A report by the National Assembly for Wales’ Climate Change, Environment and Rural Affairs Committee published on 24 March received more publicity than might have been expected. That was largely because the chairman of the Committee, Mark Reckless AM, is a leading member of UKIP.  Despite that fact, the Committee’s report emphasised the importance to Welsh agriculture of maintaining tariff and quota-free access to the EU single market for Welsh agricultural and food products and of maintaining levels of agricultural subsidies at current levels set under the EU Common Agricultural Policy (“CAP”). Commentators noted that these issues would not have arisen had the UK rejected UKIP’s advice and decided to remain in the EU.

But the report highlighted an area that is likely to be of considerable interest to constitutional and public lawyers over the next few years, namely the way in which the devolution settlement deals with the “repatriation” to the UK of areas of law that have hitherto been dominated by the UK’s membership of the EU. Since this post is inspired by a report of the Assembly, it will focus on Wales.

Current arrangements for agriculture in Wales

Ever since the origins of the EU – and certainly since the UK joined in 1973 – agricultural policy has been determined at EU level.  National competence has been limited to administering the CAP and to taking a few limited policy decisions within the framework of the CAP.

It was against that background that, in Wales, the area of “Agriculture, including animal health and welfare” has (with various specified exceptions) been within the legislative competence of the National Assembly for Wales (“the Assembly”): see paragraph 1 of Schedule 7 to the Government of Wales Act 2006 (the “GWA06”).

Perhaps more importantly in practice, given the limited legislative competence left to Member States in this area, the Welsh Ministers were given (under article 3 of the European Communities (Designation) (No. 5) Order 2010) to exercise, in Wales, the power in relation to the CAP to make statutory instruments under section 2(2) of the European Communities Act 1972.  An example of the use of those powers is the Common Agricultural Policy (Integrated Administration and Control System and Enforcement and Cross Compliance) (Wales) Regulations 2014, under which Welsh Ministers exercise certain powers left to Member States (such as the minimum size of agricultural parcel in relation which an application for support may be made).

Further, the Welsh Government is responsible for the administration of the CAP in Wales.  In practice the Welsh Government has administered certain parts of the CAP through the Rural Payments Agency, which administers the CAP on behalf of the Secretary of State in England and (in some respects) on behalf of the Scottish Government in Scotland. But even where the RPA administers the CAP in Wales, various key decisions, for example after internal appeals against administrative decisions under the CAP, are taken by Welsh Ministers (for a Scottish example of this, see Angus Growers v Scottish Ministers [2012] CSIH 92.

Finally, the competence of the Assembly in this area is, on the one hand, circumscribed by its lack of domestic competence to pass any measure incompatible with EU law (see section 108(6)(c) GWA06) and, on the other hand, buttressed by the Sewel Convention that the UK Parliament will not normally legislate in an area of devolved competence without the consent of the Assembly.

Changes under the Wales Act 2017

The first change made by the Wales Act 2017 (“WA17”) is that the Sewel convention is, as from 31 March 2017, given statutory form in a new section 107(6) GWA06, which provides that “it is recognised that the Parliament of the United Kingdom will not normally legislate with regard to devolved matters without the consent of the Assembly”.

The second important change for present purposes is that, when the WA17 is fully implemented, the model of specific devolved competences will be replaced by the “Scottish model” of a general legislative competence subject to powers reserved to the UK Parliament (see new Schedule 7A to GWA06) (the ‘reserved powers’ model). As might be expected given that it has been a devolved matter to date,  agriculture is not one of those reserved competences.

What happens after Brexit?

After Brexit (and on any type of Brexit, given that EEA members do not take part in the CAP) the UK will no longer be in the CAP.

Absent any other measures, the result would be that the Assembly would retain legislative competence in the area of agriculture but would no longer be constrained by EU law in exercising that competence.  It could, for example, devise a wholly new system of support for farmers.

That raises two serious issues for the UK as a whole.

First, at a purely national level, there would be serious difficulties for the UK agricultural market if systems of support for farmers varied substantially across national borders.  To take an example, if subsidies for sheep farmers on the slopes of Pen y Fan are substantially higher than those offered to sheep farmers on the slopes of Skiddaw or of Ben Lomond, that is likely to affect the price of Welsh lamb compared to English or Scottish lamb.  Since erecting tariff barriers on Offa’s Dyke is unlikely to be an option, there is scope for considerable distortion of competition within the UK.  The Assembly Committee refers to the comments of David Jones MP, Minister of State at DExEU, to the effect that there would probably have to be a common UK-wide framework for agriculture in order to ensure that one part of the UK does not enjoy an unfair advantage over another (see paragraph 57).

Second, at an international level, the level of agricultural subsidies is frequently the subject of free trade agreements: and it is likely that any free trade agreement (FTA) with the EU and (in due course) with other countries such as the US, is likely to limit the extent of permissible agricultural subsidies.

Looking at the question at a purely national level, the UK Parliament could either restrict the devolved agricultural competence or legislate across the UK in that area. That would involve, unless the Assembly agreed, a breach of the Sewel Convention, with significant, if not stormy, political consequences (if not legal ones, following the Supreme Court’s approach to the Sewel Convention in Miller). The UK Government would doubtless contend that, in reality, no power currently available to the Assembly or Welsh Government was being taken away: all that was happening was that powers repatriated from the EU were returning to London rather than to Cardiff. But the fact would nonetheless remain that in order to prevent repatriation to Cardiff, the UK Parliament would have to legislate in a way that engaged, and would be seen to breach, the Sewel Convention.

Another option – and this is the one preferred by the Assembly Committee – would be for the devolved administrations and the UK Government to agree a common framework across the UK through the mechanism of an enhanced Joint Ministerial Committee (a “UK Council of Ministers”), but allowing “maximum freedom” within that framework to develop agricultural policy for Wales (see page 31 of the report). But it is not clear how far agreement even of a common framework will be politically feasible, given the different political complexions of the devolved administrations and the UK Government: and there is plainly much room for disagreement as to what needs to go into a common framework and what should be left to the devolved governments.

Part of the solution may, however, emerge at an international level.  As already noted, it is likely that any FTA with the EU (in particular one that preserves tariff-free access) will commit the UK not to increase agricultural subsidies.  That is not likely to be too onerous an obligation for any part of the UK, given that no part of the UK is likely to want to increase support above current CAP subsidy levels.  However, subsequent FTAs with other countries may well impose rather stricter controls on subsidy levels.

If and when the UK enters into such FTAs, devolution legislation enables Westminster to intervene to ensure that the devolved governments take no action that breaches the UK’s international obligations.  Thus, in Wales, section 114(1)(d) of GWA06 gives the Secretary of State power by order to intervene to prevent the Assembly from enacting a measure that would breach an international obligation of the UK.  And under section 82, the Secretary of State has power to prevent the Welsh Ministers from infringing an international obligation of the UK and to direct them to introduce a Bill into the Assembly to bring any such breach to an end (see section 82(2) and (15)).

In short, the potential problems of differing levels of agricultural support in different parts of the UK may in the end be solved by the UK entering into international commitments which in turn restrict the ability of the devolved administrations to offer agricultural subsidies that exceed those agreed by the UK.  Whether that will be politically acceptable to the devolved administrations remains to be seen.

Indeed, the difficulties identified here in relation to agriculture raise a wider issue.  The devolution settlement – as will be apparent – simply assumed membership of the EU.  That meant that it did not have to address the possibility that acts of the devolved parliaments or administrations could substantially distort the UK internal market: any such acts were likely to be contrary to EU single market law.  Indeed, the fact that the devolution settlement did not deal with the possibility of distortion of UK food markets by means of agricultural subsidies can be seen as a particular example of the wider point that that settlement does not restrict subsidies in any area of the economy, such restrictions being unnecessary while all levels of government were subject to EU State aid rules.  As the present author pointed out in a recent paper on the State aid regime, the absence of any domestic restriction on the powers of the devolved governments to grant State aid, with the possibility of serious distortions in the UK internal market thereby arising, is another question that may well need to be addressed during the Brexit process.    Politically, however, any such re-examination of devolved competences is likely to be politically fraught: to adopt a suitably Welsh metaphor, here be dragons.

George Peretz QC is a barrister at Monckton Chambers, London

(Suggested citation: G. Peretz, ‘Storm Clouds over the Welsh Mountains: Agriculture and Devolution’ U.K. Const. L. Blog (30th Mar 2017) (available at https://ukconstitutionallaw.org/))