Scottish Government overview of 'no deal' Brexit preparations

SECTION 1: Introduction

1. The referendum on EU exit took place on 23 June 2016. In that referendum 62% of voters in Scotland voted to remain in the European Union. The Scottish Parliament subsequently voted against the triggering of EU exit negotiations and has consistently opposed a ‘No Deal’ exit from the EU.

2. The Scottish Government has also consistently opposed the UK’s proposed departure from the EU, in line with the clear majority of votes in Scotland in the 2016 referendum. At the same time, we have also been willing to seek compromise – for example, by suggesting that, in the event of EU exit, the UK might remain part of the single market and customs union. These efforts at compromise have, however, been rejected out of hand. Therefore, our priority remains to protect Scotland’s place in the EU.

3. Meanwhile, in the more than three years since the referendum, the UK Government has failed to secure an agreement with the EU on the terms of the
UK’s withdrawal and a joint ‘political declaration’ on the future relationship that is acceptable to a majority of MPs. As a result, the formal process of leaving the EU (the ‘Article 50 process’) is into its second extension period, which comes to an end on 31 October 2019.

4. The current UK Government has indicated it wishes to renegotiate the agreement reached with the EU for the UK’s withdrawal – but that in the event
it cannot reach a new agreement it is prepared for the UK to leave the EU on
31 October without a withdrawal agreement, transitional period or path for the future relationship. The Scottish Government vehemently opposes this proposal – because of the impact a ‘No Deal’ exit would have on the people and the economy of Scotland, and the UK as a whole.

5. We therefore continue to call on the UK Government to rule out the possibility of a ‘No Deal’ exit – as is entirely within its gift to do. The UK Government should instead act to secure an extension to the Article 50 negotiating period from the
EU, to enable a General Election to break the current deadlock in the House
of Commons. The Scottish Government would support a future vote on EU membership that includes an option to remain in the EU, now that the implications
of EU exit are much better known and understood.

6. While the risk of a ‘No Deal’ exit remains, we must take appropriate steps as a responsible Government to mitigate its potential impacts – as we would with any significant threat to Scotland’s wellbeing. In doing so, we are in no way seeking to ‘deliver EU exit’ or to encourage a ‘No Deal’ – we are seeking to protect Scotland from the worst impacts of an utterly wrong-headed approach with which we profoundly disagree.

The Scottish Government’s preparations for the possibility of ‘No Deal’

7. The Scottish Government has been preparing for the impact of EU exit ever since the 2016 referendum. This has included a significant and growing programme of work addressing the specific possibility of a ‘No Deal’ exit. In the past year, this scenario has been the main focus of these preparations – since its negative impacts would be greater than those associated with leaving with a ‘Deal’, and because they would hit us immediately on exit, rather than at the end of a transition period. At the same time, it is also important to note that leaving the EU with a ‘Deal’ would also involve significant levels of hardship for Scotland.

8. This work has involved a significant input of time from Ministers, officials and partners across Scotland. Preparations for a ‘No Deal’ exit have been discussed at a number of meetings of the Scottish Cabinet, in meetings of the Scottish Government’s ministerial resilience committee and (since the appointment of the new UK Government) through a ‘Ministerial Group on EU Exit Readiness’. This last group has met weekly, and is chaired by the First Minister or Deputy First Minister. This work ensures that the actions taken by the Scottish Government are joined-up and coherent, and will have the greatest effect possible in mitigating the risks of a ‘No Deal’ exit. This group is supported by a ‘No Deal Planning Board’ comprising of senior officials across Government.

9. The Scottish Government, and our public sector partners, have undertaken a range of work including:

• taking steps to minimise disruption to supplies of food and medicines, should there be problems at key ports and our transport and logistics networks suffer disruption
• providing bespoke online information and support in areas of concern to the public, such as the rights of EU citizens after exit and how businesses can prepare themselves
• establishing a £7 million Rapid Poverty Mitigation Fund, to scale up current poverty mitigation measures including the Scottish Welfare Fund, Discretionary Housing Payments, and responses to food insecurity and fuel poverty
• ensuring that over 150 legislative instruments have been consented to or made so that the statute book is ready if we leave without a deal
• working with Scotland's business organisations to provide appropriate information, advice and support to help them manage the business and economic implications of leaving the EU
• paying farmers and crofters 95% of their Common Agricultural Policy entitlement through a loan scheme at the start of October to support them if EU exit takes place on 31 October
• Police Scotland has established a Force Reserve of 300 officers to deal with any issues arising from EU exit, such as issues related to ports and borders, but also in relation to possible protests and civic unrest.

Requirements of the UK Government

10. This work has been, and continues to be, made unnecessarily difficult by the approach taken by the UK Government.

11. It is the case that many of the impacts of ‘No Deal’ originate in ‘reserved’ areas like borders and tariffs, but manifest themselves in devolved areas like medicines and transport in Scotland. It is also the case that many of the practical problems of ‘No Deal’ will arise outside Scotland – for example at the ‘short straits’ ports in the south-east of England – but would then have significant knock-on effects within Scotland. The Scottish Government is therefore unusually dependent on an open flow of accurate, transparent and timely information from the UK Government – on its modelling of the likely effects, the actions they are proposing to take, and their assessments of the likely outcomes.

12. While there have been some examples of an effective approach to joint-working, in general the approach of the UK Government has been to actively limit the analysis shared with us, to exclude the Scottish Government from decision-making, and to fail to share with us its own plans for actions to mitigate ‘No Deal’. The quality of engagement has deteriorated since the appointment of the current government in July. For example, we have not seen a version of the Yellowhammer planning assumptions, which are critical to our planning work, since early August. As a result our planning has had to be conducted on the basis of inadequate information, and with a lack of assurance that the actions ultimately taken by the UK Government will work well in Scotland, or be co-ordinated with the Scottish Government. This has also made it harder to ensure that our own efforts work in a complementary way to the actions of the UK Government.

13. Prior to May, Scottish Government Ministers and officials were routinely invited to relevant meetings of the UK Government’s ‘European Union Exit Trade (Preparedness)’ (EUXTP) Committee. These arrangements were far from perfect but provided some basis for sustained engagement with the work of the UK Government. However, the arrangements established by the new administration are much weaker: Scottish Ministers have been invited to only 8 out of over 50 meetings of the new ‘XO’ Committee. This is clearly inadequate. This is not just a matter of process: it limits the ability of both the Scottish and UK Governments to plan mitigations that will be as effective as possible in the event of ‘No Deal’, and to ensure concerns in Scotland are properly understood by UK ministers. It is therefore a matter of the wellbeing of the people and economy of Scotland.

14. We have asked the UK Government to take, as a matter of urgency, a range of actions we consider essential to protecting the wellbeing of the people and economy of Scotland. These are set out in detail in section 4 of this document, and include the following:

• share up-to-date ‘Yellowhammer’ planning assumptions
• share the information we need on delays and other issues at the border
• confirm whether arrangements will be in place that avoid additional tariff or non-tariff barriers on exports of food and drink produce with priority countries
• share data on the continuity of supply of medical supplies and radioisotopes and make sure that regulatory frameworks are in place for their continued supply
• take action to minimise as far as possible the worst impacts of an economic shock
• support households to manage an increase in the cost of living and prevent more people from falling into poverty, including making changes to Universal Credit, lifting the benefits freeze on working age benefits and uprating benefits in line with inflation
• allow a tailored approach for Scotland within the UK immigration system, engage with EU Member States on the rights of UK citizens living in the EU and guarantee the rights of EU citizens living in Scotland
• take account of our separate criminal justice system when planning for the loss of access to key EU security and law enforcement tools, and share information with the Scottish Government and our operational partners on contingency plans, proposed mitigations and developments
• involve Scotland fully in decision-making and planning for maritime security issues, and confirm their capacity to respond to any serious incident at sea
• meet the costs related to EU exit, provide full financial compensation for the consequences of EU exit, either commit to contributing to the EU budget until the end of 2020 or ensure the guarantees cover all aspects of the 2014-20 programmes, and replace all EU funds in full beyond this – recognising Scotland's right to determine its own priorities.

Legislation

15. A ‘No Deal’ exit would have major implications for the law in devolved areas, since EU law on matters such as agriculture and the environment would no longer apply and devolved legislation that implements or is otherwise linked to EU law may no longer work properly. The Scottish Government has therefore undertaken a large volume of work to identify and find solutions for these issues. That work has identified a need to develop and put in place nearly 50 Scottish Statutory Instruments (SSIs) in time for a ‘No Deal’ exit. Of those, over 40 have already been made or are with the Scottish Parliament for consideration, and the remainder are in hand for 31 October.

16. In addition, around 200 UK instruments that affect devolved matters have been identified as being needed for a ‘No Deal’ exit. We have been working to ensure that these instruments meet Scottish needs and are scrutinised by the Scottish Parliament. The vast majority of these instruments are now in place. However, there is significant uncertainty around when the remaining instruments will be made and thus whether the Scottish Parliament will have adequate opportunity for scrutiny before they are made. That uncertainty has been increased by the UK Government’s failed attempt to prorogue Parliament from 10 September, which disrupted their plans for the making of these instruments.

UK Common Frameworks

17. The UK Government and the devolved governments have agreed to work together to establish common approaches, known as Common Frameworks, in some areas which are currently governed by EU law but that are otherwise within areas of competence of the devolved administrations or legislatures.

18. These frameworks are designed as the long term policy arrangements that would be implemented by the end of the implementation period. In a ‘No Deal’ scenario an implementation period will not apply, potentially increasing the risk of unintended short to medium term policy divergence emerging before frameworks are agreed. In a number of framework areas interim working level arrangements have therefore been agreed to manage the impact of a ‘No Deal’ exit.

19. Working Level Arrangements (WLAs) set out the interim administrative arrangements put in place specifically for a ‘No Deal’ exit from the EU. These arrangements build on existing administrative working practices in place at official level. Their purpose is to ensure that existing shared ways of working are fit for purpose and support the necessary levels of information sharing and cooperation we need if the UK leaves the EU without a deal. They aim to ensure that there is transparency in the policy operating environment post exit and that roles and responsibilities are clear. WLAs should help to reduce the risk of divergence by facilitating regular and effective communications, but this is not their core intention.

20. WLAs have been entered into voluntarily by the 4 UK administrations. All WLAs respect the UK’s devolution arrangements and the specific devolution settlements for Scotland, Wales and Northern Ireland, and are without prejudice to future long term Common Frameworks’ arrangements.

Communications

21. The Scottish Government recognise that, in the current situation of deep uncertainty, people in Scotland will look to us for accurate and relevant information as regards actions that they may need to take should the UK leave the EU on
31 October 2019 without a deal.

22. To help with this, alongside this overview of the Scottish Government’s
‘No Deal’ preparations, we continue to publish up-to-date guidance on mygov.scot setting out guidance for citizens, businesses and organisations as regards action they may need to take, including advice from the Scottish Government and links to guidance provided by the UK Government and other organisations where appropriate.

23. In addition, Scottish Government agencies and other public bodies, are engaging directly with stakeholders across different sectors – including business, fisheries, agriculture, health, education – to ensure they have the specific information they require to prepare for a ‘No Deal’ scenario. For example, Scottish Enterprise are providing guidance and advice to Scottish businesses on EU exit through their Prepare for Brexit communications campaign. Student Awards Agency Scotland (SAAS) has information on its website for students and the Scottish Funding Council has information for colleges and universities on its website.

24. The period up to and following the EU exit referendum has been particularly unsettling for EU nationals living in the UK. The Scottish Government believes Scotland is richer for our diversity and EU nationals make a valuable contribution to our society, our population and our economy, which is why the Scottish Government is making every effort to ensure EU citizens feel welcome and valued. We have established Stay in Scotland, our dedicated communications campaign, to encourage EU citizens to take the necessary steps to ensure their settled status in the UK. We also continue to underline Scotland’s commitment to Europe and positive international relations through our Scotland is Open marketing initiative. The Scottish Government is taking a cost-effective, targeted approach and making use of digital media channels or direct communications wherever possible.

25. The UK Government is running its Get Ready for Brexit campaign, at a reported cost of £100m, to encourage UK Citizens and other stakeholders to “get ready to leave the EU on 31 October 2019” – an assertion that the Scottish Government does not support. The Scottish Government was not consulted or involved in the development of this campaign, despite the fact that it is also running in Scotland, and were only informed of its detail after it was launched.

This overview

26. This document provides a snapshot of the Scottish Government’s work as the date of a ‘No Deal’ exit draws nearer. It is important that the Scottish public, and their representatives in the Scottish Parliament, are able to reflect on the situation we find ourselves in, the risks we face, and the Scottish Government’s efforts to mitigate those risks. It is for the UK Government to set out its own position and its own detailed plans, and we call on them to do so.

27. Following this introduction, Section 2 summarises the potential impacts of
‘No Deal’. It is based on analysis carried out by the Scottish Government and
our partners, including for the Chief Economic Adviser, and reflects the Scottish Civil Contingencies Planning Assumptions, also published today.

28. Section 3 provides detail of the extent of financial decision making that has been, and continues to be required, to adequately prepare and fund ‘No Deal’ exit preparations.

29. Section 4 provides an overview of our planned response. It is organised into 6 thematic strands:

• issues most likely to require a Civil Contingencies response on Day 1 or soon after, including Transport and Medicines
• protecting vulnerable communities
• supporting businesses and the Scottish economy
• supporting the Rural Economy, including Fisheries and Agriculture and the Environment
• labour Market Interventions: Employability and Skills Support
• protecting citizens’ rights and international connections.

30. For each strand, we set out:

• the specific impacts we face
• the aspects of these impacts for which the UK Government is responsible for any mitigation measures
• the steps we are taking, or planning to take to mitigate impacts for which the Scottish Government and partners have lead responsibility
• the range of outcomes which we may nevertheless face
• the actions we require of the UK Government to further mitigate, as much as will be possible, some of the impacts of the course it alone has set us upon.

31. We are clear that even the fullest and most comprehensive set of mitigating actions cannot remove entirely the negative impacts of ‘No Deal’. Depriving citizens and businesses of the benefits of the UK’s membership of the EU, in any circumstance, will inevitably have a significant and enduring impact on businesses, the economy and the lives of the people of Scotland on top of the unpredictable effects of a chaotic exit. However ‘ready’ we are, we will still face those impacts.