Nicola Sturgeon speech on Brexit at the David Hume Institute

Below is a speech given by Nicola Sturgeon at the David Hume Institute on Tuesday 16 January 2018, setting out the Scottish Government’s position on the Single Market, the EU Withdrawal Bill and migration.

The meet the leaders season has become a new year tradition – it’s almost the David Hume Institute’s contribution to Scotland’s winter festivals. And it’s a good demonstration of the institute’s role in leading and informing public debate and discussion. I greatly value – as I am sure all the party leaders do – the opportunity to discuss with you some of the key issues facing Scotland for the future.

All of the leaders this year have been asked to speak about “Scotland after Brexit”. In doing that, the second half of my speech will focus in particular on migration – an issue which is of considerable importance, and one where Brexit presents Scotland with distinct challenges which, to my mind, require distinct solutions.

However I want to start with a brief overview of where I think the Brexit process is now – although you might be able to guess my basic view on that! – and what the Scottish Government’s priorities are for influencing that process in the year ahead.

 

It’s hard to believe that it’s five years next week since David Cameron delivered one of the most significant and fateful political speeches in the UK’s recent history. At the Bloomberg offices in London, he announced that  if the Conservative party won the 2015 general election, he intended to hold a referendum on EU membership.

The Bloomberg speech set out David Cameron’s belief that “Britain’s national interest is best served in a flexible, adaptable and open European Union, and that such a European Union is best with Britain in it”. However the eventual consequences of the speech, as we now know, were the exact opposite of what he intended.

We are now only 14 months away from the date when the UK is set to leave the EU. I still don’t want Scotland, or the UK, to leave the EU – my preference is for Brexit not to happen.

However, as First Minister, I also need to be pragmatic and work to protect Scotland’s interests in all circumstances.

I must be frank in saying how disturbing it is that the UK government’s plans still seem to be – and I am putting this as gently as I possibly can – in a state of complete chaos.

That’s partly because there still seems to be a wilful denial of the complexity of Brexit. The leader of the House of Commons said last week that  “It will be easy for the EU and the UK to agree to continue to do things with…zero non-tariff barriers”. That’s not a statement which has any roots in reality. Avoiding non-tariff barriers – which requires agreement on harmonised regulations and other matters – is never something which is easy to agree. That’s why Canada’s trade deal with the EU took almost a decade to negotiate.

The Prime Minister, meanwhile,  continues to suggest that no deal is a viable option for the UK – without acknowledging that no deal is, almost by definition, a terrible deal.

And the UK government, perhaps most fundamentally of all, is still delaying setting out a clear position on the big issue it faces. There will have to be trade offs – for example, between abiding by European regulations in order to gain the best possible access to the Single Market, and developing the ability to negotiate separate trade deals with countries outside Europe.

In fact, the UK Cabinet has scarcely even begun to discuss that issue, let alone agree and articulate a position on it. Instead, we are consistently told that the UK can have everything it wants – regulatory flexibility, the freedom to strike trade deals with other countries AND the full benefits of the Single Market – despite abundant evidence to the contrary.

2018 is the year when that rhetoric will finally meet reality. On every issue of substance so far where some decision has been taken – for example the timetable for talks, and settling the UK’s budget obligations – the UK government has set out a completely unrealistic starting position, and then been forced to capitulate.

That seems almost certain to happen again this year if they stick to unrealistic positions. Far better, surely, to stop wasting time and squandering goodwill and instead embark on these negotiations with a sensible and credible position at the outset.

In the view of the Scottish Government, that sensible – the only sensible post Brexit position – is continued membership of the Single Market and Customs Union.

It’s not a perfect position – it is  to as good as membership of the EU – but it far preferable to any of the limited number of alternatives.

In my view – and of course you won’t be surprised to hear me say this – every single month that has passed since the referendum has borne out the logic of the Scottish Government’s position. If the UK leaves the EU, the least damaging way of doing so is to retain membership of the Single Market and the Customs Union.

The economic importance of doing that was highlighted by the paper we published yesterday.

It shows very clearly that although all forms of Brexit are likely to harm the economy in some way – by reducing our exports to the UK’s largest and closest market – harder brexit will cause significantly greater damage. Our modelling suggests that by a no deal outcome will cost our economy £2300 per head by 2030, compared to staying in EU. With a free trade agreement the loss in GDP will be £1600 per head.

And if we stay in the Single Market, it will be £700 per head.

So, there is no cost free option – but staying in the Single Market minimises the damage and that surely must be a priority for all of us.

There is also, to my mind, a fundamental democratic point. The EU referendum gave no mandate for leaving the Single Market – in fact, leave campaigners were confused among themselves about whether they wanted to do that.

So the idea that leaving the EU requires us to leave the Single Market and the Customs Union is simply an assertion of the Prime Minister’s – it is her interpretation of the referendum result, and nothing more.

And actually, given the closeness of the EU referendum result across the UK – and the fact that two out of 4 nations in the UK voted to stay in the EU – surely a soft brexit, rather than a hard Brexit, should be the UK government’s default position?

Single Market membership isn’t just the best way of minimising the economic harm of Brexit; it is the obvious democratic compromise in a divided UK.

And so my priority for the year ahead is to continue to make the case for Single Market and Customs Union membership.

I believe that that’s a position which can and should command majority support both across the country and in the UK parliament. And so throughout 2018, as First Minister and as leader of my party, I will work with anyone and everyone – across the political spectrum and across these islands – to contribute towards that outcome.

 

The duty to proceed in a way that respects the views of all parts of the UK is also relevant to the current debate over the Withdrawal Bill.

As many of you will know,  that bill is currently the subject of discussions between the devolved governments and the UK government. Both the Welsh and the Scottish governments have indicated that we cannot accept the bill in its current form.

The Scottish Government does not object to the basic intention behind the bill. If the UK is to leave the EU, there has to be a legal mechanism which allows EU law to be carried over into English and Scottish law at the point of Brexit.

However, the way in which the UK government has chosen to enact the bill runs counter to the basic principles of devolution.  In particular, clause 11 prevents the Scottish Parliament from making changes to devolved areas, such as justice or agriculture, if those changes would not have been permitted under EU membership. However, the UK government will be able to make changes. In effect, the UK government is giving itself the ability to legislate on a devolved area without the consent of the Scottish Parliament.

Those provisions are hugely problematic. On a practical level, they massively increase the complexity of the devolution settlement. For example, as the EU’s own rules evolve and change, it creates an ongoing uncertainty about the Scottish Parliament’s powers.

But more fundamentally, they undermine a basic principle of devolution – the idea that policy matters are devolved to Scotland unless they are specifically reserved under the Scotland Act. As Professor Nicola McEwen, of the Centre on Constitutional Change, said last autumn – “Clause 11 cuts across the existing devolution settlements. UK government ministers… do not seem to get this.”

That’s why the Scottish Parliament’s Finance and Legislation Committee unanimously recommended last week that consent should not be granted to the EU Withdrawal Bill. It’s worth repeating that point – all parties agreed that consent should not be granted. It’s fair to say that Scottish political parties have not often been united on constitutional questions in recent years – so that gives some idea of the scale of the UK government’s achievement here!

Scottish parties have also been unanimous in our disappointment that the UK government’s amendments to clause 11 – which we have been promised, and which I am sure are being developed – won’t now be tabled until the bill reaches the House of Lords.

As a result,  the Scottish Government is – with some regret – preparing an EU Continuity Bill. It means that even if we cannot reach an agreement on the UK’s Withdrawal Bill, Scottish legislation should be able to protect Scotland’s laws from disruption caused by Brexit.

Now it’s worth being absolutely clear. Passing a separate Bill is not the Scottish Government’s preferred option. We have had some positive discussions with the UK government about section 11, and we have a promise from them that amendments will be tabled. There is, I hope, a reasonable chance of reaching an agreement with them about the bill.

Unless that happens – and I very much hope that it does –  the Scottish Government will not recommend that the Scottish Parliament grants consent to the EU Withdrawal Bill. In its current form – as virtually everyone in Scotland who has studied it recognises – the Bill is unacceptable. We will not consent to legislation which is so profoundly contrary to the principles of devolution.

In fact, our view is that the challenges posed by Brexit, are best met by a further devolution of powers rather than a centralisation.  The Scottish Parliament would benefit in particular from further powers over immigration, welfare, trade, and employment and employability.

Migration is the issue I want to focus on for the rest of my speech this evening – since it was central to the EU referendum debate, and it’s an area where Scotland’s needs and requirements are so different from the rest of the UK that the case for a different approach here is, to my mind, overwhelming.

I am also aware, however – and John Curtice produced very interesting research on this last week – that there isn’t yet a clear public consensus behind having a distinct migration policy in Scotland.

Migration is not an easy issue for politicians.

But, given some of the stark projections that I am about to talk about, there is a duty on us – on politicians across the UK, and certainly here in Scotland – both to spell out the importance of attracting skill and talent from other countries and also to provide evidence and reassurance about the benefits it brings to everyone in our society.

When the impact of ending free movement within the EU is discussed, a lot of the focus tends to be on the immediate consequences for specific sectors. That’s entirely understandable. For many core public services, and key sectors for our economy, EU immigration is absolutely crucial.

More than half of the people who work in food processing industry are EU citizens from outside the EU; so are more than a quarter of our higher education researchers, and almost a tenth of the workers in our tourism sector.

The potential consequences of reduced immigration to those sectors  are very important. And they are certainly are one reason – among many – why I have been so determined, since the referendum, to ensure the rights of EU citizens are protected, and that EU citizens know that Scotland welcomes the contribution they make to our economy and our society.

However, I want to focus today on an issue which transcends the immediate consequences of Brexit on specific sectors. I want to talk instead about the consequences of any restriction in our ability to attract skills and talent here for Scotland’s overall population level and economic growth.

The figures are very clear. If you look at population projections for the UK as a whole, over the next 25 years, 3/5 of the predicted population increase is due to immigration, and 2/5 is due to natural change –  to births outnumbering deaths.

However, in Scotland the picture is different. All of our projected population growth is projected to come from migration. Births are not expected to outnumber deaths over the next 25 years.

So without inward migration, Scotland’s population will start to fall rather than to rise.

That will, inevitably, affect overall economic growth. More importantly, however, it will also have an impact on living standards. For example as the proportion of older people in our population increases, the proportion of people in the workforce is likely to decline – that will make it more difficult to fund vital public services. That’s something the Scottish Fiscal Commission warned about in their economic and fiscal forecasts last month. They’ve predicted reduced Income Tax receipts in Scotland as a direct consequence of less immigration and a lower working age population.

Now, there is some evidence that support for parents can increase the birth rate. So the package of policies which we’re adopting with the aim of making Scotland the best place in the world to grow up – most obviously our expansion of childcare, but also steps such as enhanced Best Start grants, and the delivery of Baby Boxes – that could lead in time to a higher birth rate. But that isn’t certain, and of course it takes around two decades before an increased rate of childbirth leads to an increased size of workforce. So in the short and medium term, and probably in the long term, Scotland has a significantly greater need for immigration than the rest of the UK.

This isn’t a new issue. Scotland suffered low population growth, and even population decline, for much of the 20th century. The need for more immigration was an early priority for the Scottish Parliament when it was re-established in 1999. That’s why the previous Labour-Liberal Democrat administration in Scotland – with cross-party support – worked with the UK Government to introduce the Fresh Talent initiative. It allowed people to stay and work in Scotland for up to two years after they had finished studying in Scotland.

However the Fresh Talent scheme – because of its success – was then included within the wider UK immigration system. And so when the UK government decided to restrict immigration in 2012, the post-study work visa – because it was by then a UK policy – was axed from Scotland as well.

I think that Fresh Talent is worth mentioning because it is a good example of how sensible, practical, proportionate immigration policies – steps which brought real benefits to our economy and our society – have been sacrificed in pursuit of the UK government’s arbitrary net migration targets.

And Fresh Talent is important for another reason. It is sometimes – as the John Curtice research I mentioned earlier highlighted – seen as being problematic for Scotland to have a separate immigration policy from the rest of the UK.

But actually, a distinctive immigration policy, on a relatively small scale, worked well in Scotland less than ten years ago.

And differentiated immigration policies still seem to work well in other countries. If you take Australia as an example, different states have discretion to set different immigration standards and requirements. South Australia, for example, has its own immigration office. In Canada, too, significant immigration powers are devolved to the provinces. And in Switzerland, cantons have the autonomy to run their own immigration systems.

So it’s not surprising that three years ago, the Smith Commission – whose recommendations were signed off by every party in the Scottish Parliament – recommended the reintroduction of the post-study work visa within Scotland.

The UK government has not implemented that proposal yet, and has not announced any plans to do so. But in my view, the UK government needs to look again – not just at the post-study visa, but at allowing a distinctive Scottish approach more generally.  The principle that such an approach is possible should be  uncontroversial. And the evidence that it is needed is conclusive.

That’s why the Scottish Government will soon publish proposals for powers over immigration to be devolved.

As you would expect, the reintroduction of the post-work study visa is one of those proposals.

We also argue that immigration to Scotland should not count within the UK’s net migration target. It makes no sense for immigration to Scotland – where we have very specific demographic challenges – to be included within a target which is primarily aimed at restricting immigration into England.

And we would like the freedom to apply a distinctive approach on family migration. We believe that it is counterproductive to restrict the ability of British citizens to bring family members home – immigration policy should support family life and community integration, rather than creating obstacles to it.

 

And of course, in arguing for a distinctive immigration policy, we will also recognise that the debate about Scotland’s place in Europe isn’t simply about trade rules and regulations – important though they are. It’s also a debate about who we are, about what sort of country Scotland aspires to be. The debate about Brexit is partly about how to ensure that Scotland remains an inclusive, welcoming, outward-looking country – one which seeks to contribute to the wellbeing of the wider world, and which also seeks to benefit from our openness to new people and new ideas.

I began this speech by noting that next week marks the 5th anniversary of David Cameron’s Bloomberg speech. 2018 also, of course, sees the 20th anniversary of the Scotland Act’s passage through the UK parliament.

And so twenty years ago last week, the Bill was being debated on the floor of the House of Commons. Donald Dewar, introducing that debate, made several remarks which turned out to be prescient. He described the Scottish Parliament as offering “a new dimension”  to Scotland’s representation in Europe.

And so I am determined throughout 2018 to do everything I can to maintain and strengthen  that voice and that role– by arguing for membership of the Single Market and Customs Union; by ensuring that Brexit does not undermine the devolution settlement; and by seeking the powers which will enable Scotland to continue to attract talent from Europe and around the world.

In my view, 2018 provides an opportunity – as the UK government is finally forced to confront the realities of Brexit – to build support for those measures, not simply in Scotland, but across the UK. By doing that we can minimise the economic harms caused by Brexit. We can safeguard Scotland’s place as a good global citizen. And we can bring benefits, not simply to Scotland, but to all the nations of these islands.