On its passage through Parliament, the United Kingdom Internal Market Act 2020 (UKIMA) attracted a great deal of criticism, the majority of which was directed towards the – since withdrawn – provisions which purported to break international law (albeit apparently only in a limited and specific way). Another, perhaps initially overshadowed, criticism, now coming to a head in a forthcoming challenge being mounted by the Welsh Government, has been that the Act represents a ‘power grab’ by Westminster.

This post explores one of the issues raised in that challenge, namely whether provisions of the UKIMA ‘ostensibly – albeit implicitly – limit the scope of the devolved powers of the Senedd’. It considers two issues in turn: Firstly, the prima facie interaction between the UKIMA and Senedd competences and, secondly, the possible judicial treatment of this interaction.

1. How does the UKIMA appear to interact with devolved competences?

The competences of the Welsh Parliament (the Senedd) are limited in two ways relevant to present discussion. Firstly, there are areas of policy – ‘reserved matters’ – listed in Schedule 7A of the Government of Wales Act 2006 (GoWA), over which the Senedd has no jurisdiction. According to GoWA s 108A (2) (c), ‘[a] provision is outside… competence so far as… it relates to reserved matters’.  Secondly, there are ‘protected enactments’. Although the fields of these enactments are not necessarily beyond Senedd competence, Schedule 7B 5(1) stipulates that ‘[a] provision of an Act of the Senedd cannot make modifications of… any of’ the protected enactments.

The first way that the UKIMA interacts with Senedd competences is explicit: Section 54(2) inserts the UKIMA into this list of protected enactments, meaning that the UKIMA may not be ‘modified’ by the Senedd. The second way that the UKIMA interacts with devolved competences is more implicit: through the ‘market access principles’.

There are two market access principles in the UKIMA: mutual recognition and non-discrimination. Mutual recognition means – according to s 2(1) – that goods ‘should be able to be sold in any other part of the United Kingdom, free from any relevant requirements’ including Senedd legislation, ‘that would otherwise apply to the sale.’ In order to guarantee this, s 2(3) stipulates that ‘[w]here the principle applies in relation to a sale of goods in a part of the United Kingdom… any relevant requirements there do not apply in relation to the sale.’ Non-discrimination – according to s 5(1) – means that ‘the sale of goods in one part of the United Kingdom should not be affected by relevant requirements that directly or indirectly discriminate against goods that have a relevant connection with another part of the United Kingdom.’ In order to guarantee this, s 5(3) states that ‘[a] relevant requirement… is of no effect in the destination part if, and to the extent that, it directly or indirectly discriminates against the incoming goods’.

The Welsh Government claims that these limitations, coupled with the protection of the UKIMA from modification, amount to an effective expansion of the ‘reserved matters’ list ‘through the back door’. It claims that this equates to implied repeal of the GoWA, something which cannot be achieved because the GoWA is constitutional legislation. This hangs, however, on how the courts might make sense of the interaction between the UKIMA and devolved competences provided in the GoWA.

2. How are the courts likely to treat this interaction?

Although the market access principles mean that a piece of Senedd legislation will ‘not apply in relation to the sale’ or ‘is of no effect… to [a certain] extent’ this is, importantly, different to the system employed in the devolution legislation – as in s 94(2) GoWA – that purported legislation is ‘not law’ so far as it is outside legislative competence. The market access principles do not mean that a piece of legislation is ‘not law’. Neither does the UKIMA appear to place a burden on the courts to ‘disapply’ relevant requirements; these appear to be disapplied by the UKIMA itself. There are, therefore, a number of different ways the courts might treat the UKIMA’s interaction with devolved competences.

(a) Reliance on Constitutional Statutes(/Principles)

The first way the courts might resolve this question is to rely heavily on the notion of constitutional statutes. The Welsh Government is right that the GoWA is constitutional legislation, but this is not necessarily a straightforward, binary question. Although the courts have consistently given lists of constitutional ‘instruments’ that, as the Welsh Government suggests, are immune from implied repeal, the Supreme Court particularly has also noted that there might be a more nuanced hierarchy of constitutional principles in play. The possession, embodiment or creation of constitutional principles is, according to the Supreme Court in HS2 what gives constitutional statutes their ‘constitutionality’. If one constitutional statute interacts with another, priority might be accorded to the provisions that embody the more significant constitutional principles. The constitutional characteristics of the UKIMA cannot therefore be entirely side-lined, even if ultimately they are less significant than those contained in the GoWA. Of course, the court might instead be inclined to say that, although a protected enactment, and even though – to use Laws LJ’s broad definition in Thoburn (at paragraph 62) – it ‘conditions the legal relationship between citizen and State in some general, overarching manner’ the UKIMA possesses no constitutional characteristics at all. Nonetheless, the court’s conclusion on this point is only important if it considers that the UKIMA actually purports to amend the GoWA at all, something that in turn depends on its conclusions to the issues below.

(b) A Narrow or Broad Reading of ‘Competence’

The court might be minded to adopt an interpretation of this interaction that depends on the very nature of ‘competence’. It could suggest that, because the UKIMA does not affect whether devolved legislation is ‘law’, it therefore does not affect competences. An analogy for this can be found in the Factortame (No.2) case: it is not the case that a law which is disapplied for reason of incompatibility is no longer law, it is just not given effect by the court. However, it should be noted that Lords Neuberger and Mance in HS2 did suggest, at paragraph 206, that Factortame meant that ‘European law requires them to treat domestic statutes… as invalid if and to the extent that they cannot be interpreted consistently with European law’. If this is the interpretation the court prefers, then invalidation may be the price for an interaction with the UKIMA.

A potential route for the court out of this conundrum might be to rely on s 154 of the GoWA. This provision means that, inter alia, ‘any provision of an Act of the Senedd… which could be read in such a way as to be outside the Senedd legislative competence… is to be read as narrowly as is required for it to be within competence or within the powers, if such a reading is possible…’ This provision might mean that the court, depending on its interpretation of the nature of a competence, could justify interpreting the extent of devolved competences narrowly in a way that means the UKIMA does not in fact reduce them.

Alternatively, the court might prefer a broader reading of competences. In the Continuity Reference case, the Scottish Continuity Bill included a provision – s 17(2) – that ‘subordinate legislation… is of no effect unless the consent of the Scottish Ministers was obtained’ beforehand. In that case, the Supreme Court held, at paragraph 52, that such a provision ‘would therefore limit the power of the UK Parliament to make laws for Scotland, since Parliament cannot meaningfully be said to “make laws” if the laws which it makes are of no effect’ (emphasis added). Competence, on this view, is broadly construed (although not unreasonably) to mean the power to make ‘effective law’, rather than just ‘law’. This would in turn mean that the UKIMA provisions which mean Senedd legislation would ‘not apply’ or be ‘of no effect… to [an] extent’ would equate to an impact on devolved competences themselves, lending itself to the Welsh Government’s position.

(c) Narrow Reading of Modification

A third route open for the court is to distinguish legislation in the field of the UKIMA, even if incompatible with the market access principles, from modification of the UKIMA itself.  This interpretation would mean that such Welsh legislation would still be within the competence of the Senedd and would be effective, but it is difficult to say with certainty that ‘modify’ can be read this narrowly. In the Continuity Reference case, although there concerned with very different issues, the Court held, at paragraph 51, that:

When the UK Parliament decides to reserve an entire area of the law to itself, it does so by listing the relevant subject-matter in Schedule 5. When it has not taken that step, but has protected a particular enactment from modification by including it in Schedule 4, it is not to be treated as if it had listed the subject-matter of the enactment in Schedule 5.

(emphasis added)

This is obviously analogous to the position regarding the UKIMA and Schedules 7A and 7B of the GoWA. It suggests that protecting an enactment is a far more confined limitation than reserving an entire field. However, the Court went on to say in the same paragraph that:

Without attempting an exhaustive definition, a protected enactment will be modified by a later enactment, even in the absence of express amendment or repeal, if it is implicitly amended, disapplied or repealed in whole or in part. That will be the position if the later enactment alters a rule laid down in the protected enactment, or is otherwise in conflict with its unqualified continuation in force as before, so that the protected enactment has to be understood as having been in substance amended, superseded, disapplied or repealed by the later one.

(emphasis added)

This, therefore, would seem to hinge on whether an Act of the Senedd, because of its incompatibility with the market access principles is ‘in conflict with [the UKIMA]’s unqualified continuation in force as before’. The point here is that, although it is unlikely that a court would seek to collapse modification and reservation, the precise location of that dividing line is not easily identified.

Conclusion

The Welsh Government’s challenge to the UKIMA depends on the claim that, in effectively extending the reservations listed in Schedule 7A of the GOWA, the UKIMA impliedly repeals a piece of constitutional legislation. The court will, it seems, have to answer other questions about the way the UKIMA actually interacts with devolved competences themselves before it can come to a conclusion on that question. The Welsh challenge is framed as a win-win: if the UKIMA’s effects on devolved competences amount to an amendment of the GoWA, the constitutional statutes formula would seem to suggest that the courts would ‘read down’ the UKIMA to that extent. Conversely, if the court suggests that devolved competences are not impacted by the UKIMA (at least to the extent that the GoWA is amended) then the Senedd’s competences remain intact. It is only the intermediate position that is troubling for the Welsh Government: if the court concludes that the UKIMA does affect the realities of devolved competence but not to the extent that this amounts to an implied amendment of Schedule 7A.

The courts have for a long time, and in appreciation of the constitutional significance of devolution, been happy to interpret competences in the devolved institutions’ favour; indeed, they have an obligation to do so. Yet, there is only so much protection the courts can provide. Neither the Senedd nor the Scottish Parliament consented to the UKIMA and yet it remains on the statute book nonetheless. Further, as the Continuity Reference demonstrated, Westminster remains able – provided the political will can be mustered – to wield its sovereignty to outmanoeuvre a review of this kind. Indeed, the Internal Market Act is arguably a proxy for debates about the very nature of the post-Brexit Union, whose future is arguably more uncertain than ever. It is against that backdrop that Westminster may wish to think carefully before clarifying what is really meant by ‘taking back control’.

My thanks to Professor Mark Elliott and Professor Alison Young for their helpful thoughts and comments on an earlier draft. Any errors or omissions remain my own.

Nicholas Kilford, PhD Candidate at the University of Cambridge

(Suggested citation: N. Kilford, ‘The UK Internal Market Act’s Interaction with Senedd Competences: The Welsh Government’s Challenge’, U.K. Const. L. Blog (23rd Feb. 2021) (available at https://ukconstitutionallaw.org/))