Single Market and Trade (European Union Referendum)

– in the Scottish Parliament on 15th November 2016.

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Photo of Kenneth Macintosh Kenneth Macintosh Labour

The next item of business is a debate on motion S5M-02488, in the name of Keith Brown, on the single market and trade and the European Union referendum.

I am conscious that, because of questions and the point of order, we have gone well over time already. If members—and ministers, too—can be as concise as possible and shave off a few seconds here and there, that will be very welcome.

Photo of Keith Brown Keith Brown Scottish National Party

This is the fourth in a series of debates that focus on the challenges that Scotland faces as a result of the recent European Union referendum. Following Scotland’s overwhelming vote to remain within the European Union, our priority is to protect all of Scotland’s interests, and we are considering all possible steps to ensure Scotland’s continuing relationship with the EU.

Previous debates have reaffirmed our aim of getting the best deal for Scotland in circumstances that are not of our choosing. Today, we will discuss the importance of membership of the single market for Scotland and its trading relationship with the EU and the rest of the world, and how that can best be protected.

Before I go on to outline why being part of the single market is so important for Scotland, I say that I welcome this opportunity to listen to and work closely with MSPs from across the Parliament who share our goal of keeping Scotland, and indeed the whole of the UK, inside the single market—an outcome that is in the best interests of everyone in these islands.

From that, members can tell that my strong preference is for the whole of the UK to retain membership of the single market. However, given what we have heard from the UK Government over the past few months, we need to be prepared for the possibility that the UK Government will pursue a hard Brexit.

That is why I hope that we can seize the opportunity today to work towards a unified position of support for the single market. We know that that option is favoured by Ruth Davidson, who told the BBC in July:

“I want to stay in the single market. Even if a consequence of that is maintaining free movement of labour”.

Indeed, the 2015 Conservative manifesto said:

“We say: yes to the Single Market.”

In September, Kezia Dugdale wrote to the First Minister to express her support for the Scottish Government’s efforts

“to find a way to retain our EU membership.”

It would be interesting to find out from Labour members when they speak whether they maintain the position of supporting membership of the single market or whether they have now settled for access, as their amendment suggests.

There has been no such clarity from the UK Government, and that has allowed those in the Tory party who favour a hard Brexit to fill the void. The damage is already becoming clear. Earlier this month,

The Times quoted a UK minister’s response to rhetoric from his colleagues on immigration. The minister said:

“It has been absolutely catastrophic in terms of the way we are now seen abroad. The impact has been devastating.”

Today, we have the opportunity to reaffirm the Parliament’s commitment to the single market and free movement, and to make clear that Scotland rejects the divisive language of the hard Brexiteers.

Photo of Murdo Fraser Murdo Fraser Conservative

This morning, the BBC reported that the Scottish Government’s preferred option is membership of the European Economic Area. In June, the First Minister published five tests that related to Scotland’s relationship with the EU, one of which was that Scotland had to have a say in shaping the single market and not just be subject to its rules. As the Law Society of Scotland has made clear, members of the EEA would be subject to EU regulations, but would have no influence in deciding them. Can the cabinet secretary confirm that membership of the EEA would be incompatible with one of the First Minister’s five tests?

Photo of Keith Brown Keith Brown Scottish National Party

I am able to confirm that, just because the BBC says that that is the Scottish Government’s position, that does not make it so. We have made it clear all along that, through the process that the First Minister has identified involving the standing council on Europe, which has members from across the political spectrum and has profound knowledge of European matters, we will come to a decision in due course. I am sure that that will be substantially in advance of any clarity from the UK Government.

As I was saying, today we have the opportunity to reaffirm the Parliament’s commitment to the single market, as expressed previously by the Conservative Party and others. Encouraging sustainable and inclusive economic growth is at the heart of everything that we do as a Government. We have a small, open economy in a rapidly changing and globalised world, and our ability to create a more productive and fairer Scotland depends more than ever on trading with the rest of the world and attracting investment into our economy, businesses and assets.

The EU is the world’s largest trading bloc. It is the largest trader of manufactured goods and services in the world, and it ranks first in both inbound and outbound international investments. Forty-two per cent of Scottish international exports go to the EU and eight of Scotland’s top 12 export destinations are in the EU. Scottish exports to the EU were worth £11.6 billion in 2014, and Scottish exports to the EU were associated with more than 300,000 Scottish jobs in 2011.

Photo of Neil Findlay Neil Findlay Labour

On export destinations, does Scotland have a greater export field into the EU or to the rest of the UK?

Photo of Keith Brown Keith Brown Scottish National Party

The UK market for our exports is currently substantially larger than the EU market. However, it is also true to say that many of the goods that we export to the rest of the UK go on to be exported to the EU. Therefore, it is not possible to give a definitive figure.

It is not my party’s position that we should not encourage more trade and exports with the rest of the UK. We have taken a number of measures to ensure that that is true. However, it surely cannot be right, as the Tory minister David Davis has said, that the people in Ireland do not have to choose between Ireland and the EU, but that they can have the best of both worlds and they will not have a hard border. If that is possible in the Republic of Ireland, why would it be impossible in Scotland?

Being part of the EU, of course, makes easier the free movement of goods, services, workers and capital without any internal borders or other regulatory obstacles. The single market removes barriers to trade. With a market of more than 500 million people, it opens up opportunities for citizens, workers, businesses and consumers. It makes it easier for businesses to offer and receive cross-border services and to do business in other EU countries.

Scottish businesses wishing to export to, or import from, the EU face no tariffs, quotas or duties applied to the goods that they trade. A common set of regulations and rules apply. In a wide range of sectors, Scottish businesses have the right to establish companies to provide services in other member states. Financial services firms based in Scotland also have the right to provide services to the EU, and EU citizens can live and work anywhere in the EU area.

Membership of the single market removes many other non-tariff barriers to trade, such as licensing and regulatory constraints, which are particularly important for services.

The benefits of being inside the single market go far beyond our imports and exports to the EU. The free movement of people has been a driver of economic growth, and access to a skilled workforce has been important to businesses and in attracting investment into Scotland.

Inward investment into Scotland has been an area of terrific success in recent years, with Ernst & Young figures consistently showing that Scotland is the top location for inward investment in the UK outside of London. Our place inside the single market is a critical factor in attracting that investment, with 79 per cent of investors citing access to the single market as a key feature of the UK’s attractiveness as an investment destination in 2016.

Photo of Mike Rumbles Mike Rumbles Liberal Democrat

I seek an explanation of the Government’s motion. It says that if

“the UK Government ... will not secure that option” the Parliament

“calls for Scotland’s place in the single market to be fully protected.”

How does the minister envisage protecting our position in Europe if the UK Government refuses to do so?

Photo of Keith Brown Keith Brown Scottish National Party

As I said in response to an earlier question, we will put to the UK Government a set of proposals whereby we can maintain and protect that position. We are undertaking a process in which we are consulting a number of people, most—or many—of whom are not from the Scottish National Party, but who come from other parties or no party, and who have expertise in the European area and on constitutional politics. We will take that advice and we will make our case to the UK Government.

I am reminded by Mike Rumbles’s question of today’s front page of

The Times

, which reports on an internal leak from the Conservative Government. It says that, five months on, the UK Government has no plan. That is remarkable. It also anticipates that 30,000 new civil servants will have to be taken on to work on Brexit. There is also a complete split in the Conservative Party, with the three Brexiteers on the one side and Philip Hammond on the other side. It is complete chaos. Indeed, Murdo Fraser has issued a press release saying that it is absolutely essential that the Scottish Government produces its plans. Presumably, that is because the UK Government has no plans and it would like guidance and leadership from the Scottish Government.

As I have said, the benefits of being part of the single market go far beyond imports and exports. In February 2017, I will address global companies based in London in order to promote Scottish businesses and the investment opportunities that Scotland presents and to send the strong message—the continuing message—that Scotland is open for business.

Given the importance of single market membership to Scottish trade, it is not surprising that there is a broad consensus among economists—and actors in the Scottish economy—that any relationship with the EU short of full membership risks increasing barriers to trade and reducing exports.

The Fraser of Allander institute has estimated that leaving the single market under a World Trade Organization scenario could result in our economy being worse off by about 5 per cent overall—about £8 billion—after a decade, compared with the position if we were to remain in the EU. That is 80,000 fewer jobs and real wages lower by £200 a head a year.

Photo of Keith Brown Keith Brown Scottish National Party

I am sorry, but I must make progress. If I have time towards the end, I will take the intervention.

Leaving the single market could mean the introduction of costly tariffs on traded goods; the loss of financial passporting and the right of establishment in other member states; new non-tariff barriers to trade such as divergent regulatory regimes; and—perhaps crucially—restrictions on the free movement of people. All that risks putting Scottish companies at a significant competitive disadvantage. It is not a risk that we are prepared to take.

It is not just this Government that understands the risks. We are hearing concerns across the economy about the impact of leaving the single market, with Scotland’s main business organisations calling for continued access to the single market and to the free movement of labour.

The Japanese Government has set out in remarkable detail—and with some vigour—the potential implications of the UK leaving the single market: a loss of company headquarters, a hit to exports, turmoil in labour markets, damage to financial services and cuts to research and development investment.

JP Morgan’s chief executive officer has warned that the company could be forced to move jobs away from the UK to other EU financial centres if the UK is denied access to the single market’s passporting regime.

If Scotland were also to leave the EU customs union, businesses could face the additional burden of border checks for exports and onerous rules-of-origin procedures. In many cases, those are more costly than tariffs and could pose a particular risk to our time-sensitive exports such as fresh food, or to industries with complex pan-Europe supply chains, such as aerospace and other high-value manufacturing sectors.

That is why the Scottish Government has been clear that we strongly support membership of the single market. We will seek to make common cause with those of like mind across the UK to try to reach the best outcome for Scotland and the least-worst outcome for the UK as a whole, and that means remaining in the single market.

As I have said, in the coming weeks, we will table specific proposals to protect Scotland’s interests and to keep us in the single market, even if the rest of the UK decides to leave. I believe that the UK Government actually has no democratic mandate for taking the UK out of the single market, which would seriously damage Scotland’s interests. That is why I welcome the recent decision of the High Court in London that article 50 cannot be triggered without parliamentary approval. Now more than ever, Scotland must be and must be seen to be a country that is confident, outward facing and open for business.

Our economic strategy recognises that strengthening our links with the global economy is key to Scotland’s future economic success, and our trade and investment strategy sets out an ambitious agenda of internationalisation to support the strong performance that has seen Scotland’s international exports increase by 17 per cent over the past five years. The First Minister has recently announced a four-point plan to build on our trade and investment strategy, boost exports and take Scotland’s message to the heart of Europe. First, next year, we will add to the innovation and investment hubs in Dublin, Brussels and London by establishing a hub in Berlin to enhance our current presence and build on existing relationships.

Secondly, to support and enhance Scottish Development International’s work in helping companies win export orders and attracting investment to Scotland, we will double the number of people working for SDI in Europe. Thirdly, we will appoint dedicated trade envoys for particular markets or sectors, who will help to make companies in Scotland more aware of export opportunities and champion Scottish strengths and companies in key markets. Finally, we are taking forward our plan to establish a board of trade, which will promote the internationalisation of Scotland’s businesses and provide advice on practical ways to boost our export performance.

I will take the intervention from Dean Lockhart, if he still wants to make it.

Photo of Dean Lockhart Dean Lockhart Conservative

Last week, the Irish Government made it clear that it would deal only with the UK Government, as the member state, in respect of Brexit negotiations. Will Keith Brown not listen to the constitutional lesson given by the Irish Government and recognise that the member state is the UK?

Photo of Keith Brown Keith Brown Scottish National Party

There is an element of self-loathing here, which says that Scotland cannot be active in the international arena, although it is. The Cabinet Secretary for Culture, Tourism and External Affairs, Mike Russell and Alasdair Allan are all very active on the international stage talking to Governments and others.

While we are on the subject of who is talking and who is not talking, it is interesting that the finance spokesperson for the Conservatives leads and puts out a press release, once again elbowing out of the way the economy spokesperson from discussion in the area. I am reminded of “The Two Ronnies” series “The Worm that Turned”—there might come a point when Dean Lockhart says, “Murdo, you’ve had enough; it’s time for me to have a go.” We look forward to that day.

To finish broadly where I began, membership of the EU single market has delivered significant economic and social benefits for Scotland. It has removed barriers to trade and opened Scotland to a market of over 500 million people. [


.] Murdo Fraser mumbles from the sidelines. He should perhaps look at some of the comments of his idol, Margaret Thatcher, who was instrumental in establishing the single market and who talked forcefully about the necessity for freedom of movement of people. That shows how far to the right the Conservative party has gone, first of all down south and now here in Scotland.

The important point for people across Scotland is that leaving the single market could increase the cost of exporting, reduce the country’s attractiveness to overseas investors, lose us jobs—the figure mentioned by the Fraser of Allander institute is 80,000—and impose new restrictions on labour, thereby increasing skills shortages and reducing productivity. Therefore, I hope that the motion will gain the support of members across the chamber.

I move,

That the Parliament recognises the overwhelming vote of the people of Scotland to remain in the EU; supports calls for clarity from the UK Government on its proposals to leave the EU, including whether it will seek continued membership of the single market; notes the reports of the Fraser of Allander Institute and the National Institute of Social and Economic Research regarding the negative impact that leaving the single market would have on the UK and Scottish economies; recognises the opportunities for business and citizens that come from a Europe-wide approach to trade, regulation and free movement and the importance of ensuring that the benefits of this are shared fairly across society; supports the Scottish Government’s efforts to assist businesses in Scotland to secure new international opportunities; believes that the UK Government should seek to maintain Scotland's place in the single market, and, in the event that the UK Government cannot or will not secure that option, calls for Scotland’s place in the single market to be fully protected.

Photo of Murdo Fraser Murdo Fraser Conservative

It is an interesting tactic from the cabinet secretary to say that he wants the support of members across the chamber when he spent most of his speech attacking the Opposition parties. However, let us approach the debate in the spirit that we should address it in. I believe that this is the 11th debate that the Scottish Government has scheduled on the consequences of Brexit, with increasingly little that is new to say on the subject. A cynic would be forgiven for thinking that that is because the Scottish Government wants to deflect attention from its failing domestic agenda, whether that is on the health service, education, justice or even Scotland’s economic performance.

We in the Conservatives are happy to debate Brexit, particularly in light of the latest revelations about the level of support in the Scottish National Party for the UK to leave the EU. For months, we have had to put up with SNP politicians from the First Minister downwards lambasting Conservative members and saying how dare we vote to see Scotland dragged out of the EU against its will. We now know that those who were responsible for the leave vote were not just Conservative members but SNP members.

At least the Conservatives who campaigned for leave did so openly and proudly; some of them will speak in the debate. We know—according to former SNP deputy leader Jim Sillars—that there are four, five or six SNP MSPs who voted for leave. Among them, only my good friend Alex Neil has had the courage to stand up and state his position. I hope that the others who are here today will not be as shy as they have been in the past. They should stand up and declare their support for Brexit.

Sadly, Mr Harvie is not in the SNP, but I shall happily give way to him nonetheless.

Photo of Patrick Harvie Patrick Harvie Green

Murdo Fraser can be assured that I will never stand up to represent the SNP. Has he not noticed that the debate is about the single market? Does he have a single word to say about that subject?

Photo of Murdo Fraser Murdo Fraser Conservative

I am simply putting into context the debate on the single market. It is just a few days since we heard SNP MP Mhairi Black say that she voted remain only while holding her nose. The other SNP voices that we have heard—those of Gordon Wilson, Jim Sillars and Brian Souter—are all entirely happy that we are heading for Brexit.

We know that one in three SNP voters backed leave. Before SNP ministers start pointing fingers in my direction, they should look at those behind them—those who used to sit in the Cabinet with them.

I will please Mr Harvie by moving on to the substance of the debate. I agree with the Scottish Government that we want to continue to trade with the EU after Brexit. However, we are still no clearer as to what exactly the Scottish Government is asking for. It talks about membership of the single market, but it must know that that concept does not exist separate from membership of the EU, as I am sure its committee of expert advisers will have told it.

What exactly is the SNP looking for? Is it membership of the European Free Trade Association? Is it membership of the European Economic Area? Is it a deal like that of Norway or Switzerland? Is it a free-trade agreement like the one that Canada just signed? Is it a customs union? Is it operating under WTO rules?

Photo of Murdo Fraser Murdo Fraser Conservative

Let me make some progress.

Nearly five months on from the Brexit vote, after all the attention that has been paid to the issue by the First Minister, the Scottish Cabinet and their committee of experts, and with all the considerable intellectual firepower of the Brexit minister, Mr Russell, we might be a bit further forward, but there is still absolutely no clarity from the Scottish Government, while at the same time it demands absolute clarity from the UK Government, which is conducting the negotiations.

Photo of Willie Rennie Willie Rennie Liberal Democrat

Murdo Fraser talked about giving absolute clarity and set out a range of possible options. How far is he prepared to go? What is he prepared to accept for our relationship with the European Union? Is he prepared to write a blank cheque?

Photo of Murdo Fraser Murdo Fraser Conservative

I will expand on that point in great detail in the next few minutes.

The BBC suggested this morning that the Scottish Government’s preferred option is EEA membership. That would be the worst of all worlds, as we would be bound by EU rules but unable to influence their creation. That would be a clear breach of one of the five tests for an EU deal that the First Minister set out in June, which was that we would have to be able to influence the single market’s rules. The Law Society and others have made it absolutely clear that that would not be the case with EEA membership, and Professor Michael Keating of Edinburgh university’s centre on constitutional change has said that that would be the most complex arrangement imaginable. It would not be in Scotland’s interests and, in Professor Keating’s words, it would mean a hard border with the rest of the United Kingdom, which would be disastrous for our economy.

It is interesting that the cabinet secretary seems to be in full retreat. I do not know which civil servant from the Scottish Government briefed Brian Taylor at the BBC, but it is clear that the briefing was very full. It was the basis of the lead story on “Good Morning Scotland” when I woke up this morning.

The cabinet secretary is in full retreat. The Scottish Government has been exposed on the fact that its proposal contradicts what it said previously.

Photo of Murdo Fraser Murdo Fraser Conservative

I need to make progress.

Conservative members understand that we cannot be members of the EU single market unless we are members of the EU, but we can have the maximum possible access to the EU single market with the lowest possible tariffs—or none at all. If Canada can negotiate a free-trade deal with the EU, there is no reason why the UK cannot. Just last week, German manufacturers called on their Government to ensure tariff-free access to the EU for the UK. In Europe, there are voices that are calling for the continuation of free trade, and we should be happy to work with them.

Two key points need to be made. First, although EU trade is important, it is nowhere near as important to Scotland as trade with the rest of the United Kingdom is. Some 64 per cent of Scottish exports go to the rest of the UK, while 15 per cent go to the EU. The rest of the UK is four times more important to Scottish business than the EU is. We know that, even if it were possible to retain single market membership, we could not do that while we were a member of the UK single market.

On 7 September, when talking about trade between Scotland and the rest of the UK, Professor Michael Keating said:

“There would be an economic barrier, a barrier to free movement, a barrier to goods and probably services as well … There would be a cost to that.

And the question would be is it more important to maintain access to the European single market or to the UK single market? We can’t have both.”

Photo of Michael Russell Michael Russell Scottish National Party

I respect Professor Keating’s point of view, but how does that position square with the Prime Minister’s commitment to ensure that there is no hard border between the north and the south of Ireland and that the present arrangement will continue? I have heard the Prime Minister say that personally.

Photo of Murdo Fraser Murdo Fraser Conservative

Mr Russell will be well aware of the different historical arrangements between the north and the south of Ireland. I am simply quoting the opinion of a well-respected constitutional expert—Professor Michael Keating. I suggest that, if Mr Russell has an issue with those words, he should take them up with Professor Keating, who understands—in a way that the Scottish Government does not—that seeking to secure trade with a market for 15 per cent of our exports and turning our back on a market for 60 per cent of our exports makes no sense on any level.

It is not as if the EU economy is growing in a way that makes it a more attractive proposition. Over the 10 years to 2014, the share of our exports that went to the EU declined from 17 to 15 per cent. That is little wonder, as all the economic information tells us that the eurozone economy is growing more slowly than that of the UK and has been for years. In the EU, the unemployment rate stands at 8.5 per cent, and in the eurozone it is 10 per cent. In the UK, the local rate is 4.9 per cent.

The policy of economic and monetary union under the EU single currency could be on the verge of collapse. Professor Otmar Issing, who was the European Central Bank’s first chief economist and who is widely acknowledged as the champion architect of monetary union, has said that the euro project is unworkable in its current form. He says that,

“one day, the house of cards will collapse”,

and that, until then,

“it will be a case of muddling through, struggling from one crisis to the next one. It is difficult to forecast how long this will continue for, but it cannot go on endlessly.”

That is his view, yet that is the economy that the SNP thinks is far more important to Scottish interests than the much closer, more stable and faster-growing economy of the rest of the United Kingdom.

The second point to make is that we need to focus on exports to the rest of the world. Some 20 per cent of Scotland’s exports go to the rest of the world, and that figure has gone up in the past decade from 16 per cent. That is the growth area across all sectors. Leaving the EU gives us a huge opportunity to negotiate a new network of free-trade agreements in major markets that have long-term potential, such as India, China, Brazil and sub-Saharan Africa.

Photo of Murdo Fraser Murdo Fraser Conservative

No—I have taken three or four interventions and I need to make progress.

Bodies such as the Scotch Whisky Association are already looking to opportunities that Brexit will bring to reduce tariffs and promote Scottish produce. Why will the Scottish Government not get behind them? We have consistently called on the Scottish Government to expand the work of Scottish Development International across the rest of the world—not just in Europe but where the new markets are—and to consider the opportunities to support business there. That is what the Scottish Government needs to do instead of continuing to gripe and moan about the Brexit result.

Mr Brown needs to start listening to his former Cabinet colleague, Alex Neil, who said in the chamber on 6 September that devaluation as a result of Brexit had brought a huge opportunity to boost our exports. He said:

“We have to have a new export drive to take advantage of that competitive pricing” and that

“there is an opportunity in some industries for more import substitution—to grow our own goods and services at home rather than rely on more expensive imports from abroad.”—[

Official Report

, 6 September 2016; c 43.]

Unlike the dismal and downbeat Keith Brown, the sunny and upbeat Mr Neil can see the positive opportunities that might come from Brexit. There are other SNP back benchers—they are keeping their heads down—who undoubtedly agree with his analysis.

The Scottish Government needs to make up its mind about what it wants from our future relationship with the EU. In so doing, it cannot and should not put at risk our relationship with the rest of the UK, and it needs to start focusing on the opportunities for improving trade with the rest of the world. Those are the key points that are covered in our amendment, which I have pleasure in moving.

I move amendment S5M-02488.2, to leave out from “overwhelming” to end and insert:

“vote of the people of the UK to leave the EU; supports the UK Government in its efforts to secure a positive trading relationship with the EU for the benefit of the UK economy; notes that exports to the rest of the UK from Scotland are at four times the level of exports to the EU, and considers that access to the UK single market should not be put at risk; welcomes the opportunities that leaving the EU presents in relation to developing Scotland's growing trade with the rest of the world, and calls on the Scottish Government to specify its proposals for the future trading relationship with the EU, and for it to work positively with the UK Government to deliver the best outcome for Scottish businesses and consumers.”

Photo of Jackie Baillie Jackie Baillie Labour

Presiding Officer, whatever way we voted in the referendum—I voted to remain in the European Union—there is little doubt in my mind that we will be leaving. When article 50 is triggered, we will have a relatively short time in which to negotiate the terms of Brexit. It is absolutely right that we should underline our priorities for that negotiation, so I welcome the opportunity to debate the single market.

I think that that is the single biggest issue facing us. The impact on our economy of Brexit and ensuring that we have access to the single market for businesses is of the utmost importance. I am therefore genuinely disappointed that the SNP appears to want to break the consensus on that issue, despite Keith Brown’s calls for unity in public. I believe that we should get the very best deal possible for Scotland, and I support the Scottish Government in so doing.

The SNP wants continuing membership of the single market but does not tell us how that would be achieved. In truth, membership of the single market requires membership of the European Union. Scotland would need to be an independent country and would need to apply to join the EU as a new member state.

Photo of Jackie Baillie Jackie Baillie Labour

I will in a second.

Even I, committed as I am to membership of the EU, would want us to pause and think about the terms of any such entry. For a start, we would need to join the euro and the consequence of that would be to slash our public services in order to close the £15 billion deficit in Scotland’s budget. For a responsible Government, that surely requires some reflection. I invite comment from the cabinet secretary on that point.

Photo of Keith Brown Keith Brown Scottish National Party

The member says that we have broken the consensus. I remind Jackie Baillie that in September, when Jeremy Corbyn indicated that he did not favour single market membership, Kezia Dugdale tweeted the First Minister, saying

“@scottishlabour absolutely committed to EU and single market and supportive of SNP efforts to retain both”.

It is Jackie Baillie who has changed her position. Can she explain why?

Photo of Jackie Baillie Jackie Baillie Labour

I will say how wonderful it is that the cabinet secretary spends so much time looking at our tweets. I will tweet more regularly in order for him to do so.

There is absolutely no change to the position. If the cabinet secretary cares to look back over the letters that were written to the First Minister and others, he will see that we talk about access to the single market.

Photo of Jackie Baillie Jackie Baillie Labour

No, I need to make some headway.

Our response to Brexit must be clear and straightforward and not a thinly veiled attempt to pursue the only thing that unites the SNP, which is independence.

Access to, not membership of, the single market is key. Access alone will be difficult to negotiate. It is unclear what price would be exacted in return. Experts tell us about the Norwegian model, the Swiss model, the World Trade Organization model and other permutations besides. All of them have their challenges. I understand that the Scottish Government is keen to pursue membership of the European Economic Area through membership of the European Free Trade Association. That is worthy of consideration. The positive aspect would be that we could access the single market and we know the benefit that that would bring to our economy. The downside is that Scotland, and indeed the UK, would become law-takers rather than lawmakers, as we would need to follow all the EU rules without having a say in making them.

Let us have that debate and consider the proposal.

Photo of Jackie Baillie Jackie Baillie Labour

Give me a minute.

Let us also be clear that there is little capacity in the UK—Scotland included—to negotiate trade deals. I genuinely cannot believe just how cavalier the Tory Government has been to hold a referendum because of internal Tory divisions on Europe, to tear us out of a partnership without a single idea about how to make Brexit work, and to make promises about things that they were never, ever going to deliver. Where is the money for the national health service? I ask the Tories that.

Photo of Patrick Harvie Patrick Harvie Green

Jackie Baillie is right to say that a common regulatory standard is a part of the single market and that it would be wrong to be law-takers and not contribute to the lawmaking. However, I am keen to understand the economic ideas that inform Labour’s position about access. She mentioned

“access to the single market for businesses”.

Is it not also fundamental that people have a right to access a single market by being free to move where they want to sell their labour?

Photo of Jackie Baillie Jackie Baillie Labour

I accept that point entirely and have no difficulty in agreeing with Patrick Harvie.

We need to be careful with language. By claiming that we want continuing membership, as the SNP does, we might be in danger of setting the bar so high that we are likely to fail from the outset. It would be much more realistic to secure continuing access. That is a practical approach and it is what businesses want.

We cannot sit around hoping for the best while declaring difficult-to-achieve-positions in motions. The UK and Scottish Governments have a responsibility to do their very best to protect our economy. That means protecting the interests of business and of people. For example, we need to understand the impact on key sectors such as financial services. What work has the Scottish Government done to ensure that financial passporting arrangements continue? Without those, some of the functions and jobs that are enjoyed here in Edinburgh are likely to move to Germany or Luxembourg or Paris. We need practical action.

Members will forgive me for not joining in with the self-congratulatory tone of the motion, which says that the Parliament supports

“the Scottish Government’s efforts to assist businesses”.

What do those efforts amount to? A trade board, which I welcome, and a doubling of the number of staff in Berlin, which is also welcome. However, are those the right things to do?

Let us look at the statistics. The value of our exports to the EU is £11.6 billion and to the rest of the world it is £15 billion. The value of exports to our biggest market, which is the rest of the UK, is £48 billion, which is more than four times what we export to the EU. That is not entirely surprising, because economists tell us that we export more to our nearest neighbours and that proximity matters. Why are we not looking at doubling the number of staff in America, China, India or Brazil? What about doubling the number of staff who are focused on the rest of the UK?

The statistics tell us something else that is contrary to what the cabinet secretary said. When the numbers were last published, our overall exports were down. If we dig a little deeper, we find that exports to Europe were down. In the Netherlands, which is the place in Europe to which we export most, exports are down by 22 per cent and they are down by 8 per cent to France and by 2 per cent to Germany. At the same time, our trade with the rest of the UK was up. Surely focusing exclusively on Germany is not the answer. Perhaps it is more down to politics than following the evidence.

The SNP’s own figures confirm that remaining part of the UK single market is more important for Scotland’s economy than being in the EU. Being part of the UK secures hundreds of thousands of jobs in Scotland, grows our economy and funds the public services that we all rely on every day. It is illogical for the SNP to spend so much energy making the exclusive case for the EU single market at the same time as campaigning to leave the UK single market, which is much more valuable to us. It is time for the SNP to accept that tearing Scotland out of the UK would be economic vandalism on a scale that is at least four times worse than Brexit. That is why the SNP Government should focus on the practical things that it can do to protect jobs and the economy and not stir up more grievance.

It is too important for game-playing. It is about people’s jobs, our economy and our children’s future. If the Scottish Government is serious, it will have our support, but if it is making an excuse for another referendum, the people of Scotland will not forgive it.

I move amendment S5M-02488.3, to leave out from “supports the Scottish Government’s efforts” to end and insert:

“further recognises the importance of Scotland’s place in the UK single market and the opportunities for business and citizens; notes the Scottish Government’s efforts to assist business in Scotland to secure new international opportunities; calls on the Scottish Government to expand opportunities for business in Scotland to the rest of the UK, and believes that the UK Government should seek to maintain Scotland’s access to the single market and to retain the benefits that it currently derives from the EU customs union.”

Photo of Willie Rennie Willie Rennie Liberal Democrat

Today I will set out why the Liberal Democrats are opposed to a blank cheque Brexit, why we support a referendum on the Brexit deal and why any deal that is agreed will never be better than what we have right now.

The Conservative Government is in chaos over Brexit. I praise Murdo Fraser for his gall and nerve in standing up to claim that the SNP Government is in chaos when it is his own Government back home down in London that is in that position. We saw the briefing in

The Times today. Although there seems to be a dispute about its origin, the fingerprints of civil servants seem to be all over it and it shows the harsh reality of the situation that we face.

Five months on from the Brexit referendum, this well-sourced, leaked document says that we potentially face another six months before we even begin to understand what this Conservative Brexit Government wants to do. It will be another six months before we even start debating Brexit based on sound information and a proposition—a whole year since the Brexit referendum. That is when we will begin the process. That will be a wasted year for jobs and opportunities in this country. I do not think that Murdo Fraser should criticise anybody else, considering the record of his own Government.

We also believe that we should set out why we are clearly better off within the European Union. I do not believe that any Brexit deal will be better than what we have right now. The Institute for Fiscal Studies has made it very clear that

“Whilst any country has ‘access’ to the EU as an export destination, membership of the Single Market reduces ‘non-tariff’ barriers in a way that no existing trade deal, customs union or free trade area does.”

Whether it is the Norwegian option or the Turkish, Swiss or World Trade Organization model, none of those is better than what we have right now. That is why I believe that we need to do everything that we possibly can to protect the United Kingdom’s place within the European Union.

I firmly believe that we need to make sure that this Government is working extremely hard to get the best possible deal. However, we understand from the Conservatives that they are prepared to accept anything. It will be a blank cheque Brexit.

If there are job cuts, that is okay—the Conservatives will sign up. Higher tariffs? That is okay, as long as we are outside the European Union. Lower growth? The Tories are up for that too. European citizens’ rights being ripped up completely? That is fine, no matter the effect on families here or abroad. No European health insurance card that protects the health of travellers? That does not matter. No European arrest warrant that delivers speedy extradition of criminals across the European Union? All that can go and it will not concern the Conservatives, as they have signed that blank cheque. Even Ruth Davidson, who previously described the leave campaign as full of lies, is signed up to that blank cheque approach and, I presume, accepts all the lies that were uttered earlier on in that campaign.

Although Ruth Davidson accepts it, at least Stephen Phillips has not. He is the Conservative member of Parliament who resigned over Brexit. He said that to leave the EU without consulting Parliament would be “divisive and plain wrong”. He said that it would be

“fundamentally undemocratic, unconstitutional and cuts across the rights and privileges of the legislature”.

What is more—and we should not forget that this man voted to leave the European Union—Stephen Phillips said that Britain would remain in the single market. That was the commitment that was given by all the political parties at the last general election. However, that all now seems to be in the trash bin. Stephen Phillips is against the Conservative Government’s approach, as are a majority of people in a poll this week. They do not want a blank cheque Brexit. They are not prepared to sign up to just anything, which the Conservatives seem to be prepared to do.

The Liberal Democrats will oppose that blank cheque Brexit. We will not accept just anything. People voted for departure from the EU—that is true. However, they were denied the information on the destination in the debate. To give credit to the SNP, in its independence referendum, at least we got the colossal, big white paper so people knew what they were rejecting when they voted. That is certainly the case. The paper was a bit repetitive and a bit boring. Nevertheless, people knew exactly what they were rejecting when they voted. [


.] I kept the SNP members on side until that point.

That was not true of the Brexit referendum. We did not have a clue about the deal.

Photo of Adam Tomkins Adam Tomkins Conservative

It was not Government policy.

Photo of Willie Rennie Willie Rennie Liberal Democrat

Exactly. It was not Government policy but they have now swallowed it hook, line and sinker—every single bit of it—and that is letting Britain down.

We need to make sure that we have a Brexit deal referendum so that people can have a say on whatever deal is agreed at the end of the day. We will, in the House of Commons and the House of Lords, refuse to trigger article 50 unless that guarantee is forthcoming: no referendum, no support for article 50. My amendment challenges every party in the chamber that proclaims its support for the single market and the benefits of a close relationship with Europe—if that party believes in democracy and the right of people to have a say on the final destination—to encourage every single one of its representatives in the House of Commons and House of Lords to back an amendment to the legislation.

There are around 50 SNP MPs in the House of Commons and the burden of responsibility will be on them too. Nicola Sturgeon said that she is prepared to consider all options. I hope that she will consider this option too and encourage her party’s members of Parliament to back a Brexit deal referendum.

If there is no referendum on a deal, I think that the British people will demand that Government changes its mind so that we can have a proper, democratic debate on the destination.

I move amendment S5M-02488.1, to leave out from first “Scotland’s place” to end and insert:

“the UK and Scotland’s place in the single market; considers that voting for a departure is not the same as voting for a destination, and, with the ongoing contradictions and absence of any certainty within the Brexit Conservative administration over issues, including the single market, calls on the UK Government to agree to a referendum on the final terms of the deal that it negotiates and for all Scottish MPs in the House of Commons to vote against the triggering of Article 50 unless this is guaranteed.”

Photo of Bruce Crawford Bruce Crawford Scottish National Party

Previously, I had a reasonable degree of confidence that our economy would continue to grow, but I confess that some of that optimism was based on the UK remaining in the single market. If I needed a reality check on the prospects for the economy, the paper that the Institute for Public Policy Research provided in advance of tomorrow’s Finance and Constitution Committee meeting would be it. The IPPR projects that, as a result of the Brexit vote, increased inflation will lead to a growth shock and an estimated further black hole of £25 billion in the public finances.

As Professor Graeme Roy, the director of the Fraser of Allander institute, has pointed out, the long-term structural effects of Brexit will certainly impact on Scotland. Professor Roy’s most concerning piece of advice is that, even with the most positive economic forecasts and if Scotland retains single-market status, the impact of Brexit will still be negative for the Scottish economy.

As I am sure colleagues are well aware, that is only the good news in this sorry tale. Professor Roy’s most negative economic projection, which would see Scotland facing a hard Brexit outside the single market, paints a very worrying outlook. Professor Roy estimates that, in that scenario, our gross domestic product will fall ultimately by 5 per cent more than it would have done if we were still a member of the European Union.

As the Fraser of Allander institute has shown, a hard Brexit would mean that we would revert to the WTO model, which could—as the cabinet secretary outlined—put at risk up to 80,000 jobs in Scotland alone. The institute has rightly pointed out that, outside the European single market, we will be exposed to the harsh effects of globalisation from which we have previously been sheltered.

It is our duty in this Parliament to represent the best interests of the people who live in Scotland on matters relating to the economy, and we must scrutinise robustly any policy that would impact on the Scottish economy.

Photo of Neil Findlay Neil Findlay Labour

I am sorry to interrupt Bruce Crawford’s tales of woe, but does he really believe that Scotland has been sheltered from the impact of globalisation? Is that really what he is saying?

Photo of Neil Findlay Neil Findlay Labour

But he concurs with that view.

Photo of Bruce Crawford Bruce Crawford Scottish National Party

If Mr Findlay would listen to what members said in the chamber, he might actually pick something up. That is not quite how I said it. I will go on to explain some of what I meant.

It can be no surprise that many of us feel very strongly, for very good and sound reasons, about Scotland remaining in the single market. We are a fantastic country of 5 million innovative and resourceful people on the western periphery of the European Union. For the past 40 years, as part of that union, we have developed to become its 12th largest economy, and our membership ensures that—as the cabinet secretary said—we have access to a market of more than 500 million consumers. It is clear that our ability to participate in free trade in the EU has been absolutely invaluable to Scottish business. Our membership of the single market provides an opportunity for us to compete with our fellow EU countries on a level playing field. Every business has the right to free trade, and such discrimination-free competition has been healthy for the Scottish economy, as it has challenged us to innovate and to drive up our growth.

Leaving the single market brings a real threat of tariffs and other trade restrictions, such as safety requirements, compulsory manufacturing processes, different licensing processes and intellectual property obstacles. Even more important than tariff-free trade is the common regulation and standards that enable firms to sell goods and services freely to that market of 500 million people.

I am slightly confused about Labour’s position today, so perhaps someone can clear up my confusion, because it might just be me. In its amendment, the Labour Party talks about access to the single market but, on five occasions since June, it has voted for motions that clearly say that maintaining membership of the single market is the key issue. There may be a bit of nuancing going on that I do not really understand. The European Economic Area provides for the free movement of persons, goods, services and capital within the European single market. The EEA was established in 1994 and the EEA agreement specifies that membership is open to member states of either the European Union or the European Free Trade Association, so I am not persuaded by Labour’s argument, unless somebody can explain to me what has changed in the meantime.

If the Westminster Government seriously intends to remove the UK and, therefore, Scotland from the single market, it has a duty to provide us with its alternative plan. What is it to be: a customs union, membership of the European Economic Area, access to the EU’s free-trade arrangements or simply leaving us exposed to World Trade Organization mechanisms? It is pretty clear that the UK Government has no plan.

If Scotland is to be taken out of the EU against her will to face the inevitable economic consequences, we should certainly have the right to influence and shape the UK’s negotiating position. We cannot be kept in the dark any longer. To do that would be to treat Scotland with utter disrespect. Therefore, in all seriousness, I urge the UK Government to properly include Scotland in the negotiations and to give serious consideration to our viewpoint.

Like the cabinet secretary, I ask all members in the Parliament to unite at decision time to support the Scottish Government’s motion. A united Scottish Parliament will give us the best chance of securing Scotland’s place in the single market. It is time to put Scotland first.

Photo of Liam Kerr Liam Kerr Conservative

I am delighted, yet again, to speak in our weekly EU referendum—insert topic here—debate. It is, of course, vital that, in Scotland’s Parliament, we discuss issues of importance to the people of Scotland, and I acknowledge that the democratic decision of the British people to leave the European Union, the sort of deal that the UK might strike and what that might mean for open borders, trade, investment and security are important questions. However, I wonder whether it requires nigh on three hours a week, every week, debating, in essence, the same thing, while the Scottish Government fails to set out what it is looking for and Scotland faces multiple challenges—with regard to our national health service, schools, college places, common agricultural policy payments, economic performance and the systematic fleecing of the north-east’s council tax—or whether we might, in time, get round to debating a Government bill.

The single market is simply a function of the principal objective of the EU, which is to make war in Europe impossible through a common system of law and making member states’ economies completely interdependent. That process has been expanded to include the establishment of common currency and fiscal policies and joint action in international trade negotiations. The result is free movement of goods, people, services and capital through the removal of barriers to trade such as tariffs or taxes on imports.

For well over 40 years, the Conservative Party has fought for free trade. Keith Brown was clear about how much he admired Mrs Thatcher, who fought for

“action to get rid of the ... customs barriers and formalities so that goods can circulate freely and without time-consuming delays ... to make sure that any company could sell its goods and services without let or hindrance ... to secure free movement of capital”.

We believe that free trade increases wealth and opportunity, which is why we welcome the work of SDI and the Scottish Government’s proposals for trade hubs within Europe. I hope that the Scottish Government also backs the UK Government’s efforts to build better trade relations with India, China, New Zealand, Turkey and Colombia.

Photo of Ash Denham Ash Denham Scottish National Party

On the trade deals that everyone is so keen on talking about with America, India, China and other countries, does the member accept that many experts say that such deals will take a decade or even two decades to negotiate?

Photo of Liam Kerr Liam Kerr Conservative

The EU trade deals take much longer. I refer Ash Denham to the

Official Report of this morning’s meeting of the Economy, Jobs and Fair Work Committee, at which such matters were discussed in depth. She will find the answers to her question there.

Contrary to popular belief, the single market is not complete; it remains in flux. Much single-market legislation remains to be implemented in member states, several states exploit loopholes and still more have discovered new ways to protect domestic industries. The French ban on British beef, which was imposed in 1996, was lifted by the European Commission in 1999, but it took until the end of 2002 for British beef to be back in France. The French state’s stake in the energy industry has led to the virtual exclusion of energy from the single European market, to date. Many of the more intangible barriers to the four freedoms remain, such as the lack of mutual recognition of academic and professional qualifications, the need for product certification and import licences, persistent protectionist attitudes and, of course, divergent fiscal regimes.

The idea of a true single market is therefore a chimera. Different countries have different relationships with it, and mourning its loss through loss of EU membership, instead of working constructively to access it, helps no one.

What will our relationship to the single market look like following the negotiations? That is difficult to predict. Perhaps there will be full access to the single market, as Norway has, or another relationship, with almost full access to the single market for goods but much more restricted trade in services, such as Canada has. Perhaps there will be a Swiss-style relationship.

It is doubtful that the EU will want to reintroduce trading tariffs with the UK when German cars, French wine and Italian shoes are pushing the UK trading deficit on goods with the EU to record levels—some £24 billion a quarter.

However, for completeness, let us say that we withdraw from the EU without agreement. What then? As we have heard, World Trade Organization rules would apply, because the UK and EU are both WTO members in their own right and the WTO specifies that WTO members must offer each other most-favoured nation deals. For that reason, Scotch whisky will not face a tariff on exports to the EU and will continue to benefit from existing zero tariffs, for example in the United States, Canada and Mexico. In many markets that currently demand high tariffs, such as India, Brexit will not make the situation worse, and perhaps the UK will no longer be subject to EU excise duty or VAT.

For all those reasons, our amendment asks the Parliament to support the UK Government in securing a positive EU relationship and to welcome the opportunities that are presented.

There is one single market—one union—that is even more vital to Scotland than the European one is, and that is the single market that exists within the United Kingdom. Scottish exports are valued at around £76 billion, of which exports to the EU account for £11.6 billion. Some £48.5 billion is generated for Scottish business as a direct result of tariff-free exports to the rest of the UK. It is the UK economy and UK links that are more important to Scotland’s interests.

Our amendment is clear: we are saying to the Scottish Government that it should not put access to that UK single market at risk. We ask it to work positively with the UK Government to deliver the best outcome for Scottish businesses and consumers and to move forward, not in fear or uncertainty, but with hope and opportunity.

Photo of Ash Denham Ash Denham Scottish National Party

It is unfortunate that the UK Government has lost touch with reality, as was demonstrated recently when a citizen-led foray forced the Prime Minister, via a court judgment, to consult her own Parliament over the details of Brexit.

The advisory vote to leave the EU provided no details on what Brexit would look like, and the UK Government has very little in the way of a clear mandate from leave voters, who might have voted for different and even contradictory post-EU-membership models.

Citizens, businesses and both Parliaments agree that the Brexit plan must be fleshed out. Is the Brexit mandate for EEA or EFTA membership or for bilateral deals such as Switzerland has? Who knows? What we know is that Scotland voted clearly to stay in, in order to protect jobs and trade, inward investment and travel and study opportunities.

Clarity from the UK Government must now be a priority. Now is not the time for coyness. Business after business, in a variety of sectors, has been giving evidence to the Economy, Jobs and Fair Work Committee’s inquiry into Brexit impacts, and many of them have been saying exactly the same things. They say that the complete lack of information coming from the UK Government means that they are in wait-and-see mode—a holding pattern; that their expansion plans are on hold; that investment decisions are being postponed; and that the very viability of their business will be put at risk if EU nationals are not available as staff. That is the climate that Brexit has created for businesses, and CBI Scotland concurs, warning of a

“serious deterioration in business sentiment” and that Scottish businesses have put their investment plans on hold.

A recent survey for the Centre for Economics and Business Research found that nearly half of large companies had cancelled investment plans since July—that is £65 billion of investment that has been abandoned since the vote in June. The negative impact for Scotland of not being in the single market is huge. The Fraser of Allander institute has predicted that a hard Brexit would cost Scotland 80,000 jobs. IPPR Scotland forecasts that the Scottish Government’s budget could be cut by up to £1.34 billion per year over the next four years due to lower growth and tax receipts following Brexit. Figures from the National Institute of Economic and Social Research suggest that Scotland’s exports could fall by £5 billion if we fail to retain access to the single market. I do not think that the Tories would normally consider themselves to be anti-trade or anti-investment. However, if the reports that we are hearing are correct and we are heading for a hard Brexit, an astonishing act of economic self-harm is about to be inflicted by the Conservative Government on this country.

While the UK continues to mismanage this crucial period, jobs, trade opportunities, research collaborations, investments and more are draining out of our economy. Even once the UK Government settles on a negotiating position, the size of the task ahead and the sheer complexity of exiting the EU and negotiating a new relationship seem to be beyond some members of the UK Cabinet. Liam Fox charmingly thinks that we are in a “post-geography trading world”. I am not sure that the WTO would agree with him.

Just one example of the current mishandling is the Nissan deal, or the letter of intent. Assurances should not be given like that on a case-by-case basis. Any sector-specific deal is, according to Dr Margulis of the University of Stirling,

“not likely to be WTO compliant.”

Renegotiating trade agreements with the EU and the other 50 countries with which the EU has preferential free-trade agreements is a mammoth undertaking. It will take a decade or maybe two decades just to get back to where we are now. The UK is also, as Jackie Baillie said, seriously lacking in the capacity to negotiate, not having done these types of deals since the 1970s. In addition, I cast doubt on the position that the Conservatives in this chamber maintain that the new trade agreements will somehow be a case of pick and mix, with the UK holding a large paper sweetie bag. The reality is likely to be very different. Dr Margulis said:

“nobody is getting in line to sign trade deals with the UK—globally, it is not such an important economy and the UK is not the country that most other countries are lining up to trade with. There must be some realism about where the UK sits in the global picture.”—[

Official Report, Economy, Jobs and Fair Work Committee

, 1 November 2016; c 39 and 58.]

The Deputy Presiding Officer:

I am afraid that, because you are in your last minute, you will lose time for the intervention.

Photo of Liam Kerr Liam Kerr Conservative

How does Ash Denham answer the President of Colombia, who said only last week that he is

“ready to simply have a free trade agreement with the UK and have the same conditions or even improved”?

Photo of Ash Denham Ash Denham Scottish National Party

The experts are telling us that these deals will take decades to negotiate. Does the member not accept that the UK Tories are an utter shambles on the issue? They have no plan after five months and have no plan for the next six months if the leaked memo that was published this morning is to be believed. Scotland really does deserve better than having the three Brexiteers in charge at Westminster.

The UK Government must get a grip on the realities that we face at the moment: the risks to trade and the effects that Brexit will have on our economy. Scotland did not choose to be in this situation, but our vital interests are now at stake. I ask the Parliament to get behind protecting Scotland’s place in the EU.

Photo of Neil Findlay Neil Findlay Labour

I found the debate around the EU referendum— indeed, the debate post the EU referendum—pretty depressing. All of it has been about Scottish exceptionalism and why we are not like those bad folk in England and Wales who voted to leave the wonderful EU, which has brought us so many riches and eternal happiness. It is a debate that is so far from reality that it is painful to observe. Little of it has been about the material reality on the ground for ordinary people.

Of course the Tories are clueless, but we have had a series of non-debates to speculate on what might happen and to raise the latest round of scare stories. The Cabinet Secretary for Justice recently claimed that the UK would become a haven for criminals, while Stuart Donaldson MP said that we would not be able to watch Netflix and that young people would be deterred from having a holiday in Magaluf or Zante. It would take much more than Brexit to deter the young people I know from going on holiday. We have heard that there will be a jobs crisis, a housing crisis and an investment—

Photo of Stewart Stevenson Stewart Stevenson Scottish National Party

This is not my figure, but it has been suggested that the price of visas for our young folk to travel to Magaluf et al will be £120 million a year. If that is true, is it likely to be a disincentive?

Photo of Neil Findlay Neil Findlay Labour

I am sure that, tomorrow, the figure will be £350 million a year, because that is the level of the debate that we are involved in—it is a case of throwing up another figure or another scare story and moving away from the reality of what people are experiencing on the ground at the moment.

I have heard people say that there will be a jobs crisis. It has been mentioned that 80,000 jobs might be lost, but 80,000 jobs have been lost in local government in Scotland and not a tear was shed by any SNP member. I have no doubt that there will be difficult times ahead, but the holding of endless diversionary debates to take our attention away from the Government’s failings on health, education and local government discredits the Parliament. Let us blame someone else; whatever we do, let us not focus on the here and now and the issues that the Parliament has responsibility for.

On the single market, 14 countries across the EU have unemployment rates of higher than 20 per cent, and Greece and Spain have unemployment rates of almost 50 per cent. Is the munificence of the single market delivering for our Spanish, Greek, Croatian and Italian young brothers and sisters? I think not. Has the single market delivered for the young Poles and Lithuanians who have been forced to leave their homeland and their roots to try to make a living, or for the Romanian women whom I speak to in the morning on my way to the Parliament? Has it delivered fair pay and employment conditions for all workers across the EU?

The driving force within the single market is not a social Europe; it is a neo-liberal Europe. It is a Europe that puts competition rather than co-operation at the heart of policy and which forces competitive tendering that is heavily weighted in favour of price competition rather than social value or benefit. Forced tendering lowers costs, which in turn lowers wages and cuts conditions. Members need look no further than this place. When I first came here, canteen workers, cleaners and maintenance staff were paid below the living wage and had little protection against sickness and illness on the basis of a contract that had been won under EU single market rules. Where is the understanding or critique of any of that in the debates that we have had? Where is the demand for reform of the single market that produces those results?

The truth is that, despite the efforts that have been made, the EU and many of its component parts have too often acted as an impediment to progressive policy making and legislation. Whether we like it or not, as it is currently formulated, the EU, along with its single market, reflects the wishes of capital markets, speculators and bankers more than it reflects those of working people.

That was evident when we considered the Public Bodies (Joint Working) (Scotland) Bill. At stage 3, I sought to amend the bill such that companies would have to pay their workers a living wage. The then minister, Alex Neil, said:

Neil Findlay’s amendments would not do what he said he wants to do ... Had the European Union’s Lisbon treaty allowed it, the Procurement Reform (Scotland) Bill would have incorporated a provision whereby the providers under every public contract would have had to offer the living wage before they could even be considered for the tender. When we took advice, we were strongly advised ... that that was ... unacceptable under the terms ... of the Lisbon treaty.”—[

Official Report

, 25 February 2014; c 28088.]

Despite the fact that the Opposition wanted it, the minister wanted it and, presumably, the Government wanted it, this Parliament was prevented from accepting that piece of progressive legislation because the EU told us not to—yet I have not heard a single word of criticism of such rules from the Government or a demand for the single market rules to change.

That was a terrible decision for the workers involved, but it was also a terrible day for our democracy because the wishes of the Scottish Parliament were blocked by the rules of the single market, which so many people champion. Why would we want to remain part of that system? We should be arguing for a reformed single market that allows and encourages progressive social and economic policy and does not block it. We need access to a reformed single market that allows state aid, public ownership—let us start with ScotRail—and conditionality in public contracts so that we can protect jobs and communities, end tax avoidance and demand fair working practices from companies such as Amazon.

However, I hear none of that from the Scottish Government; I hear only a continued and intensified acceptance of neo-liberal orthodoxy and single market rules, complemented by a EU-wide austerity agenda that has caused so much economic havoc across Europe. The failure to understand that and address the needs of our communities feeds racism and xenophobia across the continent. If left unaddressed, it will lead to the break-up of the European Union.

The Deputy Presiding Officer:

I must ask you to wind up, Mr Findlay.

Photo of Neil Findlay Neil Findlay Labour

I find it incredible that the Government is trying so hard to remain part of the EU single market while at the same time trying so hard to leave the much bigger UK single market.

Photo of Richard Lochhead Richard Lochhead Scottish National Party

As Murdo Fraser said at the beginning of his speech, it is Tuesday and therefore time for another debate in the Scottish Parliament on Brexit. I was a bit confused: he said that the SNP was debating the issue only to distract attention from domestic issues, but then spent most of his speech attacking the SNP as a distraction from speaking about Brexit.

However, he then changed his mind, saying that it is good to talk about Brexit because it is important. That was in tune with Jackie Baillie’s comment that Brexit is the biggest issue that we face today, especially in maintaining—to use her term—access to the single market. However, she then went on to make the case for Brexit, which I thought was a bit strange and shows the Labour Party shifting its position, unfortunately. I hope that that will not happen at decision time.

I was puzzled by Neil Findlay’s disappointment. He lamented the fact that the debate that we are having north of the border is different from the debate south of the border. Clearly, there is a distinction between the debate north of the border and that in the rest of the UK, because 62 per cent of Scots voted to remain in the European Union. Brexit is a massive issue that is about respecting the democratic wishes of the people of Scotland.

Photo of Neil Findlay Neil Findlay Labour

I make no comment on this other than to ask whether the member thinks that if we were faced with the same circumstances and the same levels of migration as people face in England and Wales

, we would have ended up with the same result.

Photo of Richard Lochhead Richard Lochhead Scottish National Party

The job of the Scottish Parliament is to respect the wishes of the people of Scotland and to fight for Scotland’s national interest, which is why we have a Scottish Parliament and Government. As Jackie Baillie said, Brexit is one of the biggest issues that we face in Scotland today.

As well as this being another Tuesday and another debate on Brexit, it is just another day, which means that, as we do every day, we have more headlines about the chaos at the heart of the rudderless UK Government. It is a divided Government, riven by in-fighting and confusion. Some of today’s headlines about the memo are quite staggering. One paper said:

Whitehall is working on more than 500 Brexit-related projects and could need to hire 30,000 extra civil servants”,

and the Government

“may need another six months to decide on its priorities”.

The memo itself is quoted:

“It is likely that the senior ranks in the civil service will feel compelled to present potential high-level plan(s) to avoid further drift ... Departments are struggling to come up to speed on the potential Brexit effects on industry. This is due to starting from a relatively low base of insight and also due to fragmentation.”

Of course, the killer paragraph in the leaked memo is the last one, which says:

“Industry has 2 unpleasant realisations—first, that the Government’s priority remains its political survival, not the economy” and

“second, that there will be no clear economic-Brexit strategy any time soon because it is being developed on a case by case basis as specific decisions are forced on Government.”

We have utter chaos and a huge vacuum in leadership from UK ministers and the UK Government. They have turned the UK into a laughing stock. We are now left with this Brexit boorach, and I commend the Scottish Government and Scottish ministers for working hard to protect our national interests.

As I said, Scotland voted to remain, and the economic benefits of EU membership will have been a big feature of the thinking of those in Scotland who voted to remain. I expect—this is an important point to consider in the debate—that most of the 38 per cent of Scots who voted to leave the EU did not expect that we would now be heading towards a hard Brexit, yet with each day that passes, a hard Brexit looks increasingly likely as the outcome of the UK voting to leave. Even more worryingly, it looks as if it is the preferred option of many UK ministers.

Given the lack of UK strategy and the political divisions, it is clear that the EU now holds all the cards, and a hard Brexit is, in effect, becoming the default position. The UK Tories do not want to be seen as weak on immigration, and EU leaders will not want to see the UK getting a good deal, because that would set a bad example for other populist movements in Europe. Therefore, it seems—unfortunately—that we are heading towards a hard Brexit.

It is also worrying that we now seem to be facing a Tory party and some right-wing commentators who are more excited by prospects across the Atlantic than those across the English Channel or the North Sea. Since last week’s Brexit debate, we have had the election of Donald Trump as US President. It is really important that we have these debates in the context of what is happening globally. John Bolton has now been tipped as Donald Trump’s Secretary of State. He wants to take on Russia, Iran and China, which represent about 20 per cent of the world’s economy.

To have security here in Scotland, it is really important that we maintain links to the European market, given what is potentially going to happen to the global market. We do not have the luxury of being able to turn our back on any markets in the world given our dependency on exports and the employment position. The outlook for world trade is perhaps quite uncertain as well, and that is why we need the security of the European market.

The food and drink sector is very important in my constituency. I know that companies are watching the debate closely and will be watching where we go on maintaining our links with the European market. Some 30 per cent of the exports of Walker’s Shortbread, which is based in Aberlour in my constituency, go to Europe, and it is understandably concerned about what the future holds if we break our links with the single market. Other members have spoken about common regulations, and we also need to consider customer reactions in Europe. Will European consumers be less likely to buy Scottish or UK products because we are walking away from the single market? That is a real concern for many food and drink producers in Scotland, and we have to heed it.

We need membership of—and not just access to—the single market because Walker’s and many other businesses in my constituency and in other members’ constituencies rely on EU nationals to plug skills gaps and for labour purposes. Primary sectors such as fishing and farming also rely on EU nationals. That is why the free movement of people, which is one of the four key freedoms, is so important, and it is why I make a plea to the Labour Party to vote today for membership of the single market and not just access to it.

The Deputy Presiding Officer:

Thank you. You must conclude.

Photo of Richard Lochhead Richard Lochhead Scottish National Party

I urge ministers to continue to fight for Scotland’s national interest and ensure that we maintain membership of the single market.

Photo of Patrick Harvie Patrick Harvie Green

I am happy to have the opportunity to take part in the debate, not least because of the very many commitments that Brexit campaigners made during the referendum campaign about the single market, which was not something that we needed to worry about losing our participation in. Since the referendum result, many of them have continued to say that we will remain part of the single market. Murdo Fraser criticised the Scottish Government, saying that he is sure that it knows that it is meaningless to be in the single market and outside the EU. I can only assume that he was also referring to Ruth Davidson, who pretty much said that the same thing should be the priority within days of the referendum result.

Photo of Murdo Fraser Murdo Fraser Conservative

I have to correct Mr Harvie. Ruth Davidson was campaigning for us to retain our membership of the EU and of the single market because she is clear, as we are, that those two things go hand in hand. We cannot separate the two.

Photo of Patrick Harvie Patrick Harvie Green

Since the result was announced, Ruth Davidson has agreed that one of the priorities should be to remain in the single market with free movement. To be frank, I think that that position—that we should be inside the single market and outside the EU—is bizarre, because the only thing that would change, as Jackie Baillie rightly said, is that we would lose our participation in the democratic process that determines the rules of that market.

That is very relevant to Neil Findlay’s speech, some of which I agreed with and some of which I disagreed with. However, it has been the most substantive speech that we have heard this afternoon.

The pillars of the single market are not just a common approach to competition law; they are common approaches to regulation, to external tariffs and to the free movement of not just capital and goods and services, but people. The endeavour is inherently co-operative. That is not to say that I agree with every decision that has been made in the single market or with every policy position that it has taken. However, seeing the value of a system that has protected people’s rights in the workplace and their rights against exploitative businesses in the marketplace, and committing to protecting that for our citizens—not just for our businesses—have absolutely nothing to do with so-called Scottish exceptionalism. The approach recognises that the framework is flexible enough to encompass reasonable debate about the balance between a free-market ideology and the proper role of Government in regulating the market in the interests of the common good.

Photo of Neil Findlay Neil Findlay Labour

Where has the ethos of co-operation been for the 50 per cent of young people in Greece and Spain who are unemployed and the young people in Croatia, Italy and all the rest of the 14 countries that have unemployment rates of over 20 per cent?

Photo of Patrick Harvie Patrick Harvie Green

I think that Neil Findlay is talking about aspects and decisions that he and I would agree on condemning absolutely. However, that is not to say that there has been no value to people in those countries, or to people in Scotland, in their ability to move freely within the single market and to decide where they want to sell their labour. Labour is the most valuable thing that most people have to trade in the single market. Most people are not businesses with the ability to make profit by trading anything other than their own labour. There is real value in those things.

A contradiction has developed within the Tory Government. Ideological advocates of deregulation, small government and free trade now want to restrict where people are permitted to sell their labour. That position is unresolvable.

Leaving the single market will not have the consequence of a return to some of the more socially just approaches and a proper approach to the Government’s role in regulating the market, as Neil Findlay and I might want. One consequence will be a threat to hard-won regulatory standards and to people’s freedoms in an environment in which far too many people are now almost adopting the language of the vile spiv who has just been elected on the other side of the Atlantic. I think that they have been reading his book on the art of the scam. They will just say, “We’ll have more deals and better deals—they’ll be the best deals ever,” as though free-trade deals are the only things that we need to achieve with the challenge of leaving the single market. That will simply increase the race to the bottom and towards an ever more deregulated and exploitative free-market ideology. It will not achieve the proper response to some of the justified anger that Trump and some of the Brexiteers tapped into—and some of the arguments that Neil Findlay tapped into. Anger about the negative consequences of a free-market ideology that has been dominant for too long is justified.

The Prime Minister’s speech at the Lord Mayor’s banquet demonstrated an astonishing degree of disconnect. It seems that she has only just encountered the revelation that decades of free-market mania and ever-lower taxes for the wealthy and corporations have led to chronic inequality. It is clear that she will never offer a progressive response to that reality. Instead, she is simply throwing her lot in with the fashion for self-destructive and xenophobic responses.

I will support the Government’s motion. I am not able to support the Conservative amendment or the Labour amendment. I can see the case for the Liberal Democrat amendment and I can understand why my colleagues in the Green Party of England and Wales, who represent people who voted by a majority to leave the EU, are also open to the idea of a second referendum on the terms of the deal, but I do not think that it is the place of members of the Scottish Parliament, representing people who gave them a mandate to remain, to make that case.

The Deputy Presiding Officer:

I am sorry that we are so short of time, but I remind members that if they go over their time allocation they cut the time of lots of other people.

I call Gil Paterson, to be followed by Alexander Stewart. Mr Stewart and the speakers following him will have five minutes.

Photo of Gil Paterson Gil Paterson Scottish National Party

On 9 June, a Conservative MSP appeared alongside the former Chancellor of the Exchequer, George Osborne, when he highlighted a Treasury analysis suggesting that unemployment could rise by about 43,000 in the two years following a Brexit vote. That MSP said:

“Thousands of Scottish jobs are reliant on the exports we sell within the EU. I’ll be voting to remain in order to ensure we can create thousands more”— that is thousands more jobs—

“over the coming years.”

On 22 June 2016, the same Conservative MSP said that if the UK were to leave the EU the rest of the EU would impose tariffs and taxes. If we swing forward only a few months, the same MSP—post referendum—is saying that we need to make Brexit work. The MSP now talks about the opportunities of Brexit, despite the evidence mounting of the potentially huge damage it threatens to jobs, to investment and to Scotland’s economy as a whole. That MSP is none other than the leader of the Scottish Tories.

In the referendum, Scotland overwhelmingly voted to remain in the EU. Every local authority said remain, including local authorities that contain Conservative constituencies. The Scottish people have spoken, so why is this so-called Scottish party not listening? Why is it abandoning what it stood for pre referendum? Why have party members become born-again Brexiteers? They should try and explain that one to the country. How much more does it take to convince the Tories what the people of Scotland want? Is 62 per cent now not good enough? I remind the Tories that Scotland is an equal partner in this United Kingdom—the union that they strive to defend and to protect.

There is no doubt that Scotland is and remains an attractive and stable place in which to do business, but the referendum outcome presents a significant challenge to our economy. As I mentioned, even the former Chancellor suggested that unemployment could rise by about 43,000 in the two years following a Brexit vote, but—as many members have said—according to the Fraser of Allander institute’s paper, a hard-right Tory Brexit threatens to cost 80,000 Scottish jobs and to cost Scotland’s economy up to £11 billion a year by 2030. Those figures can be put into context when we consider various businesses and associations’ concerns about the effects on losing access to the single market.

As a member of the Economy, Jobs and Fair Work Committee, I recently heard the food and drink industry’s concerns. It identified three top issues, the first of which was on trade. The industry highlighted that about 76 per cent of all the food that is exported from Scotland and goes out of the UK goes to the European Union, and emphasised that continued access to the European market in as pragmatic, tariff-free and sensible a way as possible must be a priority for us all to achieve.

The second issue was access to labour. About a third of our food manufacturing workforce comes from the European Union. The committee heard that reassurances to the existing workforce and on-going access to the EU workforce after Brexit are crucial to achieving the ambitions for further growth.

The final issue was access to funding and what that might mean for agricultural support in particular. The committee understands that about £400 million to £500 million is paid directly to farms through EU funding, and that another £300 million to £350 million is paid through rural development measures. That supports much of the raw materials that go into food and drink manufacturing.

The people of Scotland voted overwhelmingly to remain within the European Union, and it is vital that any Brexit negotiation acknowledges and respects that choice. I welcome the fact that, by the end of this year, the Scottish Government will bring forward its own detailed proposals to protect Scotland’s interests. I expect all Scottish parties to at least be supportive of protecting Scotland’s interests. I commend the cabinet secretary’s motion to the Parliament.

Photo of Alexander Stewart Alexander Stewart Conservative

I am pleased to have the opportunity to discuss the issues surrounding the single market and international trade. Earlier this year, the people of the United Kingdom, which is the member state of the European Union, made a collective decision to leave the EU. Momentous decisions are now being made and a plethora of information is coming forward. There is a real opportunity for Scotland. Scotland has a world of opportunity as we move forward.

While the UK Government has begun the process of making preparations for our eventual departure from the European bloc, our First Minister has only postured. European leader after European leader has dismissed the First Minister’s opportunistic pleas to negotiate with Scotland bilaterally and they have made it clear that it is solely the UK that is the member state. At the same time, the new UK Government has been actively engaged in forging new trading relationships with countries around the world. For example, the recent trade delegation to India secured £1 billion-worth of business, which is very much to be welcomed. UK Export Finance has committed £1 billion to support trade with Colombia, and the Chancellor has agreed new deals that will help to increase trade between the United Kingdom and China. Those are all very good stories that are happening now.

In stark contrast, the Scottish Government has said little or next to nothing about its proposals for future Scottish trade with countries round the world. We on the Conservative benches welcome the announcement from the Scottish Government about increasing staff levels in Scottish Development International and the creation of new trade hubs, but much more can be done beyond that.

I have made it clear in the chamber before that the most important single market for Scotland is the United Kingdom, to which we export more than four times as much as we do to the European Union. A fact that is not often heard in political discourse is that we export more outwith the EU than within it. Although 15 per cent of our exports go to the EU, 20 per cent go to other nations. That reflects the changing dynamics of the economic strengths of countries round the world. The European Union has continued to grow in membership, but its share of the world’s gross domestic product has shrunk. In 1980, the nine member states accounted for about 30 per cent of the world’s GDP, but now we have 28 member states and they account for 16.5 per cent of the world’s output.

Photo of Tom Arthur Tom Arthur Scottish National Party

On the differences in relative GDP, does the member not think that that might have something to do with the rise of China and India in the intervening period?

Photo of Alexander Stewart Alexander Stewart Conservative

There is no doubt that there have been rises across the world, and we are tapping into those. I want us to continue to ensure that we develop across the world, and that will take place when we are no longer part of the EU.

The Scottish Government has what can only be described as an illogical obsession with the European Union that is regardless of the impact on the economy. The SNP is obsessed with the process. People would think that nobody in Scotland voted to leave, but that is not the case. We know the facts about the number of people who voted. We are aware that a number of people in the SNP voted to leave, including a number of MSPs. The SNP has to start to take cognisance of that and understand where we are going.

Photo of Alexander Stewart Alexander Stewart Conservative

No. I am sorry, but time is tight. I have already taken one intervention and I want to continue.

One of the success stories as we continue to move forward is on exporting to the United States of America. Between 2004 and 2014, our exports to the US rose from £2.4 billion to £4 billion, which is an increase of 67 per cent. The trade deal between the US and the UK was extremely important. After recent events, we can look forward to continued processes with our friends across the pond.

Photo of Alexander Stewart Alexander Stewart Conservative

No—I think that I am in my last minute.

The Deputy Presiding Officer:

The speaker is in his last minute, indeed.

Photo of Alexander Stewart Alexander Stewart Conservative

If members listened to the rhetoric of the Scottish National Party, they would believe that nobody voted to leave. We must remember that Parliament should represent the views of the Scottish people, and it is very important that we do that.

Last week, the First Minister stated that while the outcome of the presidential election was not what she wanted, she would respect it. That contrasts with the position whereby she is not prepared to respect what is happening with the EU referendum. She has now even jumped on the bandwagon of using the courts to frustrate the democratic will of the British people; I find that totally unacceptable.

To conclude, the First Minister, her Minister for UK Negotiations on Scotland’s Place in Europe and her Government should look at the new opportunities that the powers bring to Scotland to do all we can to develop strong trading relations with countries around the world.

Photo of Stewart Stevenson Stewart Stevenson Scottish National Party

I start by saying gently to the absent Neil Findlay that it is not helpful to suggest that anyone here would describe our friends and neighbours south of the border as “nasty people”. My English relatives and my friends in England remain my friends however they may have voted on whatever subject. Indeed, my American relatives and friends also remain friends. Such intemperate language devalues and contaminates his broader arguments.

We have heard from almost everybody on the Conservative benches, and from Jackie Baillie, numbers about Scotland’s exports to England. Let us examine where those numbers come from and what credibility we should place on them.

I start with a paper that was produced by the previous Labour-Liberal Executive in 2005. Regarding those numbers, it says:

“The main difficulty arises because taxes are collected at the UK level, and also since Scotland is a region of the UK ... there is no legal requirement for companies to report financial information at sub-UK level”.

It goes on to say that the global connections survey is difficult

“for both practical and conceptual reasons”.

It is difficult to say where things are exported.

Photo of Stewart Stevenson Stewart Stevenson Scottish National Party

Let me continue—I may give way if time permits.

I turn to 2013, and a paper that the UK Government produced in the run-up to the referendum in 2014—“Scotland analysis: Business and microeconomic framework.” Indeed, that paper quotes the £45.5 billion. I am prepared to agree, by the way, that the figure probably has 11 digits in it; that is probably correct. If we look one paragraph below, there is a neat little footnote that says that it may be

“£35.651 million lower than the estimate ... in Scotland’s Global Connections Survey”.

Photo of Stewart Stevenson Stewart Stevenson Scottish National Party

I have another four to do before I get there.

Photo of Stewart Stevenson Stewart Stevenson Scottish National Party

That footnote illustrates precisely the imprecision about the way in which we produce the figures.

Photo of Stewart Stevenson Stewart Stevenson Scottish National Party

If time permits.

The “Export Statistics Scotland” 2014 report, produced by statisticians in Scotland, interestingly provides information that perhaps illustrates where some of the difficulties may arise. The report points out that the Netherlands is Scotland’s second biggest export market, and the biggest in the EU. That seems rather surprising, because the footnote says that the Netherlands and Belgium are consistently reported as our “top trading partners”; however, those countries contain “key ports” where many of our exports are exported.

The report goes on to deal with Her Majesty’s Revenue and Customs figures for regional exports of goods. Here, it gets really interesting. In the figures for the various countries of the UK, there is—and I quote—an “unknown region” that exported £37.3 billion. That is quite interesting; if that were to be attributed to Scotland, our exports beyond the UK exceed the £45 billion-plus that are represented. Could that be the case? Actually, it is quite likely, because that is the oil region, and it is only by omitting oil that one can get the result that one does.

Let us turn to the business of ports—I say to Jackie Baillie that I am now out of time. The Rotterdam effect is an idea that is so pervasive that it is part of the A-level syllabus in England and Wales, and I have before me a study note about it. The issue concerns the fact that an export is booked at the last point at which it touches the ground. Given that Scotland does not have many ports that are equivalent to Felixstowe, Zeebrugge or Rotterdam, most of our exports touch the ground and are counted somewhere else.

We need to be conscious about the numbers that have been presented. I do not say that they are wrong; it is just that, on the basis of the evidence that is before us, I cannot possibly say that they are right, and there is evidence that suggests that they might actually be the other way up from what we are seeing.

Presiding Officer, it has been an absolute delight to have the audience listen to me here today. I hope that we will talk about more numbers as the debate progresses.

Photo of Daniel Johnson Daniel Johnson Labour

It is always something of a challenge to follow Stewart Stevenson in the chamber, but I will give it a shot.

I am pleased to be speaking in the debate this afternoon. We have had a great number of debates about Brexit, but this is perhaps the most important one, because trade is at the very heart of the EU. That is not because the EU is narrow and is purely about trading, but because trade was the foundation of a much bigger project, which was designed to make war impossible. The creation of the European Coal and Steel Community in 1951 was about tying together the European nations’ production and distribution of steel and the very materials for war, so that war could not be waged. It was an explicitly political project—that is explicit in the Schuman declaration. I say to the Brexiteers that I get tired of hearing them say that the EU is just a trading pact that we are part of. It is not; it was always a much wider, political pact. It was also an arrangement that understood that the importance of trade is political as much as economic, and that, in order to facilitate trade, you need political as well as economic institutions.

As the EU has progressed and our economy has developed, our trade has become increasingly complex and reliant on the EU single market and, I stress, the UK single market—we cannot split one from another in terms of their importance to our economy. We need clarity and we need a plan for how to deal with the situation that we are in. The issue is too important to be used for political grandstanding.

Photo of Keith Brown Keith Brown Scottish National Party

On that point about clarity, can the member make it clear whether he supports maintaining membership—I stress membership—of the single market, which I think that he voted for on 27 September, or now agrees with Jackie Baillie’s new position of simply seeking access to the single market? Which is it?

Photo of Daniel Johnson Daniel Johnson Labour

The position is not new. We are seeking clarity about how we maintain access to the relevant markets for our industries.

I want to talk for a few moments about financial services, an industry that is incredibly important to my constituency of Edinburgh Southern, and which I will use to broaden the argument somewhat. We have heard a number of speakers, particularly from the Tory benches, talk about brand new export deals: £1 billion here, deals with Colombia there. I do not want to do Colombia an injustice, but I find it slightly bizarre that Liam Kerr virtually raises the idea of trade deals with banana or, indeed, coffee republics. That is no substitute for the value of the trade that we have.

The financial services industry employs 100,000 people directly, and another 100,000 indirectly. In Edinburgh, it employs 35,000 people in banking, insurance and pensions. Those jobs are reliant on the passporting rights that those industries enjoy within the EU, by which I mean the ability of a financial institution that is based in one state to be able to sell its services into any other state in the EU.

We think of trade as involving crates on ships, and when we talk of trade deals, we talk of tariffs and the possibility of goods perhaps becoming a little bit more expensive. However, the reality is that the loss of passporting is much more serious than that, because it prevents trade completely. Given the importance of financial services to this country, and our reliance on them, we need to ensure that we maintain access to the single market, because banks are already making decisions. The warnings from the British Bankers Association are clear. Banks are not waiting around to see what kind of Brexit we get; they are already drawing up plans for how to move their operations to ensure that they can continue to trade.

Photo of Liam Kerr Liam Kerr Conservative

I wonder whether Daniel Johnson wishes to reflect on the evidence that we heard in the Economy, Jobs and Fair Work Committee today that passporting rights and issues for banks would not be as significant for Scotland as they would be for the City.

Photo of Linda Fabiani Linda Fabiani Scottish National Party

You are in your final minute, Mr Johnson. [


.] I am terribly sorry, Mr Kerr, I thought that you had concluded.

Photo of Daniel Johnson Daniel Johnson Labour

If Liam Kerr thinks that he can disentangle our financial services industry from that of the rest of the UK, good luck to him.

That brings me neatly to my next point. Throughout all this, we are suffering a great deal from a lack of authority. It is ironic that Murdo Fraser listed all the permutations of Brexit that the Scottish Government was failing to outline, because the UK Government is equally guilty. Likewise, I would put it to the Scottish Government that the jobs in this country are reliant on access to markets. The Scottish Government needs to stop posing a false dichotomy between EU membership and UK membership. As I have just pointed out to Liam Kerr, the valuable jobs that we have in this city and country are reliant on access to both the EU single market and the UK.

Photo of Emma Harper Emma Harper Scottish National Party

Since joining the Culture, Tourism, Europe and External Relations Committee, I have learned, and continue to learn, more about trade agreements than I ever thought I would, and how crucial trade is to our economy.

Listening to witnesses and reading evidence, the overriding message I receive is that the European Union has been the most successful attempt at regional economic integration within the World Trade Organization. To replicate that success outwith the EU will be a challenge indeed.

I represent South Scotland, a region that has benefited profoundly from membership of the single market in terms of agriculture and the food and drink sector. I am acutely aware that the best way to protect the interests of my constituents, and the rural economy, is to maintain that membership. I have spoken to several farmers and dairymen who tell me that the threat of a hard Brexit is very likely to damage their business. They tell me that although subsidy is important and it supports and allows for new ventures and improvements, trade is the key. Trade is the bedrock that their businesses stand on.

In a recent report, passed to me by a dairy farmer in Dumfries and Galloway, the Agriculture and Horticulture Development Board concludes that trade between the EU and UK dominates Scotland’s agricultural sector. That makes access to the single market imperative to the economy in the south of Scotland.

As most of you will be aware, without the UK-EU agreements, standard World Trade Organization most favoured nation rules would apply, so UK exports would be subject to EU tariffs and vice versa. Those tariffs would be especially harmful to the agricultural sector.

As a note, I am not sure where all the farmers of the chamber are today. Agriculture is extremely important when you are talking about trade.

Professor Stephen Woolcock, of the London School of Economics, estimates that the trade-weighted average EU tariff is 22 per cent on agricultural products, compared to 2.9 per cent on manufactured goods. Professor Woolcock also estimates that there could be tariffs of approximately 42 per cent on dairy products. The two major dairy processors in the UK are European, and those tariffs could prove crippling to them.

As well as threats, there are opportunities as we move forward. It is important to acknowledge that Scotland’s brand is strong when it comes to food and drink. Developing trade with other markets outwith the EU is of key importance, particularly for the dairy industry. However, the fact remains that it is in the best interests of Scottish producers to avoid EU tariffs. Of course we can still trade without membership of the single European market, but the reality is that we will always be at a disadvantage compared with our main competitors.

Another issue of critical importance that was raised with me recently by representatives from NFU Scotland is that of EU nationals working in Scotland in the food supply chain. Specifically, concern was expressed to me about the uncertain future of Polish dairymen in Dumfries and Galloway. They are extremely skilled workers who make a vital contribution and both employers and workers need a guarantee that they can stay and work in Scotland.

Sadly, they have been offered no hope by those on the Conservative benches. Last month, those in the House of Commons voted against an SNP motion to protect the rights of EU nationals. Safeguarding the rights of people from other EU countries to remain here is a moral imperative and an economic necessity, but free movement remains a sticking point for Theresa May’s Government, which is intent on ignoring the tremendously valuable contribution of EU nationals in the UK in favour of anti-immigration rhetoric.

It is vital that the Scottish Parliament shows a united front in backing Scotland’s continuing membership of the EU single market so that Theresa May receives the message that Scotland’s interests must be protected during Brexit negotiations. Unfortunately, we cannot rely upon Scotland’s man in Westminster to relay that message to his boss. In an appearance before the Culture, Tourism, Europe and External Relations Committee last month, the Secretary of State for Scotland, David Mundell, was alarmingly unable to answer straightforward questions about the input that he will have into the Prime Minister’s Brexit cabinet committee. When it was revealed last month that the UK Government was seeking a special deal to keep the City of London in the single market, I and my colleague Joan McAlpine contacted Mr Mundell to ask him to match those attempts by pressing for a deal for workers and business in Scotland.

The Deputy Presiding Officer:

You have to close now.

Photo of Emma Harper Emma Harper Scottish National Party

Almost one month later, we are yet to receive even an acknowledgement. That is an indication of how seriously Mr Mundell takes his role of representing Scotland in the negotiations.

Photo of Graham Simpson Graham Simpson Conservative

My first speech in the chamber came before the vote to leave the European Union and it was on that very subject. It came less than a month before the vote and I would like to think that my prophetic words had some influence here, particularly on my good friend Alex Neil, and perhaps a few others.

I welcome the setting up of a cross-party group on Brexit.

Much guff was talked during the campaign and much more has been talked since. We have heard plenty in this chamber. Let us get one thing clear: Scotland did not vote to remain in the EU. The UK voted to leave and Scotland voted to remain in the UK. The UK is the member state and it is the UK Government that will do the deal on leaving that rotten organisation.

Photo of Keith Brown Keith Brown Scottish National Party

On the subject of guff and the UK Government, does the member agree with Liam Fox’s statement that British business is “too lazy and fat” and with Liam Kerr’s statement—he has just left the chamber—that the passporting issue is not significant to Scotland?

Photo of Graham Simpson Graham Simpson Conservative

I will go on to discuss trading opportunities for the minister.

We in Scotland and in Parliament should have an interest in Brexit because we stand to gain a great deal, such as extra powers in agriculture and fisheries, for example, and an end to meddling from Europe in this Parliament’s decisions. It is those powers that the Scottish Government’s Mr Brexit, Mike Russell, should be concentrating his efforts on, instead of posturing and agitating.

Mr Russell is a skilled operator and he could bring home the bacon—British, of course—if he applied himself in a more positive manner. Instead, he acts like the big bad wolf, huffing and puffing, but failing to blow down the Brexit house. If he carries on like this, he will be out of breath soon.

There is a better and healthier way for Mr Russell and the Scottish Government to go about their business that will bring positive results for Scotland. Instead of whining about Scotland having its own deal on the single market, they should work with the UK Government to identify new trading relationships that could help Scottish business. There is whole world of opportunities out there waiting to be grabbed.

Only 6 per cent of British companies do any business at all with the rest of the EU, but 100 per cent of our firms must apply 100 per cent of EU regulations. Our aim should be to exempt the 94 per cent from EU directives and regulations.

When we talk about the single market, most people think that it means one big free trade zone. It is, in fact, one big regulatory zone. Access to the single market and membership of it are two different things.

Britain, as a relatively large economy that exports more to non-EU than to EU markets, could easily trade freely with the single market without belonging to it. We need to look at Brexit as an opportunity, not see it as a hindrance. It is an opportunity to look outwards and strike trade deals with the rest of the world.

Whatever people thought about the outcome of the US election, the President-elect stated during his campaign that, under him, America would be first in line to sign a post-Brexit trade deal. Given that the US is our largest export market, such a deal would be hugely beneficial. The US is just one country that the EU has failed to strike a trade deal with, meaning that we do not have one either. India and Japan—both massive markets—are others. However, now we can do our own deals.

We could look, for example, to the Commonwealth, where we have obvious historical links. It also has similar legal frameworks. As part of the UK, we have an incredible opportunity to strike out with renewed entrepreneurial zeal. We can do a deal with the EU; it will do a deal with us. We can be free to choose our new trading partners—free from the shackles of Brussels—so let us grab that opportunity.

Photo of Gordon MacDonald Gordon MacDonald Scottish National Party

There are three key pillars to Edinburgh’s economy—the university sector, financial services and tourism—which are all dependent on the EU to varying degrees for funding, trade or a skilled workforce. If we do not remain in the single market, there is the potential for those sectors to be undermined, which will impact on the Edinburgh economy.

The Institute for Fiscal Studies produced a report in August entitled “The EU single market: the value of membership versus access to the UK”. The report states:

“Full ‘membership’ of the EU Single market substantially reduces the costs of trade within the EU.”

It continues:

“Whilst any country has ‘access’ to the EU as an export destination, membership of the Single Market reduces ‘non-tariff’ barriers in a way that no existing trade deal, customs union or free trade area does.”

I will address the impact on Edinburgh. Across Scotland, 13,000 EU nationals are studying at higher education institutions. Many of them are based in Edinburgh, where there are four universities. Edinburgh university alone has 4,700 EU undergraduates and another 1,000 EU postgraduate research students who are being supported in their studies by an academic staff, a quarter of which are EU nationals.

Alastair Sim highlighted at the Economy, Jobs and Fair Work Committee meeting on 8 November that there are

“4,600 EU staff in universities, across academic and professional disciplines”.—[

Official Report, Economy, Jobs and Fair Work Committee

, 8 November 2016; c 25.]

He pointed out that those staff have long-term unanswered questions. If they are given the right to remain, what will happen to their access to public services—will they be able to access them on the same basis as UK citizens?

If salary thresholds are in place for tier 2 visas, researchers at the start of their academic careers would fall beneath those thresholds. Alastair Sim said that we need to ensure that the many early-career people who have modest salaries but huge talent to offer can remain in this country. He also commented:

“Free movement of talent is the life-blood of universities and we do not want it to be restricted.”—[

Official Report, Economy, Jobs and Fair Work Committee

, 8 November 2016; c 29.]

The university and research sector in Scotland has access to £95 million per year of research funding. Assurances have been given by the UK Government regarding existing funding but what happens post-Brexit? Edinburgh university has identified that Europe is the university’s biggest collaborator and a third of research is co-authored by EU members. If we are outside the single market, how will our universities gain access to EU funding? Will they be junior partners? If so, will they lose the ability to influence future research policy?

Another aspect of the Edinburgh economy is financial services, where it is estimated that 35,000 people are directly employed out of 90,000 across Scotland. A report by the international public policy institute at the University of Strathclyde highlights that

“the financial services industry ... contributes around £8 billion a year to the Scottish economy”.

The financial services sectors that may be impacted by Brexit relate to asset management. Scotland provides asset management services to clients around the world, including the EU. The report notes that

“an investment fund managed in Scotland can attract investors from all over the EU” and states that, if we were outside the single market, such funds could lose their exemption from national regulations in individual EU countries. It describes how

“Scotland is the leading centre for asset servicing”,

in which large international banks carry out operations for other financial institutions, and states that

“These companies may see a disadvantage with dealing with companies in Scotland if” we

“no longer have passporting rights.”

In its briefing, the Association of British Insurers states:

“Any future migration policy must enable the employment of high-skilled professionals from both inside and outside the EU.”

Given the difficulties facing the sector, it should come as no surprise that Jenny Stewart of KPMG recently highlighted at the Economy, Jobs and Fair Work Committee that, following the Brexit decision,

“Dublin, Frankfurt and Luxembourg are making a play for financial services institutions.”—[

Official Report, Economy, Jobs and Fair Work Committee,

1 November 2016; c 30.]

Tourism is another important part of the Edinburgh economy, with approximately four million visitors a year injecting £1.3 billion into the local economy. The hotel sector is booming, and occupancy levels were running at 92 per cent for most of the summer. However, the Edinburgh hospitality sector depends on EU nationals to service that demand, with 7,000 working in the sector. Why is it that, while most academic studies show that attracting skilled migrants to the country is good for the long-term health of the economy, the UK Government believes the opposite?

The Deputy Presiding Officer:

Please, Mr MacDonald.

Photo of Gordon MacDonald Gordon MacDonald Scottish National Party

I am just finishing. The people of Scotland voted overwhelmingly to remain in the EU, and we need this Parliament to send a united message that Scotland must remain in the single market.

Photo of Willie Rennie Willie Rennie Liberal Democrat

The debate has been pretty good and we have heard some good contributions. Bruce Crawford highlighted the 80,000 jobs in Scotland that depend on the European Union and Jackie Baillie spoke about the benefit from the United Kingdom’s significant contribution of jobs to our economy. Ash Denham said that everything has been on hold for the past while—it will be a year by the time the UK Government makes up its mind about what Brexit means. Stewart Stevenson read out a lot of numbers and concluded that he did not know what any of them meant. [



Photo of Willie Rennie Willie Rennie Liberal Democrat

I use only the member’s own words.

Bizarrely, we heard the Conservative Alexander Stewart say that everybody else is obsessed with the European Union, which I find remarkable given that it is all that the Conservative Party has been obsessed with for the past 30 years.

The final contribution in the open debate, from Gordon MacDonald, was excellent. He spoke about the benefit of the European Union to our university sector, which is important to me given that the University of St Andrews is in my constituency. The EU benefits universities in terms of grants, students and staff. The risks to those areas are considerable, and we can already see behavioural change in all three of them as a result of the vote. European leaders of grant-funded projects are turning away from United Kingdom institutions; students are making up their minds about whether they want to come here; and staff members are thinking again about coming to a UK university and committing to spending a considerable time in the UK.

The threat to universities is considerable, as it is to the food and drink sector. Richard Lochhead spoke about those risks, and Emma Harper spoke about Polish dairymen. All those issues, concerns and fears are incredibly valid, and we need to work through and try to resolve them. However, I gently say to the members who raised those issues that their points could apply equally to our membership of the United Kingdom. We were accused of running project fear when similar concerns were raised about what independence would mean for Scotland, so a bit of self-reflection in that respect would do no harm.

Keith Brown urged us towards unity, but I am afraid that I will have to decline on that front. The last time that I was asked to unite on Europe was by the First Minister, who promised me on the phone that it was not about independence—

Photo of Willie Rennie Willie Rennie Liberal Democrat

Murdo Fraser says, “Sucker,” perhaps because the First Minister spent the whole summer talking about nothing else but independence. That is why we are no longer signed up to that effort.

I am disappointed that the First Minister could not keep her word, try to have a cross-party consensus to explore all the options and respect those who are against independence. That is why we will decline Mr Brown’s offer today of unity.

The SNP’s approach has been bedevilled by one central problem, which is that it thinks that the only solution available is the solution that is for Scotland only. It does not contemplate that a UK-wide solution is possible. I have not given up on the UK and I will not give up on it.

I am worried about Murdo Fraser, who seems to be enjoying Brexit far too much. The language that he uses now is the language that Nigel Farage and Michael Gove used before the referendum. Mr Fraser spends all his time trashing the European economy. Liam Kerr joined in and used all the old scare stories about beef and the energy sector; Alexander Stewart did likewise on the declining fortunes of the European economy.

Photo of Willie Rennie Willie Rennie Liberal Democrat

Yes, although if the member is going to give me more European trashing, I am not so sure.

Photo of Murdo Fraser Murdo Fraser Conservative

I am most grateful to Mr Rennie for giving way. The difference between him and those of us in the Conservatives is that we are democrats and we accept the outcome of the referendum and the decision that the British people made. Mr Rennie claims to be a Liberal Democrat—is he now just a liberal?

Photo of Willie Rennie Willie Rennie Liberal Democrat

I presume that Mr Fraser will not support our amendment and will deny the people the democratic choice to decide on the destination following the Brexit deal negotiations. If he calls himself a democrat by denying them that choice, that is his definition of democracy, but it is certainly not mine. He may be right that we voted for Brexit—that we voted to leave the European Union—but we did not vote for a destination. That is why the British people should have a say.

Perhaps Mr Fraser should also reflect on being a bit too enthusiastic about trashing an institution that he urged everybody else to stay a member of just before June.

Photo of Willie Rennie Willie Rennie Liberal Democrat

Not just now. I will not give up on the United Kingdom and I will not give up on the European Union. That is why I favour having a Brexit deal referendum. I am not prepared to write a blank cheque and accept anything that comes along—anything that the Conservative Government negotiates, no matter how bad the deal. We need to have a get-out clause. That get-out clause needs to be the British people having a say on the final deal. If SNP members want to reject that, that is up to them. If the Tories want to reject that, that is up to them, too, but the British people will regret that decision by both those parties.

I urge the SNP to get behind the campaign. The SNP holds a large number of seats at Westminster and, if it is true to its word that it wants to stay in the European Union, it should use those votes to have the Brexit deal referendum.

Photo of Richard Leonard Richard Leonard Labour

In closing the debate on the Scottish Labour Party’s behalf, I will make a couple of points. First, leaving the European Union does not mean leaving Europe. We are in Europe whether we like it or not and we are about to re-enter a Europe of Belgrade and Reykjavík and of Zurich and Oslo. We will need new dialogue, new exchanges, new trade and a new destiny. I say to Graham Simpson that I hope that that new destiny does not include a transatlantic trade and investment partnership.

Bruce Crawford asked about the Labour Party’s position on membership or access. The Labour position is not, as he suggested, nuanced. It is that we need the fullest possible access to the single market. As was privately briefed to the BBC this morning from an SNP source, that might, for example, mean joining EFTA, which in turn would allow us to become a member of the European Economic Area. We would not be members of the EU or the single market, but we would have maximum access to the single market.

Of course, the word “nuanced” might not be in the SNP dictionary, because the SNP motion calls for membership of the single market, which means membership of the EU, and in the SNP’s book that means the creation of Scotland as a separate state. That is why we cannot support the motion.

Photo of Richard Leonard Richard Leonard Labour

I do not have time just now—I am sorry.

During the debate, we heard again about businesses and even industries in Scotland that have become reliant on migrant labour from elsewhere in the European Union and particularly from the 2004 accession states. We heard that leaving the single market would put those enterprises in jeopardy. However, the Parliament is bound to ask such business owners, “What did you do before 2004?” Access to a talented and skilled workforce is highly desirable, but surely there is a leadership role for the Scottish Government and its agencies, such as Skills Development Scotland, in ensuring that there are no skills gaps and that we are educating and training people for the jobs of the future.

It is also the Parliament’s duty to ask about the scrupulousness of businesses that are looking for the freedom of movement of capital and cheap labour, because we must guard against that. A market—single or otherwise—does not have its own moral compass; it is for us to formulate and direct it.

Members have rightly praised Ken Loach’s Palme d’Or-winning film “I, Daniel Blake”, and a few of us even appeared in a trailer for the film. I direct members to the film that Ken Loach made in 2007 about European Union enlargement—“It’s a Free World...”. In that film, Ken Loach and Paul Laverty showed how migrant workers from EU accession states are hired, fired, mistreated and underpaid with impunity. They showed us that migrant workers are on temporary contracts of employment, if they are on contracts at all, and that they are hired through employment agencies, payroll agencies and umbrella companies—outsourced and subcontracted.

Anyone who believes that such exploitation does not happen in Scotland is deluding themselves.

Photo of Patrick Harvie Patrick Harvie Green

The member makes a strong case for a good standard of regulation of employment practice rather than varying standards of employment practice in different European countries. I genuinely still want to understand the Labour position. If maximum access to the single market means free movement of labour, goods, capital and services and a common approach to external tariffs, competition and regulation, how is that different from membership? Is it just that we do not get a say in the rules? Is there some other difference that Labour is looking to achieve?

Photo of Richard Leonard Richard Leonard Labour

The difference is that people did not vote for membership. People voted to come out—

Photo of Patrick Harvie Patrick Harvie Green

They were not asked about membership of the single market in the referendum.

Photo of Richard Leonard Richard Leonard Labour

We will come on to the referendum in a second.

On the treatment of workers in this country, we want to say loud and clear to migrant workers, who make a big contribution not just to our economy and our Exchequer but to our society, our communities and our public services that we are on their side and we want them to stay and make this country their home. That is why Labour members today repeat our call to the Conservative Government to confirm the existing legal status of all European Union citizens who live and work here.

We also want all workers, whether they are skilled or unskilled, to be paid the rate for the job. We want all workers to be treated with dignity, to be paid overtime when they work overtime, to be allowed to join a union, to have secure employment and to have holiday pay and sick pay. We do not think that that is too much to ask for.

I say to the cabinet secretary that that is not simply about Scotland plc or Scotland being “open for business”, as he put it—as if money and the maximisation of profit were the be-all and end-all. It is about the kind of country and the kind of society in which we want to live. In the end, that will require a change in the balance of power in industry and commerce, so that working people, whoever they are and wherever they are from, are not just hired hands but citizens of industry as well as society.

Next year will be the 60th anniversary of the treaty of Rome and the 30th anniversary of the enactment of the Single European Act. Keith Brown praised Margaret Thatcher for bringing in the Single European Act. That act introduced qualified majority voting to provide for the free movement of capital and services, opened up public procurement contracts and centralised common customs tariffs, but unanimity was still required to give working people social and employment protection.

Around that time, Italian economist Paolo Cecchini produced the report “The cost of non-Europe”. We now need our own plan to make our own assessment of the regional and sectoral impacts of being outside and inside the single market. Incidentally, the export figures that we quote are the Scottish Government’s figures from its own surveys and its own input/output tables. We need to act not just defensively but affirmatively so that we can proceed, step by step, with an element of trial and error, bold and confident. We need to rise to the call—the circumstances that we find ourselves in demand that of us. I hope that we can unite around that, at least.

Photo of Dean Lockhart Dean Lockhart Conservative

I welcome this 11th debate on Brexit and the discussion on the implications for our trading relationships. I also welcome the speeches that members from across the chamber have made, although I highlight the irony of Mr Brown lecturing others on trade policy after a week in which the SNP has been called “the Scottish shambles” by senior Chinese trade officials. It looks as though Mr Brown’s policy of internationalisation is finally paying off—previously, only people in Scotland referred to the SNP as a shambles; now the rest of the world is joining in.

Not only has the SNP upset global investors in Asia; it has suddenly found itself in the position of having a deeply damaged relationship with the newly elected President of the US—a new President that the SNP recently sacked as a trade ambassador and even wanted to ban from entering this country. Following a week in which the SNP has managed to damage our trading relationships with the largest and second largest economies in the world, its lectures on trade policy are wearing a bit thin.

After 11 debates on Brexit, the differences between our approach to Brexit and the approach that is taken by the SNP are clear. First, we respect and will follow the democratic vote that was taken by the UK electorate to leave the EU. Unlike the SNP, we respect the outcome of referendums. As Graham Simpson highlighted, the UK is the member state and the UK voted to leave. It is now time for the SNP to recognise that as well and to work positively with the UK Government to secure the best possible trade deal for Scotland. Last week, the Irish Government made that very point when it said that it would discuss Brexit only with the UK Government and not with the SNP.

Photo of Dean Lockhart Dean Lockhart Conservative

I will later.

If SNP members do not want to listen to our friends in Ireland, I am sure that they will listen to their esteemed colleague Alex Neil, who reminded us recently that Scotland cannot “retain” EU membership because it is “not the member state”.

The second issue on which we disagree with the SNP is trade priorities. As several of my colleagues have mentioned, our priority is to secure and expand our relationship with the rest of the UK—a market that represents 65 per cent of our trade exports. I know that Mr Brown is not an economist, but surely he recognises that a market that is worth 65 per cent of our exports is more important than a market that is worth 15 per cent—that is simply true.

The priority of trade with the rest of the UK has been emphasised by various experts at the Economy, Jobs and Fair Work Committee. The representative of SDI commented last week:

“it will be paramount that we protect free trade or the open market with the rest of the UK.”—[

Official Report, Economy, Jobs and Fair Work Committee

, 8 November 2016; c 21.]

At the same time as protecting the UK single market, we want to retain the maximum possible access to the EU single market, which accounts for 15 per cent of our exports.

In another key difference between us and the SNP, we also want to significantly expand our trade opportunities with the rest of the world—which represents 20 per cent of our exports—through exploring new trade deals. As Liam Kerr mentioned, there is great potential for trade agreements with countries such as the US, China and India.

Photo of Willie Rennie Willie Rennie Liberal Democrat

I agree with the member about our relationship with the rest of the United Kingdom. However, if the deal with the European Union that his Government negotiates is not really good enough and harms jobs and opportunities, will he just accept it?

Photo of Dean Lockhart Dean Lockhart Conservative

Given that the UK has the second largest economy in Europe and the fifth largest economy in the world—as well as the fastest-growing economy in Europe—I am confident that we will strike a deal that is good for the UK but also for Scotland.

Photo of Dean Lockhart Dean Lockhart Conservative

I will later.

In contrast, as Jackie Baillie rightly highlighted, the SNP wants to turn its back on the UK single market and is clearly using Brexit as a political football to agitate for a second independence referendum.

Another key difference between our approach to Brexit and that of the SNP relates to our future relationship with the EU. We have made it very clear that we want to secure the maximum possible access. However, as Murdo Fraser has highlighted, in not one of the 11 debates that we have had on Brexit has the SNP clarified what outcome it is trying to reach.

Perhaps Mr Russell can clarify in his closing speech what the SNP’s objectives are. Does the SNP seek membership of the EEA or the European Free Trade Association? Does it want to adopt the Norwegian model, the Swiss model or some other model? Alternatively, is the SNP really planning for independence within the EU, which would involve adopting the euro and joining the Schengen zone?

Photo of Daniel Johnson Daniel Johnson Labour

The member is absolutely right. We need clarity on which option we intend to pursue, so which option does his party favour? It is far from clear to me that the Conservatives have made that clear.

Photo of Dean Lockhart Dean Lockhart Conservative

I think that I made it clear to Willie Rennie that we will negotiate for a bespoke agreement that works for the UK. The Prime Minister has made it clear that we will aim to get the maximum possible access to the single market.

Photo of Dean Lockhart Dean Lockhart Conservative

I am sorry—Ms Denham has now asked me to give way a couple of times. Let me just make a bit of progress and then I will.

The final area in which we take a different approach from the SNP is that we want to highlight the global trade opportunities that will arise from Brexit. In every Brexit debate, it has been left to the Scottish Conservatives to highlight the trade and export opportunities. We are the ones who have called on the SNP to take action, but we have had nothing from the SNP in response. There has been no export action plan, no real change in economic policy and no leadership on new business.

Photo of Ash Denham Ash Denham Scottish National Party

The member is quick to criticise the Scottish Government’s lack of a plan. Would he accept that it is completely unacceptable that the UK Government, which has brought the current situation upon Scotland, has no plan at all after five months, and has no plan to bring one forward in the next few months?

Photo of Dean Lockhart Dean Lockhart Conservative

The polls have shown that a significant number of SNP voters voted leave, so Ash Denham cannot blame the situation on others. [



The Deputy Presiding Officer:

I am sorry, Mr Lockhart—I cannot hear you because the colleague beside you is screaming.

The Deputy Presiding Officer:

You have two and a half minutes left.

Photo of Dean Lockhart Dean Lockhart Conservative

Thank you very much.

Let us highlight further opportunities that are available. At this morning’s meeting of the Economy, Jobs and Fair Work Committee, we heard about the massive opportunities that we have to increase trade with Asia—

Photo of Dean Lockhart Dean Lockhart Conservative

No, thank you—I have taken enough. [



The Deputy Presiding Officer:

Ms Martin, the member said no. Please sit down.

Photo of Dean Lockhart Dean Lockhart Conservative

Asia accounts for two thirds of all global economic growth, but less than 2 per cent of Scotland’s exports go to China and just over 1 per cent go to Japan and India. There are significant opportunities there, so it is time for the SNP to move on from its post-Brexit denial, show real leadership in the Scottish economy and provide hands-on help to increase our exports.

I will conclude by reflecting on an eventful week in the context of trade and Brexit. In the course of the past week, we have discovered that, in Asia, the SNP is now known as “the Scottish shambles”. With regard to the US, the SNP will have to work hard to mend its deeply damaged relationship with the incoming US President. We should remind ourselves that the US is our largest international export destination market.

Closer to home, the Irish Government has made it clear that Scotland is not the member state and that it will negotiate only with the UK. Even closer to home, we found out that we have a number of silent SNP Brexiteers in our midst in this very chamber. Surely that must end once and for all the SNP’s grievance agenda over Brexit. The SNP can no longer blame the leave vote on others when a number of its MPs and MSPs, and a significant percentage of SNP voters, voted leave.

I say to the SNP that it should stop using Brexit as a political football, stop damaging our trading relationships and our reputation as a place to do business, and start acting in the best interests of Scotland as a whole, rather than in its own narrow and parochial political interests.

The Deputy Presiding Officer:

I call Michael Russell to close the debate. I ask you to finish speaking at 4.59, please.

Photo of Michael Russell Michael Russell Scottish National Party

Thank you, Presiding Officer. I shall do my very best to do so.

I will begin at the beginning. What is the single market? The best definition of that was given by Daniel Johnson, who I thought traced the background to the single market very well. Let us remind ourselves of what the single market is based on. It is based on the free movement of goods, the free movement of services, freedom of establishment, the free movement of persons, including the free movement of workers, citizenship and the free movement of capital. The purpose of the free market is to underpin a fair and equitable system. It is ruled by the European Court of Justice, and that is the problem, because the European Court of Justice is not a body that the Tories wish to have any say within these islands. They also do not wish to see migration take place within these islands.

Those are the two issues that are at the heart of the matter, because there is nothing objectionable about the single market. Indeed, Keith Brown pointed out that, to a great extent, it was created by conservative forces that wanted to see greater trade between the countries of Europe but knew that that would happen only if there was fair competition within that market. That is what the single market actually is, and to object to the single market is to object to the economic benefits that are experienced by these islands. They have also been experienced by the rest of the continent as the single market came into effect gradually over a period of time.

The single market is not a threat, but we have heard a great deal this afternoon about a dichotomy—Daniel Johnson rightly called it a false dichotomy—between the single market and trade within the UK. There is no dichotomy; indeed, the only people who raised it previously were the better together forces during the independence referendum, who referred to it repeatedly and tried to make it something that people would use in making their choice. However, there was no choice to be made in that regard. It would be perfectly possible to have arrangements north and south of the border that allowed freedom of movement—just as it is perfectly possible to have an arrangement with Europe that has the benefits of membership of the single market. Those things are absolutely doable.

Why we have we heard so much about the issue? Clearly, it is because it is a political issue for both Labour and the Tories. It is an issue of politics, not economics. The problem is that if we make it a political issue in the way that the Tories and Labour have done, we will damage the very heart of Scotland’s economic prospects. That is the problem with the way in which both Labour and the Tories have approached the issue in the debate.

Photo of Murdo Fraser Murdo Fraser Conservative

Mr Russell might dismiss voices from the Conservative and Labour sides of the chamber, but how can he so easily dismiss the views of the constitutional expert Professor Michael Keating? He said today that it is impossible for Scotland to join the European Economic Area while the rest of the UK remains outside it without introducing a hard border between the two. Why does Mr Russell think that Professor Keating is wrong?

Photo of Michael Russell Michael Russell Scottish National Party

I am not here to debate academic opinions. I am here to say that it is possible to do both things, and many experts will argue that it is possible to do both. The reality is that, as with most things in Europe, it is possible to get a solution that is both political and legal, if the will is there to do so. The position of both the Tories and Labour is about their obsession with independence and absolutely nothing to do with Europe and what we need to do.

Photo of Michael Russell Michael Russell Scottish National Party

I was just about to mention the Labour position, but I am happy to give way to Jackie Baillie.

Photo of Jackie Baillie Jackie Baillie Labour

The minister will know that we support a special deal for Scotland, Wales and Northern Ireland, but can he comment on comments made by Dr Fabian Zuleeg, of the European Policy Centre, who is also a member of the First Minister’s standing council on Europe? Dr Zuleeg said:

“If the UK leaves the single market, I think that it is highly unlikely that any part of the UK will get a special deal to remain in the single market.”—[

Official Report, Economy, Jobs and Fair Work Committee,

1 November 2016; c 43.]

That is very disappointing, but does the minister agree with the First Minister’s own adviser?

Photo of Michael Russell Michael Russell Scottish National Party

I know Fabian Zuleeg well and I will continue to debate these matters with him. We are looking at difficult situations, but that is so because of the difficulties created by what the Tories have done, as Jackie Baillie said in her speech. However, difficult does not mean impossible; difficult means a great deal of hard work.

I value Labour’s support for the position that we have taken. I am sorry that that support is not clear this afternoon, because I have in front of me five motions on maintaining membership of the single market that the Labour Party voted to support. That is not what Labour is arguing this afternoon, but I am a person who is full of hope and I hope that Labour will return to ensuring that it supports a cross-party initiative in this area, because that would be valuable.

I say to Willie Rennie that I greatly enjoyed his first speech in the debate—if only he had stopped there. His first speech was very productive. It focused exactly on what the problem is—and was: in the referendum campaign, a false prospectus was put in front of the people. The people of Scotland saw through it, but it was a false prospectus. Murdo Fraser said at the weekend that he was looking forward to standing shoulder to shoulder with Willie Rennie. Given Willie Rennie’s first speech, Murdo Fraser would be presented with a very cold shoulder indeed.

Photo of Michael Russell Michael Russell Scottish National Party

If Mr Rennie will allow me to finish, I will let him in in a moment.

Alas, Mr Rennie’s shoulder got a bit warmer as the afternoon went on, when he began to fear that he was being seen as too close to independence. I would advise him to stick to his first speech because, if he does that, we might be able to find a way through for Scotland and the rest of the UK.

Photo of Willie Rennie Willie Rennie Liberal Democrat

The best way through this is for the SNP members in the House of Commons to join our effort to have a Brexit deal referendum so that we do not have a blank cheque Brexit. That would be the way to get some consensus on the issue. Will the minister encourage his members in the House of Commons to do that?

Photo of Michael Russell Michael Russell Scottish National Party

I would never presume to bind my colleagues in the House of Commons. It would be a harder job for me, of course, because there are 50-something of them, as opposed to simply eight for Willie Rennie. However, I would commend further discussion between the SNP group and the very small Liberal group at Westminster. They could find a phone box or something and have that conversation to see whether they could take this forward. I do not oppose that in any way.

Let me conclude with some observations about the debate. I have quite important observations on the Tory position. A number of Tory members spoke about huge opportunities that exist elsewhere, and a number of them were foolish enough to talk about the United States and India. Those two countries now stand as a microcosm of the problems that the Tories have set themselves.

Let us start with the United States. No less a figure than Sir Malcolm Rifkind clearly pointed out today that the problem with looking to the United States for free trade is that it has now elected the most protectionist President in a century. Free trade does not run in Donald Trump’s veins. Protectionism runs in his veins, and trying to build a future on the basis of a relationship with a protectionist United States strikes me as a very worrying thing to do.

There is even worse. India was mentioned several times. I have two quotes. The first is from an article by Mihir Sharma from last week about the Prime Minister’s visit to India, in which he said:

“this fond hope that Britain can once again be a goods-exporting powerhouse mistakes the kind of economy the UK needs to become post-Europe. The global economy today hardly needs or can support another high-cost location for manufacturing.”

His point is that, in reality, the economies of the future are based on people and ideas. Of course, the Prime Minister did not waver for a moment in her objection to migration, but the UK cannot become that type of economy because of its obsession with migration.

More deadly still was Sir Keith Burnett, the vice-chancellor of the University of Sheffield, who explained in a remarkable piece in

Times Higher Education why he was—I use his word—“ashamed” of having been part of the Prime Minister’s trip to India. He saw the decimation of higher education as a result of that obsession with migration.

I say to those who argued that position—to Liam Kerr, Alexander Stewart and others on the Tory benches—that this is very close to T S Eliot’s definition of tragedy: it is something funny that is then no longer funny. Two weeks ago, Liam Kerr talked about Trafalgar and the wooden walls, and last week he talked about the debate on EU staff in the NHS being meaningless. Today, he talked about the single market being a chimera and about passporting as not being significant. That belief in things that are not real and opportunities that are not real will lead us to disaster.

Graham Simpson gave me some advice and asked me to bring home the British bacon. Let me give him and his colleagues some advice. They should wake up from the dream of empire, from the delusion of absolute control and from the isolationism of Brexit. They should join the world or they will severely let down, particularly in terms of their prospects, the very people they were elected to represent.