Brexit: Devolved Administrations

Lord Bruce of Bennachie Excerpts

Thursday 25th January 2018 Lords Chamber

[Lord Bruce of Bennachie (LD)]

My Lords, I join others in thanking the noble Lord, Lord McInnes of Kilwinning, for opening this debate and congratulate him on the way in which he did so, which I think we would all agree was thoughtful and ranged across the issues. In general, while the tenor of the debate has been modest, constructive and reasonable, it has encapsulated some devastating criticisms of what is happening or not happening. It would be remiss of us not to acknowledge that, whatever the tone may suggest.

The noble Lord said that he was driven by his political unionism and his fear for the union as a result of Brexit. He is right to say that, at the moment, the pressure for further independence in Scotland has diminished, but that is not to say that it will not be revived in the long term. As he rightly said, in Northern Ireland and Ireland, the whole situation is so fraught that almost anything is possible. While Members from Northern Ireland have said that that they do not believe that the drift towards a united Ireland is necessarily stronger, who is to say, if we mishandle this, that the mood would not change? Nobody should be in any doubt that the future of the United Kingdom is at risk, and Brexit has demonstrated that.

While the second part of the Motion refers to seizing the opportunity to redefine the union and how it operates, frankly, we should have done that long before we got to Brexit. We have done it in a piecemeal, ad hoc and untidy way. I know that I on these Benches am perhaps a little idealistic in my commitment to federalism, but something like federalism will eventually have to be enshrined in our constitutional arrangement if the union is to hold together.

Speakers have looked at different aspects of devolution for the different, component parts, with the Irish question being the most fraught and the most unclear, and then the Scottish question and the Welsh question. Regardless of how the countries voted, there is a fundamental anger that, in spite of the statement that there is a wish to ensure that the settlement for Brexit carries the whole United Kingdom with it, it is clear that England is carrying the rest in its slipstream and that it is not a partnership of equals or even a partnership—let us be realistic that they are not equal, but there should be a partnership.

I was interested to see the dilemma, from my own point of view in Scotland, of the Scottish Conservative Party, which is fundamentally split in a very obvious way. We had a delegation from the Scottish Parliament in the last few days, including Conservative Members of the Scottish Parliament, seeking clarification on Clause 11 and encouraging the amendment that we are all looking for, which will meet the wishes and aspirations of the devolved components. Yet Conservative Members of the Westminster Parliament from Scotland have lifted not a finger in any way at all to support amendments that would have dealt with Clause 11. So the MSPs are singing from one hymn sheet and MPs, apparently, from a different one. Indeed, with one exception, it seems that all the Scottish Conservative MPs are enthusiastic Brexiteers, in spite of the will of their own constituents, and have followed the votes accordingly.

The leader of the Scottish Conservatives, Ruth Davidson, just in the last few days has pleaded with the Prime Minister to ensure that the Brexit settlement is a settlement for the whole of the United Kingdom that takes full account of Scotland’s interests. But in reality how can that be, when Scotland is quite clear that being part of the single market and being in the customs union is essential for Scotland’s economic future, and the Government have ruled both those things out? These are unscripted exchanges, but, fundamentally, they are incompatible.

In fact, it has dawned on me in the last two weeks that not only are the Government divided absolutely down the middle, with a Cabinet that is so carefully balanced that it encapsulates in equal numbers two utterly irreconcilable positions but, worse than that, the communication from the Government is two-way and, if I may say so, two-faced. They say to people who voted remain, “Don’t you worry—there will be an agreement that fundamentally maintains many or most of, if not all, the benefits that we have enjoyed as a member of the European Union”. At the same time, turning to the Brexiteers, they say, “Be assured, we are leaving the Union and all its institutions—we will not be part of the single market or the customs union”. At what point does this logjam have to be broken? We have eight months until we have to have an agreement on exactly what kind of exit arrangement we will have negotiated.

We had the noble Baroness, Lady Goldie, in this House earlier this week, for whom I have a lot of respect—and I know that the Scottish people have a lot of affection for her in her role as leader of the Scottish Conservative Party. It hurt me to see her defending a position on financial services, so important to Scotland, on the lines that it would be impossible to deliver the promised statement on the future arrangement for financial services, as this would reveal our negotiating position. My understanding of negotiations is that, while you can negotiate in secret, it is quite important that the people with whom you are negotiating are not included in the secret—that they are, in fact, a party to what your aspirations are and know what you are negotiating for. Until you do that, you actually make no progress. We are deadlocked. It seems to me that we have a few months to come to a conclusion as to what the compromise is going to be.

I mentioned financial services. There is a tendency for people to assume that this means the City of London, but it does not mean that; the City of London is about half of our financial services industry, but there are more than 150,000 jobs in Scotland in financial services, especially in Edinburgh and Glasgow, but also in Aberdeen and elsewhere—Perth, in fact, is an important centre, too. I have served on the EU Financial Affairs Sub-Committee, and we have had consistent and overwhelming evidence, including from Scottish institutions, that without passporting and without an agreement that enables us to participate fully in the single market in comparable terms to the way we do now, thousands of jobs will be lost.

Indeed, JP Morgan has said overnight, in the meeting in Davos, that if there is no agreement to maintain most of our existing arrangements, it will move more than one-quarter of its 16,000 workers out of the UK. Replicate that across the financial services sector and then add it to every other sector that has the same uncertainty and difficulty. We are talking about tens if not hundreds of thousands of jobs at risk, and we have only a few months to come up with an agreement that will resolve the issue.

Currently, the pound is on an upswing. I am told that the markets are of the view that a constructive agreement can be reached, and that is why the pound is strengthening—although some people say that, actually, inflationary pressures and the prospect of an interest rate increase may be the major factor. However that may be, it cannot go on with all these questions about how the interests of Scotland, Wales and Northern Ireland, and indeed those parts of England that voted to be part of the single market and the European Union, can be reconciled with an agreement that maintains or does not maintain the links. How is it possible for our interests to continue outside the single market and the customs union?

The issue of Northern Ireland has been particularly fraught. As the noble Lord, Lord Bilimoria, said, the can has been kicked down the road. My noble friend Lady Smith mentioned alignment, which is absolutely crucial. The Government are basically saying that everything will change and nothing will change. The border will be open, there will be no border, but we will not be inside the institutions that protect themselves by a border. It is not our decision. Indeed, the Government will say that if there is a border in Northern Ireland it will not be our fault; it will be because the EU imposes it, but the EU will impose it only because we do not have an agreement that enables the border to be open.

I suggest to the Government that the letter has to go beyond to the spirit. They should listen to the devolved Governments and institutions, because it is impossible to deliver a settlement for the whole of the United Kingdom that does not take account of the wishes of Northern Ireland, Wales, Scotland and the regions of England. I agree that the Scottish Government’s plea for some kind of separate deal for Scotland to be in the single market and not the rest of the United Kingdom is preposterous, absurd and undeliverable. Indeed, as my noble and learned friend Lord Wallace said, the United Kingdom single market is far more important to Scotland than the EU single market. But they are both important and both need to be reconciled, and time is running out for the Government to go on facing both ways, keeping the negotiations secret and offering no end-point. We have to resolve this dilemma, or not only is the UK’s economic future at risk but the integrity of the United Kingdom is under threat. The Government should not underestimate that.