UK internal market: initial assessment of UK Government proposals

Comparison with the EU and European Single Market

The Scottish Government has previously set out the benefits of participation in the European Single Market. Proposals for a ‘UK Internal Market’ are a consequence of the decision to leave the EU despite a clear rejection by the people of Scotland and the Scottish Government.      The benefits of the European Single Market are clear:   

• enables Scottish exporters to be inside the world's largest single market and allows our citizens to buy goods and services from any other part of the single market, free from import taxes or other barriers

• ensures that our component manufacturers can prosper in the complex supply chains that characterise contemporary production systems

• ensures a level playing field for our exporters, and protection for our consumers, by setting common product and trading rules (including production rules) across the EU that must be met before a product can be sold - rules governing weight, size, packaging, ingredients, labelling, shelf-life conditions, and testing and certification procedures

• means that companies engaged in selling services such as financial products have so-called "passporting" rights, allowing them to sell directly to consumers across the EU

• allows people and companies - architects, engineers, students, tourists, haulage companies to name only a few - to move around the EU and establish businesses, build careers and live their lives free from discrimination

The White Paper draws a number of comparisons between the UK Internal Market and Scotland’s current situation within the European Single Market and previously as a member of the EU.  These parallels are misconceived.

The development of the European Single Market has been based on principles of equality, cooperation, co-decision, subsidiarity and consent and setting a baseline of minimum agreed standards that all member states’ own rules must be compatible with.  The UK Government’s proposals are based on unilateral decision-making and imposition, with no minimum standards or guarantees.  The UK Government’s proposals therefore do not simply replace EU rules with UK rules as they claim. 

European Single Market rules recognise and allow for policy objectives alongside pure market economic considerations, for example, the health benefits of Minimum Unit Pricing. 

European Single Market principles ensure that decisions are taken as close to affected citizens as possible, and that member states abide by the rules agreed by the EU, and that rights can be enforced by individuals and companies against their own governments if necessary. The institutions of the EU also ensure that regional variations are taken into account.

The UK Government is proposing the opposite of the European Single Market approach. 

The White Paper does not include any mechanism for negotiation or agreement for minimum standards which all four governments of the UK would then be expected to follow.  Instead, the mutual recognition mechanism would allow the UK Government to decide its standards for England which would have to be accepted across the other nations of the UK, while in practice reserving the right under the doctrine of Parliamentary sovereignty to reverse any decisions taken by the devolved governments which might   constrain the decision-making powers of the UK Parliament or UK Ministers.  In reality, this means that the UK Government could impose decisions on the devolved governments with no right of repeal or means of redress.  As one commentator has noted,  “the Parliamentary sovereignty of Westminster … means that, inherently, the legislative aspect of the internal market will never be independent and impartial in a way that would be recognised in the EU, for example”.

The White Paper proposals also differ from the European Single Market, in that they do not cover reserved matters which currently need to meet minimum EU standards such as employment and competition law, and also go beyond the current arrangements for the devolved governments: devolved matters such as building standards are apparently included despite there being no evidence of an adverse market impact from the current  long lasting arrangements in that area, which predate devolution and are the result of geography, geology and different  aesthetic and overseas influences.   Finally, there is no indication in the paper that important policy objectives such as the protection of health and the environment would be legitimate reasons to derogate from mutual recognition, unlike the EU which allows for wider policy objectives to be taken into account as well as economic considerations.