It is fitting and timely that the debate is taking place so shortly before the United Kingdom Government triggers article 50 and starts on the path of leaving the European Union.
The committee’s inquiry work since the EU referendum on 23 June last year has revealed layer upon layer of complexity in relation to leaving the European Union. The committee initiated its work almost immediately after the referendum. I commend and thank my fellow committee members for the time and energy that they committed to the inquiry, which involved weekly and sometimes twice-weekly meetings, as well as visits, events and meetings with stakeholders and visiting parliamentarians. The fact that we are debating four reports today is testament to the committee’s hard work. Although different members held different positions on some issues, we succeeded in reaching broad conclusions in a number of areas.
From early in our inquiry, our two expert advisers, Professor Sionaidh Douglas-Scott, of Queen Mary University of London’s school of law, and Professor Michael Keating, of the University of Aberdeen and the centre on constitutional change, have supported the committee’s work. I thank them for the many written and oral briefings that they provided to the committee. Their expertise and knowledge benefited our work. I also thank the committee clerks, who worked incredibly hard over the course of the inquiry.
An early action of the committee was to commission two pieces of research. The first, from the Fraser of Allander institute, was into the long-term economic implications of Brexit, and the second, from Professor Alan Page, of the University of Dundee, was on the implications of leaving the EU for the devolution settlement. Both pieces of research have been important in informing the committee’s inquiry work—in particular, our most recent report, “Determining Scotland’s future relationship with the European Union.” I thank the Fraser of Allander institute and Professor Page for their work.
I also thank the Scottish Parliament information centre for the many briefings that it has published on the impact of Brexit on individual sectors in Scotland, and for the briefings that it prepared specifically for the committee.
In conducting our inquiry, we aimed to hear from stakeholders from as many sectors as possible, as well as from individuals who would be affected by Brexit. I am grateful to everyone who gave evidence to the committee. That evidence deepened our understanding and raised our awareness of the implications for Scotland of leaving the EU.
We received more than 160 written submissions in response to our call for evidence, and the views that were contained in those submissions are summarised in one of the reports that we are debating today—“Brexit—What Scotland thinks: summary of evidence and emerging issues”. That report shows that for virtually all sectors of the economy, with the notable exception of the catching part of the fishing industry, Brexit is a challenge. Whether the submissions were focused on justice and home affairs, further and higher education, schools and skills, agriculture and food, climate change and the environment, health and sport or equal opportunities and human rights, the overwhelming message was about concern and the risks that lie ahead that have been identified. There are fears about the risks of leaving the single market. There are fears about losing access to EU funding, such as horizon 2020 funding, and there are fears about the erosion of rights, about the huge volume of legislation that would need to be revised, about environmental standards, and about losing the EU citizens who work in so many sectors. There was very little optimism or sense of opportunity in the evidence that we received.
The report “Brexit—What Scotland thinks: summary of evidence and emerging issues” is a comprehensive summary of Scottish interests. I call on the Scottish Government and the United Kingdom Government in the weeks, months and years ahead to recognise those views in all discussions, negotiations and decisions relating to Scotland’s future. The report should be a reference point for identifying both what is and what is not in Scotland’s interests.
The committee undertook an early visit to Brussels in July last year, as well as another in January this year. In July, there was still a sense of shock and disbelief about the result of the referendum, and there was uncertainty about the next steps. However, by January, the Prime Minister had made known her intention to pursue a hard Brexit, and the experts in EU policy and the members of the European Parliament whom we met were clear about the challenges for both parties in the negotiations that lay ahead. Those two visits were very important in giving us a perspective of the views from Brussels on the negotiations.
The visit to Brussels last July contributed to our first report, in September, which summarised the initial evidence that we heard and included our conclusion that access to the single market is vital to Scotland. The visit in January was invaluable in extending our understanding of the withdrawal negotiations, the negotiations to agree a new treaty and the need for transitional arrangements. In January, we published the report “EU Migration and EU Citizens’ Rights”. The evidence that that report brings together on EU migration to Scotland provides valuable quantitative and qualitative material on migration patterns and on the contribution of EU migrants to the Scottish economy and society. It also considers the rights of the 181,000 EU citizens who are resident in Scotland, who represent 3.4 per cent of the population, as well as the rights that UK citizens enjoy as EU citizens whether they live abroad or in Scotland.
The UK’s withdrawal from the EU has made all our futures uncertain, but in no group is that uncertainty more keenly felt than among the 181,000 EU citizens who live in Scotland and the Scots who have made their homes in Europe. In Scotland, EU citizens have settled in our cities, towns and rural communities. They have helped to reverse the population decline that so worried us at the beginning of the century. They have contributed to the growth of our economy by filling skilled and unskilled, and temporary and permanent jobs. Most important, they have settled in our communities, enriched our lives and broadened our cultural horizons.
In “EU Migration and EU Citizens’ Rights”, we include testimonies from two EU citizens who have lived in Scotland for many years. Both have made their homes here and regard Scotland as their home, but they were unclear about whether they could remain in the future, particularly given the complexity of the 85-page form and the documentation on health insurance, national insurance contributions, employment and periods spent outside the UK that people are required to submit when they apply for a resident’s card. It should not be forgotten that UK citizens living in this country and in Europe will also see a reduction in their rights on the UK’s leaving the EU. We have become used to moving freely within the EU for business and pleasure, but in the future, as a third country, we face the prospect of visa requirements or travel restrictions.
We heard from the Scottish Youth Parliament that young people in Scotland see freedom of movement as an opportunity rather than a threat, and want that right to be protected. There must be consideration of how the rights of EU citizens in Scotland can be protected and how EU nationals who are already in Scotland can remain. Therefore, the committee concluded that, in the future, there should be a bespoke or differentiated solution for immigration policy in Scotland. Not only would that allow the Scottish Government to end any uncertainty for EU nationals, it would also protect Scotland from the demographic risks that are associated with a reduction in the number of EU migrants.
The committee’s final report, which was published at the beginning of March, is entitled “Determining Scotland’s future relationship with the European Union”. It covers three key areas: future trading arrangements, intergovernmental relations and the impact of withdrawal on the devolution settlement.
The UK Government has chosen to withdraw not only from the European Union but from the European Economic Area. Witnesses told us that the UK will leave the most successful free trade area in the world and that it will no longer be a party to the EU’s preferential trade agreements with more than 50 other countries. As we were told, never has a country decided to dismantle its existing trade agreements in such a way.
Scottish exporters have benefited from the abolition of tariffs and non-tariff barriers, and it has become the norm to send Scottish produce across the continent without any border controls. There is no need to satisfy rules of origin for goods that are manufactured in Scotland and exported to the EU. All that could go when we leave the EU. By choosing a hard Brexit, and by entering the negotiations with red lines that relate to freedom of movement, the jurisdiction of the European Court of Justice and EU legislation, the UK might find that it can achieve only a very limited trade agreement with the EU, so Scottish businesses will suffer as a result. Alternatively, as we heard being suggested at the weekend, the UK may be unable to reach a deal with the EU within two years, and we will fall back on World Trade Organization rules.
The UK will be reducing its trading opportunities by choice. We heard that, since the second world war, there has been a progressive move towards reducing tariffs and non-tariff barriers in international trade. The EU has made the greatest progress of any region in pursuing free trade, but the UK Government has decided that it wishes to give up those opportunities by leaving the EEA and starting from scratch in renegotiating its trading relationship with the world’s biggest trading partner, as well as with other countries throughout the world.
The possibility of a hard Brexit on WTO terms looks increasingly likely, as UK ministers have described that scenario as “perfectly OK”. In contrast, the Fraser of Allander institute submitted a report to the committee that predicts that that situation would result in a 5 per cent reduction in gross domestic product, a 7 per cent reduction in real wages and the loss of 80,000 jobs.
Our latest report also considered the intergovernmental arrangements for agreeing the UK’s position on Brexit and for conducting negotiations with the EU on withdrawal, as well as on the future trade relationship, and it considered intergovernmental relations between the UK and the Scottish Governments. Those areas will be the focus of other speakers, so I will limit myself to referring to the role that other sub-states have in relation to trade. During our inquiry work, we heard about how Québec, along with the other Canadian provinces, was included in negotiations on the Comprehensive Economic and Trade Agreement, and about the influence that the Parliament of Wallonia was able to use to block the CETA agreement temporarily. Both those examples highlight the comparative limitations of the intergovernmental structures in the UK.
Finally, the report considered the impact on the devolution settlement of withdrawal from the EU. As all members will be aware, under the devolution settlement, powers that are not reserved to Westminster are powers of the Scottish Parliament and the Scottish Government. Thus, under the devolution settlement, current EU competences—including the environment, agriculture, fisheries, justice and home affairs—fall within devolved policy areas. The committee concluded:
“We believe that any power currently a competence of the EU that is to be repatriated after Brexit and which is not currently listed in schedule 5 of the Scotland Act 1998 should be fully devolved, alongside a funding mechanism, resulting in no detriment to Scotland.”
Scotland currently receives considerable funding under agricultural and structural funding programmes. There is no clarity about how funding in those areas would be calculated in the future. The committee considers that there is
“a very significant risk to EU competitive funding streams, agricultural support and structural funding in Scotland following withdrawal from the EU.”
and is particularly concerned that
“Any move towards a territorial funding framework within the UK that is based in population share rather than the allocation system currently in use would see Scotland’s agricultural sector, for example, lose hundreds of millions of pounds.”
Finally, the majority of the committee concluded that a bespoke solution for Scotland that would enable it to remain in the single market should be explored as part of the negotiations ahead, and that the UK Government should provide a response to “Scotland’s Place in Europe” before article 50 is triggered.
In conclusion, I say that members will see that there are significant implications for Scotland of withdrawal from the EU, which the committee’s reports highlight.
That the Parliament notes the conclusions and recommendations contained in the Culture, Tourism, Europe and External Relations Committee’s 1st Report, 2016 (Session 5), The EU referendum result and its implications for Scotland: Initial Evidence (SP Paper 5); 1st Report, 2017 (Session 5), Brexit: What Scotland thinks: summary of evidence and emerging issues (SP Paper 64); 3rd Report (Session 5), EU Migration and EU Citizens’ Rights (SP Paper 84) and 4th Report, 2017 (Session 5), Determining Scotland’s future relationship with the European Union (SP Paper 99).