Media Briefing Note: The Legal Impact of the No Vote on Businesses

LONDON, 19 September 2014 - Scotland has rejected independence following yesterday's referendum, with the "No" campaign winning 55 per cent of the votes to 45 per cent.

The UK Government has pledged to devolve more powers to Scotland and the focus has now turned to changes to the UK's constitutional structure. It was announced this morning that the UK Government's intention is for Scotland to hold new powers including being able to allocate money in whichever way it chooses to health, education and justice. It will also have the final say on funding for the NHS. However, the UK Government's view is that this should be linked to a broader settlement involving the constitutional position of England, Wales and Northern Ireland.

The UK Government intend to bring forward draft legislation before the 2015 General Election but the legislation would only pass through Parliament following that election.

Charles Brasted, a partner in Hogan Lovells' UK & EU Public Law and Policy practice, said:

"Although a "no" vote means some of the most complex issues (for example, those related to potential temporary loss of EU membership or changes to Scotland's currency) will not now arise, significant questions are raised by the proposals to significantly extend devolution particularly given the UK government's intention to include the remainder of the United Kingdom in a process on the same timetable.

"These questions will broadly fall into two categories. Firstly, where public sector functions are devolved there will be structural questions as to the arrangements for those functions to be fulfilled. Will existing departments or agencies be separated and what arrangements, if any, will be established to liaise over policy development or share common functions to ensure alignment and efficiency going forward?

"Secondly, devolving functions or creating different regimes applicable to various parts of the United Kingdom inevitably raises the possibility of divergence. To the extent that institutions in Scotland (or other parts of the UK) take on more responsibility for policy making or regulatory decision making there is real potential for business to face additional burdens. These burdens will arise both in the need to engage with an increased range of public bodies on development of policy and regulation and in complying with a more complex patchwork of regulation. Depending on the precise scope of additional powers which are devolved, issues may also arise from scenarios in which those powers are exercised in different parts of the UK for the benefit of individual regions rather than being looked at on a unified basis across the UK as a whole.

"The proposed timetable for this process (which is currently under discussion) envisages draft legislation within the next 6 months and ahead of the 2015 general election. This is very challenging given the complexity and range of issues on the table. Business will need to act swiftly to understand and engage with the proposals as they emerge in the coming weeks and months."

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