National Assembly for Wales

Good afternoon, and can I welcome Members and the public to this afternoon's meeting of the External Affairs and Additional Legislation Committee, which will continue to be operated in a virtual mode at this point in time? In accordance with Standing Order 34.19, members of the public are excluded from the committee's meeting in order to protect public health, but it is available to view via www.senedd.tv, and you're able to choose the verbatim focus or, if you need translation from Welsh to English, there is a version with translation available. If I lose connection for any purpose, then we have already agreed that Alun Davies will act as temporary Chair either until I return or to the end of the meeting, whichever is the case. We have apologies from Laura Jones this afternoon and we greatly welcome David Melding as a substitute on her behalf. So, welcome back to the committee, David; you know the way we work. Any Members at this point in time wish to declare an interest? Huw. 

Only my standard declarations, Chair, of the groups I chair for the First Minister.

Thank you, Huw, and it is important that we recognise that because, clearly, the area we're covering is preparedness, and that will have an impact upon that. 

We move on to item 2 on today's agenda, and that's our evidence session on preparedness in Wales for the end of the transition period, and we welcome Dr Richard Greville, who is director of distribution and supply at the Association of British Pharmaceutical Industry Cymru/Wales, and also Judith Vincent, who's clinical director of pharmacy at Swansea Bay University Health Board, but also here representing the Welsh NHS Confederation. Can I welcome you both to this afternoon's meeting? We have a short time span—we have 45 minutes for our session—so, if it's okay with you both, we'll go straight into questioning, and over to Alun to start. 

I'm grateful to you, Chair. The last few months, and most of this year, in fact, have been a bit of a rollercoaster in terms of Brexit negotiations. We have these rushed meetings across in Brussels and London, and then, quite often, two entirely different interpretations of what was said. Currently, of course, the European Council is meeting in Brussels this weekend. I was hoping to start our session this afternoon by seeking to understand whether the negotiations that have taken place between the UK and EU are having an impact on how you're able to prepare, and if it affects the priorities that you have in terms of the preparation that you're undertaking. That's a question to both of you, I assume.

Richard first. 

Shall I start? Okay. Prynhawn da. To be honest, our ask from day 1 has been for a fully comprehensive trade agreement with the EU. We fully appreciate that that has been a challenge in terms of some of the red lines, both from the EU perspective and the UK perspective. We're currently in a position where we are asking for a slimline agreement at the very least, and one of the principal asks from us is that of a mutual recognition agreement. Medicines, as I'm sure you all appreciate, are highly regulated, and that is one fundamental ask that we have—that the negotiators prioritise patients, prioritise the supply of medicines, and prioritise an alignment of standards for medicines across Europe and the UK. 

Judith.

Thank you. I guess, in terms of our priorities, it's not really work that I would undertake at any level other than more locally, and quite a lot of what is going on in terms of the negotiations really is not within my specific, or our specific, control, if I talk about my counterparts across Wales. Clearly, what we will be focusing on is working with Welsh Government to understand what the implications of the negotiations are, and what steps are being put in place to ensure that we can access medicines in a timely and effective way for the population. 

That makes sense. Okay. So, going back to what the context is, it would be useful for us as a committee to understand—and I accept that you've probably explained this to other committees at different times—how barriers to medicines trade might impact the national health service in Wales and Welsh patients. What is the impact on the NHS of increased costs or delays in importing medicines from the European Union? I take six tablets a day for a heart condition. Now, to what extent could that be—I should be declaring an interest, perhaps, Chair; I don't know—but to what extent could that be interrupted, if you like, in early January, and to what extent would the ability of the national health service to provide those medicines on a monthly basis be impacted if there is disruption to trade?

Richard.

Well, in terms of the preparation that the industry has progressed with, certainly we've worked very, very closely with the UK Government. Medicine supply is one of these powers that are retained by the UK Government, and because of that, we've been working closely with the UK Government in the run-up to earlier potential Brexits, and certainly since the beginning of this summer, with the end of transition in mind. COVID has obviously had an impact, and certainly has delayed our focus in terms of end of transition, but the lens of end of transition is now fully in focus for us, and we will do everything that we possibly can to ensure continuity of supply of medicines to the UK as a whole. That's involved various preparations with the UK Government. I'm very happy to describe some of those later if the questions arise—or now, Alun?

Yes, well, it makes sense.

I think Alun's nodding, so I think he would like to you actually expand upon it now. 

I'm really interested in this area.

Yes, that's absolutely fine. So, in terms of the work we've been progressing with the UK Government, there's a recognition that there may be potential disruptions at the border at the beginning of next year. I think the reasonable worst-case scenarios that have been outlined suggest delays or disruption for three to six months into June of next year. So, bearing that in mind, the industry have been asked to prepare in various ways, and, in fact, in multilayered ways, and the multilayered approach that has been suggested by Government, and adopted by industry, has three prongs to it, if you like, or three foundation stones. 

The first is that of rerouting medicines from the short, straight crossings, which are, and have been, the preferred routes of supply to the UK for medicines over many, many years now. But the largest disruption to the border is expected at those short crossings. So, companies have been encouraged to change their routing arrangements to the UK. And also, to further support that, the Government in fact announced earlier this week their intention to support and deliver what they call 'Government-secured freight capacity'. And you may well have heard of the 10 ferry routes that have been commissioned to enable industry to bring medicines over to the UK. Predominantly medicines—medicines certainly qualify as category 1 goods as far as end of transition is concerned. So, that's an important arm—an arm, of course, that the industry will have to pay for. The Government has commissioned the service, but, obviously, the ticketing will have to be funded, and those funds will come from those who are actually moving medicines. So, that's one arm.

The second arm is that of—again, perhaps a technical term, really—trader readiness. But I think what this does is recognise that there will be new customs and border arrangements as of the end of this year, whether there is a negotiated outcome or not, as it so happens, so that the traders and the suppliers are aware of the paperwork, the rules, the infrastructure, the new IT systems that are in place, et cetera. And there are various support mechanisms that the Government have put in place for industry, and I'm glad to say that the pharmaceutical industry is at the forefront of those preparations.

And then, thirdly, there's the consideration of appropriate buffer stocks, because the idea here is to ensure continuity of supply for this first, critical three-to-six-month period. And alongside the importance of being able to replenish stocks, the Government has asked the pharmaceutical industry to increase their current buffer stocks so that they have at least six weeks' supply on UK soil at the end of this year.

So, with those three foundation stones in place, certainly there is the—everybody is hopeful that the supply of medicines can continue in normal fashion. I'll stop there, Alun, if I may.

Thank you for that—that's very useful. Has the industry done any analysis on the additional costs to the national health service of all of this?

From our side, remember that there were, or I represent the branded pharmaceutical industry, so, as such, costs of medicines don't come into it in many ways, Alun, because the ability for our members to increase costs of medicines that are already available is extremely limited. Over and above that, we have a capped pricing arrangement with the UK Government, which ensures that the expenditure on branded medicines does not exceed a capped amount on an ongoing basis. We've only just started that arrangement and there are four years left with that. So, as far as the branded pharmaceutical industry is concerned, we don't expect any increased direct costs of medicines for the NHS, which is clearly good news. There will undoubtedly be increased costs for the industry, but the industry will have to absorb those changes in the best way it possibly can.

And in terms of, I think you said, buffer supplies—I assume you mean stockpiling, essentially.

It's not quite stockpiling, I suppose, Alun. The pharmaceutical industry constantly has a supply of medicines in the UK as contingency for any manufacturing changes or, in fact, any disruptions at a port on an ongoing basis. They may not always have six weeks' supply in the UK, but the ask currently is for us to ensure that we do have that six weeks' buffer stock available—stockpile if you wish, but slightly different—on UK soil by the end of the year, to give that little bit of extra flexibility if the replenishment of stocks is disrupted in any way.

So, you've got six weeks' supply, but you're planning for a potential—the worst-case scenario is six months. Let's just say that's an outlier and three months would be a reasonable bad-case scenario. I'm just interested to understand at what point you press buttons and say, 'There are difficulties here.'

No, no, the six-weeks figure is one that was given to us by the UK Government. I'm sure they've done analysis. But, remember, the expectation is for disruptions for three-to-six months—it doesn't mean a three or six-month disruption. So, it's understood that there may be some few day disruptions in terms of ferry crossings to the UK, but we don't envisage that the six weeks' buffer stock will be insufficient and the advice from the UK Government, which obviously has done the border disruption analysis, to a large extent, is that it will be robust and sufficient, alongside those other two aspects as well of knowing how the borders will work, having the paperwork ready and having also rerouted away from short straits, where most of the disruption is expected. So, it's not a one-solution-fits-all; it's not a silver bullet in any way—it's a multilayered approach, which seems reasonable and the best means of creating a contingency to ensure that you get your six tablets, Alun. 

You're very kind. Thank you very much. 

Judith, did you want to add anything to that?

No, I think he's very eloquently described it all. Thank you very much.

Okay, thank you. I'll move on to Mandy.

Thank you, Chair. Hi to you both. All the evidence so far suggests that we're having a hypothesis about 'deal' or 'no deal' scenarios. Hopefully, today, the UK Prime Minister, Boris Johnson, will stick to his own deadline and actually give the country clarity on this. I think clarity is what's needed in all sectors. If a deal has not been reached, then negotiations need to end and focus on preparing for WTO trading terms, as far as I'm concerned, and then businesses and authorities—they can prepare properly once they've got that clarity. My question to you both is: can I have your response to the publication of the UK's border operating model—which you've just touched on, Richard—published on 8 October, outlining its risks and implications for medical supply? And what are your views on the UK Government's tiered approach in comparison to the EU saying that they will check all goods entering the EU from the UK?

You were cutting up a little bit at the end there, Mandy, but shall I start, Chair?

The emphasis on the UK Government's approach and the border operating model.

Yes. So, in terms of the border operating model, it's obviously critical, if we're to understand what our trader responsibilities are and to be able to tick the box of being trader-ready—we absolutely need to understand what the processes are, Mandy. The border operating model provides that. It's an extensive document, it provides a lot of information. That information has come to us quite late, I have to confess that, and even now, the border operating model I don't think anybody pretends is fully comprehensive.

So, there are aspects of the border operating model, especially to Northern Ireland, for example, which has gaps in it, but having said that, we are responding very, very closely to what is asked in the border operating model. It touches on new IT, it touches on new infrastructure, it touches on new paperwork, and we haven't had an opportunity to actually user-test many of those. However, the industry is an industry that will undoubtedly operate through customs intermediaries, Mandy, and the feedback from our members suggests that all our members will engage with professionals to ensure that the appropriate preparedness is in place, and I think that's critical, bearing in mind that very few of our members have actually had to do any of this paperwork or preparation over the last 40 years. So, because it's so new, because it's so technical, because the in-house experience isn't always there, our industry will reach out to the professionals and ensure that they do have the knowledge to be able to be secure in the ongoing supply of medicines. 

Anything to add, Judith?

Thank you, Mandy. I will admit, I have seen the document, but not had time to read and digest it, so, unfortunately, I don't think I could give you a view at this point in time. If you wish me to, I'm happy to go away and provide you with an update after the meeting. 

Fantastic, thank you. And—

Do you want me to come back on the tiered approach, Mandy? Yes?

Well, the last part of my question was about the tiered approach in comparison to the EU saying that they will check all goods entering the EU from the UK.

Yes, and I suppose borders are always difficult, aren't they, and there are two sides to any coin? So, if the EU is making checks on everything that comes out of Europe, they have first dibs, if you like, on checking goods before they come into the UK. The tiered approach as outlined in the border operating model doesn't make much of a difference to the medicines and the pharmaceutical industry. Controlled drugs don't have the tiered approach, and the tiered approach as outlined gives some paperwork flexibility. But, to be honest, because medicines are so covered by the need for regulation and regulatory rigour and standards, it's unlikely that this tiered approach will actually help the pharmaceutical industry at this time. So, it isn't an area that may necessarily help the pharmaceutical industry; it may well be very helpful for other suppliers who will have, perhaps, and operate in, a less regulated world than we do.

Thank you. My second question for the ABPI is: can you describe the degree of certainty provided by the model and the extent to which it allows the sector to fully prepare for the end of the transition period, and would you agree that, with only 11 weeks to go, absolute clarity, as I said in the beginning, is required to ensure businesses and authorities can properly prepare?

Yes, you're absolutely right, Mandy. In terms of clarity, I think business in general has been seeking clarity for an extended period of time. Certainly, the pharmaceutical industry has been looking for clarity not only in terms of the border operating models, but also on regulations that will apply in the UK after the end of this year. We have a degree of clarity currently, but I have to reinforce that there are still gaps in levels of clarity. Importantly from our perspective—and I'm sure you'll be bored with me saying this—regulations are so critical to medicines. We need absolute clarity in terms of the regulations. The MHRA have provided a tranche of guidance over the last few weeks, which has been very, very helpful. However, it still isn't as comprehensive as we would appreciate and like, certainly in relation to Northern Ireland. I'm sure if Wales found itself in the position that Northern Ireland may find itself at the end of this year, we'd be having a separate and different conversation now. But, having said that, on clarity, absolutely, I very much agree with you. That's essential for industry to be able to be responsive in this space.

Judith?

Judith, do you want to add anything to that?

No, thank you.

Yes. I'll come on to, now, Rick, the Medicines and Healthcare products Regulatory Agency. Could you explain the current role of the UK's MHRA, what it undertakes in regulating the pharmaceuticals in the UK, and how highly regarded are the MHRA as a pharmaceutical regulator on the global stage? And do you believe that there will be a lessening of pharmaceutical manufacturing regulations by the MHRA? Thank you.

Yes, MHRA. I think it's well known that the MHRA over the years has been internationally recognised as being one of the strongest regulatory bodies. So, the MHRA has had a long-standing—. Yes, it has been at the leading edge, I suppose, of regulation globally. It's continued that role when it functioned alongside and under the European Medicines Agency, and the challenge now will be, Mandy, as to whether the MHRA as a stand-alone body can continue to be at the leading edge of regulation. The ABPI exists to make the UK the best place in the world to research, develop and use new medicines, and, without a strong regulator, all of that is probably under threat. So, we are very keen to work with the MHRA to make sure that it has an outstanding role and continues to play an outstanding role in the regulation of medicines. Now, whether that means that it'll have a comprehensive role into the future, Mandy, I think time will have to tell. I think it's quite interesting, because the MHRA is obviously reaching out to other regulators across the globe, bearing in mind the EU regulators may be outside of its reach. But it'll be interesting to see how that project and how that wider global collaboration can feature. So, a question mark from me in terms of what will happen into the future; my crystal ball doesn't reach that far, I'm sorry to say.

Anything to add to that, Judith?

No, Rick is doing a really good job this afternoon. [Laughter.]

Do you think that—? Just popping back to clarity just for a second, do you think the lack of clarity is because the UK Government doesn't want to spend money unnecessarily on, say, 'Oh, we're going to chuck £50 million at this just in case it happens', or do you think they're keeping their powder dry, and waiting until at least today, hopefully, as I said in the beginning, about which way Boris Johnson's going to go today? What do you think about that part?

I don't think it's a financial thing, Mandy; personal view—I don't think it's a financial thing. I think the UK Government remains very optimistic for a negotiated outcome. And the challenge of making statements during a negotiation is clearly a challenge. So, we take it that we understand why some of the uncertainty has remained for an extended period. The point that we're trying to make at the moment is that we're now reaching the buffers. I think it's now the absolute critical time for that clarity to be declared, and we look to the Government to actually make certain that the industry does have as much clarity as it needs to do as much as it possibly can in the remaining time.

Okay, thank you so much, both of you.

Thank you. Huw, did you want to come in on any question here?

Only one short supplementary, Chair, and it's to ask both of our witnesses, who've covered so much ground already, just to expand on that last question Mandy was asking on the implications for manufacturing. We've been singularly successful in the UK because of our standards and because of our position within the European market, not only at regulatory systems, but also in manufacturing. I have some in my own constituency; they're very well-paid jobs, they're very highly skilled jobs. So, as we transition out, do you have any thoughts on what the future looks like? Can we say with a fair degree of certainty that we can now not only retain, but build on that manufacturing excellence and the jobs? Or should we have any worries at the moment? I ask that genuinely openly. 

It's a challenging situation, Huw. The life sciences sector in Wales is an important one. It employs in the order of 11,000 people, and exports of not far shy of £1 billion. In terms of the pharmaceutical industry across the UK, another really important sector: 60,000-odd people employed by the pharmaceutical industry, over and above the 24,000 that are employed directly in the research and development of medicines. The figures are enormous. The investment the pharmaceutical industry makes in terms of R&D outstrips the investment made by any other industrial sector—almost £5 billion on an annual basis. And you're right—the threat to that is a significant threat, but I'll have to point you back to the raison d'être for the ABPI, really. The ABPI will be working and bending over backwards to make sure that not only do we retain these jobs—

Oh.

Not only—

Go on, Richard. No, it seems to have frozen for a moment. 

—do we retain these investments in the general course, but also through COVID—

We seem to be having some technical difficulties with Richard at the moment. If Members are content, we'll have a two-minute pause to see if we can get Richard back and normal. Ah, you're back with us, Richard. You're muted.

Yes, I was kicked out. I hope you got most of that, David.

We got most of that. We don't need to pause in that case; you're back with us. We'll move on to more questions, and I would ask Members to be succinct because we've spent two thirds of our time on only one third of our questions. So, Dai Lloyd.

Thank you. I guess shortages in medicines is not a new phenomenon. I think that, as a pharmacist with many years' experience, it is something that we have seen throughout our careers. Admittedly, it would feel that there's a lot more around at the moment. But, I think that if we go back to 2017, we might actually find that they were at a much higher level at that point in time.

I guess that the issue, therefore, isn't necessarily Brexit. It is the much broader issue that drives medicine shortages, which can be multifactorial. I think that now, what we've learned, particularly through COVID, and maybe in some of the preparation for Brexit in the way that we are looking at how we are a little bit more flexible in the way that we're able to amend prescriptions to actually deal with the shortages—. If I talk from my own sector, which is within the hospital, we do have enabling protocols that allow pharmacists to make some changes to drug charts, in line with some clinically agreed protocols, although that is not therapeutic substitution. That is just things around formulation strength, dose, et cetera. I believe—sorry, I don't believe, I know—that similar flexibilities have been put in place for our community pharmacy colleagues through the use of serious shortage protocols.

So, I think that we have mechanisms by which we can deal with this. We have had to work, certainly across the chief pharmacist sector in Wales, particularly through COVID and our shortages that we faced around the ITU drugs, very flexibly and supported each other with mutual aid. So, I think that there are mechanisms to address shortages. I don't believe that Brexit at this point in time is contributing to the level that we are currently seeing. I don't believe that it is any different to what we would normally come across, or have come across in recent years.  

Diolch, Dai. Just to emphasise Judith's points, really. In terms of general shortages, they have been a fact of life; they've been a fact of life for some years in terms of medicines. There's no getting away from it, to a degree. There will always be manufacturing failures, and there'll be failures along the supply chain that make it challenging to supply medicines on an ongoing basis. Having said that, I think we should be very proud; certainly, as an industry, we're very proud of how we manage to show how resilient the supply system is when the increased demand is of the order of five or 10 times previous demand. And, obviously, we had that at the beginning of the year with COVID. So, I think the system has shown itself to be robust. It's not absolutely perfect by any means, but as Judith said, I think there are now well-established systems that have been introduced within the NHS, especially over recent times, which makes situations more manageable—again, not perfect, but certainly a lot more manageable. Certainly, a clinical perspective as to subtle changes in dosage or preparations, or finding appropriate alternatives for medicines, is really important here.

It's got to be pointed out—I think the Nuffield Trust have issued a report today that you may have seen, and I think that highlights some of the potential challenges on medicines towards the tail end of the year, and I think it references some shortages in generic medicines. Far be it for me to comment on those, because that isn't my area of responsibility, but I do appreciate that some of those may actually have been driven by everybody's desire to increase efficiencies over time. Efficiency is very effective and very useful in many ways, but it does have, on occasions, unintended consequences that perhaps do come to the fore at times of particular pressure.

Dai, you mentioned insulin specifically, and I'll have to refer you, really, to an answer I gave earlier: the UK Government and our members have been working very closely together in terms of understanding one another's preparedness and ensuring the supply of medicines for the end of the year, and the UK Government has been looking at specific medicines during those discussions with marketing authorisation holders. So, I am sure that they will have identified the challenge of insulins. The challenge of short half-life is recognised, of course, and the challenge of maintaining a cold chain, with the prospect of disruption at borders. It all goes into the mix, and our understanding at the moment is that the UK Government is comforted by the level of preparedness that the industry has provided, right across the board, for the likes of insulin and other more, perhaps, delicate medicines.

Diolch. Diolch, Gadeirydd.

Thank you. And since you've mentioned coronavirus, I want to bring in David Melding now, specifically to ask some questions in that area. David.

Thank you, Chair. I did just want to point to the flu vaccine, because we're actually seeing something work out now that has real problems with distribution because of the change in public policy—so, broadly speaking, extending the age group that qualify. There are now appeals going out in some localities for people in my age group who now qualify—the over-50s—to hold back until later in the cycle so that the most vulnerable can get their shots. This is, basically, because the flu vaccine doesn't have a very long shelf-life and, therefore, is not stockpiled in great quantities and, therefore, a sudden surge in demand in response to public health messages is not feasible. Are we going to get any other shocks like that in the next few months or are they being managed?

They're certainly being managed, David, and I would certainly argue the case that the flu vaccination has actually been well managed from the supply side. Supply of flu vaccine is always staggered. It starts in September, goes on through October and into November most years, and it isn't necessarily because of short half-life or anything like that, it's actually staggered because those taking the vaccines don't have the facilities to store within refrigerated space. So, it's actually an intention to stagger the delivery of flu vaccine so that those who take receipt of the vaccines can ensure good distribution practices and appropriate cold storage.

This year, there has been an exceptional demand, and, again, I think there may be some levels of confusion as to Government policy in this space. I think over-50s, myself included, are expected to wait until November and take a backward step so that more deserving patients have access to the flu vaccine in the meantime. I think it's partly a communication issue as to what the policy is and who's expected to fulfil that policy. In terms of supply, I can assure you that all of the orders that were placed appropriately and in a timely fashion for flu vaccines will be honoured this year. There hasn't been a manufacturing issue that I'm aware of, so those orders will be honoured; it's just that the demand at this time may well be front loaded and that, in itself, is causing some confusion out there.

I'm just using it as an example of, obviously, pinch points and to seek an explanation for how it may indicate if we have other disruptions that we can't completely anticipate. It's 15 October, we are on the verge of some form of lockdown, it appears, as a circuit breaker in the whole of Europe—it's not just Britain—and we seem to have a second wave two months before it was anticipated. We would presumably face much more transmission in the really cold months and we could well have infection levels similar to what we were getting in March and April, though we will never really know because we don't have any standard to measure what was happening in March and April compared to now. But those of us that hoped that any second wave would not be as large as the first are having to revisit this and at least plan for the possibility that a second wave and possibly a third wave will be much larger than we had hoped. Now, is this going to have any impact on manufacturing ability in Europe? As I understand it, a lot of our standard drugs are manufactured in one or two places, and whilst they are, presumably, environments that lend themselves to COVID control, with high levels of ventilation and that, obviously, if the population in the community is getting hit, then there'll be fewer people able to report for work. So, are these sorts of things being calculated at the moment and what is our plan to manage any sudden interruptions in supply that might occur?

Do you want to start on that, Judith, or—?

Well, I guess, learning from the first wave, we were hit with some shortages, as I alluded to, in terms of some of the intensive therapy unit medicines for ventilated patients. Some of that now is within our gift plan for. Welsh Government has established a medicines shortage advisory group, chaired by Welsh Government. Our medicines procurement and logistic advisory group meets fortnightly with the Welsh Government team and NHS Wales shared services partnership procurement to start identifying and then proactively manage any supply issues. That group is quite well established, it's led by an all-Wales specialist procurement pharmacist, and we meet weekly as a group of chief pharmacists to discuss any issues around shortages. So, if we take the ITU medicines and access to those, we've supported the development of a temporary medicines unit, which is not quite commissioned but is in the process of being commissioned, and we will also commission bulk solutions from another establishment within Cardiff, which will enable us to produce our own prepared syringes for ITU. There are ways around planning, and we've learned from that first wave, which I think is standing us in good stead for the second wave. I don't know whether, from a manufacturing perspective, you'd like to feed into that question, Rick. 

Thanks, Judith. It's certainly a confounding factor, David, that's for certain. But it's not the only confounding factor in terms of supply. I think Judith's outlined some of the supply issues, and I think I touched on them a bit earlier. But there are also the winter pressures, and Christmas, and also even an early Easter next year, which I'm told as well may actually be further confounding on top of whatever the second wave brings us.

But I'd like to turn to another area as well. Because of the remit of the ABPI, you're very interested in research and development, you're very interested in the research and clinical trials perspective, and I'd just like to highlight that that is perhaps as big an issue into the future. Most clinical trials in the UK were delayed or put on pause during the COVID first wave. They've been very, very slow to be reactivated in the UK, certainly in comparison with the likes of Germany. There are huge discrepancies in the health system's ability to manage with clinical trials at the moment, and it may well be that such an impact has been had on clinical trials in the UK, that may have an even more lasting impact than necessarily some components of the impact of COVID on supply. So, COVID will undoubtedly impact on lots of areas within healthcare, and my fingers remain crossed that the impacts are not too significant.

We've exceeded our time. If it's okay with yourselves, we'll have one more question from Huw Irranca-Davies and one more question from Alun Davies. If it's okay with yourselves, we'll just go a little bit longer. So, Huw first.

Thanks, Chair. If I could simply ask—. You've mentioned before the importance of Welsh Government in creating a positive trading environment going forward, but if I could ask you very briefly, at this stage in the transition, in the future, what would be your asks of Welsh Government to help the pharmaceutical industry and the supply chain and customers as well within Wales? What would be your significant asks?

In the near future, Huw, my asks are twofold, really. One of them—and I'm focusing on patients and focusing on supply, because that is the immediate threat—I would certainly encourage Welsh Government to engage with the UK Government in terms of its supply preparedness arrangements. I'm led to believe that that engagement is happening, but I continue to encourage even closer engagement. The second bit, really, is considering this supply and demand balance that is needed to ensure that shortages have as little impact as possible. To do that, I'm sure the Welsh Government can get on with the communications work that is necessary to flatten or minimise any surges in demand over the next few months. I'm sure the patients will be concerned—and we heard of Alun's situation earlier, and I'm sure that that will be replicated throughout Wales, and I think the Government has a really important role to ensure that patients have the confidence to not expect or demand a surge in medicines over the coming weeks, because a surge in demand at the current time could well compromise the entire preparations that are in hand. 

Chair, I could see Judith nodding in assent. Did you want to add something there?

No, it was something I was going to pick up earlier. I think that communication is essential, in that we should be encouraging both prescribers and our patients not to change what they normally do. I think what we did learn through COVID was there was a move in some cases to give larger quantities to see the patients through difficult access situations, and I think it's really important that we don't repeat that, going into Christmas and the end of the transition period, really, because the minute you do disrupt and give out-of-kilter quantities, then we are going to eat into the contingency that we may have established to see us through the expected difficult period. 

Thank you. 

Thank you. Alun, last question from you—succinct, as usual. 

I'd like to ask the witnesses about the level of engagement with Welsh Government in preparing for the end of the transition process and if they're content with the actions and decisions of Welsh Government.  

Shall we start off with Judith on that one?

We have a weekly meeting as chief pharmacists, and our chief pharmaceutical officer attends those meetings. So, he's fully engaged with us on a continual basis. Only this week we received a briefing from him, a lot of which I won't go over, because Rick, as I described earlier, very eloquently went through all of the plans that were in place. So, we are kept very much in the loop and informed. So, from the perspective of our engagement as chief pharmacists with the Welsh Government, I'm not sure I could ask for very much more. 

Richard.

From our perspective, we're certainly involved in the Minister's advisory board for end of transition planning. There was a meeting this morning, and that's particularly helpful, especially for the next two months or two and a half months. Most of our engagement, I have to confess, though, has been at a UK Government level because of that retained responsibility in that space, Alun. So, again, I would just encourage the Welsh Government to assure themselves on an ongoing basis, really, that they have appropriate communication channels to the UK Government with regard to medicines. 

Okay, thank you. Can I thank you both for your time this afternoon? Judith and Richard, you may not be aware, but you will receive a copy of the transcript of today's session, and if there are any factual inaccuracies, can you please let the clerking teams know as soon as possible? Thank you, both, for attending and have a good rest of the week.

Thank you very much. 

Thank you. 

And, for Members, we go on to item 3 on the agenda, and that is papers to note. The first one is correspondence from the Secretary of State for Wales to the Chair of the Legislation, Justice and Constitution Committee regarding the internal market. Are Members content to note that? I see from nods they are. The second one is correspondence from the Chair of the Legislation, Justice and Constitution Committee to me regarding the United Kingdom Internal Market Bill. Again, are Members content to note that? We did highlight it last week. And the third one is correspondence from the Secretary State for Business, Energy and Industrial Strategy and the Secretary of State for Wales regarding the UK internal market, dated 12 October. Are Members content to note that? We'll be continuing our discussions on that particular item later on. So, if Members are content to note that, that's great. 

The next item on the agenda is item 4, a motion under Standing Order 17.42(vi) and (ix) to resolve to exclude the public from items 5, 7 and 8 of today's meeting. Are Members content to do so? I see they are, so we'll now move into private session for item 5, we'll come back into public for item 6, and then go back into private for items 7 and 8. So, let's go into private session.

Can I welcome Members back to this afternoon's meeting of the External Affairs and Additional Legislation Committee? We move on to our next item of business, which is item 6, the UK internal market Bill. Can I welcome Professor Jo Hunt from the Wales Governance Centre, and Dan Wincott, also from the Wales Governance Centre. Can I thank you for the paper that you submitted to the committee for consideration? Perhaps I can hand over to you, Jo, to give an introduction and a brief overview of the paper. 

Thank you, Chair. Thank you very much indeed. This paper has been produced by Dan and me. It takes us through the internal market Bill as it was presented back in September, and also gives some of the context behind the introduction of that Bill, looking at the concept of the internal market that is appealed to through the Bill, and also some of the immediate constitutional history around how the return of powers from the European Union is going to be managed. 

I think the paper itself, as the title indicates, draws out the constitutional implications, but it's very much focused on the consequences for the devolution settlements. The paper highlights a number of points at which aspects of the existing devolution settlements are challenged, sometimes very explicitly, by what is in the internal market Bill. 

Thank you. That was a bit briefer than I thought. Okay, we'll move on to questions. It's important for us to understand some of the issues and factors that we need to reflect upon and what the internal market Bill does for devolution in particular. So, I will start with Dai Lloyd.  

Thank you, Chair. Thank you, Jo, for that wholesome introduction but, more specifically, the paper, I've got to say, is very good. Do not brook any sort of criticism—I found it a terrific read, actually, and I don't say that lightly in these circles. I've got a couple of questions to kick things off. Obviously, I come from the point of view that I think the internal market Bill is a clear and deliberate dismantling of Welsh devolution. I'll just put that on the record, just in case there was any doubt from what standpoint I was starting from, in case there's any ambiguity. But, on specific parts of it, I don't know if you could flesh out the answers using your expertise. Now, in clause 46, I think it is, when it comes to financial assistance powers and the inclusion of water infrastructure specifically there, our bedrock support in Plaid Cymru is very worried about that meaning that UK Government can determine spending on water infrastructure in Wales against the wishes of a prevailing Welsh Government and, possibly, foment another Tryweryn situation. That's how we read that part. And if I put in my two other questions at the same time, I'd just like your comment on the inclusion of financial assistance, water infrastructure, and the overriding of Welsh Government views on that, and the very real possibility of another Tryweryn.

The second is that the UK Government keep saying that, actually, they're giving Wales lots more powers in this internal market Bill. Can you supply us with any examples of the 'lots more powers' that we are meant to be having, because I've been trying, honestly, and all I can find is loss of powers. I'm intrigued. Sixty-six more powers somewhere; I don't get it.

And my final point is: what now for common frameworks? I was relatively content about common frameworks and four nations working together. We are where we are with the constitution, so common frameworks. But that's gone now, isn't it?

Three interesting points for you, Jo, and perhaps Dan as well. Who wants to answer the first one? No-one's eager. Dan.

Do you want me to come in here?

Yes.

So, I'm not sure that I'm in a position to speak in particular about the possible medium and long-term political implications of the water power in particular, but it does seem to me that there is a loose, if any, connection between the new financial spending powers and what I take to be the core of the internal market Bill proposals, which are related to market access. And I'm sure we'll come on to talk about the market access provisions in a few minutes. 

I suppose I could see how—. So, the broad thrust of the market access provisions is about removing possible regulatory frictions within the economic space of the United Kingdom, or at least Great Britain. And I can see how, in some ways, the internal market might be improved by enhancing some cross-border infrastructure in certain sorts of ways, but the new financial powers are much more broadly drawn than that, so they include things like investment in education, and educational exchanges and so on. So, it's a very wide-ranging set of new powers, which seems to me to address different issues and not to have a strong mechanical relationship to what I understand to be the core of the purpose of the internal market Bill. And I suppose that might well apply to water as well. 

I would say though that, unless some additional steps are taken, the financial powers in and of themselves wouldn't directly allow the UK Government to make changes, even for something like the M4 relief road, in the absence of planning permission and the use of the devolved planning system. So, something else would have to happen as well for those sorts of changes to be made.

If I can follow up on Dan's point there on the spending powers, what we're explicitly clear on—and we obviously had suggestions in various statements around the Bill and documentation around the Bill—is that these are essentially a replacement for the shared prosperity fund. We know that Wales's position in relation to EU funding has been different to the rest of the UK and the proportion of funding that has come to Wales has been very significant. It has also come to Wales and been guaranteed under various funding streams that have been for particular purposes. Commitments have been made in terms of maintaining those levels of funding. Now, whether or not those commitments are made good on, and what purpose they are for—whether it all goes into something that is more infrastructure driven rather than responding to broader concerns that the EU funding was able to meet, like funding that went into third sector, civil society, equality, environmental protection—that range of things that were protected for particular purposes—there are not necessarily—. Well, throughout this Bill generally, we see things in very general terms, with a lack of specificity, with a lack of detail and without any guarantees, of course, as to how those rules might be put into practice. So, with these spending powers, we simply do not know. As on so many points throughout the Bill, we don't know what might be done with them or what they might be used for. But it's very clear that there are no protections offered through the Bill for how they might be used. But, as Dan says, clearly, there are consent procedures that are written into all sorts of planning legalisation and environmental protection legislation and environmental assessment. Is this going to cut through all of that? It's so generally phrased that we don't know how to fill this in.

In relation to common frameworks, Dai Lloyd asked the question: where do they go now? But not just where do they go now—they were part of the agreement that came as a consequence of, shall we say, the Assembly revoking the continuity Bill. Is that agreement dead if the common frameworks are not going to be the realistic mechanism by which things will happen?

I think it's unclear where we are with common frameworks, but what is clear is that these things have developed independently of one another. There's not been a lot of communication across between the work stream that's been undertaken around common frameworks and that that heads this more horizontal internal market principle that's at work here. And the relationship between them simply isn't clear. Is it the fact that the principles in this Bill—that the market access principles are going to have some sort of bite on the outputs of the common frameworks? There's no explicit carve-out for the frameworks in this Bill. I can't imagine that that frameworks process has been entered into, or negotiations have taken place, with any sense that the agreement that might be reached and the space for divergence that is at the heart of these common frameworks might be undercut by the exercise of the principles in this Bill, but there's nothing protecting the output of the common frameworks from that.

It's not that the common frameworks work has stopped. We've seen some very positive outputs from that. I think there was a nutritional labelling framework that has been released—a provisional form of that framework. It's all about collaboration, it's all about partnership, it's all about shared governance, it's all about space for divergence. There are dispute resolution procedures that are written into this framework that recognise that acceptance of divergence may be an outcome of the dispute resolution procedure, but no protection, necessarily, of that from the reach of these principles. And I think that needs to be made very explicit.

So, I don't think the common frameworks are dead. If that relationship between the frameworks and these principles can be made clearer—. And you could draw parallels with what we see in the EU context. There are things like the common frameworks, there is the EU regulation that creates a commonality—not necessarily uniformity but a commonality—and that is the way that things are generally done with this fallback horizontal market access principle operating in the background to fill the gaps. Now, that's how this is sometimes described, but that's not how in law it's currently constructed as far as the internal market Bill is concerned. 

Can I just press you on what additional powers we're meant to be having from UK Government? Obviously, there's general confusion about when UK Government is being UK Government and when it's being the Government of England, which remains unresolved. But just from a knowledge point of view, what powers are we gaining? 

Shall I take that?

Yes, please, Dan.

I think there's scope for legitimate debate about whether and to what extent the Senedd, the Welsh Government and other devolved authorities are gaining additional powers as a consequence of the UK leaving the European Union. There's a question that can be debated about whether those powers sat with the devolved authorities or not whilst the UK was a member of the EU and while those rules still apply during the transition period. So, I think there's a way you could argue that the Senedd and the Welsh Government will be getting additional powers as a result of leaving the EU. It's not clear to me that that comes through the mechanism of this Bill. So, this Bill doesn't seem to me to be the vehicle by which any new powers are being transferred. I think that's the way I would see it; it's about a new UK system for regulating market access primarily, as a consequence of having left the EU. So, for me, this Bill isn't the precise vehicle. 

And I suppose that also is relevant to the point about common frameworks, because if you think back to the legislation at Westminster that introduced all of this, there were initially twin tracks; there was a review of inter-governmental relations and a common frameworks process, and initially, the internal market was one item under the common frameworks element. What seems to have happened is that the internal market element has become front and centre, with the wider common frameworks in second position and what you might think of as the institutional, constitutional elements, like the inter-governmental review, fading a bit further back into the background.

The order and sequencing of the introduction of these things and the horizontal reach of the market access principles, which are framed in very powerful ways in this legislation—that has a significance for how each of these elements will play out. I suppose that's one of the reasons why we framed the paper in terms of the constitutional implications, because in one sense these are technical, economic, regulatory proposals at the core, but they do have a wider constitutional resonance. I think that's the sort of point we'd want to make.

Can I just—? Finally, Dai, on your point about the powers coming back, as Dan said, it was the withdrawal Act back in 2018 that established that powers that were devolved were staying there, and in terms of any expansion on those powers, it was simply that these were now going to be exercised outside the context of EU law, and so any limitations that might have been imposed by EU law were going to be removed. So, as Dan says, that has been achieved, and this Bill doesn't bring any new powers, by any means. Effectively, it has the potential to hollow out those competencies that are devolved and that have been agreed would stay devolved, but their effective reach can be significantly limited by the market access principles within the Bill.

Thank you. That's very clear. Thank you, Chair. I'm conscious of time.

I've got Alun, Huw, and then David. Alun.

Thank you. It's a fascinating conversation; I'm grateful to you both for your time this afternoon, and I enjoyed reading the paper. To me, when I was reading this, there are two things happening, aren't there? There's the legislation, which we've seen published, and you've provided an analysis of that legislation—that does what it does, and all the rest of it. But there's a more profound issue at play as well, isn't there? And that is where this legislation has come from, the way in which it's been developed, and the way in which it's now being essentially bulldozed through Westminster. Because I've always considered there to be a settlement within the United Kingdom. You describe the inter-governmental arrangements as being ramshackle, I think, in your paper, and I think you're being very generous in doing so. But there'd always been an agreement—a tacit or written agreement, sometimes, whatever—that where there is legislation that has an impact on devolved competences, that legislation is developed openly and jointly, and there will be tussles, disagreements, letters, robust terminology will be used, and all the rest of it, but you'd have that conversation. That didn't happen here, and the way in which the UK administration is driving this through leads me to believe that it doesn't seek agreement, and not only that it doesn't want agreement, it doesn't seek agreement either. So, that affects us quite profoundly, not just in terms of what is written in the Bill, but also about the way that the future UK would operate. Is that your reading of this process as well? Is it your reading that we're not simply seeing the hollowing out of the competences in the way that you describe, Jo, but you're also seeing a hollowing out of an already ramshackle inter-governmental structure, which means that we're told what's going to happen to us? We're given the opportunity to comment on what's going to happen to us, and then it happens anyway, because our lords and masters have determined that that is what's going to happen, and whether we like it or not, devolution is now dead. Discuss.

Jo?

Sorry, that wasn't much of a question, was it?

This clearly hasn't been a collaborative process; it hasn't been one of shared governance, and it's not proceeded in the way—. Again, there's that complete distance between what's been happening with the common frameworks—and of course, things haven't been perfect there, and things have been delayed and there's not been agreement to the extent that agreement was hoped for—but that's completely divorced from the approach that's taken here, which is an incredibly sort of top-down approach. The process by which this was introduced wasn't one of open, shared, creation of this legislation. And then provisions within it: powers that are given to the Secretary of State to amend things that don't call for any involvement on the part of the devolved Governments or Parliaments, and don't even take as a starting—. Why aren't we taking the withdrawal Act and the consents that were written in to the withdrawal Act to respect devolved competence? Why is that consent process not something that's automatically reached for now? But as you say, there's a lot in here that undermines the existing settlement and common approaches.

Dan, do you want to add anything to that?

Yes, I would add one thing. Jo has already spoken about the lack of involvement and engagement of, for example, of devolved officials in the generation of the Bill, and of course, the Scots decided not to be involved themselves at an earlier stage, which is part of the context here. But I think it would also be fair to say that the Bill itself seems to have been produced in quite a hurry, and we've seen quite a number of Government amendments to the Bill as it's gone through. It's changed quite a lot from the Bill as originally presented to the House of Commons, and these Government amendments aren't necessarily or mainly—certainly not all—in the form of responses to criticisms and so on in the debate. Some of them feel a bit more like they're amendments that have been added to flesh out the Bill, because it wasn't as fully developed as one might have expected when it was first presented. Certainly, reading some of the early text, there seem to be bits that were missing, or some of the changes suggest they haven't been updated as fully as you might have expected; they refer back to earlier discussions and so on. So, it does feel like a rather hurried process at the Westminster end and coming from the UK Government, which is perplexing, I guess, from the point of view of someone who looks at these sorts of legislative processes, especially when the usual collaborative processes haven't been followed.

I've only ever been a Welsh Government Minister under a Conservative, or Conservative-Liberal Democrat coalition, in Westminster, and I have to say that sitting around the table in the old Cabinet room in the Cabinet Office having conversations with them on different matters, there was never a difficulty. It may not be fashionable to say so, but some of those ramshackle structures worked quite well, when you had the will to make them work. And particularly Cameron's 2010 Government did have a will to make them work, quite frankly, and we made them work, I felt, reasonably well. And so when I see something like this coming through I think this is profoundly different. And it's not a party point, is it, because a Conservative Government was very good in many ways in terms of the internal running of things, in my experience.

I'm interested in thinking perhaps the UK needed this crisis of governance in a longer term view, that the structures we put in place—. The Labour Government—well, Huw was a Member of that Labour Government—didn't need to put in a lot of inter-governmental structures because we were of the same politics, and we could have conversations that were easier, and, you know, you'd have a conversation on the telephone rather than in the meeting room because you could. And then, all of a sudden, the Conservatives were elected in 2010, and we needed great structures, because we didn't talk as often on the telephone. So, we invented those structures and those structures somehow worked. And now they've been put under challenge, those structures have collapsed. Am I being a bit too optimistic, possibly, that it may well be that what this Bill does, in retrospect, when we look back at it, is to demonstrate the fundamental fragility of the United Kingdom and the fundamental weakness of the United Kingdom as a federal or multinational state—call it what you like—and that this gives us the opportunity to rework some of those structures, as well as just to lament what is happening?

Jo, do you want to take that one?

I think what we see, in this piece of legislation particularly, is the very vulnerability of the devolution arrangements. So much in this Bill as well—. We don't know about dispute resolution procedures; there's reference to dispute resolution procedures that are going to be inter-governmental, but, if they're relying on existing governmental relations, then that's enormously problematic. Dispute resolution generally—. Again, Dan referred to this looking like quite a rushed piece of legislation, that there are large gaps within it; there have been some of those gaps filled in the version that reached the House—that started in the House of Lords. There's a new clause that the Secretary of State for Wales can issue guidance about how enforcement's going to take place. But, again, there's no indication of what that might look like and the legal enforceability of these provisions, whether we are going to go to court, and how much we might need rely on good inter-governmental relations to make this work. The point has been made—. I think that Nicola McEwen, Professor McEwen, has made the point that, at a time when we are seeking to re-establish positive inter-governmental relations, a Bill like this just pushes it further away. The tensions that are created by the introduction of this legislation, I think—. Whether it's going to lead to a new renewal—.

Dan.

I think that it is a key moment in the development of the UK's territorial constitution that could go one way or another. I guess that what I would say, as someone interested in constitutional history, is that I would also, as a constitutional historian, offer some critical remarks on the neglect, or the weak development, of these structures from the very beginning of devolution.

So, I think that both parties in power at Westminster have not built up the kind of routine, often rather mundane, prosaic structures and processes that allow relations to be maintained in periods of stress. In a sense, it's a bit like the coronavirus pandemic. If you do everything through COBRA, you can get things done in the short term. But, actually, to manage relationships between Governments in a multi-level, multinational situation, you need to have some pretty boring meetings when nothing very much is at stake, so that, when something big happens, it doesn't make things worse by calling the emergency meeting to deal with them.

So, I can be pretty liberal in my critical remarks about the construction of the constitutional architecture for the UK territorial state over the past 20 years or so, which is not to say that it would have been easy to do it otherwise, and, of course, it would have to be a piecemeal and gradual development in lots of ways, but I think there's enough criticism to go around on these matters.

Okay, thank you. Huw.

Thanks, Chair. Can I ask you both two fundamental questions? Because our role here is to challenge you, not to go with our own preconceptions. So, one is: could you be absolutely wrong on this, your analysis? It's a great paper, by the way. I've enjoyed reading it. It's very thorough. Could you be wrong?

I know the committee has sought written submissions on similar questions. It'll be interesting to see what others bring in, but would people be able to say, 'Well, this is what you'd expect; it's a Cardiff/Wales-focused view of this Bill. If this was written by somebody up in London, they'd take a totally different academic approach and come out with a totally different analysis of it'? That's question No. 1.

Question No. 2 is—and, again, I'm challenging my own preconceptions. You know my history. I came back to Wales for a purpose. But isn't it within the right—? Couldn't people argue that it's within the right of the UK Government, if your analysis is correct, to actually stake its claim around these areas? Before you respond to that, the reason I ask is that your document is pretty categoric. It is shot through with some very clear statements. On page 4, it says:

'The UK Internal Market Bill is the Johnson administration's first major piece of legislation…. If passed into law in its current form it will have a significant, largely centralising, impact on the balance of the UK territorial constitution.'

If you skip through this document, you have statements like, in terms of market access and mutual recognition, the proposals are

'centralising, limiting the capacity for divergence and differentiation currently permitted under EU law.'

In terms of—. You go on to say:

'There are no available justifications available under the proposed legislation that would support the choice of the legislature in Wales'

around things such as the spread of pests, disease, and unsafe food and feed, compared to what we currently are able to do under the EU. And I could go on. The document, page after page—. So, could you be wrong? If this was being written elsewhere, somewhere in London, would the analysis come to different conclusions? And even if you're right, isn't the UK Government entitled to do this anyway?

There are some interesting questions for you. Dan.

So, I don't suppose you'll be surprised to hear me say that I don't think we're wrong. I think it's important to underscore, for example, the differences between the concepts of mutual recognition and non-discrimination present in the Bill from those concepts, as we normally have understood them historically, in the EU context. They use the same words but they are really very significantly different concepts. So, there might well be a strong case for having some kind of system of mutual recognition across the different parts of the UK after the end of the transition period, but this form of mutual recognition seems to me to have those centralising implications that we set out in the paper. Now, it's not wholly impossible that other changes might be made around this Bill, or some version of this Bill, that would mitigate and limit its effects to some extent. So, if we had a clear statement about the relationship between the provisions of this Bill and the common frameworks that we were talking about earlier, or if we had a clear statement about the extent and nature of devolved competencies and some sort of additional protection for them, that might change the balance significantly. But I think it would only fundamentally change the balance if the core concepts of mutual recognition and non-discrimination, as set out in this Bill, were themselves also changed.

On the point about whether the—. So, I—. Sorry. On the point about the UK Government and what it is legitimately able to do, I suppose I'd think about that at two sorts of levels: one is that I think there is a genuine interest in maintaining an effective and efficient economy across the UK. I don't think, though, that there is a clear and immediate threat to that that comes simply because of the end of the transition period. In a sense, the logic of the argument that's often used between the UK and the EU, that our economic systems and regulatory systems are very similar to one another at the moment, so there shouldn't be a reason why, as some people argue, immediately there would be problems in trade between the UK and the EU—that logic, it seems to me, applies much more clearly and with much more force within the UK. The frictions would only come if new divergent regulations were developed in the future. And, indeed, according to the logic of the White Paper that underpins this piece of legislation, the disbenefits of those frictions would fall massively disproportionately on the devolved parts of the UK. So, I find that logic an unconvincing logic.

Ultimately, of course, in the current UK constitutional arrangements, if you can get a majority at Westminster, you can make any legislation that you want to make. And so, in that sense, I suppose there is a kind of bedrock Westminster sovereignty argument that says, 'If this passes at Westminster, it is, therefore, legitimate.' It seems to me that, as a way of approaching the legitimacy of Government across the UK, that's a rather contentious way of proceeding, and if and to the extent that the kinds of arguments that we set out in the paper are true, it seems to me there is an issue about a set of proposals that, at the very least, have substantial potential to change and weaken the devolution arrangements in Wales and elsewhere being promoted as an enhancement to devolution. That seems to me to be problematic, but it's problematic in ways that it's almost certainly much more appropriate for politicians to engage in than it is for me as an academic.

Thank you. Chair, could I ask Jo to answer the same two questions: whether you could be wrong in any ways and whether, even if you're right, the UK Government is entitled to do this come what may, but particularly to extend this in terms of later parts of the document where, in terms of spending powers and state aid, you say

'As drafted it reserves State Aid policy as a UK-wide competence and creates new financial powers that give scope for new UK Government public spending in the devolved nations, including in areas of devolved policy competence',

and also, 

'Notably, the reach of the market access commitment in the Bill appears to go beyond simply those areas where EU law is falling away, and across devolved powers more generally'?

So, the same question to you, and I'm genuinely asking this openly: could somebody else come to a different conclusion from you on this, on how it reaches across devolved competence, and, anyway, isn't the UK Government just entitled to do this?

In terms of, 'Could we be wrong in our legal analysis of the reach of the principles?', to the extent that we've got clarity about what those principles mean, I think what's very clear is that one approach that could have been taken is to roll over the free movement principles as they exist under EU law and as have operated and have been a check against which devolved legislation has been adopted, and UK parliamentary Acts, secondary legislation. We had to operate within that context of measures complying with those principles. What we've seen instead of that, though, is a selective translation of aspects of that in a way that limits the flexibility and the scope for divergence and difference that is recognised under EU law. So, why this set of options rather than—. What is wrong? What has been shown to be wrong with what is already there in EU law?

If we take something like the mutual recognition principle, you look at it, you recognise the language, but then when you go to the EU law source of this, 'mutual recognition' is a presumption. It's a rebuttable presumption, and it's open to a wide range of open public policy-based reasons for justification, and they include consumer protection, social and cultural choices. There are a wide range of things there that have been successfully pleaded and been demonstrated to be proportionate justifications.

Now, instead, the mutual recognition principle as it is read in this piece of legislation, as it's translated in this legislation, is almost an absolute principle, with very, very restrictive grounds on which any derogation is afforded, and that's unavoidable. What we've had, what we've existed within and what we have here are two different things. They resemble each other in some ways but they operate differently and they leave less space for divergence. The interests of the market are prioritised over pretty much everything else within this document, and, you follow that through, then why devolution at all? So, that's one logical end point of this, but it's one that has not been constitutionally endorsed. There is constitutional endorsement for devolution, and the UK Parliament, if it passes this, well, constitutionally it shouldn't do it without the consent of the devolved Parliaments. Is this a normal situation? Well, we know the last time the withdrawal agreement Act went through without consent it referred to a specific singular and exceptional situation of withdrawing from the European Union. Who gets to decide what is normal in these circumstances? Can Westminster do it? Constitutionally, properly, yes, if it has the agreement. 

Thank you. Okay, Huw. David and then Mandy.

Yes, I just wanted to probe the positions of the devolved Governments. My understanding is the Scottish Government, whilst accepting there is something called the UK market, or the British market, or whatever—I'm not quite sure how you refer to Northern Ireland at the moment—but there is certainly no need for the Bill, were working through the framework process. The Welsh Government has said it much prefers the framework process, but I don't think it's said there shouldn't be a Bill and they've said warmer things about the concept of an internal market. So, my question to you basically is: could the internal market be reasonably well governed via the frameworks, or would some sort of fundamental legislation be required? It may not be this legislation, obviously, if you answer 'yes' to whether there needs to be a statutory basis. But I'd just like to probe that—whether the frameworks could have been enough, could have been sufficient. 

Who wants to take that one? Dan. 

I'm happy to have an initial stab. Of course, some of the frameworks envisage and involve legislation, so it's not a doing things through discussion and informal agreement versus legislation distinction, to make a contrast between the idea of an internal market, this one or some other version, and the common frameworks. My personal sense is that it would have been perfectly possible to look to strengthen inter-governmental relations structures, to develop a set of common frameworks, and to see how things developed over a period after the end of the transition period. The internal market, as a broad idea, is clearly an important idea, and we could have seen whether a transversal underpinning set of legislatively defined arrangements were necessary by testing out how things worked in the post-transition period. Clearly there has been a big change. The arrangements envisaged whilst Theresa May was Prime Minister had these three components: the more institutional inter-governmental review, the set of common frameworks, and then, within them, the internal market as one aspect of one of the common frameworks. My understanding actually is that if you go right back to that early stage, even the Scottish Government signed up to looking at the common frameworks when they encapsulated the internal market as one element. Now, with the change of administration, change of Prime Minister, it's pretty clear that the Johnson administration doesn't regard itself as particularly bound or constrained by proposals made by the previous administration. My sense is that what the Scots have objected to is the raising of the internal market to the first, primary and most important of these arrangements, and, for me, there is then a challenge in starting with these internal market proposals and trying to construct them in a way that allows them to catch as much as possible of the potential problems we can speculate might emerge in the future, rather than doing it the other way around, by building up the governance arrangements and experiencing in practice what might come out.

In a sense, this takes us back to a point that Jo made quite a long time ago about what we think an internal market is. So, is an internal market simply an economic space where regulation-based frictions are made illegal, or is it something else? There is another way you can look—. So, for example, if you go back to the White Paper, there's a comparison in the White Paper between Germany and the UK, and the German federal state, according to the White Paper, has more internal friction in its domestic regulatory arrangements within EU membership than the UK has at the moment. So, one of the modelling exercises involved imagining that friction in the UK internally rose to the levels that are present in Germany at the moment. And the White Paper made some arguments about the detrimental effects that would have. But you can also step back and look at that from another point of view and say, 'Well, how does the German economy perform and how does the UK economy perform?' And if that level of friction internally within Germany isn't hugely detrimental to the German economy, why would we imagine that some internal friction would be hugely damaging within the UK? And you then flip that another way around and say, 'Well, actually, one of the effects of an internal market is to allow for experimentation and innovation in regulation, to develop new regulations that may turn out to be socially, environmentally, but also potentially economically beneficial.

So it's not necessarily the case that all regulation is a bad thing for the economy. Some of it might be helpful, productive and generative, and divergent and different regulations potentially give scope for experimentation that we can then learn from across the UK. And there have been examples about minimum alcohol pricing, single-use plastic bags, and so on, where we've seen that kind of innovation spread across the UK under the old system. And, for me, there's an issue about this new one potentially eliminating the scope for that form of innovation coming through in the UK. So, that's, I think, how I'd try to answer. I don't know if that's a direct answer to your question. 

Jo, do you want to add anything to that? 

Only to say in terms of a need for the Bill, I don't think there needs to be everything there is in this Bill in the Bill. We know that those freezing powers—the section 12 freezing powers under the withdrawal Act—could be used, if necessary, to provide a holding situation whilst frameworks are being decided, but there's been no move down that area. But, more generally, we could do more forward thinking about something like the office for the internal market. That could very well be something that all parts of the union sign up to and participate in the governance of, but there's no space here for agreement about that institution and the priorities that that institution will have when it's making its assessment—or there's been no opportunity for a discussion to take place, bringing together different parts of the union, about what the internal market is, what's prioritised and what's valued within that internal market. So, it's not to say that there's not a need for something in this space, but not to proceed in a way that it's been undertaken to date.

Thank you. My second question, then, was just to follow up what I think Dan raised first of all, just so that I've grasped it. And it seemed to be that there was a natural stabiliser in terms of how divergent regulations would get anyway, because the UK Government sets regulations for England—that's 84 per cent of the population, and even more of the wealth generation—and that influences the space of the whole UK, without the need to actually have a legislative mechanism, doesn't it? Because what's possible in Wales and Scotland is always going to be influenced somewhat by English policy, it seems to me. 

Dan, do you want to come in? I'm conscious that we've reached our allocated time. I hope that you don't mind staying on a bit longer. 

No, I'm happy to stay on a bit longer. I wouldn't disagree with what David has just said. There's a sense in which goods that are produced to the standard required for the English market, or the English market is so large that goods will be produced to its standards and then there will be a question for regulators and Governments and legislatures in Scotland and Wales, and perhaps also in Northern Ireland—although let's not open that particular can of worms—to think about whether they decide to impose higher standards or different standards, which would make it more difficult for those companies to supply Scottish and Welsh markets. In the absence of any of this legislation, it seems to me that that would represent a likely constraint on the scope of devolved regulatory powers in the future. That seems to me to be a plausible argument. 

Okay. Mandy.

Thank you, Chair. I'd have loved to have had a proper answer to Huw Irranca-Davies's questions, but I don't feel that they were answered properly. May I just remind both of you that we have left the EU, so there's no good harping on about it?

The internal market Bill, like the withdrawal agreement, it's a living, breathing document. It's ongoing and it needs to be tweaked in favour of the UK and not elsewhere, especially not Brussels. It's a UK document, an internal document. Can I just ask you—? I've got two questions for you, actually. Mutual recognition: please can you tell me what makes you think that the UK is going to diverge and what evidence do you have? I'd like some facts on this, please, and not only just your thoughts.  

Before you answer that, I will highlight that I don't think either witness has actually indicated that we are members of the EU, so I want to reflect that. You've always commented upon the fact of the Bill, and I want to make sure that's clear in the transcript. So, on the question Mandy's asked, Dan, do you want to start? 

Could I just ask for clarification of the question? I'm not sure that I've—

Right, on mutual recognition, what makes you think that the UK is actually going to diverge and what evidence do you have on this, as in factual evidence not just your thoughts? 

I'm assuming that—[Inaudible]—divergence within the UK. 

Yes. 

So, for example, on the regulation of single-use plastics, the UK Government has identified three items—plastic straws, plastic ear buds and plastic stirrers for drinks. As I understand it, the Welsh Government is looking at a longer list of single-use plastic items that would be rendered illegal. My understanding of the operation of—. If that happens, and if these rules were applied, then, for example, expanded polystyrene cups and plates and so on that were manufactured in England could still be sold in Wales, even if their production in Wales, or their import from outwith the UK entirely into Wales, was illegal—that a law was passed in Wales that would render that illegal. So, that's an example of laws that have been passed for England and laws that are envisaged for Wales that are different, and if things develop in the way that we think can legitimately expect that they might, the Welsh regulations would be divergent from those applying in England. But those Welsh regulations wouldn't have the effect that it seems to me that the Welsh Government intends that it would have. So, that's one example. 

Jo.

More generally, if we look across the UK, we know that Scotland want to introduce a piece of legislation that will enable them to keep pace with EU law. And, assuming that England won't do that, then I think, if we are in a position that those two things happen, or commitments are made to keep as close as possible to EU regulations on a range of matters, we'll naturally see some divergence emerge. But at what point that starts to come through—.

But then again, we've copied and pasted most EU laws into UK law anyway, so—. Okay, right. 

My second question—this is specifically for you, Jo. You said initially about the shared prosperity fund. What makes you think that this internal market Bill is a substitute—your words—for the shared prosperity fund? Have you got proof of this and what justifies your comment?

There have been statements made around the Bill. I'm trying to think—was it in the explanatory memorandum? Definitely in the impact assessment. There have definitely been statements to that matter. But, as you say, there's nothing explicit on the face of the Bill that indicates that this is what it is. But that in itself is—. We're in a situation now where transition ends at the end of this year, and the shared prosperity fund has been promised for so long, and, yet, if this is the vehicle, then we still know very, very, very little about how it's going to operate and what principles it's going to operate by. So, if this isn't it, then we haven't seen the shared prosperity fund anywhere else. But, as I say, there have definitely been statements made. I can provide the committee with those after this meeting, in terms of where there's been mention of that. 

Okay, thank you.

And I will add that I remember an interview with the Secretary of State for Wales, who highlighted that he believed the shared prosperity fund could be used for infrastructure projects within Wales, under this Bill, through the Government being handed those powers. Huw, did you want to come back in on something? It's got to be quick because we're 10 minutes over. 

Chair, we're well over time, but it was purely a very practical question that might illustrate this issue of mutual recognition and divergence. If, as we know, for example, the massive impacts of both international global meat production and processing on deforestation in some of our most precious international woodlands—if Wales decided to build on its credentials and say, 'Well, through public procurement at least, which is within the devolved competencies, we want to make sure that all of our supplies come from suppliers that are not adding in any way to deforestation', under the proposals, as I see it, the UK Government could actually say, 'Well, I'm sorry, but that is trespassing on our ground; bad luck.' So, the leadership that Wales has consistently shown, which is part of the reason that I returned here, because I'm proud of that leadership, could be hamstrung by these proposals. So, I'm putting that as a question: whether or not my worry over that is exactly the type of worry that you've flagged up within your document that you've given to us.

Yes, to the extent that that production of a meat product can be brought within the mutual recognition of the market access rules more generally, then, yes, it has that impact. And in terms of the justifications that are available, then protection of the environment isn't recognised under the internal market Bill. 

Thank you.

I am going to draw to a close because we have exceeded our time. I do appreciate very much you staying on to give us that opportunity to add to the discussion. Can I thank you very much for your time this afternoon? We may well call back on you again, because this Bill has not yet finished—it's going to go through its process in the House of Lords and we may see amendments to it as a consequence of that. So, we may well call upon you once again. So, thank you for this afternoon and thank you for your evidence. As you know, you will receive a copy of the transcript. If there are any factual inaccuracies, please let the clerking team know as soon as possible. Okay, thank you.

Before we move to the next item, because we're coming to the end of our public session, I want to put on record my thanks to our deputy clerk, Rhys Morgan, who is leaving the committee after a long time with us. He's been with us since the start of the committee. He's moving on to clerk the Culture, Welsh Language and Communications Committee and I wish him well, after half-term, in that new role. I thank him for all the work he's done for us during his time with us.

We now move on to item 7, and we now go into private session for the remainder of today's meeting as we agreed earlier.