Rural Affairs, Islands and Natural Environment Committee

Meeting date: Wednesday, January 12, 2022

Official Report 655KB pdf

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Impact of European Union Exit

Our third item of business is evidence on the impact of EU exit on the rural affairs and islands remit. We welcome back the cabinet secretary and Caro Cowan, along with Jesus Gallego, deputy chief veterinary officer, and Jen Willoughby, head of the national and international regulatory alignment unit. I invite the cabinet secretary to give an opening statement.

I do not have an opening statement, convener. I am happy to move to questions.

I want to look at the impact of the common frameworks on, in particular, the future of Scottish agricultural policy. We have been told that consideration will be given to the role that the Parliament might have in the on-going monitoring and scrutiny of the frameworks, post implementation. In the previous parliamentary session, the Environment, Climate Change and Land Reform Committee raised concerns about the lack of transparency around the development of the common frameworks. What specific role is there for stakeholder engagement and parliamentary scrutiny in the process of putting together those common frameworks, particularly when it comes to the exclusion of certain provisions from the internal market access principles?

No problem. The scrutiny of the frameworks is important, and we remain absolutely committed to working collaboratively on common frameworks, in cases in which those are in Scotland’s interests, on the basis of consensus and in line with the principles that have been agreed.

In essence, the frameworks offer a model for progress by agreement and collaboration between equals that we think can be usefully applied to intergovernmental relations in the UK more widely. We recognise that there will be policy divergence; however, the model is the means by which we can try to manage that.

However, we face significant threats to the common frameworks process—a process that we engaged with in good faith—predominantly from the United Kingdom Internal Market Act 2020 and from the Subsidy Control Bill, which is currently working its way through the UK Parliament and which we believe is an assault on devolution the likes of which we have not seen since the Scottish Parliament was established. We remain fundamentally opposed to the imposition on Scotland of such legislation.

When it comes to a scrutiny role for the Parliament and for stakeholders, we are committed to transparency. Stakeholder engagement and parliamentary scrutiny are a critical part of the framework process. That is why we were clear that greater clarity was needed on the impact of the 2020 act and on the interaction of the frameworks with some of the wider cross-cutting issues before meaningful scrutiny by the different legislatures within the UK and by stakeholders could commence. We remain committed to ensuring that full scrutiny of each framework can take place, that stakeholder engagement occurs and that the outcome of those processes is reflected in common frameworks before their final agreement and implementation.

I emphasise that the frameworks are policy neutral. They are intergovernmental arrangements for managing and agreeing policy; they are not, in themselves, policy innovations. In many cases, they just reflect existing arrangements and agreements between Governments.

I know that a number of frameworks that are relevant to the portfolio are due to be published. I believe that that is going to happen this month. In one of my previous roles, I took part in the scrutiny of one of the other frameworks that the Scottish Parliament was asked to consider. Such scrutiny is important. The frameworks that fall within this committee’s remit will be available shortly.

More specifically, what exactly is your understanding of Parliament’s role in scrutinising the development of the common frameworks? What will Parliament’s role be in the scrutiny process in future? What has that meant in the past, and what will it mean in the future?

Parliamentary scrutiny of the frameworks is important, and we are committed to engaging in that process. However, it is up to each parliamentary committee to determine the time and depth of scrutiny needed for each framework. The process for that was agreed at official level between the Scottish Government and the Scottish Parliament, and was set out, around the start of last year, I think, by the then Cabinet Secretary for the Constitution, Europe and External Affairs, Mike Russell. He set out a flexible approach that depended on the size and complexity of the proposed area for consideration.

Obviously, the four legislatures will review the same version of the provisional frameworks, which will not be finalised until all the Parliaments have had the chance to fully scrutinise the relevant framework. As I said, in a previous role, I took part in the Health and Sport Committee’s scrutiny of one of the frameworks at the start of last year. That is one of the frameworks that has undergone a formal scrutiny process by the Scottish Parliament. I think that there were others that related to hazardous substances, planning and nutrition labelling, composition and standards.

The four Governments have agreed to a revised timeline that would secure ministerial clearance for the final frameworks ahead of the pre-election period in Northern Ireland, which was anticipated to take place in mid-March this year. UK Government delays in obtaining ministerial clearance to publish the other frameworks leaves a limited window for completing the scrutiny process ahead of that pre-election period. Therefore, as it stands, the earliest opportunity for the publication of the other frameworks for parliamentary scrutiny is the end of the month. As I said, there are another six frameworks that will be relevant to the immediate work of the committee and its portfolio interests.

I thank you for that answer but, specifically, what is your understanding of how, in practice, the Government will engage with the Parliament with regard to future frameworks that revolve around Scottish agricultural policy? In practice, how will you engage with the committee?

As I said, I believe that the process for engaging on the frameworks that have been published has already been set out. However, it will be up to the committee to determine how it undertakes that scrutiny. Obviously, I am willing to engage in that process with the committee. I want to be open and transparent and to work with you as much as possible. If you want to have a discussion about some of the frameworks that will be coming forward and how we will undertake that process—although some of that is for the committee to determine—I am more than open to engaging in that process with you.

We would certainly welcome details of exactly how the Government is going to engage with the committee on that.

Jim Fairlie will now ask his questions.

Cabinet secretary, I would like to delve into the impact of the United Kingdom Internal Market Act 2020 and common frameworks on our devolved remit. I remember clearly that I raised concerns after the Brexit vote in 2016 about where competence would lie with regard to how the Scottish Government as a devolved legislature could continue to fund and work with agriculture in Scotland. At the time, I remember a lot of talk from the UK Government about these common frameworks, but it could never quite tell me what they meant and where the power would ultimately lie. The Scottish Government’s view is that

“the common frameworks approach provides all of the claimed objectives”

of the internal market act

“in guaranteeing market access across the UK, while respecting devolved competence, and, crucially, effectively providing agreed minimum standards which all producers must meet, avoiding the risk of competitive deregulation while giving producers and consumers clarity and certainty.”

What impact will the internal market act have, and is it necessary when common frameworks are supposed to work across the UK?

No, I do not believe that it is necessary, because it completely undermines the common frameworks process. As I said in a previous response, we engage with the process in good faith, but there will obviously be policy divergence on some lines. The common frameworks process was meant to address—it is a policy-neutral framework—a means for the devolved Administrations to work together on an equal basis to manage policy divergence while recognising and respecting the specific roles of the devolved Governments.

However, what the internal market act has done, and what the Subsidy Control Bill will do, is completely undermine that process and the meaningful engagement that we expected to have, because it means that the UK Government has the power to impose certain measures or restrictions on devolved Governments. Common frameworks were a collaborative approach that was built on the basis of parity and respect for devolution.

As it stands, the 2020 act’s market access principles would, in many if not most circumstances, undermine any policy divergence agreed in common frameworks. The process has been developed to ensure that policy divergence agreed in common frameworks is protected from the 2020 act’s market access principles. UK ministers confirmed that in a statement to the UK Parliament on 9 December. That process reflects commitments that were made by UK ministers during the bill’s passage in December 2020. Through a common framework, the UK Government committed to using the powers that the act confers on UK ministers to exclude that policy area from the effect of the act.

It is vital that UK ministers honour that commitment consistently, because the sustainability and viability of the framework process relies on that. These pieces of legislation are frustrating because, as a member of the EU, we were able to develop and tailor our policies to our needs through the principle of subsidiarity. This is a backwards step that undermines our power to set our policies based on what best meets the needs of the people of Scotland.

We will come back to the Subsidy Control Bill. Perhaps the clerks or the convener can confirm that we invited George Eustice and a UK Government minister to talk to the committee about the impact of Brexit and the internal market act on devolved powers.

Should we be concerned about specific areas of agriculture policy in Scotland being undermined by the UK Government’s use of the internal market act? This issue is not part of the committee’s remit but, for example, the UK Government could undermine minimum unit pricing of alcohol. Is there anything in the committee’s remit that we should be concerned about?

There are specific concerns in some areas. As we have gone through the process, those policy areas have gradually started to emerge. I remember discussing the food and feed safety and hygiene framework, which I mentioned earlier, at a previous appearance at the Health and Sport Committee. Discussions were held in relation to the framework and a potential divergence in policy on genetically modified organisms. That could be impacted.

Other areas are emerging, too. If it would be helpful, I would be happy to follow that up with the committee and outline current areas of concern in relation to the internal market act. One of the key concerns in relation to agriculture is the Subsidy Control Bill, which you said we will come on to, given that it is working its way through the UK Parliament.

We have not yet had a UK minister come to the committee, but I confirm that we will.

10:45  

Certainly. We wrote to George Eustice and got a response. Unfortunately, he was unable to attend on the date that we asked, but I am confident that we will have him in front of us at some time in the near future.

We move on to questions from Mercedes Villalba on keeping pace powers.

My first question relates to fisheries. The cabinet secretary will be aware that the EU has taken action to put an end to the practice of discarding in fisheries. I understand that it is the Scottish Government’s stated position that it wishes to rejoin the EU. Is the Scottish Government committed to a discard ban? If it is, what steps is it taking to introduce such a ban?

You are absolutely right. On keeping pace, the Government has made a commitment to align with the EU and, potentially, go further where it is in our best interests to do so. Ultimately, we want to become an independent country and join the EU. We want to make that as streamlined a process as possible. In some policy areas, it will not always be possible to replicate like for like everything that happens in the EU. Some of it will not be relevant and some of it might not be legally possible. However, it is our stated policy intention to align with the EU as much as possible.

The specific policy that you talked about has been on-going for a number of years and we have already applied it in Scotland.

My second question is about the management of fisheries. I understand that UK fisheries are currently managed under the UK Fisheries Act 2020 and that the SNP in Westminster opposed that legislation but the Scottish Government in Holyrood gave it legislative consent. Does the Scottish Government intend to introduce its own legislation to govern fisheries in Scotland—for example, a Scottish fisheries bill?

We do not have plans for legislation on fisheries management.

In session 5, the Scottish Government undertook to work with Parliament to agree an appropriate and proportionate decision-making framework for parliamentary scrutiny of the commitment to maintain regulatory alignment that would provide an appropriate level of consultation at the early stage of policy development. Where are we at with that?

As you said, we are committed to working with Parliament to consider that scrutiny. I know that this committee and the Constitution, Europe, External Affairs and Culture Committee have made representations on the approach that is taken in that regard. The Cabinet Secretary for the Constitution, External Affairs and Culture, Angus Robertson, will respond to those representations in due course.

We have rightly talked for a while about the legislative and constitutional fallout from Brexit. I will ask a little about the economic consequences in rural Scotland, particularly the impact on population in rural areas. You will be relieved to know that I will not give a village-by-village account of the impact of Brexit on population in my constituency. Suffice it to say that there are fragile communities where it has made a difference. What evidence or information do you have about the impact on rural Scotland of the absence to some extent of people from eastern Europe?

The evidence that we have has shown that there has been a dramatic drop. You will have heard a lot of that evidence articulated in the debate on labour shortages that took place yesterday. My rural affairs and islands role includes responsibility for the food and drink industry, which has been heavily affected by Brexit. You can see that there has been a massive shift and a drop in population in relation to the industry’s labour needs. There is no doubt that there have been dramatic changes there.

We have had to consider specific things that we can do within our own powers. Yesterday, I announced some of the rural visa pilots that we will consider. It is very frustrating that our labour needs and population needs tend to be ignored by the UK Government. A number of approaches have been made by me and by colleagues across Government to UK ministers in the Home Office, which have largely been ignored. I think that more than 19 attempts were made at the last count, whether by letter or otherwise, to address some of the issues that we are facing at the moment. There is a refusal to engage with us on some of the issues, unfortunately.

You have mentioned the food and drink sector, but I would be interested to know what contact you have had from other sectors. The obvious ones are fishing and fish processing, but there is also the care sector and tourism. What approaches has the Government had from people in business about what they feel the impacts are?

They feel that the impacts are massive. I undertake extensive engagement with stakeholders across the piece, and labour is the issue that has been raised first and foremost above any others. A lot of businesses have been at crisis levels.

There is a fortnightly meeting with the food sector resilience group, at which we engage with our food and drink stakeholders. I understand, from hearing about some of the issues that have been experienced, that 63 per cent of seafood processors have experienced shortages and that some of them are up to 15 per cent down. I have heard story after story about various businesses losing out on multimillion-pound contracts purely because they were not able to fulfil the orders required of them, as they did not have the staff available to them.

There was also the announcement on Christmas eve about the seasonal agricultural workers scheme. Disappointingly, it will be tapered off over the course of the next few years, and that has been met with anger by many of our stakeholders and by NFU Scotland, who are seriously concerned about the impact of labour shortages on the sector.

Those are the issues that we continue to raise time after time with the UK Government, as shortages are at critical levels. I would be happy to check the figures on social care and tourism with colleagues who are responsible for those areas and to come back to the committee with further information as to the impacts there. As acute as the shortages are across the sectors for which I am responsible, there are acute shortages across the piece, which disproportionately impact our rural communities.

Earlier, you touched on the UK Government’s approach to finding responses—“solutions” is perhaps too strong a word—to some of these issues. For instance, approaches have been made for lorry drivers and care workers. Those proposals have been for relatively short-term interventions on visas, for example. Given the interconnected nature of communities and local economies in rural Scotland, do those short-term proposals work there, or do we need longer-term solutions?

No, those proposals do not work. That has probably been shown by the numbers of people who have taken up some of those initiatives. We can look at this the opposite way round, and this is part of the problem with the visas that were given for certain occupations a few months ago. The visa for butchers, for example, was for about six months. Who is going to uproot their life for such a short period of time knowing that there is no opportunity to stay on beyond that period? That is essentially what we are asking people to do—to uproot their lives and move to another country. I do not think that a lot of people would find that to be worth their while for such a short window of time.

Some of the initiatives were for a few months only. When we analysed the time that somebody would be able to spend in the country by the time their visa application had been processed, we saw that it was somewhere in the region of six to eight weeks for some of the occupations for which three-month visas were proposed. Those are all short-term ideas that do not go anywhere near to addressing the crises that a lot of these industries face.

I know that a lot of sectors feel that there have been specific exemptions, such as for butchers, but those exemptions have not been applied to other sectors that are also facing critical shortages. That has caused a lot of concern.

There are a lot of outstanding issues. That is why we repeatedly call for these issues to be addressed. As we announced yesterday, some of the pilot work that we are trying to do ourselves is looking to address these issues in the medium or longer term. We want to work with the UK Government on solutions, but it takes both of us to be willing to look at them and to engage meaningfully. We are certainly willing to do that.

There are two brief supplementaries on this topic from Rachael Hamilton and Jim Fairlie.

I want to pick up some of the conversations that the committee has had about depopulation of the islands. Cabinet secretary, do you recognise that, prior to Brexit, there were long-standing issues with the general perception of some of the types of part-time work and jobs that are on offer, the geographical and transportation challenges, the lack of affordable housing, and so on? We recognise that those are long-standing issues and that they perhaps have been exacerbated by Brexit. However, we are still attracting workers, if not necessarily into Scotland.

I do not think that there is any question that those issues might have been exacerbated by Brexit because it absolutely has exacerbated them.

You spoke about depopulation of some of our rural areas and islands. We have spoken in previous meetings about initiatives such as the islands bonds, the rural and islands housing plan and the investment in connectivity, and they are vital in trying to address the endemic issues that we face in those areas.

I engage with our stakeholders. I go out to speak with our farmers, our fishers and our food and drink businesses, and all I am saying to you is exactly what is being said to me about the availability of labour. At some point before Christmas, the Prime Minister was quite insulting when he said that all the jobs are low paid and people need to improve their working conditions, as if that would solve all the problems, which is not the case. It did not matter how much some of those businesses were offering; they were just not able to attract people to fill the positions.

We really need some meaningful interventions to address these critical issues in the immediate term. That is why we have repeatedly called for a number of different initiatives and for meaningful engagement from the United Kingdom to address some of these problems.

It is disappointing that the Scottish Government is not concentrating on ensuring that the industry is attractive to the domestic workforce.

That is not the case at all. We are looking at a number of employment initiatives. Of course we want to encourage people to work in these different sectors. The food and drink industry is such an exciting sector and there is so much that we can do to promote it as a career that our young people can engage with and get involved in.

A number of initiatives are working on that, and we are also looking at some initiatives to try to tackle depopulation. However, there is no getting away from the fact that, although we can do these things, they are medium to long-term interventions but the immediate critical issue is helping businesses to survive. That is what we need to address.

I appreciate your warm words, but, for example, the answer to a parliamentary question of mine is that there are 12 female butchers in Scotland. Workforce planning has been left short by the Government.

11:00  

I do not at all agree with that. Absolutely, there is scope to try to get more women into some industries, and I come back to some of the investment that we are making through the budget. This year, we have increased to £400,000 our investment to develop skills in agriculture and get more women involved in it. That includes a number of different strategies. In fisheries and aquaculture, too, we have commitments, and work is under way to deliver on that.

Jim Fairlie has a short supplementary question.

I am slightly confused by that last line of questioning. There is no doubt that Brexit has caused massive problems for our workforce. I have had constant correspondence from businesses in my constituency and right across the country about our huge lack of labour. I take the point about the demonisation of some industries, in calling them low skilled or saying that they involve only labour. A lot of the jobs that we are talking about are highly skilled, and the loss of our European workforce has been significant.

Recently, I had a discussion with a butcher, who made the point that, although he could increase his wages by 10 or 15 per cent, he would only be taking people from some other place, because the labour pool is stagnant. It is stuck, because we do not have freedom of movement.

Cabinet secretary, what steps are you taking? I know that you have instigated a discussion with the UK Government about a Scottish visa scheme to try to tackle the Scottish issue, and I think that there might be a rural migration pilot scheme as well. Will you outline what those schemes are and how they might help us to get through the current labour shortage crisis?

Absolutely. You made an important point on the portrayal of a lot of jobs as “low skilled”. I refuse to use that term because—you are absolutely right—those jobs are highly skilled, and it does not help to portray them in such a light.

What I outlined and announced yesterday was on the back of the Migration Advisory Committee’s recommendation to develop a pilot scheme on rural migration. In February last year, our expert advisory group on migration and population published a report on options that could be explored when developing the visa pilot scheme. Three potential options were outlined in the report.

In looking at options, it is not as though we are doing something completely new. Different schemes are currently in operation throughout the world, and there are many different examples that we can learn from.

For example, one of the three potential options that are outlined in the report is a remote and rural partnership scheme, which is modelled on the Canadian Atlantic pilot scheme. Such a scheme would be employment based and would be part of a wider partnership with local authorities, employers, public services and the voluntary sector, which would play a more active role in identifying which areas and employers would benefit the most from the scheme, and would be engaged in delivering an integration plan. There are also proposals for a Scottish visa that look at how we can expand the skilled worker route.

We are keen to work with the UK Government in, I hope, delivering much of that. The previous Home Secretary had been willing to commit to that, so we hope that that commitment is delivered in full and that we get the support to continue that work. It is certainly the case that we are not standing still on the matter. We have lots of different ideas about how such schemes can work in Scotland’s best interests. I put forward just some of those ideas yesterday.

Before we move to the next section, I have a question. Brexit has undoubtedly had an impact. However, given that we are where we are, what work is the Scottish Government doing to identify how much of the reduction in numbers is down to Brexit, how much is down to the Covid pandemic and how much is down to other issues that other European countries are also facing?

Prior to Brexit, and prior to Covid, Scotland appeared to attract few overseas workers who came to the UK; a relatively small percentage of those who came to the UK ended up in Scotland. What work are you doing to identify all the impacts in order to look for solutions to address labour shortages?

I hope that I have been able to outline in previous answers some of the work that we are doing to try to address that issue. For example, we are looking at tackling depopulation in our rural areas and on our islands, and I have outlined some of the pilot projects that we are considering to try to deal with some of the issues that we are experiencing.

I do not think that it is necessarily fair to characterise the situation by saying that everybody in Europe is facing the same problems. That is an oft-quoted characterisation in relation to the issue with heavy goods vehicle drivers in particular, with shortages being experienced across the piece, but there is no denying that the situation here has been particularly acute since Brexit.

I am outlining to the committee exactly what I have heard when speaking to businesses about the various impacts that they have seen; that is the information that we have. I am happy to follow up with the committee and provide more specifics, if that would be helpful. I hope that some of the work that we are doing to try to tackle those problems, as I have outlined today, will start to have an impact. However, I come back to the critical and immediate issues that we are facing, on which we need engagement. All that we are asking is for the UK Government to work with us on addressing some of those problems.

Absolutely. Thank you for that offer. It would certainly be interesting, and most helpful, to find out how we can allocate a percentage of the reduction in numbers in the labour market to the various crises that we are facing.

Cabinet secretary, we have been told by numerous witnesses, including NFU Scotland representatives, that a seamless UK internal market is integral to Scottish farming. How will any changes that are made to domestic policy in a devolved context affect the integrity of the important agricultural market in Scotland?

Do you envisage any issues as a result of deciding to align with the EU on, say, a ban on glyphosate or of not wishing to progress with gene editing? Such decisions would mean that production costs for farmers in Berwickshire, for example, would be higher than those for farmers in Northumberland, in England. Will your decisions be a backward step that leaves Scotland’s farmers at a disadvantage?

Some of those issues are on-going in the EU, so we continue to monitor them. As members of the EU, we had the potential to set our own policies, and we had the ability to diverge, which did not cause any particular issues. For example, we had specific schemes in Scotland that did not exist elsewhere in the UK. It is those specific schemes, which address the specific constraints and types of land that we have in Scotland, that are now very much under threat as a result of both the United Kingdom Internal Market Act 2020 and the Subsidy Control Bill. There is no getting away from the issues that we face in that regard.

I come back to the common frameworks process. That process helps us to manage divergence, because it is only fair, given that the powers and the responsibility rest with the devolved Administrations, that it is up to those Administrations, which are elected in those countries, to take the policy decisions that work best for the populations that they represent. It is up to me to deliver on the commitments that we have set out in our manifesto and on what we have set out in the programme for government. All that we want is the ability to carry out that work.

As I highlighted in a previous response, agricultural policy is taking a different road in England from the route that we have set out to take in Scotland. We have made different commitments, and that is where the fear of the United Kingdom Internal Market Act 2020 and the Subsidy Control Bill comes in, because those pieces of legislation could well constrain our policy choices in the future.

Can you give examples of any constraints that your policy decisions might place on farmers in Scotland, if you do not adopt the same approach, that would not affect the integrity of the important UK internal agricultural market on which Scotland relies?

We also have other important markets to which we now no longer have access, unfortunately, because of Brexit. Again, that is why we had the common frameworks process, with which all Administrations engaged in good faith. That process is about helping to manage policy divergence, which is not a threat to any one Government—there was divergence when we were members of the EU. All that we ask for is the ability for Scotland to continue to do that.

If the Subsidy Control Bill is passed in its current form, it will constrain our policy choices in the future. For example, we have support payments for our less favoured areas that do not exist in other parts of the UK, and our ability to continue to offer such payments might well be put at risk, given the powers in the bill as it is currently drafted.

It is not only the Scottish Government that is raising those concerns; the same concerns have been raised by the Northern Ireland Executive and the Welsh Government. They, too, are seriously concerned about the powers in those two pieces of legislation, which completely undermine the collaborative work that we have all done to establish the frameworks. That might lead the devolved Administrations to lose faith in the process altogether, because the UK Government is trying to retain control of those powers and to constrict our policy-making powers.

What kinds of domestic policy choices do you want to make that the rest of the UK does not want to take? How will those affect Scottish farmers?

One of those choices is to maintain direct payments, which the UK Government has said it will phase out. Again, the Subsidy Control Bill could have a serious impact on our ability to do that, or to offer payments through the less favoured area support scheme or some of the coupled support schemes that do not exist elsewhere or in which there might be policy divergence in the future.

The only policy divergence that you can foresee relates to direct payments.

No—that is one area, but it is a fairly substantive area, given the size of the payments involved and the fundamental nature of the support for our whole agricultural sector.

You mentioned this in answer to a previous question, but I would like a bit more detail. What progress has been made in developing the common frameworks? Do you believe that the Scottish Government has the power to make regulations on food, for example?

With regard to the common frameworks, I know that there are six areas that relate to the committee’s remit. Those frameworks should be published at some point towards the end of the month, and it will then be up to the committee to scrutinise them.

I am sorry, but I have forgotten the last part of your question.

Do you believe that you have the necessary powers to make regulations on food, for example? You have stated previously that you did not have such powers.

I do not know whether there are particular issues in that regard. Perhaps my officials have further information on food regulation.

I can see no volunteers.

That is one area on which I would be happy to follow up with the committee after the meeting.

Okay. I will give you a helping hand by quoting what the Government has said:

“Without a power to keep pace with changes to EU law Scottish Ministers would lose the ability to introduce, amend or update secondary legislation on livestock matters in line with EU legislation.”

Bearing in mind that your goal is to keep pace with EU powers, that is what I am getting at.

I know that there are powers in legislation that we have introduced in Scotland, such as the Agriculture (Retained EU Law and Data) (Scotland) Act 2020, that enable us to maintain alignment with the EU. The 2020 act includes provisions on matters such as marketing standards and covers a wide range of food products. I believe that we have the necessary levers in that act, but I would be happy to look into that and follow up with the committee in more detail.

It would also be helpful for the committee if you could give us more examples of the financial implications that you talked about with regard to domestic policy decisions, in particular on direct payments, which you mentioned. Perhaps you could give us an insight into what you are thinking, because we are running out of time, without any future farm policy direction, as it were.

11:15  

We have already committed to maintaining that level of spend throughout this session of Parliament. I know that the committee is aware of the work that is under way with the implementation board to help to design and develop our future policy.

It is not possible for me to give the committee the full financial impact. The problem with the Subsidy Control Bill is that it could constrain our ability to make future policy decisions so, sadly, it is not possible to quantify the impact. When I spoke about figures earlier, I was talking about the scale of the overall investment that we make in our agriculture sector and the fact that our policy choices about how to direct that investment are constrained.

I am conscious of the time. Alasdair Allan has a brief supplementary question.

In her questions, Rachael Hamilton attributed support for the United Kingdom Internal Market Act 2020 to the NFUS. There is certainly support for access to markets in England, but more than one committee of the Parliament has had representations from the NFUS about its concerns about the 2020 act. For instance, Andrew McCornick, the former president of the NFUS, said:

“the UK Internal Market proposals put forward limit the devolved administrations’ ability to act if any standards were lowered and give the UK Government a final say in areas of devolved policy”.

The NFUS said that publicly, and we have had representations from the industry to more than one committee. Has the Government had representations about some of those concerns, too?

Absolutely. Some of the concerns that I have outlined about the Subsidy Control Bill and the United Kingdom Internal Market Act 2020 are shared concerns. That is why we have continued to raise them with the UK Government.

I will further explain some of the impacts that we can expect from the Subsidy Control Bill. Agriculture is fully devolved. Farmers and crofters in Scotland face challenges that do not exist elsewhere in the UK, but the principles that are set out in schedule 1 to the bill put at risk our ability to develop future policies that are tailored to address those challenges. For example, the incoming coupled support payments play a vital role for many of the businesses that operate in some of our most remote and constrained areas, but they would be incompatible with the principles that are proposed in the Subsidy Control Bill, particularly those about encouraging a change in the economic behaviour of the beneficiary.

Agriculture is carved out of many subsidy control regimes and is covered by the World Trade Organization agreement on agriculture, so it does not make sense for it to be included in the Subsidy Control Bill. The UK Government told us that a consultation was undertaken and that the vast majority of respondents agreed to agriculture’s inclusion in the bill. We have asked for that consultation information to be shared with us but, as yet, it has not materialised. At first, we were told that it could not be shared because of data protection legislation. We asked for anonymised examples to try to understand the rationale for including agriculture in the subsidy regime, because it is unusual for it to be included in that way.

The Subsidy Control Bill could also prevent us from retaining alignment with the EU if schemes that we want to develop and adopt are incompatible with the UK regime. The Minister for Business, Trade, Tourism and Enterprise, Ivan McKee, and I had a meeting with the relevant UK minister this week to discuss some of the significant issues that we have with the bill and to try to better understand the rationale for some of the decisions that have been taken. It is unusual for agriculture to be included given that it is carved out of so many other regimes and that there is sector cover for it under the WTO agreement on agriculture.

At a previous committee meeting, in November, we looked at the UK Withdrawal from the European Union (Continuity) (Scotland) Act 2021 policies. One of the things that stood out for us was a statement on behalf of Scottish ministers that

“the constraints under which Scottish Ministers currently operate, in particular as a result of the working of the UK Internal Market Act, mean that they judge that to align in full at this time would not serve Scotland’s wider interests.”

Although you are beginning to touch on that in some ways, could one of you expand on that? I want to hear about that in connection specifically to the United Kingdom Internal Market Act 2020. What are the issues to do with the powers that the Scottish ministers have or do not have?

It is about those pieces of legislation together. Ultimately, we are finding that it is huge step backwards from being in the EU, where we had those powers and the freedom to exercise those powers in developing our own policy. The 2020 act and the Subsidy Control Bill remove those powers and put them in the hands of UK ministers, which—as I said in previous responses—undermines the common frameworks process. It was designed to resolve, or to try and work through, some of the policy divergence that we will have in some areas, because it is every devolved Government’s right to set the polices that are right for the people who elect it to that position and who deliver on the commitments that it has set out. In essence, the 2020 act and the Subsidy Control Bill remove our ability to do that, because the ultimate end decision rests with the UK Government. That completely undermines the powers that we have in those devolved areas that are of critical importance for devolved Administrations, and it means that the UK Government can overrule us in devolved areas of policy.

Thank you very much for clarifying that. From my perspective, it is quite concerning in relation to the work that we have to do for Scotland. Other colleagues have outlined that we have a very unique set of circumstances, and the Scottish ministers need to be able to take forward the things that we need for Scotland, including for our island and rural communities.

Exactly.

I note that we are not subject to subsidy control. We are able to operate effectively under the trading co-operation agreement that is in place at the moment. Again, because of its very nature and the fact that we need those interventions, the situation with agriculture is very specific and separate to other subsidy control or state aid regimes. However, that is not to say that it is not monitored. As I said previously, we have the WTO agreement on agriculture. It is therefore simply not necessary for it to be caught by the bill. That is where it is frustrating, because, with that information so far not having been shared with us, it is hard to understand the rationale for its inclusion. We see no reason why it should be included when it is covered by those other schemes.

I will ask you to clarify something, cabinet secretary. You seem to have contradicted yourself. One moment you were saying that there was lots of collaboration over common frameworks, then you were saying that there was none. Is there good collaboration over common frameworks or not?

We are talking about two different things here. In relation to engagement on the Subsidy Control Bill, it has so far been difficult to get that information. The situation is similar to what I said about different areas in relation to population and the different departments of the UK Government that we deal with. Sometimes, we get no engagement whatsoever. So far, in relation to engagement on the Subsidy Control Bill, it has been difficult to get that information. As I said—

I am asking specifically about the common frameworks.

There has been collaboration on the common frameworks. As I said, it is now up to the legislators to approve what has been set out. There has been collaboration there, which is why it is disappointing when we see pieces of legislation such as the 2020 act and the Subsidy Control Bill, because they undermine the process in which are all engaged in good faith.

I want to reflect a bit on the Subsidy Control Bill. I am a member of the Constitution, Europe, External Affairs and Culture Committee, which heard evidence from Jonnie Hall of NFU Scotland in which he raised concerns that the Subsidy Control Bill could be used as a tool to say that the Scottish Government had to stop giving certain types of support, as it was affording Scottish farmers an advantage. In that regard, he cited areas such as Northumberland and Cumbria, where the farming is very similar to that in Scotland.

I thank the cabinet secretary for the information that she gave on what the Scottish Government is doing to challenge Westminster on the Subsidy Control Bill. I was interested in her comment that the Westminster Government has been reticent to provide the Scottish Government with the information on questions and the evidence that it gathered for including agriculture under the bill. I am interested in her thoughts on general procedures between Westminster and the Scottish Parliament for legislation. A lot of statutory instruments have come to us from Westminster at short notice. How is the cabinet secretary working with Westminster to inform it that it should take account of our procedures in the Scottish Parliament to enable us to do the proper scrutiny that is required?

That is an absolutely critical point, which we continually re-emphasise to the UK Government. We highlight the parliamentary processes that we have in place and continually make the point that it is hugely important to recognise those processes to enable the scrutiny that you need to undertake. I can only apologise for the late notification that you get, particularly with some pieces of secondary legislation. Again, some of those issues are outwith our control. We try to keep the committee up to date and informed as much as we can. However, there are occasions on which we get information at the last minute or when decisions are taken that completely change initial policies.

There was an instance of that just before Christmas, with the official controls regulation and some of the changes that are proposed on that. Discussions took place at a meeting that was attended by the devolved Administrations, only for a huge policy shift to then become apparent, which we were asked at very short notice to sign up to and agree to. The committee will be aware of that, because you had the various notices from me that then had to be revoked and changed.

That is just the environment that we are working in. However, we take every opportunity to remind the UK Government of the essential parliamentary scrutiny processes. Some of that is outwith our control. We genuinely try to give the committee information as and when we receive it to ensure that we allow as much time as possible for scrutiny. However, that is not always within our remit.

We have talked about agriculture, but are there any concerns with regard to fisheries in relation to the Subsidy Control Bill or the 2020 act?

Fisheries is a more complex area in relation to the Subsidy Control Bill. I will bring in Caro Cowan on that point.

The position on fisheries is quite different. I am sure that you are aware that there are live WTO negotiations on that. It was originally hoped that they would be completed by this year. The approach broadly matches our views on fisheries subsidies—actually, the EU would have supported the direction, and thus there would be no questions about alignment.

It is worth noting that, with fisheries, there is a very mobile resource and a mobile fleet—hence the involvement of the WTO in the sustainable management of fisheries, and to an extent a level playing field. I am afraid that I do not know enough about agriculture to be able to compare the two, but the committee should be aware that we are in a very different position with fisheries because of the WTO negotiations. We expect to be engaged by the UK Government as it develops a position on that, but, because of the live negotiations, we are not yet at that stage.

Thank you. In relation to both of those answers, it is important to recognise the engagement and the need to have the Scottish perspective as the UK Government negotiates on our behalf to ensure that it is recognised that one size does not fit all.

I will bring in Karen Adam to ask her questions, and then Rachael Hamilton can ask a brief supplementary.

11:30  

Quite a lot of my questions have been answered. I express disappointment that a UK Government minister cannot come before the committee next week as planned, and I hope that that is taken into consideration before we change our work plan again to accommodate that. It would be helpful if the session could be rearranged for any time before completion of our consideration of the Subsidy Control Bill, because we seem to have quite a lot of questions about that.

We have spoken quite a lot about agriculture, and we have touched on fisheries. What can we do to prepare our Scottish fishing industry for what is ahead in the light of EU exit?

A number of changes are still due to come into force. The industry will face changes towards the end of this week, with new export health certificates needing to be used, for example. There have been a number of changes, and transitional arrangements have been put in place in relation to border checks and controls on imports, for example. We use our connections with stakeholders and concerned businesses, and we work with our industries as much as possible, to prepare them for any changes that are coming their way, but that can be difficult.

A source of frustration has been that the goal posts have continually been moved in relation to import checks. Our exporters are being put at a specific disadvantage because they have had to be aligned, to implement checks, to satisfy all the requirements for export health certificates and to face all the other barriers, whereas imports into the UK have not faced the same barriers. The deadlines keep shifting and moving backwards, but we work with our industries as much as possible to prepare as best we can for any issues that come our way.

Jenni Minto mentioned Jonnie Hall’s evidence to the Constitution, Europe, External Affairs and Culture Committee, which I followed with great interest. With regard to the Subsidy Control Bill and the Scottish Government’s policy choices, he said that international safeguards are already in place through WTO rules that would ensure that, if the Scottish Government decided that it wanted to keep direct payments, Scotland would not be at a competitive advantage. I just want to make that point.

That is not the case with the Subsidy Control Bill, which will open us up to legal challenge from other parts of the UK if we continue to provide the type of income support that I have talked about, because that conflicts with the principles that have been outlined in the bill. That is where the problem lies.

We need to get clarification on that, because my point was taken directly from Jonnie Hall’s evidence.

I would be happy to write to the committee outlining our concerns about specific parts of the bill, if you would find that helpful.

Yes, that would be helpful. Thank you.

The cabinet secretary has answered an awful lot of the questions that I wanted to drill into. I have serious concerns about the Subsidy Control Bill. As a very recently retired farmer, I know how vital direct payments are to farmers across the country.

Also, I have written down, “Why has the UK said agriculture hasn’t been taken out, given that there are protections from the WTO?” and you have kind of answered that on the basis that there was a consultation. The question that sprang to my mind is: who did the UK consult? I cannot think of a single farmer or farming organisation in Scotland that would have wanted the Subsidy Control Bill to go through in its current form, which, if I am not wrong, is in the second reading in the House of Lords, meaning that its passage is imminent. Who did the UK consult with? I just cannot see how the Scottish agricultural industry would have agreed to the Subsidy Control Bill going through in its current form.

No, and that has been part of the problem. We asked for the consultation responses to be shared with us but we were told that they could not be, for reasons of data protection. We followed up by asking for anonymised responses so that we could understand the rationale for people asking for agriculture to be included. After the meeting we had on Monday, we were told that that information will be shared with us, but, as yet, we have not received it.

Would it be worth asking the farming unions or representatives if any of them have been asked about the consultation? Has anybody in Wales or Northern Ireland been asked about it? Was it an England-only consultation? I simply cannot understand where it was done, who was asked the questions or how it could ever be described as okay for us here, in Scotland, or those in the other devolved nations. I just cannot get my head around that.

Jim, I suggest that your questions might be more appropriately addressed to the UK Government minister when he appears in front of the committee instead of to the cabinet secretary. She obviously does not have that information in front of her.

I will be delighted to ask the UK Government minister, but, as we do not have a date for that meeting at the moment, I was pressing the cabinet secretary to do the homework on our behalf so that we can find out whether the Scottish agriculture industry has been consulted.

Okay. We move on to questions from Beatrice Wishart.

My question is about the import and export of chilled meat products. What are the long-term plans for those, and do you expect the derogation to be rolled over?

I will bring Jesus Gallego in on that point.

The current derogation is expected to run for the duration of the stated period to the point where the transitional period for the introduction of checks expires during this year. The local plan for what we call prohibition and restrictions, which includes the prohibition of fresh and refrigerated minced meat and meat preparations, is to come to a technical agreement with the EU so that the conditions that apply are the same in both directions. The UK Government, with Scottish Government involvement, has put the case to the EU of a risk assessment that shows that there is no scientific ground for the prohibition of refrigerated minced meat being traded internationally. Our objective is to have that restriction lifted in both directions. If we can import fresh meat and meat preparations, there is no reason why we cannot export refrigerated minced meat and meat preparations. At the moment, however, the prohibition is on both directions, so we are treating it as a technical discussion under the trade and co-operation agreement and we are looking to come to a consistent point that the rules should be for both imports and exports.

I have a quick question on statutory instruments and Scottish statutory instruments.

Prior to Christmas, the Scottish Government withheld agreement to a statutory instrument that related to border controls, and a Scottish statutory instrument was brought in, which I believe we will look at next week. Can you go through the process that the Scottish Government follows to decide whether to agree to an SI or put in place an SSI that, ultimately, has the same outcome? At what point do you make the decision to agree to a UK-wide SI or to bring in your own? We saw an example of that with the decision on the border controls instrument, which was taken at the very last minute.

Yes—that is because there had been a significant policy change, which we were made aware of only at the last minute. I understand that the timing of that was not ideal.

Normally, the policy notes that accompany the SI notifications that we send to the committee explain what the instrument is looking to achieve and why Scottish ministers are content to agree that the UK does that on our behalf. Often, it saves our time and resource for the UK to do that on our behalf and with our consent. Off the top of my head, I cannot think of many other incidences where we have taken the decision that we took with the border controls instrument. I do not know whether officials have further information, but, because of the extent of the policy that was changing in that SI, we needed to be able to take the time to fully consider the ramifications, which is why we decided to bring forward our own piece of secondary legislation. Jesus Gallego will have more to add on that.

In respect of the instrument just before Christmas, which the convener referred to, we were not given the option. The UK Government has the ability to legislate on behalf of Scotland, but it does not have the obligation, and we cannot introduce a UK SI unless we are given that opportunity. What happened before Christmas was that the UK Government introduced that last-minute change to the island of Ireland checks and requested that the Scottish Government consented either to the whole instrument or to nothing. Since we were not in a position to consent to the whole instrument, we had no choice but to withdraw from the rest of the instrument, including the provisions that we were prepared to consent to. Those provisions were introduced through a separate Scottish statutory instrument just before Christmas. The officials’ preferred option would have been to continue with the UK instrument for the provisions that we had agreed to, but we were not given that option.

Thank you. That is very useful information.

Finally, Rachael Hamilton has a supplementary question.

I want to pick up on Jim Fairlie’s point, because I was also interested in who was involved in the Subsidy Control Bill. It seems as though there is a statutory duty under section 53 of the United Kingdom Internal Market Act 2020 to consult devolved Governments. Therefore, unless Jim disagrees with that, it seems as though the UK Government invited the devolved Governments to make representations within that consultation, to which they received 234 responses.

I think that you were just putting that on the record rather than expecting a response from the cabinet secretary.

Since I see no further questions from members, I thank the cabinet secretary and her officials for taking part. It has been most useful, and I am sure that we will visit some of those topics again in the near future.