Tory 'power grab' Act faces fast-track review and could be revised

Martin Shipton

A controversial Act of Parliament seen as a prime example of Boris Johnson’s mission to roll back devolution is to be reviewed earlier than expected by Labour’s UK Government.

The government has decided to fast track a review of the UK Internal Market Act, saying it will work with devolved governments to deliver better outcomes for businesses and citizens across the UK..

When the UK was an EU member state, it had to abide by EU regulations that set compliance standards in policy areas such as consumer goods, food safety and the environment.

After Brexit, it was initially thought that the four UK nations would have the legal power to set their own standards. But the Conservative UK Government, with Mr Johnson at the helm, decided to legislate so that common standards would apply in all four UK nations - and that the lowest standard chosen by one of the countries would be applicable throughout the Union.

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'Common frameworks'

While the Welsh and Scottish governments accepted the need for “common frameworks”, they wanted individual standards to be set by agreement between all four nations, based on a dialogue of equals.

The Act was pushed through despite serious reservations expressed by the Welsh and Scottish governments.

In a July 2020 letter to the then Cabinet Office Minister Michael Gove - who was responsible for steering the Internal Market Act through Parliament, Jeremy Miles, then the Welsh Government’s Counsel General, protested that the legislation was an attack on devolution.

He wrote: "My understanding is that you intend to publish a Green Paper shortly, and that the Green Paper is likely to reflect a growing view within the UK Government that embedding an enhanced mutual recognition principle in primary legislation – a legal right for any good or service produced in one part of the UK to the standards which apply there to be put on the market across all parts of the Union – is the only way of achieving these aims.

"Regrettably my officials have not been able to confirm this formally – let alone discuss the joint work – because your officials no longer appear authorised to discuss this with us. As it was agreed that this would be a joint piece of work, it is wholly unacceptable that we now seem to be faced with a solely UK Government generated proposal coming forward, and this is a missed opportunity to show we can work collaboratively.

“[We] are very concerned that a mutual recognition regime without underpinning standards agreed by all the governments of the UK would effectively result in the actions of one UK nation, by adopting lower standards, leading to another having to choose between its legitimate policy objectives and the competitiveness of businesses producing in its territory, at least for goods and services whose market does not support differential quality.

“The capacity for policy innovation in one part of the UK within the EU regulatory system has, we would argue, been an important benefit of devolution for the whole of the UK. Charging for single use plastic bags, minimum unit alcohol pricing, an opt-out system for organ donation are all innovative policy ideas which have been tested out in one nation and subsequently – having been proved to be effective – have been replicated in other parts of the UK.

“We need to learn from the experience of the EU Single Market – where, of course, the approach to legislating for standards and mutual recognition is based on a process which treats member states as equals.”

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Disregarded

But the arguments put forward by Mr Miles were disregarded by the then UK Government, which pushed the new law through in its original form.

Now, the Labour UK Government has pledged to launch a review in January 2025 and complete this by summer 2025 – ahead of the legal deadline for a review by December 2025.

In a written statement, Minister of State for Trade Policy Douglas Alexander said: “The UK internal market is essential for the UK economy, allowing people and business to buy and sell goods, provide services and work across the four nations of the UK.

“The internal market has been estimated to be worth around 10% of GDP and Scotland, Wales and Northern Ireland all trade more within the UK market than outside it. It’s crucial we protect that market whilst respecting policy divergence which comes with devolution.

“This UK Government is committed to engaging with the devolved governments, and we recognise frustration with how the UK Internal Market Act has operated in the past, particularly the lack of clarity in terms of how it operates.

“That is why we are bringing forward a review of the Act six months earlier than the statutory deadline. We will engage directly with the devolved governments as part of the review in a good faith process that seeks to balance the different policy choices that devolution affords us, while protecting the integrity of the internal market to ensure we can continue to drive for economic growth, jobs and higher living standards.

“This government is delivering our Plan for Change with investment and reform to deliver growth and put more money in people’s pockets. Reviewing this Act is a key part of that.”

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Meaningful changes

Welcoming the announcement, Plaid Cymru Westminster leader Liz Saville Roberts said: “This review of the Internal Market Act is welcome and must lead to meaningful changes.

“Plaid Cymru opposed the Act from the beginning, as it enables UK ministers to alter the devolution settlement through secondary legislation, disregarding the will of the Senedd and the people of Wales.

“Respect for devolution must now be put on a legal footing to protect our democratic rights and ensure genuine collaboration, not Westminster diktats.”