The Internal Markets Bill – rowing backwards on devolution?

The Internal Markets Bill – rowing backwards on devolution?

Published: 21/09/20 | Categories: Author: David Cook

The Internal Markets Bill is a controversial piece of UK Government legislation that, if enacted, seems likely to harm the devolution settlement in Wales. David Cook, WCVA Policy Officer, and Charles Whitmore of the Civil Society Forum on Brexit, cast an eye over this problematic Bill and tell you how you can have your voice heard on the issue.

The UK Government’s Internal Markets Bill, intended to prevent new barriers to internal trade in the UK post-Brexit, has caused controversy. You’ll almost certainly have heard how it breaks international law (in ‘a specific and limited’ way…) by violating the Withdrawal Agreement signed last year between the EU and the UK, effectively reneging on the agreement that Northern Ireland must comply with EU trade standards, and also muddying the UK’s commitment to the likes of the European Convention on Human Rights and various United Nations treaties.

The Bill also presents numerous problems to Welsh devolution. The First Minister has criticized the Bill as an ‘enormous power grab – undermining powers that have belonged to Wales, Scotland and Northern Ireland for over 20 years’, and claimed a lack of engagement from UK Government on the drafting of the Bill. A lack of engagement in general has certainly been a problem – there was only a four-week consultation period on the Bill over summer, while people’s minds were otherwise occupied with grappling with the Covid-19 crisis.

Let’s take a look at some of the areas where the Bill compromises the devolution settlement.

State Aid

There has long been debate between UK Government and Welsh Government as to whether State Aid is a devolved competence – however, it does not appear in the Government of Wales Act 2006, which suggests that it is. Regardless, the IMB sets out State Aid as being a competence reserved for UK Government.

The UK Shared Prosperity Fund

Welsh Government, with facilitation by external partners, has been the administrator of EU funding in Wales. With such funding coming to an end, it has asked for such arrangements to continue with Wales’ share of the UK Shared Prosperity Fund. However, the Bill, although promising that Wales’ share of the UKSPF will match the size of previous EU funding, gives UK Government spending powers in many areas that intersect with devolved competencies, including economic development; health, education, cultural and sports facilities; international education; educational activities within the UK; housing, and more besides. There is no clarity as to the role of Welsh Government in delivery of these funds. There is yet to be a consultation on the UKSPF, despite UK Government promising one ‘very soon’ back in May 2019.

Trade

Mutual recognition and non-discrimination policy tools are commonly place and aim to prevent technical barriers to trade. They are standard in regulating internal markets for goods and services, but are being used in the Bill to tip the balance of favour UK wide centralisation. The Bill offers little acknowledgement of devolution, suggesting devolved policies will be utilised only if doing so prevents ‘an extraordinary threat to human life’, or a ‘serious threat to public health’ in the areas of pests, diseases or unsafe food. The Bill views only potential harm as a reason to enforce local requirements, rather than allowing devolved regions to deviate from regulations if there is scope for local improvement. This leaves little incentive for new devolved requirements as these will be inapplicable to trade from outside Wales and, indeed, place Welsh trade at a disadvantage, harming local business across the country.

Standards

Following on from the above, the Bill suggests that if a business meets regulatory standards in just one of the UK’s four nations, it can trade in all the other nations without need for further compliance. Taking housing as an example, this could mean that those seeking to build homes in Wales could disregard the Welsh Housing Quality Standard and Development Quality Requirements, providing they comply with regulations elsewhere in the UK. Similar scenarios could unfold elsewhere, for instance those working in environmental industries.

Intergovernmental relations

The White Paper on the Bill recognized the need for opportunities for different levels of government across the UK to collaborate and engage in dialogue. Yet the final Bill contains nothing suggesting a direction of travel towards collaborative inter-governmental processes. In fact, it points towards the reverse, with little to no recognition for the role of devolved nations, while many of the Bill’s provisions can be changed by UK Government with no involvement by Wales, Scotland or Northern Ireland.

What’s next?

These are all vital issues impacting civil society activity in Wales. WCVA and the Brexit Forum is keen to keep the sector informed on how this Bill could affect them. We’ll be holding a free webinar on 24 September at 4pm looking more closely at the detail of the Bill and what it means for the sector. You can book your place here.

We’re also planning a letter to MPs setting out the issues we have with the Bill. If you’d like your organisation to be a signatory of this letter, please email policy@wcva.cymru. The Civil Society Forum on Brexit and the Brexit Civil Society Alliance are trying to arrange briefings with MP’s and members of the House of Lords.

We’ll be sure to keep you updated on any further developments on the Bill. In the meantime, email policy@wcva.cymru if you have any questions.