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Will Westminster take back control?

How much of a threat could plans for the post-Brexit UK internal market be to devolved housing policy? Matt Dicks assesses some worrying evidence.

Earlier this month, CIH Cymru wrote to the Secretary of State for Wales seeking clarity on the proposals contained within the Westminster Government’s white paper on the internal market.

I, like many other housing professionals, had assumed that it was a piece of legislation focussed on homogenising sectors like food, drink, pharmaceuticals etc. across the UK for the purpose of international trade deals, such as the one  looming with the United States.

However, I then read the rather sobering analysis from the excellent Senedd Research Service.

At the heart of the legislative proposals is ensuring market access across the UK based on the two key principles of ‘mutual recognition’ and ‘non-discrimination’. But with little detail on how these principles would apply in practice.

Could for example, the proposals impact on how Welsh housing policy is determined in future?

The wording in the White Paper suggests that ‘mutual recognition’ means that if a business meets a regulatory threshold in one nation then it will be accepted in all other nations, without any further compliance. Whereas ‘non-discrimination’ will mean that a national government cannot set higher standards for people, goods or services from other UK nations that it does for its own.

So, what does that mean for the housing sector?

Well, the White Paper specifically cites the example of building regulations as a barrier to trade and as an argument for internal market legislation – ‘Complexities in key sectors such as construction could arise, were differences in regulations to emerge over time….( if there was regulatory divergence it would be) more difficult for construction firms to design and plan projects effectively across the UK.’

If it is the intention that the internal market will capture building regulations, then we require further clarity on how differences in approaches that exist now will be accounted for, in addition to those differences that develop in the future.

Standards such as the Welsh Housing Quality Standard, Homes for Life, Development Quality Requirements play an important role in safeguarding the reputation of our members as organisations delivering high quality social, affordable and market-sale homes across Wales.

But the specific inclusion of building regulations in the White Paper does suggest that construction companies could seek to build new homes while disregarding national standards and legislation, so long as it was complying in one of the four nations. In layman’s terms, could a developer based in England be able to build homes in Wales but only have to meet the regulatory standards set by the Westminster Government? Would this undermine the Welsh Government’ own desires to see Development Quality Requirements evolve further in Wales and apply across all tenures by 2025.

It’s worth noting that the White Paper also specifically mentions private landlord licensing and registration as a barrier to ‘mutual recognition’ and ‘non-discrimination’

If Northern Ireland has a different scheme for authorising private landlords in Northern Ireland, would the principles of mutual recognition and non-discrimination apply? As the Senedd research paper asks:

‘Would a person who carries on business as a private landlord in Northern Ireland be permitted to carry on business as a private landlord in Wales by satisfying the Northern Ireland rules, but not the Wales rules?’

But there’s a wider perspective than the housing sector here as outlined by commentators such as Professor Nicola McEwan, who had argued that:

‘Given the relative size and dominance of the market in England relative to the rest of the UK, under a principle of absolute mutual recognition there would be an economic imperative for companies to produce to the standards set for England by the UK Government – be they lower or higher.

‘Therefore, while the devolved governments may not face any new legislative constraints, there would be a practical policy impact of placing their producers or service providers at a comparative disadvantage – even on justifiable social or environmental policy grounds, compared to elsewhere in the UK.’[1]

At their heart, the overarching principles set out in the White Paper are in themselves positive. The housing sector in Wales wants to see increased economic opportunities, improved welfare and economic security for everyone in the UK. However, until we have greater clarity on the legislation this White Paper unfortunately only raises concerns about where the parameters of housing policy in Wales will be set in the future.

Matt Dicks is director of Chartered Institute of Housing Cymru

[1] https://senedd.wales/research%20documents/20-30-internal-market/2020-30-eng-web.pdf

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