BREXIT ‘A FUNDAMENTAL CHALLENGE’ TO THE FUTURE OF THE UK – LORDS EU COMMITTEE

The House of Lords EU Committee has today published its report on Brexit and devolution. The report concludes that on the day of Brexit, all powers currently exercised by the EU will ‘by default, be exercised in accordance with … pre-existing statutory provisions’. This would mean a large range of powers in areas such as fisheries, agriculture and environmental protection returning from Brussels to Edinburgh, Cardiff and Belfast not Westminster.  
The Committee recommends that during Brexit ‘the statutory balance of competences between the UK Parliament and the devolved legislatures should as far as possible be unchanged’. This would lead to a ‘significant increase in the powers and responsibilities of the devolved institutions.’
The report stresses the need for UK Government and the devolved Governments to ‘set aside their differences and work constructively together to achieve an outcome that protects the interests of all parts of the UK’. 
The Committee calls on the UK Government in particular to ‘raise its game’ in consulting the devolved governments, so as to give them real influence in the Brexit negotiations.
The Committee’s report was agreed before the publication of the European Union (Withdrawal) Bill last week, and the joint response from the Scottish and Welsh Governments indicating they could seek to withhold legislative consent to the Bill in its current form. The report is clear, however, that a durable outcome ‘will need the consent of all the nations of the United Kingdom, and of their elected representatives’.
The report highlights the complex ‘overlapping and shared competences’ within the devolution settlements, describing the supremacy of EU law as the ‘glue holding together the United Kingdom’s single market’.  Brexit therefore presents a ‘fundamental challenge’ to the future of the UK’.
The report notes in particular the ‘acute concern’ that the devolved jurisdictions will ‘lose heavily’ if needs-based EU funding is replaced by UK subsidies granted in accordance with the population-based Barnett Formula.
The report considers the impact of Brexit on Northern Ireland, Wales and Scotland.
Northern Ireland
The Committee restates its previous conclusion that the unique circumstances of Northern Ireland will require unique, ‘flexible and imaginative solutions’.
The Committee notes that Brexit has already undermined political stability in Northern Ireland and exacerbated cross-community divisions. In light of the Conservative/DUP agreement, it calls on the Government to maintain confidence in the nationalist community. The Committee welcomes the commitment of the UK Government and the European institutions to protect the achievements of the peace process and to avoid the imposition of a hard border in the island of Ireland.
Wales
The Committee notes that the Welsh economy is heavily dependent on exports to the EU, operating a £2.25bn trade surplus with EU member states against a £2.3bn trade deficit against non-EU countries: Welsh manufacturing would therefore be hard hit by a failure to agree a comprehensive trade deal with the EU. The report also highlights that the loss of EU funding will put Welsh agriculture at risk, given the predominance of hill farming and sheep farming.
The Committee notes the Welsh Government’s wish to “work constructively” in achieving a successful outcome, and calls on the UK Government to “reciprocate this good faith”, finding ways protect Wales’ interests in the Brexit negotiations.
Scotland
The report finds that the Scottish Government’s proposal for Scotland to remain a member of the EU Single Market, while the rest of the UK leaves, would be politically impracticable, legally complex and economically disruptive.  At the same time, the Committee calls on the UK Government to “respect the particular circumstances in Scotland”, including the high level of support in Scotland for remaining in the EU.
The Committee concludes that any Brexit deal should accommodate Scotland’s particular needs, including its reliance upon EU migration to meet both labour market and demographic needs. The Committee warns, however, that conferring legal personality upon Scotland, to enable it to negotiate its own agreements with the EU or third countries, would have ‘profound and unpredictable constitutional and political consequences’.
Commenting on the report, Lord Jay of Ewelme, a member of the Lords EU Committee and former Head of the Diplomatic Service, said:
“Brexit’s impact on the future of the United Kingdom will be profound and unpredictable. At the moment the internal politics are pretty toxic, and we saw only last week the start of what could become a deep and bitter dispute on the role of the devolved institutions in passing the EU (Withdrawal) Bill.   
“We can’t afford this. The UK Government must respect the devolved institutions. It’s not enough saying it’s listening to them—it’s actually got to take account of what they say and adjust its approach to accommodate their specific needs. Equally the devolved administrations must work with, not against, the UK Government to get the best Brexit for the whole of the UK.
“Devolution in the UK has been uncoordinated. For the last 20 years the EU and its institutions have helped hold together an increasingly devolved UK. In the long term we will need real reform: we will need to agree guiding principles, and finally replace the Barnett Formula with a needs-based funding arrangement.
“But that’s for the future. In the short term what is crucial in getting the best out of Brexit for all parts of the UK. That means setting aside party politics and working together. It means the Government getting the basics right, using existing structures like the Joint Ministerial Council on European Negotiations to build a true consensus.”