European Union Strategy
Agenda item 2 is a videoconference with our MEPs.
I welcome to this meeting of the Scottish Parliament’s European and External Relations Committee Ian Hudghton MEP, who is involved in the European Parliament’s Committee on Fisheries, and George Lyon MEP, who is vice-chair of the Committee on Budgets and member of the Committee on Agriculture and Rural Development. I believe that we are expecting Catherine Stihler, who is a member of the Committee on Internal Market and Consumer Protection.
George and Ian, can you hear us okay?
Yes.
We can hear you loud and clear.
Excellent. As we have only a very short time with you, we will go straight to questions. Recently, President Barroso said that Europe had fought back. Now that you are coming to the conclusion of the parliamentary term, do you agree with President Barroso or do you think that Europe is still fighting back?
There is still a bit of a way to go, but there are signs that the fightback is having some effect. However, all European countries are still facing considerable challenges and all of us can contribute to that fightback.
Catherine Stihler has just arrived, so perhaps I should stop there.
Good morning, Catherine.
There is no doubt that, although the euro crisis has not gone away, it has stopped getting worse—that is the best that we can say about it—because of the European Central Bank’s intervention and Mario Draghi’s pledge to underwrite all debt in Europe and support the currency. That action seemed to stem the markets, which were reaching the stage at which they would not lend to Italy, which is the biggest potential defaulter and the country with the biggest debt problem.
A lot of work has been going on to construct a banking union and further work has been carried out on building greater political integration; after all, as we have all discovered, a currency union in which there is no central control of individual countries’ spending and borrowing is simply flawed and does not work. Indeed, that is why the euro got into such a mess. I find it interesting that the same model has been proposed for a separate Scotland but, if you want, we can discuss that later.
Committee members have a number of questions. Hanzala Malik is up first.
I am sorry that our technology is so fabulous, because it means that you are missing out on a wonderful sunny day in Scotland.
My question relates to George Lyon’s area of interest. What do you consider to be the key rural development policy issues for Scotland in the coming year, particularly with regard to information technology and the support that Europe can lend for its roll-out in Scotland? At the moment, opportunities for trade in our rural areas are haemorrhaging away.
As I am involved in telecommunications, I am perhaps better placed to answer that question.
At the moment, we are discussing and working on the introduction of a digital single market. My committee is not only an opinion-giving committee but is responsible for consumer protection issues. With regard to the digital single market, one key area of debate is the very fragmented nature of the market in the 28 member states. If we can create a better single telecoms market, the potential for growth will be phenomenal. For example, for every two jobs that are lost, five jobs are created in the telecoms sector. However, in the next little while, we will be missing out on almost 1 million IT jobs simply because the European Union does not have the appropriate skills set. Those statistics are scary.
The key issues for my committee are how we can end roaming charges, which, as many people in Scotland know, are simply pure profit for the telecoms industry; net neutrality, which is becoming a huge debate in our committee and on which I would like to hear the Scottish Parliament’s views; and contracts for mobile phones, which the European Commission has proposed should last for six months. In the UK, we have 24-month contracts, which can include hidden charges. Another key issue that will be of interest to Scottish Parliament members is spectrum policy. Of course, Governments do not want to lose the revenue that that brings, but it needs to be better co-ordinated.
The idea is to reach a deal on the issue before the Parliament goes into recess. That is ambitious, but there is certainly political will behind it. Yesterday, my committee held an initial hearing and the hope is that the Committee on Industry, Research and Energy, which is the lead committee on the matter, will reach a conclusion on a legislative proposal and that it will have a first reading. The digital single market will be absolutely pivotal in getting us out of the crisis that George Lyon referred to through job creation and growth and we are keen to work with the Scottish Parliament in any way that we can to get the right tone in our reports.
On Mr Malik’s specific question about rural development, the legislation has been passed and the ball is now in the Scottish Government’s court in relation to how it will implement the new rural development plan for Scotland. The Government will have to make important decisions on how much money to take from direct rural development payments as a top-up and on what the overall budget will be. The final decisions on how that money will be invested and what the priority areas will be are for the Government. We await the outcome of those discussions.
I should also flag up that the European Parliament is still considering delegated acts that implement the primary legislation, but I think that we have sorted the matter out reasonably and that there are no nasties in there that one need worry about. It is now up to the Scottish Government to decide how to implement the plan and I hope that jobs and growth will be the focus of everything that it does. That certainly seems to be the big challenge.
What Catherine Stihler said sounds like good news, but what can we in the Scottish Parliament do to support the case that you—and, I am sure, other European countries—are making for the need to roll out the IT programme in rural areas sooner rather than later and to ensure not only that our bid succeeds in that respect but that we address the various other challenges that you have brought to my attention this morning?
If we can get it right, the digital single market is the big win. Anything that we can do to work together on that would be good. I am not hearing much about the issue. We have had a United Kingdom Government brief, which supports the principle of what is going on in the digital single market but perhaps not the practical proposals that the Commission has made. I am interested in whether the committee has a different perspective. This is a quick process. We have to put down amendments in the near future, so deadlines are tight.
On issues such as consumer protection, we all agree that we want to end roaming charges and ensure that consumers get a better deal and are not exploited. We hear some shocking stories. For example, the consumer organisation Which? gave evidence yesterday. Data is becoming the big issue and we need to ensure that people are not ripped off. Anything that the committee can do to help us in that process would be extremely welcome.
I am getting some confused messages from Europe. The “Brussels Bulletin” says that
“Infrastructure investment is to be significantly bolstered”
to include some work in the digital single market. However, in previous reports, we have been told that the IT infrastructure budget has been cut from €9 billion to €1 billion. Is that the case, now that the multi-annual financial framework has been agreed? Did you support that? What impact will the cut from €9 billion to €1 billion have on IT infrastructure projects in Scotland?
Unfortunately, the digital infrastructure budget was reduced, although the Parliament fought hard to correct that in the final deal. The good news is that research and development and overall infrastructure spending through the connecting Europe initiative has been increased. There are some big opportunities for Scotland within that. Electrification of the Glasgow-Edinburgh rail network is one of the projects that is listed in the connecting Europe initiative. The new grid interconnector off the west coast of Scotland between us and Ireland, if it goes ahead, is another project that is slated to receive funding. That is a big opportunity to harness some of the potential renewable power off the west coast of Scotland.
There is also money—
Sorry, but I am talking specifically about IT infrastructure investment in support of the digital single market. My understanding is that the budget for that has been seriously reduced.
That is the final outcome.
What will be the impact of that on IT infrastructure investment in Scotland, particularly in rural parts of Scotland such as the Highlands and Islands and the Borders?
I am not sure how much money is currently going in from Europe. I know that the UK Government has a huge investment programme in the Highlands and Islands and there is roll-out throughout the Highlands and Islands. There is certainly a long way to go, but at least there is money available to deliver on that. How much of that money is European, I do not know. Maybe you could tell me.
What I can tell you is what I am hearing from you, which is that you have slashed the IT budget from €9 billion to €1 billion. I do not see how that can advance IT infrastructure projects and the digital single market project. Can you explain that?
10:15
In fairness, I heard George Lyon say that the European Parliament was against that reduction. Like everything else in European decision making, decisions are made jointly by a majority in the European Parliament and the majority of member state Governments. Even if we all agree on something, it does not always happen, because it has to be negotiated with the Council. In broad terms, we try to do the best that we can.
My view has generally been that, for the time being, we should take decisions at European level on broad parameters and devolve as much as we can of the decision making about how to use budgets to member states and parts thereof. That is my view not just on budgetary matters but on a whole load of things.
Now that we have got to the stage at which the MAFF has been agreed for future years, Scotland—via the UK, currently—must press to ensure that maximum use is made of any funding that would help rural development through technical infrastructure or other avenues. The UK Government has been presented with recommendations on how it is doing in relation to Europe 2020. One of them is that it should reduce debt and deficit but prioritise capital expenditure with a high economic return. I know that the Scottish Government is doing as much of that as it can, but more could be done to generate economic growth.
I have a couple of questions on fisheries. The Scottish fleet has done much for conservation in the past 10 years. Will it be faced with yet more compulsory conservation measures from the EU? With the new situation regarding discards, has thought been given to what will happen to the fish that are no longer discarded?
How much time do you have? The issue of the reform of the common fisheries policy is coming to us for a plenary vote in a couple of weeks’ time, as the approval of the European Parliament is being sought for the compromise package of reform that has been agreed in the agriculture and fisheries council and, yesterday, in the Committee on Fisheries. It is likely that that package of reforms will go ahead.
From my point of view, a significant reform concerns decentralisation. Now that the broad parameters have been agreed in the form of a supposedly reformed CFP, we need the member state Governments to push the boundaries of regionalisation to the maximum. In order to get the necessary compromise, the wording in the document was a little bit woolly, so there is considerable scope for member states and fishing nations to make use of the parts that say that member states shall be empowered to do certain things. That would include how to prepare for a discard ban or an elimination of discards, as I would prefer to call it.
It would be easy to set a date by which no discards will be allowed and all catches must be landed, but a realistic approach has to include preparation and investment in preparations that are designed to avoid unwanted catches in the first place. There is no point in having a discard ban at sea if that means that we end up with a problem onshore with unwanted catches or exceeded quotas. The area is hugely complex. Quota uplift has to be a part of it, as do technical measures, supported by the new fisheries fund. We need time in order to comply with all that.
It is quite right to say that the measures that have been voluntarily led by Scotland have shown signs of success. Therefore, it seems to me that that kind of approach should be built upon, using expertise and techniques that we know will work, because they are designed for particular fisheries.
Jamie McGrigor raises a fundamental point. With the best will in the world, a discard ban will mean that we end up landing the discards. In a mixed fishery, it is impossible to have no discards at all. The challenge will be how we can deal with that, how we can market that, what value it has and, therefore, what role Government has in setting up the processes by which we can deal with that.
Have there been any further developments with Iceland and the Faroes on the mackerel situation and the herring situation?
Last week, I was at an interparliamentary meeting with representatives of the West Nordic Council. The Faroese were present to update us on the last round of the on-going negotiations. After I leave you today, I am going to the joint parliamentary committee with Iceland, where the issue will again be on the table. As far as I know, the negotiations are on-going but there is still no resolution. Is that your understanding?
Are you talking about the infraction proceedings?
Yes, including the infraction proceedings on the Faroese. I can keep the committee updated on what is happening. At present there is a sense that there is hope, but there is still no resolution on the issue.
Yesterday at the Committee on Fisheries, the Commissioner for Maritime Affairs and Fisheries was grilled for an hour and a half in camera, mainly on that subject. It is true that there is considerable work to be done to reach an agreement. As the commissioner acknowledged, the only way that a solution will be found is if agreement is reached round the table.
It seems that there are some hopes—particularly with regard to Iceland and mackerel—that it may be possible to get an agreement, but the question is, at what cost? What will we have to give in order to get a compromise on Iceland’s part? That is the only way that agreement can be reached.
At the West Nordic Council meeting last week, it was suggested that the group would like to visit Edinburgh. Perhaps I could give you the details of the key organisers of that interparliamentary group, convener, and your committee could speak to it as well. That is another route for raising those issues; I do not know whether it would be helpful.
That would be extremely helpful—the clerks will pick up that information and disseminate it to committee members, and we can work that out.
Good morning, everyone. The committee has done a lot of good work on the new €70 billion European Union horizon 2020 funding programme for research with regard to the benefits and opportunities that the programme can bring for our universities, colleges, research institutes and small and medium-sized enterprises in Scotland.
I am looking for an update on where that funding programme is just now, and when the first call for proposals will be made.
The legislation was voted through last week in Strasbourg, and the multi-annual financial framework budget was voted through, so the programme is now up and running and will, it is hoped, be ready to come in on 1 January. As I recall, there is some front loading of cash into the first 2014 budget year, because we passed the budget for the programme last week.
As part of that, we got an increase of approximately €200 million on the original proposal for R and D. As Aileen McLeod rightly points out, the UK—Scotland in particular—does very well out of the R and D budget. The total UK drawdown over the past FP7 programme was approximately 25 per cent of the total budget line.
There were some plans to move away from the quality criteria that govern who gets the funding to a more quantitative approach. That might have meant that the UK would lose out, because we have some of the best universities in Europe, which attract disproportionately higher levels of funding as a result. Thankfully, however, that is not happening, and the criteria are still based on qualitative rather than quantitative measures.
There is a bigger budget, and it is front loaded for 2014, so it is up to our universities and research institutes to get their bids in as soon as the programme opens and start drawing down that money.
Thank you—I appreciate that answer. One of the three pillars within the horizon 2020 programme relates to societal challenges, which includes investment in health, demographic change and wellbeing. The funding is approximately €7.4 billion, which is one of the largest investments among all the societal challenges.
On a related matter, the University of Edinburgh is currently leading an international consortium bid to establish a European institute of innovation and technology knowledge and innovation community—KIC—in the area of healthy living and active ageing, which, if it is successful, will be financed from the new EU horizon 2020 funding programme. That bid is being pursued through our team Scotland approach with the support of NHS 24, the newly established digital health institute, Scotland Europa, Scottish Enterprise and the Scottish Government. That bid—it is called LifeKIC—is the only Scottish, UK-led KIC. To be successful, the KIC bid will require backing from both the UK Government and the Scottish Government, and a number of Scottish agencies. I wanted to flag that up to our MEPs and ask for any support that you can give to the bid.
We would be very happy to assist in any way possible. I visited one of the projects in Edinburgh—the Scottish centre for regenerative medicine—which has done well and is a fantastic leading-edge research facility with lots of high-paid jobs. We would be very happy to do anything that we can to help ensure that we secure the right outcome.
On the focus on SMEs and the opportunities that the horizon 2020 projects could bring to Scotland, do you get the impression that the Scottish institutes that support SMEs are gearing up for that change? When you speak to Scottish businesses, do you get the impression that SMEs have an awareness and understanding of the opportunities?
My impression is that many of the small companies that I visit and, indeed, the university sector are well prepared for the increased funding that is coming this year and over the next seven years. Many of the companies in the small business sector are very aware, too, of the help and support that they have had from European funding in the past. Clearly, they need to ensure that they are focused on getting their funding bids in at the right time. The money is there, so it is up to them to ensure that they bid for it. We hope that it will deliver jobs and growth for Scotland. That is important in the current tough times.
Scotland has a pretty good record on making maximum use of available European funding. We have a lot of expertise in business and public bodies that has helped and will help to steer people towards available funding routes. Of course, we have issues about match funding for particular types of European funding streams.
All in all, we have done pretty well but that is not to say that we could not do better if we had control over everything that is controlled by normal member countries of the European Union. However, that might be a debate that we do not have time for today.
Yes; that is a debate for another time.
Aileen McLeod spoke about the potential of horizon 2020 and the good story that we have to tell, and Clare Adamson raised an issue about what we can do. We are always saying think small first. I think that it is true that we need more people to access funding and feel that that is a route by which they can do things. We got a breakdown of how horizon 2020 has been used previously, which showed that a lot of large organisations with capacity had benefited. To be honest, putting together a bid is a complex, difficult process. However, I think that there is potential for more opportunity for other organisations to benefit if we can tell a good story and talk about the issues.
What Aileen McLeod said about ageing and so on is absolutely right. The key issue for the whole of Europe is how we deal with an ageing population. Some of the telemedicine projects are fascinating.
As I said, I think that Clare Adamson makes a valid point. I do not know what you are doing about talking to the small business organisations that come to your committee, but perhaps you could ask them what problems they face. We could probably address that as well, so I would be very interested to hear what their experience has been and what we can do to improve the next programme.
Given that 2014 will be such an exciting and interesting year for us all, what do you think are the biggest challenges facing the European Union as we come to the end of this parliamentary session? It would be remiss of me not to ask you, too, whether there has been any informal commentary by your colleagues about the white paper that the Scottish Government published this week.
10:30
I will start with the first question, on the challenges facing the EU. The challenges that it still faces are overcoming the economic crisis, returning Europe to growth, and trying to ensure that we repair the single currency to make it fit for purpose. That is partly about how to centralise control over individual countries’ borrowing and spending in the eurozone, because the huge mistake that was made at the beginning has been at the heart of the problem. The single currency was shared, but everyone then just went off and used low interest rates to borrow and spend as much as they liked. The crisis then enveloped us. That closer political integration is at the heart of trying to resolve the eurozone crisis, returning all the countries that are in the debt recovery programmes back to normality and, I hope, returning growth across Europe and doing well.
If the decision is to leave the United Kingdom, I think that the biggest challenge that we will face is to renegotiate our way back into the European Union, which is fundamental. Most of the comments that have been made here by colleagues across other member states are about the Scottish National Party Government having a pretty challenging list of demands. There are opt-outs on all the main issues that we know that the UK already has, plus another €2 billion in spending on the common agricultural policy and rural development. I do not think that any member state thinks that the negotiation will be easy or quick, given how great and challenging the demands are in the negotiations.
The renegotiation process would be long and difficult. There are, of course, huge sensitivities around Europe on the whole issue. Many other member states have the right of veto, regardless of whether article 48 or 49 of the Treaty on European Union is used—I think that it would probably be article 49. Regardless of which article is claimed to be the right one to use, every member state has a veto and will have to pass the proposal through its Parliament. That is the reality of the challenge that we will face.
It is an interesting time.
It is indeed a fascinating time. It is, of course, a matter of negotiation from within, because when we vote yes in the referendum, we will still be part of the UK for the 18 months or so thereafter while we negotiate the settlement. Therefore, we will still be part of the European Union, and in parallel and along with the UK Government, which has signed to say that it will accept the outcome of the referendum, we can and will negotiate in Brussels on the details that we have always recognised will be required. Scotland will have to be named in the treaty. That involves a treaty change, but that does not seem to me to be momentous or difficult. We will need to have a specified number of MEPs, but there is a formula for that.
Negotiation from within with the Edinburgh agreement fully implemented—that is, with the outcome respected by both Governments in the UK—makes the situation unique. That means that Governments and the EU as a whole will accept the outcome; I am quite certain about that. Therefore, I think that the 18-month timescale and the route that has been set out are perfectly realistic and will recognise a democratic expression of will in the ultra-democratic format of the referendum.
I thank Patricia Ferguson for her question.
On the first part of the question, the biggest challenges are jobs, jobs, jobs; the cost of living; and an alternative to austerity across the EU. The socialist group has been involved in the relaunching Europe campaign. Obviously, there is youth unemployment across the EU; indeed, in some parts of the EU, youth unemployment is over 50 per cent, which is completely unacceptable. We cannot have a lost decade of jobs and a lost decade for our young people. That is one of the pivotal issues next year.
I think that many people feel that we have lost the social dimension in Europe. We cannot have the single market without the social dimension. That is one of the great benefits, and we must get back to that balance. Currently, people feel that relaunching Europe is the way forward.
On the question of the independence white paper and yesterday’s paper on Scotland and Europe, I have tried my best to read both. I went to the Committee on Economic and Monetary Affairs where Commissioner Almunia was speaking. When I asked him about article 48 and about whether there can be exemptions on the euro and Schengen, his advice to the Scottish people was to vote no. That is on the record; we also have what the Spanish Prime Minister has said.
If article 48 is the basis on which you want to negotiate, I am pleased that after pursuing the Scottish Government for two and a half years on the question, we at last have the fact that it is a negotiation. You will require a treaty change and even under article 48, as George Lyon has said, you will need unanimity. The Spanish Prime Minister has made it very clear that he is not keen on the whole issue. However, at the end of the day it is a negotiation. The advice from Commissioner Almunia is to vote no. It will be up to the Scottish people to decide how they will vote in the referendum.
If you look at that 18-month negotiation, I do not know how you can possibly succeed in doing that in that timescale. The paper talked about Austria, Sweden and Norway. Remember that Norway decided not to join the EU. The paper says that negotiations in relation to those countries took 13 months. That was a different time. Also, to put German reunification into the paper is just a non-starter. You have to look at the situation in its entirety. It is a negotiation and you cannot predict what that negotiation will bring.
You can have a wish list but at the end of the day, my preference is to remain part of the United Kingdom and—as a large member state—part of the EU. The way to succeed in doing that is to have a Labour Government at Holyrood, a Labour Government at Westminster and, for me, sister socialist parties elected across the EU—but that is what you would expect from a Labour politician. Thank you for the question.
When it comes to next year, it is a real pity that we cannot do something in the European Parliament on, say, the Commonwealth games. I do not know whether we could do something on the Commonwealth games as part of a team Scotland approach before we finish. Yesterday we saw something on the Paralympics—there was an exhibition. I feel that sometimes we are missing some of the things that we could do. We could put aside party politics—it is great that the Commonwealth games are coming to Scotland and we need to ensure that we celebrate that. I do not know whether we can do something on that before we finish as a team of MEPs—putting aside party politics and our positions on the referendum.
The context of the Spanish Prime Minister’s remarks has to be considered. We need to bear in mind that he is running his own project fear—big style—at the moment. The points about German reunification and other examples illustrate that the EU is very adept at fixing things that arise due to democratic changes within or around the member states. I am quite certain that a democratic expression in a referendum in Scotland will result in a smooth transition as outlined in the white paper.
Just to finalise—
Sorry, I have to go to the EU-Iceland joint parliamentary committee—I am speaking on economic matters in Iceland. I am so sorry that I have to leave but thank you very much for your questions. I am sure that we will catch up again soon.
Jamie McGrigor can have a supplementary, but it needs to be quick because I know that Ian Hudghton and George Lyon have other meetings to get to.
Bearing in mind the drop in the broadband budget, what are the tangible and practical benefits of being in a transitional region for the Highlands and Islands?
It is for the Scottish Government to decide what the priorities are for investment using that budget and I do not think that the European Parliament Committee on Regional Development legislation excluded the possibility of that money being used for investing in improving broadband or information and communication technology in the Highlands. It will be up to the Scottish Government to decide how the money is spent.
Very quickly—Hanzala Malik.
I just want to come back to that point. It is all very well saying that the Scottish Government will find its own resource to spend on that area. That is a big ask considering that the funding from the European Union has been slashed in the way that it has. I really have to press this point to our European Union colleagues. You really need to think out of the box and advise us on how we can encourage additional resources because it is an urgent matter. We need the resource to roll out the information technology systems in that region. Our students, businesses and quality of life are suffering from a lack of communication. We must do more than simply say that a decision was made by the European Union and that we must live with it. I am looking to you to come up with some solutions. Will you work with us to see how we can assist each other in finding solutions?
I am very happy to do that. As I said, the budgets are set, but the Scottish Government has flexibility in how it spends the European regional and structural funds in the Highlands and Islands and other areas. Indeed, it is up to the Government to prioritise how that European money is spent, which means that there is opportunity to at least target the funding to where the greatest need is.
We were disappointed as a Parliament that the digital budget was reduced. If you look at the negotiations that took place in February, the digital budget was reduced and the CAP budget increased. That is where the money went.
All that I am asking is that we reach out to one another. I accept the fact that the budgets have been set, but there are always fringe budgets and other projects and avenues, and we need to search and dig deep to explore those possibilities. We are willing to do that, but we need you on board to assist us in that process.
You have agreement on that—we will do what we can.
I know that our colleagues in Brussels have to rush off. We have managed to squeeze 10 more minutes out of you than we had anticipated, which we appreciate. Thank you very much for coming before the committee, albeit over our great videoconferencing technology. We look forward to working with you in the future. We wish you all well, whatever happens with your attempts to be re-elected in 2014.