Chamber and committees

In recent years, I have sat through quite a number of debates relating to internal market legislation. Like many across the chamber, I never wanted Brexit to happen, but I supported the need for legislation, and that is largely because the common frameworks designed to navigate the UK’s post-Brexit pathways did not provide the legal instruments that would provide the necessary legislative safeguards for open trade across the UK, complemented by provision for regulatory divergence and more effective parliamentary scrutiny.

I note from the committee’s report that there is cross-party agreement on the benefits of the UK internal market with Scotland, and rightly so, for exactly the reasons that Mr Rennie cited. Open trade across the UK is absolutely essential. Scotland trades one and a half times as much with the rest of the UK as it does with the whole of the EU and the rest of the world put together. That trade with the UK is worth four times as much to Scotland as what the EU single market provided. For those reasons, it is absolutely essential that the post-Brexit era poses no new barriers to trade across the UK, and that is very much an agreed conclusion of the committee report.

From previous debates in the chamber, members will know that I harboured some concerns about the initial United Kingdom Internal Market Bill, on the basis of concerns from stakeholders about the potential impact on devolution, which were similar to the concerns that the cabinet secretary spoke about in his speech. I could understand that, if we were not careful with the legislation, there was scope for the UK Government to undermine the devolution settlement, and that was certainly not acceptable. To avoid that—and it absolutely has to be avoided—it was essential that the legislation protected the right of the devolved Administrations to have their own genuine policy differences, such as minimum unit pricing for alcohol. Those policy differences, which reflect different national and regional circumstances, are absolutely what devolution should be about. Should the UK Internal Market Act 2020 curtail any of that, it would undermine those differences, and that would be a very serious issue.

At the time, my former colleague Adam Tomkins said that the important doctrine of proportionality, with its roots in common law, has relevance here. He was right, because not only does that doctrine govern the legislation, but it puts in place the opportunity to ensure that it is fair and independent and there is trusted adjudication of whether it is delivering on its stated objectives. Those objectives, in relation to the internal market, are agreed across Scotland and the UK, and it is in everyone’s interests to aspire to economic growth, better investment, a greener economy, job opportunities and the development of innovation and enterprise. Anything that disrupts the UK internal market would be contrary to the interests of both Scotland and the UK—a point that was very well made by Bruce Crawford when he was convener of the previous Finance and Constitution Committee.

That brings me to the current situation and, later this afternoon, we will debate the shared prosperity funds and how the EU funds absolutely have to be replaced.

There are other issues, such as the concern over the Scottish economy and the difficulties that it faces when it comes to ensuring that it has all the advantages that we would expect it to have, whether it had remained in the EU or as part of the United Kingdom. I will finish on that point, because the reason that the internal market is so important is to help Scotland to flourish in the way that we all want to see.

I begin by reiterating the belief on the Conservative benches that, in the post-Brexit era, the UK Government must make every effort to ensure that there is absolutely no loss to the devolved nations of funding that is equivalent to the money that we would have had, had we still been part of the EU. Whether it is via the community renewal fund, the levelling up fund or the shared prosperity fund, it is vital that there is at least equivalent funding for the loss of the EU structural funds. In other words, and to adopt one of the principles of the Smith commission, there must be no detriment.

For me, three things matter in this whole debate: first, that the absolute best interests of Scotland, most especially in terms of improving our economic performance, are met; secondly, that our local authorities and communities—which, for such a long time, have asked for more autonomy—feel more empowered; and thirdly, that there is a joined-up approach between Westminster, the Scottish Government and local authorities.

Last week, the Finance and Public Administration Committee took evidence from the Secretary of State for Levelling Up, Housing and Communities, Michael Gove, and that was an important session, during which members could address their understandable concerns about the details of replacement funding. Earlier this afternoon, during the debate on the internal market, we had an opportunity to debate more of those issues.

We know that the United Kingdom Internal Market Act 2020 confers a right on Westminster to spend money in the aspects of the UK for which it does not have devolved competence—for example, on infrastructure projects such as roads or railways. The aim is to provide additional investment, but there are some—and I hear them on the benches on my right—who feel that the 2020 act is an all-out attack on devolution, a power grab of unlimited proportion and something that Scotland can well do without.

There are two points, and the first is about co-operation; it is essential that there is proper co-operation. Mr Gove gave a full commitment that, if any of us feel that that co-operation is not happening, he will address that as soon as possible. The cabinet secretary has just referred to the fact that he has had engagement with Scotland Office ministers, who are saying exactly the same thing. The second issue, which is also relevant, is the statistical evidence that relates to the performance framework and how the Scottish Government’s ambitions articulate with those of the UK Government. That is a very important issue, which both Mr Johnson and I were pursuing at the committee meeting.

As we debate this crucial issue, it is vital that we are cognisant not only of the fact that there are clearly set out devolved responsibilities but of the fact that aspects of devolution go further down the line to our local government and local authorities, which want a greater say in how that money is spent. Mr Lochhead referenced some of the spending that has already happened in his constituency of Moray, and that is vitally important. If we measure what is happening now in the levelling up work, we see that some really good programmes are giving additional money, which is on top of anything that would come from Barnett consequentials. It is giving us that additional say, and that is extremely important.

I will deal with a few of the criticisms that have been made, particularly in relation to the comment that Mr Lochhead made about what the Treasury Committee and the Welsh Government said about their concerns that the replacement funds are not the full £183 million that would have been Scotland’s share. I acknowledge to Mr Lochhead that there would be some concern about that if it were not for the fact that the EU funds are being replaced, and not just by the shared prosperity fund. It is correct that EU funding is still taking place in Scotland, but it will diminish as time goes on, and Mr Gove has given a very full commitment that funding will be ramped up as that EU funding diminishes. The key point is that if, at any stage, there was a hint that we were not getting money on the same basis as when we were in the EU, that would be a very fair criticism.

The Scottish Government is saying that the 2020 act is an attack on devolution, but I do not accept that. When it came to the Tay cities deal in my region, there was excellent co-operation between the Westminster Government, the Scottish Government, local authorities and stakeholders. It is about making sure that our local communities, who know their areas best, have the facility to be able to direct funding in a way that is of the most benefit to their particular economies.

There are issues with some of the modelling that is used to decide on how the funding will be applied, but I do not accept that there is a deliberate undermining of what has to be spent in Scotland. There is some scope for change when making sure that the data that is used and interrogated by the Office for National Statistics applies to both the Scottish and UK objectives.

I move amendment S6M-03393.1, to leave out from “agrees” to end and insert:

“warmly welcomes the UK Government’s commitment to level up every part of the UK and the commitment provided by the Secretary of State for Levelling Up, Housing and Communities, The Rt Hon Michael Gove MP, that Scotland’s share of the UK Government’s Shared Prosperity Fund, worth £2.6 billion over the next three years, will at least match the level of EU funds it is replacing; agrees with local authorities across Scotland, which have commended the UK Government for directly funding levelling up projects in their local areas, bringing much-needed investment and employment, and calls on the UK Government, the Scottish Government and local authorities to continue to work together to ensure the effective delivery of future projects.”

Does Mr Johnson recognise that Mr Gove accepted that there could be issues with some of the modelling? There has not been a deliberate attempt to try to deny particular funding to specific areas. If we have issues about the modelling and it is not as objective as it could be, we are to go back to him with clear examples of where there might be problems.

Why does Mr Lochhead think that local government has been so enthusiastic about many aspects of the shared prosperity fund?

I thank the member for giving way. Does he accept that, as it stands, there is some existing EU money in Scotland? We need to ensure that, as that diminishes—which it will over time—the rest of the funding that will come from the UK Government’s shared prosperity fund and other structural funds is ramped up. Michael Gove gave a very firm commitment on that.

Does Mr Lochhead acknowledge that, when it comes to the city deals, for example, there has been first-class engagement between the Westminster Government, the Scottish Government, local authorities and local stakeholders? That, surely, is joined-up thinking that is very much to Scotland’s benefit.

I am grateful for your decision to move straight to questions, Presiding Officer, given the fact that the statement about the economic strategy was made yesterday.

Presiding Officer,

“not … market tested nor pragmatic”

was Sir Tom Hunter’s assessment of the economic strategy. The Scottish Trades Union Congress in effect disowned the strategy, despite having been key to the consultations. Other bodies, including the Confederation of British Industry and Scottish Chambers of Commerce, were a little bit more encouraging about the lofty ambitions, but said that there is a real lack of clarity about the detail, so it was hardly a ringing endorsement of the Cabinet Secretary for Finance and the Economy’s new economic strategy.

I will ask the cabinet secretary three questions. First, she says in her Scotsman column this morning that Scotland must become

“more welcoming … for innovators and entrepreneurs”.

I completely agree with that, but how does that fit with the Scottish National Party’s priority for a second independence referendum, which virtually all leading businessmen and businesswomen tell us would create a lot of renewed uncertainty and additional cost when the exact opposite is required to attract the new investment that we desperately need?

Secondly, Chris van der Kuyl of 4J Studios has said that none of the cabinet secretary’s ambitions will be achieved unless there are serious efforts to improve education and skills across Scotland. Does she agree that publication of the recent report by the Organisation for Economic Co-operation and Development on school education is essential if we are to fully understand and address the weaknesses in our education system?

Thirdly, I ask again when the Scottish Government will provide the full details of the current situation at the Scottish National Investment Bank, given its key role in supporting future investment.

Ms Rowand, when you talked about the opportunity cost of developing a new social care system, you said that we had to bear in mind not just the cost of introducing a new system but the fact that resources might have to be taken away from elsewhere. Can you expand on that? Are you saying that any new system will create an additional administrative burden or do you foresee some of the social care services that are provided on the ground being changed or removed?

Thank you very much.