Introduction

The key to understanding the distinctiveness of the UK’s constitution is to appreciate that our political revolutions occurred much earlier than in other European countries. They took the form of the English Civil War of 1642–1651 as the result of the constitutional conflict between Parliament and the Crown, and the ‘Glorious Revolution’ of 1688 resulting in the Bill of Rights of 1689 as part of the broader post-revolutionary political settlement. Both centrally involved matters of the economic constitution; in particular, could the Crown tax and spend without Parliament’s consent? As a result of this history, our underlying constitutional principles give a central role to Parliament rather than to the courts; “[on] the one hand, the judiciary has a fierce independence; on the other, law is not regarded as the great interpreter of politics”.¹

The central principle of the English constitution has been seen, at least since Dicey’s restatement of the constitution in 1885, as Parliamentary sovereignty.² Strictly interpreted, this is a statement of the relationship between Parliament and other institutions; it requires there to be no restrictions on the subject-matter on which Parliament can legislate, and that no other institution, including the courts, can hold a provision in an Act of Parliament to be legally invalid. However, it has also had a further, less clearly defined, effect; to privilege, in constitutional terms, the role of Parliament over that of other actors, including the courts. Over the last half-century, there has been some questioning of the continuing validity of Parliamentary sovereignty, but it has recently been re-affirmed by the Supreme Court as a fundamental constitutional principle and has played a major part in the rhetoric (though less in the reality) of the Brexit process.³

Allied to this principle is the fact that, although we have had a Supreme Court since 2009, its role has been very different from that of constitutional courts in Continental Europe. It cannot invalidate a provision in an Act of Parliament, nor is it able to use a codified constitution as the basis for developing a constitutional jurisprudence. This is not to say that it has been unable to make constitutionally far-reaching decisions, as we shall see below, and indeed there has been considerable controversy about the way in which it has acted to hold government to legal account, especially in the Brexit process.⁴ The enactment of the Human Rights Act in 1998, which makes the European Convention on Human Rights enforceable in domestic law, has also given important new impetus to the UK courts in reviewing governmental action, though it has had relatively little impact in the economic field. What is not present in the UK, however, is a body of judicially enforceable constitutional norms providing the basis for a constitutional jurisprudence, especially in an economic context. Nor is there any clear set of philosophical or economic principles of substance underlying economic management; for example, we have no equivalent to the ordoliberalism of Germany⁵ and, arguably, of some parts of the European Union’s economic constitution.⁶

Finally, the UK has never been a federal state, and for most of its history it has been highly centralized, especially in the economic field, where the UK Treasury and the Bank of England have been the central economic actors (especially the former). Both institutions have had only very limited relations with authorities outside London. In 1998, however, a process of devolution was commenced, in which three of the UK’s constituent nations, Scotland, Wales and Northern Ireland, were given their own parliaments and executives, and a substantial number of policy areas were devolved to them. These include areas of major economic significance, such as much of regulation, and in the case of Scotland there has also been devolution of some fiscal powers. However, this is far from a federal system.⁷ Devolution is not legally entrenched, though it can be seen as politically protected through prior approval by referendums in each of the devolved nations. More recently, the devolved system has come under major strain as a result of the Brexit referendum. Scotland and Northern Ireland voted decisively to remain in the European Union, and serious disputes have arisen, as we shall see, about the allocation of powers returned from Brussels between London and the devolved nations. Scotland now has a popular Scottish National Party government committed to Scottish independence. As a result of these strains, there is a clear possibility that the UK will break up in the foreseeable future.

These characteristics make the UK very different from other European nations. It is true that there has been a degree of convergence with them since the major constitutional reforms under Labour Governments from 1997–2010, particularly through the creation of the Supreme Court, the incorporation of the European Convention on Human Rights, and devolution. However, these have not fundamentally re-written the nature of the UK’s constitution. Nor has there been any sort of historical rupture during the 18th–20th centuries which has resulted in the need to draft new constitutional models as in many other European states. As a result, analysis of our economic constitution must be carried out differently from that of our European neighbours. It cannot be based on codified constitutional norms or an established constitutional jurisprudence.⁸ Instead it has to be an institutional account of the arrangements for the making and implementation of economic policies, and for holding governments, and indeed markets, to account. In fact, an adequate analysis must be as much sociological as strictly legal.⁹ Clearly, the role of Parliament, and of its committees, will form a major part of this but, as we shall see there are many other institutions responsible for economic management and its scrutiny which are not directly parliamentary. Before examining them, however, it will be helpful to say a little more about the limited role of the courts in relation to economic management.

1 Our Constitutional History and the Role of the Courts

As I mentioned above, the experience of the 17th century and the violent conflict between Parliament and the Crown was essential to shaping our constitutional development. The courts played a major role in the early part of these conflicts, but they were at best ambiguous in their support for the principles which were to emerge in the course of the century.¹⁰ In cases concerning taxation and spending the courts sided with the Crown. For example, in Bate’s Case in 1606, the Court of Exchequer held that a levy imposed by the Crown on imported currants was justified by the Crown’s extraordinary prerogative to regulate foreign affairs, and there were broad dicta to the effect that the Crown’s prerogative was not reviewable.¹¹ In the celebrated, and politically explosive, Case of Ship Money in 1637, the defendant refused to contribute to a levy to fund the navy, claiming that the financial resources necessary for defence had to be raised through Parliament.¹² The majority of the court held that the King had sole responsibility for the defence of the realm and that this included the raising of taxation in this field which could not be restricted by Parliament. Parliament responded vigorously; in 1641 it passed a statute pronouncing the decision void, declared the writs for the collection of ship-money unlawful, and impeached two of the judges.

The courts were more active in restricting the powers of the Crown to regulate without reference to Parliament; notably, in the Case of Proclamations in 1616 where it was held that the King could not by proclamation change the common law, statute or custom, nor create a new offence by way of proclamation; the King “hath no prerogative, but that which the law of the land allows him”.¹³ This case is still of major importance today and formed a central basis for the two successful challenges to the Government’s conduct of the Brexit process discussed below. Similarly, the famous Case of Monopolies in 1602 concerned the Crown’s sale of the exclusive right to make, import and sell playing cards.¹⁴ The court held that monopolies were in most circumstances contrary to common law and to the liberty of the subject. The monarch continued nevertheless to sell monopolies, which were an important means of raising funds, and they were finally prohibited (with exceptions) by statute in 1624.

Rather than the courts developing the fundamental constitutional principles relevant to the economy, this fell to Parliament, most importantly after the ‘Glorious Revolution’ of 1688 in which the Roman Catholic King James ii was deposed and replaced by the Protestant William and Mary. A central part of the resulting settlement was the Bill of Rights of 1689 which placed Parliament, not the courts, at the centre of the constitution. Article 4 provides that “levying of money for or to the use of the Crown, by pretence of prerogative, without grant of Parliament for longer time, or in other manner than the same is or shall be granted, is illegal”. Although the Bill does not explicitly deal with spending powers of the Crown, there was recognition of a similar principle based on the redress of grievances before supply. As the Judicial Committee of the Privy Council put it in 1924 “it has been a principle of the British Constitution now for more than two centuries [...] that no money can be taken out of the consolidated Fund into which the revenues of the State have been paid, excepting under a distinct authorization from Parliament itself”.¹⁵ Moreover, the Bill of Rights firmly established the principle of Parliamentary privilege under which Parliament is self-regulating; Article 9 provides that freedom of speech and debates or proceedings in Parliament ought not to be impeached or questioned in any court or place out of Parliament. The result has been that Parliament, not the courts, has been the dominant institution in our economic constitution.

Of course, this does not mean that the courts have played no role in supervision of governmental measures relating to economic management through the application of conventional legal principles. This was demonstrated most vividly in the two Miller cases referred to above.¹⁶ In Miller 1 a majority of the Supreme Court held that the Government was acting unlawfully in triggering Article 50 of the Treaty on European Union, and so irrevocably commencing the Brexit process, by an exercise of the Royal Prerogative rather than using legislation passed by Parliament. The main reason for the decision was that the prerogative could not be used to render ineffective the European Communities Act 1972, the legal basis for EU membership, and so to change domestic law. In Miller 2/Cherry, the Supreme Court held unanimously that the Royal Prerogative could not be used to prorogue (suspend) Parliament to avoid Parliamentary scrutiny of the Government’s Brexit plans. Although these decisions resulted in fierce political controversy, and much academic ink has been spilled in discussing them, in my view they are seen simply as the application of clear principles established in earlier cases, including the Case of Proclamations discussed above.

Similarly, the basic principle of ultra vires used as a basis for much judicial review may play an important role in areas of economic management. This has been particularly marked in relation to taxation. Although tax law is a hugely important area of law in practice, it is treated, and taught, as a matter of private commercial law rather than as public constitutional law. Nevertheless, the courts have been prepared to apply public law concepts as the imposition of taxation is seen as potentially infringing private property rights and so appropriately subject to judicial scrutiny.¹⁷ On public expenditure, the courts have taken a restrained approach to review of central government on the basis that “the levels of public expenditure and the incidence and distribution of taxation are matters for Parliament”.¹⁸ By contrast, the courts were excessively keen to restrict the spending powers of local authorities, developing the concept of a fiduciary duty owed by such authorities to their taxpayers and interpreting the concept of ultra vires strictly.¹⁹

Even for central government, however, the courts will of course apply conventional review in challenges to government schemes which entail spending allocation so long as the judiciary does not have to make difficult judgments about balancing spending between projects. For example, a decision by the incoming Coalition Government to cancel a major school building programme was held to be unlawful by the High Court on the basis that there had been a failure to consider the merits of individual cases in exercising a statutory discretion, failure to consult resulting to unfairness and failure to consider statutory equality duties.²⁰ In one case in 1995 it did appear that the courts would go further and consider the value for money of public expenditure.²¹ Here the Government was providing funds for the building of a dam in Malaysia from funds for overseas development. The High Court interpreted the statutory power under which the funding was provided as restricted to support for sound development projects, whilst this project was so economically unsound that there was no economic argument in its favour. The immediate outcome was that the Government provided temporary funding for the project from the Contingencies Fund, normally used for unforeseen emergencies such as Covid-19 support. Permanent funding was secured through a fresh Act of Parliament and a supplementary estimate. The extreme nature of the facts in this case is the explanation for the fact that such an approach has not been applied to other examples of public expenditure, and the case does not seem to have established any more far-reaching ground for judicial review of spending.

Finally, although review under the Human Rights Act has transformed many other areas of law, in relation to economic management its effects have been quite limited. It has resulted in a much greater consciousness of the importance of designing regulatory institutions so that they comply with the procedural requirements of Article 6 of the European Convention on Human Rights, notably in the area of financial services. Substantive provisions of the Convention have also been applied in the tax field, notably holding unlawful a discriminatory tax reduction available only to widows and not to widowers.²² In a decision finding that an error of law by a regulatory body had deprived a company of a financial benefit to which it was entitled, the Court of Appeal was prepared to award damages based on an infringement of Article 1 of the First Protocol of the Convention.²³ However, these cases are far from establishing a general human rights-inspired jurisprudence in the area of economic management, and the courts have been eager to underline the limitations of their role here. For example, the Court of Appeal emphasized that decisions in the area of macroeconomic policy would be relatively remote from judicial control, even where infringement of a Convention right is alleged, as they are more within the competence of government than of the courts.²⁴

Although the UK courts have used existing principles of administrative law as the basis for review of economic decision-making, including the expenditure of public funds, there is no developed body of case law constituting a specifically economic constitutional jurisprudence. For our economic constitution, it is necessary to look to other institutions, commencing of course with Parliament, though it will become apparent that there are also important limits to its capacities.

2 The Centrality of Parliament and Its Weakness

At this point an important distinction must be highlighted, that between a substantive and a ‘communicative’ or ‘contestatory’ economic constitution.²⁵ A substantive economic constitution sets out principles which are to be applied to the substance of economic management. In socialist or social-democratic constitutions, this may reserve certain areas of the economy to public ownership; in market-oriented economies, it may implement a philosophy such as ordoliberalism and protect property rights. The UK has never had an economic constitution of this kind, with the possible exception of the influence of European Union law, to be discussed below. A ‘communicative’ or ‘contestatory’ economic constitution does not establish such principles of substance but instead establishes the institutional structures for economic management, and, crucially, the means by which they can be scrutinized.²⁶ Such a constitution may establish arrangements for deliberative accountability of the way the economy is run.

The UK’s economic constitution falls firmly into the second category. The result of the 17th century revolutions was that, whilst the conduct of economic management was for the Crown, now better envisaged as the executive, scrutiny was for Parliament. Indeed, this was a general characteristic of the UK constitution, which has led it to be characterized as a ‘political’ rather than a ‘legal’ constitution.²⁷ This distinction is problematic in many ways, particularly where it suggests a clear-cut distinction between the two and that they are somehow in competition with each other. For example, the two Millar cases, though based on conventional legal reasoning, can be interpreted functionally as the legal constitution acting to reinforce the political constitution by ensuring that the royal prerogative could not be used to avoid scrutiny by Parliament of the Brexit process, thereby reinforcing the institutional balance of the political constitution. However, to refer to our political constitution does make the important point that the 20th century settlement made Parliament the central institution for scrutiny of the executive.

This can be seen in the role of the House of Commons in the scrutiny of public expenditure, for example. We have no equivalent to the French Cour des Comptes or the Italian Corte dei Conti. Instead, this scrutiny is carried out by the powerful Committee of Public Accounts of the House of Commons on the basis of intensive work carried out by the National Audit Office, headed by the Comptroller and Auditor-General, an officer of the House of Commons. Examination is far-reaching, including in-depth inquiry not just into the legality of spending but of whether it represents value for money.²⁸ This makes an important point about the role of Parliament, which, in the context of economic management, is essentially one of ex post facto scrutiny rather than of policy making or implementation. That is for the executive. For example, the advance allocation of public expenditure is carried out through a spending review process in which Parliament has only a minimal role.²⁹ The authorization of expenditure by Parliament through the supply process is very much a formality with very limited debate indeed of issues relating to the allocation of expenditure. In the words of an inquiry into the process, “[t]he majority of people who gave evidence to this inquiry were of the view that the supply process as it currently operates, while being very complex, is little more than a ‘rubber stamp’”.³⁰ No estimate (the document setting out each department’s annual spending for approval) has been rejected since 1919 (referring to the provision of a second bathroom in the Parliament building for the Lord Chancellor).³¹ It is important, therefore, to emphasize that the role of Parliament is not one of control but of scrutiny.³²

Even this role has however become an increasingly difficult one to undertake, and our economic constitution has grown in a way very different from that envisaged by the 17th century settlement. This is partly due to changes in Parliament itself. The UK has a fused executive and legislature with the executive drawn from Parliament, mainly from the House of Commons. At the time of the Bill of Rights and for many years later, political parties were relatively weak. However, the later growth of political parties has meant that the governing party is able to exercise strong party discipline over its members in the House of Commons. This is one reason for the very weak advance scrutiny of spending plans by the legislature. Moreover, government is, of course, now hugely more complex than anything envisaged by the 17th century settlement. The result has been that the scrutiny function of Parliament has shifted to its specialist committees which normally work on a non-partisan basis, and which are also able to amass a degree of specialist expertise. Apart from the Committee of Public Accounts referred to earlier, each department is subject to scrutiny by a specialist select committee examining the ‘expenditure, administration and policy’ of the department and of public bodies associated with it. In particular, the Treasury Committee played a major role in examining issues such as the spending review process, the response of government to the 2008 banking crisis, and reform of financial services regulation. The select committees may also examine draft legislation and will hold hearings examining key public appointments, for example of members of the Monetary Policy Committee of the Bank of England. In almost all such cases these do not, however, include a right of veto of the appointment.

Even more importantly, there has been a high degree of pluralization of the executive and of the arrangements for its scrutiny. The traditional doctrine of ministerial responsibility was based on a highly monolithic view of the state; the minister was responsible to Parliament for all the activities of his or her department and it was assumed that this was in itself sufficient to secure effective scrutiny. For reasons set out above, this was a wildly unrealistic expectation. In fact, there had long been important institutions which did not take the form of departments headed by ministers and so were not directly accountable to Parliament.³³ An important example is that of the Bank of England, which was established as a private bank to lend to government in 1694 and nationalized by the Bank of England Act 1946. In the central task of determining monetary policy, it was given substantially greater legal and de facto independence by the Bank of England Act 1998.³⁴ This creates a clearer set of relations with government through which the Chancellor of the Exchequer (our minister of finance) sets a remit for monetary policy and the independent Monetary Policy Committee determines interest rates and issues an open letter if the remit is not met. The Committee publishes the minutes of its meetings the day after the meeting to which they relate.³⁵ When the UK had a substantial number of nationalized industries, they were also set up as public corporations at ‘arm’s length’ from ministerial departments and were subject only to limited Parliamentary scrutiny.

This process has accelerated with the setting up of independent regulatory agencies, particularly as part of the process of privatization of public enterprises from the 1980s onwards. In this the UK was ahead of other European nations (though not of the United States), in part because the flexibility of our constitutional arrangements permitted conferral of wide discretion, including rule-making powers, on independent agencies. There were strong political reasons for the use of such agencies rather than government departments, notably to assure investors that there would be only limited political intervention in enterprises after privatization.³⁶ Although there was some initial political controversy about their lack of direct accountability to Parliament, they quickly became the standard model for regulation, and indeed were highly influential in the creation of agencies elsewhere in Europe. Lack of direct ministerial responsibility was compensated for by other means of accountability; for example, the agencies are subject to scrutiny by the National Audit Office and the Committee of Public Accounts as their boards are appointed by ministers. They have also adopted open and participatory procedures for rule making and other decisions. The Constitution Committee of the House of Lords published a detailed examination of the ‘regulatory state’ in 2004 and emphasized the ‘360 degree’ accountability of regulatory bodies with multiple accountabilities to Parliament, the courts, interest groups, regulated companies, customers and consumers and their representative bodies, citizens and ministers. This could be more effective than direct upwards accountability of a minister to Parliament.³⁷

This increasing pluralization of the executive was mirrored in a wider range of institutions for scrutinizing it and for opening up its workings, as the report of the House of Lords Committee suggested. One striking example is that of the Office for Budgetary Responsibility, established after the 2010 election and given a statutory basis by the Budget Responsibility and National Audit Act 2011. It is responsible for publishing independent assessments of the public finances, which amongst other things form the basis for the government’s spending review. It is also responsible for assessing whether the Government is on course to meet its financial targets, reporting on the financial implications of tax and spending measures, the health of the public sector balance sheet and the long-term sustainability of public finances. The existence of the Office has done much to open up the public expenditure process through creating an independent body which engages in what is almost a form of public dialogue with government. In relation to monetary policy, a similar form of openness can be seen in the processes of the Bank of England Monetary Policy Committee discussed above. Moreover, the institutions of the European Union have also provided a further means of outside scrutiny of government; I shall say more on this below as Brexit poses major problems of how their role will be fulfilled in future.

The model of a unitary executive undertaking management of the economy, including managing public expenditure and regulation, and accountable through a minister to Parliament, is now profoundly misleading. Instead we have a plurality of different institutions accountable in different ways. This has strengths in terms of learning from a variety of experience and in creating flexibility; it also has weaknesses where problems of communication exist between different institutions. The problem was illustrated vividly when serious difficulties arose in responding to the 2008 economic crisis due to problems of communication between the Treasury, the Bank of England and the financial services regulator.³⁸ This is of course now complicated further by the complexity of relations with the devolved nations and the uncertainty of the future of the Union. The most serious problem now, though, is the lack of clarity as to how the economic constitution will develop after Brexit, and this requires some consideration of the role of EU economic law during the UK’s membership.

3 The European Union and a Post-Brexit Economic Constitution

The UK joined the European Union much later than other major European industrial powers and so was unable to influence the design of the European economic constitution in its early, defining moments, in marked contrast, for example, to the UK’s central role in the drafting of the European Convention on Human Rights. Moreover, UK membership was qualified in important ways. The UK remained outside the Eurozone and the full system of European Monetary Union. Very importantly, it was also not party to the Fiscal Compact and the Treaty on Stability, Coordination and Governance with its demanding requirements for the quasi-constitutional restriction of deficits and debts.³⁹ Nevertheless, membership of the European Union had far-reaching consequences for the UK’s economic constitution. Of course, specific rules and principles, such as the four freedoms, changed the management of our economy in fundamental ways, and also had major social consequences. Indeed, the substantive commitments of the EU treaties, for example, the commitment to “a highly competitive market economy, aiming at full employment and social progress” now contained in the Treaty on European Union, were the closest thing to a constitutional commitment to economic values that the UK ever acknowledged.

Moreover, membership of the European Union also transformed our economic constitution in more subtle ways. For example, though the UK was not a member of full monetary union, it was party to the Stability and Growth Pact adopted in 1997 and to the excessive deficit procedure, though no sanctions could be issued against it. It was committed to “endeavour to avoid an excessive government deficit” and was subject to scrutiny by the Commission, notably through the European Semester process; in 2008 the excessive deficit procedure was initiated for the UK.⁴⁰ This can be seen as filling an accountability gap in the UK domestic arrangements; as noted above, though Parliamentary committees have been effective in scrutinizing the ex post facto use of public money, Parliament is weak at examining overall public expenditure and borrowing.

The most striking example of Europeanization of the working of our economic constitution was that of competition law.⁴¹ Before EU membership, this was entrusted to a highly complex mix of different institutions under the Monopolies and Restrictive Practices (Inquiry and Control) Act 1948 and the Restrictive Trade Practices Act 1956. The former established a Monopolies and Restrictive Practices Commission to investigate oligopolies and cartels (with mergers added later), reporting to the relevant government department which would then decide what action to take. The latter legislation established the Restrictive Practices Court, a specialist adjudicator on cartel policy required to apply broad public interest tests in deciding whether cartels were to be prohibited. Otherwise, the role of the minister remained central, for example in determining whether to refer a merger to the Monopolies Commission and whether or not to follow its rulings. According to the historian of the Monopolies Commission, “[t]he Secretary of State for Trade and Industry [was] the sun around which British competition policy orbits”.⁴² The approach was discretionary, political as well as economic, and certainly not underpinned by a theoretical approach based on ordoliberalism nor by any form of economic theory.

The institutional arrangements and methodology of competition law were to change dramatically from the late 1990s, in part reflecting the move to the use of independent agencies described above. Much more significant, however, was the influence of EU law and institutions. In brief, from the passing of the Competition Act 1998 onwards the vast majority of ministerial discretion was removed and instead independent authorities were employed to take decisions on the basis of economic tests rather than exercising a broad public interest discretion. The process was taken further as a result of the decentralization of EU competition law to national competition authorities operating through a European Competition Network by Regulation 1/2003.⁴³ As Wilks has argued, this represented an ‘extraordinary coup’ on the part of the European Commission, delegating tasks to national authorities which reflected the Commission’s own economics-based approach to competition policy.⁴⁴ The relevant UK authority is now the Competition and Markets Authority, a non-ministerial government department established under the Enterprise and Regulatory Reform Act 2013.

This transformation of major aspects of the UK economic constitution as a result of EU membership raises major questions relating to the effect of Brexit. It can safely be said that little thought had been given to post-Brexit economic management before the 2016 referendum, not least because no one expected its result to be in favour of leaving the EU, even (or especially) those most strongly campaigning for a leave vote. The fraught process of negotiation since has also limited the attention paid to what the future arrangements will actually be; a trade deal was eventually reached between the UK Government and the EU but major continuing uncertainties remain, particularly relating to the status of Northern Ireland.⁴⁵ The early stages of life after Brexit will be made easier by the fact that the major domestic legislation involved, the European Union (Withdrawal) Act 2018, whilst repealing the European Communities Act 1972 which provided the gateway by which EU law entered UK domestic law, retains in force what is referred to as ‘retained EU law’.⁴⁶ This is most directly effective EU law in force in the UK at the time of exit, and it remains valid, subject to very extensive ministerial powers to repeal provisions through the use of order-making powers.

However, in the longer term, important questions remain to be asked about how the gaps left by withdrawal from the European Union will be filled, and in particular the extent to which divergence will be possible in practice from the European Union model. The position on competition law is that it is covered only briefly in the Trade and Cooperation Agreement, and in the short term the Competition and Markets Authority will have to apply the current statutory provisions, themselves largely based on European Union law. However, there was considerable controversy on the future treatment of state aid, or ‘subsidy control’ as it has been re-christened by the UK Government. On this subject, the Government stated that it will proceed “by clearly moving away from the EU’s State Aid rules to create our own, sovereign subsidy control regime. This will build on our obligations under the wto and other trade agreements”.⁴⁷ Along with fisheries policy, this was one of the major blockages to the negotiation of a new trade deal, despite the fact that in the past the UK has granted far less state aid than other European nations. Even more controversially, the new regime will apply to the whole of the UK so will be a responsibility of the UK Government with no role for the devolved governments of the constituent nations.⁴⁸ This has caused major tensions with those devolved governments, which wish to remain closely aligned with the European Union rules. A Bill to provide a legislative basis for the new system was introduced to Parliament in June 2021, and envisages arrangements very different from those of the EU, with self-assessment of compliance by public bodies and an advisory role for a new Subsidy Advice Unit within the Competition and Markets Authority; enforcement will be for the Competition Appeal Tribunal.⁴⁹ State aid will be one of many matters on which we can expect to see major complexities in rebuilding aspects of our economic constitution previously shaped by membership of the European Union.

Conclusion

It is clear from the analysis above that not only does the UK have a radically different set of constitutional arrangements from those of other European nations, but that this divergence is especially strong in the case of our economic constitution. Rather than an economic constitution setting substantive limits to economic management, we have one which is concerned with institutional scrutiny and deliberation, traditionally through Parliament but now through a more plural system of different institutions.

The UK model has had one great strength; it allows politics to be politics and does not impose artificial, and potentially partisan, constraints on the substance of economic policy. We have no constitutional balanced budget rule, for example, and a decision such as that of the German Federal Constitutional Court in relation to the European Central Bank’s Public Sector Purchase Programme would be unthinkable in the UK.⁵⁰ This openness of our economic constitution has had the benefit of flexibility, most evident recently in permitting a response to the Covid-19 crisis untrammelled by constitutional restrictions on funding. It has also permitted us to develop a pragmatic and experimentalist approach to institutional design of regulation and to develop institutions other than Parliament or the courts to scrutinize government.

Our economic constitution also has some major disadvantages. The chief of these is a lack of coordination between different institutions, a major difficulty in the response to the 2008 financial crisis. The post-Brexit agenda has also permitted the marginalization of the devolved nations of the UK with no effective constitutional protection for their role in decision-making. In particular, the arrangements for a UK internal market created outrage in the devolved nations through centralizing a wide range of powers formerly exercised by the EU to the UK rather than to the devolved level, without proper consultation with the devolved institutions, and potentially threatening high regulatory standards supported by those authorities.⁵¹ As a result, there is now a real chance that the UK will cease to exist in its current form should there be a successful vote for independence in Scotland, possibly followed by similar moves in the other devolved nations.

There is also a lack of clear critical constitutional principle in this crucial area. The degree of political flexibility and reliance on political scrutiny of government through Parliament has meant that it has been impossible to differentiate constitutional values from politics. To some extent the gap has been filled in the past by the creation of other forms of scrutiny of government, including those emanating from the European Union, but Brexit creates major problems of how the resulting constitutional and institutional vacuum will be filled. At the moment the alternative vision held within the current Government seems to be one of what Max Weber termed ‘plebiscitary democracy’ with a strong executive claiming its legitimacy not from a set of constitutional arrangements which includes checks and balances, but from an assumed unitary ‘will of the people’ expressed through a referendum or general election.⁵² This is not, of course, a development confined to the UK, but the radical break of Brexit, and the fact that lack of preparation meant that Brexit arrangements have had to be improvised in a rush, has meant that this constitutional vision is particularly problematic.