The United Kingdom Internal Market Act has become law, receiving Royal Assent shortly before MPs and Lords departed the Palace of Westminster for the holidays. The controversial provisions in Part 5 conflicting with the EU-UK Withdrawal Agreement and Northern Ireland Protocol – previously discussed by me here – have been removed following the outcome of a meeting of the EU-UK Joint Committee that resolved – at least for the moment – outstanding issues in the practical implementation of the Protocol.

But it would be wrong to think that opposition to the legislation ended with the changes to Part 5 or with the Bill becoming law. Indeed, Royal Assent to the Bill was given notwithstanding that both the Scottish Parliament and the Senedd Cymru withheld their legislative consent over the implications of the legislation for the exercise of devolved competence.

In this post I explore what concessions the UK Government gave during the parliamentary process and why it seems likely that both the Welsh and Scottish Governments will seek to test in the courts the implications of the legislation for the devolution statutes.

Concessions and Ministerial Control

Seasoned observers of the legislation will be familiar with its principal component parts. At its heart are the ‘market access principles’ of ‘mutual recognition’ and ‘non-discrimination’. These principles can be invoked in courts to disapply local rules (the rules in one of the jurisdictions of the UK) and allow goods and services to be offered on the local market in compliance with the regulatory standards applicable in the part of the UK from which the good or service originates.

For the devolved administrations, the risk is that competition may then put local producers and service providers at an economic disadvantage with the risk that governments feel required to adjust regulatory standards to align with market demands rather than public preferences. Given the size of both the Scottish and Welsh markets relative to the market in England, there has been an evident anxiety that the rules set for the English market could in practice end up being the basis for the sale of goods or provisions of services in Scotland and Wales to the detriment of the exercise of devolved regulatory competence.

Some of the heat of this is taken out when one recalls that certain areas of regulatory policy like data and consumer protection, product standards and product safety (but not food or pesticides) are reserved in the devolution statutes. As a consequence, the impact of the Act on devolved competences is likely to be felt instead around issues of human, animal and plant health, environmental protection and food standards and safety.

The domain of human, animal and plant health is the subject of a specific, but conditional, exclusion under the Act in Schedule 1 that is framed in narrow terms to cover pest and disease control. This schedule also conditionally inhibits the application of the mutual recognition principle to requirements controlling the sale of unsafe food. Further exclusions in Schedule 1 apply to chemicals and pesticides authorisations, and taxation matters. For services, Schedule 2 lists different sectors that are either excluded from the mutual recognition principle or the non-discrimination principle or both. These exclusions are categorical rather than conditional.

It should be obvious, therefore, that much of the bite of the legislation depends on what is or is not contained in these schedules. As introduced, the Bill empowered the Secretary of State to make changes to these schedules by regulations subject to the affirmative procedure. However, in relation to Schedule 2 and the list of services excluded from the market access principles, the Bill originally conferred an additional power to make changes – which could mean the removal of a service like health services from the lists of excluded services – by way of a ‘made affirmative’ procedure within three months of the Bill becoming law.

The Bill also empowered UK ministers to change the list of recognised ‘legitimate aims’ that qualify the application of the non-discrimination principle when applied to local rules that indirectly discriminate against cross-border trade. As introduced, the Bill only recognised a very limited list of legitimate aims: protection of the life or health of humans, animals and plants; the protection of public safety or security. As with the schedules to the Act, the Secretary of State would be empowered to amend the list of legitimate aims by regulations made under the affirmative procedure.

During the passage of the Bill, the Lords sought to remove the Schedule 1 exclusions entirely, relying instead on a proportionality-based interest balancing examination of measures similar to that which exists in EU internal market law. The Government was not prepared to concede this, citing its desire for flexibility to adjust the legislation in light of the development of the internal market. However, the Government tabled amendments that require the consent of the devolved governments to be sought prior to any exercise of the powers to amend the schedules or the list of legitimate aims. However, if consent is not obtained within a month, the Act makes clear that the regulations may nonetheless still be made. The additional power to change Schedule 2 via the ‘made affirmative’ procedure was dropped by the Government.

The other key battle between the Government and the Lords was over the attempt by Lord Hope to secure protection for the ‘common frameworks’ process. Common frameworks are intended to be a consensual intergovernmental means of managing modifications to, and future divergences from, retained EU law. The ambition was to have these common frameworks in place by the end of the transition period. Although a number have been published in provisional form, it is clear from a letter written by the Chair of the Lords’ Common Frameworks Scrutiny Committee that there have been delays to the programme and difficulties in parliamentary scrutiny of outline frameworks. Significantly, the implications of an Internal Market Bill for the operation of these frameworks – in particular where the result is an accepted divergence in a future modification of retained EU law – was not necessarily evident when the frameworks were developed. Equally, when published, the Bill made no reference to the common frameworks at all. It was obvious that while UK and devolved governments might consensually agree to future divergences from the baseline of retained EU law, there would be nothing to prevent new requirements from being challenged as contrary to the market access principles to be enshrined in law.

Lord Hope’s amendments sought on the face of the legislation to shield divergences arising from the common frameworks programme from the application of the market access principles. Notwithstanding Government opposition to the amendment, the Lords continued to insist on some form of recognition of the common frameworks programme. In the end, the Government proposed its own amendment that would allow the power to make regulations to amend the schedules to the Act to be used for the purpose of giving effect to agreements that emerge from common frameworks. Given the need for UK ministers also to seek the consent of devolved ministers when exercising their powers, these amendments are intended to give some comfort to the devolved administrations.

Legal Challenge

Despite these and other concessions, it is clear that the devolved governments remain unconvinced that the Act respects the devolution settlement. In a Written Statement, the Welsh Counsel General Jeremy Miles indicates that upon the Bill being given Royal Assent, the Welsh Government will seek a declaration from the Administrative Court that the Act cannot be interpreted to ‘cut down’ the ambit of ‘constitutional legislation’. In particular, the statement draws attention to the powers under the Act for UK ministers to adopt regulations which the Welsh Government considers could alter the powers of the Senedd under the Government of Wales Act 2006. It is UK ministerial control via the power to make regulations changing the application of the legislation that is the focus of the complaint.

This falls short of a full-frontal re-litigation of the Sewel Convention. This is understandable given the UK Supreme Court’s statements on the enforcement of the Convention in the Miller case. Nonetheless, the elephant in the room remains that the Act has received Royal Assent notwithstanding the absence of legislative consent.

Instead, and as Glasgow Law School Professor of Public Law Tom Mullen has suggested to me, the essence of the litigation lies in the protection of the Government of Wales Act as ‘constitutional legislation’. The invitation will be for the courts to test and determine whether a ‘constitutional statute’ in the Thoburn sense derives special protection against the effects of the Internal Market Act 2020 and the regulations made under it.

There are two obvious counterpoints to this argument.

First, even if one accepts that devolution statutes are constitutional statutes whose provisions are protected against any implied repeal, there is an argument to be made that the Internal Market Act is itself a constitutional statute. For one thing, it is an enactment that is protected against amendment by the devolved legislative institutions. So the question for the courts may turn out to be a rather more interesting one of how should two constitutional statutes be interpreted inter se. Or more precisely, how should regulations adopted pursuant to one constitutional statute be interpreted in respect of another constitutional statute.

Second, the power of UK ministers to adopt regulations under the Act is now subject to the requirements to seek the consent of the devolved administrations. If consent is obtained then the prerogatives of the devolved institutions would be protected without the need for judicial protection. If consent is refused it is clear from the Act that it is not unlawful for a UK Minister to make regulations notwithstanding that refusal. It may not be apparent what sort of anticipatory guidance the Administrative Court will be able to offer on the interpretation of any such regulations, leaving any judicial review application vulnerable to the claim that it is premature.

The controversies surrounding this legislation are not going away any time soon.

Kenneth A. Armstrong, Professor of European Law, University of Cambridge

(Suggested citation: K. A. Armstrong, ‘Governing With or Without Consent – The United Kingdom Internal Market Act 2020’, U.K. Const. L. Blog (18th Dec. 2020) (available at https://ukconstitutionallaw.org/))