A LABOUR review of controversial Tory-era legislation has left an “effective veto” for UK ministers on Scottish Parliament legislation, the Constitution Secretary has said.
Angus Robertson branded the results of the UK Government’s review of its Internal Market Act (IMA) – which was introduced post-Brexit to regulate trade across the UK – "absolutely unacceptable”.
In October 2023, the Scottish Parliament passed a motion calling for the IMA to be repealed, saying it had “undermine[d] democratic decisions of the devolved legislatures … to the detriment of the people of Scotland”.
Scottish Labour MSPs, led by Anas Sarwar, voted for the motion. However, since the Labour victory in the 2024 General Election, they have changed position and now support the IMA.
Labour did pledge a “fast-track” review of the legislation in December 2024, the results of which were published on Tuesday.
The review's key points deal with exclusions from the IMA, which allow specific laws to bypass the act’s rules on mutual recognition and non-discrimination – meaning it can apply even if it restricts trade within the UK.
The review said:
- A new process will allow exclusions from the IMA if their economic impact is under £10 million per year. These will be fast-tracked if all UK governments agree.
- The UK Government will monitor the total economic impact of MEI exclusions in each sector, triggering a review if the cumulative impact exceeds £50 million. This could block further exclusions in that area.
- Exclusion proposals will now be assessed not only on economic grounds but also on environmental protection and public health impacts.
- The Office for the Internal Market (OIM) will retain its advisory role without new decision-making powers, but it will be involved earlier and more actively in policy discussions.
Constitution Secretary Angus Robertson said the IMA “undermines the ability of the Scottish Parliament to use its powers to pursue devolved social and economic objectives in Scotland for the people to which it is accountable”.
He went on: “It introduces radical new uncertainty as to the effect of laws passed by the Scottish Parliament and effectively provides a veto to UK ministers. Nothing set out in the UK Government’s response to the review changes this position, which is completely unacceptable.
“The conclusion of the review falls well short of our stated position of repeal and replace the IMA, and indeed short of the legislative change required to mitigate the most damaging aspects of the operation of the IMA.
“It is important also to note that the Scottish Parliament has twice voted to repeal the act – since it is fundamentally misconceived and incompatible with devolution.
“We do welcome the UK Government’s intention to address some of the most egregious issues with the function of the IMA exclusions process.
“However, we remain concerned that there is no clear vehicle to give meaningful effect to these changes, which work against our shared interests to promote growth, protect jobs and ensure seamless trade across the UK nations.”
The UK Government has promised “improvements” to the IMA, with Trade Policy Minister Douglas Alexander conceding there are “real concerns” about how the laws have operated to date.
He further said: “A thriving internal market is essential to the UK’s economic success, so we’ve listened to what businesses want — and we’re acting ahead of schedule.
“These reforms will keep trade flowing, reduce friction, and unlock growth across all four nations.
“We’ve also worked closely with devolved governments to ensure they can deliver on their priorities.”
Jane Gratton, the deputy director of public policy at the British Chambers of Commerce, said: “Trade between the nations of the UK is vital to the health of our overall economy and a key driver of growth. Businesses want to see devolved and UK governments working together to ensure there are no unnecessary barriers to the flows of goods and services between us.
“The IMA is key to this, setting the foundations which underpin over £100bn of trade. This new streamlined approach to rulemaking will give businesses the certainty they need so they can grow, invest, and prosper.”
