Internal market creates tension in devolution settlement, MSPs find

In a new report out today, the committee has concluded:

• There are significant challenges in managing the tension which exists in any internal market between open trade and regulatory divergence, and that the UK internal market has significant economic benefits
• In resolving this tension within the UK internal market, it is essential that the fundamental principles which underpin devolution are not undermined
• The fundamental basis of devolution is to decentralise power so as to allow policy and legislation to be tailored to meet local needs and circumstances
• Policy innovation and regulatory learning are one of the key successes of devolution.

The Committee also reports that it is essential as recognised by the Joint Ministerial Council (JMC) in 2017 that devolution outwith the EU continues to provide “as a minimum, equivalent flexibility for tailoring policies to the specific needs of each territory as is afforded by current EU rules.” The Committee will invite the UK Government to explain how, in its view, UKIMA will provide for this equivalent flexibility.

The Committee’s report also noted that Common Frameworks in certain policy areas may ease this tension by managing divergence on a consensual basis. This could be achieved through creating opt-outs from UKIMA, allowing for divergence in certain areas.

However, the Committee has voiced concerns that because Common Frameworks are agreed between the UK and devolved governments, there is a lack of Parliamentary oversight and public consultation.

The Committee is working with counterparts in other parts of the UK as it seeks to press the Governments to open up the Common Frameworks process towards greater consultation and scrutiny.

Speaking as the report was launched, Committee Convener, Clare Adamson MSP, said: “We believe that policy innovation – being able to pass laws that are tailored to the situation in Scotland – is one of the key successes of devolution.

“As a Committee, we believe it is essential that outside the EU, devolution continues to provide at least the same level of flexibility.

“However, we have found that UKIMA places more emphasis on open trade than autonomy for the Scottish Parliament compared to the EU Single Market.”

Ms Adamson continued: “While the Common Framework process may resolve the issues between UKIMA and devolution, we have concerns about how these are created between UK and devolved governments, as well as their operation. 

“Our view is that there needs to be a much wider public debate about how to deliver appropriate levels of parliamentary scrutiny and public engagement at an inter-governmental level.

“At present, we are concerned that lack of processes in place mean less democratic oversight of the Executive, and a less consultative policy-making process.”

Ms Adamson concluded: “The UK internal market has created tensions. We will seek answers from the UK and Scottish Governments on issues raised in the report, as well as continuing to work with our counterpart Committees across the UK.