By Joanna George
Research Associate, University of Cambridge
The impact of Brexit on devolution (in all regards) has been controversial from the outset. This is because the results of the Brexit referendum showed that each component part of the UK voted differently, with a majority voting in favour of Brexit in England and Wales in contrast to Scotland and Northern Ireland where the majority voted in favour of remaining in the EU. As the UK is a unitary state, and because the referendum had national application, this meant that the majority (52%) voted in favour of the UK leaving the EU. The practical application of Brexit, however, only began to be developed once the referendum was over.
One of the core pieces of legislation that practically applies Brexit is the UK Internal Market Act 2020 (‘UKIMA’) which is a legal framework that outlines trade between the component parts of the UK. The passing of the Act proved contentious, with MPs and Lords across all political parties tabling a number of amendments whilst the EU also intervened. This post will explain that whilst the framework of the UKIMA is necessary, some of its provisions and the process by which it was enacted has proved politically and legally controversial, and even detrimental, to understanding how the UK Union ought to operate post-Brexit.
What is the UKIMA?
Within the EU, EU laws operate to govern the internal market (also referred to as ‘the single market’) for goods and services both across the EU and within EU Member States. Brexit meant that the trading framework provided by the EU single market would no longer be in operation within the UK when the UK left the EU on 31 January 2020.
In response, the UKIMA was enacted on 17 December 2020 to promote the continued functioning of the internal market within the UK post-Brexit. The UK internal market refers to the trading relationship between businesses in England, Scotland and Wales. Northern Ireland is also part of the UK internal market, however unlike England, Scotland and Wales, it has its own rules and regulations under the Northern Ireland Protocol in light of its unique political and constitutional history within the UK.
The UK Government argued that the enactment of the UKIMA was necessary to allow goods produced in or imported into one part of the UK to be freely sold within another part of the UK without incurring trade barriers, unless this is for Northern Ireland which remains within the EU single market for goods. Meanwhile, the devolved governments claim that the UKIMA does not fulfil its stated purpose of providing regulatory coherence, clarity and certainty for businesses and consumers.
The UKIMA has two core principles. These are called market access principles (MAPs) which outline the regulation of goods and services. Firstly, mutual recognition means that if a good or service which is compliant with the statutory rules relating to its sale in the part of the UK in which it was produced or imported into, then it will automatically be acceptable for sale in other parts of the UK. Secondly, non-discrimination means that statutory rules which discriminate against goods or services from another part of the UK (whether directly or indirectly) do not apply.
To manage divergence in some areas that were previously governed by EU law and are within devolved competence, Common Frameworks have been used as a non-statutory intergovernmental method to achieve this. For example, if a good is going from Great Britain (Scotland, Wales and England) to Northern Ireland and that good is likely to stay in Northern Ireland, then the good is treated in the same way as intra-Great Britain trade. In contrast, if that good is likely to then go on to Ireland (which is an EU Member State) from Northern Ireland then it will be subject to customs checks at the UK border before crossing the open border to Ireland.
Why was it controversial?
As acknowledged in a previous post, constitutional responsibility for negotiating the UK’s exit from the EU rested with the UK Government. Yet issues arose as to the extent to which UK Ministers should take account of the views of the Ministers from the devolved governments. In particular, how powers exercised at EU level would be allocated back to the UK and devolved Governments after Brexit.
For example, Members of the Scottish Parliament (MSPs) passed their own Scottish Continuity Bill in 2018 as an alternative to the UK’s EU Withdrawal Bill (which they refused to give their consent to), and this was supported by lawyers representing the Welsh and Northern Irish Governments. Despite this, section 17, which provided that MSPs give consent for UK Brexit laws, was held by the UK Supreme Court to be outside of the Scottish Parliament’s devolved competence. Since then, different interpretations of powers returning to the UK from the EU have caused controversy with regards to the UKIMA for three mains reasons.
Firstly, the Scottish Parliament refused legislative consent, yet despite this, the UKIMA was passed by the UK Parliament. The Welsh Senedd originally refused consent and enacted its own legislation but later gave consent following concessions and the shift of powers returning to the devolved legislatures, subject to the ability of the UK Government to keep those powers in the UK for two years. As a result, the Act has been criticised by the Scottish Parliament, Welsh Senedd and Northern Ireland Assembly for undermining devolution and the Sewel Convention. It restricts devolved competence in specific ways (e.g., by making state aid a reserved as opposed to devolved matter) and weakens the effectiveness of devolved legislation in relation to goods and services.
The constitutional interpretation of the UKIMA has also become a source of tension. The Welsh Government (supported by the Scottish Government) sought a Judicial Review of the effect of UKIMA on devolved legislation. The Court of Appeal recently refused permission to bring that challenge based on the case being brought prematurely, however the Welsh Government is currently seeking permission for an appeal to the UK Supreme Court. As the UK Government seeks to improve intergovernmental relations and Common Frameworks, what impact will ongoing legal disputes about the UKIMA have on relations between the UK Government and devolved governments?
Secondly, the UK Internal Market Bill contained provisions which would have enabled UK Ministers to issue binding legal instruments that could break international law ‘in a very specific and limited way’ without incurring legal challenges. This would have included reinterpreting and disapplying parts of Northern Ireland’s unique Brexit arrangements (known as the Northern Ireland Protocol) where EU rules regulating trade in goods and services continue to apply. The provisions would have allowed UK Ministers to unilaterally implement parts of the Northern Ireland Protocol in a manner contrary to the Withdrawal Agreement which has caused friction with the EU. This is because within the UK, some Unionists claim that the Protocol undermines Northern Ireland’s position within the Union.
However, following a meeting of the EU-UK Joint Committee on 8 December 2020, the UK Government withdrew the controversial clauses in the Bill (44, 45 and 47) that would have violated international law had the Bill been enacted with them. As the UK seeks to pursue foreign policy objectives, this process has damaged the UK’s reputation abroad as an upholder of international law and promoter of the rule of law.
Finally, the UKIMA remains controversial because of its ongoing impact on the Union, of which we won’t know the full extent until years to come. Whilst in Bill form, the Scottish Government asserted that the UKIMA, was a Westminster ‘power grab’, whilst the UK Government claimed that it was a ‘power surge’.
These contrasting interpretations and expectations of how powers should be allocated within the Union post-Brexit is likely to rumble on unless consensus, respect and greater equality is shown and willingly exercised from all governments within the UK. Without the ‘glue of the EU’ keeping it together, a more considered and consensual approach to what each component part of the UK wants from the Union and its internal trading arrangements would be constitutionally calmer, and less controversial, in the long-run.
- Institute for Government, ‘The United Kingdom Internal Market Act 2020’
- House of Commons Library, ‘United Kingdom Internal Market Bill 2019-21’
- Katy Hayward, LSE Brexit, ‘How does the UK Internal Market Bill relate to Northern Ireland?’