CARDS ON THE table: on 23 June 2016 I voted for the United Kingdom to remain a member state of the European Union. Not with anything like the same enthusiasm as I had voted on 18 September 2014 for Scotland to remain part of the United Kingdom. My vote in 2014 was a matter of deep conviction; my vote in June 2016 was calculation rather than anything else. I am no cheerleader for the European Union. It is undemocratic, intolerant of critical voices, bullying and, since Maastricht in the early 1990s, it has taken on far too much and has lost sight of its core purpose. Maastricht was a double error. Its expansion of economic union to embrace a single currency was a mistake (and the United Kingdom was entirely correct to stay out of the Eurozone). And the expansion of the EU’s role beyond the core task of economic integration, into fields of political union, was a grievous error. None the less, I thought Britain should remain a member state so that we could argue from within for a radical change of European direction.
Referendums, however, are not opinion polls whose verdicts we can celebrate or ignore as the case befits. They are formal, binding, decision-making devices. They represent not advice to government, but instructions to government. Had Scotland voted ‘Yes’ in 2014 the United Kingdom would not have been free to ignore or to seek to overturn the result. Likewise in 2016: having asked the people for their decision we are now duty bound to give effect to it. The UK is leaving the EU not because the Tories have willed it – both the current Prime Minister and her immediate predecessor campaigned and voted to remain, as did Sir John Major – but because parliament decided in the European Union Referendum Act 2015 to ask the people whether we should leave or remain, and the people gave their answer, calmly and clearly, just as the Scottish people gave their answer on the independence question in 2014.
That some parts of the UK voted to remain and others to leave is immaterial to the result, just as it was immaterial to the result in 2014 that Glasgow and Dundee voted ‘Yes’. No local authority had a veto over the result of Scottish independence referendum; and no part of the UK has a veto over the result of the EU referendum. Scotland was not the only place where a majority of voters wanted the UK to remain a member state. London, Manchester, Leeds, Liverpool, Newcastle, Bristol and Northern Ireland all voted remain.
Sadly – if predictably – however, the Scottish government has yet to accept this. At the end of 2016 the Scottish government published a paper, Scotland’s Place in Europe (Scottish Government 2016), which made three arguments. Each is worthy of analysis. The first argument was that the whole of the United Kingdom should seek to become a member of the European Economic Area (EEA). This option, sometimes referred to as the softest of soft Brexits, would mean that the UK, whilst it would leave the institutions of the European Union (no more British MEPS, no more British members of the European Commission, and no more British judges at the Court of Justice), would remain a ‘member’ of the single market. Legally, there is no such thing as ‘membership’ of the single market. One can have access to a market; one can participate in a market; but markets do not have members. Clubs have members, and on 23 June we elected to relinquish our membership of the EU club. Membership of the single market has been adopted, however, as shorthand for membership of the EEA.
It is not the policy of the United Kingdom government to pursue EEA membership for the UK. Theresa May is right to have rejected this option. We all know that the most powerful slogan of the leave campaign was ‘take back control’. EEA membership means full participation in all four fundamental freedoms of the European single market (free movement of goods, services, workers and capital) – so EEA membership would not enable the UK to take back control of its borders. EEA members must comply with the entirety of the Court of Justice’s case law on the single market, including its case law on the supremacy of European law – so EEA members cannot take back control of their national legislation. For EEA members the sovereignty of national legislation is conditioned by, and subject to, the supremacy of European law. And, finally, EEA members must make a substantial financial contribution to the EU institutions, so there is no taking back control of national finances, either.
It could be argued that EEA membership is compatible with the referendum result, in that the referendum question was about EU membership, not about the EEA. But such an argument would be a triumph of form over substance. People voted to take back control, and EEA membership does not deliver on that democratic mandate.
The second argument put in the Scottish government’s paper was that even if the UK as a whole was not going to become a member of the EEA, Scotland should join the EEA in its own right. This would see a ‘differentiated’ deal for Scotland, on the one hand, and the rest of the UK, on the other. This option was put forward by the Scottish government in order to maintain and protect Scotland’s place in the single market. In its view, a differentiated deal such as this would reflect the differentiated result of the 23 June referendum (in which Scots voted 62:38 to remain, whilst the UK as a whole voted 52:48 to leave).
My party – the Scottish Conservative and Unionist Party – spent two months carefully considering this option. In February 2017 we published a paper, Scotland’s Trading Future (Scottish Conservatives, 2017), in which we explained why we cannot accept it. On analysis, the option suffers from two basic flaws. First, it is undeliverable. Only states may accede to the EEA Treaty and Scotland is not a state. There is no precedent for a sub-state region or territory (I am using the language that European law uses) to join the EEA (nor indeed the EU) in its own right. Member states are exactly that: states. Scotland is not a state because in the 2014 independence referendum a majority of 55:45 rejected the Scottish National Party’s proposal that Scotland should leave the United Kingdom to become an independent state. It was precisely Scottish statehood that was rejected in 2014. Subsequent opinion polls very clearly show that Scots do not want to be asked that question again.
Secondly, and more importantly, a differentiated deal along the lines proposed by the Scottish government would be contrary to Scotland’s economic interests. Scotland trades four times as much with the rest of the UK as it does with the whole of the European Union. Since 2002 the value of Scottish trade with the rest of the UK has grown by 74 per cent (from £28.6 billion to £49.8 billion) whereas in the same period Scottish trade with the EU has grown by less than 8 per cent (from £11.4 billion to £12.3 billion) (Scottish Conservatives, 2017: 12). This is far from the only measure of the comparative importance to Scotland of the British domestic market compared with the European single market. Consider, for example, Scottish jobs. There are currently 2,790 enterprises registered in Scotland with ownership in the rest of the UK, employing more than 340,000 Scots (17.7 per cent of the Scottish workforce). This compares with just 1,000 EU enterprises operating in Scotland, employing 127,000 people (6.6 per cent of the Scottish workforce).
And here’s the rub: whether we like it or not, a differentiated deal for Scotland, in which Scotland was in the EEA and the rest of the UK was not, would inevitably see growing divergence either side of the border. The nature of the border would change, as controls appeared along it. And the nature of trade in goods and services between Scotland and the rest of the UK would likewise change, becoming more complex and more expensive as the regulatory regimes developed along their own, different, paths.
Prime Minister Theresa May has made it clear that her ‘guiding principle must be to ensure that, as we leave the European Union, no new barriers to living and doing work within our own Union are created’. As the Prime Minister made plain, that means, among other matters ‘maintaining the necessary common standards and frameworks for our own domestic market’ (May, 2017).
This does not mean that there can be no Scotland-specific elements to Britain’s Brexit deal. For example, were universities in England and Wales not to want continued participation in the EU’s schemes of research collaboration and research grants there is no reason in principle why Scottish universities could not do so, if that is what they wanted. (I should add: I do not think this likely. I think it likely that all UK universities will want to continue to participate in these schemes, and there is no reason in principle why that should not be the case even after Brexit.)
It is striking that, for a nationalist document, Scotland’s Place in Europe fails to identify any Scotland-only interests that require a bespoke solution, different from that for the rest of the United Kingdom. This is striking, but not surprising. After all, the interests of farmers in Perthshire are surely the same as farmers in Yorkshire; the interests of manufacturers in Lanarkshire and Dundee are surely the same as those in Tyneside and South Wales; and the interests of the financial services sector in Edinburgh are the same as those of the City of London.
It may very well be that Britain’s Brexit deal can be sensibly differentiated sector to sector. But no case has been made for a Brexit deal that is differentiated nation to nation.
The final argument made by the Scottish government in its paper is that Brexit should deliver a fresh round of devolved powers to the Scottish parliament. I have no doubt that it will do so. It seems inevitable that some of the powers to be repatriated from Brussels to the United Kingdom will pass to the devolved legislatures in Scotland, Wales and Northern Ireland. But I am equally in no doubt that this will occur at nothing like the scale proposed by the Scottish government.
In Scotland we are now seeing Devolution 3.0. We are on our third Scotland Act, the 2016 legislation implementing into law the conclusions and recommendations of the all-party Smith Commission, which met in the immediate aftermath of the 2014 independence referendum (full disclosure: I was a member of the Smith Commission). Opinion polls record no desire on the part of Scots to see the devolution question opened up yet again. The priority must surely be to get on with the job of implementing the Smith powers, some of which (particularly as regards social security) will in any event not be operational until 2020 or 2021, the slowness of the pace being set by the Scottish Ministers, not by the United Kingdom government.
What the Scottish government argued for in Scotland’s Place in Europe is actually a copy-and-paste job of what it had argued for going into the Smith Commission: namely, the devolution to Holyrood of more or less all powers except those pertaining to defence, national security, and monetary policy. It asserts the need to devolve employment law, equalities law, health and safety law, consumer protection, import and export controls, immigration law, competition law, company law, energy regulation, financial services, telecommunications and postal services. This is not devolution designed to strengthen the United Kingdom’s domestic market: it is devolution designed to destroy it, to undermine its integrity and to break it apart. This is a vision of devolution that was rejected by the Smith Commission in 2014 and it will be rejected again as Brexit unfolds.
There are perhaps three main areas regulated by the European Union that would most obviously fall within devolved competence in Scotland. These are agriculture, fisheries and environmental regulation. One might add a fourth policy area: VAT. The Smith Commission agreed that a proportion of VAT receipts in Scotland be assigned to the Scottish government. VAT could not be devolved, the Smith Commission was advised, because it is contrary to EU law for a member state to set more than one rate of VAT. Brexit may liberate us from that rule, meaning that a proportion of VAT could be devolved to the Scottish parliament, rather than merely assigned. To date, this matter has not featured prominently in Scottish political debate since the EU referendum. Perhaps the Scottish Ministers are in no great rush to take control of sales or consumer taxes?
In recent months there has been more consideration given to agriculture, fisheries and the environment than there has to VAT. Early assumptions that these fields would be devolved in full and that this would be automatic given the nature of the Scotland Acts have been challenged since the turn of the year, however. The position of the United Kingdom government is that no power currently exercised by Holyrood (or, presumably, by Cardiff Bay or Stormont) will be re-reserved. There is nothing currently done by Holyrood that will be removed from its powers. But is it in the British national interest to have two (or three) regulatory regimes for fisheries policy and four for agriculture? It is surely a question worth asking, even if it risks a political row.
There is also the question of understanding just how broad an array of powers is covered by the Common Agriculture Policy (CAP). It includes regulation of the quality, grading, weight, sizing, packaging, wrapping, storage, transport, presentation, origin and labelling of agricultural products. By no means all of these matters are really about agriculture. Some are concerned with consumer protection or product safety. These fields are generally reserved to Westminster under the Scotland Act 1998, although there are exceptions for food products. Again, the question does need to be asked: is it in Britain’s interests to have different rules on labelling, packaging, transport and storage in each of England, Wales, Scotland and Northern Ireland, or would it be more coherent, given the integrity of the UK’s domestic market, to have a single, UK-wide regulatory regime for these matters?
Perhaps the answer is both. This leads me on to my final point. For more than 15 years we have acted as if a power is either devolved or it’s reserved. If it is devolved, it is for these ministers accountable to this parliament; and if it is reserved it is for those ministers accountable to that parliament. The reality, particularly since the Smith Commission Agreement and even more so after Brexit, is more complicated than that. Of course there are devolved powers, and of course there are reserved powers. But there are also shared powers – areas where both the UK and Scottish governments have concurrent and overlapping responsibility. Social security is a good example. Universal Credit is a reserved benefit, but the Scottish Ministers have powers to make adjustments to its operation in Scotland. Likewise, child benefit is reserved, but Holyrood has the power to top it up (i.e. to make additional payments to recipients) if MSPs consider it to have been set at too low a rate.
The repatriation to the UK of powers over agriculture, fisheries and the environment presents an opportunity for the further development of ideas and practices of, and institutional apparatus for, shared rule. Could the UK establish a UK department of fisheries but base it in north-east Scotland rather than in landlocked Whitehall? Or think about it this way: the European Commission typically governs via directives, setting out broad principles of convergence but leaving to the member states the choice of form and methods of delivery. This is not a mechanism we have used in devolved Britain: it is not as if the UK sets broad principles and devolved administrations implement them in a manner best suited to local needs. But could such a system – innovative and novel as it would be in the UK context – not be the future of agriculture in Britain? These are the sorts of questions we are likely to be looking at in Scotland as Brexit unfolds.
Scottish political debate since 23 June 2016 has proceeded as if there is a gulf of difference of view and direction between the Scottish and UK governments. This has no doubted suited the party political aspirations of the SNP. But it really does not have to be like this. When you read the published views of the two governments and analyse them dispassionately, they have much more in common with one another than divides them. For example, the Scottish government wants continued ‘membership’ of the single market; the UK government wants the ‘freest possible trade in goods and services between Britain and the EU’ and ‘the greatest possible access to’ the European single market through a ‘new, comprehensive, bold and ambitious free trade agreement’ (May, 2017). These positions are really not that far apart.
Similarly, Scottish Ministers have said that EU nationals resident in the UK should have their rights protected. The Prime Minister has said that she wants to ‘guarantee the rights of EU citizens who are already living in Britain… as early as we can’. But such a guarantee needs to be reciprocal, and it is the EU holding this up, not the British government. Again, Scottish Ministers have said that workers’ rights, currently protected under European law, should be fully protected after Brexit. The UK government evidently agrees – in the Prime Minister’s words: ‘as we translate the body of European law into our domestic regulations, we will ensure that workers’ rights are fully protected and maintained’ (May, 2017).
In the end, Brexit could mean one of two things. It could see Britain turning in on itself, becoming more isolated, as protectionist walls are thrown up. Or it could mean the very opposite. It could mean that Britain recaptures something of its historic role as one of the world’s great global trading nations, as one of the world’s leading advocates of free trade and of the promise of economic freedom and prosperity it offers. The Scottish Conservatives are firmly in the latter camp. We are unionists, not nationalists – advocates of growing the economy through increased international trade, not of separating ourselves from our nearest trading partners. But this is a vision of Brexit that will need to be fought for – it cannot be taken for granted.
Across the western world, liberal internationalism is in retreat and nationalist protectionism is on the rise, in Trump’s America, in Le Pen’s France and elsewhere. The argument for free trade is not yet won. Those of us who believe in it must be ready, forcefully and confidently, to make its case.
May, T. (2017), A Global Britain, Speech delivered at Lancaster House, 17 January.
http://www.telegraph.co.uk/news/2017/01/17/theresa-mays-brexit-speech-full/
Scottish Conservatives (2017), Scotland’s Trading Future.
Scottish Government (2016), Scotland’s Place in Europe.