Culture, Tourism, Europe and External Affairs Committee

Meeting date: Thursday, June 25, 2020

Official Report 642KB pdf

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Negotiation of the Future Relationship between the European Union and the United Kingdom Government

The next item of business is an evidence session on the negotiations on the future relationship between the European Union and the UK Government. I welcome to the meeting the Rt Hon Michael Gove MP, Chancellor of the Duchy of Lancaster and Minister for the Cabinet Office; and Lindsay Croisdale-Appleby, the deputy chief negotiator and deputy sherpa with the UK Government’s task force Europe. We have around one hour for the evidence session, so I would be grateful if questions and answers could be as succinct as possible.

Before we move to questions, I invite Mr Gove to make a brief opening statement. Good morning, Mr Gove.

Good morning, Joan. It is a pleasure to appear in front of the committee.

I just want to say that, in various different roles that I have had in Government, I have valued the opportunity to talk to parliamentarians from all the devolved Administrations, and I am looking forward to our conversation today.

Thank you. Is that your brief opening statement?

That is all.

That is very welcome and very brief—thank you.

In the course of the inquiry, our committee has heard many witnesses say that it is vital that the UK Government extends the transition period if we are not to face a double disaster of a Covid recession and a no-deal or a low-deal Brexit. Last week, you were asked about your Government’s refusal to extend the transition when you appeared before the House of Commons Northern Ireland Affairs Committee. You told that committee that the reason why the UK Government has taken that position is because

“staying in the transition period would mean continuing to pay into the EU without having a voice in the multiannual financial framework that determines how much we would pay”.

Is that still your position?

Absolutely. The position has not changed.

Right. My understanding is that the withdrawal agreement is clear that the amount that we pay is determined by a decision of the EU-UK Joint Committee under the Withdrawal Agreement, which you co-chair. Therefore, not only does the UK Government have a voice, but it co-decides and ultimately it can veto any proposal. I believe that that is stated clearly in paragraph 3 of article 132 of the withdrawal agreement.

We have been clear, right from the moment when the Prime Minister won the general election, that the basis on which he did so was that we would not extend our time in the transition period. Were we to do so, we would be liable to continue paying into the EU, and the multiannual financial framework would be set by the EU 27, not by us. We would also be subject to new laws that the EU could pass without our input or say. Furthermore, our ability to put in place the measures that might help us to recover effectively from the Covid-19 pandemic would be less.

It would be mistaken, foolish and perhaps naive to assume that if we asked for an extension in the EU-UK Joint Committee under the Withdrawal Agreement, the EU 27 would allow us to dictate how much we paid. I think they would say that, if we wanted an extension, that was fair enough, but we would still be benefiting—as they would see it—from unimpeded access to the single market and everything that goes with that. Just as we had been paying in during this transition period, right up to the end of the MAFF at the end of 2020, we would have to continue to pay in. We would be on the hook, as it were, for a significant sum.

That is what you told the Northern Ireland Affairs Committee last week. I will quote from article 132 of the agreement. Paragraph 3 says:

“A decision of the Joint Committee under paragraph 1 shall ... establish the appropriate amount of the contribution of the United Kingdom to the Union budget for the period from 1 January 2021 to the end of the transition period, taking into account the status of the United Kingdom during that period, as well as the modalities of payment of that amount”.

It seems to me that, if you are co-chair of the joint committee, you could surely negotiate a good deal, given that the alternative would be to crash out with a low deal or no deal in the middle of a Covid pandemic.

I think we would be a price taker, not a price maker, in such a negotiation. As I say, the EU 27 would be agreeing their budget overall, and I do not think that they would say that we could have a discount membership. That would be naive.

Formally, it is of course open to the EU-UK Joint Committee under the Withdrawal Agreement—or it was open to the committee—to agree that we should extend, and then to agree what we should pay. However, in that case, agreement would not be a process by which the UK would be able to determine cut-price access. I think that the EU would politely but firmly inform us of our obligations and invite us to agree to accept that price for continuing membership of—or rather a continuing extension of the transition period, I should say.

People can disagree about whether or not extending is a good thing or a bad thing but, for reasons that have already been outlined and that we may go into further, I think it would be wrong, and indeed undemocratic to do so. Nevertheless, it would come at a price.

Thank you for that answer. I do not think that we will agree on this, but I was just quoting the withdrawal agreement, and it seems to give you more influence and power than you seem to think you have. We are tight for time, however, so we now move on to Claire Baker’s questions.

I will ask about business preparedness. In a letter to the committee dated 9 June, you said, referring to the customs area and the single market:

“Businesses will need to prepare for life outside both at the end of 2020, and many have already done so.”

It would appear that some businesses have done that by relocating out of the UK and moving their head offices outside the UK. We heard evidence from Allie Renison of the Institute of Directors a couple of weeks ago. She expressed concern over the level of uncertainty that businesses were facing. Given the very short timescale—we have until the end of the year—how are businesses able to prepare for something that is currently unknown? Allie Renison argued for a transition phase or “implementation phase” as a formal stage that would follow from the end of the year, starting on 1 January. Could you talk a bit about that and about how you believe businesses should be preparing, given the level of uncertainty?

In the first instance, we have seen a number of businesses that had been thinking about where they were going to locate their headquarters and additional production deciding that they wanted to reshore and have more jobs and do more work in the United Kingdom. At one stage, Unilever was contemplating moving its headquarters to the Netherlands, but it now says that the UK will be the base for its operations for the future. Nissan in Sunderland decided that it wanted to reshore production in the UK. We have seen a number of companies say that, notwithstanding the difficulties of the Covid pandemic, the future of the UK is bright in the medium to long term, and that is therefore where they want to be.

You made the point about certainty, which is important, and making it clear that we will not extend the transition period means greater certainty for business. We have talked about a Canada-style trade agreement. However, whether or not we secure precisely that kind of free trade agreement, businesses will know that we will be outside the single market and the customs union, and that, come what may, whether there is an FTA or we leave without one, they will need to prepare for new customs declarations and other processes, for example.

If we are looking at a six-month period for businesses to prepare, and they are still in the dark about what the new customs arrangements might be, when will businesses know what they will be? To go back to Allie Renison’s point, would there be an opportunity for a more formal transition period that would allow businesses to adjust to what the new rules might be, given that they do not know what they are the moment?

In April, you gave evidence to the House of Commons committee about operation yellowhammer and preparations in relation to and economic analysis of the impact of leaving without a deal, which would create even more uncertainty for businesses. Will you respond to those points? In addition to that, on the topic of analysis, does the UK Government do any analysis that is specific to Scotland and the issues that our specific sectors face?

The member raises a series of important points. First, the border and protocol delivery group communicated to business a few weeks ago what the arrangements at the border would be. Although Government can always do more to make sure that businesses and others are prepared, the nature of the relationship that we will have with the EU is clear, whether or not we get a free trade agreement, and business’s requirements in relation to, for example, customs declarations have also been made clear.

On the broader point about economic analysis, we conduct economic analysis all the time. However, there are so many variables at play, not least because of the Covid pandemic, that it is important to draw a distinction between economic analysis and modelling and prediction. Sometimes, people place an enormous amount of emphasis on models and assume that they are a predictor of the future, but they are not. However, we know that the Scottish Government has done economic analysis of the impact on the fishing industry of being outside of the common fisheries policy, which, in its estimation, would create thousands of jobs and millions of pounds of additional revenue. That is certainly an analysis with which we agree.

When the joint ministerial committee on European Union negotiations was established, the UK Government, in agreeing its remit, committed to work collaboratively with the other Governments in the UK to

“seek to agree a UK approach to, and objectives for, Article 50 negotiations”

However, instead of seeking to agree an approach to and objectives for those negotiations, it seems as though the UK Government has simply decided and then told the devolved Governments what the situation is. Mr Russell told this committee:

“On 19 May, the UK Government published its draft legal texts for the negotiations, which were shared with the Scottish Government less than 24 hours before publication, with no opportunity to amend.”—[Official Report, Culture, Tourism, Europe and External Affairs Committee, 18 June 2020; c 7.]

Is it accurate that the UK Government has shown no intention of agreeing a joint approach with the other Governments of the UK and has merely imposed its own solutions? If that is not the case, can Mr Gove give us a list of examples of the UK Government changing its negotiating position as a result of input from the other Governments?

11:15  

I think that it is fair to say that that characterisation is not wholly accurate. We have had extensive consultation with the devolved Administrations in Northern Ireland, Scotland and Wales.

I will give an example. On fisheries, work has been done with Department for Environment, Food and Rural Affairs officials and Scottish Government officials to make sure that the approach that we take on that uniquely important issue takes account of the fact that the majority of the fish that is caught and landed by the UK fleet is caught by Scottish boats and landed in Scottish harbours.

I am surprised that that is the end of the answer; it seems that Mr Gove does not have a list of examples—or, indeed, any examples—of cases in which the UK Government has changed its position as a result of input by the other Governments. The failure of the UK Government to do so led to the Scottish Government and the Welsh Government refusing to take part in the most recent ministerial meeting, which was an online meeting.

Is it not the case that, as a result of the events of recent months and years, the intergovernmental relationship is fundamentally broken? What does the UK Government intend to do differently if it has any intention at all of repairing that broken relationship and beginning to share power properly with the elected Governments and Parliaments of these islands?

It is important to say that I do not believe that the relationship is broken; it is quite the opposite. There has been regular contact between me and other UK Government ministers, most notably the Paymaster General, Penny Mordaunt, and representatives of the devolved Administrations.

When we negotiate, we take account of specific Scottish, Welsh and Northern Irish interests. On everything from thinking about the impact of a free trade agreement on the livestock sector to considering how we can ensure that we maintain the economic equities of vital parts of the UK economy, we negotiate in the interests of the whole UK. Of course there are sometimes disagreements, which is to be expected when people from different political parties and traditions are involved in those conversations.

Mike Russell has a clearly expressed view on the nature of the relationship that he and others in the Scottish Government would like the UK to have with the European Union, but that is not the view of the UK Government, nor is it the view of the majority of people who voted in the 2016 referendum or of the majority of people who voted in the recent UK Parliament elections. However, I and my colleagues always benefit from hearing from Mike Russell, Jeremy Miles and others. Their expertise and insight are appreciated and, where appropriate, incorporated.

I would like to pick up on some of the points that have just been made. In the session that the committee had with Michael Russell last week, quite a different picture was painted. We were given examples of details of the negotiating position being provided to the Scottish Government only 24 hours before the negotiations started. We heard that there was a lack of information forthcoming from the UK Government about levels of preparedness and planning, and that there were no pre-briefs or debriefs in relation to the various discussions in Brussels.

Michael Russell told us that, in his view, the Scottish Government and the other devolved Governments were being treated as mere stakeholders rather than as Governments of nations of the UK. In answer to my question, he agreed that there was “no respect agenda”. He went so far as to say that it is now difficult for him to trust the people he has to deal with. I would have thought that you would attach great importance to the issue of trust. Therefore, are you not worried about the inevitability of the Scottish Government cabinet secretary having reached that view?

It is fair to say that Mike Russell always gives a good account of himself in whichever committee he participates, whether that is the JMC(EN) or this committee. He is a fluent and effective advocate and that fluency and effectiveness is brought to bear in our JMC(EN) discussions and others in which Mike Russell and other Scottish Government ministers participate. Of course, we take proper account of the arguments that they make, but there is a difference of opinion: the Scottish Government has a view on the nature of the relationship that the United Kingdom should have with the European Union that is not the view of the United Kingdom Government. Inevitably, if there is a difference of a kind, it will be the case that not everything that Mike Russell believes that the UK Government should be doing will be done. He is free to express his disagreement with us and he does, as always, in effective, fluent and precise terms.

I think that if Mr Russell were here to speak for himself, he would say that he always advocates and stands up for the Scottish interest.

I turn to another area of bilateral trade deals. Obviously, many issues are devolved to the Scottish Parliament. Notwithstanding that there appears to be the same level of disengagement on crucial issues. We have heard the serious concerns of farmers, and indeed of the people of Scotland, about the lowering of food standards that some of those deals might entail, but all we have heard in response to those deep concerns, I respectfully suggest, are platitudes. I ask Mr Gove: what trust should the people of Scotland place in the judgment of UK Government ministers such as him, who is on the record saying that it is wise to drive around for 30 minutes to test your eyesight?

When we consider trade agreements we take very seriously the importance of protecting our high animal welfare and environmental standards, and your question gives me the opportunity to state that those protections already exist in law and that we are not going to dilute them. The Department for International Trade engages with the devolved Administrations, as do all Government departments when we discuss free trade agreements. When I was fortunate enough to be the Secretary of State for Environment, Food and Rural Affairs in the UK Government, I regularly talked to colleagues such as Fergus Ewing in the Scottish Government and Lesley Griffiths in the Welsh Government about making sure that we could have an approach that safeguarded animal welfare and put the environment at the heart of everything that we did. I was pleased to see that the Scottish Government recently sought to echo and emulate the UK Government’s lead on the establishment of an office for environmental protection and the adoption of high environmental principles; that has been incredibly helpful.

I agree with Annabelle Ewing that Mike Russell is an effective advocate, but there is a distinction to be drawn: the Scottish Government is of course rightly exercising a series of devolved responsibilities, but when Mike Russell speaks for the Scottish Government, he does not speak for everyone in Scotland.

During the course of our inquiry, we have heard a lot about fishing, which is very important to Scotland, as you have already said. Can you confirm that it is the UK Government’s strong position that the United Kingdom should be an independent coastal state, which is in contrast to what we hear from the Scottish Government, whose position would leave Scottish fishermen trapped in the common fisheries policy?

You are absolutely right. One of the benefits of being outside the European Union is that we can have full control of our exclusive economic zone, which means that we can decide who fishes in our waters and on what terms. At the moment, because of the nature of our accession to the European Union in the 1970s, other countries have significant access to our waters in that exclusive economic zone.

We want to make sure that we are an independent coastal state, exactly as you say, so that, just like Norway, Iceland and the Faroe Islands, we can allow others in, but on our terms. As we touched on earlier, that means that, as the Scottish Government’s research has shown, there will be more jobs and more money for Scotland’s coastal communities, in particular—but not exclusively—those in the north-east of Scotland. It also means that we will be able to manage stocks in a more environmentally sensitive way, so it is a win-win both economically and environmentally.

You are right that the logic of the Scottish Government’s position of wanting us to remain in the European Union would mean that we would be in the common fisheries policy. If, at some future date—I hope that it does not happen—there were an independent Scotland and it wanted to accede to EU membership, it would have to accept the common fisheries policy and it would lose a lot of its territorial waters. Under current terms, Scotland would also have to agree to join the single currency, which would create additional economic turbulence not only for coastal communities but across Scotland.

Thank you for that response—I think that Scottish fishermen will be pleased to hear that the UK Government is going to fight for that prize that Brexit delivers.

You talked about the political differences between the Scottish and UK Governments on Brexit but, as you know, more than 1 million people in Scotland voted to leave the EU. Do you share my concern that the Scottish Government tries to present staying in the customs union and the single market as Brexit? I do not think that that is what those people voted for. Do you recognise that there is an impasse in that regard where a compromise could not be found?

That is very fair. Again, the Scottish Government’s position is well known, and it has been well rehearsed and presented, as I mentioned, by Michael Russell and others very clearly. However, it runs counter to the clearly expressed commitment in the EU referendum to leave the customs union and the single market. Indeed, many of those who argued that we should remain pointed out that leaving would mean that we would leave the customs union and the single market; David Cameron and others made that clear.

You are right to say that a million people—38 per cent of the population of Scotland—voted to leave. I think that it is important that, when the Scottish Government presents a case on behalf of the people of Scotland, it takes account of the views of those people. Their decision was taken in a considered fashion, and the Scottish Government should seek to represent their views to the best of its ability.

Good morning, Mr Gove. I go back to Patrick Harvie’s question about the ways in which the Scottish Government has successfully influenced the development of UK policies. Can you provide the committee with five examples of where each of the devolved Administrations has successfully managed to get the UK Government to change its policies, or perhaps some of its Brexit negotiating tactics?

It is important to recognise that the JMC(EN), and indeed the negotiations, take place in an environment where there is give and take. It may well be the case that, during those negotiations—because of their sensitivity, they are inevitably conducted in private—there is inevitably give and take as different positions are tried out to see whether there might be movement, and it is always best to make it clear that there is flexibility. However, the whole point of the JMC(EN) is that it is a private discussion, and the whole point about our negotiating stance is that we should not negotiate in public—that is not how international negotiations take place.

We should take everything into account: the fact that, in agriculture, as I mentioned earlier, Scotland, Wales and Northern Ireland rely to a greater extent than England does on livestock production; the fact that there are specific equities for Scottish producers in the agri-food sector because of the prominence of geographical indications; the fact that the Scottish Government has said that it is strongly attached to access to the Erasmus+ programme; the fact that the Northern Ireland protocol and its implementation have to take account of the legacy of the Belfast agreement; the fact that, as we look again at Wales’s economic future, we need to be certain that particular sectors—not only agri-food but manufacturing—have the right deal.

11:30  

In all those areas, our negotiating stance has been shaped and framed by determination to do the best for the United Kingdom. In doing that, we are listening to the Scottish and Welsh Governments and the Northern Ireland Executive. However, from time to time, of course our judgment about what might be in the interests of the whole UK differs from that of, for example, the Scottish or Welsh Governments, because party traditions and the political philosophies of politicians, although it is always good if they overlap, will inevitably diverge in some circumstances.

“Shaped” and “listening to” do not indicate amendment or fulfilling any of the suggestions. I would be grateful if you could write to the committee with specific examples. As you said, the negotiations are taking place privately, not in public—quite rightly—and it would be useful for us to have those details.

I studied through an Erasmus scheme, which you mentioned, so I know how important it is. You will be aware that Scotland benefits disproportionately from participation in EU programmes such as Erasmus+ and horizon 2020. They are of huge importance to this committee. In your recent letter to us, you stated that the UK Government is

“considering participation in the next generation of these, including Horizon 2020 and Erasmus+, which are due to begin in 2021 and are currently under negotiation. Where it is in the UK’s interests, we are open to participating in some EU programmes, including elements of Erasmus+ on a time-limited basis, provided they are in line with UK interests and we can agree a fair and proportionate financial contribution.”

In their letter to you, the Scottish and Welsh Governments requested

“confirmation that in the negotiations on participation in EU Programmes, the UK Government will respect the devolution settlement by asking for, where appropriate, the option for devolved administrations to continue participating even where you have decided on behalf of England not to do so.”

How do you respond to that request from both the Scottish and Welsh Governments?

Stuart McMillan has made some very important points. On the first one, about listening, it is important that I refer to the UK Government “Ministerial Code” paragraph 2.3, which says:

“The internal process through which a decision has been made ... should not be disclosed. Neither should the individual views of Ministers or advice provided by civil servants as part of that internal process be disclosed.”

That is to have a safe space for discussion.

I have mentioned a number of areas where we have taken account of the specific interests of the devolved Administrations and, more particularly, the people within Scotland, Wales and Northern Ireland. I can understand that it is a perfectly legitimate question, but I do not think that it would be right to give a blow-by-blow account of the discussions that take place, which would run counter to good practice in policy making and the need to have a safe space for discussions to take place and for advice to be offered.

On the point about a programme—I am sorry, I see that you want to come back on that point.

I did not ask for a blow-by-blow account.

I understand that, and I was explaining the context.

I ask whether Mr Gove could move on quickly, as there are two questions from members.

On horizon 2020 and Erasmus+, for the UK’s involvement in any EU programme, the important thing is that we need to make sure that it is value for money. We know that Scottish universities, because of their excellent research base, benefit particularly from involvement in the UK-wide allocation of research funding. As in so many ways, Scotland benefits financially from being in the United Kingdom because of the strength of the UK Treasury and its institutions.

We will look at future participation in Erasmus+ and in science programmes. We hope that we will be able to participate in such programmes, but they need to be value for money. One thing that is unambiguously value for money is Scots universities having access to UK research.

Operation yellowhammer was alarming reading. Do you believe that the warnings from it still apply in the context of a no-deal scenario? Might the situation be worse now, given all that businesses have had to deal with in the past six months? Are there particular areas, such as supply chains, that might be more vulnerable now than they were six months ago? What is the current status of operation yellowhammer?

Operation yellowhammer was specifically set up to deal with a no-deal outcome. We have a deal: the withdrawal agreement. That means that some of the questions that would have been unresolved if we had not secured that withdrawal agreement are now resolved, such as the position on Northern Ireland through the Northern Ireland protocol, the rights of EU citizens in the UK and so on.

You are right to say that the Covid-19 pandemic has created difficulties for citizens and businesses across the United Kingdom. We believe that the most important way in which we can help citizens and businesses is to provide certainty about the end of the transition period and to use the strength of the UK Exchequer to underpin economic recovery.

On citizens’ rights, the coronavirus has shone a light on the enormous contributions that EU citizens make to public services, our economy and society. The lockdown has meant the closure of settlement scheme support centres and local scanning centres, making it more difficult for EU nationals to apply for the identification needed to make applications. The Home Office claims that it will be able to ensure that every qualifying EU citizen has settled status by next year. Do you think that that is credible and should the deadline for the settlement scheme be extended to take account of the impact of Covid-19?

It is credible. I do not see any reason to extend that deadline, which is halfway through next year. Some 3.2 million EU citizens in the UK have applied for settled status, which is more than the number of EU citizens that we imagined were in the UK—that figure was widely believed to be around 3 million rather than 3.2 million. You are right that the presence and participation of EU citizens in the life of the UK is a good thing.

How will law enforcement and security provision be enhanced by the end of transition?

When we take back control of our borders, we will be able to decide more effectively who comes into our country and on what terms.

Do you really think that our security will improve without things such as the European arrest warrant and other co-operation with European police and security organisations, particularly in relation to efforts to tackle organised crime and smuggling? Are you seriously suggesting that that is the case? If so, does that mean that all that co-operation in recent years has been detrimental to the UK?

It is important to recognise that security and intelligence co-operation is done at the nation state level—it is a nation state competence. We freely co-operate with our European neighbours on several tools and areas. We also co-operate with other countries outside the EU in order to keep our citizens safe.

Glasgow and Edinburgh alone employ 62,000 people in financial services, which were worth £6.3 billion in exports last year. Again, I wonder how the end of transition will benefit that key sector, given that the CBI has said that the overall economy will shrink by 3.5 per cent in the first year after the end of transition. In particular, I am thinking about sectors such as life insurance, in which Scotland has 24 per cent of the UK’s entire employment, as well as about the loss of the benefits of passporting.

You are right that financial services matter a great deal to the economy of the United Kingdom and Scotland. It is not just about Edinburgh and Glasgow; in Perth and Aberdeen and across Scotland, people are employed in financial services. It is also important to recognise that, when it comes to financial services, the EU should grant equivalence to the UK. That is an autonomous EU decision; it is not subject to negotiation. A number of voices in financial services have said that the ability of the UK to thrive is greater outside the single market. For the success of the financial services sector, when it comes to making sure that we have the right regulatory and legal framework, it is important that we are not a rule taker.

In the current pandemic, we have seen how important many key workers are in areas such as the national health service; some of them are not currently paid at levels that many might think appropriate to the importance of the work that they do. In Scotland, as in many parts of the United Kingdom, those who work in tourism and the care sector and seasonal agricultural workers might fall into that category of people who are essential but who are at the lower paid end of the scale. When I was on the Scottish Parliament’s Economy, Jobs and Fair Work Committee, we heard evidence from a number of Scottish companies about those issues. Often, they would say that they could not remember when they had most recently tried to recruit workers within Scotland, in spite of there being lots of unemployed people, including younger people. It seemed that it was easier to bring workers in from the rest of the European Union at lower pay rates. When the Secretary of State for Scotland give evidence to this committee, he said that he hoped that, as a result of us leaving the EU, there would be a rise in wages for people who are lower paid, so that their work would be properly remunerated. How do you see that developing?

I completely agree with the secretary of state. One of the features of economic analysis that was highlighted during the referendum and subsequently is that, although immigration is vital and valuable, uncontrolled migration in certain areas can depress the wages of some workers. A number of important thinkers on the left, such as the Labour peer Maurice Glasman, and the former Fire Brigades Union official Paul Embery, have made that point clearly. The secretary of state is right and you are right, Gordon, that in the future, we need to make sure that all work is properly valued and that people who, in the past, might not have been paid as they should have been paid enjoy the opportunity to see their earning power increase.

You will be aware that training and education skills programmes are devolved but, now that we are out of the EU and after the transitional period is over, are there examples from other areas of the United Kingdom that we can look at in approaching that area?

Yes, that is a very good point. I would like to encourage the adoption of good practices in the education and training sector from different parts of the United Kingdom. Whether it is the apprenticeship levy or giving more day-to-day control over schools to headteachers and professionals, we can all share good practice and it is critically important that we do so, because you are right that one of the ways in which we increase productivity as a country is by improving education alongside infrastructure. It would be beneficial overall to make it easier for students from every part of the United Kingdom to study in other parts of the United Kingdom.

11:45  

Thanks to you, Mr Gove, and to the questioners, we have a little time in hand. I return to your appearance before the House of Commons Northern Ireland Affairs Committee last week. You said:

“businesses in Northern Ireland will, as has been recognised, because of the protocol, have certain advantages that businesses in other parts of the UK may not enjoy, whether or not we have a free trade agreement.”

I represent South Scotland, which includes Dumfries and Galloway in the south-west. Businesses in my region often consider businesses in Northern Ireland as their direct competitors. What words of comfort do you have for them, given that you have said that businesses in Northern Ireland will have an advantage over Scottish ones?

We all recognise the gains that have been made in the past 22 years as a result of the Belfast/Good Friday agreement. We would all want to make sure that Northern Ireland continues to prosper.

If we look at Scotland’s history, the ties of affection and respect between citizens of Scotland and those across the island of Ireland, including Northern Ireland, are strong. We do not make ourselves stronger by pulling others down. I think that Scots would want to stand in solidarity with the people and businesses of Northern Ireland and to make sure that they can build on the successes of the past 22 years. If Northern Ireland businesses succeed, the trade that plies from Larne to Cairnryan—which benefits people in Dumfries and Galloway—can continue to flow freely. That is good for all of us.

People in Scotland, and in Dumfries and Galloway in particular, have strong fraternal ties with Northern Ireland and they wish people there well, but that does not mean that they want to be put at a competitive disadvantage.

Businesses in Scotland enjoy a number of competitive advantages as a result of being part of the United Kingdom. Northern Ireland businesses have unfettered access to all of the UK. Scotland’s businesses and consumers benefit from the strength of our UK internal market. If that internal market were to be fractured, that would be the greatest competitive disadvantage that Scotland’s businesses could face. That is why the Northern Ireland protocol, the commitment to unfettered access for Northern Ireland goods and the overall strength of the UK internal market give all businesses confidence and a competitive edge.

The World Trade Organization suggests that there will be a fall of between 13 and 30 per cent in world gross domestic product in 2020. When Philip Rycroft appeared before the committee, part of the discussion was about the 2018 modelling that was undertaken for the UK Government. He said:

“What the modelling did not accommodate at all—because, of course, it could not have done—was the impact of the coronavirus on macroeconomic conditions, around which I absolutely accept that there are huge uncertainties.”—[Official Report, Culture, Tourism, Europe and External Affairs Committee, 4 June; c 19.]

That being the case, and given the economic challenges that we will face, do you not agree that it would be wise to look at some of the financial frameworks that are in place, particularly the one between the Scottish and UK Governments that they signed in 2016? The macroeconomic conditions have clearly changed since then.

There are two important points to make. First, as Philip Rycroft helpfully and graciously acknowledged, the point of economic models is that they cannot accurately predict the future. The famous unknown unknowns will always occur.

Within that, one way in which we can most effectively safeguard the prosperity of the UK—as I touched on earlier—is by making sure that we have effective working across the UK and that we have a strong and free-flowing internal market.

Kenneth Gibson has a supplementary question.

It is clear that the pandemic has hampered negotiations. Will negotiations still be outstanding by the end of October? If so, what areas of the UK economy will struggle as a result of the inability to conclude negotiations this year and the lack of an extension to the transition?

We had a high-level agreement just the other week, when the Prime Minister talked to President Ursula von der Leyen, President David Sassoli and President Charles Michel, when it was agreed that we would accelerate the pace of negotiations. The phrase that was used was to

“put a tiger in the tank”.

That is why the pace of negotiations is picking up. There is a determination on all sides to make progress.

A wee while ago, there was mention of the folk in Scotland who chose in 2016 to vote no. That is indeed the case; some did. However, 62 per cent of people in Scotland voted to remain in the EU. All recent studies have shown that the forcible removal of Scotland from the single market and the customs union will be hugely damaging for the economy of Scotland. People did not vote to become poorer. Why do you want to make my Cowdenbeath constituents poorer?

The last thing that I want to do is to make people poorer, in Cowdenbeath or anywhere in Fife. I am in politics in order to spread our prosperity and to generate greater equality of opportunity. One of the things that would make people in Cowdenbeath and Fife poorer would be if Scotland were to leave the single market and customs union of the United Kingdom.

Annabelle, do you want to come back on that?

Yes—to say that that is utter nonsense. I go back to the first question that I raised with Mr Gove: trust is the key issue in politics these days. People hear those tired messages and they just do not believe you guys anymore, I am afraid, Mr Gove.

It is unambiguous that, if Scotland left the United Kingdom, it would be poorer. I do not know anyone who would contest that.

Andrew Wilson, a gifted economist, pointed out, in the sustainable growth commission report that was commissioned by the First Minister, that Scotland would undergo additional austerity as a result of independence. Andrew Wilson and others hold the perfectly legitimate view that that is a price worth paying. However, his work draws attention to some of the weaknesses in the white paper that was published by Alex Salmond, when he was making the case for independence as the then First Minister.

I take Annabelle Ewing’s point seriously. We improve trust in politics when we are honest about the trade-offs. Last week, Andrew Wilson said on the radio that an independent Scotland would face particular economic challenges as a result of Covid. That candour helps to rebuild trust, and, with his approach in spelling out the price of breaking up the United Kingdom, that is helpful to the debate.

I return to the issue of the withdrawal agreement and the current negotiations. Before the general election, the political declaration was agreed with the EU. I accept that that was non-binding.

I wanted us to remain in the EU, and I would still rather that we did. However, the political declaration gave a broader interpretation of what the relationship could be like, which might get broader support across the UK.

In the recent negotiations, the UK Government seems to have moved quite a bit from the content of the political declaration. What is left of the political declaration that is relevant? It no longer appears to the basis for the negotiations, which it was intended to be.

It very much is the basis for the negotiations—it provides a framework for them and allows us to reach what I hope will be a mutually beneficial free trade agreement. The political declaration acts as the framework. You are right that it allows for various levels of relationship and agreement, but it is definitely the framework and foundation on which the negotiations are conducted.

Kenneth Gibson has another question. If he can keep it as brief as possible, we will make our deadline.

I do not recall any Conservative politician praising Andrew Wilson when he was a Scottish National Party member of the Scottish Parliament. Is it not the case that he, like 54 per cent of Scots, believes in independence because we know that Scotland will be a more prosperous, just and equal society when it is an independent nation once again?

Andrew Wilson’s view is clear, and I have great respect for him. However, it is also clear, as the sustainable growth commission’s report pointed out, that, if Scotland were independent, it would undergo greater austerity. Scotland would have the biggest deficit of any country in Europe, if it were independent. Some might consider that economic pain and turbulence to be a price worth paying in order to secure the goal of independence. That is fair, and Andrew Wilson’s candour in that respect is helpful.

As I have said, the sustainable growth commission’s report made it clear that some of the claims that were made in the independence white paper that was produced as part of the 2014 referendum campaign were perhaps overoptimistic. If we look back at that white paper and consider some of the projections that were made on the price of oil and what that would do for Scotland’s economy, for example, we can show that those predictions were, if not heroic, certainly at the optimistic end.

The greater degree of proportion and candour that Andrew Wilson has brought to the argument is helpful. Of course I do not agree with him on every aspect, but some of the difficult truths that he has helped to surface and enabled us to grapple with allow us to look more clearly at the economic cost of separating Scotland from the rest of the United Kingdom. As well as the economic cost, that would undermine the principle of social solidarity, which is an important part of the United Kingdom’s history. My view is that folk in Scotland, like people in Northern Ireland, Wales and England, have the same values of social solidarity, and it is important that we uphold those values across all parts of the United Kingdom.

We have three minutes in hand. I want to ask Mr Gove a brief question before we finish.

I return to the Northern Ireland protocol and the south-west of Scotland. If we do not get a deal, where will the checks between Scotland and Northern Ireland take place? Where will the infrastructure be built to carry out the checks?

There will be no need for any infrastructure in Scotland, because Northern Ireland businesses will have unfettered access to the UK internal market. There will be some additional requirements in checks on products of animal origin, because we respect the island of Ireland’s status not just as a single epidemiological zone, but as a single sanitary and phytosanitary zone. However, it is already the case that there are checks at Larne and Belfast for live animals. We will build on the existing systems in order to ensure that the checks are appropriate. It is, of the course, the case that physical checks on products of animal origin apply to only a small proportion of those goods.

What about other goods that are bound for the Republic of Ireland from Scotland? Where will the checks on those goods take place?

If they are bound for the Republic of Ireland, customs procedures will be conducted, and we believe that they can be conducted electronically as the goods make their way there. However, the overwhelming majority of trade between the UK and Northern Ireland is intra UK. That reinforces the importance of the United Kingdom’s internal market and the fact that we all benefit from those economic, social and cultural ties.

12:00  

I am talking about the proportion of goods that goes to the Republic of Ireland. We have had a look at the electronic methods that are already in place at the ferry terminal. It is quite clear that, although many of the containers that go across to Northern Ireland are marked, there are containers that need to be investigated. Additional electronic infrastructure would therefore be needed if you do not get a deal for goods that will go to the south of Ireland.

I would be grateful for the detail on that that the committee would wish to provide. I believe that the fears that some have expressed are misplaced, but I would, of course, be very grateful for any documentation that the committee wishes to share in order to look at the trade flows and specific goods and see whether there are any additional concerns that we can safely address through the work of Her Majesty’s Revenue and Customs.

Obviously, the withdrawal agreement forbids any checks, apart from animal checks, which you mentioned. Any new checks on the island of Ireland would not be acceptable under the withdrawal agreement.

Indeed. The protocol exists to safeguard the gains of the Belfast/Good Friday agreement and to ensure that there is unfettered access for goods that are circulating in the United Kingdom and that Northern Ireland stays in the United Kingdom customs territory, but it also enables provisions that ensure that there need be no physical infrastructure at the border between Northern Ireland and the Republic of Ireland.

We will certainly share with you any evidence that we have gathered, Mr Gove.

That completes our questions and concludes our evidence session. I thank Mr Gove for his evidence in an extremely helpful evidence session as the committee continues to scrutinise the negotiation on future relationships between the EU and the UK. We look forward to taking evidence from Mr Gove later in the year to assess whether progress has been made in the negotiations, which are, of course, of critical importance to Scotland.

The committee will consider the evidence that it has heard in private. That concludes the public part of the meeting.

12:01 Meeting continued in private until 12:55.