Brexit: response to the EU exit vote in Westminster - ministerial statement

Statement from Cabinet Secretary for Government Business and Constitutional Relations Michael Russell.

Presiding Officer, the date at which the UK is scheduled to leave the EU is now 38 days away.

In terms of sitting days in this Parliament, that equates to 18, including today.

Yet, Presiding Officer, there is still no resolution of the chaos that prevails at Westminster, no consensus about the way forward, no relief from the incompetence of the current UK Government, and still no respect for the decision of this country, and this Parliament, decisively against Brexit.

Instead with every day that passes the unrealistic, irresponsible and – in terms of realisable outcomes – impossible approach of the Prime Minster only serves to heighten uncertainty for communities, citizens and businesses across Scotland to an intolerable degree and to increase the risk of a ‘no deal’ exit.

Of course the House of Commons had the opportunity last week to agree to an extension to Article 50 to allow us to avoid the economic damage of a ‘no deal’ or hard Brexit outcome.  

Presiding Officer, this Scottish Government continues to believe that the best outcome for the UK as a whole and for Scotland is to remain within the EU and that now, given the impasse that exists at Westminster, the best democratic way forward is to give the people the final choice.

But we have over the past two and a half years been very clear about willingness to compromise, setting out credible and achievable positions in December 2016 and subsequently which  were ignored or summarily dismissed by the UK Government.

No doubt at some stage this afternoon the opposition benches will insist that the only way to avoid a ‘no deal’ is to support the Prime Minister’s very bad deal.

But surely even their certainty in that mantra must have been shaken a little this week when no fewer than 40 senior retired diplomats signed a letter which pointed out just how awful the Prime Minister’s deal actually is.

Not only would that deal make Scotland poorer, removing us from the European Single Market, risking a fall in Scotland’s working, tax-paying population and putting us at a competitive disadvantage to Northern Ireland.

It would also, in the words of those very knowledgeable diplomats result in what they call a “Brexternity” of endless uncertainty about our future for both citizens and businesses alike.

And if there was ever to be an end to that “Brexternity” the best that could be hoped for at that far distant date – given the Prime Minister’s red lines - would be some sort of Free Trade Agreement, which our modelling indicates, would mean that by 2030 our GDP would be around £9 billion lower than if we stayed in the EU - equivalent to £1,600 for every person in Scotland.

But as things stand, even if the Withdrawal Agreement was approved by the UK and European Parliaments it is entirely possible, even probable, that No Deal will have been postponed rather than avoided.

Such is the chaos that now engulfs Westminster it is impossible to say with any confidence that the terms of any future trade deal with the EU will be approved by MPs.

Next week, the House of Commons will again get the opportunity to pass further judgement on the Prime Minister’s efforts.

We will continue to provide a voice for common sense.

For, Presiding Officer, a ‘no deal’ outcome isn’t inevitable.

But, alas, it is becoming more likely with every day that passes, and every attempt the Prime Minister makes to bludgeon and frighten MPs into accepting her threadbare and damaging plan.

So as a responsible Government we must act wherever we can to minimise and mitigate the impacts in Scotland, as far as we are able to do so.

And in doing so we must, as always, be very straight with the people of Scotland.

Later this week my colleague the Cabinet Secretary for Finance will publish a paper on the likely economic costs and impact of a “no deal” Brexit. 

It is vital that this Chamber and Scotland knows that things will change – and change very fast for the worse – if a no deal is forced upon us.

For example a no deal Brexit could, we estimate, result in an increase in unemployment in Scotland of around 100,000 people, more than doubling the unemployment rate.  

We would go from a record low to a level not far off that at the depth of the last recession, with all the human cost which that would entail.

Whatever we as a Government do – and we will do everything we can – we simply could not avoid that sort of damage being done to our economy and our country. 

But one person could. The Prime Minister could, if she were to immediately agree to an extension to Article 50 and rule out, with concrete legislative steps, any “no deal “ outcome.

Getting such an extension would not be difficult. Indeed, President Junker said yesterday, “any decision to ask for more time lies with the UK. If such a request were to be made, no one in Europe would oppose it.” So the only opposition to an extension lies within with House of Commons.

The work of the Scottish Government Resilience Committee and the Scottish Resilience Partnership on planning, mitigation and preparing arrangements to respond to the risks and impacts of leaving the EU without a deal is continuing and intensifying, as the First Minister made clear last week after our special Cabinet meeting. 

The Resilience Committee met in Glasgow last week – its ninth session - prior to that Cabinet meeting, and is meeting again tomorrow.

I will be in London tomorrow, attending yet another UK Cabinet EU Exit Sub Committee, and seeking firm answers to the many questions what we still have.

For example, we do not yet know how much ferry capacity is available, on what routes it will exist or exactly what priority goods will be carried.

Nor do we know what priority will be accorded to each category of goods, nor what arrangements will be made to service Scottish requirements including the particular challenges of rurality.   

We have also not yet heard whether export of foodstuffs can be integrated with special arrangements for import, consolidating inbound and outbound capacity to maximise the benefits.

There are many more matters on which we need clarity and we will continue to seek that, given that such clarity is essential for our preparations.

Yet, leaving those difficulties aside it has to be said that although we are working as closely as we can with the UK Government even if there was a perfect information flow we do not now believe there is the time or the resource to ensure absolutely everything required will be in the most effective place, in the most effective way, by the required dates.  

That is not a criticism of anyone working very hard on these matters north or south of the border. 

It is simply a fact of the shortness of the time available and the size of the task to be undertaken.

Of course there are those who seem to be seeking to ‘normalise’ no deal or, with a profoundly concerning sense of misplaced optimism, who are suggesting that its effects will somehow not be as serious as has been widely predicted.

They are utterly wrong.

It is clear - and will be made even clearer in the Chief Economic Adviser’s Paper which will be published on Thursday - that a no-deal Brexit remains a significant (and live) risk which would lead to a major dislocation to the Scottish economy. 

The impact of any shock is likely to vary across sectors, as well as regions according to their economic structure, and if prolonged, such a shock could lead to significant structural change in the economy.

In addition to this, the uncertainty relating to Brexit is already impacting key economic indicators for Scotland including consumer confidence and business investment.

Let me however indicate what is being done, against the clock.  

Transport Scotland is working with providers and ports and airports in Scotland to assess existing capacity and identify how that capacity could help mitigate disruption to imports and exports.

In trade, whilst the UK Government is currently negotiating with 40-plus trading partners in an attempt to roll over existing EU third country agreements there is now no possibility that all, or even a majority will be in place. Access to some markets will therefore be considerably disrupted.

None the less, we are working to secure as consistent and wide ranging a food supply as possible and to enable improved or new supply chains to ensure it gets to every part of the country. And to try and overcome barriers to export of food and drink as well.

If free movement is curtailed, as seems very likely, this would have serious and immediate consequences in, amongst other sectors, that of health and social care workers.

The Scottish Government is absolutely committed to doing all it can to speak up for, and in support of, EU citizens at this uncertain and anxious time. We passionately want relatives, friends, neighbours and colleagues who come from other EU countries to stay in Scotland.

We have already committed £800,000 to Citizens Advice Scotland to provide advice and support to EU citizens in Scotland affected by changes in the immigration rules as a result of Brexit and we will shortly intensify our information campaign to encourage EU Nationals to stay.

Presiding Officer, in my statement earlier this month, I urged MSPs to reach out to small businesses in their constituencies and encourage them to seek the information they need on Brexit.

It remains of concern that so many small businesses in particular have not yet engaged in sufficient detailed planning and preparation.

Undoubtedly the tendency towards “normalcy bias” is well established in Scotland. But the UK Government is not functioning as a normal Government. It may well allow a “no deal” to come about either by accident or design, contrary to all norms of government.

Accordingly, I would today strongly urge all businesses to seek out the information we are providing through our Brexit website or that for the Prepare for Brexit campaign - a one-door online approach jointly delivered by Scottish Enterprise, Highlands and Islands Enterprise, and Skills Development Scotland and to do it now whether you export or not. 

The Chief Constable of course, recently announced plans to put 360 officers on standby from mid-March to deal with any incidents that may arise across the country, such as disruption at ports. 

That is just one more example of an initiative which seeks to align existing financial and staff resources to the challenges we face, in order to ensure that we have the right people, in the right places, with the right skills to respond quickly and effectively.

We have been clear that any costs related to EU exit should not have a detrimental impact on Scotland’s public finances, and Derek Mackay again raised this matter with the Chief Secretary to the Treasury when they met last week although no satisfactory response was forthcoming.

We are actively pursuing the issue of funding for the consequences of a ‘no deal’ outcome with the UK Government, along with a number of other matters. But it is abundantly clear is that Brexit is going to cost Scotland - at every level of governance, in every business sector and in every part of the country - far more than the existing consequentials.

Finally, I will turn to the important matter of our legislative preparations.

To date, only 30 of the 114 UK SIs to which we have consented have actually completed their passage in the UK Parliament.

I have made clear my concerns on this matter to the UK Government, and have impressed upon them the importance of ensuring that the deficiency fixes to which we have given our consent are actually delivered.

We are still on track to have processed both parts of the programme – UK SI notifications, and Scottish SIs – through the Scottish Parliament by the end of March. So, our laws should be  as ready as they can be for the shock of EU exit.

However the Prime Minister has now indicated  that in the event of an agreement being reached, she would intend to push through the Withdrawal Agreement Bill before the 29 March 2019 as well as a range of other Brexit related legislation.

This could mean passing laws of the profoundest importance, with consequences for all the devolution settlements, in a few days.

This cannot and should not be done. If that bill is presented to this Chamber for legislative consent the Government will recommend that such consent be refused both because of that impossible timetable and also because the UK Government has moved not an inch on the issue of essential changes to the Sewel process.

Presiding Officer, let me conclude by re-iterating the First Minister’s message from last week.

The Scottish Government remains absolutely committed to preparing as best we can, and to safeguarding the interests of businesses and communities in Scotland as far as possible.

However, the way this has been approached by the Prime Minister is reckless and irresponsible.  

It is now clear beyond any doubt that the UK Government pose a real danger to Scotland.

The only sensible solution now available is a delay to Article 50, a ruling out of a no deal and a people’s vote.  

We will continue to press for those things with every legislative and political tool and every ounce of energy at our disposal.


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