Finance and Constitution Committee

Meeting date: Wednesday, November 16, 2016

Official Report 581KB pdf

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Intergovernmental Relations

Item 4 is evidence on intergovernmental relations from two Scottish Government ministers: Derek Mackay, Cabinet Secretary for Finance and the Constitution; and Mike Russell, Minister for UK Negotiations on Scotland’s Place in Europe. They are accompanied by Scottish Government officials Gerry Hendricks and Alison Byrne.

The First Minister is appearing before the Conveners Group at 12.30, so I will need to bring the meeting to a close by 12.25 at the latest. We have plenty of time, I think—

That is an hour and a half away.

I was just making sure that these guys realise what is ahead of them. [Laughter.]

It will be just the short version, then.

I will curtail what I was going to say.

I understand that the Cabinet Secretary for Finance and the Constitution wants to make some opening remarks, to which the Minister for UK Negotiations on Scotland’s Place in Europe might add.

Thank you for the opportunity to give evidence with my colleague, who will indeed add to my opening remarks on intergovernmental relations.

The Smith report recommended that the current intergovernmental machinery between the UK Government and the devolved Administrations should be reformed. In December 2014, it was agreed at the meeting of the joint ministerial committee plenary—the JMC(P)—that the joint secretariat should develop proposals for revising the memorandum of understanding on devolution. As the committee will have noted from the communiqué following the meeting of the JMC(P) on 24 October, work has been proceeding on measures to make the JMC(P) a more effective forum for the management of intergovernmental issues.

However, the world has changed since the EU referendum. If the Prime Minister is to deliver on her commitment not to trigger article 50 until a UK approach and objectives for negotiations are agreed, the reviewed intergovernmental machinery must enable the process that is being set up for EU negotiations to deliver meaningful engagement. That will include the JMC on European negotiations—the JMC(EN)—the forum at which the Minister for UK Negotiations on Scotland’s Place in Europe represents the Scottish Government. The JMC(P) therefore remitted further work to the secretariat, to ensure that that will happen; it will return to the issue once the JMC(EN) is up and running in a satisfactory way.

The other Smith recommendation was that intergovernmental relations should be underpinned by stronger and more transparent parliamentary scrutiny. The session 4 Devolution (Further Powers) Committee’s report, “Changing Relationships: Parliamentary Scrutiny of Intergovernmental Relations” led to the development of a written agreement on parliamentary oversight of intergovernmental relations, which was developed jointly between the Scottish Government and the Scottish Parliament, signed off by the Deputy First Minister and ratified by the committee in March.

The Scottish Government is committed to openness and transparency in our joint working, on a bilateral and multilateral basis. We are committed to complying with the written agreement, and we have made a good start during this session of Parliament, with relevant committees receiving information about the finance ministers’ quadrilateral, the joint exchequer committee, the joint ministerial working group on welfare, the JMC(P) and the JMC(EN). We will continue to work with the Parliament to deliver on that commitment.

The Minister for UK Negotiations on Scotland’s Place in Europe will update the committee on recent events, which have overtaken issues.

It is a pleasure to be back at the committee, where I think that I first heard that the job that I now occupy was to be created—if I am remembering our away day properly.

I want to say two things about the structure that has been established. The first is to confirm the view that academics have given the committee—and the conclusion of parliamentary committees themselves—that many issues arise out of the joint ministerial structure that require to be resolved and that the structure has not operated efficiently or effectively for almost all the time that it has been in existence.

The purpose of having a revised MOU is to try to change that situation and the revised MOU, when it is eventually in place, may do so, but a bigger influence might be the establishment of the JMC(EN). That is because, for the first time in the JMC structure, there is a need for a group that can both agree actions and have oversight of those actions. In other words, the JMC(EN) has to agree on what some elements of the UK negotiating position on Europe should be, given the interests of the devolved Administrations, and it then has to have the confidence that the UK Government is entering fully into that approach. That must be reported back so that the committee understands that the approach has been effective.

We will discover whether that can happen as the JMC(EN) continues in operation. It has had a single meeting, which was last week, and we have agreed to have monthly meetings. As time goes on, we will discover how that works. I am happy to discuss, in so far as I can, the detail of what has taken place at the meetings and what lies ahead.

Thank you very much.

Both of you alluded to the fact that numerous commissions and parliamentary committees and some academics, when they have studied the United Kingdom’s joint ministerial machinery, have written that it is not fit for purpose. I confess to having written, or helped to write, some of those reports. Before we can understand whether that claim is correct, we need first to understand the purpose of the United Kingdom’s joint ministerial machinery. What is the Scottish Government’s view of what the purpose of the UK’s joint ministerial machinery is and/or ought to be?

I would offer the view that its purpose is to help to ensure good governance and implementation in relation to issues that have been agreed. My closest interest has been around the finance ministers’ quadrilateral, where all the devolved Administrations come together with the UK Government to discuss finance matters. That might include negotiations on issues that are of interest to all of us, joint working and implementation. It is a forum in which we can share issues and ideas, discuss implementation and proposals and show respect for all the Administrations and for governance.

The joint exchequer committee is a useful forum specifically for implementation of the Smith commission proposals. It relates to functions that have been devolved and other finance matters that are of interest.

My experience of both so far has been fairly positive. I have been able to raise issues, make progress and inform this committee of areas in which we have had agreement from the UK Government where we have sought it. So far, my experience as Cabinet Secretary for Finance and the Constitution is that the areas that have been servicing finance have had a better start. We meet more regularly and there is a helpful new rhythm of meetings, including of the JMC(P), in keeping with fiscal events. Those are helpful in my finance brief, and they are taken seriously by the UK Government.

The most recent quadrilateral meeting was on the same day as the JMC(P) meeting in London. Civil servants advised me that the meetings might not always be as positive as that one was, but I thought that it was a good start for my first quadrilateral meeting. The machinery is there to serve good governance, in recognition of the UK Government’s role and our role on matters that affect both Governments and their competencies.

That is interesting. It is notable that, in speaking about what you think is the purpose of the quadrilateral and the joint exchequer committee, you did not mention joint policy making. Those bodies are about respect and sharing information and ideas, but they are not about joint policy making. Is that right?

We respect each other’s competencies, although we might try to influence. We would obviously guard very closely rights around devolved issues, but some reserved matters and finance decisions impact on those devolved issues—I could give many examples of that. The finance meetings are generally not about joint policy; they are more about financial understanding, negotiation and perhaps resolving matters such as the block grant adjustment or implementation of a power. The joint exchequer committee and the quadrilateral meetings are not about determining new policy as such.

Mr Russell might want to add to that, on the wider issue of the JMC(P) and current European issues.

We must distinguish between what the Scottish Government regards the meetings as being important for—what it would like to get out of them—and what the other participants regard them as being important for. It also depends on what the function of the meeting is.

I will illustrate that in two ways. The JMC on Europe—the JMS(E)—has always been the best attended of the JMC meetings. I was a member of it in 2009. I remember being at one meeting at which there were 20 UK ministers, as well as Rhodri Morgan and me, which was not exactly an equity of arms. The purpose of the JMC(E) was to brief ministers on what was on the upcoming Council agenda, so many UK ministers attended it in order to get a briefing from the United Kingdom permanent representation to the European Union—UKRep—about the European situation. In those circumstances, it was not really a joint ministerial meeting; it was a case of Scottish ministers being involved in a Whitehall structure, which happened to be the JMC(E) structure.

The JMC(EN) has clear terms of reference, which I think have been provided to the committee. Those terms of reference are to

“discuss each government’s requirements of the future relationship with the EU; seek to agree a UK approach to, and objectives for, Article 50 negotiations; and provide oversight of negotiations with the EU, to ensure, as far as possible, that outcomes agreed by all four governments are secured from these negotiations; and discuss issues stemming from the negotiation process which may impact upon or have consequences for the UK Government, the Scottish Government, the Welsh Government or the Northern Ireland Executive.”

Therefore, there is some clarity on what we are trying to achieve in those meetings.

JMC(P) meetings are consultative and co-ordinating meetings between the Prime Minister and the First Ministers. The JMC(O) is the officials’ meeting—it services what takes place in the other committees. There has been a JMC domestic process, but I think that it is formally in abeyance. There are no plans for a further meeting at this time, while the JMC(EN) is in operation.

It is a complex structure. The overall Government approach is clear. Each part of the structure has a different function, and one part of it—the JMC(EN)—now has clear terms of reference with regard to how it is to operate and what it is to achieve.

That is a helpful overview of the position that we are in. I thank Mr Tomkins for teasing that out.

Ash Denham wants to ask about the improvements that could be made following Smith.

Cabinet secretary, in your opening statement, you mentioned that the Smith commission recommended substantial reform. It said that the JMC structures should be “scaled up” and that there should be a new memorandum of understanding, especially in light of the further devolution that is coming. You said that some work has been done on that. How would you characterise the progress that has been made towards that goal?

There were negotiations to improve those structures. Our aspiration is to have parity of esteem, and to make sure that the machinery works well and that there are regular meetings. We would like improvements to be made in a range of areas, but that process has been overtaken. There have been elections and purdah periods since then. The whole improvement process has been overtaken by the European issue, which has become the focal point of intergovernmental relations. Mr Russell leads on that, and the First Minister is involved in the current negotiations on what a new memorandum of understanding might look like.

The Government continues to use the existing machinery to make sure that the joint exchequer committee and the finance ministers’ quadrilateral continue to work, because that is how the powers that have been agreed are implemented. We are getting on with making sure that that process works well while the discussion continues on whether a new memorandum of understanding can be agreed.

There is agreement that further discussions on the memorandum of understanding will proceed after the JMC(EN) structure is in place and operating. A commitment has been made to hold another JMC(P) before article 50 is triggered, and I suspect that the issue will be on the agenda then.

If a further MOU is developed, to what extent do you think that it will incorporate the recommendations of the Smith commission? In what timeframe do you envisage that that might happen? If it does not happen—if the process is on hold, which I think is what I am picking up—how will that affect relationships between the two Governments in light of the further devolution that is to take place and the complexities over Brexit? Having a new structure in place would obviously help with those discussions.

I would say that the issues that were already in play around implementation of Smith are going fairly well. A pragmatic approach is being taken. The secretary of state and each relevant minister have oversight—I have some oversight of the implementation of policy and finance—and we are approaching matters in a very positive and constructive spirit and mood, and our civil servants are working together.

Of course, the Government would take a view around our constitutional position, but we are absolutely getting on with what has been agreed and making sure that the infrastructure is in place to achieve that. That all continues, and whether it is achieved through access to ministers or by officials, the work is on-going—I can assure you that it is happening. Intergovernmental relations are currently heavily dominated by the emerging agenda around Europe, because of its criticality and the state of politics in the UK at the moment.

11:00  

I want to unpick that a bit, in relation to the MOU and the changed dynamic because of Brexit. Can you explain what happened there a bit more? I think that there is a general understanding that we are on the road to signing off an MOU, but there may be stuff that you cannot say.

That is partly the issue. We can report to Parliament once negotiations around the issues are concluded, but they are not concluded yet.

Good progress was being made on getting a new memorandum of understanding but, post-Brexit, the JMC process is focused more on the relationship that the Administrations have with one another and with the UK Government, and on any approach that the UK Government takes. We were getting there with a new agreement and, if the referendum had gone the other way or had not happened, the most recent JMC(P) session would probably have discussed the agreement, because the European issue would not have been dominant.

Those are the facts of the matter. My assumption would be that we would probably have had a new agreement in place because that would have been the main issue. However, we are where we are and the European issue is dominant—hence Mr Russell’s involvement. Mr Russell attended the most recent meeting, rather than me, which signifies the importance of the issue, while we got on with other issues of cross-Government work.

Okay.

I do not think that many issues would worry us in the present situation; the agreement has just not been concluded yet. The fact that the last JMC(P) took place at the end of 2014 is perhaps indicative of the lack of urgency on the matter from the UK Government; it does not seem to have been at the top of agendas.

What has now focused minds on the JMC structure is the European situation. It is not simply a question of the European negotiation process being dominant in the relationship; it is that that has also drawn attention to the need for a JMC structure that is effective. That has resulted in a development of the JMC structure—we may see changes in the entire structure.

Patrick Harvie has a supplementary question in this area.

Good morning. I will stay away from the Brexit process, because I know that others have questions about that, but before the referendum result—before that was the context that everyone was thinking about—the Smith commission called for on-going work between the two Governments to arrive at an agreed position in relation to a number of its recommendations. Changes to allow victims of trafficking to be given a temporary right to remain in Scotland, some kind of replacement for the post-study work visa and agreements to allow asylum seekers to lodge a claim from within Scotland are all areas in which there was no hard and fast recommendation but there was a call for discussions to take place between the two Governments. Did the previous intergovernmental machinery give any opportunities to progress such issues, and how will they be easier to resolve with the new machinery, once it is in place?

We do not really know about the new machinery because there is no agreement in place.

With the old machinery, we had an issue with the fact that if there was a dispute, it was ultimately the UK Government that would decide. The UK Government might have been the party that we were arguing with, but it then made the final decision if there was a dispute in intergovernmental relations. The Scottish ministers would raise matters of importance in any event, whether through communication meetings or the formal structure. However, if the matter was reserved to Westminster, the UK Government could just ignore it—potentially that meant that it would not even get back to the Scottish ministers in good time.

Just so I understand the previous experience, is it the case that those kinds of issue were first put on the table by Smith, there was then some discussion between the two Governments and then the UK just said, “No, we’re not at all interested in doing that”? Is that what happened, or has the process been gummed up—delayed—by a lack of communication?

There might sometimes be a failure to respond to matters that the Scottish Government has raised because the UK Government does not want to respond. Therefore, to go back to the original question, we think that that element is not fit for purpose because it does not respect the nature of government in Scotland. I suppose that the UK Government would say that such a matter is within its competence, but that does not lead to healthy intergovernmental relations in areas in which there is a dispute. As I said, the current difficulty is that if there is a dispute on an issue, it is ultimately the UK Government that would decide on it. We believe that that is a weakness in the system in relation to areas that are outwith our competence.

It is also sometimes the case that UK decisions cut across devolved competences. For example, the apprenticeship levy is a tax that was imposed on Scotland without any proper consultation with anyone, and it cuts across devolved competences and responsibilities. That is the kind of issue that I raise through the current machinery and infrastructure. I have raised that issue with the UK Government and have written to the committee about it as well. However, it is still the case that the UK Government can ignore the protocol, and there is no mechanism to resolve that. Whether that will be resolved in any new memorandum of understanding remains to be seen.

Does the Scottish Government believe that the additional issues that Smith identified are still on the table and must be progressed?

Yes. We would like to see much more happen so that we could have a totally harmonious position, with the Scottish Government able to express views that would be taken on board seriously and a more effective mechanism of resolution.

If we analysed what has happened over the past two years, in hindsight we could describe it as having been focused on urgencies that have occurred. There were the Smith recommendations, but then there was the process of putting in place the fiscal framework, which took over the space available on both sides. Once that had been resolved, we were pretty quickly into the issue of Europe, which has now taken over the space that is available. All of that says something wider about the difficulty that exists in ensuring that the mechanism is fit for purpose and operates effectively. Carwyn Jones always says that we must remember that there is a joint process and that a joint commitment to get things done is required. I suppose that that gets particularly intensified when there is a considerable issue that requires resolved for both sides.

Before we get into issues around Brexit and the JMC (European negotiations), Murdo Fraser wants to pick up on issues around the finance quad.

Just before I do that, I have a quick follow-up question on Patrick Harvie’s last question. I am interested in the discussion around the Scottish Government bringing what are, in effect, reserved issues to the joint meetings. Do the ministers have experience of UK Government ministers raising devolved issues in relation to which they are critical of the Scottish Government’s stance?

The apprenticeship levy, as I said, is an example of a reserved issue that has cut across a devolved responsibility, and there is the prospect of a sugar levy, which would also impact on Scotland but on which there has been no engagement with us either. We would argue that those are devolved areas in which the UK Government has intervened.

No, I am not talking about intervening. Obviously, you use the forums to make representations to the UK Government if you think that it has got policy wrong on a reserved issue. Is the UK Government doing the same to you the other way round?

Certainly, in finance quad meetings and in meetings of the joint exchequer committee, the UK Government has been more focused on outlining its position than on listening to our requests. That has been the nature of the discussion at the meetings that I have been involved in, to be frank. Mr Russell might want to add to that.

I was a member of the plenary, domestic and European joint ministerial committees in 2009, and I can remember what Mr Mackay described happening on many occasions and a particularly vitriolic attack by the then Secretary of State for Scotland, Mr Jim Murphy, on the First Minister. I can assure you, Mr Fraser, that they appeared to give as good as they got.

Okay, thank you. I have a couple of questions on the finance quadrilateral meetings.

Mr Mackay, you wrote to the convener on 3 November with a summary of the latest meeting, which was on 24 October. You make reference in that letter to HM Treasury approval for annually managed expenditure cover for the Scottish growth scheme, which is welcome. You also narrate that the Treasury agreed to permit a budgetary carry-forward of up to 15 per cent for financial transactions, which was a change of approach. What does that represent in monetary terms for the Scottish Government?

It does not mean anything by way of new cash. For the Scottish growth scheme, it gives us budgetary cover to use AME if required. Over the period of the scheme, we can give loans and guarantees to companies whose growth can be supported by getting access to finance and, if there is default, that has a call upon our resources. There is no cash implication though.

With respect, I think you misunderstood my question. It was not about the growth scheme; it was about the agreement on the 15 per cent budgetary carry-forward and what that represents in monetary terms.

It does not mean new money. It just gives us the flexibility to carry forward as used to be the case when there were higher levels of carry-forward for financial transactions. The limit was lowered quite drastically, which was an issue that other Administrations faced as well. Landing exactly on the line is very difficult to do, so a margin of flexibility is needed. It was felt that the reduction was too strict and too rigid. The devolved Administrations agreed that we needed further flexibility; it was maybe more of an issue for the other devolved Administrations but we were all sympathetic. It means simply having more flexibility for budget exchange, specifically on financial transactions, if required.

I am sure that Mr Fraser is aware of the nature of financial transactions; they can be issued and get close to the line. Some of them—assistance for help to buy, for example—are not like a normal budget, where one can determine how much is spent, as they are demand led. For all of those reasons, further flexibility seemed like a reasonable request, and the Chief Secretary to the Treasury agreed and increased the limit at the request of all the devolved Administrations.

So there is no new cash; there is flexibility. That is a good example of joint discussion and of having flexibility in the arrangements, so that we are all able to deliver policy.

I understand that. My question was simply whether you are able to put in monetary terms how much that represents. Maybe that is something that you need to write to the committee about.

Yes, I will write back with the quantum of current financial transactions.

Thank you. That would be helpful.

My second question relates to current EU funding streams. Various constituents—I am sure this will be common across members—were in the process of applying for funds, such as LEADER funding or agri-environment schemes, and are concerned about whether their applications can go ahead.

On 3 October, the Chancellor of the Exchequer announced that such funding would be guaranteed for England and Wales. The Scottish Government did not make a parallel announcement for another month, until 2 November. What was the reason for the delay in the Scottish Government coming forward to confirm the position?

We sought absolute clarity on the resources that would be coming to Scotland—I can check the dates—so that I could pass on guarantees to stakeholders in Scotland. That was what I was subsequently able to do and have done. We still do not have clarity beyond that period, but I have passed on those guarantees. We needed clarity on the figures and all the information that we would require, and that pledge has been followed through.

Are you aware of any reason why that clarity was not available from the Treasury when it made the announcement on 3 October?

There are sometimes follow-up letters. For example, we discussed the Scottish growth scheme at the quadrilateral meeting, but I like to have it in writing. I am happy to check the timescale, but there was no difficulty in principle. Obviously, the Government considers financial matters and so I was of the view that if we had the guarantees from the UK Government, we could follow through on that in due course. I am delighted that we have been able to do that. It does have a call on resources but it is the right thing to do.

Thank you.

I am not entirely clear about the dispute mechanism in the existing processes to deal with any fall-out over fiscal framework issues.

11:15  

So far things have worked fairly well with regard to implementation. There is cross-working between the secretary of state, the relevant departments and ministers, and there is an expectation that we will just get on with it. The joint exchequer committee looks at specific matters of negotiation, but so far we have not had a dispute.

I suppose that one of the differences between the joint exchequer committee and some of the other machinery that is in place is the very nature of the committee: the location changes; and there is a sense that ministers are almost co-chairing it. There is no sense of the Chief Secretary to the Treasury convening a meeting to have a discussion with me; there is a genuine joint arrangement that gives more of a feeling of parity of esteem and of the Administrations working together on an agreed format, which is the implementation of Smith. So far we have not had to trigger any dispute mechanism, because any implementation issue—whether about understanding figures, data or whatever—is worked through by getting access to officials. If a dispute were to arise, there would be an expectation that it would be resolved jointly, because we know what agreement we are working to.

Even though the fiscal framework is a joint agreement, the relationship between the Scottish and UK Government might, for whatever reason, not always be as productive as you have just described. What, then, would be the process to deal with any such dispute that arose?

You are right that we have not had to use the process yet. My understanding is that a dispute would go through the JMC process, the fundamental problem with which is that the UK Government ultimately determines the outcome. That is why there is an expectation that matters will be resolved at the joint exchequer committee, where the relationship is between finance ministers and civil servants are just expected to get on with things. As I have said, if a data, finance or joint working issue arises in any policy area, we raise it and it should be taken on board and a resolution found. If that process fails and the matter goes back into the JMC machinery, it is ultimately up to the UK Government to determine the dispute. That does not put us in the strongest position, but that is why we are trying to make the implementation of the fiscal framework with regard to Smith work to the letter.

Let us move to a slightly different area, because I want to start to understand the issues around Brexit, the negotiations and so on. Before we get into the specifics of the JMC(EN), I believe that Maree Todd and Neil Bibby have some questions about general oversight, reporting-back mechanisms, differences between the UK Parliament and the Scottish Parliament and, indeed, what happens in the European Parliament.

We have certainly learned over the past few months that there are significant differences between the UK and Scottish Parliaments with regard to transparency and accountability in our ways of working. Being transparent and accountable and allowing parliamentary scrutiny of what the Government is doing are very much at the core of the work of the Scottish Parliament. Will you comment on the opportunities to scrutinise what the UK Government is doing with regard to EU negotiations?

I have also been struck by how easy it is for the EU Parliament to scrutinise, comment on and feed into the process and how difficult it might be for us in the Scottish Parliament to do the same. You might also want to comment on how challenging that might be even for the UK Parliament.

It will be very challenging for any Parliament. The European Parliament is probably in pole position on this, because it regards itself as a player and wishes to have information, and also because it has a vote at the very end of the process. The European Parliament has to vote by simple majority on the conclusion of the negotiations.

Having spoken in particular to Guy Verhofstadt, the European parliamentarian who has oversight of the process—he is not the negotiator—I know that his view, echoed by other views that I have heard in the European Parliament, is that that Parliament will take an active role in looking at what is taking place and in ensuring that constitutional due process is observed. That means that the committees of the Parliament will take evidence and there will be discussion of one sort or another.

I cannot speak for the UK Government but, clearly, it is presently involved in a legal action around the rights of Parliament with particular regard to the royal prerogative. The Scottish Government has indicated that it wishes to participate in and join itself to that action, and the application to do so has been submitted by the Lord Advocate. It is the view of the Scottish Parliament that we should take a view on the article 50 process and that the Scottish Parliament should have a legislative consent motion, and we will argue for that.

That takes us up to the triggering of article 50. Beyond that point, the parliamentary process will be a reactive one. For example, the great repeal bill is promised for the next parliamentary session in Westminster. There are considerable issues arising from that for Scotland, and there would have to be an involvement from Scotland. Would that require a separate Scottish bill? If not, it should require a legislative consent motion. All of those issues will have to be dealt with.

It would be inconceivable if there were not also a process in which I was able to report to the Parliament on the progress that we are making, particularly with regard to the devolved issues, on securing a position in the UK Government’s negotiating strategy. We do not know what that strategy is and we do not understand the higher principles that are guiding it, as I said yesterday in the debate. We are clear about the principles that guide the Scottish Government’s strategy, and we raise them in debates regularly in the Scottish Parliament—some people do not seem to enjoy that as much as I do. They include issues around the single market, free movement and a range of other issues that we wish to be addressed—we will have more detail on those later.

The picture is emerging and mixed and changes fairly rapidly, but I hope that the process will be transparent. I do not mean that the terms of the day-to-day negotiations should be transparent—I accept that people do not negotiate in the full spotlight. However, those who negotiate have to be open about their principles and they have to offer reassurance to people. That reassurance must, in part, be public. The Nissan letter is an example of private reassurance, which rings alarm bells and makes people wonder whether they have been excluded rather than included, and whether, for example, there are implications for state-aid rules and the present Commission rules. There has to be a consideration of such matters.

In the wider context, early on, the Japanese sent a very cogent letter saying that one of the big issues at play was transparency—the letter specifically mentioned that issue.

We have to do our best to ensure that transparency is observed, excepting some issues around the negotiating process.

We have talked a lot about the structures that are in place for intergovernmental relations. Do you have confidence that they work well? Will the Scottish situation be reflected in negotiations? Will we be in a position to influence the discussions? Are we getting a sense of clarity?

We are not getting a sense of clarity. We have entered the discussions in good faith, we continue to be part of them in good faith, we will bring our ideas to the table in good faith, and we will endeavour to make good progress. So far, we are moving very slowly—in some ways, with unsatisfactory slowness—but we are doing our very best.

The terms of reference that I read out are extremely important. We expect those terms of reference to be honoured and to guide and underpin what we are trying to do, and we will constantly return to them.

We are starting to get into the JMC(EN) issue, which Ivan McKee wants to raise. Before we address that, Neil Bibby has a question.

With regard to parliamentary scrutiny, what is the Scottish Government’s planned contact with EU institutions over the coming months, and what will the nature of the contact be?

I should make it clear that that matter is being dealt with by my colleague, Fiona Hyslop. I work with her and Derek Mackay, and directly to the First Minister, via the Cabinet sub-committee and the other structures. She is working on a strategy of engagement, and I am sure that she will be happy to talk to the committee about it. She is meeting and talking to ambassadors and representatives at various levels of the member states. That is an on-going process and I am assisting with that, where it is helpful to do so. I am focused much more on the UK discussions, but I am engaging with European institutions, as is the Cabinet Secretary for Culture, Tourism and External Affairs.

We need to explain two things, I think. It will be helpful to understand them. The first is the constitutional due process, which is what the European states are looking to the UK to provide. That is between the European member states and the UK as a member state but, of course, the process has to include parts of those states that are part of the constitutional structure and settlement.

Monsieur Barnier, the representative of the Commission, has as the negotiator indicated that one of his negotiating priorities is the exceptions—he has mentioned Gibraltar and Northern Ireland in particular, but they include Scotland and Wales, clearly, and, I presume, London. All those areas have made and are making cases for being exceptions. We have to put our case and explain how that will work constitutionally. The JMC(EN) structure is now part of that constitutional make-up, and there are terms of reference for the JMC(EN), which have to be known.

That is one part. The wider part is to make the situation in Scotland clear to the 27 member states. The situation in Scotland is that 62 per cent of people voted to stay, that a positive debate and dialogue is going on and that the Scottish Parliament is regularly considering and taking a view on issues to do with Europe, Brexit and the referendum. That is the democratic process in which we are engaged.

We are doing both those things openly and transparently. Our diaries are subject to publication and freedom of information requests, so people know where we are and what we are doing.

We have received letters from the Cabinet Secretary and the minister about discussions that you are having with the UK Government on a range of issues, but I think that it is fair to say that we have not been updated on the discussions that Fiona Hyslop is having with EU Governments or ambassadors. An update on that would be helpful.

There is an external affairs brief and, obviously, evidence can be given. There is complete transparency about what we are trying to do and how we are trying to do it. Last night, I met the convener and deputy convener of the Culture, Tourism, Europe and External Relations Committee. I am happy to meet conveners and deputy conveners of committees and to talk to committees at their convenience.

I think that the point that you are making is that, if letters are coming into the system, they are probably going to the Culture, Tourism, Europe and External Relations Committee—

I would say so.

I do not think that there is any reason why we should not be copied in to those, even if they are not directly within our remit.

That is fair and I am not resisting it at all, but thinking about compliance and the memorandum of understanding, I note that it is about the infrastructure of the Administrations and the UK Government. It does not say, “Every time you engage with any Government.” I am not being a purist; I am just making the point that the agreement is specific. On intergovernmental relations in the UK, there is specific provision for how we engage with Europe.

Separately, I am sure that the cabinet secretary and the minister will be happy to come and explain to you their engagements to pursue policy, but we should not have crossed wires about the arrangements and wider transparency.

The point that I was making is that that matter is not for us; it is for the Culture, Tourism, Europe and External Relations Committee.

Exactly.

I add that there is transparency not only in parliamentary terms. I seem to remember that, this week, I saw a picture of Fiona Hyslop and the Polish ambassador being tweeted. There is publicity as well. Conversations are taking place and are being reported.

Can we return to the JMC(EN)? I call Ivan McKee.

Thank you for coming along to talk to us this morning. I want to delve a wee bit more under the bonnet, if you like, of what happens at the JMC(EN). The devolved nations are involved in that. Are you given opportunities in those meetings to present the case in enough detail? Do you feel that you are being listened to? Given what is coming back, have you got any more clarity on the UK’s position? What level of information are you getting back from the UK Government?

11:30  

It is early days. We have had only a single meeting of the JMC(EN). Everybody is there in good faith. A picture of the meeting was published on the internet last week, so who was present and was talking is open.

We will have to see as time goes on whether we believe that the structure that has been established works efficiently and effectively. I believe that there is an intention to discuss matters with us, but it is not a consultative meeting. That is an important point. We are not consultees in any sense nor can the Scottish Government be treated as just another stakeholder. It is a Government-to-Government relationship, so it must be conducted as a Government-to-Government relationship.

There are key issues of devolved competence that must be discussed openly. There are also issues that are not of devolved competence but which underpin issues that are, so they also need to be discussed. Free movement of persons is one such issue. There are matters that may currently be European competences but which should, were they to be returned to the UK, come directly to the Scottish Parliament. We are not into those yet, but they will need to be discussed.

We will see what comes out of the process. I repeat that we are entering it in good faith and with as much transparency as we can, and we are listening to what people and the Parliament are saying. The debates that are taking place here are useful in telling us members’ views. I am doing a great deal of engagement work with communities and organisations in order to listen to what they say and to try to fold that into the process, as well.

The process will be iterative and I hope that it will develop into a meaningful one. I suppose that the next big issue will be what is in the article 50 letter and what that letter says specifically about the Scottish situation. That will be the next test.

How often are the meetings planned to be? Is there a full schedule?

The multilateral meetings are planned for every month, but there will be bilateral meetings as well. I have met David Davis on two occasions outside the multilateral meetings, including the multilateral at JMC plenary. I have also met the Welsh negotiator—the Cabinet Secretary for Finance and Local Government, Mark Drakeford. I will continue to have those bilateral meetings, which will be folded into the process, as well. There will not be only formal meetings of the JMC(EN); there will be other discussions. There is also, of course, the celebrated hotline, which I have used on one occasion and David Davis has used on one occasion to call from the other end. My speed of response was a little faster than his.

You might not yet have the clarity that you seek from the discussions and the one meeting of the JMC(EN) that has taken place, but are you getting any level of information about what to expect?

Yes, but I cannot go into detail. There is more information in the system now than there was a month ago. Whether it is the right information, whether we can draw conclusions from it and whether it can be, or is being, analysed in the way that I believe it should be analysed are other issues. The process has been moving more slowly than we wished it to move and it has been frustrating at times, but there is movement.

I have a quick follow-up question about your understanding of the UK constitutional position. It seems to me that from time to time you are—as all of us are—capable of citing bits of the constitution and leaving to the side other bits of it that are perhaps less convenient. Is it not the job of the Scotland Office rather than the Scottish Government to feed into the United Kingdom Government what the views of Scottish stakeholders are with regard to reserved matters, including the United Kingdom’s membership of the European Union, or is that a bit of the constitution that is not as important as the JMC(EN)’s terms of reference?

In her first meeting with Nicola Sturgeon, the Prime Minister committed herself to engaging the Scottish Government fully. I regard representing a range of issues, particularly the relationship of those issues to devolved matters, as full engagement.

It is sometimes difficult to define exactly what is and what is not a devolved matter. I have given the example of free movement of persons, which underpins some key devolved sectors of the Scottish economy. It would be very strange if I were to draw an artificial mental line between the aspects of devolved matters about which I could talk and those about which I could not talk.

Fortunately, a flexible approach is being taken to that matter by the Scotland Office as well—perhaps because it has different advisers now. It is working closely with us, and I am happy to say that David Mundell has been keen to have joint meetings with me in Scotland, which I am very happy to do. There is flexibility, but I will not go to the JMC(EN) and remain silent about matters that I think are important, no matter what their technical definition. I gave that commitment. Whether or not it is a commitment that Adam Tomkins likes, that will be the reality.

That is very clear. Thank you.

I am sure that your joint meetings with Mr Mundell are low key, quiet and calm affairs always.

We have not had one yet, but we will invite you.

My blood runs cold.

I want to pick up on one brief point for clarity. You talked about the importance of the article 50 letter referring to the Scottish situation. Is it an absolute requirement, from the perspective of the Scottish Government, that that letter sets out some level of detail on what arrangements are being sought for Scotland? What do you expect to see, and what do we need to see, in that letter that relates to the Scottish situation?

I would not talk in terms of absolute requirements; that is not helpful at this stage. I will say that I think that an article 50 letter—whatever that is; as it has not been done before, that is a shorthand term for whatever the process will be—would have to refer to the special circumstances that Scotland finds itself in and the special requirements that it has. It is what would be called a differentiated position.

Whether there should be such a position has been much debated in the chamber, but I think that it is important that there is one. Whether that will be the case we do not know—it is very early days. We do not yet know whether there is to be a bill that will require parliamentary approval to trigger the article 50 process. The Prime Minister and David Davis have both said that the process of triggering will take place before the end of March. I think that a differentiated position is important, therefore developing clarity about what we believe should be in the letter with regard to Scotland is important.

Has that been communicated to the UK Government already?

I do not think that there is any doubt. As our discussions go on, they will focus more and more on the need for differentiation.

However, it is difficult to know what we are differentiating from; that is an important issue. If the article 50 triggering letter is one line that says, “We’re off,” I am not sure that there will be grounds for a footnote. If there is more detail in it, I think that that would be required. We are in a situation in which we do not know. We might have expected to know some four months out from the process, but we do not know yet. It will be a developing situation.

Thank you.

Maree Todd talked earlier about the role of the European Parliament. A number of committees in this Parliament are taking evidence on Brexit, just as is going on in the House of Commons and the House of Lords. What do you think this committee can positively contribute to the process, from the perspective of the Scottish Government?

The committee could do two things. One is to do with its finance role: it can provide clarity on some of the financial aspects of Brexit—in particular, Government financing. European finance and finance that comes from the UK to Scotland have already been raised. Secondly, the committee could, in its constitutional role, keep a watching brief on operation of the mechanism. The outcomes from the mechanism are of most interest to the Culture, Tourism, Europe and External Relations Committee, but its effective operation might be of most interest to this committee. That will be a matter for the committee, which will no doubt take a wide view of its remit—as committees, ministers and Governments do—but I think that doing those things will be particularly helpful.

To use Ivan McKee’s description, we want to get under the bonnet as much as we possibly can without getting our fingers dirty. Will you therefore give us a commitment, from your own perspective, to provide us with as much information as possible, as and when you can?

I am absolutely happy to give that commitment. I shall look up in my greasy overalls from under the bonnet and try to give you as much information as I can on what is happening in there.

I thank the minister and the cabinet secretary for coming along today and for engaging with the committee. I am very grateful for that. I also thank members.

Meeting closed at 11:39.