UK’s EU representation: what has changed and how is it working?

 

Summary: impact of Brexit on Scotland

  1. Before outlining the nature of the Scottish Government’s engagement with both the EU and the UK Government on European affairs, it is important to note the context in which this engagement takes place. The people of Scotland did not vote for Brexit in 2016, and the impacts have been overwhelmingly negative.
  2. It is clear that the costs of Brexit outweigh any costs of EU membership. This month, the Office for Budget Responsibility repeated their expectation that the UK’s GDP will be 4% lower in the long run due to Brexit. This equates, each year, to around £100bn in lost output, and around £40bn in lost public revenues – Scotland’s population share of this is around £3bn. Between 1973 and 2019, the UK contributed £225 billion to the EU budget. On this basis, over 3 years the UK will have lost more in GDP than it contributed over 46 years – with none of the benefits of EU membership to show in return.
  3. Scotland is currently losing out on hundreds of millions of pounds in EU funding due to Brexit. The UK Government promised that its UK Shared Prosperity Fund would replace, in full, the EU structural funding lost to Scotland after Brexit. But it has only allocated £212m to Scotland over a three-year period, when EU funding would have been worth around £549m over three years – a shortfall of £337m.
  4. In research, Brexit has put UK access to the €95.5bn Horizon Europe programme at risk. Scottish organisations secured around €100m per year under the previous Horizon 2020 programme – and around €870m in total between 2014 and 2020. Agreement on the Windsor Framework is welcome and clears the path for discussions on UK association to Horizon Europe to resume. Scottish Ministers have been clear throughout that association is a matter of significant importance to Scotland, and is the best option for our nation and sector. We welcome the fact that negotiations can now restart with the European Commission, and we urge the UK Government urgently to make the most of this opportunity. However, the Treasury’s clawback of £1.6bn previously allocated for research and innovation threatens the reputation and competitiveness of the sector, and it is unclear how the UK Government plan to mitigate this loss of funding committed to the sector, and how this interacts with discussions on UK association to Horizon Europe. The UK Government should clarify the position.
  5. In education, Scotland has lost access to the €26bn Erasmus+ programme, due to the UK Government decision not to participate, despite the UK Prime Minister of the time telling the House of Commons in January 2020 ‘there is no threat to the Erasmus scheme’. The new Turing Scheme fails to match the scope of Erasmus+, and is delivering less funding than Erasmus+. Under Turing in 2022/23, Scotland secured £9m for 30 projects; under Erasmus+ in 2020, Scotland secured €26.4m (around £22.7m) for 109 projects. The loss of Erasmus+ is depriving young Scots of opportunities enjoyed by previous generations.
  6. Scottish rural communities have lost access to the Common Agricultural Policy, and the UK Government’s proposed rural funding provides insufficient budget to replace EU funding levels lost to Scotland – between 2021-22 and 2024-25, Scotland is set to lose out on approximately £93m.

 

  1. The above examples are not an exhaustive list of the negative impact that Brexit continues to have in Scotland. More broadly, evidence continues to mount of the tremendous economic damage of Brexit – damage which the Scottish Government repeatedly warned of. Jonathan Haskel, member of the Bank of England’s Monetary Policy Committee, observed that Brexit has cost the UK £29bn in business investment – equivalent to about £1,000 per household in the UK. Analysis by the Financial Times shows that UK’s export volumes have grown the least in the G7 since Brexit, while the IMF reported this month that in 2023 the UK will have the lowest growth in the G7. According to research by the Centre for European Reform, the UK’s GDP was 5.5% lower by the second quarter of 2022 than if Brexit had not occurred. It also found that UK investment was 11% lower and trade 7% lower than without Brexit. Scottish Government analysis shows that Scotland’s trade in goods with the EU was 12% lower (or £2.3bn in cash terms) in 2021 because of Brexit. It is clear that the Trade and Cooperation Agreement (TCA) marks a significant step backwards from our trading position in the EU.
  2. The loss of freedom of movement has compounded labour shortages that arose as a result of the pandemic, with impacts on businesses and public services. Many EU nationals have left Scotland (and the rest of the UK) since the UK left the EU. Recent analysis from the Centre for European Reform provides further evidence Brexit has contributed to recruitment difficulties and stifled employment growth. The findings suggest that if Brexit had not occurred, the number of EU nationals in employment, at the UK level, would have been 460,000 higher by June 2022.
  3. Leaving the EU has also presented fundamental challenges to how our police and prosecutors cooperate. The greatest negative impacts are caused by the loss of the European Arrest Warrant, which means that certain EU member states will not now extradite their own nationals to the UK. In addition, losing access to the Schengen Information System has meant losing real-time alerts and intelligence from EU counterparts. The change from EU law to a relationship based on the TCA means our operational partners must use slower, more cumbersome tools and measures to cooperate with their European counterparts, which, in turns makes it more resource-intensive to keep the public safe.

 

SG engagement with European Union and EU institutions

 

  1. The Scottish Government’s network of overseas offices delivers and supports its activity and that of its agencies, in key locations outside of Scotland. The offices take work forward in line with an agreed set of strategic aims and priorities, which are around:

 

  1. Reputation – seeking to improve Scotland’s international reputation
  2. Investment – promoting increased investment to Scotland
  3. International Trade – supporting Scottish businesses in trading internationally more effectively
  4. Research and Innovation – ensuring Scottish research and innovation capability is promoted and partnerships and funding secured
  5. Scotland’s Interests – ensuring Scotland’s interests in the EU and beyond are protected and enhanced

 

 

  1. There are five Scottish Government offices in the EU: Brussels, Paris, Berlin, Copenhagen and Dublin. Each office plays a critical role in supporting both bilateral collaboration and, particularly in the case of the office in Brussels, multilateral cooperation with the EU and its institutions. Scottish Government offices – working alongside Scottish Development International in many locations – focus on both policy and economic work, as well as cultural diplomacy, in order to deliver economic benefits and to support the Scottish Government’s goal of addressing societal and global challenges, in particular a just transition to net zero.   
  2. The work of the Scottish Government' office in Brussels focuses on key areas of expertise and relevance, including a just transition to net zero; research and innovation; and inclusive growth. We continue to have positive relationships with a range of MEPs, and maintain links with national and sub-national missions, the European Commission, and other key stakeholders such as academics. We also work closely with officials from the UK Mission to the EU (‘UKMis'), and other Devolved Government offices, as well as those of Crown Dependencies. Recent cooperation with UKMis has included activity on issues such as climate change; promoting Scottish and wider UK innovation; and support for Ukraine. Despite the challenges posed by Brexit, justice cooperation with European authorities remains strong, with COPFS and Police Scotland maintaining presences at Eurojust and Europol respectively.

 

Scotland Act 1998

 

  1. The Scottish Government is clear that the Scotland Act does not preclude the Scottish Government from international engagement. We already work constructively with FCDO staff on a regular basis.
  2. Explanatory Notes in the Scotland Act clearly state that: "The reservation of international relations does not have the effect of precluding the Scottish Ministers and officials from communicating with other countries, regions, or international or European institutions, so long as the representatives of the Scottish Parliament or the Scottish Ministers do not purport to speak for the United Kingdom or to reach agreements which commit the UK.
  3. The Memorandum Of Understanding that accompanies the devolved settlement addresses international engagement directly. This recognises that while the UK Government reserves the power to develop and deliver foreign policy on behalf of the UK, the Scottish Government and its Ministers will have an interest, particularly where it has a direct – or indirect – impact on areas that are devolved.
  4. Written evidence provided to the UK Parliament’s Scottish Affairs Committee inquiry into the UK Government promoting Scotland internationally highlighted a number of organisations stating the UK Government does not do enough to promote Scottish interests and Scotland’s distinct strengths, including NFU Scotland, Scottish Chambers of Commerce, and the Scotch Whisky Association.
  5. While there will clearly be issues where the UK Government and Scottish Government disagree, the Scottish Government considers that there are important areas of shared interest, such as Scotland’s energy sector, which the UK Government must do more to promote.

 

 

SG engagement in UK-EU fora, including TCA arrangements

 

  1. As already noted, Scotland has crucial interests at stake in the EU-UK relationship, particularly in relation to the TCA, the UK-EU Withdrawal Agreement, and the Northern Ireland (NI) Protocol and Windsor Framework. Due to the protracted dispute over the NI Protocol, key aspects of TCA implementation – and crucially, scope to build on the TCA framework have stalled over the last two years, with significant, detrimental impact in Scotland.
  2. The agreement of the Windsor Framework has now opened up an opportunity to make progress across the UK-EU relationship, including areas of the TCA with important Scottish interests at stake.
  3. The Scottish Government noted the positive tone of the meetings held on 24 March of the Withdrawal Agreement Joint Committee and the TCA Partnership Council, co-chaired by Foreign Secretary James Cleverly and European Commission Vice President Maroš Šefčovič. We welcomed the fact that these meetings took place, with Scottish Government attendance at Ministerial and senior official level at the Partnership Council meeting, and that they were carried out in a constructive spirit.
  4. The Scottish Government will be pressing for progress through the 2023 series of TCA governance meetings, including the 18 Specialised Committees covering the various chapters of the TCA, while also seeking to ensure appropriate participation for Scottish Government participants in the preparation of agendas, conduct of meetings, and follow up activity.
  5. The following areas are examples of priorities where the Scottish Government would like to see progress made in relation to the TCA, and where we would urge the UK Government to work with us to seek improvements, as indicated:

EU Programmes (particularly Horizon Europe association)

  1. The Horizon programme has been of significant benefit to Scotland’s academic and research community. Scottish organisations secured around €100m per year under the prior Horizon 2020 programme – and around €870m in total between 2014 and 2020. We are keen to see legal association to Horizon concluded rapidly.

Sanitary and phytosanitary (particularly agrifood exports)

  1. The difficulties arising for traders in Scotland, such as the exporters of food and drink products, including seafood, whisky and seed potatoes, as well as live animals, are well documented. We strongly wish to see easements in this area, to allow trade to flow with as few restrictions as possible. Our preference would be for UKG to reach agreement with the EU on an SPS or ‘Veterinary Agreement’, including dynamic alignment with relevant EU rules.

Energy (particularly electricity trading)

  1. Scotland is currently operating under a less efficient model of electricity trading than we enjoyed pre-Brexit when we were part of the EU Internal Energy market (IEM). The current energy crisis has thrown this issue into even sharper relief. We advocate an agreement with the EU to develop a more efficient model of energy trading – which could reduce costs and improve resilience as swiftly as possible.

Services

  1. The TCA creates a framework for mutual recognition of professional qualifications (MRPQ) sector by sector which can facilitate access for specific professions. We recommend seeking progress on key sectors (e.g. legal and architectural services). 
  2. The proposed MoU on Regulatory Cooperation in Financial Services remains unsigned negotiations on the MoU were concluded at the end of March 2021, but it has been blocked since. We welcome recent indications that the MoU may be signed soon and would hope to see progress in coming weeks.

Touring creative professionals

 

  1. There remains a need for a better solution for this group. The complications over separate visas and permits for different legs of a tour, and cabotage rules, are highly disruptive for touring shows that need to transport props, instruments, and other equipment.

Student exchange

 

  1. The loss of the Erasmus programme has deprived a whole generation of young Scots of opportunities that their immediate elders enjoyed. The higher education sector has repeatedly urged us to seek a return to this prestigious programme, or to create alternatives.

Schengen Information System (SIS) “substitute”

 

  1. The loss of access to the SIS system is a key loss in law enforcement from the Brexit deal which the UK Government negotiated. It is urgent, in the public interest, that an alternative means be found to exchange vital information which underpins public security.

Emissions trading schemes (ETS)

 

  1. The TCA provides for linkage between the UK and EU ETS, as FCDO recently noted in evidence to the Lords European Affairs Committee. We strongly support further work in this area, so that the UK can maximise the benefits that could accrue from a larger cooperation zone.

Civil society input into the TCA: the Domestic Advisory Groups (DAGs) and the Civil Society Forum (CSF)

  1. Scottish members of these TCA bodies have noted that, while EU DAGs typically comprise ten members each from business, trades unions and the third sector, the UK DAG is heavily weighted in favour of business groups. Moreover, the UK DAG  does not appear to be proportionately representative of the UK’s nations and regions. We therefore urge appropriate additions to the UK DAG composition. 

Parliamentary input into the TCA: the Parliamentary Partnership Assembly (PPA)

  1. The Scottish Government welcomes the role of the Parliamentary Partnership Assembly (PPA) in TCA governance, and notes that the PPA has drawn attention effectively to key areas where progress can and should be made (for example, cooperation on energy between the UK and the EU).
  2. We also welcome the fact that the Scottish Parliament has been invited to attend the PPA, and was able to make an oral contribution at the last meeting in late 2022. It will be important that devolved parliaments continue to be able to make useful inputs to the PPA, and have opportunities to voice their priorities.    

Summary

  1. We will be advancing these interests, and others we identify, with UK interlocutors at Ministerial and official level as we continue to discuss ongoing implementation and development of the TCA.

The Scottish Government’s EU Alignment policy

 

  1. The Scottish Government’s commitment to remain as close as possible to the EU means Scotland will continue to seek to align with EU law where possible and appropriate, and in a manner that contributes towards protecting and advancing the vital safeguards and high standards Scotland benefitted from as part of the EU.
  2. We will maintain alignment where possible with the EU through policy making and primary and secondary legislation, including via the powers granted under the UK Withdrawal from the European Union (Continuity) (Scotland) Act 2021.

 

  1. By protecting and continuing to advance the high standards that Scotland shares with the EU, we will safeguard the prosperity and wellbeing of the people of Scotland and maintain Scotland’s inclusive, outward-facing reputation.

 

Retained EU Law (Revocation and Reform) Bill

 

  1. The Scottish Government regards the UK Government’s Retained EU Law Bill as reckless legislation that puts at risk over 40 years of vital standards and protections gained via EU membership. The UK Government’s approach also raises fundamental challenges to how the established devolution settlement operates and to the ability of the UK and the Devolved Parliaments to ensure effective scrutiny of the Executive. The Scottish Government has accordingly proposed a range of amendments to the Bill. The Bill’s recent pause ahead of the House of Lords report stage is welcome, provided that the implementation dates of the Bill are similarly delayed. The Scottish Government’s position remains that the Bill should ultimately be withdrawn, however.
  2. The European Union has also raised concerns regarding this Bill, particularly the risk it creates of divergence between the UK and the EU in relation to the level playing field provisions in the TCA.

 

April 2023

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