United Kingdom Internal Market

Part of the debate – in the Scottish Parliament on 18th August 2020.

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Photo of Jenny Gilruth Jenny Gilruth Scottish National Party

I have to say that that is completely untrue. In terms of handing back powers to Brussels, what the Tories are planning would be unlawful under EU law. Every single country needs to agree to standards under EU legislation. In this context, we are not being asked for permission or for our views—it is an overriding of this Parliament through a unilateral approach. I do not accept the point that the member makes at all.

I will move on. The UK Government attempts to justify its proposals on the grounds that, having taken Scotland out of the EU and the rules that govern its single market, new arrangements are needed to ensure that trade continues as it does now across the UK. However, UK ministers have not been able so far to provide an example—not a single one—of devolution threatening trade across the UK.

As the Scottish Government’s initial analysis of the “UK Internal Marketwhite paper shows, the reality is that devolution is a driver, not an inhibitor, of prosperity. The white paper’s repeated dogmatic insistence on the danger of barriers to trade sits oddly with UK Government’s decision to remove Scotland and the UK from the EU, which is a prosperous and highly integrated trade and regulatory partnership of 450 million consumers. Of course, that is the real threat to trade and prosperity in Scotland and across the UK.

I want to set out very clearly why those proposals are such a threat to devolution, jobs, businesses, consumers and citizens in Scotland. On devolution, there is an explicit power grab. There is a blatant acknowledgement that the UK Government is going to reserve the devolved policy area of state aid. However, as reported in the

Financial Times

, that is clearly a source of tension in the UK Government. Indeed, an individual close to the discussions was quoted as saying:

“the current plan is an odd combination of reserving state aid (for control from London) but then agreeing to a free-for-all. They just want to be able to bung money at things and do not want UK internal market legislation cutting across that. It is very confused.”

Elsewhere, the UK Government wants to introduce a system in which standards set by Westminster must be accepted in Scotland in devolved areas, utterly regardless of the wishes of the people of Scotland or the votes passed in this Parliament. The implications of that are clear and profoundly worrying.

Scotland’s world-class food and drink industry employs more than 115,000 people across the country and is worth £15 billion a year to the Scottish economy. Its success is built on the quality and provenance guarantees that come with the Scottish brand. Indeed, just the other week, on a visit to the constituency of the Cabinet Secretary for the Constitution, Europe and External Affairs, the UK chancellor described Scotland as one of the UK Government’s “powerhouse brands”.

However, Rishi Sunak did not mention that brand Scotland will be under direct threat from a US trade deal that lowers standards on food safety and animal welfare. He did not mention that that threat exists because the UK Government refused to accept an amendment to its Agriculture Bill that would have protected farming from substandard food imports. He did not mention that, shamefully, all six Tory MPs from Scotland voted against that amendment. Under the UK’s internal market proposals, if Westminster accepts those lower standards, Scotland will be forced to accept them as well. I look forward to Douglas Ross explaining that to the farmers of Moray, when he is not too busy running the line.

There will be the ever-present threat of court action being taken by companies with deep pockets. Paragraph 9 of the white paper says that the proposed legislation will

“guarantee the continued right of all UK companies to trade unhindered in every part of the UK.”

Are private health companies or private water companies operating in England to have a guaranteed right to trade in Scotland? Members should remember that when the Tories say that Brexit will be good for business, those are exactly the types of businesses that they mean. It will be a race to the bottom with “nothing off the table”, to quote Donald Trump.

Those are not just the Scottish Government’s concerns. Despite the ludicrously short consultation period, which, as alluded to in the Green amendment, was just four weeks long and came in the middle of recess, months before the end of the transition period and in the middle of a global pandemic, organisations from key sectors around Scotland—business, industry, farming, teaching and the environment—have made it clear that the proposals are unacceptable.

NFU Scotland says:

“the proposals pose a significant threat to the development of Common Frameworks and to devolution. The Union stresses the need for agricultural support policies to diverge where necessary to reflect different needs and objectives in different parts of the UK”.

[

Interruption.

] No, thank you.

The Scottish Council for Development and Industry warns that

“The imposition of a single approach across the UK in devolved policy areas could be to the detriment of Scottish businesses and consumers.”

Scottish Environment LINK is clear that the UK Government plans could

“force Scotland to follow the lowest common denominator, especially where countries negotiating bilateral trade deals with the UK demand lower standards, seriously undermining efforts to combat climate change and biodiversity decline”.

The General Teaching Council for Scotland—I refer members to my entry in the register of interests—said that it would

“not support the White Paper proposals for the Scottish teaching profession and believes that to do so would undermine the four UK nations’ devolved education functions.”

The white paper says that there will be exclusions from those measures, but paragraphs 50 and 144 make it clear that the exclusions could change, and paragraph 154 makes clear who will decide those changes: it will be Westminster and not this Parliament. The white paper says:

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

Everything is up for grabs.

The proposed new law is wholly unnecessary to protect trade. The Scottish Government has participated in good faith in the common frameworks project and, once implemented, the voluntary arrangements will be more than adequate to address any of the regulatory consequences of leaving the European single market.

Work is progressing well on the common frameworks, despite the difficulties caused by the UK Government’s changing Brexit policy. The Scottish Government has now agreed with the other devolved Governments a revised delivery plan for common frameworks. We remain fully committed to work to deliver those frameworks on the basis of mutual agreement between the devolved Governments around the United Kingdom. However, for the frameworks to operate as intended, we need far greater clarity and detail from the UK Government. With less than five months left of the transition period, we still do not know what the UK’s future relationship with the EU will look like.

I will now address the fundamental flaw in the UK Government’s proposals, which is the entirely inaccurate assertion that this is simply a matter of replicating the system of harmonised standards that the UK enjoyed as an EU member state.

That misconception comes partly from the assumption that there is a clearly defined and commonly understood system of laws and institutions that defines the UK internal market in a way that is comparable with the European single market. The white paper ignores the profound differences between the way that power is exercised and decisions are made in the EU and the regime that is envisaged in the UK internal market proposals.

For example, the development of the European single market has been based on the principles of equality, co-operation, co-decision, subsidiarity and consent, and setting a baseline of minimum agreed standards with which all member states’ own rules must be compatible. The UK Government’s proposals are based on unilateral decision making and imposition, with no minimum standards or guarantees; they provide a vice-like grip for a Government with no electoral mandate in Scotland.

The European single market rules recognise and allow for policy objectives alongside pure market economic considerations; for example, the health benefits of minimum unit pricing. The European single market principles ensure that decisions are taken as close as possible to affected citizens, that member states abide by the rules agreed to by the EU, and that rights can be enforced by individuals and companies against their own governments if necessary. The institutions of the EU also ensure that regional variations are taken into account.

The UK Government is proposing the opposite of the European single market approach. The white paper includes no mechanism for negotiation or agreement between the four Governments of the UK. Instead, the mutual recognition mechanism would allow the UK Government to decide its standards for England, which would have to be accepted by the other nations of the UK. In practice, it would reserve the right, under the doctrine of parliamentary sovereignty, to undo any decisions taken by the devolved Governments that might be considered a constraint on the decision-making powers of the UK Parliament.

In reality, that means that the UK Government could impose decisions on the devolved Governments with no right of repeal or means of redress. The Conservatives are kidding themselves if they cannot see how that undermines the very foundations of devolution. Indeed, the distinguished legal commentator Professor Michael Dougan noted that

“the parliamentary sovereignty of Westminster … means that, inherently, the legislative aspect of the internal market will never be independent and impartial in a way that would be recognised in the EU”.—[

Official Report

,

Finance and Constitution Committee

, 19 June 2019; c 11.]

The white paper makes it clear that the UK Government wants to impose uniform standards in policy areas such as building regulations, which were never part of European single market rules.

The Tories were anti-devolutionists in 1997. Much like they did then, the Tories have got things badly wrong on this issue, but it is not too late for them to change tack.

The proposals will be bad for business. It is not devolution that is causing business uncertainty, but the reckless decision of the UK Government not just to leave the EU, but to leave the transition period in less than five months’ time in the middle of an economic crisis.

The proposals will be bad for consumers. They will open the door to lower food standards and provide an end to the precautionary principle that has served Scotland so well.

The proposals will be disastrous for devolution. This Parliament’s wishes and the democratic choices of the people of Scotland will be undermined and overridden. The Scottish Government will not stand for it and neither should the Scottish Parliament.

I move,

That the Parliament calls on the UK Government to withdraw its proposals for a UK internal market regime, which are incompatible with devolution and the democratic accountability of the Scottish Parliament; notes that the proposals would be detrimental to businesses, consumers and citizens across Scotland, and agrees that they would fundamentally undermine legitimate devolved policy choices on a range of matters, including the environment, public health and social protections.