First Minister writes to PM about lack of interaction with Scottish Govt on Brexit

First Minister Nicola Sturgeon has written to the Prime Minister about the role of the devolved administrations in talks on the future trade relationship between the United Kingdom and the European Union.

Full text of letter:

Dear Theresa,

I recognise that this is a critical week for Brexit, ahead of the European Council at the end of the week. It is therefore with concern that I have read press reports over the weekend about offers you may be making to the Democratic Unionist Party, upon whom you rely for a working majority in the House of Commons. As a consequence I wanted to seek clarity and assurance from you at the outset.

Since the EU referendum in 2016 there has been sustained and consistent damage done to the devolution settlement, and to the idea that the UK is a partnership of equal nations. As you are aware, like Northern Ireland, Scotland voted to remain in the European Union.

In the past two years however, Scotland’s wishes and national interests have been roundly ignored and at times treated with contempt by the UK Government.

I now have three further major concerns over what appears, from reports, to be your strategy for securing a majority for your Brexit deal. By according the DUP disproportionate influence, it seems clear that maintaining your majority in the UK Parliament comes before respect for the properly constituted governments across the UK.

Firstly, there must be no question of one political party – the DUP – being represented in talks on the future trade relationship between the UK and EU when other political parties and Devolved Governments are not. As you are aware, in August 2018, the Scottish Government published a paper in respect of our role in International Trade negotiations. There has been no indication that the UK Government is taking these proposals seriously, although there has since been support for a greater role for devolved administrations in trade negotiations from both the International Trade and Scottish Affairs select Committees in the House of Commons. In addition, there have been no meaningful moves to ensure the devolved governments have a properly enhanced role in the next phase of EU-UK negotiations.

Secondly, the UK Government’s proposals to the DUP appear to involve a serious curtailment of the powers of the Scottish Parliament. Indeed in seeking to obtain support for your deal in December the UK Government committed, in the event that the Protocol on Northern Ireland is required, “to ensure that there would be no divergence in the rules applied in Great Britain and Northern Ireland in areas covered by the Protocol”. Many of the relevant rules fall within devolved competence and therefore it is not in the gift of the UK Government to unilaterally constrain the powers of the Scottish Parliament in order to strike a deal with the DUP. Continued alignment can only be guaranteed with the full support of the Scottish Government and Parliament. As you will be aware, the Scottish Government continues to be concerned that Scotland will be placed at a disadvantage if your proposals take effect.

Finally, we continue to see decisions from the UK Government which undermine and discredit the existing UK funding framework and which short-change Scotland. In 2017, The UK Government provided an additional £1 billion to Northern Ireland as part of the confidence and supply agreement between the Conservative Party and the Democratic Unionist Party and recently it allocated another £140 million in Northern Ireland’s 2019-20 Budget. These funds were allocated to devolved matters and it is completely unacceptable that these decisions did not result in additional consequentials for Scotland. The UK Government’s actions mean that Scotland has lost out on equivalent funding of around £3.3 billion. The UK Government cannot continue to favour Northern Ireland over the other devolved administrations for short-term political gain and we expect any future funding to be allocated in a fair and transparent manner.

I have said and will continue to say that while there is no broad consensus in the UK Parliament for your Brexit deal, the decision ought to be put back to the people in a second EU referendum – that is the responsible and democratic thing to do. However should the UK continue on a path to exiting the EU, then there must be fair and equal treatment of the four nations of the UK in relation to influence over and a role in the negotiations of the future relationship through the properly constituted devolved institutions.

At present, far from ensuring such fair treatment you appear to be pursuing a path that privileges one political party, further constrains the powers of the Scottish Parliament and short-changes public spending in Scotland. This approach would not be acceptable.

Article Source:

Joint statement by the First Ministers of Scotland and Wales – EU Exit Debate

Scotland and Wales unite to voice dismay at UK Government’s approach.

“Today, for the first time in the 20-year history of devolution, the National Assembly for Wales and the Scottish Parliament, voted simultaneously to oppose a damaging no deal Brexit.

Read Nicola Sturgeon’s opening speech at the debate:

“The vast majority of Members across both Chambers voted in agreement that a no deal outcome would be completely unacceptable and that an extension to Article 50 is the best way forward to protect Wales, Scotland and the UK as a whole.

“No deal would mean not just probable short term chaos, but also very real and long-term structural damage to our economy. Damage which would mean fewer jobs, lower wages and less tax revenue.

“The motions in both the Scottish Parliament and National Assembly for Wales also re-iterated opposition to the deal negotiated by the Prime Minister which would do significant damage to both countries.

“This united and historic step was taken to send the clearest possible message to the UK Government and Westminster that this reckless course of action must stop now.

“We take little comfort from the sequence of votes planned to take place in the House of Commons next week, when a vote on extending Article 50 will be held only after another attempt to browbeat Members of Parliament into supporting the Prime Minister’s deal and a vote to support no deal.

“We are just 24 days away from crashing out of the EU. The Prime Minister’s attempt to run down the clock must be resisted at all costs.

“Today we have come together to set out our clear opposition to the actions being taken by the UK Government.

“Next week the Prime Minister and the UK Parliament must show they have listened, rule out no deal at any time and request an immediate extension of Article 50.”

First Minister Speech on Brexit (5 March 2019)

Nicola Sturgeon’s speech at the Scottish Parliament debate on Brexit (5 March 2019)

The Scottish Parliament and Welsh Parliament are holding simultaneous sessions today (with debating and voting) calling on the uk govt to act on brexit – “We have been brought together by our dismay – bordering now on despair – at the UK Government’s approach to Brexit”.


Scottish Parliament TV:

Presiding officer,

In Cardiff this afternoon, Jeremy Miles, the Welsh Brexit Minister, will open a debate on almost exactly the same motion as the one we are debating here today. The Welsh First Minister will close the debate.

It is worth emphasising that this is the first occasion in 20 years of devolution that the Scottish Parliament and the Welsh Assembly have acted in unison in this way.

We have been brought together by our dismay – bordering now on despair – at the UK Government’s approach to Brexit.

That despair is echoed across our countries.

As recently as last summer, the Prime Minister confidently told me that by the autumn of last year, not only would we know the terms of exit, we would also know significant detail about the UK’s future relationship with the EU.

And yet here we are, just 24 days until the UK is due to leave the EU.

And still we don’t know if there will be any agreed terms of exit.

We don’t know if there will be a transition phase.

And the terms of the future relationship are not much more than a blank sheet of paper.

The potential consequences for businesses, communities, individuals and public services grow more stark by the day.

And in the face of all this chaos, the Prime Minister is showing no decisive leadership.

Instead of doing the right thing and ruling out a no deal exit at any stage, she insists on free wheeling the car ever closer to the cliff edge.

She is trying to run down the clock, making undeliverable promises to hardline Brexiteers and offering tawdry, half baked bribes to Labour MPs.

Her one note of consistency in all of this has been contempt for Scotland. Seemingly, we aren’t even worthy of her bribes – though I think we should take that as a compliment.

Presiding Officer,

The domestic and international standing of the Westminster system of government has surely never been lower in any of our lifetimes.

This fiasco should not be allowed to continue for even one day more.

The Scottish and Welsh Parliaments are today making three demands.

The first is that the prospect of leaving the EU with no deal is ruled out – not just at the end of March, but at any time.

The second is that MPs must not allow themselves to be bullied into choosing between the catastrophe of no deal and the disaster of the government’s deal.

And the third is that an extension of Article 50 is essential and urgent, and must be requested now.

The demand to rule out a “no-deal” scenario is, I hope, supported across this chamber.

The Scottish Government is doing everything we can to plan for and mitigate the impact of a no-deal Brexit.

I am personally chairing our weekly Resilience meetings, looking at medicine and food supplies, economic and community impacts and transport links.

But every aspect of that planning reinforces this overwhelming reality – no rational government acting in the interests of those it serves would countenance leaving the EU without a deal.

The UK Government’s own forecasts predict that a no-deal scenario could reduce GDP by 9% over a 15 year period.

But you just need to look at the nature of the preparations to know that the impact would be much more immediate.

The UK government has been buying fridges to stockpile medicine. It has been testing motorways and airfields in Kent for use as lorry parks. It has been awarding and then cancelling ferry contracts to businesses which don’t even have ships.

It has been taking steps which should be inconceivable in a developed economy in peacetime. And all of it to plan for an avoidable outcome which, if it happens, will be by choice.

It is unforgivably reckless.

‘No deal’ should be definitively ruled out – and today, from Edinburgh and Cardiff, we demand that it is.

However – and this brings me to the second purpose of today’s motion – the UK Government must not use the threat of no deal to blackmail the UK Parliament into voting for its current deal.

The response to the rejection of Theresa May’s deal has so far been characterised by delays, denials, dishonesty and most recently desperate attempts at bribery.

Ministers have wasted months pretending that significant changes to the Northern Ireland backstop are possible – despite all evidence to the contrary.

Much better, surely, to face up to the fact that the deal is unpopular because it is a bad deal – for the UK, and certainly for Scotland.

It would take us out of the EU, out of the single market and out of the custom union.

But it provides no clarity whatsoever on what our long-term future relationship with the EU looks like. The UK Parliament is effectively being asked to approve a “blindfold Brexit”.

To the extent that any direction of travel can be discerned, it points to a long-term social and economic disaster for Scotland.

The red lines mean that we are heading towards a Canada style deal at best.

And let’s focus on what that means – the Scottish Government estimates this could lead to a fall in national income of £1,600 per person by 2030 compared with EU membership.

Our services sector, three-quarters of our economy, will be particularly badly hit.

Being out of the customs union, pursuing an independent trade policy, will also make the UK vulnerable to the trade priorities of Donald Trump.

When the US Government’s negotiating priorities were published last week, it was no surprise to hear fears that Scottish and UK markets could be opened to chlorine-washed chicken and hormone-fed beef.

And, of course, part and parcel of the approach taken in the PM’s deal is the end of freedom of movement. Combined with the despicable hostile migration policy, that could lead to a fall in the number of people working in Scotland and paying tax here.

The NHS and social care will pay a particularly heavy price if EU nationals are deterred from working here.

In short, the deal on the table guarantees more years of uncertainty during which Scotland’s interests will be at the mercy of a vicious, and seemingly never-ending, Tory civil war – one where the extreme Brexiteers are currently in the ascendancy.

It could open up our markets to US products which, for very good reasons, are currently banned.

And it will damage our economy, our living standards and our NHS.

For all of these reasons, and many more, it must be rejected.

And what should happen instead?

The Scottish Government has made clear that we see continued EU membership as the best outcome for Scotland and the UK.

And if it can’t be secured for the UK as a whole, we believe that option should be open to Scotland as an independent country.

Of course, we have also, for more than two years, put forward compromise proposals which would see the UK as a whole stay in the customs union and single market.

The Welsh Government has also put forward plans for a close relationship with the EU.

The UK Government has ignored us at all stages.

What the Welsh and Scottish Governments are proposing now – and this is the third point raised by today’s motion – is that there must be an extension of Article 50.

Nobody now believes that Brexit can be delivered on 29 March.

Quite apart from anything else, there is no time to scrutinise and pass the legislation required.

But we should not simply seek a short extension, as the Prime Minister envisages.

We need an extension long enough to enable a better path to be taken. This could open the way again to the possibility of a single market and customs union compromise.

However the preferable alternative option, in my view, is now a second EU referendum.

There is a strong democratic case for it.

After all, nobody voting to leave the EU knew precisely what they were voting for – the leave campaign was deliberately vague, some may say deceitful, about the form Brexit would take.

And where the leave side was specific, it was less than honest – for example about the prospect of Turkey joining the EU and the NHS getting more money.

We also know now that the leave campaign broke the law.

Presiding officer, I understand that prospect of a second vote does not appeal to everyone.

And we cannot take for granted that there would be a majority for Remain across the UK – that would have to be worked for.

But simply pressing ahead with Brexit – knowing that we are heading for disaster – makes no sense. After all, whatever most people voted for, it clearly wasn’t where we are now.

A second referendum provides everyone with a second chance. While Scotland, of course, has the option of independence, for the UK as a whole, another referendum is now the best of the options available.

Presiding Officer, last month I opened the new Scottish government hub based in Paris.

And in a city like that – where evidence of Scotland’s ties with Europe extends back more than seven centuries – it’s absolutely impossible not to feel a deep sense of loss about what Brexit means for Scotland.

Our country has benefited immeasurably from the hundreds of thousands of EU citizens who have made Scotland their home. Many Scots have had their horizons widened and their lives enriched by the ability to study, travel and work in Europe.

The EU – while far from perfect – has also encouraged stronger trading ties, a cleaner environment, and better conditions for workers.

And perhaps most of all it has exemplified the benefits we all gain when independent nations fully cooperate for the greater good. That is not something which we should give up lightly.

For more than two years now, since the result of the EU referendum, the Scottish Government has proposed ways of mitigating the damage that Brexit will cause.

We have been joined in our efforts by the Welsh government. However we have been ignored at almost every turn by the UK Government.

This motion is a further attempt to propose a way forward. It provides the basis – even at this late hour – for a more sensible and less damaging approach.

And by doing so it allows us to act in the interests – not just of our own constituents – but of the UK as a whole; indeed of Europe as a whole.

I commend this motion to the Parliament and hope that members of this Scottish Parliament and our friends in the Welsh Parliament will vote for it this evening.

The McCrone Report

“The McCrone report is a document on the Scottish economy written and researched in 1974 on behalf of the British Government. It was composed by Professor Gavin McCrone employed at the Scottish Office. The document gave a highly favourable projection for the economy of an independent Scotland with a “chronic surplus to a quite embarrassing degree and its currency would become the hardest in Europe”. This led successive iterations of the British government to classify the McCrone report as “secret”. This was so to avoid fuelling independence sentiment in Scotland. The report became public in 2005 when new freedom of information legislation came into effect.”

Introduction from Wikipedia:

Although the report was commissioned in 1974 it allegedly only came to public knowldge in 2005 when the SNP obtained several UK Government papers under the Freedom of Information Act 2000. The full provisions of the Act came into force on 1 January 2005.

The National Newspaper printed this news feature on 27/02/19

Mr Reid
New St Andrew’s House
St.James Centre, Edinburgh, EH13TA
Telephone 031-556 840. ext, 4017

J Garlick Esq
Cabinet Office
Great George Street
London SW1
23 April 1975

At the meeting which you held last week on various aspects of North Sea oil and devolution I suggested that I might send in the attached paper in the hope that it would serve as a starting point for any assessment the Unit may wish to carry out on the economics of Scottish Independence.

The Paper was written over a year ago in the weeks immediately before the February 1974 Election. This will be particularly apparent of page 5 where, of course, the Ministerial pronouncements referred to relate to the Conservative Government. I have not attempted to update any of the figures, since although there would be differences these do not seem to me to be such as to alter the argument.

As you will realise, the debate on Scottish nationalism has been founded to a surprising extent on economic arguments ad the purpose of this paper was to examine how far this was affected by North Sea Oil. The first part goes through most of the usual arguments which have been used against the Nationalists in the past with fairly convincing effect; the second part sets out the sort of economic strategy which an SNP Government might try to follow indicating both the dangers and the possibilities. As I said at the meeting, one can reach almost any conclusion depending upon the assumptions that are made about tariffs, a common currency, a Scottish Government’s spending priorities and its success in controlling inflation. My paper may give an SNP Government the benefit of too many doubts, but I was anxious to see whether a credible economic strategy could be put together which would appear to be more convincing in terms of solving Scotland’s traditional economic problems than the regional policies of the Unionist Governments have been up until now. I think the conclusion is that the most convincing way of taking the wind out of the SNP’s sails is by demonstrating that we now have policies which can make major in-roads into these problems.

When my paper was written it was classified “secret” and given only a most restricted circulation in the Scottish Office because of the extreme sensitivity of the subject. I am copying it now to Leo Pliatzky, Dick Ross, Jim Hamilton, John Liverman and Stuart Scott Whyte.

RGL McCrone


It is commonplace that the discovery of North Sea oil and entry to the EEC are factors of major economic significance for Scotland.

Already both issues, especially the former, feature widely in the SNP’s election material. The purpose of this paper is to reassess the economic arguments for an independent Scotland in the light of these developments, especially the discovery of oil. It will be shown that the whole framework within which the economic implications of nationalism were argued has indeed been altered. The importance of this is probably greater than is recognised at present by the majority of the public and it may well be, therefore, that the discovery of North Sea oil will come to be seen as something of a watershed in Scotland’s economic and political life.

The case for Scottish nationalism is, of course, very much more than an economic issue. This paper makes no attempt to examine the wider questions. Suffice it to say that Scottish nationalism has been much more concerned with economic prosperity than nationalist movements in other countries. Unlike Wales there is no great cultural movement attaching to the preservation of a language.

The main cause of discontent is the country’s unsatisfactory economic performance over the last half century, especially the persistent unemployment and net emigration above all in the West of Scotland.

Poor social and environmental conditions, especially in and around the city of Glasgow, accompany this outdated economic framework and are as much a source discontent.

Despite regional policy and the efforts of planners, these problems have not been overcome, nor do they look as if they will be in the foreseeable future. The SNP have therefore based their campaign on the assertion that Scotland would be economically better off independent; and it is for this reason that budgetary estimates have always featured so large in the controversy. Yet in spite of Scotland’s undoubtedly poor economic performance the SNP case until recently lack credibility. Most people regarded both their statistics and arguments suspect, and they continued to believe that Scotland derived more economic advantage than disadvantage from the Union.

The importance of North Sea oil is that it raises just this issue in a more acute form than at any other time since the Act of Union was passed.

The Case Against Nationalism

The traditional economic case against nationalism has always been that a politically independent Scotland would be unable to gain sufficient economic sovereignty to solve her problems successfully.

This is partly a question of the scale of the Scottish economy, but more of the extent to which it has become integrated with that of the rest of the UK over the last 270 years.

Scotland needs a faster rate of economic growth than either she or the UK has had in recent years if she is to absorb her excess labour resources and thereby cut down both unemployment and migration.

There are three principal ways in which an independent Government might seek to bring this about. First it could seek to foster and protect Scottish industry by means of tariffs and import controls. But such measures would risk retaliation from England which, given Scotland’s close trade ties with England, could cause damage far in excess of any benefit that may be hoped for. Such policies would also be incompatible with continued membership of the EEC and withdrawal, especially with England, Wales and Ireland remaining members, would clearly have very damaging consequences.

Secondly, fiscal policies might be used to give especially large benefits to new industrial investment or tax relief and subsidies to existing industry. This might involve the imposition of a tax frontier at the border, as still exists between most EEC countries, but this need not to make it impractical. Such policies have been used with considerable success by the Irish Republic since the mid-1950s. The main disadvantage is that England would probably feel obliged to match the Scottish measures with equivalent in grants or tax allowances for industry in English and Welsh Development Areas. Up to now England has always been in a position financially where, if she wished, she could have more than matched any measures which a Scottish Government would be able to afford.

It is here that the budgetary position of a Scottish Government becomes important. Various studies, notably the Treasury’s Scottish Budget of 1967/68 and the work of the Kilbrandon Commission have shown that public expenditure per head in Scotland is generally above the UK average, whereas public revenue is Scotland is slightly lower, largely because Scottish incomes are below the UK average. The result is that budgetary estimates for Scotland show a proportionately larger borrowing requirement than for the UK as a whole. His position is confirmed in the most recent estimate of Scotland’s budgetary position carried out by the Economic and Statistics Unit of SEPD for 1971/72. This shows a Scottish current account surplus of £24m. but a net borrowing requirement of £447m. overall.

There are, of course, various ways in which this could be tackled. In the first place it is not necessary to balance the budget. To finance loans and various items of capital investment, particularly those which yield a return by borrowing is quite reasonable; other items too may be covered by borrowing from time to time particularly if an expansionary budget is necessary to generate a higher level of economic activity in the economy. For these various reasons the United Kingdom budget normally involves a net borrowing requirement and whilst this will normally be fairly small this is not always so; in the present year, for example, the borrowing requirement reached the record figure of £4,000m.

If allowance is made for the capital items that it would normally be reasonable to finance by loan, this would still lave a Scottish deficit of over £200m., a very similar figure in 1971/72 to what it was in 1967/68. Whilst such a figure could be covered if it arose only exceptionally, it could not be tolerated as a regular feature of the budget. It would involve a steadily increasing Scottish debt and it would have serious implications both for interest rates and monetary policy, unless a substantial part of it could be financed from abroad. A Scottish Government would therefore have to take steps to reduce the deficit either by raising taxes or cutting expenditure. Such measures are perfectly possible, and on the scale necessary, need not provoke a intolerable situation, especially if defence was one of the items cut; but they would create a background of acute budgetary stringency against which it is hard to see it being possible to provide a major fiscal stimulus to encourage economic expansion.

The third possible course of action would be to devalue the Scottish currency. This would stimulate economic activity by increasing the demand for exports and making Scottish goods more competitive against imports in their home market. In many respects devaluation would be the obvious measure for an economy in Scotland’s condition with persistent unemployment, a budgetary deficit and probably a serious adverse balance on the balance of payments.

Indeed, if the later was persistent, it might be that devaluation would be inescapable.

Exchange rate adjustment is, of course, the ultimate and most effective weapon by which an economically sovereign state maintains approximately full employment while at the same time avoiding balance of payments disequilibrium. Indeed, if Scotland could have devalued by a good thumping 2 percent and made the adjustment effective in terms of costs, this would be by far the best way of solving Scotland’s economic problems of the last two decades. It has been argued that the ‘regional problem’ only arises because exchange rate adjustment, the normal way of dealing with disequilibria between countries, is not possible between regions.

However, the economic case against Scottish nationalism has always at bottom come down to the proposition that an independent Scotland would not find it possible to carry out an effective devaluation.

To be effective, devaluation involves a country in making a cut in its real living standards at least until such time as production is able to catch up. But the Scottish labour market is so closely linked with that of the rest of the UK that it is hard to see how real earnings could be adjusted downwards without giving rise to the most serious difficulties.

For such a small country heavily dependent of international trade, devaluation would, of course, have serious inflationary consequences, since all imports would rise in price. Trade Unions are to a large extent on a Great Britain basis and it is hard to see them accepting a deliberate attempt to cut real wages in Scotland compared with England whatever the reason for it may be. Furthermore, even with independence, freedom of labour movement between England and Scotland would be likely to continue, a common language and two and a half centuries of free movement make this easy. Changes in real wage levels would therefore be likely to be reflected in migration figures and could lead to a shortage of certain types of skilled labour in Scotland even while a surplus among the less mobile unskilled persisted.

It is for these reasons that many economists have in the past concluded that Scotland, if she were independent, would probably be unable to devalue effectively against the rest of the United Kingdom.

Lacking this ultimate weapon of economic sovereignty and limited by the budgetary situation in the use she could make of fiscal policy, it did not seem that political independence would give Scotland sufficient economic sovereignty to enable her to tackle her economic problems successfully, At the same time, whatever the constitutional set-up, the Scottish economy would remain closely integrated with that of the rest of the UK and would be greatly affected by policy decisions taken in London, though as an independent state her ability to influence those decisions would be greatly reduced.

The Implications of North Sea Oil

The analysis in the last section is based on the situation as it appeared before the discovery of North Sea oil. Even after its discovery the full significance of North Sea oil was not immediately apparent and it still remains in large measure disguised from the Scottish public by the DTI’s failure to make provision for a proper Government return when the fourth round of licences was issued.

So far all that Ministers have said is that they expect North Sea oil to be yielding 70-100m. tons of oil per annum by 1980 and that on that basis the Government revenue from rent and royalties from the whole of the Continental Shelf including the gas fields in the southern sector may be of the order of £100m. per annum at that time. It has been explained that this estimate does not include the yield from ordinary taxation on the oil companies and it has been stated that licensing policy is currently under review but the significance of this has probably not been fully appreciated by the public.

The SNP countered these figures by claiming that North Sea oil should by 1980 be yielding a Government revenue of approximately £800m. and have charged the Government with giving Scottish oil away to the international companies ridiculously cheap. Up to now much of the Scottish public may have regarded the SNP figures as pretty wild and they have been publicly condemned as such by Ministers.

But authoritative support for the charge that the Government has failed to do a satisfactory bargain with the companies is provided in the criticisms of the Public Accounts Committee which so far remain unanswered. The example of Norwegian policy on Government revenue from oil likewise shows up the failure of British.

The Government’s reveiw of licensing policy has been in progress since the early summer of 1973. This has confirmed the total inadequacy of arrangements to secure Government revenue and shows that some of the most attractive measures to put this right would involve breaking the terms on which the licences were given. It is partly for this reason that the Government has so far failed to take a decision, the choice lying between carried interest (ie state participation), which would provide the biggest revenue and also give some power of control but would go back on the terms of the licences, and excess revenue tax, from which the return in 1980 would be some £200m. less but would be defensible in international law.

The DTI estimates of last summer showed that total Government revenue following adoption of these measures would have been between £800m. and £1,200m. a year in 1980 depending on the system used and the prices prevailing in 1980; today, following the huge increase in international oil prices of recent months the corresponding figures are in the range of £1,500m. to over £3,000m. Thus, all that is wrong now with the SNP estimate is that it is far too low; there is a prospect of Government oil revenues in 1980 which could greatly exceed the present Government revenue in Scotland from all sources and could even be comparable in size to the whole of the Scottish national income in 1970.

As well as the gain to the Government Revenue, North Sea oil will of course make a massive contribution to the balance of payments; indeed these two aspects are closely linked. At present world prices the expected output of 100m. tons of oil in 1980 is worth approximately £3,000m.; assuming price rises from the present £33 a ton to £51 a ton as in the Government revenue calculations the value could be as high as $5,000m. Part of this will, of course, be repatriated by the international companies in the form of profits distributed to their shareholders or reinvested in projects in other areas. The balance of payments gain to Scotland would therefore depend critically on the amount of Government revenue secured from the profits. Indeed, since none of the major companies operating in the North Sea are predominantly Scottish owned, the Government revenue would be the major element, apart from the expenditure of the companies on goods and services produced in Scotland, which would accrue from the value of oil produced as a balance of payments gain. Thus assuming measures which would yield Government revenue of the scale referred to in previous paragraphs, plus some additional revenue to shareholders in Scotland and to suppliers of equipment, then the net balance of payments gain might be expected to lie very approximately in the range of £2,000m. to £3,500m. a year, depending on prices and the share of the Government ‘take’.

It is not possible to compare these figures with an accurate estimate of Scotland’s present balance of payments position. From the state of Scotland’s economy one would expect a balance of payments deficit on current account and a rough comparison of income and expenditure estimates for GDP suggest that this could be of the order of £300m. a year in 1970/71.

Plainly this is a most unreliable figure and it will vary from year to year, but it is probably sufficient to suggest the orders of magnitude.

What is quite clear is that the balance of payments gain from North Sea oil would easily swamp the existing deficit whatever its size and transform Scotland into a country with a substantial and chronic surplus.

All the above figures are, of course, based on the estimated output of 100m. tons of oil in 1980. This was the DTI’s revised estimate in the early summer of 1973.

Already it is beginning to look as if these estimates may be too conservative. Recent finds and the plans of companies appear to indicate that the Shetland basin may prove very productive indeed. Zetland County Council’s consultants worked on the assumption that 70m. tons a year might actually be piped ashore in the county. It is now known that Shell expect to land 50m. tons a year through their own pipe alone and pipelines may also be expected from Total’s Alwyn field, Conoco’s Hutton and the recent BP and Burmah finds. In addition to this there are, of course, substantial finds further south, particularly BP’s Forties field and Occidental’s Piner. Whether or not this, plus any new finds that are made, result in the 1980 estimate of 100m. tons being exceeded largely depends on how quickly newly discovered fields are brought into production, but it does now seem extremely likely that production during the 1980s will use well above 100m. tons a year with consequent increases in revenue and gain to the balance of payments.

Can one be certain that the oil is without doubt a Scottish asset or, even if it is, that these substantial revenues and balance of payments advantages would indeed accrue to an independent Scotland? Clearly these questions raise complicated issues in international law which could, if allowed, occupy the legal profession for many years. Two possible lines of argument may be expected: either that Scotland should pay England some compensation for appropriating the most productive part of the Continental Shelf, or that the whole shelf should be regarded as the common property of the nations of the former United Kingdom with revenue distributed in accordance with some population based formula irrespective of where oil is discovered. As regards the first of the arguments, the prospective return from oil revenue would at the very least be one of the factors taken into account in determining the financial settlement between the two countries when they become independent. To argue the second would be directly counter to the line that the UK Government has taken with the EEC, that the resources of the Continental Shelf are as much a national asset as are those on land, like coal mines, and that there is therefore no question of the Europeanisation of North Sea oil.

Disputes on these matters might well occasion much bitterness between the two countries, but it is hard to see any conclusion other than to allow Scotland to have that part of the Continental Shelf which would have been hers if she had been independent all along.

There might be some argument about where the boundary between English and Scottish waters would lie. At present this is considered to be along the line of latitude which lies just north of Berwick on Tweed, and it might perhaps be held that it should run NE/SW as an extension of the Border. This could have the effect of transferring the small oilfields in the south, Auk and Argyll, to the English sector, but would not affect the main finds.

It must be concluded therefore that large revenues and balance of payments gains would indeed accrue to a Scottish Government in the event of independence provided that steps were taken either by carried interest or by taxation to secure the Government ‘take’. Undoubtedly this would banish any anxieties the Government might have had about its budgetary position or its balance of payments. The country would tend to be in chronic surplus to a quite embarrassing degree and its currency would become the hardest in Europe, with the exception perhaps of the Norwegian kroner. Just as deposed monarchs and African leaders have in the past used the Swiss franc as a haven of security, so now would the Scottish pound be seen as a good hedge against inflation and devaluation and the Scottish banks could expect to find themselves inundated with a speculative inflow of foreign funds.

II A Policy for Development

The situation described in the first part of this paper is indeed an astounding reversal of the problems which are usually considered in a Scottish or British context. But it could nonetheless give rise to some serious difficulties and would require careful handling if Scotland was really to derive maximum benefit from it. It is, of course, perfectly possible that these difficulties would not be overcome and that an independent Scotland despite its wealth would continue to have an unsatisfactory economic performance. It takes more than money to eliminate the traditional problems of the Scottish economy and nationalist movements, dependent as they are on strong emotional pressures, have not always been notable for their economic realism. In this respect the example of Ireland’s poor economic performance between 1922 and 1956 comes immediately to mind and the SNP is already showing signs of making promises which could be an embarrassment to its economic management.

Nevertheless it is obvious that the surpluses from North Sea oil would open up new opportunities for a nationalist Government. The purpose of this second part of the paper is therefore to consider in very brief outline some of the policies a nationalist Government could follow to try to bring about the development and prosperity of the country as a whole.

Scotland’s central economic problem is to secure a faster rate of economic growth so that she can raise income levels and absorb the excess labour which presently appears as high unemployment and emigration. As has been explained, this is a situation which would normally point to devaluation as a possible remedy. North Sea oil, however, by giving the country a chronic balance of payments surplus, would rule out any possibility of devaluation. Indeed, it is hard to see how an upward valuation of the currency could be avoided. Obviously this pressure should be resisted as far as possible; but unless there was a remarkable change in the strength of sterling, it must be expected that the Scots pound would rise in relation to it fairly soon after independence, especially if the latter continues its downward slide. A revaluation would give rise to none of the difficulties which were argued earlier to apply to a Scottish devaluation.

Since the effect would be to reduce prices and raise incomes there would not be the same resistance to making it effective in Scotland. An exchange rate of £1 Scots to 120p sterling within two years of independence therefore seems quite probable.

This exchange rate movement would improve Scottish real incomes; imports would all become cheaper, and GDP per head in Scotland, which would include the value of the oil produced, would rise smartly. The gap between Scottish income per head and English would probably soon be eliminated and might well be reversed. The danger is that with a rising currency Scotland’s traditional economy would find it more and more difficult to compete; manufactured exports would be priced out of foreign markets and imports would become highly competitive at home; tourists would find that the rate of exchange made Scotland a very expensive country for holidays; and Scottish farmers would find that the EEC’s Common Agricultural Policy gave them a much less satisfactory level of support than expected. Thus there would be grave risk that the economy would be driven more and more to depend on the oil industry and other activities would tend to wither.

But while oil would give Scotland a good income, it could never be an adequate source of employment with the rest of the economy in decline.

Scotland, therefore, could face the danger of prosperity coupled with continuing or even worsening unemployment and emigration.

To counteract this situation it would be essential to try to keep the surpluses on the balance of payments down and thereby reduce the upward pressure on the exchange rate. This could involve extensive lending abroad, whether to England, the EEC or under-developed countries. Such lending could well be in Scotland’s interest rather than face the prospect of an intolerably high exchange rate; it might also do much to help cement relations with other EEC countries and, coupled with the supplies of oil for export, would make Scotland a highly desirable member of EEC with a strong bargaining position.

The first priority, however, would be to spend the surpluses as far as possible in developing Scotland’s domestic economy and providing a modern infrastructure. The following paragraphs suggest how this might be done.

a. Manufacturing Industry

Output per head in most sectors of Scottish industry is well below European levels. This is largely because the British economy has invested much less than other European countries over the last 25 years. A substantial increase in manufacturing investment is therefore necessary if this is to be put right. Only then will Scottish industry be able to compete effectively with other members of EEC at anything other than low exchange rates.

Part of the reason for the low investment in Scotland in the past has been the persistence of ‘stop-go’ in the UK economy. Every time investment has begun to rise satisfactorily, as it was doing in 1973, the emergence of a balance of payments deficit has forced the Government to take strong deflationary measures with the result that the investment boom has petered out again. Scotland made good progress in 1973, but ideally from her point of view the 5 per cent growth rate needed to go on for another couple of years. As an independent state, Scotland’s balance of payments position would enable her to break out of the ‘stop-go’ cycle and a sustained rate of growth could be planned on the basis that it could be carried on for at least a decade.

The strength of the currency coupled with the budgetary surplus would help to keep interest rates down and there would be no need for sudden increases in taxation or massive cuts in public expenditure.

Admittedly, since Scotland is so closely tied to the English market, her economy would continue to be affected by measures taken in London, but this effect would diminish the more Scotland expands trade with other EEC countries. Furthermore, it would be quite proper for a Scottish Government to take countervailing measures to stimulate the Scottish economy at times when England was going through a recession.

Such measures would help to keep Scottish output up and would help the English economy by reducing the Scottish balance of payments surplus. It can be expected therefore that the prospect of sustained expansion and an end to ‘stop-go’ would do more than anything else could both to raise investment in domestic industry and to encourage foreign investment to come to Scotland.

However, this expansionary macroeconomic policy would need to be backed up by firm regional policy measures. The position in West Central Scotland has deteriorated vis-a-vis the rest of Scotland over the last decade and this is likely to be even more accentuated by North Sea oil developments.

Furthermore, as an independent state, it would seem to be quite inappropriate for Scotland to regard the whole of the territory as subject for regional policy. Something along the lines of the following package of measures therefore seems to be most appropriate:

i. For Scotland as a whole the Regional Development Grant would be abolished, but to stimulate investment Corporation Tax would either be abolished or reduced to a purely nominal rate. This would have the effect of more or less removing the tax from industry’s retained profits while leaving distributed profits taxed roughly as they are at present. As a national fiscal policy measure it would not come within the control of the EEC’s ceilings on regional aids. The cost of abolishing Corporation Tax would be £120m.

ii. West Central Scotland would be scheduled as Scotland’s Development Area and the definition could be extended to certain smaller areas in the Highlands and Islands if necessary. Within this area there would be a 20 per cent Regional Development Grant paid as at present in addition to (i) above.

iii. There would be a Scottish Development Authority covering the whole of Scotland but with instructions to give particular priority to West Central Scotland.

Its budget would at least be on a scale equivalent to the funds which previously went into REP and SIDO. It would be empowered to give discretionary grants and loans and would be equipped to provide advice to companies. It would be responsible for working out a strategy for developing Scotland’s domestic industry as well as promoting foreign investment. The HIDB would continue to operate with its own much wider remit in the Highlands.

iv. Steps would be taken to strengthen the shipbuilding industry by adopting a scheme for insurance against inflationary risk as operated in France and approved by EEC. The new SDA would be especially charged with the preparation of proposals for the modernisation of the industry.

b. Construction

The construction industry employs a substantial part of the labour force and its fluctuations have been a major factor in unemployment. In 1971 no less than 25,000 of the 100,000 unemployed were registered as construction workers.

In times of boom the shortage of skilled labour in the industry becomes a serious bottleneck in the economy although coupled with continuing large numbers of unskilled unemployment.

The industry does not play as large a part in the British economy as in most other European countries and this coupled with the manifest need for urban rebuilding and house replacement suggest that, with the proper policy, the industry could play a much larger part in providing steady employment for the Scottish labour force. Indeed, if the Scottish construction industry employed 10 per cent of the labour force, the EEC average, this would mean employment for an additional 40 thousand.

With North Sea oil revenues, public expenditure on construction projects could be greatly stepped up and a major operation should be mounted to carry on the rebuilding of Glasgow and do much more than has been done in the past for environmental recovery. This would probably require a special Environmental Recovery Agency to assist the local authorities rather in the way that SSHA operates.

Housing policy has been bedevilled in the past by the subsidisation of certain types of housing. This has led to the colossal public housing sector in Scotland with the emphasis on quantity rather than quality. It seems desirable to subsidise housing for many years to come both to improve the living conditions of the Scottish people and to keep up the demand on the construction industry. Instead of subsidising rents at one extreme and at the other giving tax relief on mortgages which is greater the larger the mortgage, it would seem much more appropriate to give the assistance to individuals regardless of the type of house they occupy or whether they are tenants or owners.

This could probably be done under the new tax credit system and it would have the effect of providing a housing subsidy or negative tax to those with low incomes and a housing tax allowance to others. In this way demand for housing as a whole could be encouraged while avoiding the distortion between different types of housing which has been such a feature of the past. It would be likely that local authority housing would then gradually decline in importance and housing associations would assume greater prominence. As competition between different forms of housing increased, so the quality of housing would improve.

c. Service Industry

In the past service industry has received much less assistance from regional policy than manufacturing.

In part this is right because many service activities, such as medical services, education, accountants, distribution, are governed simply by local demand. But there are service activities, notably major offices, which have a choice of location and every effort should be made to attract them to areas where labour is available.

Following independence the increased Government activity would largely wipe out any spare labour resources in Edinburgh, but major efforts would be needed to promote commercial and office development in Glasgow. The Scottish Development Authority should be empowered to offer assistance, comparable in scale to that available to manufacturing industry, to encourage such development in the Glasgow conurbation and the system of property rating should be revised, if not abolished, to prevent high rates being a brake on commercial development as they have been in the past.

Tourist development would obviously assume major importance for any independent Scotland and the financial resources available to the Tourist Board could be increased.

d. The Pace of North Sea Oil Development

On the face of it the pace of development of North Sea oil appropriate for Scotland would be very different from that now being demanded by the UK.

Apart from the need to avoid piling up excessive surpluses, Scotland would wish to extend her North Sea oil revenue over a much longer period than the 30 or so years which seems likely at presently planned rates of extraction. It is also desirable to avoid the frenzied peaks of activity which seem likely in Shetland, the Moray Firth and Loch Carron on present plans.

These will impose immense infrastructure demands, lead to a substantial inflow of population and leave in their wake problems of readjustment and unemployment which it may take years of regional policy to overcome. In addition the contribution of Scottish Industry to oil developments, which is so far disappointing, might be increased substantially if the whole programme is not required to go at the maximum possible speed.

From a purely Scottish point of view this suggests that a production flow of, say, 50m. tons a year might be ideal.

Even this would be five times Scotland’s present consumption and yield and annual revenue of between £700m and £1,500m.

However one cannot look at the Scottish position in isolation.

If, because of action in the Middle East, there is a serious energy shortage in Europe, Scotland would undoubtedly suffer severely from the resulting slump. It would therefore be in Scotland’s interests to increase her oil production well beyond what would otherwise seem desirable. If however there is no serious shortage in physical terms, merely a crisis of price, then action by Scotland is not going to affect the international price of oil, nor will it matter to the other countries what the source of their oil is.

e. Inflation, Income Policy and Training

The strength of the Scottish exchange rate and the low interest rates which would result from the budgetary and balance of payments position would do much to reduce inflationary pressure. A major part of the British inflation has resulted from the downward drift of the currency and the consequent rise in import prices. The absence of this, relaxations in taxation and subsidies for housing would no doubt help to reduce the pressure of wage increases.

Nevertheless as Scotland moved nearer full employment serious shortages of certain types of skilled labour would occur and this would tend to produce acute inflationary pressure.

Some form of incomes policy is clearly going to be a continuing feature of advanced economies and would be essential in Scotland if the economy was not to price itself out of international markets. It is important to recognise, however, that the labour shortages which give rise to the pressure could be avoided to a considerable degree if training schemes were more flexible and if a substantial increased effort was put into retraining. A full-scale examination of training is clearly an early priority.

The European Community Membership of the EEC affects the economics of Scottish independence in several important respects. It guarantees access to English and Continental markets in a way which would not be possible otherwise. Without EEC Scotland would always run the risk that England might find it expedient to impose an import surcharge, a quantitative control or even a tariff on goods coming from Scotland. It was largely to eliminate this that Scotland accepted the Union of 1707. New EEC rules would have the same effect and for all nine member states. In the unlikely event of England leaving the EEC, Scottish access to the other countries could in time largely compensate for any restrictions that might arise on English trade.

Access to EEC should also help to provide a major stimulus to Scottish industrial investment. The EEC is not only a bigger market than the UK but its economy has been much more buoyant than that of Britain. There is no doubt that the exclusion of the United Kingdom had a damaging effect on investment and that foreign firms in particular preferred development within EEC. To gain the full advantage of this stimulus from membership it will, of course, be necessary to have a stable domestic economy.

High rates of inflation and a declining currency such as the UK has had recently would do much to discourage foreign companies from coming to Scotland.

North Sea oil could have far-reaching consequences for Scottish membership of EEC because of the tremendously increased political power it would confer. Without oil other members might pay little enough regard to Scotland; her voting power would not be large and it might indeed be argued that she could exert more leverage on the Community as part of the United Kingdom. As the major producer of oil in Western Europe, however, Scotland would be in a key position and other countries would be extremely foolish if they did not seek to do all they could to accommodate Scottish interests. For Scotland the net cost of Common Agricultural Policy, which features so large in British discussions would be at most some £40m. a year, a small sum compared with the balance of payments gain from North Sea oil. The more common policies come to be decided in Brussels in the years ahead, the more Scotland would benefit from having her own Commissioner in the EEC as of right and her own voice in the Council of Ministers instead of relying on the indirect, and so far hardly satisfactory, form of vicarious representation through UK departments.

Conclusion This paper has shown that the advent of North Sea oil has completely overturned the traditional economic arguments used against Scottish nationalism. An independent Scotland could now expect to have massive surpluses both on its budget and on its balance of payments and with the proper husbanding of resources this situation could last for a very long time into the future.

Wealth does not automatically mean full employment and the end of net emigration. But provided sensible policies are pursued, it is possible to see how this situation could be used to re-equip Scottish industry and renew outworn social capital thereby providing the expansion necessary to absorb Scotland’s excess labour and the increase in productivity required to raise incomes. Thus, for the first time since the Act of Union was passed, it can now be credibly argued that Scotland’s economic advantage lies in its repeal. When this situation comes to be fully appreciated in the years ahead, it is likely to have a major impact on Scottish politics, since it is on social and political grounds alone that the case for retention of the union will in future have to be based.

Nationalist policy as outlined in this paper can, of course, be regarded as extremely selfish.

Undoubtedly it is, but it can be argued in reply that so long as Scottish GDP per head is only 70 per cent of the European average, the unemployment and emigration rates among the highest and the country regarded by the EEC as one of its worst problem regions, then Scotland is justified in using her own resources to rectify these problems rather than relying on the generosity of others at least until she has managed to catch up.

Yet undoubtedly the greatest weakness in the nationalist economic case is that Scotland, even with its oil, cannot expect to prosper in isolation.

Economic conditions in Europe and above all in England, with whom Scotland will remain closely tied in trade, are of particular importance. Even with greater diversification of Scottish trade to Europe and to North America, an impoverished England or one perpetually suffering the rigours of demand restraint would have most serious consequences for the Scottish economy. Britain is now counting so heavily on North Sea oil to redress its balance of payments that it is easy to imagine England in dire straits without it. The oil prices since the Yom Kippur war make this a much more serious matter than could have been imagined before; and it is now likely that transfer of North Sea oil to Scottish ownership would occasion much bitterness in England if not an attempt to forcibly prevent it. England would, of course, be no worse off than most of the Continental EEC countries in this respect; indeed, probably there are better chances of finding oil in the Celtic Sea or the English Channel than are open to most of them. If therefore the other countries can adjust to the new energy situation, England should be able as well.

Nevertheless it is now clear, as perhaps never before, that Europe could bring about its economic ruin by disunity. If supplies of oil become seriously restricted or the burden on the balance of payments of importing countries proves more than the international monetary system can cope with, a serious breakdown in the economic system of Western Europe could well result.

This danger imposes serious international responsibilities on those European countries which are likely to be exporters of energy, Norway, Scotland if independent, and Ireland where oil is likely to be discovered. A spirit of European co-operation is not very evident yet either in discussions or plans for the development of energy and the rather nationalistic attitude so far followed by Britain would hardly be a good example to an independent Scotland. Yet the situation offers the energy producers a real opportunity to contribute to the economic strength of Europe and in so doing to ensure their own prosperity; if instead they retreat into narrow nationalism, developing their energy resources with regard to their own interests alone, they could undermine the whole European economy and seal their own fate in the process.

Perhaps the most important conclusion is that time is now extremely limited. British regional policy has been in operation for forty years and the annual cost of the measures applied to Scotland is now about £100m. a year. But, although there have been undoubtedly been notable achievements and the Scottish economy would have been in a much worse state without such a policy, there is still little prospect that it will solve the problems of West Central Scotland in the foreseeable future. High hopes have been held out for European regional policy but any impact from this is likely to be very small for a long time to come. In much the same way agitation for a workable form of political devolution has persisted amongst a substantial part of the Scottish electorate for a considerable time but without any practical result so far and it is still far from clear whether anything will stem from the consideration of the Kilbrandon Report.

If, in five years’ time North Sea oil is contributing massively to the UK budget, while the economic and social condition of West Central Scotland continues in the poor state that it is today, it would be hard to imagine conditions more favourable to the growth of support for the nationalist movement.

Very determined steps to urgently transform economic conditions in Scotland will therefore be necessary and the Scottish people will have to be persuaded that their problems really have received the attention and expenditure they deserve if this outcome is to be avoided.

Nicola Sturgeon speech at France’s Assemblée Nationale

THE First Minister is in France to talk up Scotland as an “open and outward-looking country”.

She was addressing the Foreign Affairs Committee at the Assemblée Nationale in Paris.

She is also there to officially open the Scottish Government’s hub office in city.

It is an honour to be invited to this committee. As my remarks will make clear, Scotland and France are natural partners on many issues. In fact, one of the reasons for my visit to your great city was to launch, yesterday, the new Scottish Government office here in Paris.

That is an important development for us. It represents a commitment, not only to France, but also to Scotland’s role as an outward-facing European nation.

It also perhaps overdue. After all, France was the very first country to establish a consulate in Scotland.

It was opened by General de Gaulle in 1942. A quote from General de Gaulle’s speech on that occasion is inscribed on the outside wall of the Consul-General’s residence in Edinburgh – it says simply ‘the oldest alliance in the world’.

That of course reflects the fact that our countries enjoy ties of trade, commerce and friendship which go back for more than seven hundred years.

I will reflect on those historic links between our countries from time to time in my remarks today. But as you would expect, I will focus far more on our modern partnership. In fact my basic message this afternoon is actually very simple.

Scotland treasures our friendship with France. We believe that it brings significant benefits to both of our countries. We want it to flourish further in the years ahead. And we are working with France to ensure that that happens.

As you would expect, I will start by addressing the issue of Brexit.

It is, after all, the dominant issue in the UK at present.

The first point I want to stress is that the Scottish Government is committed to the European Union.

We believe that Scotland benefits hugely from access to a single market of more than 500 million people.

We benefit from the rights EU membership offers to workers, and from the protections it has provided for our environment.

We benefit from our freedom to travel, study and live in Europe, also from the contribution that our fellow EU citizens have made to Scotland.

Those EU citizens of course include 7000 French people, who are our colleagues, friends, neighbours and in many cases our family.

The Scottish Government is proud that they have done us the honour of making Scotland their home.

We will always stand up for their rights – in recent months we have lobbied successfully to ensure EU citizens would not have to pay a fee to obtain settled status in the UK.

And we will always make it clear that EU citizens are welcome. In fact in the coming months, we plan to step up our efforts to encourage EU citizens to stay in Scotland.

In addition to all of the practical benefits we gain from the EU, we also cherish its fundamental values – freedom, democracy, the rule of law, equality, and respect for human dignity and human rights – and we will always encourage the EU to live up to these values.

There’s actually a point here which goes slightly beyond Brexit.

The main task of the Scottish Government’s new Paris hub is to strengthen our ties with France.

But another important reason to be based here is that Paris, as a great world city, is the home to major international organisations. UNESCO and the OECD, in different forms, have both been here since the 1940s.

It’s a reminder that France was at the heart of efforts, after World War II, to create a rules-based international order.

The institutions created during that time – which of course include the predecessors to the European Union – have brought significant and lasting benefits to Europe and to the world as a whole..

We are being reminded at the moment that the principles they exemplify – multilateralism, cooperation, a respect for human rights – cannot be taken for granted. We hear too many voices of intolerance and isolationism around the world today. That should concern all of us.

And so participating in international institutions, and speaking up for internationalist values, is hugely important.

I hope that Scotland’s base in Paris – in a small but significant way – will help us to do that more effectively.

Of course at the moment, a key way in which we co-operate with other countries is through the EU.

I was struck by something that the Taoiseach, Leo Varadkar, said earlier this month. He was reflecting on the consistent support Ireland has received from the EU throughout the Brexit process.

He said: “As a leader of a small country that is fully committed to the European Union, this solidarity resonates deeply in Ireland. But not just in Ireland, in all small member states as well.”

It’s a good example of the fact that for member states – especially, but not exclusively, smaller ones – EU membership can amplify, not curtail, national sovereignty.

As I’m sure you all know, in 2016 two of the four countries that constitute the UK – England and Wales – voted to leave the EU.

But the other two – Scotland and Northern Ireland – voted to remain in the EU.

In Scotland’s case, 62% of those who voted, chose to remain.

Despite that, the UK Government has been unwilling to recognise the complexity of the vote across the UK – the 48% of people overall who wanted to remain; the remain votes in Scotland and Northern Ireland; and the fact that the UK is supposed to be a partnership of equals.

Instead, it has sidelined moderate voices and chosen to draw self-defeating red lines – none of which flow directly or inevitably from the referendum result.

That approach has led to many of the difficulties it faces today. I can understand Europe and France’s frustration with that – in fact I share that frustration.

The Scottish Government – on behalf of the Scottish people – has consistently sought compromise. In December 2016 we published Scotland’s Place in Europe.

This paper was the first detailed set of Brexit proposals to be produced by any government in the UK. These proposals aimed to minimize the harm caused by Brexit. And they also tried to take account of the nature of the vote across the UK.

In this paper, we made clear the Scottish Government’s view that continued membership of the EU would be the best outcome for Scotland and the UK.

However, we also suggested that if this was not possible, the UK as a whole should remain in the customs union and single market, or even that Scotland should retain single market membership as part of a differentiated solution.

That option represented a middle ground, given the closeness and complexity of the referendum result.

And finally, we proposed that when there is greater clarity about the terms of Brexit, Scotland must have the option to choose a different course, by opting to become an independent country.

I will say more about independence at a future date.

One thing I do want to stress, however, is that for the Scottish Government, independence is not about the isolationism that characterises Brexit – instead independence would see us recognizing and embracing our interdependence with other nations.

We will always seek to be close allies and partners with our neighbours in Europe. The last two years, to my mind, have underlined the importance of that position.

Now, you will have noticed that the UK Government’s negotiating stance has not reflected any of the Scottish Government’s views or proposals.

That is why we believe that the deal the Prime Minister agreed with the other 27 EU member states in November is deeply flawed.

Let me be clear, though – that is a reflection of the UK Government’s flawed negotiating strategy, rather than the position of the EU.

To give one important example, it seems clear that no free trade agreement envisaged by the UK Government will match the benefits the Single Market provides for services. However Scotland’s services sector accounts for three-quarters of our economic output.

Putting that sector at a disadvantage will be damaging to Scotland and indeed the whole of the UK – and ultimately to member states across Europe.

Perhaps even more fundamentally, we still have virtually no clarity on what the UK’s long-term relationship with the EU will look like. The UK Parliament is effectively being asked to approve a “blindfold Brexit”.

That is deeply concerning. If you look at the ongoing chaos at Westminster – where hardline Brexiteers appear to receive more attention than moderate voices – it is impossible to be optimistic about the UK Government’s ability to agree a long-term relationship which safeguards Scotland’s interests.

And in the places where November’s political declaration is clear, it is damaging to Scotland.

By insisting on an independent trade policy, it effectively rules out a Customs Union. It effectively rules out single market membership by explicitly committing to the ending of free of movement of people.

I spoke about French citizens in Scotland earlier. For me, this is one of the saddest parts of Brexit. The UK Government is proclaiming the end of free movement as a victory – instead, it is a self-defeating measure. It removes opportunity from millions of people.

It is an approach which is especially damaging to Scotland. Without freedom of movement there is a danger that our population will start to decline. We could face workforce shortages in rural areas, in our universities, in our care and health services.

European nationals are not only very welcome in Scotland. They are crucial to our well-being.

All of this is down to the red lines that UK Government has chosen to draw. Given the existence of those red lines, I understand why the European Union believes that the deal agreed in November is the best which could be achieved.

And I appreciate that many people in France and across the EU would like the UK to just get on with it.

But no government of Scotland which has the interests of this and future generations at heart could possibly support the current deal.

In addition, we still believe that there are still possible routes to a better outcome.

However to achieve that, the UK Government would have to alter its approach.

Firstly, the UK Government should make it clear that it would not support the UK leaving the EU on the 29 March without a deal in place. Such an outcome would be disastrous.

The UK Prime Minister should therefore write immediately to the European Union requesting an extension to the Article 50 process. That would alleviate the most immediate time pressure.

And in any event, it has been obvious for some time now that the UK is not remotely prepared to leave the EU on 29 March.

I sincerely hope France would lend its support such an extension. However I am well aware that a new European parliamentary session starts on July 1. And so I know that the time of any extension – and indeed the purpose of it – would need to be considered carefully.

Beyond that I believe there are two options. The UK Government could drop its self-defeating red lines and, at long last, stand up to the more extreme Brexiteer element in its ranks and agree to the UK as a whole remaining firmly within the Single Market and Customs Union.

Among other things, that would make it far easier to maintain an open border on Ireland. It is the UK’s chosen red lines that currently make that solution impossible.

However, there is no sign so far of the Prime Minister being willing to contemplate such an approach – and, of course, even if she was, there may be too little time left to achieve a guarantee of it before the UK relinquishes EU membership.

That is why the alternative option is now the preferred one for me and many others – a second referendum offering people the choice to remain in the EU.

There is a strong democratic case for that. For parliament, it is a way to break the deadlock. For Scotland it is an opportunity for our wish to stay in the EU to be respected.

And for all voters, it is a chance to make a decision based on much more detailed information than was ever made available in 2016.

At the time of the referendum, people who opted to leave knew that they were voting against EU membership; but they did not know what they were voting for.

That allowed the EU to serve as a scapegoat for more general discontents – for example an entirely justified dissatisfaction about austerity, inequality and stagnant living standards.

A second vote could be based on a much clearer understanding of what the leave option actually means in practice.

This option does not currently have the parliamentary support it needs. However it remains one way out of the problems the UK has created for itself.

So it is a course the Scottish Government will support. We cannot endorse the UK Government’s current Brexit proposals, and we will do everything in our power to secure a better outcome for Scotland, the UK and Europe.

And regardless of the eventual outcome of the Brexit process, the Scottish Government will ensure that Scotland is – and is seen to be – an open, welcoming and outward-looking country.

In the last two years the Scottish Government has doubled our trade representation on mainland Europe.

We have launched a new promotional campaign – Scotland Is Now – which invites people to live, work, invest in and visit our country. We have enhanced our Brussels office, and established new bases in Berlin, Dublin and London.

And yesterday, as I mentioned, I formally opened our new base in Paris. It exemplifies Scotland’s desire to strengthen the connections between our two countries.

That is something which I stressed in meetings with European Affairs Minister, Nathalie Loiseau, yesterday, and with the Mayor of Paris, Anne Hidalgo, today.

We have many opportunities to do so. Culture for example is an area where Scotland and France already have a formal co-operation agreement.

Scotland was country of honour at the Brittany’s Lorient festival in 2017, and earlier today, I confirmed that the Orchestre de Paris will play at this summer’s Edinburgh International Festival.

Economically, in recent years, France has been Scotland’s largest European inward investor. In fact French businesses employ more than 20,000 people in Scotland. France is also a key market for Scottish businesses – you are our third largest export destination.

There are obvious opportunities for us to build on those links. Low carbon technology is a good example.

One of my last official visits to Paris was for the 2015 Climate Change Summit – I know how hard France worked to secure the Paris agreement, and how seriously you take your obligations under it.

Scotland now generates more than 70% of our gross electricity demand from renewable sources. The waters around Scotland are currently home to the world’s most powerful offshore wind turbines, and the world’s largest tidal stream project.

We already collaborate with French institutions in this area – the Universities of Caen and Le Havre in Normandy are involved in a tidal energy project led by the European Marine Energy Centre in Orkney. EDF is a significant investor in Scottish offshore wind projects.

However given the scale of France and Scotland’s ambition in moving to a carbon neutral economy – and given the urgency of the global challenge – renewables is an obvious area for further co-operation.

Technology and artificial intelligence could be another.

Events such as Vivatech demonstrate how successful France has been, in recent years, at becoming a major centre for technology businesses.

Scotland is also enjoying success in that area. Our cities are becoming established as major tech hubs – partly because of the quality of our university research.

That may sometimes create healthy competition with France – for example in attracting investment – but it will also lead to opportunities for collaboration.

Other possible areas for partnership include food and drink, health and social care, and policy issues such as the need to balance growth with equality. And of course one of the most important areas of all is education.

Virtually every university in Scotland has a research connection with partners in France – either through bilateral links or through the EU’s Horizon 2020 programme.

Almost 2,000 people from France study in Scotland, and many Scots study here in France. Those exchanges are of course largely enabled through the Erasmus programme.

Scotland will do everything in our power to remain part of Erasmus, and we will do everything we can to ensure that, despite Brexit, our universities collaborate with institutions here in Paris and around the world.

Just a few kilometres from here, you can still see the entrance to the old College des Ecossais in Paris. It was established in 1325.

It is a reminder that the exchange of people and ideas between our countries has been taking place for centuries – it will be a vital part of our friendship well into the future.

I began by quoting General de Gaulle’s speech at the opening of the French Consulate in Edinburgh.

On the same occasion, De Gaulle welcomed the frequent “exchanges of ideas, feelings, customs, and…words…between two peoples joined by a natural friendship”.

In recent decades, thanks in part to our European Union membership, and then also to the establishment of a Scottish parliament, those exchanges have flourished further.

Brexit now puts some of those ties at risk. However when you look at the closeness of our countries’ existing connections, and when you see how much common ground we share, I believe that – despite Brexit – our relationship will flourish still further in the years ahead.

That is why I am delighted to be here today. It is a privilege to attend this committee. I look forward to your questions.

Calls for EU nationals to stay in Scotland

First Minister: UK Brexit deal is ‘self-defeating.’

The Scottish Government will increase its efforts to encourage EU citizens to remain in Scotland, the First Minister Nicola Sturgeon will confirm in an address to the Assemblée Nationale, the lower house of the French Parliament, as she describes the UK’s decision to end Freedom of Movement as part of its Brexit deal as a ‘self-defeating measure.’

Speaking to the Foreign Affairs Committee after opening the Scottish Government’s new office in Paris, the First Minister will give her support to EU citizens currently living in Scotland. She will say:

“Those EU citizens of course include 13,000 French people, who are our colleagues, friends, neighbours and in many cases our family. The Scottish Government is proud that they have done us the honour of making Scotland their home.

“We will always stick up for their rights – in recent months we have lobbied successfully to ensure EU citizens would not have to pay a fee to obtain settled status in the UK. And we will always make it clear that EU citizens are welcome. In fact in the coming months, we plan to step up our efforts to encourage EU citizens to stay in Scotland.”

Discussing the impact on Scotland of the UK Government’s proposed Brexit deal she will go on to say:

“For me, this is one of the saddest parts of Brexit. The UK Government is proclaiming the end of free movement as a victory – instead, it is a self-defeating measure. It removes opportunity from millions of people.

“It is an approach which is especially damaging to Scotland. Without freedom of movement there is a danger that our population will start to decline. We could face workforce shortages in rural areas, in our universities, in our care and health services. European nationals are not only very welcome in Scotland. They are crucial to our well-being.

“All of this is down to the red lines that the UK Government has chosen to draw. Given the existence of those red lines, I understand why the European Union believes that the deal agreed in November is the best which could be achieved. And I appreciate that many people in France and across the EU would like the UK to just get on with it.

“But no government of Scotland which has the interests of this and future generations at heart could possibly support the current deal.”

Article Source:

Brexit threat to jobs

Warning that ‘no deal’ will harm Scotland’s economy.

The UK Government must agree to extend Article 50 and rule out ‘no deal’ Brexit, which risks imposing severe economic damage and rising unemployment on Scotland, Constitutional Relations Secretary Michael Russell said.

Article Source:

The Scottish Government will continue to act wherever possible to minimise and mitigate the impact on Scotland. However, it will not be possible to avoid the major economic costs of a ‘no deal’ Brexit.

Speaking after delivering his latest Ministerial Statement at the Scottish Parliament, Mr Russell said:

“In 38 days the UK is scheduled to leave the EU and the economic impact will be felt across the country.

“Today’s labour market statistics show that the Scottish economy and jobs market continue to strengthen. But Brexit, and in particular a ‘no deal’ Brexit, will put this at risk.

“Later this week the Finance Secretary Derek Mackay will provide economic detail on the stark reality that a ‘no deal’ Brexit will have. We estimate it could result in an increase in unemployment in Scotland of around 100,000, more than doubling the unemployment rate.

“Of course, the Prime Minister could change this course of action by extending Article 50 and ruling out ‘no deal’. The best outcome is to remain in the EU, in line with the wishes of the people in Scotland, as even the UK Government’s current deal will remove Scotland from the European Single Market – which is eight times the size of the UK alone – hitting our economy hard. As weeks go by there is still no clarity whatsoever about the future relationship with the EU.

“As a responsible government we will do all that we can to ensure that the people of Scotland get a clear, consistent message about the work that is being done and what actions they need to take.”

Brexit: Joint statement by First Ministers of Scotland and Wales

Last week, the Scottish and Welsh Governments were invited to attend a UK government cabinet committee for the first time.

We have repeatedly pressed the UK government to engage fully with us on its preparations for the UK leaving the EU and we will continue to contribute as fully as possible to the work of the European Union Exit and Trade (Preparedness) Committee over the coming weeks.

We are particularly keen to do so to press home the point that all the evidence we have seen to date suggests that the UK is simply not prepared for a ‘no deal’ Brexit in less than 2 months’ time. Our firm view is that such an outcome to the Brexit negotiations would be a catastrophe which would cause significant short-term disruption to the lives of ordinary citizens as well as to businesses and long-term harm to our economy.

And while a longer period to prepare for ‘no deal’ as proposed by some Conservative MPs might reduce the risk of people in Scotland and Wales being unable to access the medicines that they need or the range of foods they want to buy, it would do nothing to mitigate the longer-term economic damage that such a radical rupture with our EU neighbours would cause. The jobs lost at Shaeffler in Llanelli and the cancelled investment at Nissan in Sunderland are just a foretaste of the future. The CBI has estimated a no deal Brexit could cost the Scottish economy £14 billion a year by 2034.

The House of Commons, National Assembly for Wales and Scottish Parliament have all rejected the Prime Minister’s deal. It would make the UK as a whole poorer and would open the door to a “blind Brexit” with years of difficult negotiations on the future relationship and no guarantee a trade deal will even be concluded.

Alarmingly at this late hour, following its defeat, the UK government still appears unable to identify the “alternative arrangements” to the Irish backstop which it says would allow the House of Commons to vote for the deal. In addition the EU remains totally committed to the backstop, which it says will not be re-negotiated.

The point has been reached where there is now no time to waste. We therefore renew our call for the Prime Minister to make clear that she and her government will ensure ‘no deal’ is taken off the table. This should include putting forward secondary legislation now to remove 29 March 2019 as exit day from the EU (Withdrawal) Act.

The Prime Minister must also request an extension from the EU of the Article 50 deadline. We call on the Prime Minister to request such an extension immediately to put an end to the threat of the UK crashing out of the EU without a deal in only 8 weeks’ time.

The EU has made it clear that in terms of negotiations on the future relationship, it would respond favourably if the Prime Minister was to drop her “red lines”. We therefore further call on the UK government to abandon those red lines, which the EU has repeatedly said, severely restrict the possible outcomes of Brexit.

Article Source:

Brexit: Preparations Ministerial statement

Brexit: preparations in the light of recent developments – ministerial statement

Scottish Parliament 06/02/19

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

Presiding Officer,

After today there are only 19 sitting days in this Parliament before the UK is due to leave the EU.

Meeting the legislative pressures of a possible “no deal” Brexit has been challenging and I acknowledge the flexibility and diligence this parliament, its Committees and their Conveners have demonstrated in carrying out that scrutiny role.

However, it is clear that there is a substantial backlog of Brexit legislation at Westminster and, to date, only 73 of the 115 UK SIs to which we have consented have been laid in the UK Parliament.

No one I have spoken to in recent weeks, with the exception of the Prime Minister, believes that Westminster can complete the work it has to finish on Brexit preparations in that time.

Accordingly the Scottish Government believes it is essential that two things happen at the earliest possible date.

Firstly, the Prime Minister must seek an extension to the Article 50 process no matter what other tasks she has set herself in terms of negotiation and Parliamentary decision. That is essential even in legislative, let alone economic and political terms.

And secondly, she – or the House of Commons – must take formal, legal steps to rule out a ‘no deal’ which would reduce the pressure on businesses and individuals as well as on the Parliaments of these islands.

Presiding Officer, in December last year this Parliament voted decisively against the Prime Minister’s EU Withdrawal deal, and for very good reasons.

The Prime Minister’s “deal” would make Scotland poorer, place us at a serious competitive disadvantage and, combined with the UK Government’s hostile immigration policy, make a fall in Scotland’s working, tax-paying population inevitable.

In addition the proposed deal provides no certainty. It will mean years of difficult negotiations with no guarantee that a trade deal can, in the end, be achieved.

Last week the Prime Minister seemed to agree with us, voting against her own deal by backing the Brady amendment seeking “alternatives” to the backstop – a backstop she negotiated, and alternatives she and her colleagues, including the ever flexible Secretary of State for Scotland, said (just two weeks ago) did not exist.

They still don’t exist.

The Prime Minister’s deal isn’t the solution to this problem, it is the problem. It represents the inevitable outcome of ill- conceived red lines. It is those red lines that need to change.

Alternatives are possible.

In fact they are absolutely essential. And they are available.

In 2016 the Scottish Government set out compromise plans that would keep both Scotland and the UK in the Single Market.

Now, with the clock ticking down to exit day the Scottish Government is working with others to try and obtain an extension to Article 50 to avoid a catastrophic ‘No Deal’ outcome and allow time for a second referendum on EU membership.

However, as a responsible Government we must act to minimise and mitigate the impact of a possible ‘No Deal’ outcome in Scotland.

We will do everything we can in that regard, although I repeat the caveat I added when I last updated the chamber about the matter – we cannot do everything.

Extensive preparation has been underway for some time but in the first weeks of this year we have been steadily intensifying this work.

Under the leadership of the Deputy First Minister, reporting to the First Minister, the Scottish Government Resilience Committee continues to provide a single clear, coordinating structure, with COSLA, civil contingencies responders and Police Scotland participating in these arrangements alongside senior civil servants and Cabinet Secretaries.

It will meet again later today and next week during recess. Cabinet will also meet during recess to hear a further update as we are now preparing for the potential need to operate these arrangements on a permanent basis in the event of a ‘no deal’ outcome and to activate public communications.

I have also attended two special UK Government Ministerial meetings in recent weeks which have considered no deal planning and we continue to engage on these matters with the UK Government at the highest levels. The Deputy First Minister will attend another UK Cabinet Sub Committee on EU exit on Monday.

The Scottish Resilience Partnership is coordinating work across Scotland to ensure that Local Resilience Partnerships are fully engaged in planning, mitigation and preparing arrangements to respond to any of the civil contingency issues arising out of EU Exit.

A national EU-Exit Civil Contingencies Plan is being developed on a multi-agency basis and this will be tested and exercised shortly.

A No-Deal Brexit has the potential to generate a significant economic shock which could tip the Scottish economy into recession (potentially into a deep recession).

It would also have a severe impact on the labour market resulting in potential job losses, business relocations and closures, underemployment and a reduction in recruitment.

The SME sector is likely to be the worst hit. Alongside the UK Government we are trying to rectify that and we would support measures to ensure that there is increased liquidity in the banking system should it be required.

As part of our support for business, the Prepare for Brexit campaign offers practical advice which can help to safeguard, as much as possible in these circumstances, a company’s own growth and that of the Scottish economy.

On transport, it remains our aim to try and secure the best flow of essential goods into Scotland. We are concerned at the possibility of severe delays to freight traffic through Dover and the Channel Tunnel.

We are working with the Department for Transport to establish the extent to which its contingency plans are addressing Scotland’s needs for critical goods and in particularly how rurality can be factored in to supply chain issues. Given my constituency experience I am especially conscious of the position of the Scottish islands and I discussed some of those matters when in Orkney earlier this week.

Transport Scotland is also working with transport providers and ports and airports in Scotland to assess their existing capacity and identify how they could help mitigate disruption and ensure that Scotland’s exporters can continue to get their goods to market.

Uncertainty about future tariff arrangements provide another, key, demonstration of the potentially damaging consequences of No Deal.

Studies by the British Retail Consortium and others suggest that in the absence of a trade agreement between the UK and the EU reversion to WTO tariffs for imports and exports could lead to significant price increases, particularly for food and drink. The Governor of the Bank of England has identified potential rises of between 5-10%.

Our red meat industry and seafood sector will be severely impacted by punitive tariffs, and by severe disruption at the port of Dover. The seafood sector will also be required to comply with a range of additional administrative burdens.

We are seeking urgent clarity on updated UK Government technical advice on Protected Food Names in the event of a no-deal. Not only did the UK Government fail to consult or inform us of the updated notice, the UK Government states that current holders, for example Scottish Salmon, Scotch Beef and Scotch Lamb, may need to re-apply to EU for protection in Europe, and also in other countries where there is a mutual recognition with third countries.

It has long been clear that leaving the EU, under any circumstances, will have a negative impact on the health and social care sector.

If free movement is curtailed, this would have serious consequences for the recruitment and retention of health and social care workers.

On medicines, the Scottish Government is working with all other UK administrations to make sure that patients get the medicines and other medical supplies they need, as far as is possible.

Many of the practical issues connected to medicine supply such as entry and custom controls are out with the devolved competency and we continue to raise specific concerns directly with Department of Health and Social Care.

In addition last week the Scottish Government’s Chief Pharmaceutical Officer wrote to pharmacists and other health professionals to provide information and advice.

One particular point being emphasised is that it is important that patients take a careful view, discuss issues with their GP and pharmacist and do not rush to increase their own supplies

A “no deal” Brexit also raises concerns in areas such as the supply of medical devices, clinical trials, access to future EU funding and the rights of Scottish citizens to secure state-provided healthcare across the EU. NHS Scotland Boards are taking forward their own planning to mitigate this with Scottish Government support.

If there was a no-deal outcome, be denied access to many of the security and law enforcement co-operation measures that Police Scotland and the Crown Office use daily to keep people safe. We would lose membership of Europol, the use of the European arrest warrant and access to vital information-sharing arrangements. That would represent a significant downgrading of our policing and security capability when cross-border crime and security threats are increasing.

As the Chief Constable outlined to the Justice sub-committee on policing last week, Police Scotland is taking forward extensive preparations for loss of these measures, working closely with the Scottish Government. It is also making arrangements to ensure that officers are available for, and trained for, civil contingencies demands and for mutual aid requests.

Police Scotland has today 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.

Across the Scottish Government, we are now aligning our existing financial and staff resources towards those areas with specific no-deal impacts and ensuring that we have the right people, in the right places, with the right skills to respond quickly and effectively.

Across the public sector, resources are being diverted to essential preparations for the impact of Brexit. A decision to remain in the EU would allow those resources to be returned to the support and development of frontline services and delivery of Scotland’s priorities.

Our basic principle is this; the Scottish Government believes that any costs related to EU exit by public bodies be they in government, local government or the public sector should not have a detrimental impact on Scotland’s public finances.

Finally, Presiding Officer, let me turn to communications,

The Scottish Government does not intend to replicate the UK approach of publishing a myriad of technical notices. Where those affect Scotland or Scottish issues we are happy to see them distributed and we have done our best to influence them.

We will however do all that we can to ensure that the people of Scotland get a clear, consistent message about the work that is being done and what actions they need to take.

We have therefore launched a public information website to provide important advice around issues such as transport, food, medicines and citizens’ rights. It is now available at

This will be regularly reviewed and updated, in order to ensure that the latest information is made available.

We are however coordinating our message with the UK Government where possible and supplementing their message, as we feel necessary. That is the right way forward in terms of resources and clarity.

Presiding Officer,

We do not accept the suggestion that no deal is somehow inevitable, and nor should we allow anyone to ‘normalise’ it.

Unless and until the UK Government takes the necessary steps to rule No Deal out, the Scottish Government must go on with, and indeed intensify, our work to prepare as best we can.

Though Scotland did not vote for this, and should not be having to go through it.


First Minister Nicola Sturgeon’s speech at Georgetown University

“It is an absolute honour to be delivering this address and to be taking part in this discussion in these wonderful surroundings, in this beautiful and historic library. I could quite easily spend the rest of my trip to the United States here in this library alone, so if my team are listening, if you could rearrange the schedule to allow that to happen I would be immensely grateful. But it’s also an honour to be the first speaker in what I know you are describing as “Women World Leaders” week. And it’s a big privilege to be on the same billing this week as Hillary Clinton, Margot Wallstrom and Amat Alsoswa.

For that reason and for many, many other reasons, I’m thrilled to be here at Georgetown. And of course it is always a pleasure to be in the United States.

Washington and Georgetown – like so many places across the United States, I guess – hold real reminders of the strong and very long-standing ties between Scotland and the USA.

From across the city, of course we can see the Capitol dome, which was designed by William Thornton who was a graduate of both Edinburgh and Aberdeen Universities in Scotland. This university itself, during the Civil War, briefly served as a base for the Union Army’s New York Highlanders which was a regiment mainly raised from Americans of Scottish descent.

And that of course reflects the fact, that in my view we should celebrate and never take for granted, that hundreds of thousands of Scots travelled to the USA in the 19th and then into the 20th century, in search of opportunity and a better life. And indeed that’s why the Presidential proclamation on Tartan Day, which was issued in 2008, notes that “Scotland and the United States have long shared ties of family and friendship”.

Perhaps more importantly though, those ties of family and friendship – and also of trade, of commerce and of culture – endure to this day.

And the universities sector plays a really important role in that. For several years, St Andrews University in Scotland and Georgetown have worked together on a student transfer programme. In total, almost 5,000 students from the US study in Scottish universities – who knows, some of you here might be tempted to do the same in future.

And those international connections, those important, valuable and cherished international connections – are directly relevant to the theme of what I want to talk about today.

As Joe said in his introduction, later this year, Scotland will mark the 20th anniversary of the re-establishment of the Scottish Parliament, after almost 300 years of not having a Parliament of our own. And regaining that parliament, that seat of democracy and governance that now sits in Edinburgh, has allowed Scotland – on some issues – to chart a different course from the rest of the United Kingdom on domestic policy. So for example, in recent years we’ve decided to pursue a more progressive taxation policy than the UK as a whole. And unlike in England, students studying at Scottish universities don’t have to pay tuition fees. We believe that education is something that is precious and should be based on an individual’s ability to learn, not on their ability to pay.

However, having our own parliament has also allowed Scotland to raise our international profile, in the interests of expanding trade, boosting cultural links and also making a contribution to tackling some of the big issues that the world confronts. For example the moral imperative of tackling climate change. We established a Scottish Government presence here in Washington back in 2001, not long after the parliament was re-established and later this week, when I am in Canada, I will meet staff at the Scottish Government’s new base in Ottawa.

In the last couple of years, we’ve also significantly expanded Scotland’s presence in major European cities like Paris and Berlin and when I go to the United Nations in New York on Wednesday, I will be reflecting, amongst other things, on Scotland’s programme to help women who are acting as peacemakers in conflict zones.

I know that Margot Wallstrom, the Swedish Foreign Minister, is speaking here on Thursday on the topic “More Women, More Peace” – something I feel very passionately about as well. Scotland too – like Sweden – recognises that women have an important role in peacemaking. We’re trying to play our part in promoting that.

And all of this, I hope, speaks to a country that’s relatively small in size, but nevertheless a country that has big ambitions to play our full part and have our voice heard in shaping the world that all of us live in. And of course, throughout all of that time, Scotland’s membership of the European Union has been one of the most important means in which we have been able to expand our economy and expand our economic opportunities and maximise our influence. Just last week, trade figures showed that Scotland’s exports to the EU, in the most recent year we’ve got figures for, increased by 13%, outstripping the growth in our exports to the rest of the UK, and indeed to the wider world. Though I’m delighted to say the United States remains our biggest international export market. We also work very closely with European partners on issues that range from energy security to health research.

And it’s important to say in the times that we live in right now, that these European connections have never really been particularly controversial in Scotland. Scotland has a very proud European tradition. We see ourselves as a European country and people in Scotland by and large, of course there are exceptions, but by and large, people in Scotland and this is perhaps in contrast with people elsewhere in the UK, don’t really see membership of the European Union as a threat to our own national sovereignty. On the contrary, we see that membership is a way of independent countries coming together to work together, to tackle collectively, big challenges. So membership of the EU is one way in which Scotland, as a small nation, has been able to co-operate with friends and neighbours across the continent and amplify our voice in the process. Indeed, many of us, and this is an issue that I’ll return to later, believe that our voice and influence would be strengthened if we were an independent member state of the European Union.

We value the practical benefits that the EU brings us – research collaborations, free trade and free movement. But we also, and perhaps this is the more important point, we also value the principles that the EU exemplifies – that nations can and should co-operate as equals for the common good.

Now as most of you know, in 2016 the UK, regrettably in my opinion, voted to leave the European Union. It did so by a narrow margin of 52% to 48%. But of course the vote in Scotland was very different. Scotland voted to remain in the European Union, by a larger margin than that, by 62% to 38%. So as things stand right now, on 29 March – in just 53 days’ time – Scotland faces the prospect of leaving the European Union against our democratically-expressed will.

And that throws up many issues and many questions for us, but it throws up the fundamental question about the way in which political decision making is exercised in the United Kingdom and indeed about the nature of the United Kingdom itself. It’s important to remember, and this is something is not always remembered, even within the UK, let alone internationally, the United Kingdom is not a unitary state. The United Kingdom is made up of four nations – England, Scotland, Wales and Northern Ireland – and indeed we are often told in Scotland that that is a partnership of equals.

Yet two parts of the UK – Scotland and Northern Ireland – voted to remain in the EU. The other two – Wales and England – voted to leave.

And in response to that, the UK Government could have led discussions with the devolved nations and others about how to leave the EU. It could have considered and made compromises that took account of the differing views across different parts of the United Kingdom. The Scottish Government was willing and very keen to play our part in any such discussions.

But instead of that, the vote in Scotland has been ignored. And over the two and a half years since it took place, our interests have been sidelined. And it is increasingly difficult, indeed it is now really impossible to reconcile that experience with the idea of the UK as an equal partnership of nations.

The negotiations and discussions that have taken place since the referendum, and let me be diplomatic about this, have been tortuous in the extreme – largely as a result of red lines put forward by the UK Prime Minister.

I mean let me be clear, I oppose Brexit I don’t want the UK to leave the EU but there was nothing inevitable about the chaos and the difficulties that that process has ended up being mired in. That has largely come about because of the way in which the UK is choosing to leave the EU – the red lines that the Government put in place quickly ruled out the closest forms of partnership with the EU – for example continued membership of the single market and the customs union.

However, ruling out those close partnerships has proved deeply problematic. First it, as I’m sure you’ve read, has made it far, far more difficult for the UK Government to meet its obligation to maintain an open border on the island of Ireland between Northern Ireland and the Republic of Ireland which of course is a member of the EU in its own right.

And secondly, it has increased the economic harm that Brexit is likely to cause.

After all, the European Single Market is a great modern success story.

It allows independent nations to take advantage of a market of 500 million people – that’s eight times the size of the UK market alone.

It has brought many economic benefits and it’s still not yet complete. There are still huge future opportunities in services, where Scotland has particular strengths, and of course in the digital economy.

So to leave this successful, developing marketplace makes no economic sense whatsoever and it will damage the prospects of future generations.

And that’s particularly the case, because the claims made about the supposed benefits of Brexit are already proving completely illusory.

There is no evidence that the UK on its own will be better at striking trade deals than the EU – in fact, what we have seen so far suggests the opposite would probably be the case.

And for the UK Government, the greatest prize of leaving the EU appears to be ending free movement of people and curbing migration to the UK. Yet for Scotland, that is one of the biggest downsides of Brexit.

People in Scotland and across the UK currently have the automatic right to work and study in Europe. In future, we will be denied that; and people from elsewhere in Europe will be denied similar opportunities in Scotland.

Now I think that’s wrong in principle, I think we should be looking to make it easier for people to share different cultures and get to know different countries across the world, but there’s a real practical danger in that for Scotland as well, because Scotland’s demographics are different to the rest of the UK’s. We’ve got a population that’s ageing faster and we’ve got challenges about growing our working age population. So if free movement ends then it is distinctly possible that Scotland’s working age population will start to fall with severe economic and social consequences.

Now back in November, the UK Government, notwithstanding all of these difficulties, finally managed to agree a deal with the EU which tried to reconcile all of this, tried to reconcile its commitment to Ireland and its stance on the Single Market and the Customs Union.

However that deal pleased absolutely nobody in the UK and it didn’t pass through the House of Commons.

The UK Government is now trying to renegotiate that agreement, particularly the aspect of it that relates to Ireland. But it’s trying to do so with the clock ticking and despite the fact that the European Union has repeatedly said that such a renegotiation is not something it’s willing to accept. As a result of that, there is a real and growing risk that the UK will leave the EU in 53 days’ time without any deal in place.

And that would be hugely damaging – far more so, dare I say it, than the government shut down you’ve just had here in the United States. In fact, some of the contingencies being considered – if we leave the EU without a deal – are genuinely astonishing.

Retailers and farmers have warned of price rises and shortages of key foods; motorways and airfields in the south of England are being considered for use as lorry parks; UK Government ministers – quite seriously – are claiming to be buying fridges in order to stockpile essential medicines.

And some of that sounds amusing but the idea that a prosperous country, one of the most prosperous countries in the world, in peacetime is even considering steps such as that, demonstrates how absurd this whole situation has become.

But of course, diagnosing problems with the status quo is relatively easy. The harder issue is trying to work out where we should go from here, particularly with the pressure of time that is now bearing down on the UK.

In my view, in the short term, several steps need to be taken. First, the UK Government should confirm that it will do absolutely everything to avoid the UK leaving with no deal. It should make clear it’s not prepared to allow the UK to leave the EU with no deal.

And as part of that, it should acknowledge that the UK simply is not remotely prepared to leave the EU in 53 days’ time. That’s been obvious for a while now. So the UK Government should ask the EU to agree to put back the planned date for Brexit.

The request for an extension of course must be accompanied by an achievable plan. And that plan cannot be a continued insistence from the Prime Minister that her deal is the only alternative to no deal.

And I think there are two broad options here. We could reconsider the closest possible forms of partnership with the EU – the ones that were ruled out back in 2016 – such as continued membership of the Customs Union and Single Market. That would at least minimise the harm to the economy caused by leaving the EU.

The second and, in my view, better option is to hold a further referendum on EU membership.

At present there may not be a consensus in the UK Parliament for the option of Single Market and Customs Union membership – or indeed any other option. And so the Scottish Government’s view, my view, is that this issue, given the deadlock in Parliament, should be put back to the electorate in another referendum.

Now there are three other points I want to briefly make which relate to Brexit, but which also relate to wider issues. And the first is one I’ve touched on already, and that is immigration – which was a significant issue during the EU referendum campaign. Firstly let me recognise that the issue of immigration is a difficult one for politicians and governments in countries across the world including of course in this one right now.

But equally in my view, too few politicians have the courage to make the positive case for immigration and that’s what I want to try to do, not just today, but generally.

I reflected earlier on the generations of Scots who found a home in the USA. They did so at a time when far more people left Scotland, than wanted to come to Scotland. One of the wonderful things that has happened in the last 20 years or so – largely as a result of migration to Scotland from the rest of Europe – is that that position has reversed.

That has benefited our country. Our universities, our workplaces and our communities have gained hugely from the skills and commitment of these new Scots. Immigration has been good for our culture, our economy and for our society as a whole.

In fact, for Scotland, it is absolutely essential. As I said a moment ago, without it, our population will start to decline. And everybody knows the consequences of that. A smaller number of working age people will have to support a growing number of older people. So severe restrictions on immigration pose a genuine risk to the long-term health of our economy and our society.

And one of the things that I personally find hardest to accept, in relation to the UK Government’s Brexit policy, is that they see ending freedom of movement as a good thing. I don’t believe that’s true for any part of the UK, and it’s certainly not true for Scotland.

In fact, the central trade-off at the heart of the UK’s approach to Brexit makes absolutely no sense to us at all.

By impeding free trade, in order to end freedom of movement, the UK is in the bizarre, absurd position of doing something that will harm the UK and Scotland, in order to do something else that will harm the UK and Scotland. That is the absurdity of the position we find ourselves in.

The fundamental point that I’m making – that no Scottish parliament, of any political composition, would approach Brexit in the way that the UK Government is currently doing – helps to explain why Brexit is also relevant to the debate on Scottish independence, which is the second issue I want to touch on.

In the independence referendum that Scotland had in 2014, and there’s a real irony in this, voters in Scotland were repeatedly told that if we chose to become independent, we would have to leave the European Union. We would be thrown out of the European Union and be in the position of having to reapply for membership in our own right now. I, as it happens, always think it was a bogus argument, but finding ourselves four years on facing being taken out of the European Union against our will really does grate on many people in Scotland considerably. But back then voting to stay in the UK was portrayed as the way to protect our European Union membership.

And that in itself raises the question of whether decisions about Scotland should continue to be taken at Westminster – or whether it would be better if those decisions were taken in Scotland by our democratically-elected parliament.

And of course the ongoing chaos at Westminster and the way in which Scotland’s interests have been consistently ignored makes that question even more relevant.

I as First Minister have said I will set out my thoughts on the timing of another independence referendum in the next few weeks – once the terms of Brexit have become clearer.

But, amid the confusion and uncertainty of Brexit, one thing I think is clearer than ever. Scotland’s national interests are not being served by a Westminster system which too often treats Scotland as an afterthought, or too often sees our interests as not being material. In my view, they can only properly be served by becoming an independent country. But an independent country that then seeks to play its part in an interconnected world. And that is a vision that I think more and more people in Scotland, in the wake of the Brexit experience, find very attractive.

Now the third and final point I want to touch on in relation to Brexit is the issue of inequality.

Inequality, like immigration, was a major issue in the build up to the EU referendum.

We know that across the UK, people on low incomes were more likely to want to leave the EU. And when you allow for student numbers, so too were areas with low employment rates. The vote for Brexit was partly caused by austerity – deep public spending cuts, stagnant living standards, and a sense of disempowerment on the part of many people across the country.

Now in my view, Brexit is the wrong response to inequality – because it’s likely to make people’s living standards worse rather than better. But at the same time, there was a logic to many people’s decision to vote for major change. After all, if people aren’t benefitting from the status quo, we can’t expect people to vote for the status quo.

So the Brexit vote – and there are maybe parallels here with the US and with other countries around the world – highlights a real challenge for those of us who do support free trade and those of us who do welcome and support immigration. We must ensure that those policies benefit everyone in our society – not just a few.

Otherwise, an open economy will encourage popular resentment, rather than commanding the widespread support it needs to do.

That’s one of the reasons why Scotland’s economic strategy has for several years emphasised so strongly this notion of inclusive growth – growth which benefits everyone, and growth to which everyone has the opportunity to contribute.

So in Scotland we have promoted fair work. In Scotland a higher proportion of people are paid what we call the living wage, than in any other part of the UK. We are currently using new powers that the Scottish Parliament has over social security to ensure that people who rely on benefits are treated with dignity and with respect. As I said earlier on we have taken a decision to make our tax system more progressive, so that those on lower incomes pay slightly less but we ask those on the highest incomes to pay slightly more to support the public services that so many of us rely on such as our national health service.

We’re also taking steps to promote equality. Last year, we became the first country anywhere in the world to take a decision to embed LGBTI rights into the school curriculum. We are also implementing legislation to better tackle domestic abuse, something which is attracting international recognition.

And, where it makes sense to do so, we’re trying to improve living standards by removing some of the financial burdens on households. So for example we have ensured that medical prescriptions, and personal care provided for elderly or infirm people is not subject to charging, that is something that people get through the contribution they make through their taxes.

I’ve already mentioned that Scotland doesn’t charge tuition fees for going to university. And in the last year, we’ve become the first country anywhere in the world to provide free sanitary products in all secondary schools and universities. Now these are just some examples of the work we’re doing to try to make the country fairer and more equal.

And the financial cost to the government of some of these policies is relatively small. But it makes a big symbolic difference.

We do these things – first and foremost because they are morally right, but also, because we know that societies and economies that are more equal do better, so these kinds of policies deliver social and economic benefits and they help to develop a stronger sense of community cohesion, a sense that everybody has a role to play and everybody benefits from doing the right things.

And Scotland, like all countries, is more likely to prosper if we fully use the talents of all of our people.

And our policies also honour what we describe as the social contract between the people and government. We know that everybody, at different times and in different ways, contributes to the economy and society. However we also know that everyone – at different times and in different ways – can need a helping hand from the state. So we make sure that public support is available to everyone because we believe if we do that, we help everyone to contribute more effectively. It is a virtuous circle that we seek to promote.

And that focus on equality, on inclusive growth, is likely to become even more important in the years ahead.

Scotland, like the rest of the developed world – certainly including the United States – will have to address several hugely important challenges. We will have to continue to adapt to an ageing population; we will need to ensure that artificial intelligence and automation benefit society as a whole; and of course we will need to tackle climate change and the transition to a zero carbon economy.

And I am very firm, in Scotland we are all very firm, we don’t want to shy away from those challenges – instead I want Scotland to be a world leader in addressing them.

Climate change is a good example. It is the most important economic, environmental and moral issue currently facing our planet.

Scotland is trying to take a lead. Back in 2007, our parliament set what at the time were the most ambitious climate change targets anywhere in the world. They used 1990 as a baseline year and required us to reduce greenhouse gas emissions by 42% by 2020. We achieved that target five years early and are now aiming to go much further.

We already generate 70% of our gross electricity demand from renewable energy. And we have a target to reach 100% by the end of next year.

We have also set a target of removing the need for new diesel and petrol cars by 2032.

I’m actually going to discuss Scotland’s low carbon ambitions tomorrow with Governor Murphy of New Jersey. And I’m sure one of the things that will crop up is that the transition to a low carbon economy isn’t simply an overwhelming moral obligation –although it is – it’s an obligation that we owe to future generations, but it is also a massive economic opportunity for the countries that are ahead of the curve.

I know that President Obama gave a major speech on climate change here at Georgetown back in 2016. And he argued, among other things, that inaction in the face of climate change showed “a lack of faith in American business and American ingenuity”.

And what he was doing then was appealing to an American tradition that really resonates in Scotland. Scotland is famous for a range of innovations ranging from the television and the telephone to penicillin and beta blockers. We modestly and humbly claim in Scotland that we literally invented the modern world – we don’t like to boast.

This year we are marking the bicentenary of the death of James Watt – the man whose improvements to the steam engine were fundamental to the industrial revolution. It’s a reminder that Scotland was in so many ways the country that led the world into the industrial age. So it would be fitting if we could now help to lead the world into a carbon-neutral age.

And in some areas, we have the opportunity to do exactly that. Scotland’s waters host the most powerful offshore wind turbines anywhere in the world and the most successful tidal power turbines. We are also home to the world’s first and largest floating windfarms. And we have really important strengths in areas such as smart grids and battery storage.

All of that activity is bringing economic benefits. Low carbon technologies already employ more than 50,000 people in Scotland and for a country of our size, that’s a significant number that will only grow in the years ahead.

But we have seen, and this takes me back to the inequality point, that in previous waves of economic change too many people have been left behind. Where I grew up, in the west of Scotland, I remember vividly the job losses caused in part by the decline of mining and heavy industries during the 1970s and 1980s. And I know that some US communities have suffered in a similar fashion.

So we all have to be determined that future waves of economic change are handled better. In Scotland we’ve appointed a just transition commission – a panel of independent advisors to make recommendations about how we ensure that the transition to a carbon neutral economy benefits all of our citizens.

And of course, there is a really important international dimension to all of this. The worst impacts of climate change are not largely felt within developed nations, it is one of the huge injustices of climate change that it is usually developing countries – who have done least to cause the problem – who pay the heaviest price.

Which is why the Scottish Government a few years ago established a climate justice fund, helping countries in Africa adapt to the consequences of climate change, and develop in a sustainable way. That’s a relatively small programme given the overall scale of the issue – but it is a significant gesture from a country that wants to be a good global citizen.

And in many respects, that brings me back to conclude where I began. Brexit is dominating all the headlines at home – I’m sure it’s claiming a few headlines here in the United States. It is an unwanted challenge for Scotland – if it goes ahead it will be harmful to our economy and our society. But regardless of it, Scotland will always strive to be a good partner to countries around the world.

In the 20 years since our parliament was created, we have helped to take a lead in tackling climate change, we have forged new relationships with international organisations such as the UN and the EU; and we have strengthened old friendships such as those that we enjoy with the USA and Canada.

And where we can, we will try to lead by example, in combining an innovative and open economy, with a fair and inclusive society.

In all of this, we know that, as a nation of just 5 million people, we will never be one of the world’s great powers. But we do believe that we can still make a meaningful contribution to great causes. And we understand, and this in the world we live in today is an important point never to lose sight of, that we will all achieve more, and learn more, when we engage constructively with partners around the world.

Few of those partnerships mean more to us than the one we share with the people of the United States. So it is a real pleasure and a real honour for me to be here today. I am looking forward now to some discussions and questions. And I hope that many of you, if you haven’t done so already, will visit, study or live in Scotland in the future, as we continue to strengthen the enduring friendship between our two countries – Scotland and the United States.”