Environment, Climate Change and Land Reform Committee

Meeting date: Tuesday, February 23, 2021

Official Report 591KB pdf

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European Union Exit

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EU-UK Trade and Co-operation Agreement

Good morning and welcome to the Environment, Climate Change and Land Reform Committee’s eighth meeting of 2021. The first item on our agenda is evidence on the environmental implications of the United Kingdom’s exit from the European Union. We are joined by Roseanna Cunningham, the Cabinet Secretary for Environment, Climate Change and Land Reform. I also welcome the cabinet secretary’s Government officials: Katriona Carmichael, deputy director, future environment, environment and forestry; Don McGillivray, deputy director, environmental quality and circular economy division; and Euan Page, head of UK frameworks.

Good morning, cabinet secretary, and thank you for coming to talk to us. The trade and co-operation agreement has been described by some as being blind to the devolution settlement. What is your opinion on the extent to which the TCA—in particular, the level playing field and rebalancing provisions—impact on the ability of the Scottish Government to exercise devolved powers in environmental policy, maintain environmental standards and keep pace with EU law, as has been your stated desire?

It is not just a stated desire—it is now a Government commitment. In general terms, the Brexit deal that has been agreed will hit jobs and the economy and is happening at the worst possible time. We should not shy away from stating that. Scottish Government modelling estimates that the deal could cut Scotland’s gross domestic product by about 6.1 per cent by 2030, when compared with what it would have been under EU membership.

We are facing real issues and there are likely to be permanent new barriers that will cause immense difficulties. We cannot fully mitigate every negative consequence. At the outset of today’s meeting, I should say that the agreement is very complex and hard to read. It will be many months, if not years, before the impacts of the agreement, which we consider to be suboptimal, are fully understood. I ask members to bear that in mind throughout my comments.

At the moment, there is considerable ambiguity and uncertainty around the level playing field provisions. The non-regression provisions will permit divergence between the UK and the EU as long as overall levels of protection are maintained. However, regulatory divergence from the EU represents a risk to environmental standards in Scotland—the Scottish Government would want to assert that. We remain committed to maintaining or exceeding the high and very best practice standards represented by the EU in most areas. The UK Withdrawal from the European Union (Continuity) (Scotland) Act 2021 helps us to deliver on that commitment.

The non-regression issue in the TCA that I referred to will prevent a lowering of standards, but only where there is an economic impact. Divergence will be possible between the UK and the EU as long as an overall measure of protection is maintained. We are pressing the UK Government for clarifications on interpretation and implementation, and reinforcing the need to take account of our devolved powers and responsibilities. It is not only Scotland that is in that position—so, too, are Wales and Northern Ireland.

The current lack of clarity makes it very difficult at this early stage—we are only a few weeks into the process—to determine what the UK Government’s approach will be to non-regression and potential levels of divergence and to determine the range of potential impacts on environmental protection standards in Scotland. We have tried to take measures to pursue Scotland’s interests. We remain committed to maintaining or exceeding the high and best practice standards represented by the EU in most areas, and the power to align contained in the 2021 act helps us to do that.

There are more things that I could say, but perhaps you want to comment at this point, convener.

My colleagues will want to dig into the Government’s arrangements. I want to ask you about measures that you have been taking to protect Scotland’s interests. Conversations will have been had with your counterparts in the UK Government. Can you outline what conversations and access you have had in order to make the points to the UK Government that you have made to us this morning?

We make those points continually. We make them in a variety of different meetings. There are now more regular what one might call four-nations meetings. However, in all those meetings, on various different issues, the three devolved Administrations will be making roughly the same point to the UK Government. We are still trying to get clarity on how oversight and enforcement by domestic authorities will take devolved responsibilities into account and confirmation that our supervisory bodies, including Environmental Standards Scotland, will be involved in co-operation on monitoring and enforcement between the UK and the European Commission. We want to ensure that Scotland’s voice is heard in meeting the commitments to implement various multilateral environmental agreements, and we want to co-operate on the trade-related aspects of environmental policy in those multilateral arrangements.

There is a dispute settlement mechanism for environmental protection, along with some rebalancing measures. However, we are still seeking some guidance from the UK Government on interpretation and implementation. It is very early days, so it is hard to see precisely how much of this will work. Do you want further details on the dispute resolution process?

My colleagues will ask direct questions on that point.

Yesterday, the committee had a private meeting with the House of Lords EU Environment Sub-Committee—although it was private, it was also very much on the record. It was a very useful meeting for two reasons. First, the sub-committee acknowledged the need for much greater engagement with the devolved Administrations. Secondly, it allowed MSPs to put on record our concerns about the lack of clarity. I know that you have just outlined your concerns on that and I am sure that you will tell us what you think the reasons are for it. Putting politics aside, what mechanisms should there be to ensure much better co-operation between the devolved Administrations and Westminster in the future? My second question is perhaps more difficult. What has to happen to allow that clarity in the understanding of where responsibilities lie?

I am not entirely certain what you are asking me. The mechanisms for all of this will be both formal and informal. At the moment, it is very hard to establish how the formal mechanisms will work.

When I refer to conversations that are had in various four-nations meetings, I am referring to regular meetings that are held for different purposes. The similarity of conversation would be evident if you were to track across those meetings. However, in a sense, that is not formal, because such meetings are not set up principally with the issue that we are discussing in mind. Representations are being made at meetings where the principal issues are different from that specific one. Therefore, at the moment, we do not have anything formal that is particularly helpful to us.

As I have already said a couple of times, we are at an early stage in the process. I am not making a party-political point, but we all recognise that the deal was done at such a late stage in the day that we are now in the process of trying to work some of it out. We might have expected there to have been more working out beforehand, but it is all being done now. We are therefore in a difficult place on formal mechanisms. It is hard for me to say what those should look like—whether there should be one overarching process or whether we ought to expect engagement in more specific areas. That has yet to be decided.

At the moment, I am concerned that the level of early working out that is going on risks engagement developing in a way that is not particularly structured and therefore does not actually take into account what it needs to. I do not think that I am being particularly party political—I genuinely hope that I am not—when I say that, at Whitehall level, there is still an uneven understanding of exactly what devolution means and precisely what it covers. I have come across that in a variety of different conversations over the years. There is a slightly uncertain, uneven recognition of what the reality of devolved responsibilities means. In fairness, the department with which we deal most often—the Department for Environment, Food and Rural Affairs—is probably better at it and cottoned on earlier than many other departments.

However, things are still a little bit ad hoc. From my experience, I have a slight fear that Westminster does ad hoc, and always has done, whereas our structures tend not to be so inclined towards such a set-up. That is the thing that worries me slightly—that we are going to get a mismatch in culture. I do not think that that is about political parties—it is more about institutional culture.

I am trying to be as fair as I can be about where we are in the process at the moment. I appreciate that I am not giving absolutely crystal-clear answers, but it is currently impossible to do so.

That is a very helpful answer, actually. I agree that different cultures exist, for obvious reasons, but that some aspects could have been dealt with a little earlier.

As we move forward, we must ensure that the difficulties that you highlighted when you answered the convener’s first question, plus the complexities surrounding the ad hoc engagement that you have just mentioned, are addressed. We need to establish a mechanism whereby there can be full engagement between the devolved Administrations and Westminster. Overarching policies exist, but some will be devolved and others reserved so we have to be mindful of both.

In its next session, should the Scottish Parliament consider having a slightly different formal structure? Your answers have suggested that the difficulties have happened partly because of timing. We could blame various people for that, but the point is that engagement has been unstructured and ad hoc, so perhaps we need to find a mechanism that ties things together. I am interested in your views on that, given your experience.

09:15  

I will need to be a bit careful, because, in effect, what you are talking to me about is the impact of all that on the way in which the Scottish Parliament will go about its business of scrutiny. That is certainly not a matter that I will be involved in, unless somebody wishes to ask me for advice. It is difficult enough for ministers to keep across all that—even with the full resources of the civil service, it is hard enough for us to manage to keep across it.

I well understand concerns on the part of the committee and the Parliament about some of the management of this, particularly because we have been bedevilled by short timescales, which have made everything challenging. Some of that might ease its way out of the system, because many of those short timescales were a result of having to pull everything together in subordinate legislation to get everything ready for what was a very telescoped process towards the end. I do not think—[Interruption.]—to be honest—[Inaudible.]—in Westminster is going to—[Interruption.] I can hear that the convener’s dog agrees with me. I do not think that people, even at Westminster level, would want to argue that what we had over the past year was exactly the optimum. I appreciate that.

It will be essential that the Scottish Government and the Scottish Parliament are recognised as equals alongside the UK Government and Westminster in their respective areas of competence—that will be absolutely fundamental. We—both Government and Parliament—should therefore be meaningfully engaged in developing new structures and processes. You would probably get almost exactly the same response from Wales and Northern Ireland. As I said, the situation at the Westminster end is still very ad hoc, and I am not sure that it is working from first principles.

I do not disagree with a lot of that. Given the urgency of so many environmental issues—we do not have time on our side because of all sorts of issues to do with climate change and biodiversity—it is important that the structures are up and running as soon as the Parliament resumes in the next session. All that I read and hear about on the subject is the lack of clarity and a slight concern about where responsibilities lie. The Parliament must look at that carefully. I am sure that my colleagues will return to those issues.

That is a big ask, given the timescale. The new session of Parliament is only a couple of months away, and I do not see any sign that the process will be decided or set up by then. However, it must be at the forefront of everyone’s minds. The Scottish Parliament will probably have to look again at matters such as the committee structure to establish whether there is a better way to do it. I do not know; I genuinely do not have an answer to that.

I appreciate your dealing with the situation in a non-party-political way. We all recognise that there needs to be better work between Westminster and Holyrood to ensure that we all achieve the outcomes that we are looking to achieve.

I want to move on to governance of the trade agreement. The EU and the UK agreed to create a joint body called the Partnership Council to manage the agreement and to oversee the achievement of its objectives. What is the Scottish Government’s view on the governance arrangements in the trade agreement? How will they need to be developed to ensure that the objectives of the agreement are met?

When it comes to governance, all the comments that I have made so far should be taken into account. The issues about clarity still apply.

The overall structure of the UK-EU partnership is in place, but there is no doubt that the implementation will have a major impact on our devolved responsibilities and interests, including those that relate to future environmental standards and to the Scottish Government’s ambition to tackle climate change. We are seeking meaningful involvement and representation within the governance structures and their underlying co-ordination and decision-making processes. It is important that our involvement takes account not only of Scotland’s devolved responsibilities and separate legal jurisdiction, but of the reserved areas that touch on our responsibilities or that significantly relate to the territory of Scotland.

Discussions about the role of the three devolved Administrations have begun at official level. That is a good thing and is typically how such matters begin: officials talk to officials. I am sorry to say that, throughout the process, the devolved Administrations have not felt that we have been involved in any meaningful conversations. Although officials are beginning to talk to one another, I will reserve judgment until I see the outcome.

We must aim for more direct, formal and acknowledged involvement in bodies such as the Partnership Council. The structure is one thing, but if it results in a door that is closed against the three devolved Administrations—each of which has its own specific devolved responsibilities—that structure will not be meaningful for them. That is a concern.

I said to Liz Smith that there is a small-c cultural assumption in Whitehall when it comes to what needs to be done. Where the agreement is concerned, the approach is outward facing; thought is not being given to the devolved responsibilities. There may also be some knotty political thinking going on but, in the main, the focus as regards the Partnership Council and the relevant structures has been in one direction. It has been forgotten that there is an entire set of jurisdictions that have different devolved responsibilities for key important issues. I do not want the devolved Administrations to be kept outside the door.

I think that members are probably all aware that the Welsh Government is taking quite a hard line here and is approaching the matter in a slightly different way from us, but the concerns and worries are shared by all the devolved Administrations. That leads me back to thinking that some of this is about culture rather than hard politics. I am sure there is an element of hard politics, but much of the issue is about culture.

We know that the Partnership Council will be difficult because, as you have said, it will be dealing with not just devolved issues but reserved issues that will have an impact on Scotland. There will be a specialist committee on the level playing field, as well as committees on devolved issues such as energy, transport and fisheries.

You have said that there might be an issue with the culture. What progress have you made so far in ensuring that Scottish interests are represented at that level? Has any progress been made? Given that you think that there are issues, how will the Scottish Government seek to reassure us that Scottish interests are being represented? You said that civil servants talk to civil servants, and that that is the first step. If there is a cultural issue, do you need to be far clearer that there should be a change in culture, which could be driven politically rather than by civil servants?

We have never stopped making that point. The processes by which these things begin seem quite routine. Officials set up committees with other officials and have discussions at that level of operation, always with the caveat that proposals or decisions may be subject to ministerial sign-off at either end—whichever end we are talking about. That is as far as we have got so far.

At the moment, we expect that each specialised committee and working group will most likely be led at official rather than ministerial level. That is the fallback process by which things are done. Each committee and group will contain representatives from the EU and the UK with the appropriate expertise. The extent to which the devolved level of responsibilities will play into that is not yet clear. Given the background of the small-c cultural issue that we have to deal with, it worries me—given that it looks as though the initial process will involve only officials—that important devolved concerns will fall off the table. When I say “important”, I am referring to the fact that Scotland has an entirely separate legal system and is its own legal jurisdiction. You would be surprised by the number of times that that gets forgotten about, yet it is pretty fundamental to practically everything that we do. That is the bit that worries me.

There are various proposed groups to be established through the TCA. Again, there is no clear indication of how Scottish interests would be represented in those groups. Those are the things that we still have to discuss. I cannot say to you, on behalf of the Scottish Government, that we will be able to do this, that or the other; all I can say is that we are definitely pressing at every opportunity that there should be proper representation for the devolved Governments at every level, including ministerial.

I take that on board, but why has the process not been working up to now? With all due respect to the civil servants who are sitting around the table today, if we keep on trying the same process and still get the same outcome, do we need to approach it differently? We are now in a situation in which a Holyrood committee has suggested that we are not happy with progress when it comes to, for example, frameworks. Do we need to do it differently, or are we just going to keep on trying the same old way and not making any progress?

I would respectfully suggest that some of that questioning ought to be directed at the Westminster Government. We cannot unilaterally dictate the process. The only Government of the four that appears to want to dictate the process unilaterally is the Government at Westminster. I know that the committee has not had great success in getting representatives from Westminster before it but, with the greatest respect, I think that questions need to be asked of them.

There are a number of committees and working groups—on energy, transport, fisheries and participation in EU programmes. There is a level playing field committee and the Partnership Council. Is it your wish to have Scottish official representation on each of those committees? Do you see a case for Scottish officials in effect leading on some of them—for example, on fisheries—where we have a majority interest in the UK resource? Do you see there being a role for parliamentarians, particularly in the Partnership Council? There is a concern that Parliaments are being locked out of the process.

09:30  

The answer to your first question is yes. We have previously made the case in different processes that that should be the situation—very much in those areas where there are very clear devolved responsibilities, and perhaps where entire policy areas are devolved. Thus far, however, in general terms, that argument has been accepted only very rarely.

We can go as far back as when Richard Lochhead was not allowed to speak at a European fisheries council, despite fisheries being an incredibly important issue for us. When the UK Government minister was not able to attend the council, it put in a civil servant instead of a Government minister from a part of the United Kingdom that has huge fisheries interests. That goes back quite a long way. The answer to your first question is absolutely yes.

Your second question is slightly more difficult for me to respond to because, in effect, it is a Parliament-to-Parliament matter. I observe a degree of unhappiness being expressed from time to time by Westminster parliamentarians about being bypassed in respect of decision making and scrutiny. I do not know how the matter can be addressed in terms of parliamentary work.

Do you think that there could be an observer role for parliamentarians?

“Good luck with that” is what I would say in response. At the moment, there is not even an observer role for devolved Governments, as far as I can see, never mind parliamentarians. Perhaps something will be cobbled together over the piece, but I do not know the answer to that question. I do not know how easy that would be to set up either, to be fair, as it would cut right across other parliamentary duties, and it would be difficult to manage.

We need to move on. I am mindful of the time, colleagues. We might not have time for three or four supplementary questions, so if members could be a wee bit more succinct, that would be great.

I hope that we can now hear from Claudia Beamish—she is on audio only. Claudia, can you hear us?

It seems not. However, we have a substitute to ask Claudia’s question in the event of her losing her connection, and that is Stewart Stevenson.

Thank you, convener. I may cast the question slightly differently from how Claudia Beamish would have done, but that is not intentional.

I want to develop the issue of future relationships with the EU and its institutions and the extent to which the trade and co-operation agreement provides for that. We know that many sub-state parts of Europe, as they are sometimes termed, have direct and proper relationships with colleagues in the EU. To what extent might the Scottish Government be able to continue to have relationships with the EU, particularly because of our distinct and different environmental requirements, which are purely a matter of geography and climate?

In particular, just to try to get control of the timetable, are we getting collaboration with the UK Government and the EU on strategic areas such as the 26th United Nations climate change conference of the parties—COP26—which will be in Glasgow, and COP15 on biodiversity? That is a big question, but I hope that we can deal with it relatively concisely.

To be honest, it is difficult to deal with any of those matters concisely. If there were easy yes or no answers, I would be giving them. You can see that I am shuffling backwards and forwards, because the briefings that I have are similar across a range of subjects.

It is our express desire to maintain not just, in effect, parity with EU standards and to look to the EU for a lot of what we want to do, but to try to do that on a more organised basis. Indeed, I have an event coming up that will be put on by Scotland house, which involves the European side of things. I have tried to maintain contact with the chair of the European Committee on the Environment, Public Health and Food Safety, for example. I am trying to keep all the networks going.

I think that the committee heard last week from Terry A’Hearn. He talks about maintaining contact with the European Environment Agency organisations so that we do not lose those connections. At the moment, those are the ways in which we are trying to do what Mr Stevenson asks about. You will know that there are attempts to formalise some of those matters. Members will have seen the attempt to formalise a continuation of the Erasmus programme, but that does not work. If there are opportunities to formalise some of the matters, I expect that we will want to pursue those but, at the moment, it is difficult to see them.

It is pretty clear that people in Scotland want us to retain close links with EU institutions and European member states. Frankly, that is the path that represents the best future for Scotland. I have indicated that I have been attempting to do that over the past few months, with direct one-to-one meetings and conversations, and I expect that my colleagues in other portfolios have been replicating what I have been doing.

We have other mechanisms by which we can try to do it. The fact that we are European co-chair of the Under2 Coalition brings us into direct contact with a great many other devolved Administrations across Europe, with whom we have very good relationships. Throughout that, we are trying to increase our global ambition and to maintain our voice in the world.

I could talk about a variety of things, such as the European green new deal. However, if you are asking me about formal networks, I would have to say that there is not much just yet. Part of that is just about the difficulty that we have at the moment and the speed with which things have been happening. We are not yet much further forward in our attempts to establish where we could have a more formal arrangement.

Stewart Stevenson mentioned other things that go beyond the European Union. There are things such as the Convention for the Protection of the Marine Environment of the North-East Atlantic—OSPAR—and the rest of it. These are global agreements, and it is important that we are absolutely clear that we want to continue, and take a leadership role in, discussions at that level, particularly when there are workstreams of strategic interest for Scotland, as there often are.

We have also done a huge amount of work on the other COP that will be held this year—COP15, on biological diversity—and on the Edinburgh process, on which we have led and which is about representing the Under2 level of Administrations. We are continuing to work on those as formally as we possibly can in all the arenas that are available to us.

I have a brief final point. There are relationships between many Scottish bodies in the third sector and different parts of Government and Europe. To what extent is the Scottish Government supporting their efforts to maintain useful relationships with their European counterparts?

I am sorry—I do not know what you are asking me. Are you asking about third-party relationships?

Clearly, it takes time and effort for third parties and for Government bodies such as the Scottish Environment Protection Agency and NatureScot to maintain relationships. Is the Scottish Government formally seeking to support such relationships in both respects?

In terms of our public bodies, absolutely. I do not think that we have felt it necessary formally to say to them that they should be doing that, because all of them already want to do so and are continuing to be as involved as they can be at that level. Sometimes, that depends on the structures of multinational organisations—for example, whether they are set up because of EU membership alone or more widely. Those are practical considerations, but I can absolutely reassure you that not only would we anticipate that, for example, SEPA would want to continue to be part of that European group of environmental protection organisations, but we would positively encourage it to do so. We see that as part of what it ought to be doing.

I am sorry—I misunderstood. I thought that you were talking about third parties altogether. Environmental non-governmental organisations in Scotland mostly already have pretty strong connections with their global counterparts, so I assume that they will continue to have those.

My question is on the transition to the new regulatory systems that replace the EU ones, such as the Great Britain system for registration, evaluation, authorisation and restriction of chemicals—GB REACH—and the UK emissions trading scheme. Have you been monitoring those? How effective has the roll-out been in its first month?

I do not know whether you want me to talk about individual systems.

It is about those two in particular.

On chemicals, we have been fully engaged with DEFRA and the Health and Safety Executive on the development and launch. For example, we have participated in the current REACH substance registration prioritisation exercise. We have also been fully involved in on-going parallel work on other new UK chemicals regimes.

I understand that the chemicals industry has put proposals to UK ministers for revisions to the UK REACH regime, to make it less costly to operate. That takes me on to an interesting point. Obviously, the Scottish Government’s position is that the regulatory approach to chemicals must be compatible with our overall approach, which is maintaining alignment with EU standards. We have not yet had the opportunity to assess whether the industry’s proposals would deliver that. It is a slight quirk that some industry sectors are only putting stuff up to UK ministers—they are not necessarily discussing it with us. That issue is outside the Government-to-Government scenario, and we will need to find a way of tackling it. However, we have been involved there.

09:45  

I am not sure that I need to rehearse the ETS story, as the committee is pretty much aware of where we have been with that. The scheme is now operational and we are all pleased that we have an ETS and not a reserved carbon tax. SEPA has issued all its permits under the new UK ETS. Decisions will be taken jointly by ministers from the four Administrations on that particular common framework. There has been one meeting already, on 8 February—Ben Macpherson attended on my behalf because I had a diary clash. Notwithstanding the late decision-making on it, that framework is up on its feet and operating at a ministerial level, and I can only welcome that.

From our perspective, it is obviously still a work in progress. It is a stand-alone scheme but has been designed to be link ready, and the TCA states that the possibility of considering linking remains open. We will continue to press for that linkage as soon as possible.

Both the chemicals and ETS common frameworks are now actually working, but we are at a very early stage in the process.

Are you saying that you do not have a view on the industry proposals for deregulation of chemicals under REACH because nobody has bothered to speak to you or the Scottish Government yet? When will you have a view on it?

I do not know. We have not yet had the opportunity to assess whether the proposals would deliver what we consider to be our overall approach of maintaining alignment. I do not have a timetable for that, I cannot answer that question and, therefore, I cannot even say whether it will be me who engages with that. The moment that we are able to do so, we will take a view. The point that I was making was about the presumption that a UK trade body would just go to the UK Government on the issue, notwithstanding that three other devolved Administrations are also involved.

On the role of ESS monitoring the implementation of international obligations, I suppose that it is early days for ESS, but what role do you see it playing?

It is fair to say that it is early days for ESS. We expect that ESS might decide to have a look at international issues, but I suspect that it will not want to go into specifics. It will probably look at that in an overarching way.

It is obviously early days, but we anticipate that ESS will engage with other equivalent UK and European bodies to get an understanding of UK-EU co-operation arrangements. However, ultimately, it will be for ESS to decide its priorities and working methods now, when it is non-statutory, and then once it is established and fully statutory. I expect that it will still focus on individual areas of concern with respect to international obligations rather than a routine broad monitoring effort, which would be quite a big task.

ESS’s role is pretty critical to demonstrating compliance with the TCA, as it gives all the parties reassurance that environmental standards in legislation are being reflected in regulatory practice. I am confident that ESS will be able to do that job, but it will be for it to decide the best processes for when its work touches on international obligations. We anticipate that ESS will be in full statutory form before the end of the year.

I will turn to environmental governance, including intergovernmental relations, which have been touched on briefly. Article 7.6 of the TCA commits the EU and the UK to

“co-operate on the effective monitoring and enforcement of the law with regard to environment and climate”.

We have just been speaking about ESS, which we have been told will seek early dialogue with the European Commission and relevant European and UK bodies to understand the arrangements that will be required at UK level and with the EU in order to fulfil that commitment. Will the cabinet secretary advise the committee what intra-UK governance will be required to meet aspects of the agreement on good regulatory practice and co-operation on effective enforcement?

I am not entirely sure that I have a great deal to add to what I said during the discussion with Finlay Carson about that. Clear structures have been established by the TCA. My concerns are about the extent of our involvement and whether we will be met by a closed door, which has often been the case. I do not want to go back over what I have already said about things such as the Partnership Council. However, it is imperative that we are not met with a closed door, whether at the Partnership Council level or at the specialised committee level.

I have already spoken about ESS. From my perspective, I would expect the UK Government to understand that it has to include the devolved Governments in all the structures and conversations; if it does not, it is, in effect, setting aside devolution in everything that it does. I do not think that that is what people want or expect to happen.

Indeed. Is it fair to say that the Scottish Government is not confident that domestic arrangements fully comply with the TCA in relation to good regulatory practices and environmental principles?

I have already said that, at the moment, it is basically officials talking to one another—which is fine, because they deal with the nuts and bolts. I have to reserve judgment on how it will work in practice until we have proper ministerial engagement and are not met with closed doors.

I will move on to the replacement of EU funds. We are no longer automatically entitled to participate in EU funding programmes such as the common agricultural policy, LIFE funding or structural funds. I am glad to note that the TCA makes provision for UK participation in horizon Europe between 2021 and 2027, although there seem to be details around how access may be limited. In addition to that, we have seen issues with regard to the UK shared prosperity fund.

The United Kingdom Internal Market Act 2020 makes subsidy control a reserved matter, and the UK Government’s consultation on a UK-wide regime for subsidy control closes on 31 March. What are the implications of rules on subsidies or state aid in the TCA, including on replacement funding programmes such as for post-CAP rural support? Does the Scottish Government have any further clarity about the development of the UK shared prosperity fund and how it will be disbursed?

I think that you have heard us express our concerns frequently about the UK shared prosperity fund and I am not sure that rehearsing them now will take us further forward. It is a matter of concern in more than just my portfolio.

From our perspective, future funding programmes must respect the UK’s obligations in relation to subsidy control and UK international trading commitments. The UK Government undertook to do a consultation exercise on the establishment of a domestic regime. The consultation opened on 3 February and will close on 31 March. I am not sure whether the committee has been able to do anything on that topic. The consultation was launched without full prior consultation with the Scottish Government.

We want to be properly and meaningfully involved in considering responses and the UK Government’s final proposals. If a policy is set at the UK level without appropriate consideration of Scotland’s devolved spending powers, it could pose a threat to those powers, which would be unacceptable. However, I go back to the point that I made right at the start that we will be unable to mitigate all negative consequences of the loss of EU funding. We are trying to protect Scottish interests as far as possible, but it is simply not possible for the finance secretary to find money to mitigate the withdrawal of EU funding. That will potentially be a problem for us. We will do as much as we can to manage that process but, unfortunately, I would not be doing my job if I was to sit here and mislead people into thinking that there is some magic way that we could replace all those different funds.

The UK shared prosperity fund has been the big example of how not to do it, and that worries me slightly.

Another example of how not to do it is the United Kingdom Internal Market Act 2020. Do you have a view on its implications, including the provisions on state aid, for replacement funding schemes?

I do not have a specific answer to that, in the sense that the United Kingdom Internal Market Act 2020 holds out the potential for massive disruption to devolved responsibilities, and neither I nor anybody else can establish the extent to which it will be used. One might say that the UK Government has covered its back with the ability to do whatever it wants, whenever it wants. Whether it will choose to use the power is a difficult one to answer, and I genuinely do not know the answer to that. We are in uncharted waters. I would hazard a guess that the UK Government will not necessarily use the powers all the time. It will, undoubtedly, attempt to do so at some point. Depending on what it chooses to make its move on, it will potentially be incredibly controversial.

However, I am now in the realm of guesswork. We all need to accept that the United Kingdom Internal Market Act 2020 has the potential to be extremely disruptive, regardless of whether it will be used in its entirety. Whether that potential is realised is a different matter entirely, and I suspect that that will depend entirely on other issues that are being debated at the time.

10:00  

We will move on to questions on future trade deals from Mark Ruskell.

Obviously, environmental considerations will be paramount in future trade deals. What are your reflections on the negotiations on the TCA? How can the interests of Scotland and the environment be better represented in that process? What are the lessons for the Government?

To a certain extent, I could repeat some of the things that I have said already in my answers. We want to ensure that future trading arrangements support our economic recovery, do not disadvantage domestic producers, do not undermine existing standards—including on the environment—and do not expose public services to competition or cause further divergence from the EU. That is a fundamental set of approaches that we would want to check against. It is vital that the UK Government recognises our interests in trade agreements are—we are circling back to some of the conversation on that—and we continue to call for an enhanced role in all stages of trade negotiations.

In the meantime, we will do all that we can, with the limited level of engagement that we have, to ensure that our interests are identified and protected. Committee members might be aware that, in January, the Scottish Government published our paper, “Scotland’s Vision for Trade”. That is based on the principles that are important to us: inclusive growth; wellbeing; sustainability; a just transition to net zero emissions; and good governance. Obviously, the paper has not emerged from my portfolio but emerged from a different portfolio.

We have called repeatedly for a full and meaningful role for the Scottish Government and Parliament in all stages of trade negotiations, and we come back again to the question of the closed door. What is being discussed in the negotiations? What is just not being acknowledged or not well understood with regard to devolved responsibilities, some of which is fundamental to agreements that might be getting made? If we are met with a closed door, we are unable to make the point on behalf of Scotland that the UK Government is overlooking key issues. Again, that concern is not confined to Scotland—Wales and Northern Ireland also have that concern, so we get some of the same story across the board.

Although this is not a direct issue that relates specifically to my portfolio, I want to flag up that the fact that there is a different legal system in Scotland is frequently overlooked when the discussions are taking place, with the net result that Scots law is never even mentioned. In itself, that can create issues. There are some pretty fundamental issues. The separate legal jurisdiction of Scotland is not something that emanates from devolution. It has been around for a few hundred years and still it gets forgotten about in decision making and negotiation at the Westminster level. That is a bit worrying. If the UK Government can forget about that aspect after more than 300 years, the concerns about its not understanding devolved powers after 20 years are pretty serious.

Yes, it sounds as though a history lesson is needed somewhere. [Interruption.] “Scotland’s Vision for Trade” has emerged from the work that the Scottish Parliament has done on trade justice principles, which the Scottish Government has now taken on. How does the TCA match up to that, specifically? If we are saying that those are our clear principles as a nation for how we want trade to proceed, how do we set that against what is in the TCA?

I have to give the caveat that trade is not part of my portfolio and that is not my paper. You would probably have a better conversation on that with Ivan McKee than with me. “Scotland’s Vision for Trade”, in effect, sets down our approach, our principles, how those principles ought to underpin Scotland’s trading investment relationships, and the levers at our disposal. It also identifies various asks of the UK Government. A closer reading of the document will probably elucidate that.

I go back to my comments that we are calling repeatedly for a full and meaningful role for the Scottish Government and Parliament in all stages of trade negotiation. That would help to ensure that Scottish economic interests are recognised and identified, and allow us to ensure that the principles in “Scotland’s Vision for Trade” are reflected in any trade agreements. The UK Government has not accepted that role for the Scottish Government or for any other devolved Administration. In the meantime, we are doing all that we can with the limited engagement that we have.

We are not where we would have wanted to be. The Scottish Government has been clear that we should have aimed for a deal with the EU that was far better than what we have and closer to our pre-existing EU membership. We do not want to see a shift of trade priorities away from the EU, and we are clear that we should be aiming to build global trading relationships with like-minded countries, based on shared principles on trade. Therefore, the TCA does not reflect anything that we would have regarded as optimal, as I have said already. “Scotland’s Vision for Trade” and the TCA, of necessity, do not simply replicate one another, because that is not how we see our role in international trade.

The short answer to your question is that the TCA does not accord with what we consider to be the right way to conduct trade. Equally, at the moment, the door is closed to us, which, to circle back to my previous points, is a big concern. Who knows what will be decided behind that closed door?

We have asked all our questions, so I thank the cabinet secretary and her officials for their time.

The committee will suspend until 10:15, to allow us to have a little break.

10:09 Meeting suspended.  

10:15 On resuming—