LABOUR must reform the Internal Market Act or risk consigning devolved governments to “years of inertia, delay and uncertainty,” campaigners have warned.

The post-Brexit Act was passed by the Tories in 2020 with the aim of harmonising legislation within the United Kindgom and creating a nationwide single market, limiting the legislative powers of devolved administrations in economic policy.

A new report for Scottish Environment Link (SEL), a charity which brings together more than 40 different environmental groups, argues that the legislation is stifling innovation.

The report’s author James MacKenzie said that despite devolution being introduced to “great fanfare,” two decades on “those devolved institutions were radically undermined [by the Act] in a way many people are still not aware of.”

Pointing to Scotland’s failed deposit return scheme for bottles and cans as an example, Mr MacKenzie branded the Act “a mechanism unfit for the governance of four nations.”

He urged the Westminster government to undertake the legislative “keyhole surgery” required to help “devolved institutions flourish again.”

SEL chief executive Deborah Long said the role of devolution as “part democracy, part test-bed” had now “come to a grinding halt under the Internal Market Act.”

“Devolved governments and parliaments are now wary of prolonged tussles over measures which had been well within their power for two decades,” she said.

“If the changes proposed in our report today are not adopted, we face years of inertia, delay and uncertainty, just as all the indicators show we should be acting more urgently than ever before.”

A Westminster government spokesperson said: “We are beginning a broad review of the UK Internal Market Act this month and will be consulting widely.”

 SNP Deputy First Minister Kate Forbes said: “The Scottish government is clear that the statutory review must lead to the Act’s repeal, with the powers of the Scottish Parliament fully restored.”