The impact of UK withdrawal from the EU on the UK’s devolution settlements is one of the most technically complex and politically contentious elements of the Brexit debate. The devolution settlements have developed incrementally and asymmetrically since 1997, as more overlapping and shared competences have been introduced. Moreover, EU law is interwoven with the devolution settlements, and throughout this period, the supremacy of that EU law, and its interpretation by the Court of Justice of the EU, have helped to hold the UK together and maintain the integrity of its internal market. Brexit thus presents fundamental constitutional challenges to the United Kingdom as a whole. In the absence of changes to the devolution settlements, responsibility for policy areas that are already devolved, but are in practice exercised largely at EU level, notably agriculture, fisheries and the environment, will fall automatically to the devolved jurisdictions at the moment of Brexit. This will lead to an increased risk of clashes between the devolved administrations and the UK Government (which will remain responsible for negotiating international agreements, which may overlap with devolved competences). There will also be the potential for regulatory divergence, for instance in environmental standards, creating intra-UK barriers to trade. These challenges are compounded by the current political climate. In Northern Ireland, the failure to form a power-sharing Executive, the fact that no nationalist MPs have taken up their seats in the new Parliament at Westminster, and the Conservative Party/Democratic Unionist Party agreement, could lead to increased instability and the erosion of cross-community support. As for Scotland, although the immediate prospect of another independence referendum has receded, relations between the Scottish and UK Governments are highly strained. Against this backdrop, the Welsh Government, which is seeking recognition of Wales’ particular needs within a whole-UK Brexit deal, fears its interests will be overlooked. Brexit is not just about competences — it is also about the economy, and about money. The devolved jurisdictions are major recipients of EU funding, including funding from the Common Agricultural Policy, on which hill farmers in particular rely, and structural funds, which support economically deprived areas. Such reliance is not unique to the devolved jurisdictions — many regions of England face similar challenges. But, notwithstanding the Chancellor’s commitment to match agreed EU funding until at least 2020, we heard compelling evidence that the existing population-based method of allocating funding to the devolved jurisdictions will not adequately recompense them in the long term for the loss of EU funding. Brexit means that it is now time finally to bite the bullet and replace the Barnett Formula with a needs-based funding arrangement. Our inquiry has also underlined the significant reliance of the devolved jurisdictions upon EU migration, to meet labour market needs and demographic challenges. We call on the UK Government, in its forthcoming Immigration Bill, to look for opportunities to enhance the role of the devolved institutions in managing EU migration in ways that meet their specific needs. The over-riding conclusion we draw from this inquiry is that the UK, Scottish and Welsh Governments, and, if it is formed, all parts of the Northern Ireland Executive, need to set aside their differences and work constructively together to achieve an outcome that protects the interests of all parts of the UK. No durable solution will be possible without the consent of all the nations of the UK. Common standards will be needed to maintain the integrity of the UK single market, but these cannot be imposed top-down by the UK Government. They must be developed in partnership with the devolved Governments, respecting national, regional and local diversity. The belated acceptance by the UK Government that it will seek the legislative consent of the devolved legislatures to the Repeal Bill is a step in this direction, but more is needed. In particular, we urge the Government to raise its game in making the Joint Ministerial Committee (European Negotiations) more effective. It needs to have more regular meetings and a structured work programme; it should be authorised to agree common positions on matters affecting devolved competences; and its meetings should be synchronised with the cycle of negotiations in Brussels, allowing the devolved governments to influence negotiations, and the UK Government to report back regularly on progress. This in turn needs to be complemented by enhanced interparliamentary liaison between Westminster and the devolved legislatures. Brexit will be a major constitutional change for the United Kingdom, and thus potentially a source of instability. Any attempt to use Brexit to make a powergrab, either to ‘re-reserve’ powers previously devolved, or to claim more devolved powers, could compound such instability: this is not the time to embark on controversial amendments to the devolution settlements. We therefore believe that the existing statutory balance of competences between the UK Parliament and the devolved legislatures should as far as possible be unchanged. The House of Lords Constitution Committee has concluded that hitherto “there has been no guiding strategy or framework of principles to ensure that devolution develops in a coherent or consistent manner”. We agree. Brexit makes it more important than ever that a clear and agreed framework of principles should underpin any future reform of the devolution settlements.
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