Seòmar agus comataidhean

Thank you very much, convener, and a very good morning to colleagues on the committee. We are here today to discuss the Scottish Government’s legislative consent memorandum on the UK Government’s Northern Ireland Protocol Bill. The committee is very well aware of all the reasons why colleagues and I have serious misgivings about the bill, but let me begin by acknowledging that talks between the UK and the EU on the protocol have resumed in recent weeks—they are the first substantive structured talks since the early part of 2022—and that there appears to be a shift in tone.

It was certainly striking to hear the Northern Ireland minister and former European research group chair, Steve Baker MP, publicly apologise to Ireland and the EU for behaviour during Brexit negotiations that had not inspired trust. It is my sincere hope that the UK Government will seize this moment to re-engage in good faith with our European partners, build more positive momentum and seek sustainable shared solutions, but two important things must happen to make that possible. First, the chaos engulfing Westminster needs to be brought to an end. Secondly, the UK Government must end its irresponsible threats to override the protocol unilaterally and withdraw the bill without delay.

As the committee will be aware, shortly after the bill’s introduction in June, the Scottish Parliament held a debate and passed a motion condemning the bill as “fundamentally unacceptable”. Not a single member of the Scottish Parliament voted against that. Since then, the legislation has passed through the House of Commons unamended and is now progressing through the House of Lords. The bill has been met with deep concern by legal experts and our allies around the world, yet not a single Conservative member of Parliament voted against it. The UK Government has acknowledged that the bill engages the legislative consent process and has sought the consent of the Scottish Parliament. As the memorandum sets out, the Scottish Government does not recommend consent for the bill, for reasons of its potential illegality and its impact on Scottish interests.

On the question of legality, the bill will make UK domestic law incompatible with the UK’s international obligations under the protocol. To do so may put the UK in breach of international law. Although that is a question ultimately for the courts, domestic or international, many prominent legal commentators—you have heard from some this morning—and European leaders have already robustly challenged the UK Government’s legal position. The bill also threatens profound consequences for Scotland. It has heightened tensions in a dispute that has already badly damaged UK-EU relations and stalled all progress on the TCA, with direct implications for Scottish priorities, including horizon Europe association, energy trading and re-establishing market access for key exports.

As the memorandum sets out, if the bill becomes law, the consequences of the escalation could be economically disastrous for people in Scotland. It could lead to tariffs being imposed and even to the trade and co-operation agreement being suspended. That the UK Government is willing to risk a trade war in the middle of a cost of living crisis, after all the ideologically driven economic chaos that it has already inflicted on us all, is unconscionable. For those reasons, the Scottish Government cannot recommend consent for the bill.

On my last trip to Brussels, I met the UK ambassador to the EU and European partners and emphasised that a negotiated solution is in everybody’s interests. It is important to maintain constructive relations, and that is what the Scottish Government will continue to seek to do. Indeed, that is why I wrote to the Foreign Secretary, James Cleverly, on 30 September requesting urgent bilateral and four-nations meetings on UK-EU relations. Mr Cleverly responded this week, committing to a four-nations meeting before the TCA partnership council next meets. However, no date has been fixed and in general there has been a frustrating lack of ministerial-level engagement in this space.

I hope that this introduction has been helpful and I welcome any questions, convener.

When I have discussed this issue with colleagues in Wales, it has been one of the areas of great concern that we share because of the direct implications of what is happening as a result of the very confrontational course that the UK Government is taking. It is no way to run international relations; it is no way to deal with an important trading partner in Ireland and the wider EU in general. What is happening in relation specifically to Henry VIII powers—the ability of the UK Government to pass legislation that allows it to make subsequent legislative changes that are not subject to parliamentary scrutiny and oversight at Westminster, let alone here in the Scottish Parliament, and potentially in devolved areas—should concern us all.

The last part—and this is a concern in Wales, as it is in Scotland—is that when we, as Parliaments and Governments, say that we have a profound problem with a piece of legislation and we use the mechanisms that are in place to underline that, up until now and repeatedly we have seen the UK Government override it. Yes, the concerns are shared. I would hope that there is understanding across the committee, given that no MSP objected to the concerns that were expressed in the motion that the Scottish Parliament passed, and that we are of one mind, both as a Parliament and as a Government, in saying to the UK Government that it really needs to think again about this. Not only is it of profound importance to Northern Ireland, it matters to devolution and intergovernmental relations in the UK, and of course it matters that we do not escalate things with the EU such that we face a potential trade war. It is in nobody’s interest.

There is the direct question, but there is also the implied suggestion that there should, with a change of tone, perhaps also be a change of approach more generally that might be able to secure an agreed solution between the UK and the EU. If that is the thinking in Downing Street, I would very much welcome it, but I think that Donald Cameron would agree with me that we need more than a change in tone. These are very technical questions, but just to underline his point, which I agree with, I note that in the conversations that I had with UK and European partners, which I alluded to in my opening statement, there was a clear acknowledgement that there is a potential for what is described in the jargon as a landing zone for an agreement. All of that underlines the point to me that, if that is the preferred trajectory, that is indeed where we should be looking, rather than passing legislation, which as we know is deeply troubling for a number of reasons, especially given where things are in Northern Ireland and the sensitivities around that.

I think that everybody understands that no Executive has been formed in Northern Ireland and that, unless there is progress this week, that there will be elections again in Northern Ireland. It is worth putting on record if it has not been put on record thus far today, that in the last Northern Irish elections, a majority of members were elected in support of the arrangements, and it seems to me that what we need now is more than just a change in tone. We need a change in substance. We need to break the logjam in all of this, which is why I think that the UK Government should not proceed with the confrontational course of action that it is proposing to take with this legislation but should do what the Scottish Parliament voted for—or certainly did not vote against—and withdraw the bill and make progress on a diplomatic and technical level to reach a solution that I would hope is to everybody’s benefit. A change of tone, yes, but let us see a change in substance too.

Donald Cameron asked whether there were areas where one could see room for technical solutions. The answer is yes, and that has been signalled by Commissioner Šefcovic and proposals have been made by the EU side. It would be good to see those from the UK side, but it certainly will not be helped by legislation that legal observers with much greater legal training than I have—I am sure that Donald Cameron, as an advocate, knows many of them—believe is in breach of international law. That is very serious, if that is the case, and is yet another reason why the UK Government should not be proceeding with the legislation.

Indeed. What is happening with these so-called Henry VIII powers has been described by the Hansard Society as “breathtaking” in scope. For those who are unaware of what Henry VIII powers are, it is very important that we do not hide behind terminology that sounds fluffy and historic and archaic. What does it mean? It is exactly as Sarah Boyack suggests. It is in effect taking away the power of Parliament to have oversight and scrutiny, but at the same time it drives a coach and horses through the devolution settlement because it confers on the UK Government powers to legislate in any areas that it so chooses and is the end of us as parliamentarians, elected in this Parliament to hold the Scottish Government to account and me as a minister of the Scottish Government to be answerable to you as a committee and Parliament more generally. I would be saying to you that in future evidence sessions you really need to speak to UK Government ministers who are legislating in this area.

Work has been done in the House of Lords. I am a critic generally of the House of Lords as an unelected institution but, obviously, a great many members of the House of Lords have great minds and legal experience, and its European committees in particular have an incredibly high standing. I know that as somebody who sat on the European Scrutiny Committee of the House of Commons for a decade. What has been said by the House of Lords committees on the point that Sarah Boyack raises should make alarm bells ring everywhere. I do not know whether this is on the record, convener, but it is worth making sure that it is—the chair of the House of Commons Justice Committee, Sir Robert Neill, observed, somewhat colourfully:

“There are Henry VIII powers and Henry VIII powers; and this is Henry VIII, the six wives, Cardinal Wolsey and Thomas Cromwell all thrown in together.”

That is amusing in making the point that we are talking about something that is very significant, but let us understand what the significance of it is. Again to pray in aid the House of Lords, I note that its Delegated Powers and Regulatory Reform Committee made the following assessment in June and I quote from it:

“The Northern Ireland Protocol Bill is a skeleton bill that confers on Ministers a licence to legislate in the widest possible terms. The Bill represents as stark a transfer of power from Parliament to the Executive”—

and we are talking about the UK Parliament and the UK Executive—

“as we have seen throughout the Brexit process. The Bill is unprecedented in its cavalier treatment of Parliament, the EU and the Government’s international obligations.”

One could add that the result of using this power is that it totally undermines and subverts the devolution settlement, so we should be very concerned about all of this, which is another reason why we should not be giving it legislative consent to proceed.

I think that the reputational damage is profound. One of the common narratives that one hears when one hears people internationally talk about the UK is about the mother of Parliaments, the rule of law and so on, and how all those things are positive attributes of the UK. That is being called into question, and not just—I say “just”—by our colleagues across the EU. That is also the position of the United States of America, which is one of our most important trading partners. We have not gone into this yet, but the idea that there will be a trade agreement between the UK and the United States in the present context is unimaginable. It will simply not happen and the US has said so in terms. You are absolutely right—the issue is a very broadly damaging one from the point of view of reputation.

There is another aspect to this that may develop in time. I reflect on the fact that there was an election in Northern Ireland at which people voted for something to happen, just as people voted in last year’s Scottish Parliament election for something to happen. There will potentially be another election in Northern Ireland. Were it to be the case that, yet again, a majority of parliamentarians in Northern Ireland were to be elected with the view that they were in favour of the protocol arrangements and were not in favour of the UK Government’s approach, and for that to be disregarded again, how much more would it take for that to be noticed internationally?

I do not think that it would take a lot more, because what we are seeing is a UK Government that is disregarding election results in Northern Ireland and in Scotland, and which is potentially about to do so again in Northern Ireland. Therefore, the UK Government has a reputational problem as regards its being prepared to “disapply” the protocol, which is the way that the UK Government likes to put it. Imagine having that as your defence in a court of law: “I have decided to unilaterally disapply the law as it affects me. Please rule in my favour.” It is ludicrous. It is a unilateral breaking of international undertakings when there are other routes to remedy.

There are ways in which the UK Government could act in line with its international agreements in an effort to solve the problems that it believes to be in need of resolution. I agree that there is a reputational issue when it comes to international law, but I think that there is also a parallel issue in relation to the UK Government disregarding democracy, which I think will undermine us reputationally in the months to come.

Good morning, convener, and thank you for the opportunity to make some opening remarks.

This evidence session on pre-budget scrutiny is an important part of the normal process for setting annual Scottish budgets, but I think that we all agree that the circumstances that we face today are anything but normal. Our public finances are under huge pressure from soaring inflation—which is at a 40-year high—and the cost of living crisis. Uncertainty has increased with the negative market reaction to the UK Government’s tax announcements two weeks ago.

The combination of the on-going cost of living crisis, high inflation and the forecast recession has increased demand for Government funding. Not surprisingly, the committee has consistently heard that theme from witnesses in the culture sector. The limited cash funding that the Scottish Government can make available for public services is being eroded by rising inflation. Our budget for this year, as you know, is worth about £1.7 billion less than when it was announced in December, with inflation having risen from 4 per cent to 9.9 per cent in the meantime.

Our cash plans in the resource spending review announced little more than four months ago are similarly being eroded by greater inflation. That is a challenge that faces public services in all Government portfolios, but I am acutely conscious of how economic circumstances are affecting the culture sector. Building-based organisations in particular face steeply rising costs. Everyone who works in the sector is rightly concerned about their pay as living costs rise so steeply.

Added to that is the mixed picture of post-Covid recovery in visitor and audience numbers. On the one hand, I hear some positive reports of recovering visitor numbers in museums, galleries and heritage attractions, but, on the other, there is a more tentative picture in relation to audience figures in performing arts and cinema. Most of all, there is the continuing uncertainty, as the rising cost of living undoubtedly means that people are cutting back on leisure spending. What the committee has heard from witnesses is what we are hearing from our discussions with our culture public bodies and the broader sector.

To address those economic challenges, the Scottish Government is making hard choices to prioritise spending through savings that were announced by the Deputy First Minister on 7 September and the emergency budget review that is due later this month. Although none of that is a surprise to the committee, it is worth repeating the context to what will be difficult decisions in the forthcoming 2023-24 budget.

The resource spending review envelope for culture and major events for the next financial year is £172.8 million, which is a cash reduction of £4.2 million, or 2.3 per cent. That does not include the impact of inflation, which shows that there is already a challenge before inflation is factored in and, indeed, before the possible further public spending cuts that are being trailed by UK ministers.

I will continue to argue for the most public funding that we can afford for the culture sector. I am also keen to conclude some work on multiyear funding, even if economic uncertainty means that the figures for later years can be at most only indicative, because I know that multiyear figures would help the sector to plan ahead.

I know that the committee wishes to concentrate on the culture budget in its pre-budget discussions, but I would also be happy to answer any questions on other areas of my portfolio. If there are any questions that I cannot answer today, I will, of course, write to the committee.

Galleries and museums are in a better position to understand trends in visitor attendance and spending, but we know the headline numbers and percentages. To be frank, a lot of that is encouraging and shows that people are visiting, which is one reason why we are committed to free public access.

We hope that people who view evidence sessions such as this will take every opportunity to encourage the public to visit our amazing galleries, museums and public cultural institutions. I will take a stab at answering by saying that discretionary spending reflects how people are feeling about how much money they have in their wallets. Although people might enjoy going to see great works of art, they might be economising on other things—they might be choosing to use the cafes less and to buy less in the amazing, high-quality shops in our galleries and museums. That is my best stab at answering that question, but I have no doubt that those who are in charge of galleries and museums will be looking at all of that.

Notwithstanding that, I take the opportunity to encourage people to be aware that such facilities are still free and are open to the public to attend. They are also warm spaces, which people should consider as we enter the winter months. As we emerge from Covid, we should remind ourselves that we perhaps have not been to visit our galleries and museums for a while so should take the opportunity to do so.

I am sure that those who are charged with making some of these project funding decisions will be looking closely at the evidence that has been given. The committee took evidence from Creative Scotland before I sat in this chair. I am sure that they will be thinking about that, because they will be thinking about it anyway. If I am entirely honest, I think that it will be an eternal question. We want new and innovative projects, do we not? We want to learn the best from elsewhere and we want to try to improve things. There is always an attraction on all our parts, regardless of where we sit politically, to say, “This is a good and new thing, and we need this new thing to help address this shortcoming or this challenge or this opportunity.” At the same time, we have a series of established projects that are supported. There might be a feeling that those are holies of holies that could never be challenged. There is a tension in that, is there not? I do not think that there is a simple answer to this, but we need to be on the ball with that particular dynamic. We need innovation and projects, but we also need to protect that which is good and that which works.

That is one aspect of the challenge, but on the second question of different funding pots, it was always thus, was it not? As well as the Scottish Government and Government agencies that are charged with supporting projects, there are other places that provide funds for cultural projects. I am thinking of, say, the UK Government in some cases; in the past, we had the European Union; and beyond that there are different national and international pots.

Another dimension that is worthy of consideration is the amount of time that organisations have to spend on trying to identify where they can get funding from. One has to be of a certain size to do that sort of thing efficiently and effectively and to have the expertise to draw down those funds. I am not being critical here—it is just an eternal observation and a statement of fact.

Something that I would be concerned about if it were so would be people not knowing where to turn in order to draw down funds. That is as relevant in the public sector as it is for Government and other organisations. After all, there are some very important funding sources beyond Government; I can think of, for example, the Heritage Lottery Fund and, indeed, the Postcode Lottery, which, incidentally, is headquartered in Edinburgh and gives a lot of support to a lot of small and medium-sized community and cultural projects.

I know that there was a lot in that, but what I will say is that if the committee has evidence that people are finding it difficult to know where to turn—which is potential criticism number 1—or, secondly, that they are not being treated fairly when they seek support, I have to say that I would like to understand that better. The context of all this is constrained budgets, which are an issue affecting not just Government but other funding organisations in both the private and public sectors. I should also mention philanthropy, because there are cases of people who have been extraordinarily generous in supporting culture and the arts but whose spending has now been constrained.

There is something in all of that. I take upon myself the fact that I have some responsibility with regard to my convening power—if I can call it that—to be able to help in different areas of funding, whether it be national or local government, philanthropy or the private sector. I am doing some of that work already, but maybe there is more that I can do. I am open to encouragement, Mr Cameron.

Forgive me for not having mentioned it, but there are cross-party groups in Parliament that do a lot of work in parallel with the formal subject committees. Unfortunately, I am not able to go to as many of those meetings as I might want to, but I would hugely welcome feedback from them. If you are learning important lessons and meeting important people who you feel we need to hear more from or understand better, please get in touch. We are keen to be as informed as we can be.

I am alive to the points that you are making. As, I think, committee members know, the challenges of Covid led to an unsurpassed level of dialogue between the Government, Creative Scotland and the creative sector, because we were dealing with an existential crisis across the entire sector. We were in the fortunate position of having funds to dispense in that emergency situation. The Government tried its best, as did Creative Scotland, to get funding to where it was needed through the different phases of the intense Covid period in order to deal with the specific challenges that Covid posed to the cultural sector. We were being very well advised as to what those challenges were.

My first observation is that having the funding to distribute undoubtedly made the situation a lot easier than it would have been had funding not been in place. Secondly, it is worth noting that when one is dispensing such a significant level of funds, there is always a risk that fraudulent applications for financial support could be made. We know that that happened with personal protective equipment and the like during the Covid period, but I am not aware of any significant parallel development in culture funding. In significant part, that is because of the experience of Creative Scotland as a funding organisation, for which it deserves recognition: we should not take that for granted.

The convener made the important point that we are talking about public money. People need to have confidence in the culture sector, the public agency that supports it, the Government and the Parliament, which oversees that funding and makes strategic decisions around it. We should never take that for granted. Creative Scotland deserves to be recognised for having managed the funding process.

I will move on to the substantive point about cultural organisations after the most extreme phase of Covid. I completely understand that it is a tremendous challenge that there is not now the amount of money going out the door to support organisations that there was during the height of the Covid period. People are trying to balance their books, recover from Covid and recover visitor numbers and the numbers of people who pay to come through their doors in theatres, cinemas or similar venues. I hear the warning that things are going to get more difficult, in many respects. This summer, festivals across Scotland have been very successful, in comparative terms. There is a feeling, however, that next year will be more difficult—not least because of inflation, among other reasons.

I will address the specific point: I will take it away and will be happy to write to the committee on how organisations are advised in relation to funds that they hold, and on how they are advised on funding decisions that might be made on the basis of their having £X in reserve meaning that funders are prepared to give only £Y in public funding. Organisations might have made difficult decisions about having reserve funding in place so that they can keep their heads above water, because they do not know what the situation will be like in three, six or 12 months. I am content to go away and look at the matter so that I can try to get the best guidance, because I want organisations to feel that they are being treated fairly.

However, again it behoves me to say that we are talking about dispensing taxpayers’ resource during a cost crisis. Therefore, decisions have to be made on the basis of who has funds—full stop. All I am trying to say is that it is not easy. I want decisions to be as sympathetic as they can be, but I also want people to be advised as best they can be advised. There is an additional dimension to that. I have had conversations with people in the culture sector who are looking at next year’s festivals or the following year’s tour, for example. They are having to make medium-term and longer-term financial plans, and it is extraordinarily difficult for them to work out how things will add up.

We will be as helpful as we can be. Unfortunately, I do not have the magic wand that can answer all the queries, but I want things to be fair and I want people to be well advised. I do not want people to feel that they are being penalised for running effective organisations or that they are hard done by compared with others.

Incidentally, I should say that, although we look closely at the public evidence sessions and the evidence that the committee receives, if you have information about circumstances that I and my officials might not know about—any information that might not have been said in public or that you have picked up during visits—please let us know. In that way, we can be as well informed as possible.