Official Report 726KB pdf
Agenda item 3 is an evidence session as part of our article 50 inquiry on the withdrawal agreement and negotiation of the future relationship between the United Kingdom and the European Union. We are delighted to be joined by the Secretary of State for Scotland, Alister Jack MP, in what I believe is his first appearance before a Scottish Parliament committee. He is joined by his officials Gillian McGregor CBE, director, and Nick Leake, deputy director, policy, in the office of the Secretary of State for Scotland. I welcome you all to the meeting.
I invite the secretary of state to make an opening statement, which I believe will be of three or four minutes.
Yes. You have covered the first two or three paragraphs, convener, which should speed things up.
I welcome the opportunity to appear in front of the committee. Thank you for your introductory remarks, convener. As you correctly pointed out, I have with me, on my right, Gillian McGregor and, on my left, Nick Leake, from the Scotland Office. You also pointed out that this is my first appearance before a Scottish Parliament committee. It is not only that; it is my first visit to the Scottish Parliament for any official engagement, so I thank you for inviting me. I am sorry that my scheduled appearance was postponed as a result of an unexpected Cabinet meeting, but I am very pleased that I was able to get to appear at such short notice.
On 31 January, we delivered on the promise that was made to the British people nearly four years ago and finally left the European Union. We left the EU as one United Kingdom, and we are now free to determine our own future and form relationships with old allies and new friends around the world. The UK Government will negotiate those relationships on behalf of the United Kingdom, but we are clear that the devolved Administrations should be closely involved in the process, both at ministerial level—for example, via the joint ministerial committee (European Union negotiations)—and via on-going and constructive engagement between officials.
Turning to today’s session, understandably, the committee will be interested in the impact of the Northern Ireland protocol on Scotland and the building of a future relationship with the EU. First, I want to emphasise that Northern Ireland will remain part of the UK customs territory. Tariffs are not payable for movements of goods within the UK, which will allow Northern Ireland to benefit from the trade deals that we intend to strike around the world. Furthermore, the Prime Minister has made it very clear that, beyond the limited changes that are introduced by the protocol, there will be no change to trade between Great Britain and Northern Ireland.
Secondly, there is no need for a free trade agreement with the EU to involve accepting EU rules. That is a very important point. No other comparable FTA involves acceptance by one party of the rules of the other party. The UK will maintain the highest standards, which, in many respects, will be better than those of the EU, but without being compelled by a treaty to do so.
As the Government has made clear, we want a relationship with the EU that is based on friendly co-operation between sovereign equals and centred on free trade. We are not asking for a special, bespoke or unique deal; we want a comprehensive free trade agreement similar to Canada’s. In the very unlikely event that we do not succeed in achieving that, our trade will be based on our existing withdrawal agreement deal with the EU. The choice is therefore not a deal or no deal, in that respect. My priorities throughout the transition period and beyond are clear: to negotiate the best possible future relationship with the EU and other partners around the globe for Scotland and the UK, to uphold the union and to help to grow Scotland’s economy.
Now that we have left the EU, our fishermen and coastal communities will be free of the common fisheries policy and our world-class exporters will benefit from new trade around the globe. Our points-based immigration system will ensure that the Scottish economy continues to gain access to the labour that it requires. We will treat everyone on the basis of their skills and contribution, rather than on the basis of where they came from. That will mean that it will get a lot easier for Scottish companies to recruit the labour that they need from outside the EU and European economic area countries, but it will be harder to recruit from within the EU-EEA countries.
The undersecretary of state and I have been very keen to meet Scottish stakeholders over the past week—and we have done so—to discuss the genuine difficulties that arise from some aspects of the points-based system. We may talk about that later. However, I am very clear that the salary thresholds that we now have in place are reasonable. The threshold for a job on the shortage occupation list is below the Scottish living wage and we will not lower that further. The new system provides an opportunity for employers in Scotland to make the case for the inclusion of a range of roles, which, up to now, have been out of the scope of the visa regime. We believe that companies should treat employees fairly. The Scottish Trades Union Congress made that point very clearly to me last week and told me that the TUC is very pleased in that regard.
A period of adjustment will inevitably be required, but the Government will continue to support businesses through the changes as we develop the new system. Looking ahead, I am confident that 2020 will be a year of optimism and opportunity as we begin to unleash our potential. My ministerial team and I, and the office, will work tirelessly to represent Scotland’s interests and secure the best possible relationship with the EU and other countries around the world.
Thank you, Mr Jack. Can you set out for us what the UK Government’s current estimate is of the economic impact of leaving the EU, for the UK and for Scotland, either on a Canada-style deal or in a no-deal scenario?
We have to follow through on respecting the referendum of 2016. We believe that the best outcome is a Canada-style agreement, which will give Scotland a lot of opportunity, as the minister for the Department for International Trade said only on Monday. Scottish businesses—whether whisky, textiles or agri-food businesses—will benefit from those free trade deals. Being outside the common fisheries policy will also be of huge benefit. Over time, we will see the ability to increase the harvest that we take from our marine resources and to better manage our marine resources, and we will have the opportunity to rebuild our coastal communities and increase employment and prosperity. We think that a Canada-style trade agreement brings many benefits. There is always a bit of yin and yang in any change, but we believe that, with the change that has come, a Canada-style deal is the best way forward.
Okay, but what estimate have you made of the economic cost of that?
It is about being positive and seeing the opportunities in front of us. The situation that we find ourselves in is that we are delivering on the referendum—we are leaving the EU—and we have assessed that the best way forward is a trade deal that is based on precedent. The precedent that we like is Canada. That is the deal that Michel Barnier offered to Mrs May not so very long ago.
We have a very tight timeframe in which to do this, so we have to acknowledge that what is important is the timeframe for getting a trade deal. To get a trade deal in that timeframe, we must go on precedent. For trade, think Canada, and for fisheries, think Norway—we want to negotiate as an independent coastal state. We are only asking for existing deals that other nations have with the EU.
That is understood, but what I am getting at is the economic cost of it. What analysis have you done of the cost?
That has been debated a lot in the British Parliament, and the Treasury has made many assessments of the cost. The reality is that, as a new Government, we have taken the view that we are going to be optimistic.
Some of the analysis was published previously and nothing has changed. On the back of that, we believe that the best way forward is to go with a free trade agreement and be optimistic about the future. The best free trade agreement is on the shelf—we are not asking for anything bespoke. The best free trade agreement for us is a Canada-style comprehensive economic and trade agreement.
You mentioned analysis that had been published previously. I take it that you are referring to the Treasury’s analysis of April 2016, which suggests that the impact of a Canada-style deal, which you mentioned, would be a reduction in UK gross domestic product of 6.2 per cent after 15 years compared to what it would be if we remained a member of the EU. Given that that is the deal that you are pursuing, is that an acceptable price to pay?
I do not accept that. When I was on the Treasury Committee, we looked at a lot of the analysis that was done prior to the 2016 referendum. The one conclusion that we drew was that every single prediction and all the analysis that was done in 2016 about what would happen immediately after a vote to leave the EU, including that of the Bank of England, was completely wrong.
We have to recognise that we are a strong, outward-looking nation. We are very good at trade; we always have been. We need to focus on getting a free trade agreement with the EU that has no tariffs and no quotas, and then get on with making trade agreements with the rest of the world that will enable us to build and strengthen our economy.
I am struggling to understand why you think that all the predictions are wrong. The Scottish Government did its own modelling of the impact on Scotland and came to a very similar conclusion to that of the UK Treasury—and it is not always the case that the UK Treasury and the Scottish Government agree. The Scottish Government said that there would be a 6.1 per cent reduction in GDP and that that would cost every person in Scotland £1,600.
When we analysed it, we had Oxbridge professors who said that they felt that the Treasury forecasts were wrong. You can go back and look at the Treasury Committee papers. We heard from people on both sides of the argument.
I still maintain that there is no point in looking backwards. We have left the EU. We have respected and delivered on the democratic outcome of the referendum, and the focus now is on taking the many opportunities that are in front of us and using them to best advantage to build the Scottish and UK economies, so that all our people prosper.
We want to level up, as you know. We want to create higher wages and more prosperity for people. There is no point in looking back to what predictions were made; the reality is that it has happened and we have left. Hindsight is 20:20 vision, and all we can tell you is that, with hindsight, all the things that were predicted would happen in 2016 if we voted to leave did not happen.
Of course, but we are still in what you call the implementation period. We have not actually left yet. We have left, but we are still in the implementation period.
That is correct, and we are now scoping trade deals. We will leave, and I am confident that, as the fifth-strongest economy in the world, we will prosper. We must look at it with optimism.
Are you saying that the UK Treasury was wrong in its predictions?
When I sat on the Treasury Committee, the Treasury’s forecasts for growth and other things were often wrong. That is acknowledged. The one thing that forecasters seem to be quite consistent at is getting things wrong. That has been the case for many things, not just for this.
I will stand by this: we will grow our economy successfully outside the EU and we will do good trade deals around the world.
The United Kingdom Government has modelled one trade deal, which is a proposed deal with the United States. The UK Department for International Trade has predicted that such a deal could increase UK GDP by between 0.07 per cent and 0.16 per cent in the long run. Do you have more confidence in that modelling?
10:15
With regard to modelling, I had 25 years in business before I came into politics, two and a half years ago, and I have looked at many business plans, forecasts and models produced by banks, business advisers and accountants, but none has turned out to be the outcome. The outcome is what you make of it—the result of the gumption and commitment that you have put into making the best of what is in front of you. That is how life works.
I do not hang on the Treasury model just because it says that there will be an uplift in GDP from an American trade deal. The uplift would be based on the quality of the trade deal and the standards that we set.
It is your Government that has said that.
I am not standing by forecasts. As a practical person with a practical business life behind me, I stand by what I have said: we get on by looking at the problems in front of us, coming up with solutions and working hard to get the best outcomes.
Notwithstanding that, you do not set a great deal of store by your Government’s modelling—
I do not set a great deal of store by forecasting; I set a great deal of store by planning and in making a success of things through hard work.
Okay. You do not set a great deal of store by the UK Government’s modelling. However, we have modelling on a future trade agreement with the US but not on the preferred Canada-style deal that you favour. Will we get that modelling or economic analysis soon?
I ask Nick Leake to answer.
Because the economic impacts of a trade deal with the EU have been the subject of considerable debate between analysts, we have a variety of figures. I have done some forecasting in the Treasury; people make their best guess, to be fair.
Are you both going to fight it out when you leave, then?
A forecast is, “All other things being equal, this is what will happen.” However, all other things are never equal, so we make the best estimate that we can. That is why all forecasts are wrong. It is impossible to have a single model number or scenario that captures all the complexity that is involved in the various impacts of the changes that will be felt in different parts of the economy.
Mr Leake, you said that you have done some economic forecasting. Are you saying that your colleagues were wrong in 2016 when they said that there would be a 6.2 per cent fall in GDP with a Canada-style deal?
No forecast that I have ever been involved in has proved to be 100 per cent accurate—they cannot possibly be, because they are not modelling the same things. What was modelled in 2016 is not what is being done now. The Government has announced that it will invite contributions via a public consultation on the economic implications of the future relationship from a wide variety of stakeholders. It will take place later in the spring, and that work will not just be internal within the Government.
That is interesting. Why is the Government consulting people after it has published a negotiating mandate? It has already decided that it is planning to pursue a Canada-style deal, but it will consult people after it has decided its mandate, as opposed to before, to help to shape its approach.
A consultation will look at the economic implications and allow the Government to decide which tools it will use to maximise the beneficial implications that would result from those changes and mitigate any negative implications. That is standard practice and what Governments do.
That consultation is not the same as modelling the economic impact. Are we going to get modelling of a Canada-style deal, to see whether it would show a 6.2 per cent fall in GDP?
We will invite contributions on the economic implications of the future relationship from a variety of stakeholders via a public consultation.
Are you going to get other people to do the forecasting?
There are many forecasts. You have chosen one—
That forecast is your Government’s.
You have chosen one that was based on 2016, when we did not know the outcome. Here we are, in 2020, and we know the outcome: it is a Canada-style trade agreement. As I said, what is important is that we focus our energies on securing that deal with no tariffs and no quotas. In that circumstance, our trade with the EU should carry on as normal. We should then look to do more trade around the world and strengthen our economy. That is my argument.
As a simple businessman looking at the situation in front of me, it seems that, if the Canada-style trade agreement puts us broadly in the same position with the EU as we are in at the moment, what we have at the moment will carry on as normal. I argue that that will be to the EU’s advantage, because we have almost a €100 billion trade deficit with the EU—the figure varies depending on the exchange rate—and we take more German cars and German white goods than any other country in the world apart from China. Therefore, it has to be in the EU’s interest to have a free trade agreement with us. In that situation, I do not see there being an impact or any difference from what would have happened anyway. The EU zone may go into recession—that is entirely possible—but that would have happened anyway.
Modelling is just modelling; it does not account for recessions or a fall in world GDP this year on the back of coronavirus, just as it did not account for a fall in world GDP on the back of severe acute respiratory syndrome, or SARS. In practical business terms, you deal with what is in front of you and you make the best of it.
I take it from what you are saying that there will not be any new modelling on a Canada-style deal. Are we going to get any further analysis—yes or no?
That is a matter for the chancellor. The Treasury may well choose to model when we see the outcome of the negotiations, but, if the outcome of the negotiations is to have something similar to CETA, the situation will be that, broadly, the forecasts at the moment will carry on. However, forecasts are forecasts; they are not outcomes.
I will just add, in defence of my Treasury colleagues, that they will do that sort of modelling all the time. The modelling that you referred to, convener, was done back in 2016, but there will be constant modelling going on. The negotiations are at an early stage and things are changing—as the secretary of state pointed out, there are other external factors. I expect my Treasury colleagues to continue to model all the possible outcomes.
Could I be so bold as to ask that, when you get that modelling, you share it with the committee?
If the Treasury shares the modelling, we will be happy to share it, but that is entirely a matter for the Treasury.
The Treasury might be modelling, but we will never actually see the results.
It might be, but, as I say, that is a matter for the Treasury and not for us.
Thank you. I am keen to bring in other members.
I am interested in the statement that, under an FTA, things would carry on as normal. The evidence that the committee has taken from academics, stakeholders and economists does not support that position. To have a trade relationship with the EU, there is an expectation of alignment with regulations, but the UK Government has said that it does not intend to align with the EU on trading issues. I struggle to see how we can trade in the same way as we do at the moment if we are not prepared to work on a level playing field and align with the EU.
That is an important point. It is absolutely the case that we are not signing up to a level playing field. I learned about the principles that we have laid out for the negotiation—basically, our objectives—at exactly the same time as the cabinet secretary, Mike Russell, learned about them. At a meeting in Cardiff, the deputy to David Frost, who is the leader of the negotiating team, presented to the devolved Administrations. It was very simple. I will set out all the principles and you can pick up on the whole, as they all knit together. One principle is that we will not trade off a fisheries agreement against any other priority. The next one is that we will not align or, if you like, accept level-playing-field terms. The third one, which is linked to that, is that we will not be ruled by the European Court of Justice on anything. We are leaving the club, and we have to do so in a way that means that the committee of the club is not telling us what we can and cannot do and does not set the rules for us. That approach was laid out at that meeting, and it was also laid out in Parliament last week.
We can still go on and trade very successfully into countries without level-playing-field arrangements and without aligning. On some things, we can set for equivalence, which means that we have the same standards or higher but not lower. Again, we are not ruled on that, because equivalence gives us freedom of flexibility on it. However, if we were ruled by the ECJ, it would make life difficult for the UK and we would not be truly outside the EU. For that reason, we have not set it. Unless you tell me otherwise, there is no precedent anywhere in the world of a free trade agreement in which one country or sovereign entity in the agreement is subjected to the rules of another. That does not exist in any free trade agreement in the world and it will not exist in ours.
However, those changed circumstances would not mean that we would carry on as normal. If we are in that type of relationship, there will be significant changes to our trading.
Why can we not carry on trading as normal?
The UK Government is attached to the idea of a Canadian-style deal but, because of our proximity to the European mainland, the EU has said that the situation is not comparable and that it is not willing to entertain our having a similar deal to Canada’s.
Why did Michel Barnier offer it to Mrs May?
That was a few years ago. We are now in the current set of circumstances. You made the same argument on the convener’s points about trade; you said that that was a previous situation. You argued that we are now in a new landscape, in which the negative economic effect will not be as significant as it was judged to be four years ago. In that new landscape, the EU has said that it will not entertain us having the same deal as Canada.
At the moment, we have a withdrawal agreement deal with the EU and we are asking to set up a free trade agreement deal. Proximity has nothing to do with it; I have heard the EU make that remark, but that is just a negotiating position. Today, we are ending the first week of negotiations, and the EU has set out its position. If it had completely agreed with our position last week, we would not be having a negotiation but we do not agree, so we have to have a negotiation. We do not want anything from the EU that is bespoke, special or different from what it does with other countries. We want just an off-the-shelf agreement that it already has. For that reason—
I am sorry to interrupt, but it cannot be off the shelf, because even if it were the same deal as Canada’s, a number of areas are not involved in the Canadian deal, such as security and defence, fisheries, data protection and science and research collaboration. We are looking for a more extensive deal than the one that Canada has.
You are absolutely right about that. For all those areas, there are precedent deals with other countries. We would replicate the data rights arrangement that the EU has with Norway and the fisheries arrangements that it has with Norway or Iceland. We will be a sovereign nation. We are leaving home; we are not asking to have a key to the door, keep a bedroom in the house or be paid out by the bank of mummy and daddy any more. We will be on our own; we will look outwards to the world and do the deals that we have to do. We would like to have a close trading relationship with our closest partners, and a free trade agreement would give us that.
Other members are keen to come in, so I will finish with a question about the timescales. Negotiations are starting and, at the moment, the UK and EU positions look far apart. The timescale—to conclude negotiations by December, with the threat of walking out if we cannot get progress by June—is a false deadline that the UK Government set. Do you accept that the timescales are extremely challenging and present problems for achieving a good and secure long-term deal with the EU?
I do not accept that they present problems, but I accept that they are challenging; we have always accepted that. The deadline of 30 June is set in order to take stock, as the Chancellor of the Duchy of Lancaster made clear last week at the dispatch box. On 30 June, we will take stock of where we are, and the deadline is 31 December. As someone with a business background—in fact, I did deals in France and other countries around the world—I understand that you have to have a deadline to get deals done. If you do not have a deadline, things do not happen and negotiations stretch on and on. It is right to have a deadline, and the free trade agreement can be done within those times.
10:30With regard to cynicism, I point back to the 80 days that we had to reopen the negotiations last year, when the Prime Minister was successful in doing what the EU said was “impossible”—it said that the deal was a lump of stone that could not be carved into any more, and all the other lines that we were given. The reality was that he went and renegotiated a deal that was impossible to reopen, to remove something that was impossible to remove, in the form of the backstop, and he did it within 80 days. If there is a will from both parties to get things done, things will be done.
I make the point again that I made earlier: a trade deal is absolutely in the EU’s interest. We have a massive trade deficit with it. Given the levels of debt of the nations within it, the EU financial zone is fragile—Italy’s debt is €2.7 trillion and rising, and on it goes. The EU needs to carry on free trade with us. It is imperative for it that we do not stop free trade with Germany, which is our biggest trading partner, because it is in Germany’s interest and Germany is, after all, the country that finances the EU.
As the secretary of state said, the Government is looking for an agreement like those that the EU has with others, so there are plenty of precedents and texts around. The other advantage that both sets of negotiators will have is that they are very familiar with each other’s systems. In that sense, there is a feeling that, with the right energy and will, there is plenty of time to reach an agreement, but the negotiations are in the very early stages. It is to be expected that deadlines will be set to check the progress.
Kenneth Gibson has a supplementary. Is it just a supplementary?
Yes. It is about Canada. I did not intend to go down this road at all, but you seem to have put an awful lot of eggs into the Canada basket, secretary of state. Last week, The Economist said:
“The commission retorts that Boris Johnson accepted ‘robust commitments to ensure a level playing-field’ in the political declaration attached to the Brexit withdrawal agreement.”
As Claire Baker said, Britain is not like Canada. The bigger the trade flows and the shorter the distance, the more substantial the risk of being undercut by looser rules. It looks almost like a fingers-crossed approach rather than an actual policy. If Canada is the model, why has the UK Government completely rejected—without, I understand, even bothering to look at it—the Scottish Government’s representations on, for example, migrant visas for Scotland? I understand that Jackson Carlaw has disagreed with Priti Patel on that issue in discussions with the Prime Minister in the past 24 hours. Why the obsession with Canada when the EU has said, “I’m sorry, that is not acceptable to the bloc”?
To go back to what Claire Baker said, there is a time challenge here, and therefore we want to negotiate on the basis of precedent, and the precedents that exist are clear. There are arrangements with other countries, such as Japan and South Korea, but we believe that the Canada deal fits best for our relationship with the EU, and it is an off-the-shelf agreement or, as the Prime Minister might say, an oven-ready agreement. It makes sense for us to go with that approach. We believe that it would be good for our economy and good for their economy, and that is something that is important to us.
Yesterday, Jackson Carlaw and I met the Prime Minister. I spoke at some length in that meeting following my stakeholder engagements last week with a number of people in Stirling and Glasgow. I spoke about the challenges of migration in relation to tourism, hospitality and seasonal agricultural workers, which I believe are real and require to be addressed. Two solutions came out of my stakeholder engagements. Jackson and other MSPs have had other stakeholder engagements and have come up with ideas. The solution that I have in mind does not contradict the Home Secretary’s position and can be built on effectively. I will not go into the detail, because it is a work in progress, but I am sure that we will come up with a solution for those industries.
We came out very early—as soon as we could after 31 January—with the points-based system. We wanted people to know very quickly what was in front of them. The points-based system has many advantages. I wrote an article in The Herald about that last week and no one came out to contradict it, because what I said was correct. We are removing the cap for the number of migrants we can bring to the UK, we are reducing the thresholds, and there will be more people with tier 2 skills in the system. There is also the shortage occupation list but—not even in the shortage occupation list—just in the tier 2 skills list there are jobs such as filleting fish and working in abattoirs. Those jobs are all there. It will involve increasing wages and I make no apology for that. I have been to a fish-processing plant in Iceland, where the wages are substantially higher than they are here in the UK. That plant is doing a similar job to the plants in the UK and it is a viable, competitive business. I make no apology for the fact that we think that, if you stand in a cold factory filleting fish, you should be paid a number beginning with a “2” rather than a number beginning with a “1”. I think that that is absolutely right.
Okay, but why—given the direction of travel, which is welcome—did the UK Government not look in detail at the Scottish Government’s visa proposals? I understand that they were dismissed out of hand, which is contemptuous of the Scottish Government and of this Parliament—and indeed of your own party members within it. Given your obsession with all things Canadian at the moment, it is a rather strange anomaly.
Again, that is a fair question. I know that you are referring to the prompt response from the Home Office, but the Scotland Office spent a lot of time looking at those proposals. We believe that the S code has weaknesses, and some MSPs have confirmed that. The S code is about where you live; it would be a problem for the Home Office if, for instance, the “S” on the end of your tax code is because you live in Gretna but you work in Carlisle. That issue is a weakness in the proposal.
However, I still maintain that the problems that exist for seasonal agricultural workers going to Angus to pick soft fruit are the same problems that exist for people picking apples in Somerset. There are many other examples that I could give. The problems that we have around tourism and hospitality are as extreme in Cornwall as they are in the north-west of Scotland, for instance, so we have to come up with a solution. That has been my argument to the Prime Minister and he agrees with me on this. We must come up with a solution that works for the whole of the UK and that is based not just on the nation of Scotland but on what may be the requirements in north Wales or in Northern Ireland. We have to acknowledge that these problems are not just problems for Scottish businesses; they exist for other businesses in the UK, so the solution must be a UK-wide one.
Other members want to come in on the topic of migration, so I think that we will be returning to that topic, but we will move on now.
I am sorry if I went too far in my answer—I apologise for that.
Secretary of state, the food and drink industry wants to keep tariffs, quotas, product checks and inspections to a minimum. First, how will the negotiations achieve a good outcome for UK food producers and, indeed, enable them to seize new opportunities in export markets? Secondly, you mentioned CETA; CETA protects geographical indications, but tariffs remain on poultry, eggs and meat. How can the negotiations accommodate both the rules of origin in the same sense as CETA does and protect UK products, including certain food products?
Right—Nick Leake will answer that. Could you just lean into your microphone a bit? I have terrible tinnitus at the moment, and I could not hear half of what you said.
I am sorry. Did you hear my questions, Nick?
Yes. On the detail of CETA, we have all used the term “level playing field” today to mean one country following the rules that are set by another country. However, the term “level playing field” means different things in different contexts. In the context of CETA, I have just pulled up on my iPad a European Commission document entitled “The benefits of CETA”. Benefit number 2 is this:
“Thanks to CETA, Canadian and EU businesses will now compete on a truly level playing field.
That will create a host of new opportunities on the Canadian market for EU companies, especially smaller ones with up to 250 employees, which together account for 99% of all companies in Europe.
In fact, with CETA Canada has agreed to give EU companies better conditions for doing business than it gives to companies from other countries.”
It is not that CETA does not contain any provisions in those areas—it does—but it contains standard free trade agreement provisions and standard free trade agreement dispute resolution processes if one country thinks that those are missed.
You draw an example of the extremely small areas where CETA retains tariffs. I think that CETA gets rid of 98.8 per cent of tariffs. The figure for the Japan agreement is 99.5 per cent and for the South Korea agreement it is above 99 per cent, too—I am sorry; I do not have the numbers in front of me.
At the moment, between the UK and the EU, there are zero tariffs, and it is not obvious to anyone in Government why we would wish to impose any tariffs on any products. Again, negotiations have just started, but nobody on the EU side is talking about having any tariffs, either—they always talk about zero tariffs and zero quota. Given that that is the position of both sides, you can expect that that is what we are all trying to achieve in the negotiations. We are not suddenly going to impose a tariff on European eggs, and the EU is not suddenly going to impose a tariff on our eggs.
CETA is a nice shorthand, because it is one of the most comprehensive trade agreements that the European Union has ever struck, along with those with Japan and South Korea. We think that it is a modern trade agreement with modern dispute resolution processes and modern regulation on things such as the level playing field. However, taking that approach does not mean that we have to cut and paste the tariffs on eggs from CETA. CETA gets rid of almost all tariffs, as do the agreements with Japan and South Korea. Nobody in either Brussels or London is talking about imposing any tariffs on trade between the UK and the EU.
Secretary of state, the Prime Minister has insisted that there will be absolutely no checks either way between Great Britain and Northern Ireland, but you have said that there will be checks at Larne and Belfast. Can you confirm who is correct?
We both are. You raise a fair point. I do not think that I said Larne and Belfast—I probably said Larne, but I definitely said on the Northern Ireland ports.
As someone who brings in dairy heifers from southern Ireland and has exported beef in the past, I know about the situation. On the sanitary and phytosanitary requirements—let us just say animals, plants, seeds and other bits and pieces—the situation is that there are checks on certain of those items. The animals are all checked through Larne, and I do not envisage that changing. That is the point that I was making.
On trade between Northern Ireland and Great Britain, the protocol says quite clearly that there will be unfettered access. That is what the Prime Minster is referring to, and I agree with him on that.
This confuses me. You will be aware that the leaked paper from the Treasury in November said that there will be substantial checks and that the cost would be the equivalent of 30 per cent tariffs on goods purchased in Northern Ireland. Her Majesty’s Revenue and Customs told Arlene Foster, the Northern Irish First Minister, that there would be substantial checks. Your colleague Stephen Barclay has acknowledged that there will be checks—I think that he described them as “minimal interventions”. Every trade body, every business association and every elected representative in Northern Ireland has acknowledged that, by the terms of the agreement, there will need to be checks. To eliminate any chance of a land customs border between Northern Ireland and the Republic, there has to be some level of checking between Northern Ireland and the UK, because the UK is not going to be in the customs union.
We believe that those administrative processes can be done electronically. That applies to goods that are going from GB into Northern Ireland and passing on through the land border.
Michael Gove said that it would take up to five years for smart border infrastructure to be in place, but the transition period ends at the end of this year.
He did say that, but there have already been submissions to the Treasury on that subject. If we consider our existing trade, things are moving as people come towards realisation and practicalities. Many people have said many things on the subject. However, I say this to the committee: at the moment, we and southern Ireland have different currencies, excise duties and VAT rates.
10:45
We are inside a single customs territory.
I know, but we are able to deal electronically with matters such as moving goods around and different VAT rates, so it should not be beyond the wit of man, or woman, to make those arrangements work for registering goods that are moving through and into—
From 1 January?
I do not see why it should be a problem to do that electronically. I am not alone in thinking that—others have agreed with that view. We do many other things electronically.
I could dispute that it is possible to do so, but for the purposes of our conversation I will not do that. The point is that the UK Government is holding firmly to its position that the transition period cannot extend beyond 1 January, so all the arrangements that you have described will need to be in place by then. However, no one is yet an expert on them.
That is our position, but only for goods destined for southern Ireland. Again, if we have a Canada-style comprehensive free trade agreement, which is what we are working towards, that will resolve the issue.
It will not. Having a comprehensive Canada-style agreement would not be equivalent to staying inside the European Union’s customs territory. We are leaving that territory, but the Republic of Ireland is clearly still in it. If Northern Ireland is to remain aligned with that so that it is, in effect, still in it, there will have to be a border in the Irish Sea. Everyone but the UK Government acknowledges that borders require some level of infrastructure, whether that involves information technology or is physical infrastructure or whatever. Regardless of the level of infrastructure that you believe will be required, only 10 months remain before it will have to come into place.
The Prime Minister’s argument on that point is that Northern Ireland remains in the customs territory of the United Kingdom.
But to remain aligned with—
That is why Northern Ireland could benefit from the trade deals that we are doing.
For Northern Ireland to remain aligned with the Republic of Ireland, and thus the EU, on customs, and to prevent a hard border on the island, it has to be regarded as being de facto part of the European Union’s customs territory. You have created a situation in which you insist that Northern Ireland is part of both the UK customs territory and the EU’s customs territory. That would be possible if the whole of the UK was to remain completely aligned with the EU on customs, but that is not the UK Government’s intention. You cannot square the circle in that situation—it has to be one or the other.
If we have a Canada-style free trade agreement, do you think that there will have to be customs declarations between Dover and Calais?
My point was that—
No, your point was that what I said about a Canada-style free trade agreement is wrong. It is not; it is right. If we have a CETA—
Then why is HMRC telling the First Minister of Northern Ireland that there will have to be such arrangements?
Well, HMRC may well have been answering specific questions.
It works for you.
If we have a CETA-style agreement, which is what we are moving towards, there will be no customs arrangements between Dover and Calais any more than there will be between Scotland and Northern Ireland or the Republic of Ireland—or indeed between Holyhead and Dublin, as we have all acknowledged. Why would the position of Holyhead and Dublin be any different from that of Cairnryan and Larne?
I think that there will have to be infrastructure at Holyhead, anyway. However, for the moment, let us accept your argument on smart infrastructure. Will you confirm that the UK Government will pay for all of that, and that neither the Scottish Government nor the Northern Irish Executive will have to pay for any additional infrastructure?
I cannot make a commitment because I do not represent the Treasury, but if infrastructure has to go into place, my expectation is that the cost would be one for the UK Government and not the Scottish Government or the Northern Ireland Executive. That would be reasonable in the circumstances, and it would be entirely in line with my thinking.
Would that extend to anything that could be described as secondary infrastructure, such as improvements that would be required to the roads in your constituency to ensure that there would be no tailbacks?
Under the current arrangements with the devolved Administrations, we would have to come to an agreement with the Scottish Government on that. We cannot demand that money is spent on the A75 or the A77, nor can we give the Scottish Government ring-fenced money and tell it to spend that on the A75 and the A77. It is entirely up to the Scottish Government how it spends the money that comes to Scotland.
A good example is that, this year alone, north of £90 million came to the Scottish Government as part of the Barnett consequential for the building of crossrail. We cannot tell the Scottish Government that it has to spend that on infrastructure just because crossrail is an infrastructure project.
That is fair. However, the question is not about you insisting on how money is spent, but about whether, if there is collective agreement that improvements are required—and are required as a result of the trading relationship that you negotiate—you will front the cost.
I cannot make commitments on behalf of the UK Treasury, but as the member of Parliament for Dumfries and Galloway, I can tell you that I continually press the case for the A75 and the A77 to be upgraded. They are important roads—in fact, the A75 is a Euro route, with two villages that vehicles have to go through. The A77 action group will tell you that, over the past 10 years, only 0.04 per cent of the trunk road budget has been spent on those roads. I think that their improvement is long overdue.
I think that it is long overdue that rail infrastructure in your part of the world is expanded.
So do I. Rail infrastructure is also the responsibility of the Scottish Government, and I could not agree with you more.
Can we return to the future relationship with the EU, please?
I have concluded my questions, convener.
As you probably know, secretary of state, we visited the Stranraer area in your constituency as part of our inquiry, and we met the resilience team. Its current plan for any tailbacks that might be caused by weather or other disruption is to close a minor road behind Stranraer so that it can be used by lorries. The pertinent point is that the team pointed out that that is for an emergency situation; it is not a solution that would be feasible in the long term if there were queues of lorries requiring checks, for example.
I think that that has changed. When did you go?
We went about three or four weeks ago.
The resilience plan is to use the very large car parks at the former ferry terminal.
That is what the team was discussing at that time.
That is the resilience plan.
We have looked at the former car park in Stranraer, and it will require some upgrades. There is an issue with the local community as well. When we visited, that plan was certainly not finalised.
Who will provide the additional resources to upgrade those facilities?
As we headed to 31 October, when we could have had a no-deal Brexit, we analysed these problems and discussed them. I sat in meetings of the EU exit operations—XO—committee, at which various cabinet secretaries would be videolinked in. We went through a great number of issues and concerns for Scotland to ensure that we ironed them all out. We acknowledged the problem around Cairnryan, and the car park at the former Stranraer ferry terminal was deemed to be the solution.
I am not going to get hung up on the figure, but I believe that the first tranche of money for Brexit planning that came to the Scottish Government was £137 million, and I think that there was a second tranche, which was not nearly as much but was still a substantial amount. Money has been committed for Brexit planning.
You are saying that that car park in Stranraer, which is derelict at the moment, must be upgraded in order to accommodate—
It is not derelict. It has got weeds on it. I was there on Friday, and it is not derelict by any stretch of the imagination, although I agree that it needs a good spray of Roundup.
It was also put to us that the regeneration plan for Stranraer, with a marina and leisure facilities and so on, will not necessarily be helped by having a lorry park in the middle of those facilities.
Yes, but we should remember that the lorry park was a temporary solution in the event of a problem, rather than a long-term solution, in the same way that—
But we are now talking about long-term solutions.
Regarding the marine development, you and I both represent the area, and it would be very nice to see some progress on that. As you know, there is £16 million committed to it from the Borderlands growth deal. I would also remind the Scottish Government that, in 2015, it committed £7 million to the development, and the local authority has still not had sight of that money.
I do not want to get into the issue—
You mentioned the marine development.
I just want to clarify whether, when you talk about a lorry park in Stranraer, you are talking about a no-deal scenario, because that was the plan. We are now talking about what will happen if we have checks.
The resilience forums were dealing with the 31 October deadline, as I said. Until such time as there is a marine development, the lorry park can remain there. If there is an issue—
Sorry to interrupt, but what we are talking about now is not an emergency no-deal scenario.
Correct.
That might still happen, but what we are talking about now is a permanent situation where there are checks on goods going to Northern Ireland, which would require lorries to be parked. Is that what you are talking about?
I thought that I clarified that in my earlier remarks to Mr Greer. There will not be checks at Cairnryan. As an MP, I have had discussions with HMRC about this. The sanitary and phytosanitary checks on animals and plants will continue to happen at Larne in Northern Ireland. The checks are carried out there now and they will continue to be carried out there. There is no plan to move those sanitary and phytosanitary checks to Cairnryan.
It is obvious that a lot of people do not agree with that. However, I know that other members want to come in.
I return to immigration, which is a very important issue for Scotland, as you will be aware. You mentioned that you have been speaking to various people, including businesses, over the past week. Have you had time to speak to the chief executive of the award-winning seafood processor John Ross Jr (Aberdeen) Limited, who was reported yesterday as saying that the UK immigration position is “disastrous”, “devastating” and “catastrophic” for Scotland and that the UK Government’s proposed immigration system highlights
“just how out of touch”
UK Government ministers are with businesses? How do you respond to that, secretary of state?
I can understand why he feels that there is an issue. I have acknowledged that, for certain sectors, there is an issue, and we absolutely intend to address that. I think that his sector is fish processing. Is that right?
Yes. The company is an award-winning seafood processor.
I would encourage him to get in touch with either the Scotland Office or the Home Office, and I would be very happy to explain to him why he will still have access to the labour that he requires in the fish processing industry, as I outlined in the article that I had in The Herald last week. Either there is a misunderstanding or it is possible that he is upset about the fact that he will have to pay a little bit more money going forward, but I am not going to make any apology for that. As I said earlier, I think that, If someone is standing in a cold factory processing fish, they deserve to be paid £20,000 plus. I think that £20,480 would be the lower level if it was on the shortage occupation list. That is above the national minimum wage, but it is still below the Scottish living wage. I would argue that we should be paying at least the living wage for someone doing such a job. We should be trying to increase people’s salaries.
In the past, there has been a tendency for us to bring in cheap migrant labour, and people have come on the basis that they get access to our national health service and our benefits system. As you know, going forward, the rules will be that people make a contribution to the NHS for the first five years, and then that will change. However, it is right that, while they are doing that, employers should be paying them more money. We should be proud of doing that. We should be looking to raise wages and not still try to operate a low-wage economy.
I hear what you say. I will respond to that and then maybe bring in Ms McGregor thereafter. First, to make a sweeping assumption about what motivated—
I said “maybe”—
11:00
I am sorry—this is my shot. I think that, to make a sweeping assumption as to what motivated Mr Leigh to make the devastating comments that he made, and to make the assumption that his position is based on wages shows a lack of prudence, if I may say so, on the part of the Secretary of State for Scotland.
It is a guess.
You might wish to reflect on that and speak to Mr Leigh directly, because I think that you might be traducing his position. Be that as it may, the Scottish Government proposes a real living wage—
Could you explain better what his position is?
I do not think that the UK Government is proposing a real living wage as yet, as a matter of policy.
On the statement that you made about people—Europeans—coming here to get access to our health service, that level of debate about the participation of EU nationals in Scottish economic life and Scottish life is really pretty poor from the Secretary of State for Scotland.
I did not say that. You are putting words into my mouth. What I said was—
I think that the Official Report will show that you made that point.
What I said was that bringing in migrants on lower wages that the local, indigenous labour force would not accept and driving wages down because of the other benefits that people get in this country that they do not get in their own countries should stop. The trade unions have cited many examples of, and have made many accusations about, that practice. That was made very clear to me in a stakeholder engagement meeting last week. I accept what the trade unions say and the research that they have done. I am saying that, if that practice is going on, I have no compunction in saying that it should stop. We should pay people proper wages for doing a proper job. That is what I am saying, so do not put words into my mouth.
Okay. Well, I think that—
I said “if”. I did not say that Mr Leigh was making that statement in what he said about the UK Government being out of touch. If his concern is about increases in wages, I am very happy to discuss that with him and debate it. Regarding access to labour for fish processing plants and similar things, those jobs are on the skilled list. The cap is coming off and we are reducing the threshold on the tier 2 visa limit. There should be no concern about access to labour.
What input did you have into the UK’s recent policy paper?
Which policy paper?
The paper on the UK’s immigration policy.
I made my position very clear in Cabinet. It was the first Cabinet meeting after the reshuffle, on a Friday morning, and I remember it quite well. I understand the points-based system and I think that it has many merits. In the white paper that made the case for independence in 2014, the Scottish Government proposed a points-based system. We agree with the Scottish Government of that time that a points-based system is a good way to move forward. However, I raised my concerns about tourism, hospitality and seasonal workers in 2014, and I continue to raise my concerns about that. I am proactively looking for a solution.
The Home Office faces the challenge of designing an immigration system for the whole of the UK. As the Secretary of State for Scotland has noted, there are different challenges in different parts of the nation.
I will push back on the suggestion that proposals that have been put forward by the Scottish Government have been dismissed out of hand. I do not recognise that at all. It is very much the case that colleagues in the Home Office have engaged extensively with businesses and stakeholders in Scotland, and we speak to Scottish Government colleagues all the time. I want to make it clear that some of the feedback that we get from Scottish businesses during the events that we hold and the engagements that we have is that the thought of having different systems for different parts of the UK would be quite confusing and difficult. That is not to say that—
I do not know whether Ms McGregor has noted that a series of bodies in Scotland—NFU Scotland, the Scottish Chambers of Commerce, the Scottish Seafood Association, the Federation of Small Businesses and the Scottish Tourism Alliance, to name but a few—greeted the UK Government’s position on immigration with total dismay. The fact is that the Scottish Government put forward, in a carefully considered paper, proposals that sought not to upset the devolution settlement but to find a workable way forward. From memory, I think that the proposals were made on a Monday and had been rejected by the Tuesday morning. That does not indicate that there is any evidence of careful consideration by the UK Government.
I return to an important point that the secretary of state made. He said that he spoke up for Scotland in the Cabinet. Did he advocate a rural pilot, for example?
I have discussed with other members of the Government the pilot for remote and rural areas that the Migration Advisory Committee suggested, but I have also discussed other ideas. I will not go into the detail of those ideas today, because they are work in progress and I do not want to jump the gun.
Last week, I met not only the stakeholders that you mentioned but many more. They were unanimous on one thing: they would not like immigration policy to be devolved in any way; they want it to remain reserved and a UK-wide matter. I agree with them. We will not devolve immigration policy and, as I said much earlier in my evidence, we will look for a UK-wide solution.
I hear what you say: you will not be devolving immigration. With all due respect, however, ultimately, that gift will not be in your hands.
Why is that?
It will be a matter for the people of Scotland to decide.
Well—
On the important issue of a regional approach for Scotland, which is what people want, the Scottish Government’s proposals would not at all upset the constitutional position on immigration. The Scottish Government simply proposed a workable solution. Given Scotland’s particular needs, such as those relating to the ageing population and those that have been expressed strongly by the agriculture, fishery and hospitality sectors in particular, why is the secretary of state not advocating a regional approach for Scotland? Scotland is not a region of the UK; it is a nation that has particular challenges in those areas. Why is our position not being respected?
It is being respected. I have raised the problems with the S code and said why those could become a problem for the Home Office. Clearly, there is freedom of movement within the United Kingdom, which is completely right, but the S code is about where someone’s house or address is, or it might be about their PO box number; it is not about where they work. That is where that solution falls down.
We want to find a solution, and we are actively working to find a solution that works for the whole of the United Kingdom—all four nations and all regions within them. Earlier, I made it very clear that the way forward is to find a system that works as well for people in north Wales as it does for people in the north-west of Scotland, and that works as well for people in Cornwall and Somerset as it does for people in Angus and Northern Ireland. It is important that we get that right. When people come to work in this country, they should be able to do a job and to move to work in a similar industry in another part of the United Kingdom, if they want to do so. We should not tie people to one region or one nation.
I hear what the secretary of state has said about the technical issues relating to the Scottish Government’s proposal on the Scottish visa, but I imagine that there would be many ways of resolving them. The secretary of state’s response suggests that there has been a written analysis of the Scottish Government’s policy paper. Can he confirm whether that is the case? If it is, can we be provided with a copy of that analysis?
I cannot say what analysis the Home Office has done of the proposals, but we, in the Scotland Office, have read, debated and discussed them. As I said, we have come to the conclusion that we need a UK-wide solution.
Has anything been written on a piece of paper?
The deputy director of policy and I have spent a lot of time on the subject. I cannot say any more than I have said already. Does Nick Leake want to add anything?
We have not carried out a public consultation or asked for the public’s response, and it would not be the Scotland Office’s responsibility to do that. Some of the analysis in the Scottish Government’s paper chimes with our own. The analysis of the demographic challenges that Scotland faces builds on Christina Boswell’s very useful report, which fed into the MAC’s proposal on a rural pilot that was mentioned earlier.
All that is being looked at, but the S tax code is not designed to be an immigration measure. That is not its purpose and it is not used for that. It would not work to pick a code that has been designed to manage the tax system and use it to manage immigration control.
We will have to move on. We have invited Priti Patel to give evidence to the committee on that subject. It would be very helpful if you could make any representations to her on our behalf, as we would like to hear the Home Office’s view at first hand.
Secretary of state, you said that fisheries would not be traded off against any other priority. How likely is it that the UK will give EU fishing fleets access to UK waters in order to gain a better deal for financial services?
We will not do that. We will give EU fishing fleets access to UK waters, but on the basis that we are an independent coastal state. We will go to the agriculture and fisheries council, along with the devolved Administrations, and we will work together as we do at present. However, we are not trading off access to waters for financial services or anything else. That is a guiding principle in the negotiation.
It is kind of you to give me a chance to talk about this, because there are many misconceptions about our fishing waters. We go to the agriculture and fisheries council and have a debate about access—such as for French and Spanish boats—but the UK also has to cut a deal with the Icelanders and Norwegians, as does the EU.
Fish do not have boundaries. We had the cod wars many years ago—the cod will go north or come south, and we have to work together. The fishermen in Kirkcudbright, in my constituency, will get their scallops off the Brittany coast at certain times of the year; likewise, scallop fishermen from Brittany will come to the UK or Isle of Man waters.
We understand completely that there have to be trade-offs. We are not saying that we will deny access to UK waters, and we will make that very clear in the negotiations.
I have spent quite a bit of time working on that with the negotiating team because I take interest in what is important to Scotland. This issue is absolutely critical to Scotland because, over a period of 10 or 20 years, we can increase the number of our boats that fish in our waters and we can increase with certainty the number of our processing plants. That is because we will go to the International Council for the Exploration of the Sea for the science as we go forward. We will do zonal attachments and change the way in which we negotiate to use the science, as the Norwegians do. At the moment, for example, cod stocks are very low, so we do not run our stocks too low. We have a sustainable fishery, which is important for the industry and the environment.
There is some conflict in the fishery sector about the reliability of the ICES science, although I will not get into that.
If the ICES science is incorrect and there is something better, I am all ears. I will make the sector’s case.
I will change tack slightly. Fisheries are not just about fish that are caught in the sea but about aquaculture, salmon exports and shellfish. I represent Shetland’s fishing community, and 80 per cent of Scottish mussels are grown in Shetland. Can you comment on concern about how that community will continue to export?
In terms of the free trade agreement, exports will continue as now. When there was the risk of no deal up to 31 October, the Scotland Office put a lot of effort into how to get exports to market. It is all about the short straits: the fish that leave Scotland go in refrigerated lorries through the short straits from Dover to Calais—mainly between midnight and 2 am through the Channel tunnel—to get to the Boulogne fish market by 4 or 5 in the morning.
Those are strong markets. In the FTA, medicines came one way and we agreed that the equivalent transport going the other way would be that of shellfish and fresh fish. We recognise that getting to markets is important, as is keeping markets open.
I mention what would have happened after 31 October 2019 because it is still possible that French fishermen could blockade the port of Calais, causing a problem for the ferry system, when there is an annual negotiation and they do not get a guaranteed 10, 20 or 30 years access to our fishing waters. However, we will still prioritise fresh fish and shellfish going through the short straits of the Channel tunnel—fishermen cannot blockade that—in the hours between midnight and 2 am to get to the Boulogne fish market. That is still on our radar and the planning committee has not lost sight of that.
11:15
European Union countries, as a matter of standard, have systems in place for individuals to register where they live and to register if they move. Other requirements include that of an individual to produce identification documents for the police on request, and the police do not need grounds for such a request. When about 1 million asylum seekers and migrants came suddenly to Germany, for example, the country changed the law within months so that those individuals were required to carry ID in order to be treated equally with German citizens.
Scotland and the UK do not have in place such systems, which allow for differentiated immigration requirements or treatment in different parts of EU states. Has the Scottish Government made any proposals or indicated in what way it would change the law, administrative systems or the rights of individuals in Scotland so that a system such as that which Annabelle Ewing suggested could be introduced?
I am not aware that any such proposal has been made to the Home Office. In Whitehall, the way that the system works means that departments would have circulated to us anything that involved Scotland. The director of the office might know differently, but I have not seen anything directly.
I have not seen anything directly either. The particular proposal on differentiation and on the S tax code set out the benefits of that system without going into the detail of what would happen if people did not abide by it.
Gordon Lindhurst is absolutely right. I remember the drive to abolish identity card systems in 2010 when the coalition Government came in—that Government’s ethos has continued. It is a hugely practical issue, which requires a totally different approach in Scotland and the rest of the UK. I have discussions with my Scottish Government colleagues all the time, and I am not sure that they would have that kind of regime in mind.
I think that Mr Lindhurst knows that I was deputy ambassador in Berlin before I came to the Scotland Office. I am aware of the German system, and you are right to say that Germany runs a system—similar to a points-based one—that allows car workers to gain more access to immigration when they go to Baden-Württemberg, where the car factories are, than when they go to Hamburg, where there are no such factories.
That system works only because Germany has additional internal controls, which are appropriate to a country with a huge green border that it cannot police or control in the way that we can control our borders in the UK. The only way that a person can arrive in the UK, or in GB, is on an aeroplane, on a boat or through the Channel tunnel. We can police our borders more effectively than Germany can, so we have chosen—for the civil liberty reasons that you and my director have outlined—not to go down that route in the UK.
However, you are right: a differentiated immigration system would require considerably more internal control.
I will sum that up. In effect, given the secretary of state’s previous comments, you are saying that an immigration system is not just about who you allow or bring in to work in the country, but about what happens in the country, which includes the services to which the people who come to work here are entitled, where they work and so on. It is not as simple as saying that we will allow certain individuals in to work.
Yes—we definitely agree with you on that.
Kenneth Gibson has a supplementary question.
So far, I have asked only a supplementary question, so this is my main question. You mentioned the A75 and A77 in relation to infrastructure issues. The Prime Minister has suggested that, as a Brexit bonus, a bridge between Northern Ireland and Scotland could be built at a cost of £15 billion to £20 billion—although I do not know how they will bridge the three-and-half-mile wide, 1,000-feet-deep Beaufort dyke gap, but if—
I can help you with that.
I hope that you can. If the proposal does not come to fruition—the Scottish Government is certainly sceptical about it and considers that £20 billion could be better spent—would the estimated cost be allocated to the Scottish Government so that it could invest in other infrastructure projects, including for the A77 and A75? Frankly, I am sure that that is what your constituents would prefer.
That is an excellent question. I did not think that I would be asked about this subject today, and I am delighted that I have been.
I can clear up a few things. We must remember that—I want to get out this point immediately—Mike Russell, who is now the Cabinet Secretary for the Constitution, Europe and External Affairs, had a big, big splash in one of the newspapers in 2018 when he talked about the need for a bridge from Scotland to Northern Ireland. He was quite keen on the proposal then—you can certainly read the article online.
I am very keen on the idea now. However, I am not keen on building a bridge; I am keen on building a tunnel. That would be no different to the tunnels that connect the Faroe Islands or the tunnels that go under the fjords. A tunnel would remove the problem of Beaufort’s dyke and the munitions dumped there—allegedly, 1 million tonnes of world war two munitions were dumped there—and it would deal with the problem of weather. If there was a bridge, because of the weather or the wind, there could easily be 100 days a year when that bridge would not operate.
For me, the bridge is a euphemism for a link, which is a tunnel. Tunnelling techniques are quite advanced. Knowing what we know of the geography of the North Channel, it would be less expensive to tunnel from south-west Scotland to Northern Ireland. It goes without saying that, if there is to be a tunnel, before that is completed, the A75 and A77 would have to be upgraded. A tunnel would be of huge advantage in relation to those roads.
South-west Scotland’s economy has the lowest gross value added per head of population in the UK, and a tunnel could only help us. There would be advantages for the Northern Ireland economy. There would also be advantages because people would be able to get from Carlisle to Belfast or from Glasgow to Belfast considerably more quickly than they can now.
I have been through a few of the Faroese tunnels—they are quite magnificent. However, we are talking about a tunnel that would be on a much greater scale than they have achieved in the Faroe Islands. A tunnel across the North Channel would also be far, far deeper. We would have to tunnel down 1,000 feet—
That is why I mentioned the fjords.
Yes, but there are also issues to do with avoiding people being asphyxiated in a 20km long tunnel and so on.
It would be the same distance as the Channel tunnel—22 miles.
Yes, I appreciate that—
And, as best as I know, we are not asphyxiating people in the Channel tunnel.
To be fair, I think that that is correct. However, we are talking about far greater depths than is the case with the Channel tunnel.
Air exchange systems work, and there are longer tunnels. Depth is not the issue. Once you are underground, you are underground. The issue is the distances, and there are much longer tunnels in China for example.
The question remains that, if that does not go ahead—because, for whatever reason, it proves to be unfeasible—would the money come to Scotland for other infrastructure? England is getting £109 billion invested in HS2, which stops at Leeds and Manchester. Would get Scotland get additional infrastructure—
I would like HS2 to come up the spine of the United Kingdom.
In our lifetimes?
It would be wonderful in my lifetime, and I am not looking very healthy.
Does it look like it will?
I would like HS2 to come up through the spine of the country and I would like a tunnel to connect south-west Scotland to Northern Ireland. However, there will be a Barnett consequential from HS2, as there is from crossrail—I mentioned earlier that the consequential from that to the Scottish Government was north of £90 million this year.
Those are massive amounts of money. I cannot and will not tell you how the Scottish Government should spend that money. It will get a consequential payment, as it has already had from the HS2 exploratory work. I will not tell the Scottish Government how it should spend the money because that is not in my remit. It is up the Scottish Government to decide whether it wants to spend it on infrastructure or on something else—it is entirely its call.
However, the money for the bridge or tunnel would not be ring fenced only for that infrastructure. For example, if it is decided to allocate infrastructure funds, can the Scottish Government decide—
I will stop you there. The tunnel—we are not talking about a bridge—is at the discussion stage, and it may move to the feasibility stage. In the interim, we can start to have debates about whether it would be viable and whether it would help the Northern Irish and Scottish economies and about the benefits, as there are two nations, or specific interests, involved.
I completely appreciate your point about whether the money would be better spent elsewhere, and that decision will be for Government. Once we have better sight of the costs that would be involved, such as for tunnelling, and if the Prime Minister decides to press the button, as it is entirely his decision, we would engage with Stormont and Holyrood in order to get a better understanding of the benefits and challenges. We would not ride in roughshod and slam a tunnel in—by the way, under the devolution settlement, nor can we.
If not, would Scotland get those funds for other infrastructure projects? That is the point that I have been trying to ask about.
That is a matter for the Treasury and the Prime Minister. I admire you for pressing the case and you are quite right to do so. If I were in your shoes, I would do the same.
We are going into a bit of a tunnel in terms of the questioning. I will bring in Stuart McMillan.
I want to clarify an issue with regard to fishing. Is it a red line for the UK Government?
We do not talk about red lines. Your question is very fair—funnily enough, no one has ever asked me it before, which is bizarre; I thought that they might have done. I will again go back to what I said about negotiating deals in my business career. I never had red lines and always tried to leave the door open to get to a solution, if that makes sense. Even when there was a stand-off, I would try to leave the door open; it is important to do so to try to get deals done.
We are not talking about red lines here, and I will never set red lines. In my career as Secretary of State for Scotland, I will set out what I believe are guiding principles and objectives and I will work hard to achieve them. That is where we are. We have said that we will not trade off our fishing for anything else in this deal, and we have been very clear that we want a Norway deal. I understand from the negotiating team and from what the Chancellor of the Duchy of Lancaster said in Parliament last Thursday—the position is not mine, as I am not in the negotiating team—that we would walk away rather than trade away our fishing rights. You can determine that as a red line, in your language, if you want to, but that statement was made in the negotiating position and objectives paper that was released.
I am not a fan of the words “red lines”. Although our position is that we will not trade away fishing and we have made that crystal clear, I think that red lines get people’s backs up a little bit, and then they set red lines. Once people set red lines, they start arguing about everything and anything.
There are a number of things that we have to negotiate and agree to our mutual benefit, and we should be careful not to be too confrontational. We have had the difficult bit, which was 31 January, and we have now moved on to an environment where we want to co-operate and work with the EU as partners and build a strong trading relationship.
11:30
To clarify, you do not like using the words “red lines”, but—I quote what you said earlier—you will not “trade off” fishing. At the same time, it will be up for negotiation with the EU in order to get some type of deal going forward.
No. The position is—
The door is going to be left open, as you said a few moments ago.
I think that I covered that. In leaving the door open, what we are saying to the EU is that the Department for Environment, Food and Rural Affairs minister and the ministers from the devolved Administrations will come to the fisheries council to negotiate access to our waters. We are absolutely not saying, “By the way, come 2021, you’re not going to fish in British waters anymore.” We understand that we have to come at this in a practical way. We want access to their waters and they want access to ours. That agreement exists with Norway and Iceland, and we believe that it is the right agreement for the United Kingdom. We actually believe that it is quite achievable.
We understand that the French are upset about that and are digging their heels in, but they are not the EU negotiating team. I think that the EU negotiating team will understand that the French have to speak out on behalf of their fishermen, and I understand that. However, the negotiating team will also understand that, in practical terms, what we are offering, which is no different from what Iceland and Norway are offering, is completely reasonable for a sovereign nation.
So it is about negotiating access to UK and Scottish fishing waters. There will be an opportunity for—
The place for that negotiation is the fisheries council, not the EU trade negotiations. We will not trade off our fishing for something else in the EU trade negotiations. We are very clear to them that, if they demand a trade-off for our fishing, that will be, for us, a non-starter. They absolutely know that. However, we are saying that we are very happy to go to the fisheries council as an independent coastal state and discuss access to our waters, as appropriate, based on sustainable fish stocks and all the other factors that come into play.
Another issue is the Erasmus+ scheme. The Canada deal has been spoken about, but Erasmus+ is not part of that. Can you confirm today that the UK will continue to have some type of agreement on Erasmus+? I ask that question as somebody who benefited from taking part in the scheme.
There are a number of schemes including horizon, Copernicus and Erasmus, and all that I can confirm today is that we are in discussions with the EU about participation in them. As to what the final outcome will be, I am sorry, but I would be jumping the gun if I commented on that.
Erasmus+ has enormous benefits and lots of people have benefited from it. Were we not to come to an agreement on participation in Erasmus+ for whatever reason, I would press hard for us to put in place a similar scheme that would both work domestically for students in the UK university system and enable students to go to the EU and America, where there are very good universities.
My personal position is that Erasmus+ should be means tested. It should be students from less-well-off backgrounds who benefit from it. If we have to replace it, something else should be put in place that achieves the same things, if not more. It is fair to ask what the outcome will be, but I cannot answer that. All that I know is that the scheme and many other European projects are under discussion.
You said that you believe tourism to be important, and it is. My next question, which I put to the cabinet secretary a couple of weeks ago, is on marine tourism and marinas in Scotland.
A growing number of people from EU nations have been sailing into Scottish marinas and taking part in marine tourism activities. Given that there could be a situation where border checks take place at marinas, will the UK Government pay for any additional infrastructure that will be required across the sector?
That is quite a detailed issue, but I note that checks on people at UK borders will not change, so I do not understand—
The question is about marinas, and people sailing in on a pleasure boat.
At present, someone who is French who arrives in the UK has to show a passport. After Brexit, someone who is French who arrives in the UK will have to show a passport, so I am not sure what the change is. Maybe you can explain that, and then we will probably have to get back to you on it.
The issue has been raised in the cross-party group on recreational boating and marine tourism, which I chair. There is a fear that, particularly in the north-east of Scotland, where people come in from the Scandinavian countries and Germany—and numbers have been increasing—additional barriers will be put in place and, as a consequence, there may be additional costs for the sector. I would be grateful if you could write to the committee about that.
Yes—that is fair. Nick Leake, who is a bit of an expert on these matters, will look into that and I will write to you.
Thank you for your evidence today. We look forward to your coming back to give evidence to the committee as we continue the yin and yang of the negotiations on our future relationship with the EU over the course of this year.
11:36 Meeting continued in private until 11:36.Previous
Screen Scotland