Internal Market

Part of the debate – in the Scottish Parliament on 30th July 2020.

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Photo of Michael Russell Michael Russell Scottish National Party

On 16 July, the United Kingdom Government published a white paper on the UK internal market. The Scottish Government believes that the unilateral proposals that are made in that white paper, without proper consultation of the devolved Administrations, are unacceptable and unnecessary. I am therefore grateful for the opportunity to make a statement on the matter.

Once we have seen the final proposed legislation, the Scottish Government will provide a full and comprehensive rebuttal of what is intended. However, there is enough in the document, and enough information is now coming from stakeholders about their concerns, to make us believe that we must immediately start the process of defending Scotland against such a blatant power grab.

The UK Government is allowing only four weeks for consultation on its proposals in the paper. That is clearly inadequate and is likely to prevent proper scrutiny. Therefore, I say at the outset that, although we will submit within that timescale a clear note of our opposition to the proposals and will circulate it widely, we will also publish more comprehensive information as the issue unfolds, and particularly once the legislative consent process is under way.

The purported purpose of the proposals is to secure

“a UK-wide approach to ensure that the seamless trade across the UK’s Internal Market is maintained by providing a Market Access Commitment”.

However, there is in fact no threat to that “seamless trade”, so this is a naked political ploy—a predetermined and draconian solution in search of a non-existent problem.

Two principles that are well known in European Union law—mutual recognition and non-discrimination—are to be enshrined in the new legislation, but far from

“minimising domestic trade costs, business uncertainty and bureaucracy” and “protecting” our national life, enforcing those principles in the way that is proposed will increase bureaucracy and make life more difficult for every business and consumer in Scotland.

The real threat to the prosperity of these islands comes not from the devolved Administrations, but from the current UK Government. It is the UK Government that is causing chaos and confusion and incurring massive costs by its ideological pursuit of a hard-deal, low-deal or no-deal Brexit in the midst of the worst recession in centuries and an unprecedented pandemic.

As of today—some five months before the end of a transition period that could and should have been extended—there is no certainty on tariffs, customs, cross-border flows of data and people, or regulations. In fact, the only certainty is that the new proposals would, for the sole purpose of allowing the UK to do bad trade deals, undermine the high quality and standards that Scotland has set for food production and animal welfare.

That point was made effectively by the distinguished European jurist Sir David Edward, who observed that

“the principles of mutual recognition and non-discrimination are not simple matters.”

He noted that,

“For example, the White Paper omits any reference to the principles of proportionality and subsidiarity which are essential ways of balancing and reconciling conflict.”

He also pointed to a huge volume of European case law and other writing on what he calls a

“highly complex and sophisticated subject”.

The proposed changes would undermine not just the basic foundations of devolution, but all existing mechanisms for co-operation, the development of common frameworks and the entire list of devolved competences.

In reality, the actual purpose of the proposals is all too clear: the UK Government intends to ditch the high regulatory standards that we have enjoyed as a member of the EU, and wants to do so without seeking consent from the people of Scotland. We can be sure that that is the purpose of the proposals, because there is already a workable and constitutionally appropriate way forward to deal with any actual issues that might arise from any threats to internal trade, if they were ever to happen. The way forward is to do what we are already doing: to bring into effect the common frameworks that are currently being negotiated between the UK Government and the devolved Administrations, in line with the principles that were agreed in the joint ministerial committee as far back as 2017.

Indeed, the white paper itself, at paragraphs 87 to 94, sets out the common frameworks programme and admits, at paragraph 88, that it is already creating

“an intergovernmental policy development and decision-making process” that will

“provide high levels of regulatory alignment in specific policy areas along with roles and responsibilities of each administration.”

The white paper also points out—correctly—that common frameworks can and do work within the devolution settlements, and that they respect the democratic accountability of the devolved legislatures. The Scottish Government has engaged in good faith with the cross-UK project to develop those common frameworks, in line with the agreed principles. We are not the ones who are now tearing up previous agreements in order to veto constructive discussion and to impose an outcome that is designed and desired only by Westminster.

What the UK Government wants is not smooth trade, but to take back control—not just from the EU, but from the people of Scotland, Wales and Northern Ireland. It certainly does not want anything to stand in its way as it wilfully dismantles the high-quality system of regulation and protection that we have inherited from our years in the EU.

The effect of the proposals would be to prevent this Parliament from requiring goods or services that are produced elsewhere in the UK to meet the standards that are decided on by this Parliament. In other words, if the UK Government can simply change the rules for England—probably by using the English votes for English laws procedure, which excludes Scottish MPs—Scotland would just have to accept that decision. Helpfully, the white paper itself even contains examples of where it could do so.

On page 77, in a section that is headed, “Costs of regulatory divergence”, there is a case study on deposit return schemes. On page 78, there is an example concerning food labelling, and on pages 79 to 82, there is a case study on food manufacturing, which covers food hygiene, recycling, animal welfare and environmental matters including pesticides. Page 82 specifically mentions minimum pricing as a regulatory restriction, and on page 85, the paper discusses building regulations and the granting of construction permits. That is a considerable range, and those are only a few examples.

Of course, the mutual recognition principle is intended to be just that. It is meant to be reciprocal, so that the market in England has to accept standards that are set in Scotland, Wales or Northern Ireland. However, it is very clear that, if that were ever to happen in a way that disadvantaged the current Tory UK Government, we would, before you could say “The tail wagging the dog”, find that only rules that were made in Westminster could change the market in England.

My final points concern the implications of the UK Government’s proposals for devolution and governance. There is no commitment in the white paper to seeking legislative consent from this Parliament, and no recognition that the matters in question are devolved or affect the competence of this Parliament.

The white paper clearly says in paragraph 154:

“the evolution and overall shape of the UK’s Internal Market will be overseen by the UK Parliament, and ... key decisions will be put to the UK Parliament for approval”.

The implication is that anything in the underpinning legislation will be reserved from now on. This Parliament will lose any say, even on matters that were initially excluded, such as minimum unit pricing.

The legislation that is outlined in the white paper will require legislative consent under the Sewel convention, and the Scottish Government will recommend in the strongest possible terms that this Parliament not give any such consent, and that the UK Government respect that decision, in line with the rules of our constitutional system.

The white paper also makes clear the UK Government’s intention to centralise control in other areas. Most notably and explicitly, the white paper sets out its plans to reserve the subsidy-control regime. It makes it clear that the devolved Administrations will have no role in designing that regime and that this Parliament will have no role in approving it. In paragraph 173, it says:

“the future subsidy control mechanisms should be the responsibility of the UK Parliament to determine.”

Reserving subsidy control will require the consent of this Parliament under the Sewel convention; again, the Scottish Government will strongly advise this Parliament to refuse that consent and the UK Government to respect that decision.

In paragraphs 128 and 182, the white paper talks of

“clarifying spending powers of all levels of Government and for the UK Government to construct replacements of EU programmes.”

Again, it does not take much thought to realise that those paragraphs mean, among other things, that the shared prosperity fund will replace devolved responsibility for the current EU structural funds. The intention is that that will become a reserved matter and will be solely controlled by the UK Government.

In all this, a consistent pattern is emerging regarding the Tory view of UK governance, which insists on total freedom of action for the UK Government, unrestrained by any requirement to negotiate or compromise. It wants substantial constraint to be placed on powers that are presently held by the devolved Administrations. That is the agenda, and it is being pursued with vigour.

The Scottish Government is committed to co-operation, but it will not be bullied. There are alternatives to the UK Government’s ill-conceived proposals, including taking the voluntary common frameworks programme to its anticipated conclusion.

None of what I have discussed was mentioned even in passing during the 2016 EU referendum or, indeed, in the 2014 independence referendum. In 2014, we were exhorted to “lead not leave”, we were told that a no vote would deliver a “better and fairer Britain” and, of course, we were assured that our place in Europe was secure. In 2016, we were promised that this Parliament would gain more powers, that we would be free to make our decisions and even—Michael Gove himself said this in June 2016—that, if the UK left the EU, on migration

“it would be for Scotland to decide”,

when the reality is that the UK Government is forcing through an end to freedom of movement against the explicit wishes of this Parliament and the people of Scotland.

Not a word that has been said to us in the past six years about those matters has turned out to be true, so it takes no great prescience to realise that all the promises that are being made now will be equally hollow. It is not too late for the UK to turn back from this route, but I can assure Scotland that if it does not, the Scottish Government will fight the proposals tooth and nail, in every possible place, and with no intention of giving way. I hope that it will enjoy the support of the whole chamber in so doing.