Three Senedd Committees conclude UK Internal Market Bill could undermine devolution

Published 01/12/2020   |   Last Updated 27/05/2021   |   Reading Time minutes

The UK Internal Market Bill is currently making its way through the House of Lords. The Senedd has been asked to give its legislative consent to all parts of the Bill. However, three Senedd committees have expressed concern about the Bill’s impact on devolution in their reports published last week. Two of them have expressly recommended that the Senedd should not grant consent to the Bill in its current form.

What does the Bill do?

Parts 1-3 of the Bill establish a new system for the regulation of goods, services and professional qualifications in the UK. It does this by enshrining a Market Access Commitment in law, underpinned by the principles of mutual recognition and non-discrimination.

In essence, this will mean that goods or services that meet the standards of one country of the UK can be sold in any other part of UK without having to meet the standards in those other parts, even if they are different. For example, as highlighted by the Legislation, Justice and Constitution Committee, the Senedd could legislate to ban the production and sale of beef treated with synthetic hormones, on the grounds of public health and animal welfare. But if another part of the UK were to allow the sale of beef treated with synthetic hormones, then it could also be sold in Wales, despite the Welsh ban.

For qualifications, it will mean that someone qualified in a profession in one part of the UK will be able to practise in another part of the UK, even if the qualification standards are different. For example, generally, if the law in Wales said a profession required three A-levels, but the law in England said it required five GCSEs, someone from England with five GCSEs and no A-levels would be able to practise that profession in Wales.

Part 4 of the Bill establishes a new Office for the Internal Market Panel within the Competition and Markets Authority to advise on this new system.

Part 7 of the Bill changes the devolution settlements to reserve powers over subsidy control (alternatively known as state aid) to the UK Government. These are the rules that govern how much government subsidy can be given to businesses and other organisations.

Part 6 of the Bill gives UK Ministers new funding powers to spend money in devolved policy areas such as education and economic development.

Part 5 of the Bill as introduced to the Lords relates to the Northern Ireland Protocol. It would give UK Ministers powers to change parts of the 2019 UK-EU Withdrawal Agreement on trade from Northern Ireland to Great Britain and subsidy control, even if this isn’t compatible with domestic or international law. This Part was removed by the Lords during committee stages of the Bill but the UK Government has indicated that it is likely to re-instate it to the Bill.

Our Bill summary provides more detailed information on the contents of the Bill and how it could work in practice.

Why does the UK Government say the Bill is needed?

Our previous blog outlined the different views of the UK and Welsh governments on the Bill. The UK Government states that the Bill is needed to prevent new barriers to trade and divergence emerging after the UK leaves the EU, as the four governments of the UK will have more freedom to legislate in areas previously governed by EU law.

The Welsh Government agrees that divergence should be managed across the UK for some policy areas, but that this should be done by the four governments working together and reaching agreement through the common frameworks programme. It states that the Bill as drafted goes further than the current restrictions set on the devolved governments by EU law and would provide the devolved institutions with less freedom to diverge than they currently have.

What have Senedd committees said?

The Senedd’s External Affairs Committee and Legislation, Justice and Constitution Committee have recommended that the Senedd should not give its consent to the Bill as drafted.

Both Committees have reached a similar view to the Welsh Government and have said that, as things stand, the Bill is unnecessary. They say that existing alternative mechanisms should be used for managing divergence in the UK at the end of the transition period. They are concerned that the Bill as drafted would undermine the effect of devolved laws.

The External Affairs Committee says that the Bill would reduce the Senedd’s powers and limit the effect of future devolved laws in Wales. It says that unless changed, the Bill will “impose the UK Government’s will on Wales in way that disproportionately favours England”. It concludes:

There are clear policy alternatives to the approach taken by the UK Government and no convincing case for the Bill’s necessity has been made.

In its report, the Legislation, Justice and Constitution Committee concludes that it is unconvinced that the Bill needs to be passed by the end of the transition period and that passing it without agreement between all four governments of the UK could damage the constitution of the UK. It concludes that the Bill will:

… greatly impact the Senedd’s capability to make coherent and accessible laws that meet the needs and aspirations of Welsh citizens.

The Senedd’s Finance Committee has considered the financial implications of the Bill on Welsh spending. It says that the majority of committee members are concerned that the Bill ”could have a profound impact on devolution in Wales”.

The majority of its members have expressed concerns about the potential for the UK Government to spend money in devolved policy areas in a way that is not compatible with the strategic objectives of the Welsh Government and that the UK Government could generate funds for this spending by reducing the Welsh Block Grant – the amount of money given to the Welsh Government to spend in Wales. The Committee also expressed concern about the reservation of subsidy control powers.

The Senedd will debate giving legislative consent to the UK Internal Markets Bill sometime in the next two weeks. You can watch it live on Senedd TV.

Article by Nia Moss, Senedd Research, Welsh Parliament