Official Report 1177KB pdf
The next item of business is a debate on motion S6M-03389, in the name of Clare Adamson, on behalf of the Constitution, Europe, External Affairs and Culture Committee, on the United Kingdom internal market inquiry. I invite members who wish to participate to press their request-to-speak buttons or place an R in the chat function.
I call Donald Cameron to speak to, for around seven minutes, and move the motion.
14:58
I am speaking on behalf of the Constitution, Europe, External Affairs and Culture Committee, and I pass on the apologies of its convener, Clare Adamson, who is currently self-isolating.
In her absence, I take the opportunity to thank her for her work on the inquiry and report. I also thank other colleagues on the committee for their constructive and consensual approach to this important area of work. I see many of them in the chamber today and I look forward to hearing their contributions.
In its consideration of the UK internal market, the committee identified three significant and interrelated tensions that arise from, and/or have been exacerbated by, the UK leaving the European Union: first, tension between open trade and regulatory divergences; secondly, tension in the devolution settlement; and thirdly, tension in the balance of relations between the Executive and the legislature.
I intend to concentrate on the first and second of those tensions. With regard to the first, one of the main themes of our inquiry is the tension that can exist between open trade and regulatory divergence in the constituent parts of an internal market. The committee’s view is that it is essential in resolving that tension that the fundamental principles that underpin devolution are not undermined.
At the same time, the committee recognises the significant economic benefits of the UK internal market and open trade, and believes that it would be regrettable if one of the consequences of the UK leaving the European Union is any dilution in the regulatory autonomy and opportunities for policy innovation, which has been one of the successes of devolution.
The UK Internal Market Act 2020 seeks to address the tension between open trade and regulatory divergence. It creates two market access principles: the mutual recognition principle and the non-discrimination principle. All devolved policy areas could be impacted by those principles, although some exemptions are provided in the act.
The committee recognises that the principles do not introduce any new statutory limitations on the competence of the Scottish Parliament or Scottish ministers, but they can automatically disapply Scottish legislation. Although the 2020 act might not affect the Scottish Parliament’s ability to pass a law, it might have an impact on whether that law is effective in relation to goods and services that come from another part of the UK.
The committee also recognises the significant differences between the market access principles within the 2020 act, and principles that operate within the EU single market. In particular, the list of exclusions on public interest grounds from the application of the mutual recognition principle are much narrower in the act.
There was a clear consensus in the evidence that the committee received that the 2020 act places more emphasis on open trade than regulatory autonomy compared to the EU single market. The evidence that we received suggests that, in seeking to resolve the first tension that I described, the act has shifted the balance in the devolution settlement away from regulatory autonomy by privileging market access. The committee has therefore written to the UK Government and invited ministers to explain how the act will provide
“as a minimum, equivalent flexibility for tailoring policies to the specific needs of each territory as is afforded by current EU rules.”
At the same time, the committee recognises that the common framework programme provides an opportunity to manage the tension between regulatory divergence and open trade on a consensual basis.
The committee notes that the published common frameworks do not generally provide for minimum standards or for common approaches as set out in the joint ministerial committee principles; rather; they appear to be technical documents that provide for ways of working for Government officials that might include agreeing UK-wide or Great Britain-wide minimum standards for a common approach. The published documents are therefore limited in their ability to improve public awareness and understanding of policy areas in which a UK-wide or GB-wide approach is likely, and they also provide limited information on minimum standards.
The committee is therefore concerned that the published documents have not provided the certainty and clarity that businesses, consumers and other stakeholders expected the frameworks to provide. The committee therefore believes that there is a risk that the emphasis on managing regulatory divergence at an intergovernmental level might lead to less transparency and ministerial accountability, and tension in the balance of relations between the Executive and the legislature, which is something that I hope to explore in my closing speech.
Our report demonstrates that an understanding of how the act affects policy and legislation needs to be embedded within the Scottish Parliament’s scrutiny processes and procedures. Equally, an understanding of how common frameworks impact on policy and legislation is essential. The convener discussed that with colleagues on the conveners’ group last week. A key issue considered was the importance of interparliamentary working in addressing parliamentary oversight and stakeholder involvement in intergovernmental relations. That was one of the main issues considered at the very first meeting of the interparliamentary forum, which I attended with the convener last Friday in the House of Lords. The forum agreed the terms of reference, including ensuring appropriate levels of respective ministerial accountability and transparency in a range of areas, which, in many cases, might require new scrutiny processes.
Initial priorities for the forum will include oversight of intergovernmental relations, including agreeing a joint annual report on addressing common scrutiny challenges, and we look forward to continuing that work with colleagues from the House of Commons, the House of Lords, the Northern Ireland Assembly and the Welsh Senedd.
Finally, as a general observation on our report, we found that—as is illustrated in our report—there is a deal of complexity in the post-EU regulatory environment in Scotland. That presents a huge challenge for policy makers, legislators and those seeking to influence the policy-making and legislative process.
I move the motion in the convener’s name,
That the Parliament notes the Constitution, Europe, External Affairs and Culture Committee’s 1st Report 2022 (Session 6), UK Internal Market Inquiry report (SP Paper 113).
15:05
I am delighted to follow on from the committee’s deputy convener. Both in my opening speech and in summing up, I will speak directly to some of the points that he has raised in his opening remarks.
I begin by thanking Clare Adamson and wishing her a speedy recovery, and I pay tribute to all members of the Constitution, Europe, External Affairs and Culture Committee. I am a regular attender at the committee, and I know how much work all of its members undertake. In a unicameral parliamentary system, the role of committees is absolutely vital in ensuring that oversight and interworking between members of the Scottish Parliament and the Scottish Government are as efficient and effective as they can be and that we learn—especially when dealing with complex issues regarding the options going forward, as we are doing in this case.
The Scottish Government will take time to study the wide-ranging conclusions and recommendations in the report, and we will provide a full repose to the committee in due course. For today’s short debate, however, I will concentrate on a few key points, just as the deputy convener did.
I will start with what is perhaps the most important point in this and other related debates: people in Scotland voted overwhelmingly to remain within the European Union. Scotland has been forced out of the EU and, worse, it has been forced into a hard Brexit outside the single market and the customs union, against the will of the majority of people in this country. Such a democratic outrage, with such damaging effects, should never be normalised or ignored, and the passage of time does not make it any more acceptable. The legislation—and, therefore, the committee’s report and this debate—would not be happening if the democratic wishes of people in Scotland mattered in any way to the Conservative Government at Westminster.
The fact that the United Kingdom Internal Market Act 2020 drives a coach and horses through the devolution settlement further demonstrates the contempt that Westminster has for those wishes. The committee’s report discusses trade links between Scotland and the rest of the United Kingdom. Under any constitutional future, those links will continue to be important, and the rest of the UK will, of course, continue to be Scotland’s closest friend and neighbour. It is interesting to note that, over its years of EU membership as an independent country, Ireland has diversified its trade into Europe and has become less dependent on the UK. The more it has diversified and grown its trade with the EU, the wealthier it has become.
One of the many self-inflicted wounds from the UK Government’s hard Brexit is the fact that we have left the rules and institutions of the European Union, a single market that protected the powers of the devolved institutions while ensuring that there were no unnecessary barriers to trade across these islands or, indeed, with the European Union. The European single market, the world’s most advanced and sophisticated internal market, is based on co-operation, co-decision and equality among member states, and it offers a model of how to balance market efficiencies with the ability to set rules at a local level—the first tension that Donald Cameron spoke about.
Will the minister give way?
Of course. I would be delighted to give way to Willie Rennie.
Does the minister not think that there are some lessons here for those in the nationalist movement, such as that breaking up long-term economic partnerships is damaging, protracted and bad for business? Should he not learn the lessons instead of trying to repeat them?
I am sorry that Willie Rennie did not listen to what I said immediately before he intervened on me, in relation to Ireland’s experience. Ireland has become wealthier and has exported more. Unfortunately, Willie Rennie wishes to maintain dependency on one single market that is significantly smaller than the larger one that we have just been forced out of.
How different—
Will the cabinet secretary take an intervention?
Forgive me, but I want to make some progress.
How different that is from the fundamentally flawed internal market regime ushered in by the UK Government’s United Kingdom Internal Market Act 2020—an act imposed on this Parliament without its consent and imposed on the people of Scotland despite their overwhelming rejection of Brexit. It is an act that, at its heart, sees devolution as a problem to be fixed in a UK that is conceived of as a unitary state to be controlled by Westminster rather than a voluntary political association of nations.
The Scottish Government warned from the outset that the 2020 act represented a fundamental change to the devolution settlement that people voted for in 1997—a change achieved by stealth, and a chipping away at the powers and responsibilities of this Parliament. The committee recognises—unanimously, across all political parties—that the 2020 act
“can automatically disapply Scottish legislation”.
That is extraordinarily serious and alarming for anyone who cares for Scottish democracy. Laws that are passed in this Parliament, by democratically elected MSPs, can be radically undermined by the 2020 act. As the committee puts it,
“While”
the 2020 act
“may not affect the Scottish Parliament’s ability to pass a law, it may have an impact on whether that law is effective”.
Surely, that cannot be acceptable to any member of this Parliament, regardless of their party.
It is not just the Scottish Government and the committee who are raising these concerns. The overwhelming weight of evidence from across Scottish society and the near-unanimous views of legal experts and constitutional academics support that view. Witnesses to the inquiry have laid bare the negative impact of the 2020 act.
If I may, Presiding Officer, let me quote just a couple of examples that were identified by the committee. It said:
“There is a clear consensus within the evidence which the Committee received that”
the 2020 act
“places more emphasis on open trade than regulatory autonomy compared to the EU Single Market.”
The animal protection charity Onekind was of the view that the 2020 act
“undermines devolution and will limit the ability of the Scottish Parliament and Government to improve farmed animal welfare standards.”
Will the cabinet secretary take an intervention on that point?
I would be happy to.
The cabinet secretary is beyond his time already.
Am I beyond my time already?
You are.
Forgive me. May I move on to my peroration, briefly?
Yes.
That is very kind.
Time constraints prevent me from touching on all the issues raised by the committee’s report, from the interactions with the UK Withdrawal from the European Union (Continuity) (Scotland) Act 2021 to the increasingly complex challenges that the Parliament faces in fulfilling its scrutiny function. However, I look forward to responding in writing to the committee on all those matters.
The central issue remains the one that I have focused on today: the profound damage that the 2020 act is doing to the devolution settlement. It is an internal market regime that has been imposed on its constituent members without their consent. It is democratically unsustainable and unjustified, and the act should be repealed.
15:13
I thank the clerks, witnesses and colleagues for their work in putting together this important report.
It is right to acknowledge that the UK’s internal market is of vital importance to the Scottish economy. Trade with the UK represents 60 per cent of Scotland’s export markets. Protecting Scotland’s ability to trade freely and fairly with the rest of the UK is essential, and the United Kingdom Internal Market Act 2020 is designed to do exactly that. It also prevents the emergence of new trade barriers, given the potential for increased regulatory divergence between different parts of the UK, and it enshrines in law the market access principles of mutual recognition and non-discrimination.
One SNP argument is that the 2020 act will provide a green light for the UK Government to halt progress in the setting of regulations and standards, which, in turn, may effectively prevent the Scottish Government from setting regulations and keeping pace with emerging EU legislation. That, of course, was one of the SNP’s main arguments for the introduction of the UK Withdrawal from the European Union (Continuity) (Scotland) Bill. In reference to that bill, Mike Russell said that
“proposals on environmental principles and governance will also help us to maintain high standards, in line with the EU, in Scotland.”
Let us look at the evidence. In the area of environment and climate change, which was allegedly of great concern to the SNP, it told us that the UK Government would, at the earliest possible opportunity, roll back environmental targets and regulations and seek to diverge from the EU. The evidence shows that the UK Government did, indeed, take the first possible opportunity to diverge from the EU with regard to environmental targets—it increased them, making the UK more ambitious. The UK has set a target of a 68 per cent reduction in carbon emissions by 2030. The EU’s target is only 55 per cent. If we had still been in the EU, we would also have been signed up to a target of 55 per cent.
Does Maurice Golden agree that the EU’s targets are minimum targets and that there is nothing to prevent other European countries from going above and beyond those targets?
In some areas, there would be restrictions and an inability to meet our targets, such as our net zero target.
I will give an example. In legislating for England, the UK Government has diverged significantly on agriculture policy since Brexit, which has been possible only because of Brexit. It is going considerably further than the EU when it comes to supporting sustainable agriculture and farming practices, all of which should accelerate the move towards net zero. That would not have been possible if the UK had still been in the EU.
Will Maurice Golden give way on that point?
I would like to make some progress. I have just answered a question.
In addition, the UK plans to end the sale of petrol and diesel cars by 2030, whereas the EU’s target is 2035. There has been no roll-back on regulations. In fact, in areas such as the environment, the UK has made even firmer commitments than the EU has.
Meanwhile, in Scotland, the SNP continually fails to meet environmental and climate change targets and seems to have diverged from the EU’s targets, despite the fact that its policy position is to align with them.
When it comes to protecting the devolution settlement through the implementation of the United Kingdom Internal Market Act 2020, the UK Government is committed to working with the devolved Administrations on the principle of respecting the reserved powers of each devolved Government. In short, there is a relationship of mutual respect and trust. The recently published review of intergovernmental relations sets out new structures and ways of working that provide a positive basis for productive relations and that facilitate dialogue when views are aligned and resolution mechanisms when they are not. Through the existing common frameworks and the introduction of new ones, if that is required, any tensions within the devolved settlement can be resolved by managing regulatory divergence on a consensual basis.
At some point in the future, there will undoubtedly be situations in which constructive dialogue is required. If the SNP wants to act in the best interests of Scotland, it will engage constructively. If it wants to sow division, cause conflict and take the opportunity to promote its separatist cause, it will not engage constructively, but that would be to the detriment of Scotland’s economy and its people.
15:18
It is a pleasure to open the debate on behalf of Scottish Labour. I thank the committee and its members for their report. It is an in-depth and considered look at a topic with many strands, and the committee has done well to pull them all together. I also thank the many witnesses who contributed to the committee’s inquiry. The sheer breadth of their expertise is impressive and has provided us with a considerable resource as we proceed to consider these matters.
It is clear that the creation of the United Kingdom Internal Market Act 2020 was a watershed moment. It not only signalled the effective end of the immediate Brexit process, but inaugurated the new and uncomfortable era in which we in the devolved Parliaments and Assemblies of this country now find ourselves. The committee’s report does a good job in highlighting the tensions that are at play between the devolved institutions and Westminster, and it provides constructive commentary on how those tensions might be mitigated in the future.
It is necessary to look back briefly at how we got into this situation. It was clear to everyone that certain powers would be repatriated when the UK left the European Union. It would therefore have made sense for the UK Government to engage with the devolved Governments and institutions to arrange how that would work in the context of the devolved settlement. The fact that it did not do so and we are now in a situation of considerable tension within the devolved settlement illustrates that devolution works best when Westminster and the devolved nations work together, rather than apart.
I hope that future Governments learn the right lessons from that experience. It is unfortunate that we find ourselves in a situation in which an act of the UK Parliament was created despite the withholding of legislative consent in Scotland and Wales. However, we are where we are. Scottish Labour remains committed to devolution and to allowing it to work well. Let me move on to the tensions that are set out at the heart of the report and the committee’s suggestions on how they might be resolved.
On the tension between free trade and regulatory divergence, the committee’s view appears to be that the UK Government has got the balance very wrong. We in Scottish Labour agree. We agree that there needs to be room for Scotland to innovate in policy and in its economy, and that the UK Government has come down too harshly on the side of being prescriptive about what must be done in devolved areas. We are concerned that, in effect, the 2020 act reinforces the Tory free-market view of the world and stifles Scotland’s ability to set its own standards in public procurement practice.
On the principles of non-discrimination and mutual recognition, Scottish businesses, particularly in the agriculture sector, could be put at risk if the Tories pursue their worst regulatory instincts and insist on lowering the standards to which we have become used over the past few decades. However, I am pleased that the committee, having examined tensions in that regard, underscores the importance and economic benefit of open trade across the UK.
I note that the committee heard examples of complete or near-complete integration of supply chains within the UK. It surely follows that the imposition of trade barriers within Great Britain, which would happen eventually under the Scottish Government’s plan for independence, would cause significant disruption to such supply chains and the wider economy. Certain members might not like to hear that, but it is the logical consequence of there being such deep integration in our economies.
The report makes it clear that there is room within the common framework to work through some of the tensions that the United Kingdom Internal Market Act 2020 has caused in the devolution settlement, but it also highlights the risk of creating a power imbalance between executive and legislative functions across the UK. That is a crucial point. It is perhaps not surprising that it is committees of this Parliament and the House of Lords at Westminster that are highlighting the tensions and distinct lack of transparency in the intergovernmental system.
To put it simply, members of this Parliament and other legislatures across the UK need to be able to see and comment on the processes to do with the common frameworks, and so, too, do other stakeholders in the economic and regulatory environment. We cannot possibly repair confidence in our devolved settlement if all the work to do so is done in the dark, away from the eyes of people with an interest in the system and how it is supposed to function.
I am grateful to the committee for all its work in bringing those concerns to the Parliament. Labour members look forward to engaging with continuing work to address the matter in future.
15:25
I commend the committee for its hard work and Donald Cameron for stepping in at the last minute and making a considered speech in which he set out the three tensions that exist in this debate.
The fact that the debate is still dragging on six years after we voted to leave the EU and two years after we actually left it is further evidence that breaking up long-term economic partnerships is hard to do and damaging. It is a lesson not only for the advocates of Brexit, but for the advocates of independence, who think that breaking up the UK would somehow be a breeze in comparison. The truth is the opposite, and the sooner the nationalists understand that, the better off we will be.
Will Willie Rennie give way?
I will not just now.
I am pleased that the committee recognises the economic benefits for businesses and consumers of ensuring open trade across the UK.
Will Willie Rennie give way?
The members who are trying to intervene reject the significance of the UK market and, by contrast, believe that the EU market is somehow essential. That ignores the 21 per cent of domestic expenditure on goods that originated in another part of the UK that is part of Scotland’s economy. Agricultural exports to the rest of the UK were worth £855 million in 2018. The highly integrated supply chains across the United Kingdom are incredibly important, too. The truth is that both markets were important, but we do not compound the chaos of leaving the EU with the chaos of leaving the United Kingdom.
The minister spent most of his speech advocating independence rather than addressing the content of the report, but I will not make that mistake. The committee is correct to highlight the regulatory innovation tension with devolution. Policy that is developed in Scotland is often adopted elsewhere in the United Kingdom, and vice versa. The ban on smoking in public places is an example.
There was a consensus in the committee and among its witnesses that there is a tilt towards market access over regulatory differentiation compared with the EU experience. Perhaps that is because the UK Government is anxious about its ability to secure good trade agreements compared with the European Union. Perhaps the United Kingdom’s hand has been weakened now that it is no longer part of a wider union with the European countries. That is another lesson for nationalists in the Parliament.
Professor Armstrong put it succinctly, saying that the act
“places too much emphasis on market liberalisation over local rights to regulate”.
We do not want to have a suffocating straitjacket that snuffs out difference.
The fact that not all the common frameworks have been agreed is bad for business and is a poor reflection on the ability of our two Governments to work together. People expect our Governments to work in partnership to fix problems, not to pontificate endlessly about their different constitutional positions. However, I sometimes think that our two Governments like nothing more than a good rammy to justify their existence.
That is why we need a federalist solution to resolve differences between the constituent parts of the United Kingdom. When there are disagreements, it should not be the UK Government that has the final say. We need a partnership in the form of qualified majority voting or something similar. We need to entrench the principles of co-operation, partnership and federalism at the heart of the operation of the common frameworks and the trade and co-operation agreement governance committees. I agree with the committee that an interparliamentary forum to mirror the intergovernmental arrangements would help with the scrutiny of any agreements and public awareness.
The committee briefly explored the UK Subsidy Control Bill, which contains the successor to the EU state aid rules. It is currently in the House of Lords—
You need to wind up, Mr Rennie.
We should return to that major piece of work, because it will have a big impact on the way in which this country operates.
I commend the committee for its work and I look forward to the rest of the debate.
We move on to the open debate.
15:30
I, too, put on the record my thanks to those who gave evidence to the CEEAC Committee inquiry, the clerks and my fellow committee members. I also wish Clare Adamson a speedy recovery.
I agree that there is a great deal of complexity in the United Kingdom Internal Market Act 2020. Professor Jo Hunt, in her evidence, said that the act views devolution as
“an obstacle and a potential irritant”—[Official Report, Constitution, Europe, External Affairs and Culture Committee, 2 December 2021; c 19.]
to the economic integration of the UK. However, we live in a devolved UK. For Scotland, economic integration that is driven by the needs of London and the south-east of England is not what we need.
As Jonny Hall from NFU Scotland said,
“It is vital that the Scottish Government is able to continue to support Scottish farmers and crofters in a way that is most appropriate for Scottish circumstances to deliver the outcomes that we want around food production, climate, biodiversity and so on.”—[Official Report, Constitution, Europe, External Affairs and Culture Committee, 16 December 2021; c 15.]
I recognise that assessment from meeting my crofting and farming constituents in Argyll and Bute.
As the cabinet secretary said, Scotland was pulled out of the EU and the EU single market—the world’s largest and most successful example of economic integration—to join UKIMA, the arrangements for which Professor Weatherill described as “idiosyncratic” in his evidence.
There are three main ways in which UKIMA differs from the EU internal market. First, as we heard in evidence, the EU rules are more generous, allowing relaxation of laws for non-economic public policy reasons. In our first evidence session, concerns were raised that that might impact more widely than on trade in products, with policies on animal welfare, wildlife protection and the environment all possibly being chilled as a result of UKIMA. The cabinet secretary said of Westminster:
“What is not right is for them to tell us that we cannot legislate in areas in which we have competence, and to use the internal market act to prevent us from doing so.”—[Official Report, Constitution, Europe, External Affairs and Culture Committee, 27 January 2022; c 8-9.]
Secondly, the EU internal market is governed by the principles of subsidiarity and proportionality, and not just by mutual recognition and non-discrimination. Professor McEwen and colleagues say that UKIMA
“arguably creates a powerful disincentive to engage in legal reform or policy innovation, in response to changing social and economic”
preferences.
Thirdly, the EU single market is underpinned by a level playing field where member states implement co-determined regulations or environmental standards. That is not the case with UKIMA, where an asymmetry is built into the legislation, making the act protected within the devolution statutes. Professor McEwen said:
“There is nothing that you and your colleagues”—
that is us—
“can do about that in your law-making capacities to make any amendments. The Westminster Parliament is not constrained in the same way. If, in principle or in theory, it was found that that was a frustration for the UK Government’s ability to pursue and fulfil its policy objectives, it could change that in a way that you cannot.”—[Official Report, Constitution, Europe, External Affairs and Culture Committee, 2 December 2021; c 31.]
UKIMA does not work to Scotland’s advantage; it does not help to enrich the lives of our citizens. It means that the economic policies that Scotland needs to defeat poverty, advance equality and promote wellbeing for all are seen by Westminster as
“an obstacle and a potential irritant”.
There is good news for the UK Government: there is a way to remove Westminster’s obstacles and irritants, and that is Scottish independence. Then and only then will Scotland get the economic and social policy that it needs and wants. Only when our economic needs are not viewed through the distorted lens of Westminster, and only when Scotland is free to make its own decisions and run its own economy, can the human and material richness of our nation be harnessed for the good of all.
15:34
In recent years, I have sat through quite a number of debates relating to internal market legislation. Like many across the chamber, I never wanted Brexit to happen, but I supported the need for legislation, and that is largely because the common frameworks designed to navigate the UK’s post-Brexit pathways did not provide the legal instruments that would provide the necessary legislative safeguards for open trade across the UK, complemented by provision for regulatory divergence and more effective parliamentary scrutiny.
I note from the committee’s report that there is cross-party agreement on the benefits of the UK internal market with Scotland, and rightly so, for exactly the reasons that Mr Rennie cited. Open trade across the UK is absolutely essential. Scotland trades one and a half times as much with the rest of the UK as it does with the whole of the EU and the rest of the world put together. That trade with the UK is worth four times as much to Scotland as what the EU single market provided. For those reasons, it is absolutely essential that the post-Brexit era poses no new barriers to trade across the UK, and that is very much an agreed conclusion of the committee report.
From previous debates in the chamber, members will know that I harboured some concerns about the initial United Kingdom Internal Market Bill, on the basis of concerns from stakeholders about the potential impact on devolution, which were similar to the concerns that the cabinet secretary spoke about in his speech. I could understand that, if we were not careful with the legislation, there was scope for the UK Government to undermine the devolution settlement, and that was certainly not acceptable. To avoid that—and it absolutely has to be avoided—it was essential that the legislation protected the right of the devolved Administrations to have their own genuine policy differences, such as minimum unit pricing for alcohol. Those policy differences, which reflect different national and regional circumstances, are absolutely what devolution should be about. Should the UK Internal Market Act 2020 curtail any of that, it would undermine those differences, and that would be a very serious issue.
At the time, my former colleague Adam Tomkins said that the important doctrine of proportionality, with its roots in common law, has relevance here. He was right, because not only does that doctrine govern the legislation, but it puts in place the opportunity to ensure that it is fair and independent and there is trusted adjudication of whether it is delivering on its stated objectives. Those objectives, in relation to the internal market, are agreed across Scotland and the UK, and it is in everyone’s interests to aspire to economic growth, better investment, a greener economy, job opportunities and the development of innovation and enterprise. Anything that disrupts the UK internal market would be contrary to the interests of both Scotland and the UK—a point that was very well made by Bruce Crawford when he was convener of the previous Finance and Constitution Committee.
That brings me to the current situation and, later this afternoon, we will debate the shared prosperity funds and how the EU funds absolutely have to be replaced.
There are other issues, such as the concern over the Scottish economy and the difficulties that it faces when it comes to ensuring that it has all the advantages that we would expect it to have, whether it had remained in the EU or as part of the United Kingdom. I will finish on that point, because the reason that the internal market is so important is to help Scotland to flourish in the way that we all want to see.
15:38
I welcome this committee debate, which reminds us again of what we have lost by leaving the EU. Not only did we leave the world’s most successful peace project, but we left the world’s most successful free-trade project—a union that was literally forged in post-war reconstruction. The Schuman declaration of 1958 gave birth to the European Coal and Steel Community and started the long process of dismantling barriers to commerce. As we grew closer as a bloc, our differences in geography and politics did not become barriers to trade or regulatory innovation. Subsidiarity ensured that, within the EU internal market, a level playing field of common rules could still be flexible enough to meet the needs of individual nation states.
As Europe grew, and movements of citizens won new rights to protect their lives and environment, the EU found ways to involve them directly in the development of laws to protect people and planet. That is what we had and what Scotland was forced against our will to give up. The UK Internal Market Act 2020, as a central part of the post-Brexit landscape, threatens the laboratory of devolution that has been so successful in ratcheting up progressive policies across the UK in recent years.
The committee heard wide-ranging concerns from witnesses that the act, in the words of Professor Weatherill,
“contains a structural bias in favour of market access, and against local regulatory culture.”
Other academics stated that the act
“arguably creates a powerful disincentive to engage in legal reform or policy innovation, in response to changing social and economic”
preferences.
Meanwhile, non-governmental organisations that work in environment and public health fields laid out concerns that the act could lead to a “race to the bottom” rather than a “race to the top” in standards.
NFU Scotland raised the concern that even moves to buy local could be challenged and struck down—something that would have been absolutely unthinkable under our membership of the EU common agricultural policy.
I fear that much of the subsidiarity and trust that we had as part of the EU has now been replaced by tension. As the committee report lays out, not only do we have tension in the devolution settlement; there is a fundamental tension between open trade and regulatory divergence. As a result, there could be a growing tension between Parliaments and their Executives should they become lost in opaque common framework negotiations. On that point, much of this is uncharted territory for us as parliamentarians. We might know that 26 common frameworks exist, but only four of them have been scrutinised by the Parliament, and eight have yet to be published.
In the area of waste and the circular economy, we know very little about the position of the UK Government in relation to a Scottish ban on single-use plastics, including whether the ban could be challenged and how the common framework in that area is working in practice.
The Parliament’s founding principles are really important here: the
“sharing of power between the people of Scotland, the legislators and the Scottish Executive”
should be reflected, and the Executive should be fully
“accountable ... to the people”.
To achieve that, the Parliament
“should be accessible, open, responsive”
and participatory. It is clear that Parliaments across the UK will have to work harder to hold all their Governments to account by learning together and collaborating.
We have barely begun to count the cost of leaving the EU, but there are more than 40 years of progress still to defend. The 2020 act should concern all those who value the powers and the work of the Scottish Parliament and the value of the devolution settlement.
15:43
By consensus, our committee agreed that the UK Internal Market Act 2020 has raised some troubling questions for the devolution settlement. Our report concludes that the act
“has increased tension within the devolution settlement arising from the UK leaving the EU. UKIMA has been rejected by the Scottish Government and the Welsh Government and by the Scottish Parliament, Welsh Senedd and Northern Ireland Assembly as imposing limitations on devolved competence without consent.”
I am glad that, despite our differing political perspectives as committee members, we were able to draw attention to those facts clearly and unambiguously. Like Mr Cameron, I appreciated the way in which we were able to work together to that end. I realise that committee debates are supposed to concentrate on such consensus where it exists, and I will persevere as best as I can on that front for some moments yet.
In the debate, we have heard about how we should find ways to allow Scotland to give consent in areas of working that are shared with the UK Government. However, the fact remains that we are talking about an act of the UK Parliament to which we, as the Scottish Parliament, have indicated our dissent. Many of those who gave evidence to the committee were very direct about their view on that. The Cabinet Secretary for the Constitution, External Affairs and Culture told us that the Scottish Government has
“argued from the outset that”
the act
“represents a fundamental change to the devolution settlement”.
Other contributors, such as Fidra, which is an environment charity, indicated to us their support for the implementation of environmental policy across the UK, but Fidra pointed out that it was nonetheless
“vital that devolved administrations retain the ability to champion new and progressive legislation within their own areas of responsibility.”
Fidra highlighted the ban on plastic-stemmed cotton buds and the single-use carrier bag charge as two useful examples of policy being developed and implemented at a devolved level and then subsequently implemented elsewhere in the UK.
Others came to the committee to express concerns about what the 2020 act would have meant for the minimum unit pricing of alcohol, were we to try to legislate in that area now.
As I think that Mr Ruskell was alluding to, NFU Scotland pointed out that the non-discrimination principle in the 2020 act could in fact constrain both us and its industry. NFUS cited the example of how, were Scotland to legislate on local procurement and the intention to buy local, the 2020 act would quite likely run up against our Parliament’s legislative intentions, meaning that, in its view, Scotland would
“simply have to allow products to be allowed to compete on price in the market for public procurement rather than being exclusive about it.”—[Official Report, Constitution, Europe, External Affairs and Culture Committee, 16 December 2021; c 11.]
I think that we are all agreed about the importance of trade across the UK—that is not really contentious. What is contentious, and what Scotland’s elected Parliament cannot and has not consented to, is a power that allows the UK Government to constrain our ability to act, whenever we dare to be different.
As members are aware, there was a time, until quite recently, when UK acts of Parliament that touched on the powers of the Scottish Parliament were “not normally” passed without this Parliament’s consent. It is pretty clear either that that polite convention simply no longer applies or that the word “normally” has become bleached of any meaning in these abnormal political times.
That goes to the heart of the matter because, as numerous witnesses to our committee pointed out, the UK Internal Market Act 2020 effectively reduces our room for manoeuvre as a Parliament. It represents a step by Westminster into explicitly devolved areas. It seeks to clip Scotland’s legislative wings.
15:47
This is probably one of the most important debates that we will have in Parliament. I thank the committee clerks, all the organisations that sent us their views and analysis and the witnesses who shared their expertise and answered our questions.
The work of the Constitution, Europe, External Affairs and Culture Committee is the start of significant scrutiny not just by my committee but by other parliamentary committees. Brexit is only just over a year old, yet it has had a massive negative impact on businesses, farming and food producers, those in the haulage industry and those in our cultural sector. The UK Conservative Government’s ambition to create an internal market to lower standards must not throw into reverse the devolution settlement, our food and environmental standards or the labour market.
However, at the same time, we need to have an effective internal market, because that is crucial to our future. As has been referenced, the statistics show that Scotland’s exported goods and services to the rest of the UK are worth more than £51 billion, which is 60 per cent of our exports. Therefore, we must have an internal market that works for us in Scotland.
This has been a good debate. It has flushed out the disagreements and we must deal with those issues. We need to focus on the recommendations to manage tensions between Governments and ensure that the principles underpinning devolution are not undermined.
Life after Brexit was always going to be a challenge, so ensuring transparency and enabling all those with an interest to allow our internal market to work while making sure that our businesses across Scotland are not disadvantaged is crucial.
Common frameworks are clearly an important means by which the UK Government and the devolved Governments are able to work together. That gives those in government the opportunity to decide how they can manage the tensions in the internal market and ensure that, where there are strong arguments for divergence and different approaches, those can be enabled and understood.
Although intergovernmental working is crucial, as has been agreed by all parties, the Law Society of Scotland was clear that the current arrangements
“lack sufficient transparency and accountability.”
We need to have interparliamentary work and work within our Parliament to make sure that we get that transparency. In that way, our citizens and our businesses will be able see what is coming down the track, as well as understand the timetables, what the frameworks will cover, and the fact that we have public consultations where significant changes are being proposed. That is why the committee calls for clarity and regular updates to each Parliament across the UK, and for Government to highlight upcoming proposals to enable people to plan ahead.
We recognise the economic benefits for businesses and consumers of having trade across the UK. However, given that a fundamental principle of devolution is the decentralisation of power so that we can meet local needs and address local circumstances, we have to accept the importance of innovation and regulatory learning that has come about. That is why we think that both the Scottish Government and our councils should be able to set standards through public procurement, whether in relation to procurement of food or a deal for fair work.
This is not the time to reject previously high standards, particularly in the aftermath of the ambitions that we all agreed at the 26th United Nations climate change conference of the parties—COP26. Our committee was concerned that the internal market act and the Subsidy Control Bill cut across the devolution settlement, and that concern was expressed very effectively. OneKind expressed concern that the act limits our
“ability . . . to improve farmed animal welfare standards”.
Professor Weatherill said that the act
“places too much emphasis on market liberalisation over local rights to regulate”.
Professor McEwen and her colleagues argued powerfully that the act gives
“a powerful disincentive to engage in legal reform or policy innovation”.
Scottish Environment LINK expressed concerns about the lowering of environmental standards in relation to air, water and soil quality, which we should we worried about.
We need greater transparency, and we need effective intergovernmental working. However, as both Foysol Choudhury and Donald Cameron observed, we also have to have interparliamentary debate. The committee had an excellent briefing on our report this morning. One thing that came across clearly was the need for an independent secretariat to resource and monitor common frameworks. We also need a clear traffic light system, so that citizens, businesses, and campaign and stakeholder groups can also monitor common frameworks and alert us, as MSPs, to their interests and concerns, so that their issues can be raised and debated. There will be times when we want to diverge and innovate—and we should be able to do that—but there will also be times when we want to align. That needs to be a debate that is conducted in public, not behind closed doors.
Whether it is about keeping pace or an internal market, what must drive us are the principles of what we are trying to achieve: environmental standards, quality products, support for our local economies and fair labour market standards. We need to see the Subsidy Control Bill enable strong public procurement that not only gets us value for money but is not a race to the bottom. We need innovative strategic government intervention, both by our Government in Scotland and by our local authorities, when there is a strong case for action.
I think that the UK Government needs to listen to the concerns that have been raised by our committee. Our report was unanimous, and unanimity is not something that we always get on a controversial issue on which there have been differences of opinion in the chamber. To come back to that point: our committee was unanimous. I want the UK Government to listen to our recommendations, and I want it to act. There is an issue about treating our Parliaments across the UK with respect.
15:53
The free passage of goods between the four parts of the United Kingdom—our largest and fastest-growing export market—is not only desirable but essential for the economic wellbeing of Scotland. I think that we can all broadly agree on that. However, I can understand why some members might have concerns about how all this is going to work. It is a complicated subject, as many of us have been finding out, and it does not look likely to be simplified any time soon.
First, it is important to clear up a couple of myths. We have heard many claims that devolution is under assault, that the Sewel convention has been violated and so on. However, the clue is in the name: it is a convention, not an act or a set of regulations. The Law Society of Scotland noted in its submission that
“there should be no inference drawn that the Sewel Convention has in any way been diluted”.
On the subject of policy divergence, there is still plenty of room for Scotland to choose its own way. In a blunt letter to the Chancellor of the Duchy of Lancaster, the previous cabinet secretary suggested that the UKIMA would threaten policies such as the ban on smoking in public places, the approach to tuition fees and minimum unit pricing.
Will the member take an intervention?
No.
That could not be further from the truth. As was well reported at the time, a mechanism now exists to create exemptions for policy divergence, which provides a path for devolved Governments to choose their own way.
Today, I will focus mainly on scrutiny. The matter came up time and again in the committee, so I found it a little puzzling that it received such a brief mention in the report, totalling less than 1 per cent of the document. A huge weight of EU law comes into force each year. In 2020 alone, the EU adopted or amended 1,562 different pieces of legislation. All that must be considered, particularly given the Scottish Government’s decision to align with EU law wherever possible, regardless of how it interacts with UK policy making.
An appropriate independent Scottish monitoring service needs to be established. The divergence tracker that has been made available to the committee is a good start, but it is not Scotland specific. The committee agrees, noting that
“Robust guidance should be agreed between the Scottish Government and Scottish Parliament on how transparent and meaningful scrutiny can be delivered”.
The message is clear. Parliament cannot be sidelined, and neither can stakeholders. We must know when and why the Scottish Government is aligning with EU law and what it is aligning with. Perhaps even more notably, we must know when it is diverging from EU law. The decision-making process must be open and transparent, particularly when it comes to the keeping pace power.
The keeping pace power concerns me for a number of reasons, not least of which is to do with the circumstances in which it would be used and how it would be used. Scrutiny of that provision is nearly impossible, with there being only an annual requirement to inform Parliament of when it has been used. Other than that, the only guides that we have to its use are the policy statement and the comments of the cabinet secretary. That is simply not enough detail to go on. I therefore call on the Scottish Government to implement a more transparent reporting process, for the Parliament’s peace of mind.
15:57
I give my commendations to members on all sides of the chamber for their contributions. I listened closely to all of them. The deputy convener of the committee, who spoke on behalf of the convener—to whom we all wish a speedy recovery—highlighted three tensions: tensions between open trade and regulatory divergence; tensions around the impact on the devolution settlement; and tensions between the Executive and the legislature. He was absolutely right about that. In a moment, I will speak about common frameworks, because, in my opening speech, I ran out of time and did not reach my comments on those.
Maurice Golden talked about the importance of the UK market. I agree, but I do not agree that we should be dependent on it. We are part of a far bigger trading world, and we should not put all our eggs in one basket. No doubt, we will debate that in the months and years to come.
Foysol Choudhury, on behalf of the Labour Party, praised the report and described the period that we are in as a “watershed moment” in relation to governance post-Brexit. He highlighted the tensions between devolved institutions and the UK Government.
Slightly surprisingly, Willie Rennie told the Parliament that “we voted” for Brexit. I can tell Willie Rennie that we most certainly did not vote for Brexit. In this country, we voted to remain in the European Union, and it is our intention to rejoin it as a priority.
Jenni Minto highlighted evidence that the Scottish Parliament can be overridden by Westminster. Yes, it can, and that is not acceptable.
Oddly, Liz Smith spoke about being in favour of being economically dependent on the UK market and said that we should constrain our ambitions to that. Frankly, that would be somewhat limiting.
Mark Ruskell highlighted the threat to devolution. Incidentally, there was remarkable unanimity across the chamber in recognising that that is the case with the operation of the United Kingdom Internal Market Act 2020. He talked about frameworks and parliamentary accountability, as did a number of members. I agree that we will have to get those issues right.
In her summing-up speech on behalf of the Labour Party, Sarah Boyack drew attention to the massive negative impact of Brexit and said that transparency and accountability are important in intergovernmental relations. I agree with her on that.
Alasdair Allan and other members of the committee highlighted the increasing tensions with devolution because of the impact that the operation of the 2020 act will have. Who could disagree with that?
I was slightly confused by Sharon Dowey’s point about scrutiny accounting for only 1 per cent of the committee’s report. It seems to me that, throughout most of the report, scrutiny is pretty important. The Scottish Government takes that issue extremely seriously.
The report considers the implication of the United Kingdom Internal Market Act 2020 on the successful implementation and operation of common frameworks. I recognise the committee’s frustration at the pace at which the frameworks are being rolled out, but it is important to recognise the damage that the act has done to the development of those alternative models for managing policy divergence on the basis of equality, respect and progress by agreement. Most provisional frameworks have now been published or shared in confidence with committees ahead of parliamentary scrutiny, but I must stress that the frameworks will work only if the UK Government is committed to making them work.
I emphasise that work is under way to monitor and gauge the act’s impact on devolved policy. We continue to work closely with our colleagues in the other devolved Administrations, and we are working with the committee and the Scottish Parliament to address the complex post-Brexit landscape of which the 2020 act is a part.
16:01
In closing for the committee, I note that the debate has been useful and informative and will be extremely helpful in informing the committee’s further consideration of the issues that are raised in our report. I appreciate that members in the chamber have, in general, a favourable view of the report.
Before I note some of the excellent contributions from colleagues across the chamber, I will briefly outline the third tension that we identified in our inquiry—the tension between the Executive and the legislature that will arise from a shift towards intergovernmental working in policy areas that were previously within EU competence. A significant risk for the Parliament is that the level of transparency and ministerial accountability that existed while the UK was an EU member state will be intentionally or unintentionally diluted after our exit.
The committee has previously highlighted the need for increased transparency and ministerial accountability in relation to the Scottish Government’s policy commitment to align with EU law. The committee recognises that providing transparency, on the one hand, and maintaining confidentiality, on the other, can be a difficult circle to square when seeking to improve the scrutiny of intergovernmental relations. Although we recognise the challenge involved, the committee nevertheless agrees with Professor McEwen that the recent review of intergovernmental relations by the four Executives within the UK “offers very little” in relation to improving transparency.
The committee’s view is that there is a need to re-examine the UK Government’s approach to intergovernmental relations in the context of common frameworks. The committee is concerned that, if the operation of the frameworks is viewed as relating solely to intergovernmental relations, that might undermine the Scottish Parliament’s commitment to being accessible, open and responsive. Mark Ruskell said that there is the potential for common frameworks to be “opaque”, and I was struck by that description. That might also undermine the ability to develop procedures that make possible a participative approach to the development, consideration and scrutiny of policy and legislation.
The committee recommends that, to address those concerns, consideration needs to be given to opening up the common frameworks process to allow opportunities for public consultation and parliamentary scrutiny in significant policy areas prior to intergovernmental decisions being made.
Last week, at the first meeting of the interparliamentary forum, which has already been mentioned, we recommended that resolving the tension in the balance of relations between the Executives and the legislatures should be an immediate priority. The committee’s view is that enhanced interparliamentary working is important in delivering more robust scrutiny of intergovernmental working, including on common frameworks.
I will attempt a brief canter through the various contributions that members have made. Maurice Golden spoke about the importance of trade in the UK and about environmental targets at UK and EU levels.
Foysol Choudhury spoke about tensions within devolution and the need for future Governments to learn the lessons, and he noted that the United Kingdom Internal Market Act 2020 proceeded without the consent of either the Scottish Parliament or the Senedd Cymru.
Willie Rennie spoke about the importance of the EU and UK markets and about the Scottish Government and the UK Government preferring a “rammy” to trying to solve problems.
Jenni Minto spoke about complexity and said that London and the south-east drive economic integration, which is not what is needed. In that regard, she quoted the NFUS and spoke about her experience of talking to farmers and crofters in her constituency. She also made an important point about the principles of subsidiarity and proportionality, which exist in the EU but not in the United Kingdom Internal Market Act 2020 framework, where, in her view, a very different and more restrictive environment exists.
Liz Smith spoke about the significance of the UK internal market, of her initial fear about the devolution settlement and of the need to protect regulatory differences.
Mark Ruskell made an excellent speech in which he reminded us of what, in his view, we lost in leaving the EU. He noted the role of the EU in protecting people and the planet, and he said that the United Kingdom Internal Market Act 2020 threatened “the laboratory of devolution” and that tension had replaced the principles of subsidiarity and trust.
Alasdair Allan spoke about environmental policy. He quoted Fidra, one of the witnesses to the committee, and spoke of the need to develop policy making at a devolved level and then replicate it in the UK. As other members did, he concentrated on the issues of consent—or the lack thereof—from the Scottish Parliament and finished by saying that the United Kingdom Internal Market Act 2020 sought to clip Scotland’s wings.
In closing, Sarah Boyack focused on recommendations about intergovernmental working, saying that clarity is needed and that people want greater transparency and have to be able to plan.
Sharon Dowey spoke about the desirability of the free passage of goods and said that that complex matter was difficult to simplify. She took a different view of the Sewel convention and quoted the Law Society of Scotland.
I am grateful for the cabinet secretary’s acknowledgement of the issues that the report raises, and I welcome his commitment on behalf of the Government to consider at length and in a measured way the issues that we have raised. He reiterated the views of the Scottish Government in relation to many of the matters therein.
We welcome the reception that the report has had, and I am grateful for the constructive tone of the debate. We will, no doubt, revisit the subject in due course.
That concludes the debate on the UK internal market inquiry. I remind members of the Covid-related measures that are in place and that face coverings should be worn when moving around the chamber and across the Holyrood campus.
Air ais
Portfolio Question Time