United Kingdom Internal Market

Part of the debate – in the Scottish Parliament on 18th August 2020.

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Photo of Adam Tomkins Adam Tomkins Conservative

The Scottish Parliament has competence to make laws that have the potential to interfere with all manner of aspects of trade, market access and goods and services. As we have heard, we could make public health rules that restrict access to goods; we could make food-labelling rules that impose additional costs on manufacturers; or we could impose additional regulatory requirements on professions or services. All those are within our devolved competence. Until now, our exercise of those powers has not disrupted or threatened the integrity of the UK’s internal market, because all of the powers have had to be exercised subject to EU law, and EU internal market law, which has of course bound every part of the UK since the dawn of devolution, has acted as a check on the exercise by the Scottish Parliament of its powers over trade, markets and goods and services.

When we leave the transition period at the end of this year, that check will disappear, and at that point the exercise of devolved competence could for the first time disrupt or threaten the integrity of the UK’s internal market. That would be contrary to not only the UK’s interests but the interests of Scottish consumers, producers, manufacturers and distributors, much as Bruce Crawford just said.

Let us not forget that Scotland trades one and a half times as much with the rest of the UK as it does with the whole of the EU and the rest of the world put together, and that the UK’s internal market is worth nearly four times as much to Scots as the EU’s single market is. Therefore, no one, whether unionist or nationalist, should imagine that it is in their interests to erect new barriers to trade between Scotland and the rest of the UK. [

Interruption

.]

I will not give way at the moment.

Over the past few years, a series of so-called common frameworks have been developed that aim to address that problem, but those are not legal instruments and, in any event, they do not cover the whole of the field. Necessary and welcome though they are, I have always been of the view that, without legal underpinning, they were unlikely on their own to be sufficient. The UK Government now proposes to provide that legal underpinning, guaranteeing the future integrity of the UK internal market, and I warmly welcome that—in my view, we all should. As I have said, it is in no one’s interests for Scotland’s unimpeded access to markets in the rest of the UK to be disrupted. [

Interruption

.]

I will not give way at the moment.

I have, however, a number of reservations about the way in which the UK Government currently proposes to legislate in the area. Common frameworks are based on two principles: to enable the functioning of the UK internal market and at the same time to acknowledge legitimate policy difference. That is critical.

It is perfectly possible and, moreover, it is surely desirable to accommodate regulatory divergence within a single market. Let us take alcohol minimum pricing as an example—it is an example that has been used by a number of other members this afternoon. If one part of the UK considers that, for reasons of public health, it wants to impose a measure such as that, but other parts of the UK consider it to be unnecessary, that is regulatory divergence within a single market, but is the divergence so severe or disruptive that it threatens the very integrity of that market?

Of course, we do not want such severe divergence that access to the market becomes unreasonably burdensome, but many regulatory differences can be managed without burdens becoming too severe. It is all about balance. In European law, and indeed in legal systems around the world, that balance is achieved by the all-important doctrine of proportionality, which Alex Rowley rightly talked about earlier. Proportionate interferences with market access, as minimum unit pricing was found by the courts to be, are lawful as falling within the scope of legitimate policy difference. It is only when regulatory divergence is disproportionate that it becomes unlawful.

We have two principles at stake here, both of which are important: safeguarding the integrity of the internal market; and protecting legitimate policy divergence—or, to express the second principle differently, protecting devolution. The UK Government’s internal market white paper puts a lot of flesh on the bones of the former but says next to nothing about the latter. The two core policies that the white paper proposes—mutual recognition and non-discrimination—will indeed strengthen and safeguard the UK internal market, and they are well known to anyone who knows anything about internal market law. They are well-established principles of European law, they are coherent, practicable and sensible, and the white paper is right to want to promote them, but they need to be balanced by other equally well-understood policies that promote and protect our second principle—the safeguarding of legitimate policy divergence.

The best tool that we have to do that work is the doctrine of proportionality, as developed not only by the European courts but by courts right across the Commonwealth and beyond. Proportionality should not be understood as an alien notion of foreign law that has no roots in our own common law traditions; it is as much part of our legal heritage as it is of anyone else’s, and it is much more than mere policy. It is legal doctrine enforceable by courts of law.

The UK Government is absolutely right to understand that our departure from the EU means that we need to take steps, including legislative steps, to underscore, strengthen and safeguard the UK’s internal market. That can readily be achieved compatibly with our devolution settlement, and it must be achieved compatibly with devolution. In order to get there, we need to ensure that our new internal market law enshrines not only mutual recognition and non-discrimination as foundational legal principles, but the doctrine of proportionality. That way, we can safeguard the internal market and protect legitimate policy divergence all at once.