Internal Market Bill becomes law – How has the Act changed?

Published 18/12/2020   |   Last Updated 22/12/2020   |   Reading Time minutes

The UK Government’s Internal Market Bill has received Royal Assent and become law after the House of Commons and Lords agreed on its final wording. It is one of the most constitutionally significant Acts of recent years.

The Act does three key things:

  • Establishes new rules for the regulation of goods, services and qualifications across the UK, called the ‘Market Access Principles’;
  • Gives UK Ministers funding powers in devolved areas; and
  • Reserves powers over subsidy control to the UK Parliament.

The Act has proven controversial, with both the Senedd and the Scottish Parliament voting to withhold consent to it. However, it was passed by the UK Government without devolved consent.

The Counsel General, Jeremy Miles MS, announced on 16 December that the Welsh Government would ask for a court judgment declaring that constitutional legislation applicable to Wales cannot lawfully be ‘cut down in this way’ if the Bill was passed.

Three Senedd Committees had concluded that the Act could undermine devolution. It also had a difficult journey through the House of Lords, which voted to defeat the Government on numerous occasions, leading to concessions on its final wording.

Our previously published Bill summary provided detailed information on the contents of the Bill and summarised the amendments made during its passage through the House of Commons.

This article summarises the additional changes made to the Act during its passage through the House of Lords and during ‘ping-pong’ in the UK Parliament.

Common Frameworks

  • For background, the UK and devolved governments agreed in 2017 to work together on common frameworks to manage policy divergence after the end of the Brexit transition period. The Act aims to manage divergence by automatically allowing goods and services sold in one part of the UK to be sold in any other part, with some exclusions. The House of Lords expressed concerns that the Bill as originally drafted may undermine the common frameworks programme and proposed that divergences agreed under a common framework should automatically be excluded from the rules in the Bill.
  • As a concession, the Government amended the Bill allowing the Secretary of State to give effect to an agreed common framework by excluding certain legislation or policy area from the Market Access Principles for goods and services, but the Secretary of State does not have to do this.

Automatic Recognition of Professional Qualifications

  • School teaching was removed from the automatic recognition of professional qualifications principle in Part 3 of the Act. This is the principle which will generally allow professionals qualified in one of the four UK nations to work in the same profession in a different nation without needing to requalify. The Welsh Government had previously raised concerns about the principle undermining teaching standards in Wales.

Powers to change the scope of the Act

  • The Secretary of State’s powers to change the scope and application of the Act through secondary legislation (originally described as ‘extraordinary’ and ‘unprecedented’ by a House of Lords Committee) were made conditional on devolved consent in a number of clauses. However, the Secretary of State can proceed without consent if it is not given within a month.
  • The UK Government is now required to report on the use of these powers in Parts 1 and 2 of the Act, between three and five years after it becomes law.
  • One such power in clause 3 was also removed. This would have allowed the Secretary of State to change the scope of regulatory requirements relating to goods through regulations.

Independent advice and monitoring

  • For background, Part 4 of the Act gives powers to the Competition and Markets Authority (CMA) to monitor and advise on the internal market. These powers can be exercised through a new Office for the Internal Market (OIM).
  • The Secretary of State must review and report every 3-5 years on the CMA’s functions in Part 4 of the Act in consultation with the devolved governments. The review must consider if the CMA is the right body to carry out these functions or whether reform is required.
  • In making appointments to the OIM, the Secretary of State must seek the consent of the devolved governments and have regard to a balance of knowledge and experience of the operation of the internal market in all parts of the UK.
  • The CMA must lay its annual plan, proposals and report before Parliament and the devolved legislatures and act even-handedly towards all four governments in supporting the operation of the internal market.
  • The CMA must consult the devolved governments when preparing or revising its statement of policy on enforcement of information notices, and when specifying penalty caps for non-compliance with such notices.

Northern Ireland Protocol

  • Controversial clauses in Part 5 of the original Bill allowing Ministers of the Crown to override the Northern Ireland Protocol in the Withdrawal Agreement were removed. Once agreement was reached between the UK and EU on the implementation of the Withdrawal Agreement, the UK Government felt the clauses were ‘no longer needed’;

What happens next?

The Counsel General notified the UK Government on 16 December that he would take immediate court action if the ‘UK Parliament enact the Bill in its present form’, giving it 14 days to respond. The Act was not amended between the Counsel General’s statement and receiving Royal Assent.

With the potential legal action supported by the Scottish Government, the Act’s final ambit remains uncertain.

Article by Gruffydd Owen and Lucy Valsamidis, Senedd Research, Welsh Parliament