Contents
- Attendance
- Internal Market
- Structural Fund Priorities (Post-Brexit Funding)
Internal Market
Good morning, and welcome to the 15th meeting in 2019 of the Finance and Constitution Committee. I remind members and witnesses to set their mobile phones to silent so that they do not disturb the proceedings of the meeting. The first item on our agenda is evidence on the internal market. Our panel members are Professor Aileen McHarg, Professor Michael Keating, Dr Viviane Gravey, and Professor Michael Dougan. I warmly welcome them to the meeting and thank them for providing us with written submissions, which was very helpful, as it means that we do not need to ask for opening statements, because we have something from them already.
The question of the internal market first arose during our inquiry into common frameworks, when the point was made that we had never needed a definition of the United Kingdom internal market, because of our membership of the European Union. In our report on common frameworks, we noted that the UK internal market is not defined in law. Do we need to have it defined in law or, given the existence of common frameworks, trade deals and the like, is an internal market something that may just evolve? What might the impact be of having no clearly defined internal market? For example, would it make it harder or easier for the UK Government and the devolved Governments to challenge each other over the perceived unfair use of economic policies to support local business conditions? I know that there is interest in asking about state aid later.
There are arguments on both sides as to whether we need to define the internal market. It is difficult to define it, and the process of reaching an agreed definition would be quite tricky. There are dangers if it is not defined, however. There are dangers in not having a principled approach or in having different approaches in different contexts that do not necessarily make sense when compared with each other.
The biggest risk is that, if we do not have a clear idea of what the UK internal market is—and of what its limits are, which is probably the key thing—we run the risk of the internal market being defined by default by the UK Government and the UK Parliament. They would get to decide the appropriate balance between central control and local autonomy, as well as when it would be acceptable to depart from free trade principles to promote other values.
There are, undoubtedly, risks to the devolved Governments and devolved Parliaments in having an overly expansive definition of an internal market. However, the devolved institutions are in a vulnerable situation anyway, and having an agreed, principled framework could produce some sort of constraint or at least a set of standards against which to measure the UK Government’s actions, which is probably important.
I would be worried about putting a definition into law, because it is a contested concept that is open to challenge. It is highly politicised and highly charged, and many of the decisions should be taken in some kind of political forum.
The other danger of putting a definition into law is that it may be used as a mechanism for centralisation, particularly if Westminster is the custodian of the definition, as Aileen McHarg said. The experience in the EU is that the courts might expand the definition of what is meant and take it into unanticipated areas. It is more important to have some kind of forum or central place, representing all the Governments, where the notion of the internal market can be continually reviewed and redefined in practice.
Such a mechanism should not be hierarchical; it should involve the UK Government, the devolved Governments and somebody who represents England. There should be scope for some expert advice in there—experts would not take decisions but would provide advice on what the implications for the internal market might be. Matters would be resolved within that intergovernmental format, as far as possible, which would keep them out of the courts.
The key difference with the European Union internal market is that no single member state of the European Union can change the definition of the EU single market. With the situation as it is in the UK, it would be possible for the UK Government not only to set the definition but for every Government coming after it to simply change that definition. There is an issue with regard to the best way of ensuring that one of the four Governments cannot just change the definition of the single market for everyone, whether that is about going through a legal process to set a clear definition somewhere—which is very complex—or having a much stronger intergovernmental structure. Given the way in which the UK constitution works, it would be very difficult to hold the UK Parliament and the UK Government to some kind of commitment on not changing the rules in a way that would benefit England the most.
I agree that there needs to be some sort of definition, for the reasons that Aileen McHarg gave. You would need to provide a degree of coherence for what would otherwise be quite a disparate range of regulatory problems and policies that would potentially be in conflict or in tension with each other.
I also very much agree with Michael Keating’s point. If that is not done and you do not have horizontal principles that help to define and articulate the trading relationship between the constituent territories of a state such as the UK, there is a risk that that will happen by default, not just through Westminster but through the courts. One of the main experiences we can take from the EU is that the courts can easily step in and provide the type of horizontal internal market principles that politicians fail to articulate.
The main point that I would add to what has been said is that I find it much more helpful to think of an internal market as a process and a set of institutions rather than a simple definition of a statement of policy. Internal markets are ways of managing trade relationships between territories with regulatory autonomous powers, such as the UK post withdrawal from the EU.
If you think of internal markets as a set of institutional arrangements that constantly address new problems, try to find solutions to trade barriers and try to define and address distortions of competition, you do not, in a way, need to worry so much about the definition of a barrier to trade or a distortion of competition, because you are constantly refreshing your political and institutional understanding of it through your institutional framework. If you think of internal markets more as a process than as an end state, it becomes particularly important to define what the institutional framework should be for managing those problems instead of giving a set solution that will last forever, because we know that internal markets do not really work like that.
Thank you for those very helpful opening comments.
Good morning, everyone. Right at the beginning, I want to address head-on the question of keeping the courts out of it, which Professor Keating mentioned and which Professor Dougan also spoke about in his very helpful remarks. I did not interpret what Professor McHarg said in quite the same way as I think that Professor Dougan did. She said that the danger is that, if we do not define the internal market, the definition will happen by default, and, if it happens by default, it will happen in the courts. Is that right? No?
No—I said completely the opposite. The danger is that, if we do not define it, it will happen by default—as Viviane Gravey said—through UK Government and UK Parliament ad hoc decisions that change over time. There would be no way of legally constraining them, but some sort of statement of principle would at least give you a reference point from which to say, “Please justify that decision in accordance with this set of principles,” or an institutional framework would allow decisions to be argued out.
That is very helpful. Thank you. Is it either possible or desirable to keep the courts out of it? In the EU, as Professor Dougan says in his written submission to the committee, there are something like 6,500 legal instruments on the EU internal market, yet some of its most important rules were written in judgments, not in legislation at all. Professor Dougan cites the famous example of the cassis de Dijon decision in the late 1970s. In Canada and the United States, a huge amount of the federalism case law is about the commerce clause, economic regulation and their internal markets. Is it even possible to keep the courts out of this? If so, why would you think that that is desirable?
One reason is the asymmetrical nature of our constitution. If we were to have the courts involved, they would presumably have to be able to strike down English provisions as well as Scottish, Welsh and Irish provisions, and that is simply not going to happen. That would be a federal system, which might be desired but is not going to happen. So, there is an asymmetry there.
The fact that, as you say, the courts have made a lot of the running in the European internal market has been subject to a lot of criticism. Maybe that is precisely because something had to be done to create an internal market, and that is why we had qualified majority voting and a role for the courts—to overcome all the veto points with the 27 countries. Here, it is more a question of preserving an internal market that already exists, so we would not need that degree of initiative and momentum to create an internal market.
I suspect that the number of issues that would arise in the UK would be much lower than the number that arise in the European Union, so it would be manageable through a political process. In keeping with the way in which devolution has been handled, there has been a general consensus that it is fortunate that we have kept a lot of this out of the courts—that matters that are political have been resolved through the political process rather than through excessive recourse to the courts.
You mentioned Canada. I would add Spain and Italy, where the courts have been overburdened with jurisdictional disputes. In the UK we have, thankfully, managed to avoid a lot of that.
I take a slightly different perspective from Michael Keating’s on that question. It is true that the EU internal market had to be created and that the courts played a role in it, and it is also true that the UK internal market is already quite well established, but I return to the point that I made before. Internal markets are not about a destination; they are about the constant process of managing relationships between territories. From that point of view, it does not matter whether the EU’s internal market had to be created over 40 years or whether the UK’s internal market is a particular starting point. From the moment of withdrawal from the EU, the UK’s internal market will face identical problems to those of the EU internal market, and they will need some sort of response. The main question is whether that response will be provided primarily by politicians in legislatures, who have consciously set out to think about its design and co-ordination, or whether it will, in effect, be provided by the courts, because nobody else has provided an answer.
It is worth mentioning the cassis de Dijon judgment in a little more detail. The day before that judgment, the rule across Europe was that someone who made a good or provided a service in their own territory could not assume that they could automatically sell or provide it in any other territory without meeting its regulatory standards, so the markets were highly compartmentalised. The day after the judgment, someone who made a good or provided a service in their own territory could sell or provide it anywhere across Europe, and the burden was suddenly on the host country to demonstrate that its rules were needed in the public interest and could be justified. That was not just a minor development; it was a total transformation of the way that the entire European economy functioned, and that change was made in the space of a couple of paragraphs in a single judicial decision.
I suppose that the UK is going to face the same type of challenge. If, a couple of weeks after withdrawal, the Scottish Parliament enacts legislation that is capable of creating a barrier to trade or a distortion of competition for English, Welsh or Northern Irish goods and there is no political, legislative framework for managing that, you can bet that it will not be long before someone goes to the courts and says either, “The Scots have tried to stop me selling my English good in Scotland because it doesn’t meet their new regulatory requirement,” or, “The Scots are allowing these English goods into Scotland and it’s distorting the competition because I have a higher regulatory burden.”
It would only take a bold set of judges to say, “Cassis de Dijon,” and that would be it. The UK internal market would be created, and it would be created not by a legislature but by judges.
09:45
We are talking about intergovernmental processes, but, in the cassis de Dijon case, it was a private actor who went to court. The internal market is also about whether citizens and businesses would have the right to go to court and have remedies in a UK system that were similar to what they had in the EU. It is important that the internal market is not just about the four Governments but about everyone who lives in those countries.
Michael Dougan said that it would only take a bold court to give the UK a cassis de Dijon case, but it would have to be extremely bold. The current devolution legislation has no obvious way in, because, in the existing devolution settlements, we have only very limited provisions that have any relevance to a general concept of a UK internal market. Northern Ireland has the secretary of state’s veto power, which has never been used; if it were to be used, it could be judicially reviewed, but, until then, it cannot be. In the Scotland Act 1998, but not in the other devolution statutes, there are protections for the trade provisions in the Acts of Union, but, in the Imperial Tobacco judgment, the courts told us that they are very limited in their effect. Those provisions are not promising.
More generally, there is interpretation of existing reserved matters, but the approach of the courts so far has been to interpret them relatively narrowly and in line with normal principles of statutory interpretation, not in the light of any overarching idea that they are intended to protect the UK internal market. It would require a great deal of judicial creativity to get us to the same position as we have in the EU, which has a set of treaties that provide a hook on which a court can come in and develop a jurisprudence. I just do not see where the hook is in the domestic legal system unless there is some amendment of the devolution statutes.
In any case, as Michael Keating said, that would constrain the internal market only at a devolved level. We would still have the problem of the internal market at a UK level.
I agree, and I would add that there are many fewer issues in the devolved settlements that are likely to raise internal market issues, because most of those matters are reserved. Agriculture and the environment are devolved matters. They are important, but I imagine that they are not as broad as the internal market provisions in the European treaties, which potentially cover a huge range of things.
I am sorry, but I disagree. In the history of the cases that have been on-going between the UK and the European Commission and the European Court of Justice over the past 15 or 20 years, the environmental cases have been high ranking and the UK has lost most of them. In other areas, by contrast, the UK has been on the winning side.
In the Welsh-UK relationship around agriculture, in particular, a lot of the cases between the Welsh and UK Governments have been about agricultural subsidies. Issues around the environment and agriculture will come up and may be very important.
I mentioned agriculture and the environment. Outside those areas, it is difficult to see others.
Yes, and those areas will be important.
I do not disagree with what Aileen McHarg has said. If we focus on institutions and the devolution settlements, it is very difficult to see the hook on which a court could develop a default system of internal market rules.
That comes back to the important point that was made by Viviane Gravey about the role of individuals. The issue is not about the interpretation of the devolution statutes; it is about an individual finding a way to persuade a court to articulate some sort of internal market principle. I have given the matter a degree of thought, and I believe that an easy route in would be the Human Rights Act 1998. An individual would simply need to say, “I have the freedom of property and the freedom to trade and to run a business, but the Scottish Government and Parliament are inhibiting that freedom by refusing to allow me, as an English trader, to sell my good in Scotland, because it does not meet their local regulatory requirements.” That would be enough of a hook for a court that was minded to do so to create a cassis de Dijon approach. It would simply have to say that Scotland had, prima facie, infringed the English trader’s right to run a business and make a profit and their freedom of property. The court would have to consider how that could be justified or reasoned through from a legal point of view, and then a cassis de Dijon approach could be taken.
The hooks exist and are waiting to be exploited. The question is whether we should set a line that shows that the issues have been thought about and designed politically, which would mean telling the courts to follow what the legislatures had decided, or whether we should provide no solutions and continue talking about such things for many years, while, in the meantime, individuals and businesses push the courts to provide an answer.
A key point is that there must be an answer to the problem. The day will come—it might be in a few weeks or in a few months—when Scotland exercises its devolved powers in a way that creates a barrier to trade or a distortion of competition for an English manufacturer of goods or service provider. We can bet that, the moment that that happens, the English company will say, “Where is my hook to find an answer to the question?” If legislatures have not provided an answer, the English company will want the courts to do that.
The court’s answer might be not to take a cassis de Dijon approach, which would also be a really important decision, as it would mean compartmentalising the UK markets from each other and, in effect, having no right to trade within the UK. The decision to take a cassis de Dijon approach and the decision not to take such an approach would be of equal importance, because one would mean that we would have an expansive UK internal market and the other would mean that we would have a restricted and compartmentalised internal market. Either decision would be equally valid.
That was a truly fascinating beginning to the discussion—I say that genuinely. We will bore into the issues a bit more.
If colleagues do not mind, I will take you back a little step from the dispute resolution discussion. What processes should be in place to enable a body of people, for example, to establish what a UK internal market should look like, so that it is not defined by default or imposed on us by the UK Parliament? Professor Keating’s submission refers to a council of the UK that would
“work on similar lines to the Council of the EU.”
What systems, measures, institutions or bodies should be brought about to avoid the situations that have been described? Is any progress being made towards that?
I see no such progress. The internal market changes over time—it has living principles and unexpected things can come up—but there should be a baseline against which we can measure changes and some appreciation of what matters and what does not matter. A really big issue involves the border between public services and the market and the extent to which public services can be protected from market competition. Another issue involves proportionality—what matters? Does it matter if Scottish sheep farmers get direct production-linked payments, as they do at the moment? If Welsh farmers do not like that, is it worth making a fuss about?
We need to work through such issues and lay down the baseline principles so that when something comes up—as Michael Dougan said, something could come up in a court or anywhere—we can go to the body that represents the four nations plus the UK to find a political resolution, with assistance from people who work through the principles and with advice from business and civil society, before things get to the courts. Putting something into law without properly defining it would invite people to continually make cases, and a lot of that has happened in the European Union. It would be better to start with basic principles and to have a place where they can be applied in individual cases rather than setting up a rigid legal framework in advance.
As for what is being done, sectoral frameworks are being negotiated, discussions are going on about the internal market, sectoral bills for agriculture and the environment are being developed, competition policy is coming on and work is being done on the Trade Bill and trade policy. All those processes seem to be separate, before we have even got to the point of Brexit, without any consistent principles across them. I find that troubling.
What worries me about entrusting the matter purely to an intergovernmental process—although such a process is of course crucial because, if we are talking about UK-wide principles, there has to be buy-in from all levels of Government—is that history tells us that such a process risks being very untransparent. The decisions that are made about the internal market principles that are to be applied really matter and will have significant implications for the ability of Parliaments and Governments to make decisions and to pursue their policy objectives, which can have an impact over time.
There is a real danger of a stitch-up that nobody has had any opportunity to comment on. The advantage of a legislative approach is that, at least at some point, the proposals come to a public forum in which there is an obligation to justify decisions that are made and an opportunity to amend. The end point of that and what we get might be problematic, but at least the process would be more transparent, to an extent. I would like whatever process is adopted to be subject to proper consultation and scrutiny and perhaps some form of parliamentary confirmation in the Scottish Parliament, the other devolved legislatures and the UK Parliament. It should not simply involve people saying, “We’ve had a joint ministerial committee meeting and here’s the set of principles we’ve produced.”
When we talk about learning from the experience of the European Union and having something like the Council of Ministers, we keep on forgetting that decisions in the EU are not made by the Council of Ministers; they are made jointly by the Council and the European Parliament. We are not talking about the role of Parliaments in future discussions on the internal market.
There are different ways in which Parliaments could have a role. The process could be mostly intergovernmental, but we could have something like what the Danish Parliament does when the Danish Government goes to Brussels. The minister has to go in front of Parliament and ask whether it agrees with the Government’s objectives. There has to be support from the legislature, and then the minister has the intergovernmental discussion.
There could be an interparliamentary forum that sits alongside any intergovernmental forum to have that discussion. Alternatively, if there is an intergovernmental political agreement, legislation could then be passed in all four legislatures.
Right now, with the UK-Welsh agreement, we are talking about something that is decided by Governments, with the National Assembly for Wales having 40 days to consent. You may be extremely quick in setting up inquiries and getting input from civil society and all that, but 40 days is a very short period in which to weigh up the pros and cons—it basically means that you trust the Government to have done all that consultation work correctly. That approach would really limit your work as a Parliament. The internal market principles will constrain the action of all four Parliaments in this country.
It is important to think about not just the court and the ministers but where the Parliaments are in all of this.
I agree with everything that has been said, but I will add a couple of points.
It is worth recognising that the challenges that we are talking about are not new; they are challenges that countries all over the world have had to tackle before. In a way, in each case, the challenge is about how to find institutions that are independent and impartial of the constituent territories that will be subject to the internal market. That covers legislation, executive action and the courts. We should of course be aware that the courts have a legitimate role in any internal market, because the legislation needs to be interpreted and enforced. The question is what scope the courts will have.
The challenge is always the same. It is how to create independent and impartial institutions that will help to manage and administer the internal market for the benefit of its constituent territories. In the UK context, there are at least two real challenges to creating that independent and impartial governance system. One is constitutional and one is much more empirical.
10:00The constitutional problem has been mentioned several times: the parliamentary sovereignty of Westminster and the lack of any distinct English Parliament. That means that, inherently, the legislative aspect of the internal market will never be independent and impartial in a way that would be recognised in the EU, for example. That is a real constitutional challenge that must be grappled with and worked around.
The empirical challenge is just as important. The simple fact is that the English economy is vast compared with the Scottish, Welsh and Northern Irish economies, which really matters in an internal market. It matters because what England decides to do in regulatory terms could have an incredible empirical effect on the regulatory choices of the other territories. For example, if there were a ruling similar to the cassis de Dijon judgment—that if someone makes their goods lawfully somewhere in the UK, they can sell those goods everywhere in the UK—it would make it highly difficult for Scotland, for example, to have highly divergent regulatory standards from England, because production would just happen in England, the goods would flood into Scotland and there would be nothing that the Scottish Government could do about it.
Those are the two difficult challenges with which we must get to grips: the constitutional challenge of parliamentary sovereignty; and the empirical challenge of the size of England and its economy.
The empirical challenge depends on how much divergence there is between the UK and the EU after Brexit. If, because of the backstop or any other logical economical reason, UK regulations remain very similar to EU regulations, there will not be the same pressure. What will matter will be the much bigger EU economy compared with the smaller UK economy.
It is the same thing.
They are similar things, but at a different level.
I want to drill down into that a little more. I will use an example that may or may not become live in the near future. There was a report in the media this morning on minimum pricing and alcohol sales in Scotland being at their lowest level since records began—the drop might not be to do with minimum pricing, but there is some evidence to suggest that it is. Minimum pricing has had the biggest impact on products such as strong ciders. If we do not have some rules written down and the courts have to decide, does it begin to raise the prospect of an English strong cider maker taking the Scottish Government to court because of a process that the Government has introduced that is prohibiting sales of the cider? If that is where we are, that is both challenging and interesting at the same time.
That is exactly the kind of situation that we are talking about. The example that I have had in my head—and sometimes I have used it outside my head to illustrate the point—is single-use plastics. I am going to admit immediately that I am not completely au fait with the UK constitution and the devolution settlement and so this is a purely hypothetical example. However, for these purposes, let us accept that it is within the devolved competence of Scotland, there is no common framework on the issue, and there is regulatory autonomy for Scotland so it is capable of diverging from the regulatory standards in the rest of the UK.
Let us say that the Scottish Parliament proposed a ban on single-use plastics in Scotland. There would then be two main choices. One option is for the whole of the UK to have a similar ban—everyone has similar rules, so we do not need to worry about barriers to trade and distortions to competition. However, that requires some degree of co-ordination—either a centralised legislature or co-ordinated legislation between the four legislatures. The other option is there is no centralised intervention, in which case there needs to be some sort of default rule that governs what the ban means for English single-use plastics that want to enter the Scottish market—the rule either says that they cannot or that they can enter. There needs to be a rule and there cannot be a vacuum of law. If there is a cassis-de-Dijon-style rule, which says that any good lawfully produced anywhere in the UK can be sold across the UK, it immediately tells English manufacturers that they have the potential to challenge the Scottish rules, via the courts or another institution, depending on the framework that has been established.
That is a perfect illustration of the type of challenge that we are talking about. It is also, incidentally, why I feel that the debate about common frameworks is relatively narrow in the broad context of the whole UK internal market debate. At the minute, so much of the attention is on the existing European regulations and how we stabilise and fix them at this point in time, at the point of withdrawal or at the end of the transition period, but the real challenges lie beyond the common frameworks. They relate to the things that are not currently subject to EU rules or that will not be subject to a common framework in the future. Those include minimum alcohol pricing, recycled packaging and new digital services—anything within the competence of the Scottish Parliament that is capable of creating a barrier to trade.
That is precisely the danger of having a rule that is statutory but very generally framed: people can go to the courts and play with it. It is more important to have some principles to ensure that there is a balance in the boundaries between economic, social, environmental and public health considerations. If there is simply a single market clause, market competition trumps everything. That is a problem that has occurred within the European Union.
It is very difficult to write all those competing considerations into a law and give that to the courts. It is not the job of the judges to make such decisions; they are essentially political decisions, and, as Michael Dougan said, they will come up in all kinds of unexpected ways. We should be prepared, so that when they do, we have principles against which we can judge individual cases.
Alcohol minimum pricing is a good example to illustrate the importance of principles. The minimum pricing legislation was challenged in the Scotch Whisky Association case on the grounds of breach of EU free movement law, but it was ultimately held to be proportionate as a measure to protect public health. In that case, the role of the proportionality principle was really important in balancing trade objectives versus social policy objectives.
The problem, which could have been more important than it turned out to be in practice in the Scotch Whisky Association case, was that the devolution dimension was not properly dealt with. One of the judges referred in the proportionality assessment to the elephant in the room: there was a choice between minimum alcohol pricing and raising alcohol duty, but the Scottish Parliament did not have the option of doing the latter because that is a reserved matter. If we were to address that in a purely domestic context, we would need not only the equivalent of the proportionality principle but some sort of internal subsidiarity principle to help us to negotiate the difficult question of divided competence.
We have a couple of supplementaries from Angela Constance and Tom Arthur. I am also conscious that Murdo Fraser may have to leave soon to deal with amendments at another committee; I do not know how closely his question relates to this area.
Time-wise, I am okay for now.
In that case, I will take the supplementaries in this area and come back to you.
In essence, I want to know whether we can recreate an internal market in the UK with a new set of arrangements that is as good as what we have. The submissions to the committee from the panel members say that there is nothing that is comparable to the current EU arrangements anywhere in the world—it is the most comprehensive and integrated internal market. How can we recreate something as good as that, or on a par with it, without downgrading devolution?
There is a danger of exaggerating the impact of EU internal market law. It does not completely protect the UK internal market—for instance, it does not give us a right of internal free movement. That is why Scottish universities have to take EU students without charging them fees but can charge English students fees because those students cannot benefit from free movement or non-discrimination rights in the way that EU students can.
EU internal market law does the job well enough for us not to have had to talk about this before, but it does not do the job perfectly. If we were starting from scratch with regard to protecting a UK internal market, we would not simply adopt EU law—we would have to do something different that addressed the conditions of our internal market and the rights of citizens within the UK to move freely. We do not exactly have a right to do that; it is just that we have not tried to stop people doing it, which is a different thing.
I go back to what Michael Dougan said. It is much more a question of having institutions and processes whereby there is trust between the parties and they are all working towards a similar goal. What we are seeing now is a process in which everything is happening in parallel and there is no discussion between the different bits. There is discussion on the common framework, discussion on the Agriculture Bill and discussion on the JMC. All those different elements have different interpretations of the powers for the devolved Administrations. That is not a good basis for a discussion because, depending on who you speak to, Scotland is going to get way more powers or it is going to get fewer powers.
The big problem is that, in many ways, Westminster has been running ahead with Brexit and trying to find an answer to all those issues without taking the time to work with the other parties. Legally, Westminster does not have to work with them, but if we want to have a UK internal market that works well, where it is not necessary to use formal mechanisms a lot of the time and where most of the issues can be dealt with informally, it is necessary to build trust. As we have seen, trust has been eroded. The best way to build trust again is for Westminster and the UK Government to hold back, to not use all the power that they have and to say, “We’re going to be partners on this.”
We also need institutions to work when there is no trust and when there are different goals. That is the real test of institutions. We got off to a really bad start with the original version of the European Union (Withdrawal) Bill, in which the answer was to take back powers. There are still aspects of that in the final act—the European Union (Withdrawal) Act 2018. I suspect that that option will never be used, so why leave it there in the first place? Why is the fallback answer, in the event that all else fails, to take powers back to Westminster? The division of competencies might not be perfect, but it was agreed on in the political process on three occasions in three different acts. As the different levels of Government have their own powers, which they own, any negotiation process must take place among equals.
To pick up Aileen McHarg’s earlier point, of course we need transparency—the processes must be open to scrutiny by the Parliaments and by the general public.
I come back to something that I said earlier, which I think is particularly important in answering Angela Constance’s question. We should not think of internal markets as static end points where we have found the solution to a regulatory problem and which we will live with for ever. Internal markets involve the constant managing of relations, facing new challenges and updating the solutions that we thought that we had found five or 10 years ago, but which are no longer appropriate because science and technology and consumer behaviours have changed. We need to think about internal markets in that dynamic, institutional way.
Aileen McHarg is completely correct to say that the EU internal market is not perfect. It is not perfect in the sense that it provides answers to some of those questions that some people do not like—that will always be the case—but it provides answers nonetheless. As an EU lawyer, I find it very frustrating to hear people say that the internal market is not complete and has not been finished. What has happened is that a particular set of answers has been provided to the problems that are faced at the moment. Those answers must evolve and change. Internal markets are never complete—they are never finished.
I come back to what I said before. There is the constitutional challenge of Westminster, and there is the empirical challenge of England. If we wanted to recreate a functioning internal market—it would not be the same as that of the EU, because the context is totally different, although the challenges are the same—we would have to face up to those two facts. How would we constitutionally create a system that recognised the equality of the Governments and the Parliaments and allowed for independent and impartial management of the internal market? Such an institutional framework does not exist now. How would we recognise that the English economy and population overwhelm the economies and populations of the other nations? What would be the best substantive policy choices to manage that? If we sorted those two challenges, we would have a well-functioning internal market, but I recognise that that is quite a big task.
10:15
Professor Dougan, you have just summarised the point that I will raise with you. I appreciate that the question that I will ask is difficult but, for the committee’s benefit, will you say what would be an answer to the questions of parliamentary sovereignty and the empirical reality that Scotland has a population of 5 million and England has a population of 55 million? I appreciate that we are dealing with hypotheticals that are laced with political difficulties—some might even categorise them as impossibilities—but will you sketch out what an answer would look like in practice?
This is where the EU example is useful because, in the EU, Germany has a population of 85 million, whereas Malta has a population of 500,000, so the EU is familiar with vast discrepancies of population and economy. The Council of the EU plays an important role because, although population size is relevant to many decisions in the Council, it is also irrelevant to some things. On fundamental treaty change and designing the rules of the system, all member states have an equal voice and none can outvote the others. In particularly sensitive policy areas, such as taxation, all member states are equal and none can outvote the others.
We can imagine a system in which all four UK Governments and legislatures were treated on an equal basis for the fundamentals of how the internal market is managed but in which population size was relevant to other decisions. However, that would require a total rethinking of the UK constitutional framework.
That is the challenge that we are talking about—it is where the gap between the aspiration for independent and impartial governance structures meets the reality of parliamentary sovereignty in Westminster and the lack of a distinct English Parliament. We could say that we needed to work around those two things, which would mean that the approach was much more about building collaborative fora in which the Parliaments agreed that they were to be treated as equal and the Governments agreed that each would have an equal voice—even though, constitutionally, that is not true. Alternatively, we would have to fundamentally reimagine the UK constitution. Perhaps there would be a moment of genuine national crisis in which fundamentally rethinking the UK constitution was possible; that is what would be involved.
Can I ask a short supplementary question?
I need to be fair to the other people who want to answer your original question.
I appreciate that we are talking about bringing in the cassis de Dijon principle and the Luxembourg compromise; that is fascinating for me, as I studied EU law and politics. We must think of the Commission, too. It has one commissioner for each member state and it proposes policy that is in the common interest of the whole EU. The tension in the UK is that it has no body that could propose common frameworks for the whole UK’s interest, because the whole UK’s interest is assumed to be represented by the UK Government and not by representatives of England, Wales, Scotland and Northern Ireland. That is another missing point.
The business of parliamentary sovereignty will never be resolved, but we can get around it. My interpretation is that I am sceptical of parliamentary sovereignty, but I accept that it exists as a principle. It does not mean that Westminster must always have supremacy over everything. In a federal understanding of the UK constitution, the legislative consent convention could be seen as part of the constitution. That would not resolve all the problems, but it would change the bargaining dynamics, so that Westminster could not always overcome the objections of devolved legislatures as the last resort.
Although federalism, whether legally or conventionally entrenched, is a theoretical answer, we have to bear in mind that no federation has such an imbalance between its federal units. Germany is very much larger than Malta, and California is much larger than Maryland, but in neither case does one part account for 84 per cent of the population of the whole. That changes the balance of the argument around when it is acceptable to have equal status in decision making versus population-based decision making. There is a genuine question about democratic fairness in allowing 84 per cent of the population to be outvoted by 16 per cent.
I am conscious that Angela Constance and Tom Arthur have more questions. I will come back to them later, if they still want to ask them. I need to let others come in.
To an extent, the questions from Angela Constance and Tom Arthur went into the territory that I am interested in pursuing. I am particularly interested in the parallels between the EU single market and its institutions, and the UK internal market.
Michael Keating makes a comment in his submission about the contrasts between the two different models. The EU single market has been created by treaty—it is about sovereign countries coming together to create something new. The UK internal market is quite different because it is something that already existed. Parts of it have been devolved through powers being passed down by the centre. In that context, how much can we really learn from the creation of the EU single market, and how much of it is transferable to the UK situation?
I argue that it is difficult to simply download the EU internal market system into the UK devolution settlement because we just do not have the institutions and, as you say, the history is very different. We can learn something from it about what an internal market means, its flexibility and the fact that it can extend in unexpected directions. We can learn about the advantages and disadvantages of having a strong role for the courts that is much stronger than the role of the courts in the UK internal devolution settlement. In fact, the courts mostly interfere in the UK’s internal devolution settlement through European law rather than other kinds of law.
The principle of subsidiarity and proportionality is important. It is difficult to put that into law but it is a working principle that is quite important. People have tried to put it into EU law but it is a slippery idea, although it is built into the process. There is also the idea of horizontal co-operation and that there is no element of hierarchy. There is a hierarchy of laws, but there is no hierarchy in decision making through the European Council.
We cannot reproduce something that looks exactly like the Council of the European Union; that would be futile. However, we can learn from the principle and notion that policy is jointly made.
We can also learn from some of the downsides of the European system, such as the problems with transparency and accountability, the excessive judicialisation of some things and the role of private actors intervening in the process, which might have advantages and disadvantages. That is what I am interested in learning.
However, we cannot simply transfer the system. That is why, right at the beginning of the meeting, I was critical of using the terms “internal market” and “single market”, which have a European context, as if they would be the same thing in the UK.
We have all said at one point or another that the internal market is a flexible, living concept. There is no such thing as a perfect internal market; it is just a principle that needs to be interpreted in different circumstances, and we might need our own interpretation of it. Indeed, the different parts of the UK might have their own interpretations of it. We have seen all that in the European experience, and we can learn from it.
Different parts of the UK risk having different interpretations of the single market because there is a good chance that Northern Ireland will have a much closer relationship with the EU single market than the rest of the UK.
The UK Government has promised unilaterally that, if Northern Ireland has to change its rules and adapt to new EU rules, the Government will ensure that Great Britain follows. That issue could come into play under the next Conservative Government. Through the Northern Irish backstop, the UK could end up following quite a wide range of EU rules and, basically, staying in the EU single market.
If that becomes the reality, a lot of this discussion will not be necessary, because, in effect, we will follow what the rest of the European Union does anyway.
If we think of Brexit as being about taking back control, it would be nice not to end up having the UK single market defined by the EU. It would be nice to do some home-grown work on the matter. It is likely that UK actors will not have access to the same kind of EU remedies, so domestic rules and ways of dealing with issues will be needed, even if the UK is under the EU’s influence.
Does anyone else want to respond to Murdo Fraser’s question?
I will follow up on the question of whether this will all be a theoretical discussion in the end. Even if the Northern Irish backdrop were to come into effect, if Northern Ireland were to remain dynamically aligned with evolving EU legislation and if the UK Government and Parliament were to decide that the rest of the UK would do the same, that would cover only a relatively small part of the overall single market and certainly a small part of the economy.
The only way in which the discussion could become genuinely more theoretical is if we were to follow, for example, a Norway-style European Economic Area agreement. If that were to happen, this discussion could more or less melt away, because not much would change in practice—the UK would do what the EU said it should do but would not have a voice at the table. That is, in effect, the Norway option. The level of economic ambition that the UK Government and the EU have agreed to in the political declaration, as it stands, falls far short of the ambition under the European Economic Area model. That will become a live issue that will need to be dealt with, so we should keep that in perspective.
I will move on slightly and pick up on the points that were made earlier on the resolution of disputes. Ideally, we would want to find a political and/or governmental solution. However, if we were not to find such a solution quickly, do you foresee a large number of court cases coming—I presume—to the Supreme Court on the operation of the UK internal market post-Brexit?
We might draw an analogy with devolution jurisprudence generally. It took a long time to build up a significant body of case law, and it took a particularly long time for any cases to arise on the division between reserved and devolved competences. Most cases were about human rights. Why was that? Nobody is very clear, but part of the answer is that there are effective internal checks that prevent the devolved legislatures from straying significantly beyond the scope of their powers. Sometimes, there are no incentives for people to challenge decisions that might—arguably—be unlawful, so it is in no one’s interest to challenge them.
The difference in relation to the internal market is that it will be in people’s interest to challenge decisions, because we will be talking about powerful organisations, with significant amounts of money at stake. Some—but probably not all—of the potential disputes could be headed off. Enough precedents have been set on resorting to courts to solve matters that we might reasonably expect to come up.
10:30
I agree completely with Aileen McHarg. Another factor that makes quite a big difference and which I have hinted at in my written evidence is that, for 45 years, pretty much every lawyer in the UK has been trained in how the EU internal market works—find me a lawyer who does not know about the cassis de Dijon judgment or who does not understand how the system works. The process is entirely familiar to lawyers and to the people who would have the incentive to make their careers out of bringing such cases. All the principles are there, like a toolbox waiting to be picked up. When we add that to the economic, commercial and financial incentives for businesses that feel that the UK internal market is not working the way that they would like it to, we have a combination of factors that could quite rapidly make the situation a potent source of litigation.
I preface this by saying that I am not a lawyer, but my impression is that the Welsh experience is quite different, because of the different devolution settlement. Because there has sometimes been a lack of clarity on where the powers lie, there have been many more cases between the UK and Welsh Governments. I believe that a lack of clarity on the division of power would lead to many more cases.
I have questions about further centralisation. Dr Gravey’s written submission states:
“In devolved policy areas with direct trade implications such as agriculture, ongoing legislative developments in Westminster appear to point towards greater centralisation”.
We have talked a bit about agriculture and environmental issues. The submission points out that
“Clause 28 in the Agriculture Bill ... gives central government powers previously held by the devolved administrations”.
We have different farming practices in Scotland, and 85 per cent of our land is less favoured area, so we need to do things differently with our beef and sheep. How would further centralisation impact on farmers in Scotland? What are the threats if taking back control means that agriculture is not devolved?
In my written evidence, I referred to the work of colleagues in the Brexit and environment network. I am happy to provide supplementary written evidence to go into more detail on that. Clause 28 of the Agriculture Bill is on the World Trade Organization Agreement on Agriculture. Basically, the clause is about the UK Government looking at the instruments that are used by the different Administrations, deciding in which box they will fit and potentially then limiting the ability of those Administrations to use more or less market-distorting instruments. Until now, that has been done at EU level, and there is actually quite a lot of flexibility. There is a fear about that, which has been pointed out. The Welsh Assembly has done a lot of work on the Agriculture Bill and on that specific bit of it, so you could look at that.
That is a key concern. The obvious place where there is a tension between trade and agriculture is the issue of genetically modified organisms. England is the only part of the UK that has not availed itself of the ability to opt out of GMOs under current EU law. A lot of American companies and the US trade department have clearly stated that they hate the EU policy on GMOs, and of course a UK market would be very interesting in that respect. Exactly as Michael Dougan said, with the push towards a trade agreement with the US, we could end up with English producers that grow GMOs having direct access to the Scottish market, or perhaps the English ones would not, but American ones would. Through a trade deal, American GMO producers could have access to the Scottish market, which would have a knock-on effect on farmers.
Many of the discussions on common frameworks and so on are about having some kind of central Government control over devolved Administrations. The UK Government has missed a trick in that regard because, for me, the way to make that politically palatable is to give devolved Governments a seat at the trade negotiation table, or at least at the trade negotiation preparation table. We know from the EU example that not all 28 member states negotiate the trade deals. The European Commission negotiates the deals, but what to negotiate for is agreed by all 28 countries.
An easy way to reassure the devolved Administrations would be to say, “Of course we will pursue a trade policy that works for the whole of the UK. We will make sure that it does so by involving the Governments in preparing all position papers and having them discussed in Parliaments.” If they did not do that, we could end up with situations with lots of opposition and fears, as happened with the transatlantic trade and investment partnership negotiation.
There is an important difference between the strategies of the Welsh and Scottish Governments with regard to the intergovernmental system. The Welsh Government is quite happy to have joint frameworks and, indeed, joint policies, as long as the devolved Administration has a say, whereas the Scottish Government puts more emphasis on doing its own thing.
That is a philosophical difference, but it conditions an awful lot of those strategies. For that reason, plus the dispute over the withdrawal act, the Welsh Government has bought in to some of the sectoral bills, such as the Agriculture Bill, but the Scottish Government has not. That is problematic because it means that there is not a UK-wide system. The Northern Ireland Administration is not able to do anything because it is not working at the moment, so there is just an English and Welsh process with a bit stuck in about the WTO rules, which says in effect that the UK can control direct payments, as Viviane Gravey said.
In agriculture, there is a lot of scope and pressure for policy divergence. Surprisingly, Wales is pretty much lined up with England on the issue of phasing out direct support for farmers, whereas Scotland wants to keep direct support. Having subsidies in one part of the UK and not the others raises all kinds of internal market considerations. That situation already exists, but it may become greater.
There is also the question of the balance of considerations in agriculture: in England, it is about the market and the environment; but in Scotland and Wales it is about social considerations, maintaining the population in fragile communities and geographical balance. The circumstances are quite different and we can see a lot of pressure for divergence there.
The other big problem in agriculture is, of course, money. We do not know what will happen to the money, although we know that there will be less of it. It will not be Barnettised; there will be an agriculture formula, but direct support will come down in England, so that will drive down support here. I can see a lot of controversy about agriculture. The economic sector may be small but it is important socially and environmentally and is very politically salient.
We will move on to state aid, and James Kelly will kick us off.
Thank you, convener. State aid rules and their interpretation by the different Governments in the United Kingdom could become an area of inconsistency. What conflict issues may arise and how might they be resolved?
The panellists had a discussion about this before we came into the committee meeting. In the US, Amazon is trying to establish its second headquarters and cities are in fierce competition and increasing the amount of public money that they are spending and public rules that they are willing to bend to help to secure Amazon to come to them. We could end up with the four nations competing to make sure that the big plant is in their jurisdiction and not in another. That would be a big waste of public money, and whichever nation has the bigger purse will get it anyway.
There is a clear risk that looser competition rules—moving away from EU state aid rules—would lead to public money being spent, because businesses would put the four nations in competition with one another. That would be very problematic.
I agree. It is inevitable that we will end up with some kind of UK state aid framework. The ability to spend public money is an important policy tool for the devolved Administrations, which the Scottish Government in particular has used extensively to extend its policy competence beyond the strict limits of the Scotland Act 1998. There are sensitive issues to be addressed there. There is also the underlying question of where state aid currently lies in relation to the reserved/devolved boundary. I think that we will end up with some kind of UK framework, but I expect there to be significant disputes and tensions.
This is probably one of the areas where we do not have to worry quite so much. I think that, in any trade agreement with the EU, it will insist that the UK has a state aid regime that is roughly comparable to the one that exists today. The main issue will probably be less the substantive rules, which I do not think will diverge much from the existing EU substantive rules; the real question will be—I return to the thing that we keep talking about—which institution will interpret and enforce those rules and how independent it will be of any of the four Governments or legislatures that make up the UK’s governance system.
My concern would be about not the substance of the state aid rules but the institutional question of who administers them within the UK and how independent and impartial that body will be.
I agree with my colleagues on that. It then links in to what competition policy we will have in the UK and how that will be regulated. For example, we need to consider the role of the Competition and Markets Authority and how that will link in to other regulatory agencies that we might have, to deal with other things.
Under the backstop, EU competition policy and EU state aid rules would still apply in Northern Ireland. We could end up with an interesting situation there.
I call Alexander Burnett.
The questions that I was going to ask have already been covered, thank you, convener.
I would like to drill down a little bit further. I do not know whether this is too difficult a question either politically or legally, but there is a live dispute, as I understand it, between the United Kingdom Government and the Scottish Government about where state aid fits in relation to the division between devolved and reserved competence in the Scotland Act 1998 and perhaps other devolution statutes. What are your views on that?
My view is that it is devolved. The reason is that the UK never had its own state aid regime, so it has never been part of domestic competition law. The wording—
It has never been part of domestic competition law.
It has never been part of domestic competition law. The wording that is used in the Scotland Act 1998 has a technical meaning within competition law that would not, as far as I am aware, extend to include state aid. If we go by the standard approach to interpretation of the devolution statutes, I do not think that a court would interpret them as including state aid.
Does anyone else want to comment on that? It seems not.
Does the same apply to competition policy? That is reserved, is it not?
Competition policy is reserved. I cannot remember off the top of my head what the definition is, but the wording that is used has a technical meaning within competition law that does not encompass state aid. State aid control is a different element of competition law.
State aids were definitely reserved in the Scotland Act 1978, but they were not reserved in the second one—the Scotland Act 1998. Somebody must have known what they were doing. I noticed right away that there was a difference, which is entirely consistent with the difference between the two statutes. The 1998 act was much more generous, defining the reserved powers and not the devolved powers, and it was passed within the European context. In my writings, I have pointed out that difference between the two acts, because it seems to me to be significant.
Michael Dougan might be right to say that this will never arise in practice because, in any future trading relationship that we have with the European Union after Brexit, the European Union will insist as a condition of entering into that agreement that UK state aid policy is broadly similar to or perhaps exactly the same as—his expression was “dynamically aligned with”—the EU rules on state aid.
However, if we assume for the purposes of argument that it does arise as a real issue and, without conceding anything, that Professor McHarg is right that state aid is devolved and competition policy is reserved, how will that work, given what you have said about the close practical interaction between competition policy and regulation and state aid?
10:45
It would mean that any UK framework would require devolved consent, but whether devolved consent would be insisted on in the new constitutional disposition post the withdrawal act is a different issue.
Even if Michael Keating is right—I think he is—about the fact that we will not have much choice with regard to the content of the rules, the decision about who will enforce matters will be a really important one. We can anticipate that there might be differences of views between the devolved and the UK Administrations. Therefore, the question of where competence lies and whether the Sewel convention is engaged is extremely important.
The Sewel convention applies to legislation but not to regulatory authorities, so if the Competition and Markets Authority is the regulator that is charged with the primary responsibility for enforcing whatever UK competition and state aid policy looks like post-Brexit, because the CMA was created by an act of the UK Parliament and is accountable to the UK Parliament or to UK ministers, Sewel will not come into play, will it?
That depends on how the CMA acquires the enforcement powers. If it does so via statutory instruments under the withdrawal act, Sewel will not be engaged, although there are equivalent non-statutory consent principles that have been agreed, which are being applied to withdrawal act statutory instruments. However, if the CMA acquires the enforcement powers through primary legislation, Sewel would be engaged.
That raises a broader question about how regulatory authorities in general will tie in with the devolution settlement. There has been very little information about that from the Government.
Patrick, before I go back to Tom Arthur and Angela Constance, is there anything that you want to touch on?
I was going to touch on issues around democratic accountability, which several of the witnesses have spoken about. I want to focus on the idea of a legislative model and the problems of being unable to constrain the UK Government, and its existence as the UK Government and the Government on what we would call devolved issues for England. We have not really talked about the idea of an intergovernmental model and how accountability would work in it. We have seen what a mess a Government can get into if it makes an agreement with another Government or Government body and cannot get that through its own Parliament.
We are in a situation in which it is almost inevitable that we will have separate political jurisdictions with different political balances. There is an expectation that Governments will resolve how to make such decisions, but there is no mechanism for achieving parliamentary engagement on that. Can the witnesses point to any mechanism that would be functional in achieving accountability in the appropriate places on matters that are devolved here but not elsewhere?
Going back to what I said about how the general principles could be laid down and where that would be done, I do not think that it would necessarily be done in a closed-door meeting of ministers. There would have to be other kinds of input. I mentioned that specialists in particular areas, such as lawyers or economists, could be involved, but stakeholders and the general public would also have to be involved. That would have to be a political decision; indeed, decisions on the boundaries between the market, the environment, social policy and so on are very political decisions. I see no reason whatever for having that sewn up between Governments. There could be an open and accountable process, given that we are talking about highly politicised issues.
As for working out the details of the process, it would be up to the various Parliaments to make sure that Governments reported to them regularly—before as well as after meetings, and before as well as after making commitments—so that Parliaments got the opportunity to contribute their understanding of what the internal market meant.
But as there is no body other than the UK Parliament, which is also the Parliament for England on devolved matters, that can hold a UK-wide common decision-making arrangement accountable, where is the opportunity for citizens as voters to know who they are holding accountable for decisions that are imposed through the common frameworks to implement an internal market?
That is a key issue right now with regard to the Agriculture Bill and the environment, because stakeholders do not know who they are supposed to go and talk to. It would be problematic if that were to continue.
The Council of Ministers might be the least transparent of the European institutions—the European Parliament is much more transparent, and even the European Commission is more transparent—but it is so much more transparent than the JMC. For example, we know when the council’s meetings will be held; decisions on when those meetings will be held are taken not just by one of the countries involved; some of it can be watched online; and texts come out of it, not just one-page paragraphs. All those things could be improved as far as the JMC was concerned. As Michael Keating has said, getting Parliament to talk to ministers before and after the meetings would be a good way of going about this.
There are other ways of doing this, and people should think creatively about them. There could, for example, be a political agreement on broad principles, similar to a European Union directive, or there could be an agreement on the endgame, with the Parliaments arriving at that objective in different ways. Westminster could legislate for England, and the other Parliaments could legislate for the rest of the UK, as long as they were all working towards the same agreed political aim. UK-wide legislation would not always be needed, but that would require—
But if the political balance in those different jurisdictions varied, it might be democratically impossible to get the same outcome from the different legislatures.
There is very little voting in the Council of Ministers of the European Union. Most of the decision making is done consensually, because the ministers around the table know that they will have to go back to their countries and explain what happened. It is much harder to bind a country to common rules if it has often been in the minority. Instead of rushing things through, we need good will and time to build consensus on the common frameworks. It is because we are rushing through a lot of this that we are not able to find a consensual position.
Building on what Viviane Gravey has said, I think that, if we accept that the Westminster problem is not—short of a constitutional revolution—going to go anywhere, what we are really talking about is creating a buffer between constitutional theory and how the system works in practice, and about how to make things more collaborative and have a system of equals.
That said, there are different things that we can learn from the EU experience with regard to increasing the scope for democratic accountability and legitimacy. There is, for example, the system of mandates that Dr Gravey mentioned. In certain member states, their Government representative has to have a parliamentary mandate in order to agree to something in advance, whichever collective body is making those decisions. The EU also has the yellow card system—it could easily be an orange or red card—whereby national Parliaments are able to flag up serious issues or objections, which have to be taken into account by whichever centralised decision body is involved.
Something that Viviane Gravey said is important and worth elaborating on. There is no inherent reason why an internal market needs to be highly centralised. It is completely agnostic about the methods used to manage the market—it is the methods that count, not the end result. There are various sectors in which the EU adopts purely outline principles, which the member states implement in whatever way they see fit in their own territories. There is only minimum harmonisation; everyone agrees a level-playing-field standard, but each territory is completely free to go beyond that if it so wishes. There are also systems of derogations, in which there can be special exemptions from the rules. Those are all up for negotiation.
I am wary of equating an internal market with centralisation, because it is only one way—and not necessarily a very good way—of having a such a market. You can certainly have a well-functioning internal market that is based on a much more decentralised and co-operative model.
I should point out that, despite the disagreements over the European Union (Withdrawal) Act 2018, discussions about common frameworks are proceeding rather well and consensually, without any need to resort to the statutory mechanisms. It might be that we have not got to the bits at which consensus will break down; nevertheless, consensus is taking us a long way, even in this rather fraught political situation. Issues of political divergence do not have to become sticking points—it is quite possible for people to accept the legitimacy of divergence in the creation of the common frameworks.
That brings me to my final point. Professor McHarg sounds more optimistic than I had been expecting, to be honest. We are all grateful for your work and for advising us and giving us briefings on the issues, but I feel as if we have been going round the houses on this quite a lot. It is clear that significant constitutional innovation is required, but I see no evidence that the UK is ready for it—and this is three months after the original leaving date. Surely, then, it is completely implausible that significant constitutional innovation will cut through these problems by October.
I can see a lot of people agreeing with Patrick Harvie.
If only people had thought of these things beforehand. [Laughter.]
If only.
Quite a few Tory MPs are talking about abolishing the House of Lords. There is an appetite for constitutional revolution.
And the whole concept of the sovereignty of the Westminster Parliament has been subject to real challenge in the process.
Angela Constance, do you want to come back in?
Just briefly. Does the panel think that, whatever we do about the internal market, constitutional change is inevitable?
Well, an awful lot of it is taking place—the question is whether we can understand it and anticipate what the real issues will be. We have spent the best part of two hours talking about the internal market, but we do not really know what is likely to come up. As Aileen McHarg has said, a lot of discussions about detailed issues have been put aside; that is going to be a problem, because, as Michael Dougan has pointed out, all kinds of things can come up in that regard.
The danger lies not in our making up the constitution as we go along—we all do that; indeed, that is how constitutions are always made—but in our not knowing where we are going and making decisions that will affect future decisions and get us into dysfunctional things. We had what I thought was an unfortunate process after the Scottish referendum, with the Smith commission and its being given between St Andrew’s day and Burns night to come up with a new settlement. That was far too short a time, and the deadline was totally artificial. Now we face deadlines that are not artificial; they are real, and the danger is that we will stumble into things that will cause problems for the future.
Occasionally, we need to sit back and think about the implications of all of this. We will never have a grand-bang constitutional reform in the United Kingdom—that is just not the way it works—but we can stumble into dysfunctional things if we are not careful.
Again, I see a lot of people agreeing with that. I should put that on the record.
As a French person, I suggest that you have a—well, I will not say that you should have a revolution. [Laughter.] However, there is something healthy about changing the constitution every few decades. We just like doing that.
We are probably living in the middle of constitutional upheaval that will lead to something more fundamental.
My main worry is that all this is being done in a state of heightened crisis management and not necessarily in the types of circumstances in which we would want such important decisions, with such long-lasting consequences, to be made. We know that bad decisions that are made in a crisis can have a very long-term impact and fundamentally shape how issues are dealt with and governed long after the crisis itself has passed by. My main concern is the legacy that we will end up living with once this complete mess has passed us by—if it ever does. Sometimes it feels as if it will not.
I guess that a fair bit of irrevocable decision making is going on at the moment.
That was a fascinating, informative and enjoyable session and I thank the witnesses for coming along and contributing. Your evidence will help us significantly, and I am very grateful.
I suspend the meeting for a few moments to allow a changeover of witnesses.
10:59 Meeting suspended.11:10 On resuming—
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