UK Internal Market Act 2020: review and consultation relating to Parts 1, 2, 3 and 4
Published 23 January 2025
Ministerial foreword
Since the formation of the United Kingdom, there has always been an internal market. Businesses and consumers across the land have long enjoyed the rewards from being able to sell and buy products and services in every part of the UK. This trade between the UK’s 4 nations is worth around £129 billion, and is particularly important to the economies of Scotland, Wales and Northern Ireland.
This government’s top priority is economic growth, and we believe that growth and prosperity is supported by devolution – with all levels of government making decisions that support the economic success of our places and communities.
Maximising economic growth while protecting the significant value of the internal market therefore means finding the right balance between devolved decision-making on regulation and ensuring that unnecessary costs and barriers to trade between the 4 nations do not arise in instances of regulatory divergence.
This management of the internal market is best achieved through discussions between all 4 nations – maximising opportunities for alignment where in the nations’ mutual interest and managing divergence in ways that might promote long-term growth, rather than harm it, across the UK.
When that collaboration is working well, the United Kingdom Internal Market Act 2020 (the UK Internal Market Act) sits in the background as a tool for all governments within the UK to manage instances of divergence which might cause unnecessary cost and trade barriers – enabling free movement of goods and services and supporting people to work and do business.
The new UK government recognises the strongly held views of some around the way that the UK Internal Market Act was previously managed and that businesses have been left with little time to adapt to new policies and changes. That is why we are seizing the opportunity to conduct this review early. We want to hear views about what is and what is not working well about the UK Internal Market Act, so that we can quickly decide on next steps to make processes work better.
Our aim is for the 4 governments of the UK to collaborate and deliver our shared ambition to support businesses and drive economic growth. As an early demonstration of this commitment, the UK government has already stated[footnote 1] our:
- commitment to use Common Frameworks[footnote 2] as the main fora for the 4 governments of the UK to discuss and collaborate on new ideas and policies in the areas they cover, and to consider the impact these may have on the internal market
- aim to ensure that the programme to establish Common Frameworks is complete by Easter 2025
- desire to encourage greater sharing of policy programmes between the UK government and devolved governments, so that we are working together in a more collaborative and transparent way
- agreement to the Scottish Government’s previous proposal to exclude legislation that prohibits the sale of rodent glue traps, so that it would no longer be subject to the free movement of goods provisions in the UK Internal Market Act, on the basis that it has a minimal economic impact on business
This initial package of commitments demonstrates that we are ready to manage the UK internal market in a collaborative and open way. We are pleased the devolved governments have welcomed these measures and look forward to building on this throughout the course of the review.
The Rt Hon Douglas Alexander MP
Minister of State for Trade Policy and Economic Security
General information
Consultation details
Issued: 23 January 2025
Respond by: 3 April 2025
Enquiries to: UKIMReview@businessandtrade.gov.uk
Audience
This government seeks views from those affected by or with an interest in the operation of the UK Internal Market Act’s provisions, including but not limited to:
- businesses and their representative organisations
- specialist interest groups
- academia
- the devolved governments
Territorial extent
United Kingdom
Quality assurance
This consultation has been carried out in accordance with the government’s consultation principles.
Confidentiality and data protection
Information you provide in response to this consultation, including personal information, may be disclosed in accordance with UK legislation (the Freedom of Information Act 2000, the Environmental Information Regulations 2004, and the Data Protection Act 2018).
If you want the information that you provide to be treated as confidential, please tell us but be aware that we cannot guarantee confidentiality in all circumstances. An automatic confidentiality disclaimer generated by your IT system will not be regarded by us as a confidentiality request.
See our personal information charter and our public consultations privacy notice.
Background to the UK internal market
The value of the UK internal market
1․ The UK internal market is the trading space which exists between the 4 nations of the UK. It has existed for hundreds of years. Statistics have consistently demonstrated the importance of trade across the UK’s internal borders for our shared growth and prosperity, and that this trade is particularly important to the economies of Scotland, Wales and Northern Ireland. Data shows that trade between the UK’s 4 nations was valued at around £129 billion in 2019. The data also shows that trading with other UK nations represented 20% or more of the total economies of Scotland, Wales, and Northern Ireland. [footnote 3].
2․ Trade between the UK’s nations is particularly important for small businesses, which are less likely to trade internationally [footnote 4].
How the UK internal market has developed
3․ For nearly 50 years, during the UK’s membership of the EU’s single market and its predecessors, large amounts of intra-UK trade took place under harmonised EU-wide regulatory frameworks, which prevented any significant regulatory divergence within the UK internal market.
4․ The previous UK Labour government always championed devolution and, in 1998, delivered devolution in Scotland, Wales and Northern Ireland. This transferred decision making in a set of policy areas to the Scottish Government, Welsh Government and Northern Ireland Executive for which they were accountable to devolved legislatures. Since then, more control has been passed to devolved authorities under individual devolution settlements.
5․ When the UK left the EU in 2020, all of those powers previously held at EU level were returned to the UK. As devolution had occurred since the UK had joined the EU, only those powers which had not been devolved (such as on international relations and security matters) were returned to the UK Parliament in Westminster, and those powers in policy areas which had since been devolved were now returned to the parliaments in Scotland, Wales and Northern Ireland, according to the individual devolution settlements.
6․ This created more potential than before for each of the 4 nations to take tailored approaches in critical areas, and therefore for more divergent regulatory approaches to emerge in different parts of the UK and in economically significant parts of the UK’s internal market.
7․ Devolved powers promote an environment in which new, innovative approaches can be taken in one part of the UK and, if they are successful, these might be then adopted and rolled out in the rest of the UK. For example, in October 2011, the Welsh Government introduced a charge for single-use carrier bags which was so successful that it was subsequently adopted and rolled out across the rest of the UK. With more devolved powers post-EU exit, there is more potential for this kind of local policy innovation.
8․ This also requires all governments to work together to carefully manage these new powers to maximise their benefits and mitigate against potential costs to businesses and consumers. Trading between the nations of the UK is a crucial part of our economy, and it is vital that the operation of our internal market remains effective. People and businesses travel, conduct business, and buy and sell goods and services across the whole of the UK. Under some circumstances, businesses could find it more complicated and costly to sell their products and services in other nations within the UK if different rules apply in different places.
9․ To help manage this, the previous UK government introduced Common Frameworks jointly with the devolved governments in 2017 and the UK Internal Market Act in 2020 to provide a structure to manage the balance between the benefits of devolution and innovation and the potential impact of additional costs on the economy.
Management of the UK internal market
Common Frameworks
10․ Common Frameworks are agreements between the UK government and the devolved governments in Scotland, Wales and Northern Ireland. They establish structures for regular engagement to discuss, make decisions, and resolve disputes about developments in policy areas that are within devolved competence. They provide ways to work in areas where continuing a high level of coordination makes sense, despite powers being devolved, and to ensure any changes to policy in these areas are well-managed UK-wide.
11․ Common Frameworks are therefore the most important tool for the UK government and devolved governments to find shared approaches or agree on how to manage where one or more parties wish to take a different approach in the areas they cover. In this way, they can help protect the effective functioning of the UK internal market by supporting market cohesion. They can also help all parties to understand early where different approaches might be taken, so that discussions can focus on whether that divergence has economic impact and, if so, how best to manage that impact.
12․ The Common Frameworks programme was established jointly between the UK government and devolved governments in 2017. It covers a range of policy areas, from storing radioactive substances to food waste.
13․ As of January 2025, of the 32 Common Frameworks agreed between the UK government and devolved governments[footnote 5], 28 are operational with full or provisional clearance. The UK government and devolved governments are fully committed to Common Frameworks[footnote 6], and working closely together to fulfil their potential to help manage the UK internal market.
The UK Internal Market Act
14․ The UK Internal Market Act is the legislative tool which can be used to help manage the impact of trade barriers when regulatory divergence occurs in the UK internal market.
15․ The Act introduced principles (called ‘market access principles’) which mean that:
a) complying with regulations permitting the sale of goods or provision of services in one part of the UK will be considered as compliant with requirements across the UK. In other words, these principles mean that businesses only need to comply with a single set of regulations in order to trade freely across the whole of the UK.
b) regulations permitting the sale of goods or provision of services in one part of the UK cannot discriminate against goods and services from another part of the UK.
c) where individuals hold professional qualifications, the Act ensures that they may, by default, practice in other parts of the UK (exclusions and alternatives apply)
16․ With respect to goods, if for example a local requirement is introduced in one or more part (but not the whole) of the UK, the market access principles could mean that the local requirement will not apply to and cannot be enforced against those goods which are made in and imported from other parts of the UK. With respect to services, if a local requirement is introduced or substantively amended in a sector that is regulated in more than one part of the UK, the market access principles could apply and prevent the requirement from being enforced against providers from other parts.
17․ The market access principles could, of course, make it more difficult for a new local rule to have its intended effect. Therefore, the UK Internal Market Act contains provisions allowing the principles to be switched off for particular regulations or policy areas – these are known as ‘exclusions’. The UK government or any of the devolved governments can propose a new exclusion from the market access principles and, if the exclusion is agreed, businesses need to comply with the new rule’s application in the relevant nation when trading into it from another part of the UK.
18․ A number of areas were excluded when the UK Internal Market Act originally came into force (such as healthcare services) and regulations in existence before the Act came into force are outside of its scope until such time as they are substantively amended.
Case study: single-use plastics
In 2022, the Scottish Government implemented a ban on many single-use plastics, making it an offence for businesses in Scotland to provide the items – which include plastic cutlery, plates and stirrers.
At this time, there was shared policy ambition across the UK to ban single-use plastics. The Scottish Government were proceeding faster in implementing this than other parts of the UK, and were therefore concerned that the UK Internal Market Act’s market access principles might allow businesses in other parts of the UK to continue to sell single-use plastic articles into Scotland, thus undermining the environmental objectives of their ban, before bans in the rest of the UK had come into effect.
Due to this concern, following discussions between the UK government and the devolved governments about their plans for single-use plastics in the Resources and Waste Common Framework, the Scottish Government proposed an exclusion from the market access principles for single-use plastic products.
This exclusion was agreed and, shortly after the Scottish ban came into effect, the UK government implemented the exclusion for certain single-use plastic products. This meant that businesses in other parts of the UK would not be able to rely on the market access principles to sell single-use plastics into Scotland. The result was that the Scottish Government were able to implement their ban effectively ahead of the other governments of the UK, with little expected adverse effect on business.
19․ In practice, if divergence in the UK internal market occurs, businesses may not seek to rely on the market access principles. A recent study[footnote 7] has shown that businesses tend to respond to regulatory divergence not by relying on the market access principles but by either adopting a single high standard that is compliant across all nations (in effect gold plating their compliance), or by establishing 2 supply chains (perhaps reducing the number of their product lines to manage the costs of this), or even by considering withdrawing from selling products in a particular nation. This indicates that having different regulations applying in different parts of the UK could have potentially significant impact for the UK internal market, including on consumer choice and costs for businesses.
20․ That same study found that divergent regulations which produce effects earlier in the supply chain appear to be more challenging for businesses to address than divergent regulations which have their effects later in the supply chain. This suggests that, if some flexibility can be applied by policy makers in how they intend to achieve a particular policy goal, some regulatory differences may have a much lower impact on businesses than others, even if the policy goals are broadly similar.
The process for exclusions from market access principles
21․ Each of the governments of the UK’s 4 nations can propose an exclusion from the market access principles if it wants to enforce its new local rule against businesses trading into it from another part of the UK. The UK Internal Market Act specifies that only the UK government can implement an exclusion, by legislating in the UK Parliament.
22․ To date, only one additional exclusion[footnote 8] has been implemented for goods – to enable governments to ban the sale of certain single-use plastic items. In relation to services, a number of changes to areas excluded were made following public consultation.[footnote 9] Further details can be found in paragraphs 43 to 45.
23․ A process for managing exclusions from the UK Internal Market Act in Common Framework areas was jointly developed by all governments and introduced in December 2021 (see the process for considering UK Internal Market Act exclusions in Common Framework areas).
24․ However, the new UK government has heard criticism about the way the exclusions process has operated. To demonstrate this government’s desire to make improvements to ways of working with the devolved governments for the benefit of businesses and people across the UK, the UK government has already committed to:
a) the principles for Common Frameworks[footnote 10] agreed at the Joint Ministerial Committee (EU Negotiations) in October 2017 between the previous UK government and devolved governments. This recommitment includes:
i. developing closer working relationships and increased transparency between the government and the devolved governments on UK internal market matters that impact significantly on devolved responsibilities within Common Frameworks
ii. acknowledging the benefits of policy innovation and shared learning on policy development and implementation, while enabling the smooth functioning of the UK internal market
b) aiming to finalise the Common Frameworks programme by Easter 2025, ensuring the necessary structures exist for joined up inter-governmental discussions around regulatory divergence and implications for the performance of the UK internal market
c) making a UK Internal Market Act exclusion for legislation in response to the Scottish Government’s previous proposal that prohibits the sale of rodent glue traps, so that they would no longer be subject to the market access principles in the Act which provide for the free movement of goods provisions [footnote 11]. This government recognises this proposal has a minimal economic impact on trade within the UK.
25․ In addition, in undertaking this review, the UK government wants to understand how to make the processes that provide the important protections flowing from the market access principles work better for businesses whilst securing the benefits of local innovation.
The review
What the review covers
26․ The UK Internal Market Act requires the government to carry out a review of certain aspects of Parts 1, 2 and 4 of the Act by December 2025. Details of these legal requirements are set out in the Annex to this document. We are also seeking views on other, additional aspects of the Act, such as the process for considering exclusions from the market access principles, to help determine how the processes can be improved.
What the review does not cover
27․ The UK Internal Market Act provides important protections that can, when necessary, facilitate the free movement and trade in goods, provision of services and practice of professions across the UK. It also contains important protections for Northern Ireland’s place in the UK internal market and customs union. This review will therefore not consider whether to repeal the UK Internal Market Act or any part of it.
28․ Similarly, this review will also not consider the following parts of the UK Internal Market Act:
- Part 5 – Northern Ireland and the Windsor Framework, as this government is committed to protecting Northern Ireland’s place in the UK internal market
- Part 6 – Financial Assistance Power, as this remains an important mechanism which enables the UK government to deliver for people across the UK and on shared priorities with the devolved governments
- Part 7 – Subsidy control, as this is a matter that is reserved to the UK Parliament
- Part 8 – Final provisions
29․ The UK Internal Market Act’s protections that facilitate the free movement of goods, provision of services, and recognition of professional qualifications can deliver benefits across the whole of the UK. So, while we are of course ready to listen to all views on the market access principles, our starting point is that we do not believe the protections that flow from the principles should be weakened, but we do want to ensure that the processes around their application are appropriate and transparent.
Our approach to evidence gathering
30․ The following sections set out more information on the features of the UK Internal Market Act and its operation which we expect respondents to be most interested in: the market access principles for goods, services and professional qualifications, the role of the Office for the Internal Market (OIM), and the process for exclusions from the market access principles. Each section contains specific questions on the relevant feature. Respondents should feel free to answer as many or as few of the specific questions as they choose. Indeed, respondents may decide to answer only question 20, which invites general comments on any aspect of the operation of the UK Internal Market Act.
The market access principles for goods
31․ If a business sells goods across the UK, the UK Internal Market Act ensures that they can continue to do so, even if there are different regulations in different parts of the UK. Complying with regulations relating to their sale in the part of the UK the goods are produced or imported into, means the goods can be sold in the other parts of the UK, free from any regulations that would otherwise apply to their sale there. Regulatory requirements that discriminate against the sale of goods which have a relevant connection with another part of the UK, have no effect[footnote 12].
32․ Upon introduction, the UK Internal Market Act included a schedule detailing specific circumstances in which goods are excluded from the scope of these principles, meaning business must always follow the local legislation under those circumstances. These exclusions cover:
a. Threats to human, animal or plant health
b. Taxation
c. Chemicals
d. Fertilisers and Pesticides
33․ Since the UK Internal Market Act was introduced, further decisions have been taken concerning proposals to exclude legislation relating to certain goods from the Act’s market access principles.
34․ In 2022, the UK government agreed to provide an exclusion from the market access principles for regulations prohibiting the sale of certain single-use plastics products (such as plastic cutlery and packaging including those used by cafes and takeaways, plastic straws and single-use coffee cups). This amendment to the list of exclusions from the market access principles for goods came into force in August 2022.
35․ The government considers that this is a good example of the devolved governments and UK government working together, respecting devolved competence and the ability to make local legislation whilst minimising any potential detrimental effect on trade. It is also an example of regulations being developed that have effect later in the supply chain, which may have contributed to a lower impact on businesses[footnote 13].
36․ The OIM is currently undertaking a study into the impact of current and future regulatory restrictions on single-use plastic products. The results are expected shortly and will inform this review.
37․ In 2023, the UK government agreed to offer a temporary exclusion for the Scottish Government to implement a deposit return scheme (DRS) for drinks containers, ahead of the introduction of DRS schemes for metal and plastic containers across the rest of the UK. A DRS is a system for charging the consumer a deposit in respect of a container which is then refunded when the consumer returns the container, for example through a reverse vending machine.
38․ However, the previous UK government decided not to agree that the DRS exclusion proposed by the Scottish Government should also include glass bottles (beyond just plastic and metal containers). This was because a scheme including glass would have created a level of divergence between proposed DRS schemes within the UK, without safeguards that interoperable schemes provide, which would have been a very significant step for businesses and consumers. The previous government considered that there was insufficient evidence to justify such an approach.
39․ In 2024, the previous UK government decided not to agree an exclusion proposed by the Scottish Government in respect of the sale of rodent glue traps, on the basis that it was unnecessary because the use and possession of rodent glue traps (outside of licensed pest controllers) were already banned.
40․ This government has now stated that it will agree to the sale of rodent glue traps exclusion. The rationale is that the exclusion would have minimal economic impact.
Question 1: What are your views on how the UK internal market for goods is best supported using the UK Internal Market Act?
Question 2: What are your views on whether differing regulations that have effect later in the supply process are more straightforward for businesses to address?
Question 3: What is the right balance between the potential for local regulatory innovations in sectors and UK-wide alignment?
Question 4: What are your views on the operation of the market access principles for goods to date?
Question 5: What are your views on the use that has been made of the Part 1 amendment powers – for example the exclusion for single-use plastics? In particular, we would welcome views on whether the changes have had or will have a positive or negative impact and whether they have been effective. (An explanation of what the Part 1 amendment powers are and what use has been made of them can be found in the Annex).
The market access principles for services
41․ If a business is authorised to provide services in one part of the UK, the UK Internal Market Act ensures that they can provide the services across the UK, even if there are different regulations in different parts of the UK. Requirements that are discriminatory have no effect in relation to a service provider from another part of the UK.
42․ The UK Internal Market Act includes a list of services which are excluded from the scope of these principles. For these excluded service sectors, devolved regulators can set different requirements in their jurisdictions without automatically giving access to service providers from other parts of the UK.
43․ A schedule listing which services are excluded was set out in the UK Internal Market Act when it was enacted. The list was further developed, following public consultation in February 2021, through a statutory instrument[footnote 14] made in November 2023. As a result, the following sectors are now excluded:
a. Audiovisual services
b. Debt collection services
c. Gambling services
d. Healthcare services
e. Legal services (mutual recognition only)
f. Notarial services
g. Private security services
h. Heat networks (mutual recognition only)
i. Gas and electricity services
j. Water and sewerage services
k. Transport services
l. Functions of a public nature
m. Award or authentication of academic or vocational qualifications services
n. Social services (relating to social housing, childcare, adult social care and support of families and persons permanently or temporarily in need)
o. Waste services
p. Taxation
44․ The following services are now included in the protections provided by the market access principles, having initially been excluded when the UK Internal Market Act was enacted:
a. Electronic communication services
b. Financial services
c. Postal service
d. Services of temporary work agencies
e. Services of a statutory auditor
45․ Since then, there have been no proposals for further exclusions from the market access principles that relate to services.
Question 6: What are your views on how the UK internal market for services is best supported using the UK Internal Market Act?
Question 7: What is the right balance between the potential for local regulatory innovations in services and UK-wide alignment?
Question 8: What are your views on the operation of the market access principles for services to date?
Question 9: What are your views on the use that has been made of the Part 2 amendment powers – for example, removing exclusions for certain services? In particular, we would welcome views on whether the changes have had or will have a positive or negative impact and whether they have been effective. (An explanation of what the Part 2 amendment powers are and what use has been made of them can be found in the Annex).
The recognition of professional qualifications
46․ Part 3 of the UK Internal Market Act provides similar protections for professional qualifications to the market access principles for goods and services: if a person qualifies in one part of the UK, those professional qualifications are automatically recognised in all other parts of the UK – without the need, for example, to sit additional exams. Automatic recognition does not apply where there is an alternative process for recognition that complies with specific principles. Equal treatment is ensured so that professionals cannot be required to comply with higher ongoing practice requirements than locally qualified professionals unless justified.
47․ The Act only covers access to professions that are regulated by law. Certain professions, like education and legal services, were excluded from this system when the UK Internal Market Act was enacted. To date, there have been no further exclusions from the system of recognition of professional qualifications.
Question 10: What are your views on how the UK internal market for professions is best supported using the UK Internal Market Act?
Question 11: What is the right balance between the potential for local regulatory innovations in professions and UK-wide alignment?
Question 12: What are your views on the operation of the system for recognising professional qualifications to date?
Independent advice on and monitoring of the UK internal market and the role of the Office for the Internal Market
48․ Part 4 of the UK Internal Market Act sets out the arrangements for the provision of independent advice on, and monitoring of, the UK internal market. This involves conferring a range of functions on the Competition and Markets Authority (CMA) which it performs through the OIM. The OIM’s objective is to support and report on the effective operation of the UK internal market, making assessments and providing expert and independent advice to the UK government and devolved governments on how specific legislation, rules and regulations impact the UK internal market.
49․ The OIM is an independent body overseen by a Chair (Murdoch MacLennan) and a 7-member appointed panel. The OIM has dedicated staffing within the CMA, as well as access to the CMA’s advisory professions, such as economists, legal, business and financial analysts. The OIM can form task groups comprising OIM panel members to carry out the functions conferred on the CMA under Part 4, such as providing advice on a particular matter. A summary of the CMA’s functions under Part 4 can be found in the Annex.
50․ From the time it became operational in September 2021, the OIM has become a well-regarded independent and expert body within the UK. The OIM has produced 2 annual reports on the condition of the UK internal market and will be publishing its third in early 2025. It has published a periodic report in 2024 assessing the effectiveness of Parts 1 to 3 of the UK Internal Market Act and conducted detailed research into issues concerning the UK internal market, particularly regulations concerning single-use plastics and the sale of horticultural peat. It has also carried out data strategy work to advocate for better quality data on trade within the UK (the Data Strategy Roadmap was published in 2023 and updated in May 2024). The OIM also has a reporting function where anyone can report a difficulty concerning trade within the UK internal market. More information about the OIM and its work (including its published reports) can be found at the OIM website.
Question 13: How can the Office for the Internal Market best support the UK internal market through its role in providing independent monitoring and advice?
Question 14: What are your views on whether the current arrangements in Part 4 relating to the use of the Office for the Internal Market task groups are appropriate for securing the most effective and efficient performance of the CMA’s Part 4 functions? We would welcome views in particular on any advantages or disadvantages of continuing with the current arrangements as compared with other possible ways of carrying out the Part 4 functions. (A full list of functions is set out in the Annex).
Questions on the management of the UK internal market and operation of the UK Internal Market Act
51․ As we have heard criticism about the way in which the exclusions process has been managed in the past, and therefore the circumstances in which the market access principles applied, we are keen to understand how these processes can be improved for the benefit of people and businesses across the UK. We are therefore particularly interested in hearing views in response to the following questions.
Question 15: What improvements could be introduced to facilitate more pragmatic management of the UK Internal Market Act’s exclusions process?
Question 16: How should we ensure proportionate engagement with interested parties in relation to potential exclusions?
Question 17: What evidence should be provided in support of an exclusion proposal by the proposing government, so the proposal can be fully considered (for example, information on potential impacts on businesses’ ability to trade within the UK and the policy implications of not having an exclusion)?
Question 18: Should there be a different process to consider exclusions proposals which could lead to potentially significant economic impact, compared to those likely to lead to smaller economic impact?
Question 19: What do you think constitutes a potentially significant economic impact?
Question 20: Is there anything else you want to tell us about the operation of the UK Internal Market Act?
Responding to this review and next steps
52․ The full list of questions can be found in this document. Please send your views, and details of which organisation you represent in making these views, to UKIMReview@businessandtrade.gov.uk. Hard copies should be sent to UK Internal Market Review, c/o Old Admiralty Building, Admiralty Place, London SW1A 2DY. The deadline for responses is 3 April 2025.
53․ Following the consultation period, the UK government will consider all responses received.
54․ As required by the UK Internal Market Act, the UK government will share a draft report on the matters it is required to review under Part 4 with devolved governments.
55․ Upon the review’s conclusion, the UK government will publish a final report, covering all matters, which will be laid before the UK Parliament, Scottish Parliament, Senedd Cymru, and Northern Ireland Assembly.
Summary of questions
Question 1: What are your views on how the UK internal market for goods is best supported using the UK Internal Market Act?
Question 2: What are your views on whether differing regulations that have effect later in the supply process are more straightforward for businesses to address?
Question 3: What is the right balance between the potential for local regulatory innovations in sectors and UK-wide alignment?
Question 4: What are your views on the operation of the market access principles for goods to date?
Question 5: What are your views on the use that has been made of the Part 1 amendment powers – for example the exclusion for single-use plastics? In particular, we would welcome views on whether the changes have had or will have a positive or negative impact and whether they have been effective. (An explanation of what the Part 1 amendment powers are and what use has been made of them can be found in the Annex).
Question 6: What are your views on how the UK internal market for services is best supported using the UK Internal Market Act?
Question 7: What is the right balance between the potential for local regulatory innovations in services and UK-wide alignment?
Question 8: What are your views on the operation of the market access principles for services to date?
Question 9: What are your views on the use that has been made of the Part 2 amendment powers – for example, removing exclusions for certain services? In particular, we would welcome views on whether the changes have had or will have a positive or negative impact and whether they have been effective. (An explanation of what the Part 2 amendment powers are and what use has been made of them can be found in the Annex).
Question 10: What are your views on how the UK internal market for professions is best supported using the UK Internal Market Act?
Question 11: What is the right balance between the potential for local regulatory innovations in professions and UK-wide alignment?
Question 12: What are your views on the operation of the system for recognising professional qualifications to date?
Question 13: How can the Office for the Internal Market best support the UK internal market through its role in providing independent monitoring and advice?
Question 14: What are your views on whether the current arrangements in Part 4 relating to the use of the Office for the Internal Market task groups are appropriate for securing the most effective and efficient performance of the CMA’s Part 4 functions? We would welcome views in particular on any advantages or disadvantages of continuing with the current arrangements as compared with other possible ways of carrying out the Part 4 functions. (A full list of functions is set out in the Annex).
Question 15: What improvements could be introduced to facilitate more pragmatic management of the UK Internal Market Act’s exclusions process?
Question 16: How should we ensure proportionate engagement with interested parties in relation to potential exclusions?
Question 17: What evidence should be provided in support of an exclusion proposal by the proposing government, so the proposal can be fully considered (for example, information on potential impacts on businesses’ ability to trade within the UK and the policy implications of not having an exclusion)?
Question 18: Should there be a different process to consider exclusions proposals which could lead to potentially significant economic impact, compared to those likely to lead to smaller economic impact?
Question 19: What do you think constitutes a potentially significant economic impact?
Question 20: Is there anything else you want to tell us about the operation of the UK Internal Market Act?
Annex: the statutory requirements of the review relating to Parts 1, 2 and 4 of the UK Internal Market Act
What the review must consider
The UK Internal Market Act requires the Secretary of State to undertake a review in relation to certain aspects of Parts 1, 2 and 4 of the Act by specific dates. The content of that review is outlined in this annex. However, very briefly:
- the Parts 1 and 2 reviews relate to the use that has been made of certain powers conferred on the Secretary of State by the Act
- the Part 4 review relates to the arrangements for carrying out the functions set out in that Part
- the review provisions require the Secretary of State to consult with the Scottish ministers, the Welsh ministers and a Northern Ireland department, and this consultation is intended to meet that requirement. There is no requirement to consult beyond the devolved governments in conducting this review, but we have chosen to do so as we want to hear from all stakeholders affected by or with an interest in the operation of the UK Internal Market Act’s provisions
Following these reviews, the Secretary of State is required to prepare a report of the review to be laid before Parliament. There is an additional requirement to share a draft report relating to the Part 4 review with the bodies mentioned above before the report is finalised.
The UK Internal Market Act sets out the following time periods for conducting the review, preparing a report and laying the report before the relevant parliaments:
- Part 1 (Goods) – by 17 December 2025
- Part 2 (Services) – by 17 December 2025
- Part 4 (Arrangements for carrying out the CMA’s functions) – by 31 December 2025
The reporting requirements
The requirements to prepare a report as part of the review processes vary as between Parts 1 and 2 and Part 4.
Parts 1 and 2 only require a substantive report to be prepared where the relevant powers have been used since coming into force. Where the powers have not been used, a report is still required but will only need to state that the powers have not yet been used.
The report on the reviews undertaken in relation to Parts 1 and 2 must be laid before the UK Parliament.
For the Part 4 review only, before the report is finalised, a draft of the report must be shared with the devolved governments, inviting representations to be made. The final report must then be laid before the UK Parliament, the Scottish Parliament, the Senedd Cymru and the Northern Ireland Assembly.
Part 1 review: statutory requirements
The review relating to Part 1 of the UK Internal Market Act has to cover any use that has been made of the Part 1 amendment powers – meaning the use of the powers to:
- add, vary or remove provisions relating to what type of statutory provision is within the scope of the non-discrimination principle
- add, vary or remove a ‘legitimate aim’, which is relevant to determining whether there is indirect discrimination
- amend Schedule 1 which lists exclusions from the market access principles for goods
At the time of publication of this consultation, since the UK Internal Market Act came into force, there has been no use of the powers to add, vary or remove provisions relating to what type of statutory provision is within the scope of the non-discrimination principle. There has also been no use of the power to add, vary or remove a legitimate aim in relation to indirect discrimination.
However, there has been one use of the power to amend the Schedule 1 list of exclusions from the market access principles. This was in response to the Scottish Government’s proposal for an exclusion for single-use plastic items.
The provisions stipulate that, in completing the review, the Secretary of State must assess the impact and effectiveness of any changes that have been made under the Part 1 amendment powers and must consider any relevant reports made or advice which has been given by the CMA.
Single-use plastics
Issue: In November 2021, the Scottish Government proposed an exclusion from the market access principles for certain single-use plastic (SUP) items. This was the first exclusion to be proposed following the introduction of the UK Internal Market Act.
Treatment: There was shared policy ambition across the UK to ban single-use plastics. Scotland were proceeding faster in implementing this than other parts of the UK, and there were differences in which SUP items were to be banned by different governments. There were positive discussions between UK government and the devolved governments via the Resources and Waste Common Framework, which helped evidence gathering and demonstrated the usefulness of discussion under Common Frameworks.
Outcome and reflections: The UK government implemented an exclusion using the powers in the UK Internal Market Act[footnote 15], which meant the Scottish Government were able to implement their desired policy, with little expected adverse effect on business. This has also been the case with the implementation of bans on different SUP products in Wales.
More information can be found in the single-use plastics bans and restrictions guidance.
Part 2 review: statutory requirements
The review of Part 2 of the UK Internal Market Act must cover any use that has been made of the Part 2 amendment powers. These are the powers to:
- add, vary or remove entries in Schedule 2, which describes the types of services that are excluded from the provisions of the UK Internal Market Act
- add, vary or remove a ‘legitimate aim’ which is relevant to determining whether there is indirect discrimination
At the time of publication of this consultation, since the UK Internal Market Act came into force, there has been no use of the power to add, vary or remove a legitimate aim in relation to indirect discrimination.
However, the power to add, vary or remove entries in Schedule 2 was used to make changes to the schedule following a public consultation on services exclusions.
The provisions stipulate that, in carrying out the review, the Secretary of State must assess the impact and effectiveness of any changes that have been made under the Part 2 powers and consider any relevant reports made or advice which has been given by the CMA.
Amendments to the Services Schedule 2 exclusions: use of Part 2 power to add, vary or remove from Schedule 2
Schedule 2 lists certain services which are excluded from the scope of the UK Internal Market Act, such as healthcare services. For these excluded services, regulators in Scotland, Wales and Northern Ireland can decide to set different requirements in their jurisdictions without automatically giving access to service providers from other parts of the UK.
The list of services originally excluded from the UK Internal Market Act was based on the most relevant regulatory framework at that time - the Provision of Services Regulations 2009. These regulations were made when the UK was a member of the EU, and therefore were designed with EU trade in mind, rather than intra-UK trade. Given this, the previous UK government publicly committed to revisit the UK Internal Market Act’s list of services exclusions. In February 2021, the previous UK government publicly consulted on whether the original UK Internal Market Act services exclusions were fit for purpose.
As a result of the consultation, a number of changes were made to the services exclusions schedules:
- clarifying the scope of the exclusions for social services in Parts 1 and 2 of Schedule 2
- adding new exclusions from the mutual recognition principle to Part 1 of Schedule 2, for gas, electricity, water and waste; qualifications-awarding services and heat networks
- removing existing exclusions for financial services, postal services, electronic communications services, services of temporary work agencies, and services of a statutory auditor from the relevant parts of Schedule 2
The Department for Business and Trade has not received any representations about the changes in services exclusions since the power to make these changes was exercised. This suggests that these exclusions are working well, both for regulators and for people and businesses.
Part 4 review: statutory requirements
The review required under Part 4 must consider the appropriateness of the arrangements relating to the use of OIM task groups for the purpose of securing the most effective and efficient performance of the functions conferred on the CMA under Part 4.
A summary of the CMA’s main functions under Part 4 of the UK Internal Market Act 2020 is set out in Table 1[footnote 16].
Table 1: the CMA’s main functions under Part 4 of the UK Internal Market Act 2020
Provision | Description |
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Sections 31(1) to 31(3) | The CMA’s objective in carrying out its functions: • to support, through the application of economic and other technical expertise, the effective operation of the internal market in the United Kingdom (with particular reference to the purposes of Parts 1, 2 and 3) • this objective includes, in particular, supporting the operation of the internal market in the interests of all parts of the UK and in the interests of consumers of goods and services, and other classes of persons with an interest in its operation |
Section 31(6) |
General function: • the CMA may give information or advice to the Secretary of State on matters relating to its functions under Part 4 of the UK Internal Market Act |
Section 33 |
Monitoring and reporting on the operation of the internal market • the CMA may undertake reviews on any matter it considers relevant to assessing or promoting the effective operation of the internal market and the provisions of Parts 1 to 3 of the UK Internal Market Act. The CMA may receive and consider proposals for undertaking these reviews and may prepare and publish a report on these reviews. (Subsections (1) to (3)) •the CMA must prepare annual reports on the operation of the internal market and developments as to the effectiveness of the operation of the internal market. (See, in particular, subsections (5) and (8)) • the CMA must prepare 5-yearly reports covering specific issues, including the effectiveness of the operation of Parts 1 to 3 of the UK Internal Market Act and the interaction between the operation of those Parts and common framework agreements. Annual and 5-yearly reports must be laid before the UK Parliament, the Scottish Parliament, Senedd Cymru and the Northern Ireland Assembly. (See, in particular, subsections (6) and (8)) |
Section 34 |
Advice on proposed regulatory provisions on request • subject to certain conditions and other requirements in section 34 being met, the CMA may, at the request of a relevant national authority (meaning the Secretary of State, the Scottish ministers, the Welsh ministers or a Northern Ireland department) give advice or provide a report to that authority in relation to a proposed regulatory provision. The advice given or the report prepared may consider, among other things, the potential economic effects of a proposed regulatory provision on the effective operation of the internal market. |
Section 35 |
Provision of report on request after a regulatory provision is passed or made • subject to certain requirements in section 35 being met, the CMA may at the request of a relevant national authority (see above) provide a report to that authority in relation to the impact on the effective operation of the internal market of a regulatory provision that has been passed or made |
Section 36 |
Report on request on provision considered to have detrimental effects • subject to the requirements of section 36 being met, the CMA may, at the request of a relevant national authority (see above), provide a report to the authority on the economic impact of a regulatory provision that has passed or been made where the requesting authority considers that the operation of the regulatory provision is, or may come to be, detrimental to the effective operation of the internal market in the United Kingdom |
Section 39 |
General advice and information with regard to the exercise of the CMA’s functions • the CMA must prepare and publish general advice and information about how it expects to approach the exercise of its functions under sections 33 to 36 |
Sections 41 to 43 |
Information-gathering powers • the CMA has powers to gather information in relation to the exercise of certain of its functions, including under sections 33, 34, 35 and 36 of the UK Internal Market Act. These are powers to enforce these provisions |
The review must, among other things, assess the way in which the Part 4 functions have been carried out by the CMA through OIM task groups and any advantages or disadvantages of continuing with these arrangements as compared with other possible ways of providing for the Part 4 functions to be carried out (including possible arrangements not involving the CMA).
The CMA has, under section 39, published guidance on the operation of its UK Internal Market Act functions.
Since the OIM Panel was appointed in November 2023, the OIM has considered the impact of policy divergence and exclusions concerning single-use plastics regulations. The OIM has also provided formal advice on a proposed ban of the sale of horticultural peat in England and has published a number of other documents, including qualitative research findings with businesses on intra-UK trade and a data strategy roadmap to improve intra-UK trade data[footnote 17].
An advantage of continuing with the way these functions have been set up is that the OIM is well regarded by all 4 governments within the UK for its impartiality and for the quality of its work.
The Competition and Markets Authority is a public body, and therefore its work (including that of the OIM) is funded by the public purse. Whilst there are alternative models for funding the work of the OIM, such as private investment, those could impinge on the body’s ability to retain such highly valued impartiality.
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Written statements - Written questions, answers and statements - UK Parliament. ↩
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See paragraphs 10 to 13 for more information. ↩
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For 2019, see: Interregional trade in goods and services, UK - Office for National Statistics. This is equivalent to 6% of total UK GDP. We use 2019 data because of the potential impact of the COVID-19 pandemic on 2020 data. The data is not comparable with earlier estimates from 2015 due to methodological differences ↩
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OIM: Qualitative research with businesses on intra-UK trade - GOV.UK, page 15. ↩
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A list of Common Frameworks is available at UK Common Frameworks - GOV.UK. ↩
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For example, the Scottish Government stated its commitment to working collaboratively with the UK government on common frameworks and highlighted them as a “really positive model” for inter-governmental relations. See a letter on Common Frameworks to the Cabinet Secretary for Rural Affairs, Land Reform and Islands, Mairi Gougeon, 20 December 2023. ↩
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The studies are based on work by the Office for the Internal Market on bans on single-use plastic (SUP) items, deposit return schemes (DRS), restrictions on the retail promotion of products high in fat salt, or sugar (HFSS), and regulations relating to the use of precision breeding (PB) techniques. See the Annual report on the operation of the UK internal market 2023 to 2024 - GOV.UK for more details. ↩
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The United Kingdom Internal Market Act 2020 (Exclusions from Market Access Principles: Single-Use Plastics) Regulations 2022. ↩
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The United Kingdom Internal Market Act 2020 (Services Exclusions) Regulations 2023 ↩
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Joint ministerial committee (EU negotiations) communique: 16 October 2017. ↩
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The Scottish Government wrote to UK government on 17 August 2023 requesting an exclusion for the sale of rodent glue traps. ↩
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Goods moving to Northern Ireland must follow certain EU rules. The market access principles are modified so as to not apply in these cases. Qualifying Northern Ireland goods can be sold in Great Britian in reliance on the market access principles. ↩
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Annual report on the operation of the UK internal market 2023 to 2024 - GOV.UK. ↩
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The United Kingdom Internal Market Act 2020 (Services Exclusions) Regulations 2023. ↩
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The United Kingdom Internal Market Act 2020 (Exclusions from Market Access Principles: Single-Use Plastics) Regulations 2022 ↩
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The functions in Part 4 of the UK Internal Market Act are conferred on the CMA. However, section 32(1) allows the CMA to authorise ‘an Office for the Internal Market task group’ constituted under Schedule 4 to the Enterprise and Regulatory Reform Act 2013 to do anything required, or authorised, to be done by the CMA under Part 4. ↩
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Further details on this work can be found in the OIM data strategy roadmap update. ↩