Legislation, Justice and Constitution Committee

With that, and noting that we are fully quorate today, we're going to go straight to our evidence session with the Office for the Internal Market. We're delighted to have with us today Murdoch MacLennan, chair of the Office for the Internal Market panel, and James Waugh, the director of the Office for the Internal Market. Really great to have you both with us. Thank you for sparing the time. Could I ask, first of all, whether you want to make any introductory remarks, not least as this is the first opportunity, I understand, you've had to be in front of a committee?

It is, indeed. Well, can I start by saying diolch yn fawr iawn? That's to the Chair and the rest of the committee. I'd like to just do the introductions with James, and also with Joanne who is sitting in here. Could I pass over to you to—?

Sure, thank you, Murdoch, and prynhawn da. Good afternoon. James Waugh, director of the Office for the Internal Market, and, as Murdoch said, we're joined by—I'll turn around—Jo Borja, my colleague at the back table there. So, thanks very much for inviting us along.

I'm Murdoch MacLennan, the OIM panel chair, and a non-executive director of the Competition and Markets Authority. I'm here with James, who will also be answering questions today. We're very pleased to be here, to be able to explain in front of the Senedd committee a bit about our operation. I'd like to start by briefly discussing the OIM's role. First, we have a monitoring role, and that enables us to assist the four Governments and stakeholders, including businesses, by reporting on how effectively companies are able to sell their products and services across the four nations of the UK. Secondly, we have an advisory role. On request from one or more Governments, we can provide a report on a regulation or proposal that creates regulatory differences between the nations, to assist Governments in their analysis on policy matters. We published the first report of this kind in February, on the UK Government's proposal to ban the sale of horticultural peat in England. We can also publish a review, at our discretion, on any other UK internal matter, but that's specifically what is within our remit.

We understand that this committee is particularly interested in the implications of the UK internal market, and that Act, on the effectiveness of laws made by the Senedd. In that regard, it is probably worth reiterating that our remit is quite specific, primarily to consider the implications of new legislation on trade between the four nations. We couldn't, for example, carry out an assessment of whether legislation is effective in achieving its policy objectives or the implications of the United Kingdom Internal Market Act 2020 on devolved competencies. It's also important to be mindful that the Northern Ireland protocol and the legislative provisions that are necessary to give effect to the protocol were outside the scope of this at the very beginning. Our reports and advice to the four Governments—this is perhaps a good part—are non binding. The OIM isn't a decision maker, and, this particular part of the CMA, we're not enforcers within the regime, but we're here to help inform policy decisions taken by the four Governments, providing independent, evidence-based and expert evidence and advice. We recognise that the findings and issues raised in our reports are likely to constitute one consideration, among others, when a Government or legislature determines its preferred policy and regulatory approaches. But we're highly mindful of our statutory duty here to be even-handed across the four Governments in our work.

In March, we published the first of our annual and periodic reports and our data strategy road map. We gather evidence from a range of sources, including available statistics on intra-UK trade, including the trade survey for Wales, and views from the four Governments. On that note, I'd like to thank our Welsh Government colleagues for their very positive and very helpful contributions to these reports and to the road map in making our collaborative approach a success, because, as we'll explain through the course of giving evidence, we're only as effective as the information that we can gather. So, any help we can get on that particular front would be fantastic.

Wonderful. Thank you very much. That's a really helpful scene setting and bringing us up to date with your work so far and the reports that you referred to as well. You mentioned the even-handedness that your approach necessitates. One aspect of that is how you engage with the different Governments. So, could I ask you: how do you engage with Welsh Government, and is that the same or similar to the way that you engage with the UK Government when they're acting in the role of an England Government, if you see what I mean, as opposed to a UK-wide authority?

Yes. We hold regular, twice-yearly multilateral meetings involving all four Governments to provide updates on the projects and plans. [Interruption.] Sure.

Is that a ministerial-level meeting or an official-level meeting?

Official.

It's official.

But they're extremely helpful. The importance here, on our part, is effective listening to hear what the issues are, communicating and consulting with the Welsh and other—back to your point there, Chair Governments, particularly as UKIM is still in its early stages. Feedback from the Welsh Government on how we can improve that, though, would be really helpful, because that would—. We'd really welcome that.

Okay. That's very good, but that parity and even-handedness in the way that you meet with the four, that's what you're applying in practice.

Totally.

Okay. Good. Let me hand to Peredur to take us on.

Welcome, and it's good to have you with us. You talked there about you're only going to be as effective as the information that you're given. So, how would you ensure that the OIM panel have sufficient knowledge and understanding of the devolved legislation and policy, and the things that actually happen here?

We have regular meetings with officials. We meet with Welsh Government officials. How would we—? Do you mean how would we—

I suppose you talked about creating the panel and people will be joining you. Have you got somebody from each devolved nation, or how—?

It's a good question.

Is that one way that you'd maybe have the competence on the panel?

It's currently being appointed, and I've been saying this for the best part of a year or so now: our aim is to harness the relevant breadth of skills and experience and expertise that would be helpful to this UKIM in different parts of the UK. I hope someone from Wales will be on the panel. We've had help in that we've had help from Wales in the selection process. It's difficult to know until we hear—. There's been a bit of frustration trying to—. But for all sorts of good reasons. I know it's coming; I'm just not sure when. I was hoping I'd be able to come here and say that we have a Welsh member on the panel this time. It's a good point.

Is the process similar to what we know in other appointments systems, where there's been a range of people interviewed and a list will be put forward to—?

That's exactly right. Murdoch sat alongside, as part of the recruitment process, representatives from UK Government, Welsh Government, Scottish Government and the Northern Ireland Executive. Ultimately, the appointments are made by the Secretary of State for the Department for Business and Trade, so it's not ultimately our decision, but we fed in, along with representatives from the four Governments, as part of that process.

The good thing about this was it was a larger panel than normal—it filled the room—but it gave us quite a breadth of experience, and it was very clear that having someone from each of the devolved Government areas would be extremely helpful.

That's quite clear—quite clear what you'd like to see, so—. Sorry, Pered.

But I don't make the appointment. [Laughter.]

No. How many of you are going to be on the panel? Is it—[Interruption.] How many of you are going to be on the panel?

It's going to be seven, I think. But I always hope that there's some flexibility there if we find there's a missing gap.

That you're able to have that conversation, then, with the Minister and see—.

Certainly.

Okay, excellent. Thank you. You state in your response to the House of Lords Common Frameworks Scrutiny Committee that your approach will focus on the economic effects of regulatory divergence. How are you ensuring that the stakeholders are aware of this when interpreting your reports?

Well, the reports are published on the gov.uk website to give us as wide an audience as possible. We also attended the Whitehall & industry Group and we met with trade bodies in the four nations. The more input and information we get from business, that will help us. At the end of the day, of course, it helps the consumer, and there's scope to extend and develop the process of engagement. Again, I'd welcome any ideas that you might have to improve on that.

So, is it just going to be on the website that you'll be publishing, or are you doing engagement events, or—?

We publish a report once a year to show the effectiveness. That's a real indicator of how the trade between the nations is functioning.

I'm just wondering where stakeholders can access that additional information about the wider aspects of policy proposals, and how that engagement is actually happening.

Sure. So, as Murdoch says, the CMA as a whole operates pretty transparently, so reports and other outputs are published on our website. Around the work of the office, we published, as you know, recently the annual report, and the periodic report. Prior to that we published a discretionary report that we called the 'Overview of the UK Internal Market Report'—data strategy road map and various externally commissioned research outputs. So, we did quite an involved piece of qualitative research to support the annual and periodic reports where we got some really good, rich information from how businesses negotiate and think about the internal market, which we'd be happy to talk a bit about later on.

In terms of the broader engagement, I think that's why we were really pleased to be invited to this committee, because up to now our engagement has tended to focus with government officials, with business groups, particularly trade associations, because they're quite effective from our perspective in reaching lots of people. We've had some engagement in the past with the Scottish Parliament constitution committee—obviously, first time with your committee—and we're generally keen to build that contact with the different legislatures as well, because up to now that's not been perhaps as big a part of our focus.

Thanks. And finally from me in this section, the Windsor framework includes the new role for the Office for the Internal Market in monitoring any impact for Northern Ireland arising from the regulatory changes in the rest of the UK. Can you tell us a bit more about how that's going and how you're discharging your role within that? Because it obviously impacts us as well.

Within the Windsor framework arrangements?

Yes.

Sure. It's probably worth just going back to the part in Murdoch's opening remarks where the Northern Ireland protocol itself and regulations necessary to implement it are outside the scope of our formal functions. That said, clearly the broader trade impacts of trade flows between Northern Ireland and all the other parts of the United Kingdom are a really important part of our general monitoring work. We will be seeing at a practical level what some of the changes from the Windsor framework, what impact they have on those trade flows, because there's nothing in the Windsor framework itself that directly changes our statutory remit. But we recognise, if implemented, the various different parts of the Windsor framework are going to have that practical impact on trade within the internal market. And we're very much meeting at the moment with different officials, both at the Foreign, Commonwealth and Development Office—in fact, later this week, to understand a bit more about their thinking—and also we've already had one meeting with the Northern Ireland civil service on a particular aspect of the Windsor framework, and we're in Belfast next week to meet with Members of the Assembly to get their questions and views. So, it's a bit early to say, but we recognise that it's going to have quite a big impact on trade in the UK.

Do you feel that you are making progress?

In terms of increasing our own understanding of how those different impacts might play out, yes.

That's great. Thanks, Pred. I'm going to pass to James online just in a moment, but it's quite interesting; if I'm clear from what you're saying there in answer to Pred's question about the Windsor framework, you will be doing some interesting data monitoring on the impacts of the Windsor framework, particularly on Northern Ireland, but actually, probably, on the flows across the UK that result from it. But of course, it's not within your remit to look at the impact of the Windsor framework on, for example, what happens in Holyhead or Wales or whatever. It's that way focused, towards the impact of the internal market on Northern Ireland, and the Windsor framework, as opposed to what impacts it might have here in Wales. Is my reading right on that?

I think that that's broadly right, but we report in the annual report that we recently published on trade flows as a whole. I think that we just need to distinguish between the legal instruments underpinning the protocol—

And your statutory remit, whereas some of the data might be very interesting for us.

Yes.

Okay. Thank you very much. James, let's bring you in.

Diolch, Gadeirydd, and I'm sorry that I can't be there in person today. I have had a few problems back at home. I would like to welcome you to our committee. As you know, the internal market Act is a huge change for businesses right across Wales and across the United Kingdom. Specific to Wales, I would like to know how you directly engage with businesses and other stakeholders as part of your work, to raise awareness of these big changes that businesses are going to face.

We've engaged extensively with a range of businesses and stakeholders in Wales. I enjoyed meeting some of the business groups in Cardiff after the CMA board meeting back in March. Going back to what to what I was saying earlier, anything that we can get by way of help to have more information, more feedback—. We have had individual meetings with Chambers Wales, and a pretty broad representation of the Welsh business community. We met with the NFU on agriculture and Part 3—the key professions—of the internal market Act, which addresses the qualification recognition of the Law Society of England and Wales.

We met with some civic groups in Wales, in a meeting co-ordinated by the Wales Governance Centre. And the round-tables, of course—the round-tables have been quite successful because people open up about their concerns and issues, and that helps to inform the statutory reports that we produce. But I'm still here, asking for any help that you can give us that will make our reports more effective and much more useful.

It's important that you say that, because I talk to businesses as a weekly occurrence, and I would say to people that talk about expanding or doing things differently, 'Have you considered the internal market Act?' A lot of businesses still say, 'Oh, no, what is that piece of legislation again?' So, I do think that there are a lot more pieces of work that need to be done about actually understanding what it is. Do you think that there is a role there for the UK governments and legislatures, like we are here in the Senedd, in raising awareness of the market access principles? And if you think that we do need to play a role in that, what do you think that would look like in practice?

It's still early days. They're less than two years old. But already there have been helpful awareness-raising reports on internal market issues. You mentioned MAPs; there's a House of Lords common framework report, and another by this committee on common frameworks. But as James has said, our role is just advisory. So, we report on the operation of UKIM in practice, but as part of that advisory role, we could suggest that the Government take specific action to raise awareness. But as I said earlier on, the great thing about this part of the operation of the CMA is that you don't have to take our advice. But, I hope, by the end of this exercise, we'll explain why wouldn't you, because it's there as a facility to help you in any way that we can.

That leads on to my next question, actually. People can take your advice, if they want to, but what are the risks to businesses across the UK if they don't understand the implications of the market access principles?

It's a good question. One of the things we explored quite extensively in the qualitative research that I mentioned, but also at the round-tables that Murdoch mentioned, is general awareness of the market access principles, and, right now, it's very low amongst businesses. So, what you just said about engagement with your constituents and stakeholders doesn't surprise me at all. It's very low right now. And one of the findings from the qualitative research we undertook is that the combination of low awareness and low certainty about how the MAPs might operate in practice is likely to drive low reliance on the MAPs in practice by businesses. So, I don't make any kind of judgment about whether that's a good thing or a bad thing per se, but that is the picture as it stands at the moment, in terms of business awareness of the MAPs. I don't think we would see it as our role directly to 'promote' use of the MAPs or awareness of the MAPs. I think that's ultimately up to individual businesses to decide. But we would hope that our reports help businesses and other decision makers understand how they might operate.

I think because the businesses are trading effectively at the moment, they don't see the problems. Once things develop, they may take a more involved interest.

You just mentioned there your report, and your periodic report does talk about business and trade associations presuming that businesses will comply with the regulations in force in each of the devolved nations where possible. Is that really a a sustainable way for the UK internal market to operate?

We explored, or rather the research agency explored, quite a bit, both with businesses without telling them about the MAPs, and then having told them what the MAPs are, to test reaction. And what we saw without knowledge of the MAPs is that businesses will tend to look to comply with the local regulations and laws, and they will adjust their business strategies in response to a particular and 'local' requirement. When the MAPs were explained to them, the MAPs were explained in two different ways—firstly, at quite a high level, where reaction was generally quite mixed. Some businesses said, 'Okay, that's great. We can now rely on these things called the MAPs to trade in to this particular country'. Others were more neutral and some didn't like the sound of it. And then the second step of the research was to go into some workshops and the researchers probed some of these views a bit more. There, I think it's fair to say, the reaction was a bit more negative towards using the MAPs. Reasons included things like will they apply in practice, potential reputational concerns at not being seen to comply with a local issue or local requirement, and, just generally, not really understanding the regime at this point in time. To go directly to your question, on whether or not that's sustainable, I think we would say that that's ultimately a matter for governments across the United Kingdom to come to a view on, but at the moment, businesses are generally trading freely within the UK internal market, and they're not reporting particular problems, with the important caveat 'at this moment in time' and things may change.

That's very optimistic of you asking the governments across the United Kingdom at the minute to come to a unified position—that's something beyond me. But I'm finished, thank you, Chairman.

Thank you, James. I'm going to go to Alun. Alun's going to delve a bit deeper into some of this now. But before I do, you were asking about opportunities to engage wider; one of the very good opportunities in Wales that the Welsh Government uses and committees use regularly is the Royal Welsh Show, the biggest agricultural show in the UK, which also has a wide range of businesses and other groups there as well, so you might want to factor that into your summer programme. And it's a great day out as well.

That's very helpful. Thank you very much.

Sorry to cut across. You were talking about engagement within Wales and how we could help, and I was just wondering how much of your engagement is with SMEs and how much of it is with larger businesses, because a lot of the people that we deal with on a weekly basis when we go round in our communities are small to medium-sized businesses, rather than your big international firms, and big national firms, if you like. So, I'm just wondering what that split is like, before we move on to some of Alun's stuff.

I think that's a fair question, because one of our findings is that businesses have said that they feel relatively optimistic about adapting, but we also said that it might be a bit harder for smaller firms for obvious reasons. We definitely do engage with organisations like the Federation of Small Businesses, but, generally, because of the scale and size and the fact that we've got relatively limited resources ourselves, our engagement does tend to be more through trade associations if we want to reach SMEs, which I appreciate may not be always the most effective way of doing that. So, we can definitely take that away and think about have we got the balance of engagement correct.

And maybe whether or not there's something that this place can help with with that sort of thing in Wales, where we might have those relationships already within that community. So, there might be something there.

That would be very helpful.

Alun. Thank you.

Thank you very much. I'm grateful to you for your time today. It feels like business is having a bit of a crash course in the political geography of the UK with COVID and with these new regulations and structures coming into place. So, it seems to me to be a period of some uncertainty and rapid change, and one tends to lead to the other, in an unhappy little circle. But, in looking forward in assessing the market access principles, what criteria would you use to give consideration as to the effectiveness of those principles when they're actually working in practice?

Shall I take that one? I think our focus up to now has been more about the operation of the internal market as a whole and what an 'effective' internal market might look like. So, in our data strategy road map we talk about using trade data between the nations as being our primary indicator, but we also say that we'll look to develop other indicators over time, because trade flows between nations aren't necessarily going to give you the complete picture about whether the internal market is operating effectively.

With regard to the effectiveness of the MAPs themselves, we genuinely think it's too early to say, given the limited regulatory divergence that's been to date, given the limited practical opportunity for firms to potentially use the MAPs. So, our periodic report is very much a baseline, but I do recognise the premise behind your question, which is, clearly, over time, we're going to need to form a view on the effectiveness of the regime as a whole and whether the MAPs are—

That's just it, isn't it, and that's what interests me, because what you're doing is establishing a baseline. It's a narrative, it's a description of where things are. James is absolutely right about the optimism involved in Governments agreeing, but one area where I would have thought there was agreement, whether it's together or certainly an agreed position, is that all four Governments would want to see more trade and an increase in trade, whether that's cross border within the United Kingdom or in other ways. So, part of the success, I would argue, of these principles of the management of this market is to actually manage—or enable—that increase in economic activity and therefore trade. Have you looked at what role you would play as sort of advisers, if you like, to the four Governments, as to how that might be achieved?

I can probably just at this point go back on the fact that we said in our reports that ultimately—. So, the Act includes the possibility of the Office for the Internal Market offering advice as to whether improvements to the regime or to the MAPs might be appropriate, and we took the view, as of the spring this year, that it's too early to say. We don't think we can give that view right now.

I mean, we do say that an effectively operated internal market is likely to include a few different dimensions. Trade flows are one of those, but also that the differences between the nations have a degree of effective management over them, including via mechanisms like common frameworks, and we would see the MAPs as being one part of that overall picture.

We're happy to consider requests for advice, and it certainly opens up the debate.

I met the board of the Competition and Markets Authority some months ago, and one of the impressions I was left with, walking away from the meeting, was what a fantastic bank of knowledge and information is there, and any Government would want to be able to draw on that knowledge, experience and analysis.

Sometimes, it's the role of yourselves to give Government advice it doesn't want, of course, and to tell Governments things they don't want to hear, and that's an important role, of course; it's probably more important than reassuring Governments. But I'm interested therefore in how—because from a Welsh Government point of view, one of the issues we've had in economic policy in Wales is that there's been a lack of data, a lack of information, a lack of knowledge, a lack of expertise within the Government itself, and then, as you can imagine, London-based organisations just looking across, and not looking at or from Wales.

And so, I'm interested therefore in how you would approach the application of these market principles, because it seems to me that it's really important, if we're to have any sort of cohesion within economic interventions into the market from any one of the four Governments.

That exposure that you had to the CMA has obviously been very helpful in that—. And I've found the same; you get an appreciation of the quality of the people who work in this operation. We're very fortunate in OIM to have some of the best there. But in terms of an advisory body, it's not being used enough yet. You should be, I would suggest, using that technical advice wherever possible.

I agree.

Because the benefit at the end of the day is if you don't like it, you don't have to use it. But at least it's there.

It is, yes.

And we're more than happy.—. I used to live and work here in my formative years, so I've an interest in Wales and I think because everyone knows everyone, it's useful to be able to pull on that knowledge and experience. But we're struggling; this is early days for us in getting the information out in, but thank you for your advice, too.

In terms of where you think the market access principles sit, you've already noted the Welsh Government's position, where it doesn't recognise the effect of the market access principles on legislative competence here. Do you have any understanding of how these principles would operate in practice, and where there may be a relationship, shall we say—using a neutral term—a relationship with the legislative competence of this place?

Just in terms of articulating what we think the MAPs mean, we set that out in our operational guidance that, put very simply, the mutual recognition principle, as it applies to the goods, means that goods lawfully produced in one part of the United Kingdom or imported into that part of the United Kingdom can be sold into another part of the United Kingdom without further compliance with other rules. It's somewhat more complicated than that. There's the impact of the Northern Ireland protocol. But that's how we understand the market access principles in relation to goods working, and obviously there is a non-discrimination part as well, which, incidentally, when that was explored with businesses and stakeholders, people didn't really see how that would work in practice. So, that's our articulation of how the market access principles operate, so to speak.

But my question was the relationship with the powers of this place.

I think ultimately, to go back to Murdoch's opening remarks, I'm not sure it would be particularly appropriate for us, given our independent and neutral position on these sorts of issues, to comment on that. Obviously, we follow the debates with a lot of interest, because it's really important context, but it's not probably something right now we would be able to give a view on.

Okay, I'll leave it at that.

Did you want to add something, Mr MacLennan?

Yes, I was going to say that there's been little regulatory divergence between the nations so far, but it's early days. We've picked up a growing awareness within the devolved Governments of the possible implications of the UKIMA through public statements from the Welsh Government, and others in fact. It's gradually becoming part of the lexicon, but is that reassuring, because it's not all been positive?

Sorry, I was going to—

No, no—go on.

Well, it's not reassuring, clearly. Reassurance would be that the competence of this place, as the people of Wales have demanded through referenda, is protected by the UK state in its wider sense.

Absolutely. We need to know what people think about the MAPs and how effective they are in the context of Government. So, that's helpful. The Welsh Government has told us there has been insufficient time to properly assess the effectiveness of it. The Scottish Government considered there was a potential for MAPs to constrain the devolved policy making, and that was kind of echoed by some of the round-tables that we had. We are keen to engage further with Governments to understand the impacts of the UKIMA on their policy making, and how it kind of relates to the operation of the common frameworks, but that's still with the Government. You decide on that.

I appreciate that there's a limit to how far you can delve into individual issues, but we've got lots of stakeholders out there who are very interested in exactly the application of this in practice with the single-use plastics issue, and I do understand the constraints that you're under, but our reading, then, from what you've been saying would be that, if you have products that are legally supplied or originate from another part of the UK, then they can be distributed and supplied to other parts of the UK. That would be part of your function, to ensure that that internal market—. In terms of your advice, that's how the level playing field works.

We would be focusing in on the economic effects of that trade rather than whether or not that conduct is lawful, to make that distinction.

Yes, the economic effects rather than the issues of competence and so on, yes.

Correct.

And the policy making is—

Yes, indeed.

Absolutely.

No, that's absolutely fine. Thank you for that.

Let me turn to the issue a little bit more on regulatory divergence, because you note in your report that there have been relatively few regulatory developments impacting on the UK internal market. But can I ask what evidence did you have about whether the market access principles, the MAPs, are impacting on the appetite of devolved Governments to seek regulatory divergence?

I suppose, to build on the effectiveness of the reports that we produce, we spoke to the four Governments again on the effectiveness of the MAPs, and the Welsh Government told us there had been insufficient time to assess their effectiveness at the moment, and the other constraints from the Scottish Government. But we note in the reports that both Welsh and Scottish Governments had concerns about the exclusion process, and we're keen to engage further to offer whatever help and advice we can give.

So, do I take it from that that you have some sympathy with those who have argued for greater flexibility to create exclusions from the market access—? Sorry, I don't want to put words in your mouth there.

No.

Do you agree that this matter of greater flexibility for exclusions from the market access principles has merit in it—those who've argued that there should be—and, if so, how can that be achieved?

Well, I suppose amendments are perfectly possible, but that's kind of a matter for discussion between the Governments. I keep coming back, I suppose, to the fact that this is a fledgling set-up, and there are relatively few examples that we can look at for divergences as it stands at the moment. So, it's really a bit early to draw any hard and fast conclusions at this stage.

Okay. Peredur.

You say there are not many to draw on, can you foresee any other likely regulatory divergence in the near future, anything on your radar at the moment where you think that, actually, that might cause that?

Cause what, sorry?

Cause regulatory divergence?

Regulatory—. Sure. Yes, I mean—. So, if we take a step back—where are the areas, because of the various devolution settlements, where might you expect to see regulatory divergence are around things to do with the environment, food, agriculture, animal welfare—those types of areas. And those are certainly the areas, for us, in the recent annual report, where we listed out a number of different policy areas—single-use plastics, deposit-return schemes, and something we've not talked about so far today, but, potentially, the precision breeding Bill, now Genetic Technology (Precision Breeding) Act 2023—as some different important animal welfare-type issues and steps that the different Governments are taking around high-fat, salt, sugar food, for example, or potentially alcohol.

So, there are those kinds of specific policy areas, and potential pieces of different legislation, but I think there are some kind of overarching potential drivers of divergence as well, which would include, again something we've not talked about so far today, but, obviously, the retained EU law Bill, we think could potentially be quite a significant driver of divergence. There's obviously the public commitment of the Scottish Government to effectively stay aligned with EU law in a lot of areas that were previously subject to EU law, and, then, clearly, developments around Northern Ireland, and we've obviously already discussed a bit the potential implications of the Windsor framework. So, whilst there's not been that much regulatory divergence to report on today, we can also see some specific and more general factors that might lead to greater divergence in the future.

One piece of legislation that's going through here at the moment is health procurement, and, obviously, the impact on borders there as well.

Yes.

So, that could well be another element of divergence that could come forward.

I'm just wondering, with the MAPs and the operation of the internal market, whether or not you've been asked your advice, or assessed or contributed towards any assessment of those exclusions. Huw was talking earlier about whether or not you've given any thought to that, or whether you've been asked for your opinion on that.

Yes. So, we've not received any formal requests for advice on exclusions. We have said that we're ready to consider advice on the economic effects of potential exclusions. We think, probably, that will need relatively broad support across the four nations, and we would need a bit of time to do it properly, because, as Murdoch said at the start, we're an evidence-based organisation. That's really important to the CMA. So, we'd want to be able to provide good-quality, robust advice where possible.

And in what sort of areas do think that there might likely be some exclusions, or any policy areas or any particular areas that you're thinking that might crop up?

Yes, obviously, there's been an exclusion from the UK Government around deposit-return schemes. That's the second exclusion, after the one around single-use plastics, or rather certain single-use plastic products—not all. So, those have been the two to date.

In terms of looking to the future, in terms of exclusions, the Scottish Government said it thought there might need to be more exclusions, and DEFRA said the same. So, that's the extent of our information at this point.

And, finally from me, just moving on a little bit on the relationship with Northern Ireland. Do you share the same concerns of the Department of Agriculture, Environment and Rural Affairs in Northern Ireland that the non-application of the MAPs for goods moving from Great Britain to Northern Ireland could become a more significant issue, going forward?

I think that's hard to say because, since those views were reported, the Windsor framework has emerged. The Windsor framework was announced more or less at the same time as we were publishing our two reports. The annual and periodic reports don't really reflect the Windsor framework at all other than we note it in passing. So, I would expect the 2024 annual report to have a lot more about the practical impacts of the Windsor framework, including on these sorts of products.

Okay.

Thank you very much. James, we'll come back to you, please, to take us on to the next area of questioning.

Diolch, Cadeirydd. I'd just like to touch on common frameworks. I'd like to know what your opinion is on what role common frameworks have played in the operation of the UK internal market Act, and what potential do you think they have to manage and enable divergence across the UK.

It's a fair point. The UKIM Act defines a common framework agreement as a consensus between one or more of our devolved Governments as to how devolved or transferred—. It's back to how matters previously governed by EU rules are to be regulated after December 2020. But the common framework agreements typically set out inter-governmental meeting and decision-making processes, agreed principles, ways of working, a mechanism for a devolved Government to agree or modify what it wants to fit into the UKIM and its market access principles. I wrote that down because it goes a long way to asking for or securing an exclusion. I don't know if you'd agree with that.

At high level, if I recall, about 50 or so of the common frameworks have been identified as having some sort of intersection with the UKIM Act. Of those, few have been used so far to actively consider UK internal market issues. The resources and waste provisional common framework is the mechanism through which the single-use plastics exclusion was agreed, notwithstanding some concerns expressed by the devolved Governments about the pace of that process and also the final scope of the exclusion. That's the mechanism through which that exclusion was granted. And then, in terms of looking to the future and which common frameworks might be quite important, gene editing and some of the—. Apologies, I won't be able to name precisely the different common frameworks, but there are a number of common frameworks that have been identified to us where there might be an important intersection with the outworkings of the Genetic Technology (Precision Breeding) Act 2023. So, I mean, I think—

If I just—

Sorry. Please come in.

If I can jump in, then, because my next question is about that. How have you engaged with the Government around implementation of those common frameworks? How are the office actually helping to work all of these things through?

I suppose we continue to monitor developments under the common frameworks agreement as more of these regulatory differences that we've been talking about emerge, and we'd expect at the end of that to make a fuller assessment on the impact on the internal market, and probably, again, reporting that in our periodic report. But, there are complications there.

Okay. Diolch, Cadeirydd.

Would you be commenting in your next report, as you monitor and cast your purview over the operation of this, on how effectively you're thinking those common frameworks are working? Because if they work well, it resolves some of the policy and political issues that otherwise land up with people coming to you for advice on, 'Why isn't this working effectively? Why is the market disrupted? Why is the internal market not working properly?'.

So, from a strict, formal, 'What does the UKIM Act say we must report on every year, and at least every five years?', it's more what we've described as our periodic report that has that common frameworks focus. However, we've been discussing internally how we might scope our annual report for 2024, and we think it's probably quite important to include some commentary on the common frameworks, so—

That's useful.

Yes. So, it might not be the full ambit as set out in relation to the periodic report, but we think it important to include some further commentary.

Yes. I was going to say, it wasn't exactly our job—we're not here to defend the Act or amend it; that's certainly over to you to decide. But, we're here to make or to help with the UK internal market Act as it is, as we've inherited it, and to try and make it work as effectively as possible for business.

That's helpful to know. I think our assessment and that of other committees in the UK Parliament and elsewhere is that the common frameworks, whilst there'd been some frustration at getting them up to speed and getting all of them developed, and some issues about variability in the quality and effectiveness of them, at least most of them now have fallen into place. So, it may be too early right now to assess them, but, in a year's time, as you put your report together, it will be interesting to have your view on them alongside other work that's going on out there. But, let me go to Alun. Sorry—we're banging up against time. Are you okay for another five minutes?

Yes, of course.

Yes. Brilliant. Alun.

Look, I'm very content with what we've heard in the conversation we've had this afternoon, but what strikes me as quite fascinating is how this process is developing, because you said in a number of different answers that we're still very early in the process, that we're looking at events creating the context within which a wider analysis is possible, and I think it might be useful if, as a committee, we write to you with our view on some of these matters, and then ensure that there's an invitation to you to return here post your next report.

Always very happy to come here, to this part of the world.

Yes, creating that structure of conversation, I think, would be very useful.

And the data strategy road map that I mentioned earlier on, that's an important way for us to refine the data collected. So, again, any help and assistance you may think of after this meeting could be helpful, Chair, to develop this.

What are those areas of data deficiency? You touched on them earlier, but where do you need help? What gaps are you trying to fill? It's interesting that you referred that there's a deficiency on the England side on some of this data. What's going on there? Is it because devolution has actually filled some of those data gaps and it's left a bit of a contrast? Anyway, you tell us: where can we help?

Well, I think it's just that this is now our internal market, and it's traditionally held on trade between the UK and overseas countries, but not well collected on goods that are manufactured and traded within the UK across national borders. That's one of the issues. So, we're seeking to vastly improve the collection of this data in any way we can, or any way you can suggest that could be helpful, to allow the effectiveness of the UK internal market Act to be quantified—back to your point. But we hope to have reliable and detailed information for the 2024 report.

Maybe not in time for the publication of the 2024 report, but better data—. I mean, the way that our data strategy works is by, effectively, trying to be a catalyst across different partners, like the ONS and the devolved Governments and other stakeholders, but to have better whole-of-UK internal market data by about the autumn 2024. England doesn't produce intra-UK trade data at the moment. The most recent data for Wales I think is from 2019, via a voluntary survey that goes to businesses. And, as with the other devolved Governments' data sets, even that data has some shortcomings—the time lag, granularity, and the different data is not very comparable at the moment. So, we put in some headline numbers in our annual report, but those numbers may be wrong, because, ultimately, there isn't that consistent, timely data, unfortunately.

But also, Chair, and committee, if you, in your engagement with business, have information that we can help or assist with, we're there, at the end of the day, to help our consumers in any way we can, and for businesses to be able to trade effectively across borders. It'd be interesting to come back at some stage and have an update from both sides.

Well, one of the things, to pick up on Alun's point, that we might be able to do is, subsequently, with, perhaps, a behind-the-scenes discussion with you, is to liaise with our other sister committees as well here and to see where we can help you a little bit, if we can. But that reporting back both to the Welsh Government and to the legislature here, when you can, at that point where you have more to update us on the data strategy, would be very useful, and we'd welcome, I have to say, the continual engagement as well, going forward—we really would.

And to consider, when you put new regulations or laws into place, if we can help and assist by giving another view or take on it, we'd be happy to assist.

There we are. Very good. Colleagues, can I just briefly check is there anything else that you'd like to ask? No. Okay. In which case, can I thank you both very much—sorry, not both, the three of you, with one silent partner at the back there?

Very important.

We should've pulled up a chair and put you on the front. Thank you very much for coming in front of us today and for your evidence. As per normal, we'll send you the transcript just to check through for accuracy and so on. We look forward to having you back some time as well. Good luck in all the work that you're doing; it is evolving. We're keeping a close watch on it, as are other committees throughout the UK as well. Thank you very much.

And thank you very much for having us.

Thank you.

Okay. Colleagues, can I suggest that, whilst our guests leave us now, we take a short adjournment? And we're also going to do some swapping over here as well. So, we'll just take a short break and we'll come back at 14:40.

Croeso nôl i'r sesiwn gyhoeddus y prynhawn yma.

Welcome to this afternoon's session—welcome back. We've just taken evidence in our earlier session from the Office for the Internal Market. We are now moving on to our regular items. But just a short announcement to colleagues, because I know they'll be surprised: we have no statutory instruments to be considered at this meeting. We've got lots of business to get through, but no statutory instruments. So, just in case any of the public are watching, just an explanation there: it sometimes—rarely—happens, but we have no SIs to be considered today.

So, in which case, we move straight on to item No. 3, notifications and correspondence under the inter-institutional relations agreement. And we'll begin with item 3.1. We have correspondence from the Counsel General and Minister for the Constitution in respect of the inter-ministerial group for elections and registration. The meeting that he draws our attention to is taking place on 14 June. The Counsel General confirms he'll be representing the Welsh Government, and that he has also agreed to chair, following agreement to rotate the chairing arrangements between Ministers. The Counsel General tells us he believes the discussion will focus on the May local government elections in England and the changes made by the Elections Act 2022. And he will write to us again after that meeting.

Item 3.2, then, we have correspondence from the Minister for Rural Affairs and North Wales, and Trefnydd and the Minister for Climate Change in respect of the inter-ministerial group for environment, food and rural affairs. The meeting took place of that inter-ministerial group on 22 May. And the Ministers write that the Secretary of State for the Department for Environment, Food and Rural Affairs gave an update on the UK's biodiversity framework and the plans for the UK in response to the Kunming-Montreal global biodiversity framework. It also provided an update on the latest UK Government plans in relation to the Retained EU Law (Revocation and Reform) Bill. The Scottish Government’s request for an exclusion to the UK Internal Market Act 2020—interesting in the light of our earlier conversation—for its deposit-return scheme was also discussed at that meeting. The Ministers note that significant concern was expressed about the additional processes being added outside of the common frameworks process. And the UK Government’s intention to introduce a ban on wet wipes containing plastic was also discussed. And the Ministers state that this proposal has been made, and I quote,

'has been made at pace with little consideration of joint working.'

The next meeting, we're told, will be held on 26 June.

Item 3.3. We have several items within this section. Item 3.3. We note the written statement and the correspondence from the Minister for Rural Affairs and North Wales, and Trefnydd in relation to the Agriculture and Horticulture Development Board (Amendment) Order 2023. And Members will recall that, at our last meeting last week, we considered a letter from the Minister that confirmed that she had granted approval to Lord Benyon, the Minister of State for Biosecurity, Marine and Rural Affairs, to make the Agriculture and Horticulture Development Board (Amendment) Order 2023. So, the letter provides an update and confirms the Order has now been laid in the UK Parliament.

Item 3.4, we have a written statement and correspondence from the Minister for Health and Social Services, which confirm that the Secretary of State has laid before the UK Parliament the Healthcare (International Arrangements) (EU Exit) Regulations 2023, and the Minister states that the regulations will come into force immediately after section 162 of the Health and Care Act 2022 comes into force. And again, Members will recall at last week's meeting, we considered an exchange of correspondence with the Minister on the regulations in which the Minister said her officials expect the 2022 Act will be commenced this summer. And the Minister confirms that she agreed to the UK Government making provisions in the regulations on behalf of Wales in an area of devolved competence for, quote,

'reasons of pragmatism, efficiency and legal clarity.'

And the Minister also states that having the UK Government make this provision for Wales is not detrimental to current or future Welsh policy in this area, and the approach, in quotes,

'ensures a coherent and consistent statute book with the regulations being accessible in a single instrument.'

On any of these, I'm sure we can return as well in private session of discussion as well.

Item 3.5, we have a written statement and correspondence from the Minister for Economy in relation to the interministerial forum for trade, which took place at the end of May. And the Minister confirms that attendees discussed the latest updates on the ongoing free trade agreement negotiations with India and Canada, and the memorandum of understanding with a number of US states. And the Minister also notes that Minister Huddleston in the UK Government indicated that he would arrange for the new departmental structure and ministerial responsibility for the Department for Business and Trade to be shared with devolved Governments, and that he is happy to ensure this information is shared with us if we would find it useful. I would simply suggest to Members that we take up that offer so that we can share that more widely. Okay. Thank you for that.

So, we move on to papers to note under item No. 4. A couple of items here, the first of which is the written evidence submitted by the Bevan Foundation to the Children, Young People, and Education Committee and the Equality and Social Justice Committee in regards to the Welsh Government's legislative consent memorandum on the Illegal Migration Bill. And again, we could come back to this and discuss in private if any Members have any thoughts on that.

And then, item 4.2, we have correspondence from the Deputy Minister for Mental Health and Well-being in respect of her intention to deliver an oral statement on 27 June, which will outline the Welsh Government position in relation to price promotions and locations. And the Minister tells us she is providing early notification of her intention to do this—sorry, to bring forward secondary legislation in 2024—and is happy to engage with our committee in terms of what engagement would be helpful to us to support our scrutiny. So, some advance notice there from the Minister.

And then item 5 is a separate item to note in our public session. I invite Members to note the several items of correspondence received that relate to the Welsh Government's elective home education guidance, which was published by the Minister for education on 12 May. Members will note that, within those items of correspondence, there are a number of concerns with the guidance raised within it. So, we do thank as a committee all those who have taken the time to submit their views to us, and I suspect to other committees as well. And again, we can return to this in private session if Members want to.

And therefore, under item 6, if Members are happy—under Standing Order 17.42, would you be happy now to move to private session and seek to exclude the public for the remainder of this meeting? You're happy to do so. I'm looking to James as well. Yes, we are. So, if we could move now into private session, please.