Scotland’s post-Brexit powers raise obstacle for divorce negotiations

20 March 2017 1:23pm

22 February 2017. By Matthew Holehouse.

Scotland's devolved government will get more powers as a result of Brexit, the UK government has said.

The central British government wants to maintain the cohesion of the UK's internal market and hold the levers to strike trade agreements with the EU and other trading blocs. That ambition puts it at odds with the Scottish government, which has called for sweeping new powers.

The issue will come to a head soon, when Scottish lawmakers vote on legislation consenting to overhaul the UK statute book ahead of Brexit.

Deciding which powers will be handed back to Scotland won't be a straightforward process and could strain the constitutional settlement, at a time when Scottish leaders are considering a fresh bid for independence.

Scottish government position

The Scottish government has said it wants additional powers in areas that already fall under its remit, such as public services, railways, land use and criminal law.

It wants to take full control of policy areas currently divided between Scotland and Brussels, such as agricultural and fisheries subsidies. It also wants to hold powers that are shared between the UK government and the EU, such as employment laws and workplace regulations.

The administration has also argued to remain a member of the EU's single market even if the rest of the UK opts out. Scotland would seek to maintain single-market policies governing immigration, competition law and financial-services regulation.

Such a step would be ambitious: Scotland doesn't have its own competition or financial-services regulators, and there is little discernible support among other EU states for Scotland to be treated as an independent actor in the Brexit negotiations.

A Scottish government paper setting out this ambition — Scotland's Place in Europe — gives an overview, but doesn't go into detail about how the plans might work in practice.

Stephen Gethins, the Scottish National Party's Europe spokesman in the UK Parliament, said the document isn't prescriptive but an "invitation to compromise" with the central government, after a majority of Scots voted to remain in the EU.

The British government should respond with "fresh thinking" about how power is distributed in the UK, he said. So far, the government has shown "utter inflexibility."

UK government's position

The UK government has said it will hear the views of Scotland, Wales and Northern Ireland on Brexit, and that it won't withdraw powers now held by those administrations.

But in a policy paper on Brexit published in January, Prime Minister Theresa May's administration voiced reservations about how further devolution would work in practice.

After Brexit, the overarching EU framework on areas such as transport and the environment — under which Scotland has powers today — will be set by the UK, and this can't lead to new internal barriers, the paper said.

"We will maintain the necessary common standards and frameworks for our own domestic market," the paper said.

That could rule out Scotland's wish to sign a "differentiated" agreement on single market membership with the EU.

Preserving Scotland's current competences won't be straightforward.

Currently, the Scottish government handles payments under the EU's subsidies and grants program for farming and the fishing industry. How much funding Scotland receives in the future, and whether it is drawn from the UK Treasury or its own tax-raising powers, will generate significant debate.

The issue could arise in the context of trade deals between the UK and other countries.

Prospective trade partners such as Australia and New Zealand are likely push the UK to slash agricultural subsidies so their produce can compete with British farmers. That would require trade negotiators in London to set terms on behalf of Scottish farmers.

"The principle is these areas are devolved, so they should stay devolved," said Lewis Macdonald, a Scottish Parliament lawmaker in the opposition Labour Party, which opposes independence but supports more devolution.

"If they feel they need to take back control of the whole system as part of a trade negotiation, then we have a very real problem," he said.

Similarly, Scotland's ability to take control of fisheries policy will be limited because access to waters and commercial practices will be subject to negotiations with the EU.

Clash coming

Scotland's First Minister Nicola Sturgeon could soon follow through with threats to hold a second referendum on independence. She is likely to argue that Brexit is a "fundamental change" to Scotland's constitutional status since voters opted to remain part of the UK in a 2014 plebiscite.

The UK government is preparing its own charm offensive. On Tuesday, May hosted a cabinet meeting largely dedicated to Scotland, at which she said ministers "must continue to point out" how "incredibly successful" the UK as a single state has been.

The crunch could come relatively soon.

The UK government will propose a vast piece of legislation in May, known as the Great Repeal Bill, that will prepare the UK statute book for Brexit. It will enshrine EU legislation in domestic law, identifying powers for new UK and devolved regulators.

But under the devolution agreement, the UK Parliament won't "normally" pass legislation in a field under Scottish control, or change the Scottish government's power without the consent of the Scottish Parliament. This principle is known as a legislative consent motion, or LCM.

The UK government has said the principle applies to the Great Repeal Bill, and warned that Scottish lawmakers' refusal to approve plans would have "serious consequences" for the UK.

Scottish government ministers haven't decided whether the process should involve a single LCM covering the entire Brexit bill, or multiple, covering individual competences.

Earlier this month, the Scottish Parliament voted 90-34 against triggering Article 50, the EU's exit clause, in a nonbinding vote. This result suggests an LCM could struggle to pass.

Under pressure to prepare the statute book within the two-year EU exit deadline, UK lawmakers could still push ahead with legislation if Scottish lawmakers refuse to give consent. But this could spark a legal challenge by the Scottish government and would cast serious doubt on the meaningfulness of the devolution settlement.

The UK government could conceivably face an unpalatable dilemma if Scotland doesn't support the Brexit bill: May's government could either halt Brexit or deepen its rift with Scotland's separatist leaders.

Brexit Special Report