Kenneth A. Armstrong: From the Shadow of Hierarchy to the Shadow of Competition – Common Frameworks and the Disciplining of Divergence

This time last year, the controversial United Kingdom Internal Market Bill was ping-ponging between the Commons and Lords. A key point of contention concerned the relationship between the ‘market access’ principles now enshrined in the Act – the mutual recognition and non-discrimination principles – and future exercises of devolved rule-making. Should post-Brexit internal regulatory divergence be legally disciplined by a strong version of the mutual recognition principle or insulated from such forces? As I explained in a contribution to this blog a year ago, a partial answer can be found in Sections 10(2) and 18(3) of the Act which allows the Secretary of State, by regulations, to amend Schedule 1 (goods) and Schedule 2 (services) to exclude the outcome of a ‘common framework agreement’ from the scope of application of the market access principles. The aim of this new post is to consider how this power is likely to work in light of a written ministerial statement made on 9 December 2021 setting out the mechanism for its implementation.

Common Frameworks – From the Withdrawal Act to the Internal Market Act

It was apparent during the passage of what became the European Union (Withdrawal) Act 2018 that a process would be needed to manage modifications to retained EU law once powers previously exercised in the context of EU membership flowed back to the UK and down to devolved levels of government. Having encountered resistance to a centralisation of a power to modify, the compromise solution was what we now refer to as the Common Frameworks programme.

It will be recalled that analytical work was undertaken to identify candidate fields for Common Frameworks and to decide which of these might be suitable either for a non-legislative approach or one which might also need a legislative support. The analysis has been updated annually since 2018, with the 2021 revised analysis indicating a programme of 32 frameworks, of which 29 would be non-legislative. According to the most recent report on the programme (required under Schedule 3 of the 2018 Act), 29 frameworks apparently have provisional agreement (although only 11 provisional frameworks appear on the relevant UK Government’s website). Only one framework – Hazardous Substances (Planning) – has been adopted in final form.

Common Frameworks foster intergovernmental collaboration in the management of modifications to retained EU law that intersect with UK and devolved competences. The terms of this collaboration between officials of UK and devolved governments would be established in policy-specific Common Frameworks negotiated in light of some high-level principles agreed by the Joint Ministerial Committee. In this way, regulatory coherence and even consistency might be achieved while acknowledging that policy divergence remained a legitimate outcome. However, these frameworks were developed in the shadow of a ‘contingent mechanism’ in Section 12 of the European Union (Withdrawal) Act 2018 allowing UK ministers to adopt regulations to ‘freeze’ the legislative competence of devolved authorities to modify retained EU law. That (unused) power ceases at the end of January 2022 and will be repealed in light of the progress made on frameworks.

Nonetheless, it became apparent that a statutory internal market – and the market access principles it deploys – might prove to be a more direct constraint on the competences of devolved governments to take diverging regulatory approaches. Indeed, regulatory divergence tolerated by a Common Framework at a political level, might be disapplied if it fell within the scope of the market access principles. In this way, if the 2018 Act suggested that Common Frameworks would be bargained in the shadow of the hierarchy of the Section 12 power, then the intention to legislate for an internal market appeared to subject such intergovernmental bargains to the discipline of regulatory competition. Attempts by Lord Hope to amend the Internal Market Bill to exclude entirely the outcomes of common frameworks failed, and instead we have the powers exercisable on a case-by-case basis by a UK Secretary of State to amend Schedules 1 and 2.

Implementing the Power to Amend the Schedules

The Internal Market Act is no exception to the trend in Brexit-related legislation in giving UK ministers wide powers to amend primary legislation. The power to amend the schedules to the Act – to increase or decrease its scope of application – can be exercised by the Secretary of State in accordance with the affirmative procedure and having sought the consent of the devolved administrations. This power can also be used ‘to give effect to an agreement that forms part of a common framework agreement’. This formulation is tricky. It suggests that what is excluded is neither a new ‘relevant requirement’ that would otherwise be within the scope of the Act, nor a common framework itself. Rather, what is excluded is an agreement that results from a Common Framework; an agreement that would then take a new relevant requirement beyond the scope of the Act.

The distinction may appear subtle, but whereas relevant requirements or Common Frameworks are public documents, it may not otherwise be apparent that an ‘agreement’ exists to exclude a requirement from the scope of the Act. It is this gap which the UK and devolved governments have now agreed to fill through ‘the process for considering UK Internal Market Act exclusions in Common Framework areas’. This process – to which the December 2021 parliamentary written statement refers – has been lodged in the libraries of both Houses of Parliament. The core of this process is set out at point 5:

Evidence of the final position of each party regarding any exclusion and whether an agreement has been reached should be recorded in all cases. This could take the form of an exchange of letters between appropriate UK Government and Devolved Administration ministers and include confirmation of the mandated consent period for Devolved Administration ministers regarding changes to exclusions within the Act.

It is this exchange of letters which evidences the agreement. A statutory instrument still needs to be made under the Act to exclude whatever is covered by the agreement. Point 7 of the process simply states:

Where agreement to such an exclusion is reached within a Common Framework, the Secretary of State for the UK Government department named in the Framework is responsible for ensuring that a draft statutory instrument is put before the UK Parliament.

Whatever minimal clarity this offers, it remains a workaround. Its intention is to mitigate the effects of what I have described elsewhere as a ‘competitive model’ of economic unionism built into the governance architecture of the UK internal market. This model is one that stands in contrast to an alternative ‘collaborative model’ which finds expression in intergovernmental cooperation including through Common Frameworks.

Governing With and Without Consent

A collaborative model is one that respects the constitutional distribution of political authority, tolerates regulatory diversity, and manages problems through structures for dialogue and consent. In respect of the potential under the UK Internal Market Act to exclude agreements arising from Common Frameworks, it is obvious that the concession to seek the consent of devolved ministers before amending the schedules to the Act rather misses the point. It is the consent of UK ministers to any agreement within the context of a Common Framework and the consent of UK ministers to lay a statutory instrument that is crucial. Devolved governments, exercising powers within their own competence, are not masters of their own destiny. If UK ministers do not want to trigger the process for excluding a Common Framework agreement they are not obliged to do so. There is no requirement to not unreasonably withhold consent to an agreement, nor any duty to give reasons for decisions that could then form the basis of judicial review. Power and authority rests with the UK Government.

Given that the legislation is only a year old, that Common Frameworks are still being finalised, and that devolved programmes for government have only emerged after the summer following fresh elections to the Scottish Parliament and Welsh Senedd, concerns about consent feel largely academic. Yet the implications of this governance architecture will become apparent. Any new initiative, for example, on single-use plastics or in combatting microplastics – including any use of the Scottish Government’s power to ‘keep pace’ with future EU environmental policy developments – would fall within the scope of the Resources and Waste Common Framework. We will then see both the effects of the UK Internal Market Act and the procedure for excluding agreements arising from Common Frameworks in action. But even if the system ‘works’, there are good reasons to revisit the governance of the UK internal market to foster more collaborative and consensual ways of managing post-Brexit regulatory changes.

Kenneth A. Armstrong is Professor of European Law at the University of Cambridge. He gratefully acknowledges the support of a Leverhulme Trust Major Research Fellowship on The Brexit Effect – Convergence, Divergence and Variation in UK Regulatory Policy

(Suggested citation: K. A. Armstrong, ‘From the Shadow of Hierarchy to the Shadow of Competition – Common Frameworks and the Disciplining of Divergence’, U.K. Const. L. Blog (15th December 2021) (available at https://ukconstitutionallaw.org/))

* This article was originally published here