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United Kingdom Internal Market Act 2020

UK law relating to internal trade

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Through Conservative Party (UK), United Kingdom and Judicial review

The UK Government has stated that the legislation's intended purpose is to guarantee the continued seamless functioning of the UK's internal market, and to enshrine in law principles to ensure regulations from one part of the UK are recognised across the country. The Scottish Government has stated that the legislation is intended to introduce wide ranging constraints on devolved competence, and observed that it also authorises financial assistance by UK government ministers on devolved matters, and reserves devolved powers relating to subsidy control. They said that the intent of the bill was a power grab, and in a report published in March 2021 said that the act is undermining the powers and democratic accountability of the Scottish Parliament.

While the bill was before parliament, the Conservative MP and Minister for the Cabinet Office, Michael Gove, described the bill as a measure to preserve the territorial integrity of the United Kingdom. The devolved administrations criticised the bill for its re-centralisation of control over commerce, reversing the devolution of power in the United Kingdom.

The bill was rejected a number of times by the House of Lords. Three of the votes on the bill in the House of Lords are the three largest government defeats in the Lords since 1999. Eventually, the UK government made changes to make it more flexible, and also withdrew some provisions in Part 5 (relating to the Northern Ireland Protocol to the Brexit withdrawal agreement) that had attracted controversy because of their impact on the rule of law. The act was given Royal assent on 17 December 2020, some two weeks before the United Kingdom formally left the European single market.

The Welsh Government sought a judicial review of the legislation. In a hearing in April 2021, two High Court judges refused permission for a full hearing, ruling that the claim was premature in the absence of specific circumstances giving rise to the arguments raised by the Welsh Government.

Background

The United Kingdom joined the European Communities (EC) in 1973. In 1987, the Single European Act, a treaty amendment that sought to increase European integration and establish an internal market, entered into force. This internal market, known as the European single market, was established by 1993, the same year that the EEC and related organisations were reformed into the European Union (EU).

While a member of the EU and thus part of the European Single Market, the United Kingdom helped develop and was subject to common EU-wide rules on a number of policy areas, aimed at harmonising rules and removing trade barriers between the member states. These rules governed UK trade during a period when regulatory powers became devolved in the UK and the Good Friday Agreement on the Northern Ireland peace process was reached.

According to estimates published by the European Commission, more than half of Scotland, Wales and Northern Ireland's trade is with the other parts of the UK, in both exports and imports. The majority of England's trade is outside the UK, but the rest of the UK still accounts for more than 10% of its imports and exports.

In a 2016 referendum the United Kingdom voted to leave the European Union, colloquially known as Brexit. After lengthy negotiations, it left on 1 February 2020, but under the agreed withdrawal agreement it remained a part of the European single market until the end of a transition period lasting until 31 December 2020.

When the transition period ended on 31 December 2020, authority over a number of policy areas held by the EU reverted to the UK. Of these the UK government identified, in an April 2020 analysis, 154 policy areas that intersect with devolved competence.

Northern Ireland

Article 6 of the Northern Ireland Protocol, included in the withdrawal agreement in October 2019, includes reference to the notion of United Kingdom's internal market:

Having regard to Northern Ireland's integral place in the United Kingdom's internal market, the Union and the United Kingdom shall use their best endeavours to facilitate the trade between Northern Ireland and other parts of the United Kingdom, in accordance with applicable legislation and taking into account their respective regulatory regimes as well as the implementation thereof. The Joint Committee shall keep the application of this paragraph under constant review and shall adopt appropriate recommendations with a view to avoiding controls at the ports and airports of Northern Ireland to the extent possible.

— Article 6: Protection of the UK internal market

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