UK Internal Market: White Paper

For centuries, the United Kingdom’s internal market has been the bedrock of our shared prosperity, with people, products, ideas and investment moving seamlessly between our nations, safeguarding livelihoods and businesses and demonstrating that, as a union, our country is greater than the sum of its parts.

Today, I am publishing a White Paper on the Government’s plans to preserve the UK internal market after the transition period. Since the Acts of Union, the UK internal market has been the source of unhindered and open trade across the country, one which pulls us together as a united country. I know that the right hon. Member for Doncaster North (Edward Miliband) cares as much about our precious union as I do.

Since 1973, EU law has acted as the cohering force for the UK internal market. In 2016, the British people voted to repeal that legislation, allowing us now to articulate the continued functioning of the internal market. The Union’s economic strength is unrivalled. Since the Acts of Union, the size of our economy has multiplied over 170-fold. Successive UK Governments have legislated to share this prosperity and protect workers’ rights—for example, through the introduction of the national minimum wage and now the national living wage, and by providing for more generous holiday and maternity leave than required by the EU. Today we are announcing plans to continue this hugely successful economic Union. We will legislate for an internal market in UK law, as we leave the transition period and the EU’s single market. Our approach will give businesses the regulatory clarity and certainty they want. It will ensure that the cost of doing business in the UK stays as low as possible.

But let me be clear: preserving the coherence of the UK internal market will be done in a manner that respects and upholds the devolution settlements. On 1 January 2021, hundreds of powers previously held by the EU will rightly flow directly back to devolved Administrations in the United Kingdom. For the first time, because of our approach, the devolved Administrations will be able to legislate on a whole range of policy areas. Each nation that makes up our United Kingdom will hold an unprecedented level of powers after the transition period.

To respect devolution and uphold our internal market, we propose to legislate this year. Businesses across the UK will be given a market access commitment. That will be underpinned by the principles of mutual recognition and non-discrimination, which will guarantee that goods and services from one part of the United Kingdom can always be sold into another. The simple principle at the heart of this approach is a continuation of our centuries-old position that there should be no economic barriers to trading within the United Kingdom.

The economies of our four nations, within one United Kingdom, are strongly integrated. At the time of the last census, 170,000 workers commuted daily from one part of the UK to another. Scotland makes over £50 billion of sales per year to the rest of the UK, accounting for over 60% of all exports. Indeed, Scotland sells three times more to the rest of the UK than to the whole EU put together. About 50% of Northern Ireland’s sales are to Great Britain, and 75% of exports of Welsh final goods and services are consumed in other parts of the UK. In some parts of Wales, over a quarter of workers commute across the border. It is in the clear economic interest of the whole United Kingdom that its internal market continues to function successfully and seamlessly, as it has done for centuries.

As part of our proposals, we will also clarify in law the position that subsidy control is a reserved matter for the whole United Kingdom. This has never been a devolved matter. The Government have been clear that, after the end of the transition period, the UK will have its own domestic subsidy control regime. We will develop our policy proposals on this in due course, consulting widely.

We will only recover from covid by working together. Just over two weeks ago, the Prime Minister set out how we would strengthen the incredible partnership between England, Scotland, Wales and Northern Ireland through our economic recovery. That will be underpinned by a strong UK internal market and avoid the damaging uncertainty for businesses of a fractured economy. It will provide the unquestionable advantages of continued open trade. It will benefit businesses, workers and consumers across the country by lowering trading costs and allowing different regions to specialise in sectors where they enjoy a comparative advantage.

Our proposals are designed for co-operation between all four nations. We invite all devolved Administrations to work together and to agree common approaches to cross-cutting issues such as regulatory standards.

The UK economy has some of the highest standards in the world. We go beyond EU rules in many areas, including health and safety in the workplace, workers’ rights, food, health and animal welfare, consumer protections, household goods, net zero and the environment. We will maintain our commitment to high standards as we negotiate trade agreements that will provide jobs and growth to the United Kingdom. Through our common frameworks approach, we will support regulatory consistency across our internal market, so if the devolved Administrations seek to agree standards across the UK economy, I say simply this: come and work with us.

The UK internal market is a historic achievement for the United Kingdom, which for 300 years has supported unrivalled economic growth and innovation within our great Union. That has underpinned the best of our United Kingdom’s innovation and prosperity: the Scottish enlightenment, the steam engine, the world’s first vaccine, the telephone, the electric tramway, penicillin, radar, pneumatic tyres, the breaking of the Enigma code, the sequencing of DNA, and the world wide web. As we rebuild and recover from covid, we will work together as one United Kingdom to support jobs and livelihoods across our whole country. We will maintain high standards for consumers, and deliver our commitment to devolution by giving more power to the devolved legislatures. I commend this statement to the House.

I thank the Secretary of State for his statement. We support the principle of maintaining the UK’s internal market, which is vital for trade, jobs, and prosperity across the whole United Kingdom. The way the Government go about that has profound implications for whether we drive up standards across the UK or drive them down, and for whether that issue becomes a source of tension across the four nations of the UK. We believe in our United Kingdom, and there is a big responsibility on the Government to seek to build consensus and ensure that we do not drive a wedge between our nations, or give an excuse to those who wish to do so.

By those standards, there are significant problems in the announcement. On the process, for example, the Welsh Government were promised a draft of this White Paper last March, yet when I talked to the Welsh First Minister yesterday afternoon, the Government had still not shared it with him. That approach does the Secretary of State and the Government no good. On the substance, we should be honest that there is a real challenge regarding how we maintain an internal market without barriers in the UK as we leave the European Union, while at the same time respecting devolution when issues such as food standards and labelling, animal welfare, and other important environmental issues are devolved.

For the past 40 years, including 20 years of devolution, that has been achieved by the EU setting minimum standards, which all four nations had to abide by. The crucial question is not whether we have an internal market, which we need, but how we now set minimum standards to ensure that each nation has a proper voice in doing so, and a means of resolving any disputes that arise. By answering those questions, we can do what we need to do, which is both keep the internal market and respect devolution. Unfortunately, despite the warm words from the Secretary of State, the approach of the White Paper as presented for England, Scotland and Wales appears to be simply to legislate that the lowest standard chosen by one Parliament must become the minimum standard for all.

I thank the right hon. Gentleman for his comments and for his support for the principle of the UK internal market. I hope that that is something we will hear echoed across the House as we open up to questions. Let me address some of the points that he has raised.

The first thing worth noting is that the right hon. Gentleman talked about anxiety. The real issue at the moment is giving certainty to businesses, so that they know from day one that they are able to operate as they do now within a coherent, seamless internal market. That is what this White Paper proposal absolutely gives them. I have spoken, as I am sure he will have done, to business representatives and organisations over the last 24 hours, and they have told me that this is one big issue off the risk register of companies.

The right hon. Gentleman talked about standards. I would point out to him once again that the UK has some of the highest standards in the world across a whole range of areas. I have listed issues around maternity and paternity pay, around the exclusions and around zero-hour contracts. I say to him once again—I am sure that this issue will be raised by others as well—that we are not going to be compromising our high environmental standards, our high animal welfare standards or, indeed, our high food safety standards in the deals that we do.

The right hon. Gentleman then raised the issue about working together. He will know that the common frameworks programme has been running for some time, and we have had consultations and discussions about that. If colleagues in the devolved Administrations want to have a discussion about standards, that is absolutely the right forum in which to do it. He also mentioned the state aid rules. I know that he will understand the reason that we want to continue to have this as a reserved matter. We want to ensure that there is effectively equality across the whole of the UK and that there are no distortions. I understand his desire for us to set out the details on this, and that will come.

Nothing is currently more important for our whole United Kingdom than the protection of public health and support for our economic recovery. Does my right hon. Friend agree that the proposals in the White Paper will ensure that all four nations—indeed, all four corners—of our United Kingdom can overcome this crisis by working together and promoting good co-operation between Westminster and the devolved Administrations?

My hon. Friend is absolutely right. That is precisely what I want to do. This is a consultation; we are consulting and we want to get people’s views. My door is very much open to a dialogue and discussion with anyone who wants to come forward.

I thank the Secretary of State for his statement.

What we have seen put forward by the Tory Government is the biggest assault on devolution since the Scottish Parliament reconvened in 1999. It is clear that the Government either do not get Scotland or cannot even be bothered to get it, so let me remind those on the Government Benches that in 1997 more than 75% of Scots voted to establish the Scottish Parliament. The Tories at the time were hostile to the establishment of that Scottish Parliament; they were out of step with Scotland. Plus ça change. Today, the Tories want to strip our Scottish Parliament of its powers.

Let us myth-bust some of the lies that have been circulated this morning. Scotland is not getting 70 new powers. The UK Government say that new powers are coming on animal welfare, energy efficiency and land use. Has the Secretary of State not heard? The Scottish Parliament already has those powers. Just last month it passed a Bill on animal welfare; last year it passed a Bill on forestry; and energy efficiency was part of the Climate Change (Scotland Bill) in 2009, more than a decade ago. We have these powers.

The Secretary of State’s proposal will impose what is being called a mutual recognition regime. The only recognition here is that it is a plan for a race to the bottom on standards. It will mean a reduction in standards in one part of the UK driving down standards elsewhere, even if that is in direct contradiction of the devolved Administrations and their rights and powers.

We all know how desperate this Tory Government are to sell out food standards in return for a US trade deal. There we have it: no new powers and a plan to destroy Scotland’s world-class food and drink standards—not a Parliament in Edinburgh of equals, but one where we legislate only with the approval of Westminster. I have to say to the Secretary of State: this is not a good look. Will he guarantee to the House that these plans will not be imposed on Scotland and that he and his Government will respect, as the Prime Minister often says, the Scottish Parliament’s decisions on them as those of an equal?

The right hon. Gentleman talks about understanding Scotland; the one thing that is clear from the statements he has just made is that he certainly does not understand business in Scotland and he certainly does not understand the people of Scotland on this issue. The UK internal market—[Interruption.] The UK internal market is about—[Interruption.]

Order. Mr Blackford, I can hear what you are shouting. Please, desist.

The UK internal market is about preserving jobs across the United Kingdom. It is about making sure that investment can come in, confident in the knowledge that we have a level playing field—an internal market in which businesses can sell services and products across the United Kingdom.

The right hon. Gentleman talks about the powers that will be coming back at the end of this year—at the end of the transition period. It will be the biggest transfer of powers in the history of devolution. I do, though, agree with him that it is not going to be 70 powers coming back to Scotland; I think it is closer to 111. His colleagues in the Scottish Parliament will have an opportunity to set rules and regulations. The problem, of course, is that SNP Members are not interested in that—they are not interested in taking control; they are interested in being ruled by the European Union. The right hon. Gentleman should spend more time talking to businesses and to people whose jobs would be at risk if we did not have this seamless internal market in the United Kingdom.

Finally, the right hon. Gentleman talks about standards. I have already explained to the right hon. Member for Doncaster North (Edward Miliband) that we have some of the highest standards in the world, and we are not going to compromise on that. The right hon. Member for Ross, Skye and Lochaber (Ian Blackford) talks about wanting to have a dialogue. I respectfully remind him that it was the Scottish Government who walked away from the discussion that we were having on the UK internal market last year, so, in the spirit of co-operation, I hold out my hand to him and say, “Let us talk. Let us continue the discussion. Come back to us on the consultation and continue to work with us on the common frameworks programme.”

Will my right hon. Friend assure me that Scotland, England, Wales and Northern Ireland will also see more powers coming back to them as a result of these proposals when the transition period ends?

Yes, indeed. My hon. Friend is absolutely right: powers will flow back to all the devolved Administrations—around 70 to Wales and around 150 to Northern Ireland.

This talk of powers being returned disguises the fact that the Government are denying all of us here a much more important power—that of scrutinising the trade deals that are struck in our name. The British people used to have this power through their elected representatives in Brussels, but the Trade Bill comes back to the House on Monday and there is no provision in it for this Parliament to have scrutiny of the trade deals that are being struck in our name. Will the Secretary of State accept that trade flows throughout the United Kingdom can best be secured by the instituting of a robust and respected dispute resolution process, and will he confirm that implementing such a mechanism will be a priority as he progresses his plans?

I say respectfully to the hon. Lady that she needs to move on. The British people decided that we were leaving the European Union in 2016, and we are implementing that vote.

Scotland sells more to the rest of the UK than it does to the rest of the world put together. Does my right hon. Friend agree that preserving the UK’s internal market is vital to protecting jobs, businesses and livelihoods in all four nations of the UK?

I could not agree more. Modelling shows that Scotland would suffer a GDP loss four times greater perhaps than that of the UK as a whole from unmitigated differences in regulations.

When the UK Government seek to strike trade deals with the rest of the world, they need to be able to speak with one voice for the whole United Kingdom, so will the Secretary of State commit himself, in the Bill that he brings forward, to making sure that arrangements are in place for proper consultation with all the devolved Administrations and proper scrutiny by this Parliament and the elected representatives of the British people?