The Internal Market in the UK - The future many aspects our lives is being decided
30th July 2020
The Internal Market in the UK is something most of us never even thought about because it was always there. Now as we finally prepare to leave Europe and the arrangements we have enjoyed for over 40 years the Internal Market is being hotly debated by the devolved governments in the UK. Since most people never had to look at this in their lives is may come as shock to read just how important these debates are The devolved governments are very unhappy with what they see as a power grab by the UK parliament. It may depend on your political views on independence whether you wish to keep Internal Market arrangements with one governing body making the rules or you want to see the devolved government making some of the rules.
One thing for sure is that the "Internal Market debate" will create "Internal Wrangling" between the UK parliament and the devolved governments for a long long time.
See near the bottom of the page the statement from the Scottish Government issued on 30th July 2020
Paper delivered by Alok Sharma, the Secretary of State for Business, Energy and Industrial Strategy to the UK parliament on 16th July 2020.
For centuries, the UK's Internal Market has been the bedrock of our shared prosperity, with people, products, ideas and investment moving seamlessly between our nations. As a Union, we are greater than the sum of our parts.
Today, we face unprecedented economic challenges recovering from the impact of coronavirus (COVID-19), which has threatened our lives, livelihoods and communities. As we move through the pandemic and into the recovery phase, we must ensure that our Internal Market, which supports countless jobs and livelihoods across our country thrives.
In addition to the enormous task of recovery, from 1 January 2021, hundreds of powers previously exercised at EU level will flow directly to the UK government and the devolved administrations in Edinburgh, Cardiff, and Belfast. Devolved administrations will have unprecedented regulatory freedom within new UK frameworks, allowing them to benefit from opportunities to innovate. To allow each home nation to take full advantage of these new opportunities, and ensure businesses can continue to trade freely across the UK as they do now, we are consulting on legislating for a UK Internal Market.
Northern Ireland sells more to the rest of the UK than to all EU member states combined. Scotland sells more to the rest of the UK than to the rest of the world put together. And in some parts of Wales, a quarter of workers commute in from England on a daily basis.
Under the plans in this white paper, the UK will continue to operate as a coherent Internal Market. A Market Access Commitment will guarantee UK companies can trade unhindered in every part of the United Kingdom - ensuring the continued prosperity and wellbeing of people and businesses across all 4 nations. At the same time, we will maintain our high standards for consumers and workers.
This will give business certainty. If a baker sells bread in both Glasgow and Carlisle, they will not need to create different packaging because they are selling between Scotland and England. Likewise, engineering firms in Scotland using parts made in Wales will know that the parts are compliant with regulations across other home nations.
By enshrining the principle of mutual recognition into law, our proposals will ensure regulations from one part of the UK are recognised across the country. The principle of non-discrimination will support companies trading in the UK, regardless of where in the UK they are based.
These principles will not undermine devolution, they will simply prevent any part of the UK from blocking products or services from another part while protecting devolved powers to innovate, such as introducing plastic bag minimum pricing or introducing smoking bans.
As we fire up our economic engines to recover from coronavirus, business needs stability. By protecting the integrity of the UK's Internal Market, the proposals in this white paper will allow firms to focus on what they do best: creating jobs and opportunities for people right across our United Kingdom.
The Rt Hon Alok Sharma MP
Secretary of State for Business, Energy and Industrial Strategy
1. The UK Internal Market has for centuries been at the heart of our economic and social prosperity as a country. It dates back to the Acts of Union of 1706 and 1707, and has been a source of unhindered and open trade across the United Kingdom - one which pulls us together as a united country and means that, as a Union, we are greater than the sum of our parts. The UK Internal Market long predates many other countries' economic unions, and has been uniquely successful in driving forward economic prosperity across our whole country, providing businesses with the certainty that they need to grow and thrive.
2. While the Internal Market has been enshrined in British law for over 3 centuries, the UK's accession to the then-European Economic Community in 1973 saw European law take on a more direct role in providing the legislative underpinning of our economy. European directives and regulations, along with relevant judgements from the Court of Justice, replaced British law and took on an integral role in the legislative underpinning of the Internal Market.
3. As the UK leaves the transition period, and leaves the EU's legal order, we will need to legislate to maintain this centuries-old success story and guarantee the continued seamless functioning of the UK Internal Market. Avoiding the creation of new barriers is vital for our brilliant manufacturers, producers and service providers trading within the bounds of our nation; for our partners overseas as we seek to build ever richer trading relationships with other countries; and to secure the prosperity and the livelihoods of our people right across the United Kingdom. We will do this in a way that respects the devolution settlement, and ensures that the devolved administrations receive powers over many more policy areas than they currently hold as part of the EU, whilst ensuring that all intra-UK trade remains frictionless.
4. One of the key features of our economy is its deep integration and strong economic ties that bind the UK together. These ties constitute the UK's Internal Market, the totality of undeniably close, and complex economic relationships between all parts of our country. Examples of such relationships are plentiful. Scotland and Northern Ireland both sell more to the rest of the UK than to all EU member states combined. Scotland itself sells more to the rest of the UK than to the rest of the world together. Maintaining this economic arrangement, and the significant benefits it brings, is even more important as we plan our joint recovery from the coronavirus global pandemic.
5. Analysis of census data shows that there are significant numbers of workers who commute across the UK daily - over 170,000 people commuted from one part of the UK to another in 2011. In some Welsh local authorities up to 24% of workers come from and 27% of employed residents commute to England (ONS, 2011). And finally, the UK boasts highly integrated services regulation, without instances of overt discrimination against providers from other parts of the UK. With the UK as the second largest exporter of services world-wide1, services account for 4 out of 5 jobs nationwide through the employment of 26.7 million people2.
6. Open markets enable frictionless trade that supports efficiency and productivity, increases business certainty and facilitates better investment decisions. They are also key in supporting our international competitiveness and maintaining our attractiveness for international investment. The UK's integrated market allows workers to move freely across the country to work in industries and jobs most suited for their skills, boosting wages; unhindered movement across the UK is every citizen's right. These benefits improve consumer choice and help drive reduced prices.
7. The United Kingdom has long been a trusted trading partner in the global economy. Our unyielding commitment to the rule of law and the highest standards - enshrined in law across the board, our dedication to the protection of employees and the environment, our openness to competition and the control of subsidies, or the energy and innovation of our business sector, we are a robust, open and trusted partner, right across the economy.
8. The strength of our Internal Market and our openness to trade are part of the UK's long history as a global free trading state. With UK exports at a record high, it is important that we continue to strengthen the UK's position as a trading nation and reassert our proud history as a beacon of enterprise and innovation. We have provided specific protection in relation to freedom of trade in our law since as far back as the Acts of Union. This economic unity, and the principle that people should have fair access and freedom within the economy wherever they are in the UK, has always been part of what makes us a strong, trusted and prosperous nation.
9. As we leave the transition period and embark on an exciting new phase as an independent trading nation, we will ensure that we continue to uphold our UK Internal Market, to protect and enhance the prosperity of our nation and livelihoods of our citizens. To secure the Internal Market for the future, the government now proposes a Market Access Commitment, which will enshrine in law 2 fundamental principles to protect the flow of goods and services in our home market: the principle of mutual recognition, and the principle of non-discrimination. This will guarantee the continued right of all UK companies to trade unhindered in every part of the UK.
10. Mutual recognition means that the rules governing the production and sale of goods and services in one part of the UK are recognised as being as good as the rules in any other part of the UK, and they should therefore present no barrier to the flow of goods and services between different regulatory systems. Non-discrimination is already relevant to our Internal Market and will in the future mean that it is not possible for one regulatory system to introduce rules specifically discriminating against goods or services from another. These principles underpin the Internal Market structures of many other countries, including Australia and Switzerland.
11. A coherent approach to market access will drive efficient supply chains and opportunities for business growth and ensure fair price distribution for consumers. This will create business certainty and the clarity needed for investment decisions, also protecting consumer prices and increased choice.
12. As well as ensuring the continued smooth functioning of our Internal Market, our approach will also give the devolved administrations unprecedented new powers to create their own laws. On January 1 2021, hundreds of powers will be transferred from Brussels to the devolved administrations. This is the single biggest transfer of powers to the devolved administrations in history, and will see new powers transferred to Scotland, Northern Ireland and Wales in a total of 160 policy areas which intersect with devolved competence. Our commitment to high standards within this will be unyielding, which allows us to protect those things most important to us, like our communities and our environment, while ensuring our future prosperity. A legal commitment to reach net zero carbon emissions by 2050 is just one example of this promise.
13. The government will consider tasking an independent, advisory body to report to the UK Parliament on the functioning of the Internal Market.
14. The government continues to work with the devolved administrations on the development of Common Frameworks, which will allow a common approach to continue in many areas after the end of the transition period. There has been significant progress made on Common Frameworks, but the Scottish Government's decision to withdraw from our Internal Market workstream in March 2019 has impeded our collective approach to ensuring the continued smooth functioning of UK trade, and without the certainty we are now giving to businesses with this approach, would risk creating disruption for citizens in Scotland, Wales, Northern Ireland and England.
15. As part of our overall approach to the Internal Market and our future trade with partners across the globe, the government is also clear that it needs a single, fair subsidy control regime for the United Kingdom. As such, the government will seek to expressly provide that subsidy control is reserved (or excepted in Northern Ireland) and therefore a matter for the UK Parliament.
16. The UK is a unitary state with powerful devolved legislatures, as well as increasing devolution across England. The Scottish Parliament, the Senedd Cymru/Welsh Parliament, and the Northern Ireland Assembly are powerful democratic institutions acting within a broad set of competences. Each reflects the unique history of that part of the UK, and their history within the Union of the United Kingdom. This is a history to be celebrated and the government’s approach set out here will ensure that devolution continues to work well for all citizens.
Read the full paper HERE
Read the White Paper - The Internal Market
Scottish Parliament briefed on risks from a UK Internal Market
Constitution Secretary calls UK White Paper "disastrous for devolution".
Constitution Secretary Michael Russell will set out how the UK Government plans for a UK Internal Market will weaken the ability of the Scottish Parliament to make distinctive laws and protect Scottish interests.
In a statement to Holyrood Mr Russell will call on MSPs to defend devolution from any attempt to remove power from the Scottish Parliament without its consent and against the wishes of the people of Scotland.
Mr Russell said:"The UK Government says it wants to take back control from the EU. It is now clear it wants to take back control from Scotland too.
"Companies with deep pockets will be likely to try to challenge any Scottish Parliament law they say impedes their ability to trade across the UK.
"And it will mean the UK Parliament effectively imposing standards in devolved policy areas regardless of the wishes of the people of Scotland and laws passed by the Scottish Parliament.
“We know the UK Government is desperate to do a trade deal with the US - including opening up our market to US agricultural products - threatening our valued and hard-won reputation for the highest quality food standards and produce.
“Under these proposals Scotland will be forced to accept any standards set and agreed by Westminster.
“This proposal is bad for consumers, bad for businesses and agriculture, and disastrous for devolution."