Chamber and committees

To ask the Scottish Government, regarding any impact on fuel poverty in Scotland, what its response is to the reported announcement that the energy price cap will increase by 1.2 per cent for the period covering January to March 2025. (S6T-02208)

Good morning. I am a wee bit stunned by the diversity in the responses, which go from quoting the OBR talking about a 15 per cent drop in trade intensity over the long term, which is absolutely astonishing if you think about the impact on the economy, to a statement that Brexit has not really moved the dial. I find it hard to reconcile those two different views.

My specific question is the balance of payments, which is something we used to agonise over. I appreciate that this information may not be readily to hand for the panel members, but the balance of payments for the UK has been massively negative over a long period, although Scotland’s balance of payments has—notionally, I suppose—been positive, with exports exceeding imports over a long period. Are any members of the panel aware of how that might have changed as a result of Brexit? I imagine, for example, that if there is any data on Northern Ireland, that would have seen an improvement given its special status, but I am just guessing.

Before I bring Professor Portes in, I note in response to what Mr Buckley has just said that the vast majority of the evidence that the committee has heard has veered towards identifying disastrous effects. People have said that they stopped trading with the EU immediately. An example is small seafood producers. Some businesses have outsourced to parts of the EU and others have had to go through parts of the EU in order to continue. On the point about the lack of data, as a former economy secretary in Scotland, I note that it is very difficult to get information about Scotland from UK sources. The information is very often not disaggregated and it is often based just on surveys.

I appreciate that it is difficult, but my question was about the balance of payments. Professor Portes, can you say anything about what the balance of payments was before Brexit over the longer term and what it might be now? I realise that it is difficult, but is there any way in which you can disaggregate that to different parts of the UK?

I will bring in our last witness. Professor, on that point, you said that, even with the best will in the world, the information is not available. There is no will to look at the information on exactly the point that you made. What are Scotland’s exports? We can think about whisky and oil, but oil comes ashore, it gets sold in the Netherlands and it is apportioned to the UK. There is a lot of clarity on fiscal transfers but very little on what goes out of Scotland. I ask the last professor to wind up on that, if possible.

I have one question, cabinet secretary, which is on the same theme that members have been pursuing. I will take a nostalgic look at what used to happen in the House of Commons. When I was studying European institutions in the 1980s, and Margaret Thatcher was pushing very hard for greater European integration and economic integration, it was a truism—certainly in academic circles—that there was virtually no effective scrutiny of EU legislation in its various forms.

Notwithstanding the efforts of the House of Commons committee that you mentioned, such work that was done was really carried out in the House of Lords, but even that was recognised to be insufficient, given the volume of things that was coming out of the EU. That is a big task for the UK Government, and it is a big task for the Scottish Government. I am really pleased to hear you use phrases such as “proportionate”. You used another phrase in your introductory statement—I cannot quite read it—pointing out that you cannot do all that stuff, which is quite right.

As has been discussed, one of the stated aims of the Scottish Government is to make it as easy as possible for Scotland to rejoin the EU. Has there been dialogue or is there any scope for there to be dialogue with the EU, either at the Council of Ministers or European Commission level, to find out what would be important to them for Scotland to align with, to make rejoining as easy as possible? I am not quite as pessimistic as Patrick Harvie about Scotland’s opportunity to re-enter the EU.

The previous inhibition to that dialogue was that the UK was the member state, so there were limited conversations between Scotland and the EU. That inhibition is no longer there. Is that dialogue happening, or is it possible to have dialogue, on what aspects are crucial to facilitate Scotland’s re-entry into the EU as rapidly as possible?

I want to put to you a question that has already been asked. Given the burden on the Scottish Government—of course it is a burden, including on civil servants and on this committee—in trying to monitor alignment and any de-alignment, is it not possible to be proactive and initiate bilateral discussions, disregarding what has to go through the UK and for Scotland to separately have those discussions about the things that are most important to the EU to help relieve that burden?

I thank the clerks and the convener of the committee for the report. I know the work that the conveners had to do to make sure that we got a report that has been commended by everybody. Bringing together a consensus is not easy on the committee sometimes.

Before Brexit, Scotland enjoyed a frictionless trading relationship with the EU, thanks to our membership of the single market and the customs union. It was a system that allowed our businesses to thrive, from our iconic salmon and seafood industries to our small and medium enterprises, which could access European markets with ease. However, today, as the committee’s report highlights, that reality has dramatically changed. The UK trade and co-operation agreement, while boasting of being tariff free and quota free, is far from frictionless.

The evidence that is presented in the report makes it clear that non-tariff barriers are strangling Scottish exports, especially for our smaller businesses. One of the witnesses the committee heard from, who was from Northern Ireland, said:

“The UK is ... becoming one of the most expensive places in the world ... to do business.”—[Official Report, Constitution, Europe, External Affairs and Culture Committee, 2 May 2024; c 13.]

Another witness said that it was easier to export to Russia or North Korea than to the EU.

Those are damning statements on the impact of Brexit. For example, for the seafood industry, which relies on the EU for more than 70 per cent of its exports, Brexit has been a significant blow. Salmon Scotland has reported a loss in export value to the EU of up to £100 million since 2019. That is not just about numbers and money but about the livelihoods of thousands of Scottish families who depend on those industries.

Incidentally, one of the vaunted benefits was that we would get a grip of immigration. Today, it has been published that the UK has the highest immigration rate in the whole of the Organisation for Economic Co-operation and Development. Obviously, that never worked for those who wanted that.

The Federation of Small Businesses has shown that Europe remains the largest market for UK SMEs, yet those are the very businesses that are being hit by the added costs and the regulatory burdens that are imposed by the TCA.

The report also emphasises the growing regulatory divergence between the UK and the EU. I say to whoever mentioned that point earlier that there was no way that we—even the House of Lords, which did most of the work—were ever able to monitor convergence, and there is no way that we can properly, in my view, monitor divergence. It is so expansive and it happens all the time.

The Independent Commission on UK-EU Relations has warned that further divergence could hamper trade not only with the EU but with other global markets that recognise EU standards. We are committed to aligning with the EU wherever possible, but our powers to do so are limited by Westminster.

I think that the efforts of the Prime Minister in relation to some of the security work that is going on now are commendable, and he should go further. That work is very important, but it also shows what we lost—in the EU, we could work not only with France and Germany but with defence partners across the board.

The seed potato industry has been mentioned. Britain used to export 30,000 tonnes of seed potatoes to the EU, valued at £13.5 million, but that market was closed overnight. The NFUS—

I will just finish this point. Some have said that we should have a referendum—somebody even said that the Liberal Democrats were the first to propose a referendum. I think that we should have a referendum. Nothing is more guaranteed in this life than that Scotland will one day join the EU, and that the UK will rejoin the EU. Everyone knows the benefits of doing so, but they do not want to talk about it yet, because they are scared of political consequences. However, it will happen, and the sooner we do it, the less damage Brexit will have caused. If he still wants to intervene, I will give way to Mr Kerr.

That is a consequence of the deal that the Tories did, so it is back to the Conservatives. The FSB has said that that has been very damaging and very serious for businesses.

The other point about the EU and EU membership is the one that Patrick Harvie made: the biggest achievement of the EU was peace in Europe. If people want to know the value of peace, which people do not appreciate until they have war, they should go to Ukraine and ask people there about the value of peace. That is why the EU won the Nobel prize.

One day, Scotland will rejoin the EU, and I am sure that the UK will follow thereafter.

I will, if Mr Carson can be brief.