What is the UK Single Market?

Decisions over the repatriation of powers and the role of a 'UK single Market' will have significant implications for the future of devolution and the nature of the UK as a state, says Michael Keating. 

The devolution statutes for Scotland and Wales of the late 1990s were more permissive than those proposed in the late 1970s in several respects. One was that economic development powers, which in the 1970s were to remain in the hands of the Secretaries of State, are now devolved. This was partly because of a reduced emphasis on centralized regional policies, which reached their peak in the early 1970s. Instead, there was a move towards endogenous or bottom-up development and on inter-regional competition, part of an international trend. It was also because by the late 1990s the European Single Market and stronger European competition policies provided an alternative framework of regulation and secured a level playing field across the UK as well as the EU as a whole. After Brexit, this will disappear and the UK Government has been talking of the need for measures to secure ‘the UK’s own single market’.

It is by no means clear what this means in practice. The EU Withdrawal Bill addresses competences that are currently both Europeanized and devolved, proposing to take them back to Westminster as part of ‘retained EU law’. The main ones concern agriculture, fisheries, the environment and aspects of justice and home affairs. Later, some may be ‘released’ back to the devolved level as long as they do not interfere with the single market or other obligations. The Scottish and Welsh governments strongly oppose this.

However that dispute is resolved, it only addresses part of the question. The idea of a UK single market is potentially much wider, if it is analogous to the European Single Market.

The European Single Market is a long-term programme to eliminate barriers to the free movement of goods, services, capital and labour. It consists of a series of measures proposed by the European Commission, accepted by the Council of the European Union (by qualified majority vote among the member states) and interpreted and enforced by the Court of Justice of the European Union. Single market and competition measures can cover many fields, some unexpected. For example, the Scottish Government’s legislation on minimum pricing of alcohol was challenged by producers and has been up and down through the Scottish and European courts and back to the UK Supreme Court.

There have been complaints that the Single Market is a centralizing mechanism and, to counterbalance this the principles of subsidiarity and proportionality have been put in place. These stipulate that action should be taken at the lowest level practicable and should only be broad enough to achieve their aim.

Nothing like these mechanisms exists in the UK or in relation to devolution. Yet one can envisage many instances in which the single market principle could impinge on devolution. More stringent standards in environmental matters or agricultural produce might be seen to infringe it. The European Single Market contains a provision for mutual recognition so that if a certain products are legal in one country they are legal everywhere. It might be argued that preventing private contractors from bidding for public services is an infringement, given the different practice in England as opposed to Scotland and Wales. Free trade agreements with the EU or third countries might include higher or lower product standards in agriculture. Public health regulation might be challenged by industries like tobacco, alcohol or gaming. The boundary between social provision and commerce may be challenged where devolved or local governments provide free services. All of these questions have arisen in the European Single Market.

It may be that the UK Government will take a permissive line, encouraging regulatory competition of even a ‘race to the bottom’. Alternatively, it may seek to enforce standardization by new controls, reservation of more competences or a set of broad framework principles allowing it to intervene in devolved matters. If the example of repatriated competences is anything to go by, it is likely to do this itself, from the top down.  Ministers may replace the European Commission and the Court of Justice as the final decision-makers on how the frameworks are to be interpreted. Alternatively, as the Welsh Government has suggested, the UK could seek to imitate the EU by setting up a UK Council of Ministers to decide jointly what needs to uniform and what does not.

How these matters are resolved will determine whether the UK is on a journey towards some kind of federalism, or remains a decentralized unitary state in which the centre has the last word.

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post by Michael Keating
University of Aberdeen
20th September 2017

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