Contents
- Covid-19 (Next Steps)
- Internal Market
Internal Market
The next item of business is a statement by Michael Russell on the internal market. The cabinet secretary will take questions at the end of his statement, so there should be no interventions or interruptions.
On 16 July, the United Kingdom Government published a white paper on the UK internal market. The Scottish Government believes that the unilateral proposals that are made in that white paper, without proper consultation of the devolved Administrations, are unacceptable and unnecessary. I am therefore grateful for the opportunity to make a statement on the matter.
Once we have seen the final proposed legislation, the Scottish Government will provide a full and comprehensive rebuttal of what is intended. However, there is enough in the document, and enough information is now coming from stakeholders about their concerns, to make us believe that we must immediately start the process of defending Scotland against such a blatant power grab.
The UK Government is allowing only four weeks for consultation on its proposals in the paper. That is clearly inadequate and is likely to prevent proper scrutiny. Therefore, I say at the outset that, although we will submit within that timescale a clear note of our opposition to the proposals and will circulate it widely, we will also publish more comprehensive information as the issue unfolds, and particularly once the legislative consent process is under way.
The purported purpose of the proposals is to secure
“a UK-wide approach to ensure that the seamless trade across the UK’s Internal Market is maintained by providing a Market Access Commitment”.
However, there is in fact no threat to that “seamless trade”, so this is a naked political ploy—a predetermined and draconian solution in search of a non-existent problem.
Two principles that are well known in European Union law—mutual recognition and non-discrimination—are to be enshrined in the new legislation, but far from
“minimising domestic trade costs, business uncertainty and bureaucracy”
and “protecting” our national life, enforcing those principles in the way that is proposed will increase bureaucracy and make life more difficult for every business and consumer in Scotland.
The real threat to the prosperity of these islands comes not from the devolved Administrations, but from the current UK Government. It is the UK Government that is causing chaos and confusion and incurring massive costs by its ideological pursuit of a hard-deal, low-deal or no-deal Brexit in the midst of the worst recession in centuries and an unprecedented pandemic.
As of today—some five months before the end of a transition period that could and should have been extended—there is no certainty on tariffs, customs, cross-border flows of data and people, or regulations. In fact, the only certainty is that the new proposals would, for the sole purpose of allowing the UK to do bad trade deals, undermine the high quality and standards that Scotland has set for food production and animal welfare.
That point was made effectively by the distinguished European jurist Sir David Edward, who observed that
“the principles of mutual recognition and non-discrimination are not simple matters.”
He noted that,
“For example, the White Paper omits any reference to the principles of proportionality and subsidiarity which are essential ways of balancing and reconciling conflict.”
He also pointed to a huge volume of European case law and other writing on what he calls a
“highly complex and sophisticated subject”.
The proposed changes would undermine not just the basic foundations of devolution, but all existing mechanisms for co-operation, the development of common frameworks and the entire list of devolved competences.
In reality, the actual purpose of the proposals is all too clear: the UK Government intends to ditch the high regulatory standards that we have enjoyed as a member of the EU, and wants to do so without seeking consent from the people of Scotland. We can be sure that that is the purpose of the proposals, because there is already a workable and constitutionally appropriate way forward to deal with any actual issues that might arise from any threats to internal trade, if they were ever to happen. The way forward is to do what we are already doing: to bring into effect the common frameworks that are currently being negotiated between the UK Government and the devolved Administrations, in line with the principles that were agreed in the joint ministerial committee as far back as 2017.
Indeed, the white paper itself, at paragraphs 87 to 94, sets out the common frameworks programme and admits, at paragraph 88, that it is already creating
“an intergovernmental policy development and decision-making process”
that will
“provide high levels of regulatory alignment in specific policy areas along with roles and responsibilities of each administration.”
The white paper also points out—correctly—that common frameworks can and do work within the devolution settlements, and that they respect the democratic accountability of the devolved legislatures. The Scottish Government has engaged in good faith with the cross-UK project to develop those common frameworks, in line with the agreed principles. We are not the ones who are now tearing up previous agreements in order to veto constructive discussion and to impose an outcome that is designed and desired only by Westminster.
What the UK Government wants is not smooth trade, but to take back control—not just from the EU, but from the people of Scotland, Wales and Northern Ireland. It certainly does not want anything to stand in its way as it wilfully dismantles the high-quality system of regulation and protection that we have inherited from our years in the EU.
The effect of the proposals would be to prevent this Parliament from requiring goods or services that are produced elsewhere in the UK to meet the standards that are decided on by this Parliament. In other words, if the UK Government can simply change the rules for England—probably by using the English votes for English laws procedure, which excludes Scottish MPs—Scotland would just have to accept that decision. Helpfully, the white paper itself even contains examples of where it could do so.
On page 77, in a section that is headed, “Costs of regulatory divergence”, there is a case study on deposit return schemes. On page 78, there is an example concerning food labelling, and on pages 79 to 82, there is a case study on food manufacturing, which covers food hygiene, recycling, animal welfare and environmental matters including pesticides. Page 82 specifically mentions minimum pricing as a regulatory restriction, and on page 85, the paper discusses building regulations and the granting of construction permits. That is a considerable range, and those are only a few examples.
Of course, the mutual recognition principle is intended to be just that. It is meant to be reciprocal, so that the market in England has to accept standards that are set in Scotland, Wales or Northern Ireland. However, it is very clear that, if that were ever to happen in a way that disadvantaged the current Tory UK Government, we would, before you could say “The tail wagging the dog”, find that only rules that were made in Westminster could change the market in England.
My final points concern the implications of the UK Government’s proposals for devolution and governance. There is no commitment in the white paper to seeking legislative consent from this Parliament, and no recognition that the matters in question are devolved or affect the competence of this Parliament.
The white paper clearly says in paragraph 154:
“the evolution and overall shape of the UK’s Internal Market will be overseen by the UK Parliament, and ... key decisions will be put to the UK Parliament for approval”.
The implication is that anything in the underpinning legislation will be reserved from now on. This Parliament will lose any say, even on matters that were initially excluded, such as minimum unit pricing.
The legislation that is outlined in the white paper will require legislative consent under the Sewel convention, and the Scottish Government will recommend in the strongest possible terms that this Parliament not give any such consent, and that the UK Government respect that decision, in line with the rules of our constitutional system.
The white paper also makes clear the UK Government’s intention to centralise control in other areas. Most notably and explicitly, the white paper sets out its plans to reserve the subsidy-control regime. It makes it clear that the devolved Administrations will have no role in designing that regime and that this Parliament will have no role in approving it. In paragraph 173, it says:
“the future subsidy control mechanisms should be the responsibility of the UK Parliament to determine.”
Reserving subsidy control will require the consent of this Parliament under the Sewel convention; again, the Scottish Government will strongly advise this Parliament to refuse that consent and the UK Government to respect that decision.
In paragraphs 128 and 182, the white paper talks of
“clarifying spending powers of all levels of Government and for the UK Government to construct replacements of EU programmes.”
Again, it does not take much thought to realise that those paragraphs mean, among other things, that the shared prosperity fund will replace devolved responsibility for the current EU structural funds. The intention is that that will become a reserved matter and will be solely controlled by the UK Government.
In all this, a consistent pattern is emerging regarding the Tory view of UK governance, which insists on total freedom of action for the UK Government, unrestrained by any requirement to negotiate or compromise. It wants substantial constraint to be placed on powers that are presently held by the devolved Administrations. That is the agenda, and it is being pursued with vigour.
The Scottish Government is committed to co-operation, but it will not be bullied. There are alternatives to the UK Government’s ill-conceived proposals, including taking the voluntary common frameworks programme to its anticipated conclusion.
None of what I have discussed was mentioned even in passing during the 2016 EU referendum or, indeed, in the 2014 independence referendum. In 2014, we were exhorted to “lead not leave”, we were told that a no vote would deliver a “better and fairer Britain” and, of course, we were assured that our place in Europe was secure. In 2016, we were promised that this Parliament would gain more powers, that we would be free to make our decisions and even—Michael Gove himself said this in June 2016—that, if the UK left the EU, on migration
“it would be for Scotland to decide”,
when the reality is that the UK Government is forcing through an end to freedom of movement against the explicit wishes of this Parliament and the people of Scotland.
Not a word that has been said to us in the past six years about those matters has turned out to be true, so it takes no great prescience to realise that all the promises that are being made now will be equally hollow. It is not too late for the UK to turn back from this route, but I can assure Scotland that if it does not, the Scottish Government will fight the proposals tooth and nail, in every possible place, and with no intention of giving way. I hope that it will enjoy the support of the whole chamber in so doing.
The cabinet secretary will now take questions on the issues raised in his statement. I intend to allow about 20 minutes for questions, and I ask members who wish to ask a question to email the business team.
I thank the cabinet secretary for providing advance sight of his statement, but any hopes that he would drop his hysterical and misleading rhetoric on this issue have been quickly dispelled.
The UK internal market is vital for Scottish business and the economy, and supports more than 500,000 jobs. Scottish producers need to be able to sell to our largest marketplace—the rest of the UK—without restriction or barriers to trade.
Sadly, the Scottish Government does not seem to understand that simple point. It would rather engage in constitutional grievance mongering than consider what is best for jobs. What we have heard from the cabinet secretary today simply reinforces the view of one of his Government’s own economic advisers that there is no one in its ranks who understands business or the economy.
I have two questions for the cabinet secretary. First, not one Scottish National Party politician has been able to give a simple example of a power that is currently exercised by this Parliament that will be taken away by the proposals in question. There was nothing about that in the statement. Can the cabinet secretary do any better? Secondly, can he confirm that the SNP wants to see every last one of the powers that we are talking about returned to Brussels at the first opportunity?
I will deal with the second question first. The SNP wants Scotland to be in the main stream of Europe—to be a member of the European Union. Moreover, that is what the people of Scotland want, because that is what they voted for and what they have repeatedly voted for. If Murdo Fraser is not happy to be part of a community of 27 nations—with our joining, there would be 28—that freely shares decision making, he is entitled to that opinion.
However, not a single European nation in the single market would be treated or has been treated in the way that the UK intends to treat Scotland through the white paper. That is clear from the analysis by David Edward that I quoted. The reality is that there is no proportionality, no subsidiarity, no question of minimum standards and no question of national interest prevailing when it comes to decisions. It is purely a case of the UK Government saying, “Take it or leave it, because we know what we’re going to do.”
With regard to his first question, Murdo Fraser’s line is not an original line—it was Michael Gove’s line last week and it continues to be Michael Gove’s line; I am sure that Murdo Fraser enjoys quoting it. However, I could give examples of the kind that he asked for all afternoon—in fact, I should probably simply take schedule 5 of the Scotland Act 1998, read out what is reserved and then talk about everything else, because every single power that the Scottish Parliament has can be undermined and taken away by the UK Government’s proposals.
I have mentioned food standards, but I go back to what I said in my statement, because it is clear that Murdo Fraser was not listening. Other examples are deposit return schemes, food labelling, food manufacture, food hygiene, recycling, animal welfare, environmental matters such as pesticides, minimum pricing, and building regulations and the granting of construction permits. [Interruption.] All those examples are given in the white paper, so my advice to Murdo Fraser and to Michael Gove is to read their own white paper, because it lists the areas in which powers are going to be taken away.
The problem is that it does indeed look like a case of, “Take it or leave it.” That would not be acceptable, and it would be a failure to stand up for the rights of this Parliament and for the people of Scotland simply to take it on the instruction of Boris Johnson.
I would have thought that the one bit of certainty that the whole country would want at this time would be that our NHS will never be on the table in any trade negotiation. However, the Tories, with their majority in Westminster, have ensured that there is no safety net for our NHS when it comes to future trade deals. That is not right, and there are many aspects of the white paper that are not right.
We need to see what is in the legislation when it is introduced, but does the cabinet secretary agree that we must establish the principle that, where we are dealing with devolved areas that require a common framework to be put in place, that common framework must be agreed by the Administrations of the UK coming to the table as equals? Does he also agree that the best way to protect the internal market is through the collaboration and co-operation of all nations?
I agree. Alex Rowley made two very significant points. The first one is that the negotiations on the frameworks continue. It would be perfectly possible—to use that favourite word of the Tories—to “intensify” those negotiations to complete that task before the end of the year. There would be no difficulty in so doing.
The number of common frameworks that we agreed that we would need is 24. Although there is a difference on state aid, we could get all that work finished. Indeed, I know that it is also the Welsh Government’s view that we could do that job. We will be part of that; what we will not be part of and what we will not allow to happen is a power grab.
I want to dwell on Alex Rowley’s second point, which was about public services. Yesterday in the House of Lords, Martin Callanan, answering questions from Dafydd Wigley, gave the game away. When asked whether there was any dispute resolution procedure in the proposals, he said that there was a fine court system—I presume that he was referring to the English court system; I am not sure that he knew that there was a Scottish court system—which could have its place.
That would open the door to any company—particularly one that came to the country after a trade deal had been reached—to say that it was not fair that it was not allowed to compete for public services in Scotland, because it was allowed to compete for them south of the border. Companies will insist on being able to do so in Scotland.
Unfortunately, the courts will be used by such unscrupulous companies to undermine Scottish public services. Why? Because the Tories are going to allow it to happen—indeed, they are going to encourage it.
We have 15 minutes left and 11 members still want to ask questions, so I ask for short questions so that everyone can get in.
I am grateful for being provided with an advance copy of the statement. It is very clear that the white paper is a profound threat not only to Scottish democracy; in the words of the Welsh Minister for European Transition, it
“facilitates a race to the bottom in standards”
from the perspective of Wales, too.
Is it not the case that, in combination with the UK Government’s Trade Bill and its policy in that area, the white paper proposals would potentially lock all future Governments throughout the UK into the same race-to-the-bottom agenda? The people who are in Government in the UK recognise that their failed free market ideology is incompatible with strong Governments that are able to regulate in the interests of the environment, human health and public services. They recognise that that is a fundamental contradiction, and they want to stop all future Governments having the power to act democratically.
Absolutely. There is a strong deregulating agenda south of the border, which is designed to encourage private profit, mostly for the UK Government’s friends, and in those circumstances—I am not going to resile from what I think is blindingly obvious—it is trying to drive deregulation down the throats of Administrations that know that having strong public services and ensuring effective regulation is the right way forward. Indeed, right across Europe countries know that. The odd one out is the UK, and the UK is determined to make sure that it gets its way with Scotland, Wales and Northern Ireland. We will not allow that to happen.
It is deeply frustrating that the UK Government continues to be cack-handed in its relationship with the Scottish Government. Surely what we need is an effective dispute resolution procedure between the nations and regions of the UK so that we can agree the way ahead on areas of common interest such as the one that we are discussing. We have argued for that before, and it would be good to have the Scottish Government’s support for that proposal.
I entirely support that proposal. I can tell the Parliament that it was meant to be at the heart of the new proposals on intergovernmental relations arising from the intergovernmental review.
There are two problems with that. One is that nothing has come from the UK Government. We have been waiting to see that document for months; it has had a gestation period much longer than an elephant’s. We have had nothing at all from the UK Government on those matters.
The second problem is what Martin Callanan said yesterday in the House of Lords. If there is going to be an entire reliance on the courts for those matters, there can be no effective dispute resolution procedure, because it would be overruled by the courts.
In those circumstances, I am happy to make common cause with Willie Rennie on the issue. If the UK Government were to bring a dispute resolution procedure—a set of arrangements that treated the four nations of these islands as equals—we would be there to agree it. We have other ambitions, but of course we would agree it; the Welsh would, too.
However, the UK Government is not bringing that forward. What it wants is simply to intervene legally to stop us doing things. I hope that we will have the support of Willie Rennie and his party in resisting that.
It seems to me that, within the EU—for example, with structural funds—we had quite a lot of freedom as regards our ability to act within a framework, whereas it now appears that, within the UK, with the shared prosperity fund, we will have virtually no freedom to move at all. Can the cabinet secretary confirm that?
I think that that is an inevitability, given where the UK Government is going, and we must oppose it vigorously.
The idea is that the Scotland Office and the Wales Office would administer the funds, building an empire for the Secretary of State for Scotland and the Secretary of State for Wales, and would ignore the devolved Administrations. Those funds are already administered by the devolved Administrations. There has not been a single argument in favour of taking away that ability. Those funds should, if anything, be simpler to access and closer to people, but the Secretary of State for Scotland wants to have his empire, he wants money to fund that empire, and that is where he is looking to get it.
The Fraser of Allander institute estimates that more than half a million jobs in Scotland are supported by demand for our goods and services from the rest of the UK. Given that, and in light of the fact that the Scottish Government withdrew from work on the UK internal market more than a year ago, will the cabinet secretary commit to working with the UK Government to establish common frameworks that will prevent unnecessary damage and thus avoid putting hundreds of thousands of Scottish jobs at risk?
I will take the positive part of that question first. Donald Cameron is a persuasive man. If he is capable of persuading his colleagues south of the border to withdraw those proposals and return to the table on common frameworks, I will support that. I have made that clear—I have never left the table on common frameworks. We withdrew from the discussion on the internal market because it was obvious where it was going; the UK Government intends to impose. We made it clear that we would not have common frameworks imposed, but for more than two years we have been able to agree on common frameworks. Every three months, the relevant secretary of state in England—it is presently Michael Gove—has to publish a report that says that the common frameworks material is going ahead and that there has been no need to impose. That has happened in every single report. We cannot say that now, because the UK Government will now try to ignore that and impose them. If Donald Cameron can persuade the UK Government to withdraw the badly drafted and malicious white paper, I will agree to that; if he cannot, I will not.
The UK Government has signalled its intention to grab powers to set laws around state aid. What are the implications of that for the Scottish Government’s ability to protect strategic industries and jobs in Scotland?
It is essential that there is an effective state aid regime. Moreover, given the role that the Scottish Government has had in industrial strategy and in developing and building business in Scotland, it is important that it is done with a knowledge of the Scottish economy. That is why state aid is devolved. The UK Government wants to reserve it because it wishes to create either a much lighter regime or maybe no regime at all. People might have seen speculation in the press that that has been driven by Dominic Cummings and that he wants no state aid regime. If the UK Government insists on that, it will not be able to get an agreement with the EU, but having no regulations might be where it is going. Why would it have no regulations? Because it could then spend money willy-nilly on buying votes. That is the reality—that is what it will endeavour to do.
We need an effective state aid regime. Again, common frameworks can provide that, so, if Mr Cameron is compiling a list of those areas where work could be done, here is another that he could put in. We could have that discussion on a state aid regime through the common frameworks, but the UK Government would have to withdraw what is in the white paper, because it is a naked power grab and it is trying to find a solution to a problem that does not exist.
The devolution settlement must be protected, but any change to powers or trading relationships must have regard to economic impact. What tests does the Scottish Government propose in order to ensure that any changes to powers will also protect jobs and economies within the UK internal market and Scotland?
The member is aware that, as the established constitutional order, devolution has checks and balances within it. Those checks and balances do not prevent internal trade—it is obvious that, since devolution was established, internal trade has grown—but they allow priorities to be set. The UK Government is trying to impose something different by whipping up non-existent fears about the UK internal market.
As I said, over the next few weeks and as the process continues, we will publish more evidence to show that the frameworks process is the right process to go through. That evidence will also indicate the positive nature of using the frameworks to encourage some economic activity. However, given that Brexit will be economically disastrous, as I am sure the member remembers, we will be doing so against a declining economy. The UK Government will have not only the disaster of the Covid recession but the self-inflicted disaster of the Brexit recession. It will be very hard to cope with both—in fact, it will be impossible to cope with both.
One of the powers that the UK Tory Government seeks to deny Scotland—to our obvious detriment—is the ability to decide where to provide subsidies. That will impact directly on this Parliament’s capacity and capability to support our economy. Can the cabinet secretary provide an example or two of where such interventions have taken place, which, in the future, will be at the mercy of capricious Tory ministers?
Clearly, there is an elaborate cross-Government process whereby money is allocated and used in order to develop industry, business, agriculture or fisheries. That is a sensitive matter, because the way in which money comes in or in which other moneys come from elsewhere has to be judged carefully so that competition is not distorted. Knowledge of the economy is therefore extremely important. If decisions on those moneys are taken elsewhere—which is probably what will happen, because that is what the UK Government wants—the consequent lack of knowledge of our economy will mean that it will not be possible to do some important things such as encouraging small and medium-sized enterprises and growing the digital sector or crofting, which is dear to my heart. That will not be possible if the state aid regime is administered elsewhere by people who know nothing about crofting, for example.
The subject is clearly going to be a lengthy source of grievance for nationalists. As for the cabinet secretary’s comments on constructive engagement, last year he pulled his civil servants out of joint work with the UK Government to strengthen the internal market on the spurious ground that there was no such thing. Does the cabinet secretary now accept, as a starting point, that there is a single market and that his position puts us at risk?
Not surprisingly, I do not accept that. The member needs to be accurate in his terminology. On the question whether there is a single market as the definition of a single market is understood in Europe, the answer is no. Is there an internal market? Yes, there is. Can we trade across different regulatory regimes in the internal market or globally? Yes, of course we can. Unless the member believes that there should be no trade across different regulatory borders or systems, his position is—shall we say?—incoherent.
Scotland has a world-leading food and drink sector that is renowned for its high quality. Much of the growth in the sector is down to its excellent reputation. Does the cabinet secretary share my concern that, if the UK Government accepts lower standards, that hard-won reputation could be compromised?
I do accept that, and I know that that is also the view of many niche food and drink producers and, more widely, of the industry itself. There is substantial concern about that, and, in such circumstances, the right way to defend against that situation is to have means by which we can defend niche or growing industries. One of the greatest successes in Scotland in the past 10 to 15 years has been the growth of the Scottish food and drink sector. It has been wonderful, and we know of many producers who do an exceptional job and do exceptionally well. Their livelihoods are put at risk by the UK Government’s proposals.
I emphasise the four European Union environmental guiding principles of precaution, prevention, rectifying pollution at source, and the polluter pays, with which I know the cabinet secretary agrees. In his view, what is the best way to maintain and build on European standards for our environments across all four UK nations, in relation to devolved issues, and to ensure that the common frameworks reflect those?
I thank the member for that very good question. She and I share a passion for getting environmental regulation right. The Cabinet Secretary for Environment, Climate Change and Land Reform is bringing forward with me the UK Withdrawal from the European Union (Continuity) (Scotland) Bill, which will include proposals for keeping pace with European environmental regulation. The Northern Ireland Administration will also be keeping pace in developing regulatory standards alongside the EU.
We need to make sure that we can square that circle through the framework process, and we will do that by negotiation. What the UK Government proposes would sweep that away, with the message that the UK Government is not interested in negotiation and will simply impose standards that are set at Westminster, probably without involving Scottish MPs. That would be the worst way of doing things. I think that the member is going to support us—which I am glad about—in trying to prevent that from happening.
It is clear that Scotland’s democratic decisions are being actively undermined by the UK Government. Does the cabinet secretary agree that the only way for us to properly protect Scotland’s interests is to become an independent country? [Interruption.]
It is amazing how, when a word of truth is spoken, the Tories really get excited. They cannot take a word of truth.
I have spent my political career believing that Scotland should be a normal nation, and I do not resile from that view in the slightest. I know that there are people in the chamber who do not agree with me on that subject, but I am very glad to work with people who do not agree with me but who recognise the importance of devolution and, as we have heard from Labour and Liberal Democrat members, the need to ensure that the devolution settlement is protected. Without the devolution settlement in place, we would have even more problems.
That is the nature of the agreement that I have sought and that I have on a practical basis with, for example, the Welsh Labour Government. Very early on, Mark Drakeford and I said that, although we do not agree on the final destination, we are on the same journey—the journey to ensure that our countries have effective legislatures that can protect and promote the good things in our countries. I welcome that collaboration.
Will I ever walk away from the idea of independence? No, and it’s coming yet for a’ that.
That concludes questions on the statement.
Meeting closed at 14:35.Air ais
Covid-19 (Next Steps)