UK internal market: initial assessment of UK Government proposals

Initial Scottish Government assessment of the threat to devolution, regulatory standards, businesses and jobs.

Inconsistent with devolution

The UK Government proposals would establish new constraints on the devolved powers of the Scottish Parliament, Senedd Cymru/Welsh Parliament and Northern Ireland Assembly by the creation of the mutual recognition and non-discrimination requirements that will cut across existing devolved competence.  In addition the UK Government proposes to reserve subsidy control, a devolved matter. 

These proposals would mean that if the UK Government – not just the present one, but any future administration – decided to change the standards on food safety, animal welfare, the environment, building regulations or many other areas, other parts of the UK would  simply have to accept such detrimental changes,  even if they were unwilling to alter  their own rules.    Mutual recognition would mean that any changes would have to be accepted in Scotland regardless of whether they aligned with the desires of the people of Scotland or practical circumstances in Scotland.

The Scottish Government believes that EU standards represent international good practice, as well as facilitating trade with the EU following the end of the transition period, and intends to maintain them for Scotland where possible.  Despite its claims to the contrary, there is every reason to believe that the UK Government will have to accept reduced  standards to secure a Free Trade Agreement with the United States and accede to the Comprehensive and Progressive Agreement for Trans-Pacific Partnership (CPTPP), which takes a US-based approach to regulation.   The US has been unequivocal that agriculture, food standards and drug prices will be on the table in any future trade deal with the UK.   

In any case, whatever the claimed intentions of the current UK Government, consenting to the UK proposals would cede control and negotiating influence from devolved institutions permanently, and the Scottish Parliament could not resist any future UK Government effectively imposing lower standards on Scotland in devolved areas should it choose to do so. 

The White Paper includes many examples of where decisions of the Scottish Parliament could be overruled as a result of these proposals:

  • In a section headed ‘Costs of regulatory divergence’ there is a case study on deposit return schemes (page 77)

  • There is a trade costs example concerning food labelling (page 78)

  • There is a case study on food manufacturing which covers food hygiene, recycling, animal welfare and environmental matters such as pesticides (pages 79 -82) 

  • Minimum unit pricing is specifically mentioned as a regulatory restriction and cost (page 82)

  • Differences in building regulations and construction permits are highlighted as an additional burden (page 85)

Fundamentally, the approach, and the conceptual framework of governance, set out in the White Paper is inconsistent with devolution within the UK system, which depends on respect for devolved competence and restraint by Westminster in exercising its retained absolute Parliamentary sovereignty.  The paper illustrates a worldview that differences in devolved areas are a problem, and that the approach to that problem is to impose a new framework designed and decided by Westminster.  It does not recognise that such changes can only be legitimately made with the consent of the devolved institutions.  The consultation itself does not recognise the particular role or status of devolved institutions in the UK’s constitutional system – in the case of Scotland,  the Scottish Parliament and Government were guaranteed their permanence by the Scotland Act 2016,  after the Smith Commission following the 2014 referendum. Instead it suggests that they are merely stakeholders, and not fundamental components of the machinery of government in the UK.  

The White Paper asserts that leaving the EU will lead to an increase in the powers of the devolved governments and institutions, whatever the eventual constraints imposed by UK internal market legislation.  This is to misunderstand and indeed wilfully  misrepresent the nature of the devolution settlement.  Currently, devolved powers and responsibilities have to be exercised compatibly with EU law, as indeed do the powers and responsibilities of the UK Government and Westminster.  Following the end of the transition period, that constraint on devolved competence no longer applies, as it does not apply to the UK Government or Westminster. 

The imposition of a constraint on the exercise of devolved competence by Westminster legislation would be a reduction in devolved competence, as it would be a domestic legislative constraint imposed by Westminster not an international obligation binding on both the Scottish Parliament and Westminster.  This would also be true if, for example, existing European Structural Funds, administered by the devolved governments, were replaced by a UK Government controlled fund (the Shared Prosperity Fund). 

European Single Market rules allow national parliaments and governments considerable discretion to legislate to protect and promote the health and welfare of their populations. These rules flow through the devolution settlement to the Scottish Parliament. In practice, this means that the Scottish Government and Scottish Parliament are able to implement EU law in a way which works for Scotland and legislate in devolved areas using the well-established flexibilities of the European Single Market.  These safeguards are not evident in the UK internal market proposals and it is clear that any flexibility permitted to the devolved governments and legislatures can be reduced or removed by decision of the UK Government and Westminster (see paragraph 46 for a comparison between the EU Single Market and the UK internal market proposals).

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