Culture, Tourism, Europe and External Affairs Committee

Meeting date: Thursday, December 20, 2018

Official Report 673KB pdf

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Article 50 Negotiations (Withdrawal Agreement)

Good morning, and welcome to the 34th meeting in 2018 of the Culture, Tourism, Europe and External Affairs Committee. I remind members and the public to switch off their mobile phones. Any members who are using electronic devices to access committee papers should ensure that they are turned to silent, please.

The first item on the agenda is an evidence session on the article 50 withdrawal negotiations. The committee will take evidence this morning from the Cabinet Secretary for Government Business and Constitutional Relations, Michael Russell, and Scottish Government officials. Ellen Leaver is head of negotiation strategy and delivery, and Alan Johnston is deputy director, EU exit readiness. I thank you all for coming to the meeting and invite the cabinet secretary to make a short opening statement.

Thank you very much indeed. I give my apologies in advance: I am not only stuffed with the cold but, as many of you will know, I was in London yesterday, and I am sort of deaf in one ear at the moment as a result of that experience. If I do not hear you, I am sure that you will speak loudly.

I thank the committee for the opportunity to give evidence today. This is my third Christmas as the member of the Government with responsibility for Brexit, and it seems very strange that we are three years in, but things are still so chaotic and difficult to understand—I suppose one might use the word “nebulous” about them. I have come before the committee during various stages of the negotiations, and the attention has turned very much to Westminster in recent weeks. It is very sobering to think that we are now fewer than 100 days from potentially leaving the European Union and we still have no more clarity about what awaits us. We have a false dichotomy in the choice that is being offered by the Prime Minister between her deal, which would be disastrous for Scotland, and a no-deal option, which would also be disastrous for Scotland. We have rejected that false dichotomy, and I hope that we can talk today about the other options that exist and why we have come to such a pass.

There has been turmoil within the Conservative Party and turmoil remains at Westminster. A sensible Government would prepare for a no-deal scenario, and that is what we have done as a sensible Government, but very much with the hope that we would not have to implement those plans. In addition to the joint ministerial committee plenary meeting in Downing Street yesterday that I attended with the First Minister, I have had meetings with other United Kingdom Government ministers about no-deal issues.

Our preferred outcome from the situation at the moment is a referendum to give people the chance not to have a second thought, but to pass judgment on the chaos of the past two and a half years and to think very carefully about where they see their future lying. That second referendum would offer people the opportunity to make that choice, and there is a clear route to that, which I am happy to talk about.

We have continued to publish information. Most recently, we published our assessment of the Prime Minister’s so-called deal. Committee members will have a copy of that, and I hope that it will inform your discussion.

Even at this very late hour, there is still time to galvanise the political will and to say that what has taken place over the past two years has been a massive mistake that has been undertaken with complete incompetence by a Government that is out of time and out of date. The opportunity exists to do something better, and we would like to see that being remaining within the EU.

Thank you very much, cabinet secretary.

I will start the discussion by going back to the withdrawal agreement and the political declaration. Obviously, if the withdrawal agreement was ratified, it would be a legally binding document between the EU and the UK. However, the political declaration does not have that status. Can you say a bit more about your view of the political declaration’s content and what it might mean for Scotland in terms of the future UK-EU relationship?

As you know, convener, the political declaration is very vague and aspirational. There are many parts of it in which, in essence, things are sought to happen without there being any indication whether they could happen. Anyone who reads the political declaration will be very much struck by the fact that there is no clarity about what will take place next. That is a crucial issue.

Yesterday, the Prime Minister wished to tell the devolved Administrations that we should listen to the voice of business. That is rather curious, given, for example, the Confederation of British Industry’s view of the migration white paper that was published yesterday—we will no doubt want to come on to that. However, business has an expectation and a need for certainty, and the Prime Minister’s agreement does not provide certainty in any sense. Indeed, I thought that that was very clear in some of the debate that took place in the House of Commons yesterday.

There is no certainty out of what has happened. There is a legally binding withdrawal agreement that gets us to the starting gate of saying “What will the future relationship be?”, but what that future relationship will be will be the subject of the most incredible, complex and detailed negotiations. Moreover, once again, the timescale for those negotiations has been completely misstated by the UK Government. The Prime Minister is clinging to the expectation that the negotiations will be concluded by the end of December 2020. That is utterly impossible. Monsieur Barnier, for example, has indicated that there would be 10 strands of negotiation. What we have been through is meant to be the easy part. There is therefore no certainty in that regard, and there is no certainty of an outcome.

One of the worrying things about that is that the no-deal preparations, which we are—regrettably—deeply engaged with at the moment and which I updated members on in the chamber on Tuesday, will have to be kept on ice for however long the discussions on a future relationship take, because they could be needed at any time. We could find ourselves at the stage of having no agreement. If anybody is backing the Prime Minister’s deal simply out of what is, in essence, the scunner factor—I fully understand that—and the feeling that we have just had enough of this and had better just do it and get on with it, they are not even going to have the satisfaction of saying, “Well, at least that’s over,” because, in fact, it is just about to start.

What role do you see the Scottish Government having in the negotiations about the future relationship?

I am sure that you will realise that my experience over the past two and half years has made me somewhat cynical; I did not used to be like this, but I have sort of got there. There are constant assertions by the UK Government that things are going to change. The word “intensification” has been used about every second month for the past two and a half years. We are hearing again that, if the Prime Minister’s deal gets through, there will be a reset of the negotiations between us and the UK in which our involvement will be integral, because much of the negotiations will deal with devolved areas of competence. I do not doubt the word of many people who say that but, over the past two and a half years, I have been pretty astonished by the lack of knowledge about, and understanding of, devolution in most UK Government departments.

Although there might be a commitment from one or two people to do things better, I think that it will ground pretty quickly on that lack of knowledge and the inability to understand a key fact of devolution, which I keep banging on about: in devolution, there is no hierarchy of Governments; there is a hierarchy of Parliaments. Essentially, devolution is a set of compromises built around the view of the Westminster Parliament of itself that it is sovereign. I will not go into my view on that, but that is what devolution is; it is not about one Government being able to second-guess or gainsay another Government. What we saw with the UK Withdrawal from the European Union (Legal Continuity) (Scotland) Bill was an attempt to interpret devolution in that way. That did not succeed, because the Supreme Court would not allow devolution to be interpreted in that way.

Theoretically, there would be a need to do things better, but it would be tied up with the process of the intergovernmental review that is under way—although, as far as I can see, it is not making any progress. One would have hoped that the fact that the JMC is committed to reviewing intergovernmental relations in the light of the experience of devolution would have led to something better. However, I am not hopeful.

I want to move on to the possibility of a differentiated deal for Northern Ireland. You have indicated in the past that that could put Scotland at an economic disadvantage. Does the Scottish Government plan to do an economic assessment or any modelling of that scenario?

We have done some partial modelling in the sense that the material that we have produced in the various iterations of “Scotland’s Place in Europe” indicates what the effect of a differentiated deal would be on us. I think that there is scope to do more on the Northern Ireland situation. Officials will discuss that—indeed, they are discussing it.

There is an extraordinary irony in the present situation. The Democratic Unionist Party, speaking for the people of Northern Ireland—which, of course, it does not do completely—is desperate to oppose the deal, whereas the bulk of political opinion in Northern Ireland is in favour of accepting the deal, on the ground that it gives Northern Ireland a very special status and essentially keeps it within the single market. The opposite remains true in Scotland. The Conservatives are desperately keen to have the deal but, in reality, the deal as it applies to Scotland is a great deal poorer and would be immensely disadvantageous.

Thank you very much. We will move on to questions from the deputy convener, Claire Baker.

The cabinet secretary described the present situation as a “false dichotomy”. Last week, we had the statement on the ruling by the European Court of Justice on the UK Government’s ability to revoke the article 50 process. In response to questions about that in the chamber, you said that there was no written constitution in the UK that would make it clear what the stages for revoking the article 50 process would be. In the discussions that the committee had when it visited Brussels at the start of the month, it was made clear that, if the UK Government were to request to revoke the article 50 process, it would need to have a substantive basis for doing do—in other words, it could not do so as a tactic.

Can you say more about how that process would happen and, if it were to happen, what the stages after that would be? The UK is still divided over the issue, and there is a question about whether there would be any greater certainty if revocation were to go ahead and where that would lead us.

It is undoubtedly the case that the divisions that exist are great and profound, but I do not accept the argument that we should simply accept that those divisions exist, paper over them with the Prime Minister’s deal, and pretend that everything is fine. If we accept that the result in 2016 was bought on a false prospectus, that—as now seems likely—there was a great deal of chicanery involved and that the actions of the UK Government since then have been mind-bogglingly inept, I do not think that just saying “We’ll put all that behind us” will produce any sort of unity. Therefore, I am not convinced by the Prime Minister’s argument for unity.

I do not think that there is any template for what constitutional due process would be. There is likely to be a series of actions that could be taken that would be seen by the EU27 to be constitutional due process. Given the way in which the House of Commons has operated—we should remember that it was a resolution of the House of Commons that invoked article 50; the Prime Minister tried to stop that happening, but she lost, legally—I think that a resolution of the House of Commons would be an effective way of revoking the article 50 process.

It seems to me that the approach would be even more effective if there were to be a referendum on that basis. It is likely that the article 50 process could be suspended and, of course, the potential for an extension of up to six months exists in the Treaty on European Union. If that were to be requested, I think that it is likely that it would be granted on the basis of an election or a referendum being held. That route is reasonably clear. However, it would be wrong to look for something that is absolutely the right way to do this with the view that there are wrong ways to do it. The House of Commons would have a strong role to play, but we would want to see the democratic will being expressed.

09:15  

When I came into my post in August 2016, I was struck early on by the fact that the EU was very focused on constitutional due process as far as Scotland’s position was concerned. I had produced a little booklet on the constitution as it operated in Scotland and the UK. That was because it was difficult for people in the EU to understand that, even if there is no written constitution, there is still an understanding of how the constitution operates and that it is still possible to seek legal judgment about aspects of it, even though we do not have a constitutional court. That was clear from the Supreme Court judgment.

Since last week, I have developed my answer to the point that I now think that there is no single right track. However, if I were to think about what the best track might be, it would be a resolution in the House of Commons; I do not think that it could be just a letter from the Prime Minister. Double locking the resolution with a referendum result might be the right thing to do.

Committee members went over to Brussels for a couple of days. That was interesting; it gave us a better understanding of the EU27’s views on the situation that we are in. Are those involved in the political discussion in Scotland and the UK aware enough of those views?

To go back to the convener’s question on Northern Ireland, the EU27 made it quite clear that Northern Ireland’s set of circumstances was quite unique. The deal was to uphold the Good Friday agreement, and the EU27 was largely opposed to any other regional variations. We discussed what it would mean for the 27 if they were to start to introduce different arrangements in different parts of a member state.

At the start of the process, Monsieur Barnier was clear that, were the UK to come to the negotiating table with a set of arrangements that made differentiation—for example, for Wales or Scotland—what the UK wished to achieve, that would become part of the process. It was the UK Government that chose not to do that. It is not the place of the EU to do that; it is clear that that would be impossible. The issue goes back to the way in which the UK Government approached the negotiations from the very beginning, which was amateurish and thoughtless. We might also remember the Prime Minister’s words to the effect that, as we had entered the EU as one UK, we should leave in the same way. I have regularly described that as constitutional illiteracy. That simply is not the case, because the constitution has changed since the UK joined the EU. There is a different constitution, and that should be recognised. Devolution has taken place since then. The UK Government should have gone into the negotiations recognising the reality of devolution.

I think that it was Ryan Heath who wrote in a very important contribution to the debate last weekend that we could list the things that the Prime Minister has failed to do which have created the present extraordinary mess. We would probably start by saying that, at a very early stage, she should have taken Jeremy Corbyn, the leader of the Liberal Democrats, Nicola Sturgeon and—at that stage—Carwyn Jones, Arlene Foster and Martin McGuinness into a room and asked them, “How can we, together, get this to work?” She could have said, for example, “This is the imperative that we think that we have, but we recognise that Scotland and Northern Ireland have voted against it.” At no time did that take place and at no time was there anything other than the Prime Minister saying, “We do it my way, and nobody else matters.” That is at the heart and the root of the problem that we presently have. I do not know how anybody can talk about bringing people together when their actions at the very beginning forced people apart.

It seems to me that the Prime Minister is engaged in an extraordinary act of brinkmanship. I suppose that her tactic must be to hope that, with fears of no deal, she will get some change of mind in the House of Commons. However, it seems that the House of Commons is hostile to the deal, so in order for her to sway some of her own back benchers she would need to do something different. What could the EU do differently? It has already made it clear that it cannot change the withdrawal agreement, which is a legal document, and the political declaration is linked thereto, so there is limited room for manoeuvre, albeit not in quite the same way as the withdrawal agreement. What do you think that she is holding out to her back benchers to get that through? It is not just a question of political semantics; it is a question of whether we then go into a no-deal situation.

I have no idea. I did not get any indication yesterday of what that was. There seems to be confidence that there is something there that can be done, but we were given no indication of what that could be.

After my statement on Tuesday, Jamie Greene asked me a question about the EU saying that this is the only deal. It is important to reiterate that this is the only deal because of the red lines that were set in the negotiating process. It is not, in the platonic concept, the best of all possible deals. It is a deal that is dictated by the inputs, and the inputs were the red lines, particularly on the jurisdiction of the ECJ and the end of freedom of movement. It is beyond bizarre that anyone can claim proudly that they have ended freedom of movement; my mind is blown by that concept.

That is what has driven this—the red lines. If you have those red lines, you end up with this deal. That is where we are, and I think that the EU is probably quite proud of itself for being able to create a coherent deal around an incoherent set of red lines. There is a slide from the Barnier task force, which you are familiar with, that shows in a step diagram the possible outcomes that there are depending on what red lines are set. That has been clear from the very beginning. That slide must be 18 months old, so it has been clear from the beginning that this would be the outcome if we started there, and that is what we have ended up with.

The EU will not change that, because it is dictated by the red lines. If you take away the red lines, by taking away the four freedoms and saying, “We will accept freedom of movement”—in Scottish terms we should say that, because we need freedom of movement—you will get a different deal and a different outcome. Continued membership of the single market through the European Economic Area becomes an option in those circumstances, as we have always said, because you observe the four freedoms. If you accept the jurisdiction of the ECJ, something else becomes possible, and eventually you reach a stage at which membership is the right solution. However, because of the red lines, the Prime Minister is where she is, and I have no idea what rabbit she believes she has to pull out of a hat. I think that she may find that the rabbit has chewed its way through the hat and disappeared, but who knows?

We shall see. If we assume that the vote does indeed take place on 14 January, given that the Prime Minister seems to pull votes when she wants to, and the House of Commons does not support the deal, presumably there would be sufficient time—going back to the point that Claire Baker raised—either to seek an extension to article 50 or unilaterally to revoke article 50 per the recent court judgment. We are coming up against the deadline of 29 March, so that would avoid the worst of outcomes in terms of no deal.

Time is very much of the essence. The Prime Minister says, “We need to get on with it,” but she is the person who withdrew the vote. If she had allowed the vote to take place and had been defeated, we would be into an understood process, which would give the Government 21 days to come back and then seven days to make a proposal. She decided not to do that. If we get to the week beginning 14 January and that takes place, she then has a seven-day period in which to bring back something, and that something is clear. The First Minister made that point forcibly yesterday at the JMC.

Something could be done today; we could tell the EU27, “We want to take advantage of what is in the treaty, which is an extension of the article 50 process, and here is why we want it.” I do not think that we would get it by saying, “I’ve been incompetent in negotiation,” but we would get it on the basis of significant change. Businesses would then feel that progress was being made and, politically, we would be on a route to getting a solution. However, until that vote takes place, that cannot happen, and the Prime Minister is the person who delayed the vote.

Yes, it is all very gloomy. I have questions on a different issue, convener, but perhaps we can let the discussion flow a bit first.

This is where we depart from commentary and move to some questions. I take your point, cabinet secretary, about bringing all the leaders together, but that would have split the Tory party at the time. That may be a desirable objective from some of our perspectives, but I can see why such a meeting never happened.

Amber Rudd appeared on “Peston” last night and, for the first time, we had a cabinet secretary basically saying that she supported a people’s vote or a second referendum. I thought that that was the most important development yesterday—not what went on in the Commons, but rather the fact that a cabinet secretary is now out there saying that. What are your thoughts on that?

My other point may be rather more important in the longer term. Claire Baker mentioned our visit to Brussels. Scotland house in Brussels does a great job but will we not need to expand that operation, given what is going to happen? Mike Neilson, Ian Campbell and their team are excellent—they have nothing but my admiration—but they are understaffed, given what is likely to happen. Is that not the case?

There are strong arguments for increasing and continuing to increase our representation not just in Brussels but elsewhere, given the circumstances. Of course, we are constrained financially and we have to recognise that but I agree with you—I think that the whole team does a fantastic job. They are our eyes and ears in Brussels but they are also our ambassadors and they are doing a fantastic job in showing people what Scotland’s view is and how we have taken things forward.

We now have a presence in Paris and in Berlin, and we have a very effective presence in London and in Dublin. We will need to do more, but within the constraints that we have.

Amber Rudd’s contribution is significant but words have to be followed by actions. Who knows how many factions the UK cabinet is in? It is probably split between those who think that they might as well continue to support the Prime Minister on the grounds that they owe their careers to her, those who recognise that the people have to be heard at some stage, and those who are determined to have a no-deal Brexit, including that ludicrous concept of a managed no deal.

If anyone has any doubt about the impossibility of a managed no deal, they should read the document that the European Commission issued yesterday and they will be in no doubt at all. The Commission has thrown up its hands in horror, essentially, and said, “We will do what we need to do to protect ourselves.” That is not a managed no deal; that is saying, “We are not going to be derailed as a result of what is taking place.”

If Amber Rudd were to be followed today by others saying, “Let’s have a people’s vote,” I would be encouraged.

You mentioned the Commission paper that was published yesterday and gives the Commission’s perspective on no deal. Is Scotland house fully engaged with that?

Yes, it is. It is providing information and making sure that people are aware of our preparations and, of course, we are in detailed discussion with the UK Government, the Welsh Government and the Northern Irish civil service, all of whom I met yesterday.

I hope that none of this happens—

So do I.

However, the UK Government has written to 145,000 businesses across the UK with advice; I assume that that includes a lot of businesses in Scotland. Was the Scottish Government involved in that?

No. I made that point to the Prime Minister directly yesterday. We did not see the letter or the information pack before it was sent.

We launched an online toolkit for businesses in September or October, I think, and it has been very well received. It allows people to work out what they are going to do. If you have not seen it, I would be happy to circulate information on it. It has been helpful.

However, there have been communications that have not been checked with us; we have issues with that. Yesterday, the Welsh Government raised the point that the Department of Health and Social Care has been saying things in Wales and asking people to contact a Whitehall number, whereas in actual fact, there is devolved health administration in Wales. We have to guard against such things.

To be fair—and I want to be fair—where difficulties have arisen, we have raised them, and an attempt has been made to solve them. The situation on no deal has improved over the past few weeks and months, but it needs to continue to improve because this is desperately serious stuff.

09:30  

You have identified—and we are aware of it—that many businesses in commerce and industry, and many sectors, are putting in place contingency plans in case of a no-deal scenario. You also touched on the Scottish Government’s toolkit. What other guidance is there and will the Scottish Government publish it so that we can see what preparations it is making?

We gave a comprehensive outline of that in the chamber on Tuesday. I undertook to write to members, and I will make sure that all members get those further details, including financial details.

What we have done for businesses, we have done publicly. The material in the toolkit has been provided on websites and in further information. The financial aid that is available to businesses has been well publicised. All that material is out there.

I am not going to publish more documents about no deal. I do not want there to be no deal. If there is, I want the focus to be on ensuring that we can mitigate as much as possible. That is where we are and, to be honest, that is where the UK Government is.

There needs to be a co-ordination of message—I am addressing that with the UK Government—so that, whatever the message is, it gets through.

I made this point yesterday and I make it again today. In preparation for no deal, one of the key issues for Scotland is that we are at the end of the supply chain, so remote and rural parts of Scotland are particularly at risk. The effect of no deal would be particularly damaging to those who are most vulnerable in society in terms of their rurality, geography and demography. We have to be ready for that, and we are feeding that into the system.

We will continue to report to members on preparations for no deal. I also said on Tuesday that I am happy to commit to briefing party leaders and spokespeople on that. I am, of course, happy to brief committee conveners and committees as we go on.

I am very keen to get on with things. If there is no deal, the task will be enormous. The civil service is reallocating time and space so we will be absolutely transparent, but I am not going to spend a lot of time polishing documents.

As you have already indicated, ensuring that contingency plans are in place, should they be needed, will be a mammoth task. I firmly believe that a deal will happen, but contingency plans have to be in place because of the rurality of Scotland, as you mentioned; more vulnerable individuals will be at risk and support mechanisms will be needed to protect them during the process.

The UK has issued about 105 technical notices. Will the numbers be similar here in Scotland?

At the very last moment, we were able to inject into a number of technical notices information that was of particular relevance to Scotland, or to indicate where the information was not relevant to Scotland, or to indicate where Scots law differed or the information differed. I would not therefore see the technical notices as specifically UK Government notices. We had no control over their origins or editorialising, but when we were able to, we made sure that they were relevant to Scotland.

There have been occasions on which information has been provided to organisations by the UK that we believe we should have known about or could have done better, but we are not in a war of information on this. Public information campaigns, if they happen, will have to be nested. I have made that very clear. There will need to be a distinctive and relevant Scottish campaign, and work is well under way on that. There will be a distinct and clear Scottish web presence and information will be made available to us, but it will be nested within the message from the UK Government so that there is no contradiction. There will be a complementary approach—I have had that conversation at a high level—and we will continue to take that approach.

However, on this occasion, I do not want to get into using effort to make distinctions when we have to just get on and do things. That is a two-way street and the other side of it is that the UK Government has to recognise that we need to do things—again, there is no hierarchy of Governments—in our way with the people for whom we work. So far, that is being recognised, and it will need to continue to be recognised.

Good morning, Mr Russell—I hope you get better soon. The committee has spent a lot of time considering the status quo in the context of the withdrawal agreement. This is a genuine question to you, Mr Russell. Am I right in understanding that you have less of a problem with the withdrawal agreement—which we have been told sets out the parameters for exit of the EU, guarantees EU citizens’ rights, offers short-term transition, with continuity of the status quo for business, and protects peace on the island of Ireland—but you are less happy with the terms of the political declaration? Do you foresee a circumstance in which, if the direction of travel in the political declaration changed, you could support the basic terms of the withdrawal agreement itself, which would allow us to move into the transition period and thus avoid the cliff edge that people are talking about?

That is an interesting question, which I will treat seriously. It is fair to say that there are things in the withdrawal agreement that would have to be in a legal text of 500-and-something pages to which we did not take any great exception, and there are things that we thought were useful. However, the fact that the four freedoms will not continue and the migration issues that that will cause is a particular worry for us, because that just does not work for Scotland. A range of other areas also worry us. There cannot be a renegotiation of the withdrawal agreement, given the red lines, and we cannot support it as it is drafted—there would have to be changes to it to make it acceptable to us.

However, I will widen that out, because you raise a particularly interesting point. You asked whether there is a way that we can go from here to get to a different state in which we have a serious conversation about what happens next and avoid the cliff edge. There is a way of doing that, but it is not by trying to get the withdrawal agreement and political declaration voted on, saying, “That’s what we have, now let’s renegotiate or change it”—that is the Michael Gove position. What you need to say is, “This does not work. We need something different.” That is the product of the red lines. You can do that only if you invoke the suspension of article 50.

It would be very easy for me to sit here and say, “There’s a deal on the table, why won’t you back it?” That would be a pointless question, and I think that I would know the answer to it. What I am trying to tease out, given your involvement in the process, is practical steps to take next—taking some of the politics out of it.

The withdrawal agreement as it stands offers very little room for manoeuvre in terms of change. This committee and others have been told explicitly by the EU27 that the agreement is very much what is on offer and that any extension to article 50 would be very short term. What do you think would be a practical way forward through all this? There is a real risk that we could leave on 29 March with no deal. I do not think that there is a huge appetite for that, but, on a technical level, it could happen. If everyone is so keen to avoid that—knowing what we know—how could we avoid it?

The route is very clear. I am concerned about leaving without a deal, which you talked about. I, like Mr Stewart, hope against it—I hope that we get some progress. The progress that we need to see is this. First, the Prime Minister accepts that she needs to have at the very least an extension of article 50 and, therefore, asks for it. Secondly, there is either an election or a referendum. I think that a referendum is more likely to pass the House of Commons than an election. I do not want to second guess it, but that is my expectation. The referendum process is then completed within the period of the suspension, which can be only six months at present. If it were to be started in January, it would have to be done in June. That fits in with the timetable for the European elections—just.

I would have thought that that is what needs to be done. That is the point that the First Minister put to the Prime Minister. It is the position in which we find ourselves now and it reflects the reality of the situation. Are there other options? Your colleague Donald Cameron has indicated his support for the Norway-plus model, which is helpful. I do not reject the Norway-plus model, but at present it is not a short-term solution; it would require a considerable period of time.

If the Norway-plus model were to be followed, I think that it would require the Prime Minister to revoke article 50 and say to the EU that we want to move forward on that basis, which would be an EEA and European Free Trade Association-type arrangement. Determining whether we would be a member of EFTA—when the Norwegians have, perhaps understandably, indicated some nervousness about having the UK within that tent—or a special third pillar of EFTA, which has been discussed, would take considerable time.

Given the seriousness of the present situation and the considerable costs and worry involved, the best way to do this is to seek an extension of article 50 and have a referendum. That is my view.

Okay. You have previously expressed the Scottish Government’s official position, which I understood to be, first, not to leave the EU at all, and if we were going to leave the EU it would be to remain a member of the single market and customs union. At no point was the option of the referendum mentioned. However, in your opening statement you said that your first preference is for a referendum. Therefore, can I confirm that that is your official position, which has changed from what you previously expressed? If there is to be another referendum, what should the question be?

Okay. I am tempted to quote Keynes; I am sure that members are aware of my fondness for a quote.

“When the facts change, I change my mind. What do you do, sir?”

The reality is that the facts have changed in recent weeks. We now have something on the table. Our preference all along has been not to get to the stage of having an appallingly bad deal or no deal as the choice. That was the Prime Minister’s doing, not ours. In the circumstances of today, faced with what we are faced with, we believe that the right next move is the revocation or suspension of article 50 and a referendum. That is where we are, today—that is what we are arguing for in the circumstances.

What are we asking people?

Let me finish. I have taken the issue of EFTA and the EEA, and the issue of the single market and customs union, through endless discussions with the UK Government. We put that compromise on the table in December 2016. If only the Prime Minister had taken it, we would not be in this mess.

You have not answered my question. What is the referendum on? What are we asking people?

I am sorry. The question in the referendum has to include remain and we would have to discuss what remain is set against. Given that the only thing that exists to set against it is the Prime Minister’s deal, I suppose that the likely outcome of a discussion in the House of Commons about the question would be the options of the Prime Minister’s deal or remain. It is inconceivable that we could have a referendum without remain as an option.

So, it would be a rerun of the last referendum.

No, it would not be a rerun because there was no specified leave option last time. If you remember, the option last time was very nebulous, if I may use that term again. I am happy to share with you a leaflet that I have somewhere from the leave campaign, which is about all the powers that this Parliament would gain if people voted to leave. That campaign was run very strongly in Scotland, but we have gained none of the powers; it was run on a false prospectus. We would have to have a remain option, and we would probably have to have the fruits of the Prime Minister’s work over two and a half years, such as they are.

Good morning, cabinet secretary. You were at the JMC meeting yesterday. Did anything positive come from it?

I seem to remember that we wished each other a happy Christmas. I am not sure that I can think of anything else positive that came out of it.

The communiqué was clear. The meeting discussed the withdrawal agreement and the current state of play. It discussed the no-deal scenario and, inter alia, the immigration white paper, which had been issued without any indication of when it was going to come out.

It is interesting to note that, at the last JMC meeting before Christmas last year, I pressed Brandon Lewis—who was then the immigration minister; he is now the chair of the Conservative Party—on when the white paper would come out. He would not say, but he said that it could come out before Christmas. He meant last Christmas, so this has been going on for ever.

We had no indication until late on Tuesday evening that the white paper was going to come out on Wednesday. That came into the discussion and we also discussed the intergovernmental review, such as it is. Points were made on both sides of the table.

I will be fair about one thing. I pointed out that there were significant difficulties in a couple of areas in terms of liaison on no deal, and there was a very quick resolution that involved ministers and officials because they recognised how important it was to resolve that. I therefore think that, on the workaday level of liaison on no deal, there was something positive; in terms of the mega picture, there was not.

09:45  

You mentioned discussing the immigration white paper yesterday. You also said in your opening statement that the white paper would not be positive for Scotland. Can you elaborate on that, please?

I hope that I put it more strongly than that. To say that it would not be positive for Scotland is equivalent to that famous line: “How did you enjoy the play, Mrs Lincoln?” This is an appalling set of circumstances. The white paper estimates an 85 per cent reduction in the number of European Economic Area nationals in the UK. I will provide the committee with our published calculations, which I think estimated the effect on our gross domestic product of a 50 per cent drop, which would be catastrophic. The effect of an 85 per cent reduction would be impossible to imagine, but it would throw the economy into complete chaos.

We can consider the immigration white paper on a number of levels. At the practical, workaday level of the economy what it proposes is impossible. We are not the only ones saying that. The Prime Minister keeps saying that we must listen to business and listen to industry. Well, Tracy Black, director of CBI Scotland, said that the UK Government

“tunes out from the economic damage of draconian blocks on access to vital overseas workers.”

The Scottish Tourism Alliance states that there will be “potentially devastating effects”. NFU Scotland said that the

“evidence of our sectors has not been heeded.”

The policy chairman of the Federation of Small Businesses said:

“These proposals will make it nigh impossible for the vast majority of Scottish firms to access any non-UK labour and the skills they need to grow and sustain their operations.”

The Institute of Directors stated that

“it still seems that the government’s immigration policy is being driven by the unattainable, distracting and economically illogical net migration target.”

Universities Scotland has also commented. In this regard, I declare an interest, as I have an interest in the university sector. It needs to be remembered that Universities Scotland stated:

“We want to be part of a society that is open, richer culturally and financially. We need to be serious about attracting talent to our nation. It’s hard to see how this can be achieved with today’s white paper.”

I have never seen such unanimity of condemnation and that is about the basic economics.

The problem goes further than that, however, because what the white paper proposes is morally wrong. This is a country that should be open, inviting and welcoming. This is a country enriched by migration, both financially and culturally. Many of us take the white paper’s proposals as a personal affront in terms of how the world will see us, because we are not like that. We are not involved in dog-whistle politics. We hate and reject that type of approach. The white paper should make those of us who read it angry about what we have witnessed and determined not to have it happen.

On the back of those comments, and given the discussions that you will have in Scotland with the organisations that you mentioned and others, I assume that you would encourage as many people and organisations as possible to make further representations to the UK Government to get their points over to it so that it can change the white paper in the future.

I absolutely encourage them to do so, although I do not think that they need much encouragement, because their economic wellbeing is on the line. However, I am absolutely certain that they will do as you described, as will we. Of course, we are doing so with an alternative in mind.

Clearly, independence is the best alternative, but we have long argued for a devolved approach to migration. I remember having conversations about it with David Davis when he was in office and pointing out to him the great advantage of devolving migration powers, because he could then set whatever targets he wanted in the rest of the UK and we could meet our needs by ensuring that we had the best approach to migration. The devolved approach exists in the Canadian provinces and in parts of Australia. It is not difficult to manage and, given the circumstances, its time has come. The bodies that I mentioned are moving towards it. At the CBI dinner this year, it was interesting that people’s objection to such an approach was not an objection in principle, but on its timing, and that was before they saw this appalling white paper.

Putting in place a devolved system of migration would be a short-term solution, prior to independence, but it would be extremely positive. The chief executive of the Scottish Tourism Alliance said:

“I know there is a proposal from the Scottish Government to look at a visa specific to Scotland to allow people to come and work in Scotland, under the threshold of the £30,000 salary band, and hopefully that would enable us to attract people and they would stay with us.”

That is really important. I know that tourism businesses in my constituency have already been operating at 10 to 15 per cent below target on staffing this year. The policy in the immigration white paper will make that much worse.

In early November, we heard from Professor Manning of the Migration Advisory Council and it was clear that, with regard to how detrimental it would be for Scotland, there had been no analysis of Scotland’s economy or of any of the recommendations that the MAC was going to make.

The MAC has been a constant disappointment. It is a narrowly focused group, without adequate knowledge of or information on the Scottish economy and demography.

I commend our evidence to the MAC, which was professionally and scrupulously prepared. It tells us what the situation is. As you know, we have now set up our own independent expert policy group, which will start reporting in the new year and which includes people who understand and have academic knowledge of the Scottish economy and Scottish demography. That is really important.

A few moments ago, you mentioned intergovernmental relations and the review. Will that review continue as negotiations regarding the transition period and the post-Brexit situation take place?

Yes. The IGR, in essence, responds to the point that we made—Carwyn Jones put it well—that devolution cannot bear the weight of Brexit, which is where we find ourselves. So, how does it change? I want it to change by Scotland becoming independent, as that is a far better answer, but, while devolution continues, how does it develop and change? The Welsh published interesting information on that in August 2017, we addressed some of those issues in our first “Scotland’s Place in Europe” paper in December 2016, and there is material on the table.

That is the generality of it. The specific of it is that the sole convention is not operating at the present time, because it has been broken by the UK Government. We need urgency on that, or we will not approve and give legislative consent to Brexit legislation. I have regularly raised that and made proposals to the UK Government on how to take it forward. Yesterday, I again stressed the urgency of it, as did the Welsh.

We now move to Patrick Harvie. Before you ask your question, Patrick, I welcome you to the committee and ask you to declare any relevant interests.

Thank you, convener. I am happy to be here as a substitute for Ross Greer. I have no interests that I am formally required to declare, but, for clarity, I would like to put it on the record that I am a member or supporter of several organisations that have expressed views that are relevant to today’s business, notably the European Movement in Scotland, as well as the Equality Network and Stonewall Scotland.

I want to ask about some of the environmental aspects of the process—in particular, the European environmental principles and governance. We have already discussed in the chamber, in relation to the UK Withdrawal from the European Union (Legal Continuity) (Scotland) Bill, the requirement for both Governments to establish a set of environmental principles. It might be too soon to be able to say exactly what the Scottish Government will do in response to the Supreme Court ruling on that.

As a former environment minister, you will also be aware of the importance of environmental governance. In a period of change—if Brexit goes ahead—there is a reasonable expectation that there might be a number of challenges or contested issues where governance bodies become important.

I have a two-fold question. Is the Scottish Government any further forward in deciding what the environmental governance structures will be that will kick in, or that we will transition to, during the transitional period in respect of our devolved responsibilities in environmental matters if, somehow, the withdrawal agreement is approved by the Westminster Parliament and put into practice?

The flip side of that is that if there is to be a no-deal situation and we are to be marched off a cliff if the withdrawal agreement is voted down, what on earth is the reality as regards the decision-making authority in environmental governance matters, which are currently handled at EU level and would potentially fall into a vacuum at either UK or Scottish level?

As Patrick Harvie will know, neither question is easy to answer at this stage, but I will have a stab at both of them. As Mr Harvie also knows, we have not yet come to a conclusion about what we do next with the continuity bill. He was part of a discussion that took place two nights ago and I do not think that it is a secret that I will see Tavish Scott later today, to seek his input on those matters. In the new year, we will take this forward, and a number of options exist. The environmental issues are some of those that have survived the—I was going to say “deceitful”, but I will not use that word—approach that was taken to the bill in the House of Lords, with a small but important exception. Therefore we still have something in there that we could work on, and there are a number of ways that we could take it forward.

I understand that my colleague Roseanna Cunningham will consult on environmental governance in the new year, so I do not want to gainsay her position, but we recognise that robust and effective environmental governance procedures will need to be in place. I know that there was an announcement from the UK Government yesterday. I am sorry that I am not across that, but rather a lot of things were happening yesterday. I will get up to speed on it in a few days’ time. However, we will not allow issues of environmental governance to be eroded or undermined in this process. We will work very hard, and there are ways for us to take the matter forward.

However, if we come to a no-deal scenario, I presently do not know what we will be able to do. The environmental secondary legislation that we are putting in place will transfer responsibilities, but I am not sure that it will do so in an effective way on which we could totally rely. Therefore, I would want to think about that more carefully. If Mr Harvie would like to take it, I offer the opportunity for him to make representations to me and to Roseanna Cunningham on that once we see what the situation is in the new year. At that point we could do with having a conversation about the cliff-edge scenario, and I would be happy to have such a conversation.

That is appreciated. If, in early or mid-January, the withdrawal agreement is rejected by Westminster, notwithstanding the fact that many of us will want to cancel Brexit overall, there will also have to be an acceleration of no-deal preparations, just in case. Your no-deal preparations so far may have featured environmental services, such as the collection of recyclates, for example. Most of those go out of the country quickly and there would be very little storage or management capacity if they were to build up. Are you able to say anything about the planning that has taken place on such issues to date?

We are sighted on that, and it is in the risks and issues register. We know that it will be a concern. Essentially, the system would become blocked very quickly. What we would do with material in such circumstances will have to be considered. It would have to be stored but, as Mr Harvie will know, there are environmental and other problems with that. The issue is there and will have to be addressed alongside others. Whether it would be best to store such material at ports and wait for the opening of circumstances in which it could be transported, or whether there are ways in which it could be processed in Scotland—which is highly doubtful—are matters that are under consideration.

There arises another series of issues on environmental regulation that are the responsibility of Scottish Government agencies such as Marine Scotland, Scottish Natural Heritage and the Scottish Environment Protection Agency. They would all have to continue in operation in the event of there being no deal and at a time when there would be pressure on resources and insecurity in communities. We are conscious of that.

10:00  

On our visit to Brussels, we had some really interesting discussions, one of which was with the Labour MEP David Martin, who has been an MEP since 1984. One thing that he said that resonated with me was about Scotland’s relationship with Europe post-Brexit—assuming that we are still heading in that direction—particularly for business. As the cabinet secretary has done, he talked about the Scottish Government strengthening its support and networks in Paris and Berlin. However, he pointed out that Scotland will not be a member state or part of a member state; it will be a sub-state legislature. Therefore, while Ireland will have direct communication with the Government in France, Germany and other member states, we will not even be outside the door; we will be outside the outside door. In effect, we will be just another lobbying group with minimal influence, which will obviously have an impact on our trade and economy.

Mr Martin suggested that, given that we will be so far out of the loop, the Scottish Government might want to redirect its efforts towards places that are not capitals, such as Munich, Barcelona or Milan, where we might get a hearing from the local regional Governments. That is quite a depressing scenario, but do you think that that is a potential rational way forward once we are through the Brexit mess that we face at present?

I can see where David Martin was coming from on that. My view is that Scotland’s aspiration will be to rejoin as a member state at the first and earliest opportunity, and therefore continuing a relationship with the capitals will be essential in order to keep the dialogue going and to ensure that we measure up to the standards of the acquis. Therefore, I do not think that the Government will be downgrading our contacts or aspirations. I tend to say to organisations that talk to me about what they should be doing that, rather than weakening their connections in Europe, they should be strengthening those connections. They should be putting in place stronger and more robust relationships that can try to survive the shock of Brexit so that, at the other end, they can build from where they are. That is my view, and that is certainly what we will try to do, although I understand David Martin’s point.

We have had and continue to have good relationships with a range of sub-state entities, but we rightly see ourselves as a nation and we wish to be a nation within Europe.

Obviously, I agree with that, but the issue is whether we will get a hearing, given what we are likely to face.

Moving on, you talked about a general election as a potential way forward. Given the Labour Party’s incoherent policy of deliberate ambiguity—as I understand it, although I am not 100 per cent sure, it appears still to be pro-Brexit—what would a general election achieve? Another point that we heard when we were in Brussels was that people in Paris and Berlin fear that a Corbyn Government would be more economically damaging than Brexit. Will you comment on that?

I tend to be of the view that, if we are trying to encourage people to move along with us, we should not necessarily condemn the slowest ships in the convoy; we should perhaps help them to get faster, so I will try to do that.

Are they even in the convoy?

If not, let us seek them out and get them into the convoy. I am disappointed about where we are. I would have liked to have seen a motion of no confidence this week. It is important to have that, but it does not look as if that is going to happen. It is absolutely wrong to allow the Prime Minister to play the situation so that she can present it as being her deal or no deal. I want to try to get everybody doing the same thing. That has been my strategy in the Parliament and it continues to be my strategy. Whatever my opinion is of the individuals, I will continue to ask the Labour Party to consider that, at this absolutely historic juncture—“historic” is a much ill-used word, but this is historic—it should be active like never before in holding the UK Government to account and endeavouring to change it.

That is very diplomatic of you, given the shambolic position that the Labour Party has put forward.

On the possibility of a further referendum, you might have seen Liam Fox on “The Andrew Marr Show” on Sunday saying that, if there is a second referendum, people in his wing of the Conservative Party will go for the best of three. That would be unbelievable, but that is what he is saying. Do you believe that having a second referendum would be anything other than kicking the can further down the road? What would it achieve in the short to medium term?

Well, it gives people—

Sorry, I have just one last point. Tavish Scott said that Amber Rudd supported a second referendum. She said on the BBC this morning that she personally does not support it.

If a member of the UK Cabinet says what they think, somebody comes round and says, “You had better not be thinking that” and they are sent out on to television to say that they do not think it. Those circumstances are ludicrous.

With regard to Liam Fox, Attlee’s remark springs to mind: “a period of silence” would be in order. He is one of the people who have created this extraordinary mess. To contribute to getting out of it, he has zilch, nada, nothing at all. I do not watch him on those shows because he is part of the problem, not part of the solution. I go back to the point that we should work with people across parties, including elements of the Conservative Party. We should be working to resolve an unprecedented national emergency and trying to get ourselves into the right position.

Mr Greene’s question is germane at this particular moment; the right approach is to make sure that we defeat the Prime Minister’s deal, reject no deal—the means are absolutely to hand to do that—and then have a second referendum.

Of course, the Prime Minister is being held to ransom by people like that. You said that Liam Fox has nothing to contribute, but he is resonant of many views in Conservative constituencies up and down the country. I have no truck with his views, but they are why we are in this position. The whole situation was created by a civil war in the Conservative Party and David Cameron’s badly judged way to resolve it.

Mr Scott’s point was right. The choice is whether the Prime Minister splits the Conservative Party or not. She has the Robert Peel choice in front of her: does she split her party in order to create what is, in essence, the right solution for “the nation”? She has proved herself incapable of so doing. She is no Robert Peel.

I thank the cabinet secretary and his officials for giving evidence. I wish you all a happy Christmas. I suspend the meeting to allow a changeover in witnesses.

10:07 Meeting suspended.  

10:10 On resuming—