in question.
A recent UK government paper noted 24 areas where “no further action is required”, in which the Scottish Parliament and Government should have a freer hand post-Brexit. These include forestry, carbon capture and storage, onshore hydrocarbon licensing, building energy performance, renewable energy targets and environmental issues including impact assessments.
Certain other areas were identified as possibly needing “non-legislative frameworks”, meaning a common UK-wide approach may be sensible but statutory restrictions are not regarded by the UK government as being necessary. These include civil and criminal legal co-operation, energy efficiency (including combined heat and power), various environmental quality rules, equal treatment legislation, provision of legal services and rail franchising rules.
However, there were still 24 contentious areas including agriculture, animal health and welfare, chemicals regulation, fisheries, food safety and labelling, mutual recognition of professional qualifications, public procurement and the cross-border provision of services.
The devolved administrations seem to agree that UK-wide frameworks on these matters are desirable but want a right of approval rather than just a right to be consulted, while the UK Government fears that this could result (at worst) in different regimes across the UK, introducing friction to intra-UK commerce in these key areas.
Very few parts of the Scottish economy will be untouched by the areas where EU law and devolution intersect. Affected businesses (and others) should consider whether and how their legal environment might change post-Brexit, including the prospect of new and different rules and/or regulators either side of the Border.
l Charles Livingstone, partner, government, regulation and competition, Brodies LLP