Scottish Affairs Committee - Minutes of EvidenceHC 139-I

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Oral Evidence

Taken before the Scottish Affairs Committee

on Wednesday 16 May 2012

Members present:

Mr Ian Davidson (Chair)

Fiona Bruce

Mike Freer

Iain McKenzie

Simon Reevell

Lindsay Roy

________________

Examination of Witnesses

Witnesses: Patrick Layden TD QC, Scottish Law Commission, and Professor Andrew Scott, University of Edinburgh, gave evidence.

Q1 Chair: Gentlemen, I welcome you to this meeting of the Scottish Affairs Committee. This is part of our inquiry into the impact of separation on Scotland. We want to discuss with you today the elements relevant to the European Union. It would be helpful if you started off by introducing yourselves, and then we will start with questions.

Patrick Layden: I am Patrick Layden. I am a Scottish law commissioner, but I am not speaking in that capacity today. These are my personal views and do not reflect any position of the Scottish Law Commission. Before I became a Scottish law commissioner, for about 30 years I worked in government advising first Westminster and then the Scottish Government about constitutional and EU matters. The Committee has had my note, which sets out my position.

Q2 Chair: Perhaps we may first take the other introduction and then come back to you. I thought you were about to give us your exposition.

Patrick Layden: I was, but I will stop.

Professor Scott: My name is Drew Scott. I am professor of European Union studies and codirector of the Europa Institute in the school of law at the university of Edinburgh. I should stress that I am not a lawyer but an economist by training, although I live with lawyers daily and have an interest in that side as well. I am principally an economist.

Q3 Chair: Mr Layden, we invited you here because I was with others at the event in Edinburgh hosted by the university of Edinburgh. We found your address on matters to do with separation and Europe most interesting. That is why you are here today. I would be grateful if you could perhaps lead off on how you see a separate Scotland relating to the EU and the implications thereof.

Patrick Layden: You have my note. I would like to add to it that when you are considering the legal implications of any course of action you have to look at two risks. The first is the risk of challenge to what you want to do; the second is the risk of successful challenge. Quite a lot of Government activity happens on the basis that no one will want to challenge it, even if they might succeed if they did. Here, the risk of challenge at least to the SNP position, as I understand it, that Scotland would automatically become or remain a member of the EU arises because splitting the UK is a major event geographically, legally and politically. Seen from outside the UK, it is not even a given that both new states will want to stay in the EU. If both parts do want to stay in, there will require to be treaty alteration, and I set out in my note some of the areas in which that would have to happen.

First, we in this country tend to have a UK-centric view of affairs. We see things through the prism of our own attitudes, perceptions and wishes. We are not unique in that, but our perception of matters is not always shared by everyone else. In this case other member states, in particular those with provinces that might be seeking more autonomy, will be cautious about creating a precedent for an easy transition from being part of a country to being a full-blown member of the EU. Secondly, anyone who believes in the European Parliament will be concerned at the dilution of votes that will happen if we become independent and you have to cater for two member states where previously there was only one.

The grounds of challenge are as set out in the note. It would be said that RUK is not the same state as the present United Kingdom. The effect of the split is that the UK is leaving the European Union, even though both RUK and Scotland want to rejoin. So the argument would run that we should use the procedures in the treaty, which would give the institutions and other member states the opportunity to consider any necessary treaty amendments in an orderly way.

As far as the prospects of a challenge are concerned, if it got to that, I would myself have said that the prospects of the Court of Justice agreeing with the challenge are quite good because it would fit with their perception of the all-embracing scope of European law. They like to feel that European law provides a solution to any question. As far as they are concerned, all human life is there. If asked a question to which one could formulate an answer in terms of European law, their tendency would be to go for that.

I suspect that we would not actually get to court because both Scotland and RUK would fudge the issue and agree to negotiate as if articles 49 and 50 of the treaty applied rather than have a fight about it in the Court of Justice. The point I am trying to make is that we in this country, whether here in London or up in Edinburgh, cannot determine that we will continue as member states of the European Union on the same or comparable terms to those that we enjoy now. That is not something that we control. That is really it as far as the basic argument is concerned. I have some other thoughts about what would happen to our various opt-outs and so on.

Q4 Chair: Let us come to those separately, if we can. Drew, do you want to respond to that and also give your exposition to summarise the position for us?

Professor Scott: I defer to the law. I am not going to get into a point. I would make a few observations. First, this is uncharted territory. All lawyers agree there is no provision in the treaty and no legal precedent for this particular situation. Lawyers in my experience are divided as to what the likely outcome would be. Some take the view, as Patrick has explained, that both parts of the former UK would find themselves in the same position outside the European treaties, and both would have to go through some kind of formal readmission process.

I take a different view, which is partly informed by the work of colleagues, such as Aidan O’Neill QC, who have argued quite strenuously that, on the basis of EU citizenship law, there is no provision within the treaty for citizens of the European Union to have that citizenship taken away from them. In a sense the treaty protects the citizens of the EU. His argument-I would not like to distort it or put words into his mouth-is that the citizenship provisions of the EU treaties provide a large degree of safety for Scottish citizens of the Union, and that would prevent Scotland, or the rest of the UK, being expelled or somehow excluded from the EU.

Added to that, the EU is going through a number of constitutional situations for which there is no provision in the treaty. It goes as far back as Algeria, through the Greenland situation, the Netherlands Antilles, which is an ongoing debate, and of course into the unification of Germany. On each occasion a solution has been found that met the wishes of the constituent parts. I think the European Union is very able to tackle this type of issue without going through or getting to a formal position where the court would be asked to adjudicate.

It is worth adding to that the situation under UK law. What would be the situation of Scottish independence in terms of the UK? Would the UK exist? I think Patrick is absolutely right that the United Kingdom of Great Britain and Northern Ireland would no longer exist. Both parts of the UK would be in the same situation, but my view is that both would be continuing members of the European Union. Of course they would have to negotiate; there would have to be treaty amendments, which would have to be unanimously agreed upon, but they would be negotiated from within rather than outside. That has implications, and doubtless we will come to them, for the opt-outs and the various privileges that perhaps the UK uniquely gets, particularly, for example, on the budget. My view is that Scotland would remain part of the EU, as would RUK, and negotiations would go forward on that basis. I would hope and expect them to be satisfactorily concluded very quickly.

Q5 Chair: If, as you suggest, there is a degree of automaticity about remaining, why would there be a requirement for any negotiations at all?

Professor Scott: Because you would end up being two different countries that previously were one. The Council of Ministers is taken care of under the new treaty because it is a straightforward double majority, so there is no allocation of that, but there would have to be discussions about the seats in the European Parliament and particular policy lines, for example, on the structural funds where at the moment the UK is the state that signs those funds. Provision would have to be made for that.

Q6 Chair: But in a sense these are just housekeeping matters, are they not?

Professor Scott: Yes.

Q7 Chair: It would be automaticity except for housekeeping matters.

Professor Scott: Yes; that is my view.

Q8 Chair: Patrick, your view is somewhat different. I am struggling to express this properly. You are coming to the view that it would not be automatic because the EU would have an opportunity for the EU to involve itself in the future relationship and it would seize that opportunity to exert a price, as it were, if I remember correctly your contribution in Edinburgh.

Patrick Layden: Yes, absolutely; that is exactly the point. If you characterise the splitting up of the UK as an internal arrangement that has no effect on anybody else, of course you could say that both countries carry on in the same position as the previous country did, but that is our view of the matter, at least in terms of international law. International law might very well say that both Scotland and RUK would carry on with the same obligations as the old UK had. Even in international law it does not follow uniformly. We might both continue to be members of the Council of Europe and the United Nations, but we will not have two seats on the Security Council-at least I doubt it. As a matter of European law, the rules of that particular club are for the rest of the club. What we are saying to them is, "We have decided to split the UK into two bits. Will you now, please, renegotiate this settlement of 750 members of the European Parliament so that Scotland gets a few more, and, indeed, England or RUK gets a few more, if you take away the Scots ones? Instead of having 67 for RUK and six for Scotland, we want 12 for Scotland, because that is what other countries with 5 million citizens have. Instead of RUK having 67, it needs a few more because other countries with a similar population have more seats." Then all the other member states have to work out which of them will lose a few seats to give us what we are entitled to.

Q9 Chair: Are these what Professor Scott was referring to as internal housekeeping issues only, or do they go beyond that? I think there is an agreement between both of you that housekeeping matters of various sorts would require to be renegotiated. The simplest issue is membership of the European Parliament and so on and so forth. If I recall correctly, you seem to be going beyond that and thinking there would be a whole number of other issues that have to be reopened as well.

Patrick Layden: When Bulgaria and Romania joined they had a protocol to the treaties to do those housekeeping issues. It is housekeeping; it is procedure on one view, but, if it is to be done in an orderly way, you need a treaty change to add a few more members to the European Parliament, if that is the decision you take. You need a unanimous decision of the Council and a vote in the European Parliament before you can reallocate seats in the European Parliament. Other countries would lose seats. If they did not do that process, citizens in Scotland would have votes that were less valuable than citizens of Finland. Finland has 5.2 million people, much the same as Scotland would have post-independence. Finland has 13 seats in the European Parliament. If you worry about the European Parliament, it would be intolerable that Scottish votes should be so much less valuable than Finnish votes, but in order to achieve a more equitable solution you would have to have an agreement from the Finns and other member states that they were prepared to lose a seat so that Scotland could have more.

These are not insuperable problems, but if I were advising the Government of another member state I might very well be saying to them, "Look, the Brits are chopping themselves in half; they will wind up with more votes in the European Parliament than they have at the moment. We need to have an input into this; we need to make sure that our views on the matter are heard and expressed." Our way of doing that, as I said in my note, is to characterise the process as the UK leaving the Union and two other states applying to join. If I were advising, say, Spain, which has provinces looking for more autonomy, I would say, "No. Let’s go through the article 50 hoop and have an orderly negotiation towards the UK leaving, and then let’s have a process with the two new states joining. That will give us the opportunity, I would say to my Government, of having a go at this ridiculous British rebate, its exclusion from Schengen and British attitude to the JHA measures."

All sorts of things could get tidied up from the perspective of other member states on the back of this incident. My position is not that that will happen or even that at the end of the day the European Court of Justice might come to some conclusion less than that. My point is simply that we cannot rule out that possibility at this stage of the proceedings. There will have to be negotiation and treaty change, and the form it takes will not be determined solely by people in this country.

Q10 Lindsay Roy: Essentially, what you are saying is that this is much more than internal housekeeping; there are much wider ramifications.

Patrick Layden: Yes.

Lindsay Roy: That is very helpful.

Q11 Mike Freer: Mr Layden, you talked about the challenges coming from other states of the EU. Is there a possibility that the challenges to an internal housekeeping exercise could come from a third party? For instance, if Amnesty International believed that the UK attitude to human rights or the social chapter was inequitable, could it seek a legal challenge in the European courts to say that the internal tidying-up is not appropriate and they have to completely reapply as a way of trying to force the remnant countries to comply with European law as a whole?

Patrick Layden: They might have trouble qualifying an interest to raise an action in the European Court of Justice. They might even have trouble qualifying an interest to put representations into somebody else’s litigation in the European Court of Justice, but I am sure they would contrive that their view of the matter got before the European Court of Justice if somebody else was raising the litigation.

Q12 Mike Freer: They could put a stick in the wheel. They may not be successful, but they could at least cause a bit of trouble along the way.

Patrick Layden: I have trouble seeing how they could do it formally, but I am sure you are right about the basic point.

Professor Scott: I agree they would have to prove standing in the issue. I think that would be extremely difficult; that type of thing is very tenuous. In a sense, they could do it now if they felt that somehow the UK was violating human rights in that way. I doubt very much that that is a goer.

To go back to the European Parliament, we should remember that it does not sit as member states but as political groupings. I do not agree with Patrick that the European Parliament is a deal breaker because it is not a member state representative organisation; it is a political organisation where socialists, Christian democrats and so on sit. I do not think it would defend a particular national line, and UK MEPs do not vote according to member state.

Q13 Chair: But, surely, the basis on which people are elected to the European Parliament depends upon the numbers in each individual state.

Professor Scott: Yes, of course; it is a relationship with the population of the member states. All I am saying is that one cannot predicate a problem on the basis of nationality in the European Parliament. One can predicate problems, but not because Britain somehow would get more representation, because that is to see the European Parliament as a representation of member states. The Council is a representation of member states; the European Parliament is a representation of the citizens of the European Union-not of member states. There may be an issue about it, but I do not feel it would come because member states are complaining about too many-that is my position; that is my opinion.

Q14 Chair: I understand that.

Professor Scott: There is another point I would like to make about the incentive. The presumption of spanners in the works has to be pushed a little. Where is the driver of this? Why would other member states see it in their interests to make difficulties, given that the UK is one of the largest markets for the European 27, given that the UK as it exists just now and, one expects, post-independence, should that arise, would remain a very close partner of the main countries of the European Union?

We have to think about this more carefully. Spain has sometimes been used as an example. As a member state, why would Spain see it in its interest to block either the whole of the former UK or part of the former UK in the event of independence? We presume it would because we presume this would play to movements in Spain that seek independence. Spanish national interests may be quite different. It may be that the economic interest that Spain has in Scotland would trump domestic politics, with no guarantee that domestic politics would go in that direction anyway or that Scotland would be used as an example. It is very easy to make statements that create an incentive for other countries to be obstructive, but I am not sure how much weight I would give them.

Q15 Chair: To take Spain as an example, surely the argument is that it would not be entirely enthused by the prospect of a precedent being set whereby countries could rend themselves asunder and just carry on as if nothing had happened. That would give an impetus to those who wished to see Spain fall apart, and, the more difficult it is made for the UK to break up, the less likely it is for people in Spain to seek the same route. That seems logical to me.

Professor Scott: That may be logical to you, but I have not heard anyone pronounce on that from the Spanish side publicly yet. If it is so obvious, it surprises me that a member of the Spanish Government has not made that point clear in public. As far as I am aware, although I stand to be corrected, that has not been said. Spanish constitutional rules are quite different from what we think is the UK constitutional position. It may well be that Spain would have a quite different internal process from perhaps the UK where the principle of independence for Scotland has been conceded by successive Government-at least since Mrs Thatcher and perhaps before. The situations are not directly analogous.

Q16 Simon Reevell: Mr Layden, you referred to the manner in which the European Court of Justice might become involved, but your working assumption is that, if Scotland became independent, both it and the remainder of the United Kingdom would fall to leave the European Union. If that is right, on what basis do you say the ECJ would retain jurisdiction in respect of the remainder of the UK or an independent Scotland?

Patrick Layden: I would see the Court of Justice becoming involved if, say, the European Commission took the view that both parts of the UK remained members of the
European Union, that no treaty alteration was required and all that was left was some minor housekeeping. If that was the position taken by the European Commission, then another member state could challenge that in the European Court of Justice. That is how the matter would come before the court.

Q17 Simon Reevell: If the Commission took the view that both had gone, it could not then turn to the ECJ because the jurisdiction would no longer exist.

Patrick Layden: If we were persuaded that we were still both members of the European Union, we might go to the European Court of Justice with an action against the Commission to say, "These people have got it all wrong."

Q18 Simon Reevell: That would be dependent upon a determination of whether or not we remained within the jurisdiction.

Patrick Layden: Yes.

Q19 Simon Reevell: We have only just seen-and you may not have done-a parliamentary question to the European Parliament that goes back to 2004. Its reply on behalf of the Commission is very clear. Scotland would cease to be a member of the EU and the remainder of the UK would carry on. If that is right, jurisdiction would remain as far as the remainder of the UK, if you can call it that, is concerned, and Scotland then may be able to approach the ECJ to argue that its membership has been terminated incorrectly and the jurisdiction is still there.

Patrick Layden: Yes.

Q20 Simon Reevell: But it would have to get over the initial hurdle of demonstrating that it was still within the EU for the jurisdiction to apply.

Patrick Layden: It would maintain that it was in the EU. Since that was the question it would be asking the court, the court would assume jurisdiction.

Q21 Simon Reevell: Effectively, one would determine the other.

Patrick Layden: Yes.

Q22 Simon Reevell: That would be the sequence. Is the answer given by the Commission-whether it is right or not, there is no ambiguity there-one with which you would disagree?

Patrick Layden: I do not need to agree or disagree. All I need to say is that nobody knows at this stage.

Q23 Simon Reevell: I understand that.

Patrick Layden: I personally disagree. I think that both parts of the UK would be outside the European Union seeking to get in.

Q24 Simon Reevell: That is an example of the potential problem, because already we have learned opinion saying one thing and the Commission saying another, and the only method of resolution would be ultimately the ECJ.

Patrick Layden: The resolution is a negotiation. The negotiation will take in a range of matters. I doubt whether any of the parties would want to go off to the Court of Justice, because all that does is hold up the whole thing for months while the lawyers do their work.

Q25 Simon Reevell: But, as with any litigation, in the absence of a negotiated settlement-

Patrick Layden: Then there would be litigation.

Q26 Simon Reevell: Then it is the ECJ.

Patrick Layden: It may be that there could be litigation. There is a certain artificiality about this, because if Scotland votes for independence a whole range of processes will happen in parallel. One will be a detailed negotiation between Scotland and the rest of the UK about all sorts of internal matters. Who is going to run welfare benefits? What sort of provision is going to be made in UK law for Scotland to break away? The Scots will want this, that and the other, and the rest of the UK will be saying, "You can’t have it." There will be a long negotiation going on there. Both parties will have to negotiate with the other member states in the European Union and Commission to achieve whatever "housekeeping" is going to be necessary.

There may also be negotiations going on, on a grey basis, with other international organisations. It will be a very busy period for two years to break up the United Kingdom. There will be a great big Act of Parliament here and people will be poring over it, fighting about it and producing schedules and things to the heart’s content of the lawyers, and that will take some time. Whatever view you take of which bits of the UK are going to be in or out of the European Union, those processes could carry on simultaneously. If you accepted my analysis and said that the UK leaves and then both bits have to apply, the processes by which the UK leaves and the two new states join can all be negotiated at the same time as the Scots are having their discussions with Whitehall. The end result would be an Act of the UK Parliament and 27 or 28 Heads of Government sitting round a table in Brussels. You could sign two bits of paper. One would be the UK leaving under article 50 and the other would be Scotland and RUK joining under article 49. Maybe there would be three bits of paper. All those things could happen simultaneously. There would not be a period during which either or both countries were outside the EU trying to get in.

Q27 Simon Reevell: Don’t tease me with the prospect of the UK leaving the EU.

Patrick Layden: I am actually impressed by the idea that we are looking at this thing from the point of view of scurrying into the EU so that we do not have to think about anything outside it. If for some reason or other Scotland was outside the EU and thinking about joining it, I would have hoped that those in charge, whoever they are at the time, would at least want to think about whether it wanted to join on the same terms as the UK has at the moment. In 1971-72 the European Union cobbled together a common fisheries policy because it knew we were about to join and did not want us negotiating it. The result is a common fisheries policy that a whole range of British and Scottish politicians have said is not to our advantage, and all the Factortame litigation and so on was a result of that. There are serious advantages to us in being in the EU, but, if we were approaching the matter now, I would like to hope that we would try to do a better deal on the fisheries policy than we currently have.

Q28 Simon Reevell: On any analysis of either your position or the Commission’s position as set out in the parliamentary question response, certainly Scotland would be out and have to apply to go back in.

Patrick Layden: Yes.

Q29 Simon Reevell: There is a question as to whether the rest of the UK would or would not, but the common ground is that Scotland would be out and would be seeking to reapply.

Patrick Layden: Yes.

Chair: That is not a view with which you agree. We have already covered that.

Q30 Simon Reevell: I accept that. I asked Mr Layden, with no disrespect, simply because he is a constitutional lawyer, and we also have a response from the Commission. I accept others may take a different view.

Professor Scott: I would make one brief point about the response by the Commission. The difficulty is that this was the response from the President of the Commission at the time. We could dig out many quotes by very senior lawyers, including Lord Mackenzie-Stuart, Emile Noel and so on, who would take issue with this interpretation. I would caution against reading this as a definitive legal statement. I think that would be a very unwise thing to do.

Q31 Simon Reevell: This can be no more than the attitude of the Commission at the time the answer was prepared, but there has been nothing from the Commission since then to indicate that their view has changed.

Professor Scott: The failure of the Commission to pronounce suggests to me that the attitude of the Commission is no longer this; otherwise, why is the Commission unwilling publicly to engage in the debate? As far as I am aware-again, I stand to be corrected-the president has declined to comment on the basis that it is hypothetical.

Q32 Simon Reevell: Do you think that if someone is not prepared to say something they must be taken to disagree with a previously stated position? There is quite a leap there. They may simply not want to engage in the debate because they regard their position as clear. I don’t know.

Professor Scott: I did not take that from Mr Barroso.

Q33 Lindsay Roy: Has anyone formally asked the Commission?

Professor Scott: I do not know.

Q34 Lindsay Roy: I would have thought the status quo is the position that they retain. Is that not a reasonable assumption?

Professor Scott: I do not think so, but you are welcome to hold it. I do not hold it.

Chair: You are not the only witnesses we will be seeing on this subject, so you are our starter for 10, as it were.

Q35 Iain McKenzie: Taking a small step back in that line of argument, would a post-separation Scotland applying to be an EU member require the unanimous consent of all other EU member states?

Professor Scott: Yes. If you accept the basic assumption that Scotland would be outside the EU, any new member state requires unanimous agreement, including the Parliament’s support.

Q36 Iain McKenzie: If that unanimous consent was granted, what sort of obligations would fall upon Scotland?

Professor Scott: Going along that line-I do not share the predicate-in that event Scotland would join as a normal acceding country in your world and would settle the terms of membership at the time. We have various forms of membership of the European Union. We have countries joining-for example, Denmark-where particular rules over property were introduced into the protocol governing Danish accession because there was a particular interest. Iceland is seeking a particular protocol governing its fishing when it joins.

Q37 Iain McKenzie: But are there standard obligations on member states that Scotland would need to adopt?

Professor Scott: The standard obligations are the internal market. The core is the acquis communautaire on the internal market, and that is nonnegotiable. Issues surrounding various other elements of the EU by expedience are negotiable. We have seen a number of exceptions and derogations, including those relating to the single currency, being given regularly and repeatedly on the accession of countries.

Q38 Chair: If there are to be derogations, changes or anything like that, those will have to be negotiated. Therefore, that would not be automatic. Your position, as I understand it, is that Scotland would automatically be in, but, if there is to be change on something like, say, the common fisheries policy, presumably that would have to be negotiated with somebody and agreed by somebody else.

Professor Scott: My position is that Scotland would go in along with the rest of the UK under the current provisions. My presumption is that it would not seek to negotiate new conditions, nor would the Commission or EU member states seek to impose any. That goes back to my principle of citizenship. We in Scotland, like colleagues across the rest of the UK, have certain obligations and privileges under citizenship as it stands. My view is that the privilege cannot be removed by dint of the break-up of the UK, if that is what happens, nor can obligations be increased.

Q39 Chair: If Scotland separated and chose to leave the EU, it would be free to take its citizens with it.

Professor Scott: Yes. That was not clear until now.

Q40 Chair: Your position is that, if Scotland split and wanted to remain in, its citizens would go in with it, as I understand it.

Professor Scott: Under the current provisions of what is now the UK.

Q41 Chair: All of that would be under the existing rules as they apply to the UK about the budget, although there would be a housekeeping issue about how it was split, Schengen and all these things, including the common fisheries policy. You would argue that, if they wanted to change things like the common fisheries policy, that would have to be the process of different and separate negotiations, which would have to be agreed by other people, but that would be distinct from the question of membership.

Professor Scott: That is my position.

Q42 Chair: I just wanted to be clear about that. Mr Layden, perhaps I may clarify your position about Scotland having to get the agreement of everyone else. Am I right in thinking that certainly the Irish, probably the French and possibly others would have to have a referendum for a treaty change that brought about Scottish entry? Presumably, Scottish entry, even if they were just housekeeping questions, would change some elements of Irish involvement in the EU.

Patrick Layden: I cannot speak for their constitutional arrangements. It might be the case, yes. I do not know. Suppose Norway comes along and applies to join the EU. I do not know whether the Irish would have to have a referendum before they could ratify the required treaty.

Chair: We will have to look at the Croatian parallel, which I know is being discussed here at the moment. I confess it is not a subject I have previously explored in this context or indeed in any context, I must confess.

Q43 Mike Freer: You talked about the application on the unwinding being run as two parallel processes. What if the process of independence arises at independence before those two processes have been completed? If you are having the UK as it is and the UK as it will be having these parallel negotiations but Scotland becomes an independent country a year beforehand, surely that throws a spanner in the works as well. It does not have legal entity to be having those negotiations because the UK ceases to exist.

Patrick Layden: I am sure we could organise things so that that unfortunate displacement did not happen. I am sure that those doing it would say the target date is 1 July 2017, 2016, or what have you, and everybody would work towards that.

Q44 Mike Freer: If the Scottish Government said, "We’ve run the referendum; we’re going to be independent by 1 January 2015", but the EU says, "The parallel negotiations will not be until 1 January 2017", we will have a bit of a problem.

Patrick Layden: It really depends on whether you want an orderly constitutional process or a simple declaration of independence. If the people of Scotland got together tomorrow and said, "We want to be independent", and that was sufficiently clear from the way they voted in a referendum organised by somebody entirely different from the Scottish Government, and that was the clear will of the Scottish people, they would be off. They might have all sorts of trouble persuading the rest of the world that they were a sensible country, but they could do it. People around the world declare independence from other people and just make it work. It was happening all the time in the 19th century. You can do it either in a constitutional, orderly way or it just happens.

Q45 Mike Freer: The actual process of independence, should the referendum be run, is not in the hands of the Scottish Government but in the hands of the EU.

Patrick Layden: It is in the hands of the Scottish Government and the UK Government and, if we want to carry on being part of it, the European Union. It is a three-way negotiation. It would be quite difficult and complex. We can do it if we want to, but that is what will have to happen.

Professor Scott: There is no precedent for this, but what we do know-this is not related to the domestic situation-is that when the Commission perceives a lack of capacity in a member state on a particular theme-for example, holding the presidency-it makes itself available to the Governments of the countries concerned to support their work. It does not answer your question, but I think there is a long-standing tradition in the Commission that, once the principles have been settled, it will work incredibly hard with the member states, as we saw during the 2004 enlargement process and again in 2007, to make these processes utterly smooth. This is not a parallel; it is quite different, but I think it reveals a sense of commitment by the Commission to get on with the business once it has been agreed.

Q46 Chair: It has a vested interest in acquting, as it were. The nature of the exact terms under which that might take place would not necessarily be in the member state’s interest.

Professor Scott: There is no interest in the Commission or any other member state in having a hiatus, because what happens to the cohesion of the internal market? What happens to contracts involving Scottish legal entities in the rest of the European Union? What happens to a whole raft of investments in Scotland that presently flow according to European law? There is no interest in this becoming anything other than a very efficient process.

Q47 Chair: Unless somebody had an interest in being obstructive.

Professor Scott: I restate that this is after the principles have been agreed, which one hopes would happen ahead of the type of scenario that is being posited.

Q48 Lindsay Roy: I think there is recognition that we are in uncharted territory. There is a polarisation and a variety of views as to what would happen. Are there other useful examples to illustrate how membership of international bodies has adjusted when nation states break up? Are there any lessons we can learn from this?

Patrick Layden: There might be, but international law does not apply inside the European Union. As a matter of international law, the Vienna Convention of 1978 provides for what happens when you have a successor state. One of its provisions says that a successor state will assume membership of an international convention in the same way as the predecessor state did "without prejudice to the rules concerning acquisition of membership and without prejudice to any other relevant rules of the organization." The European Court of Justice is not going to apply pure international law to an internal European matter. It might look at international law, but if it does not coincide with its view of what European law requires it will apply European law. It has applied European law effectively to member states’ obligations under the UN charter, which predates the European Union.

When the United Nations Security Council makes provision for determining that a particular person is a terrorist and his assets have to be frozen, the European Court of Justice will look at the merits and see whether he is being treated fairly. A purist would say that since a member state freezing somebody’s assets is acting under a treaty that pre-existed-it was in place before the European Union came into being-the EU should not be doing that, but the Court of Justice is quite happy to do that. It will always take a view consistent with European rather than international law, but the answer to your question is that there are lots and lots of cases where countries have become independent and assumed a range of the obligations of their predecessors.

If Scotland became independent, as a matter of international law it would probably be a member of the Council of Europe. That would not be a difficulty. If it applied, it would get in straight away. It would not necessarily be a member of NATO. Indeed, some people in Scotland hold the view that it should not be a member of NATO. You cannot be made to stay in an international organisation if you do not want to. The Swiss still are not members of the United Nations.

Q49 Lindsay Roy: The whole process could be quite time-consuming and messy, but we are not certain about that.

Patrick Layden: It would be time-consuming, detailed but not necessarily messy.

Q50 Chair: To follow up the NATO parallel, you would almost be in a position where Scotland and the rest of the UK would inherit the UK’s membership of NATO but then would leave. Sorry, that is your position, is it not?

Professor Scott: I am not speaking about that.

Q51 Chair: But, surely, on the general principle that the two parts would inherit all the pre-existing memberships, they would just leave.

Professor Scott: You are misunderstanding. As Patrick said, the European Union is a separate legal order. It is quite distinct from the international legal order. My position is based entirely on the European legal order. NATO is not part of the European legal order, and I have no comment on that. My comment is entirely about the European legal order.

Q52 Simon Reevell: Professor, with no disrespect to you, assuming the situation is either that which Mr Layden envisages, which is that both countries fall outside the EU or that which the Commission certainly have previously indicated, which is that Scotland would and the UK remainder would not, if either or both of the two countries took the view that they did not want EU membership but EFTA membership-European Free Trade Association membership-would there be any legal bar to them seeking the ability to trade rather than integrate politically?

Patrick Layden: None that I can see. If Scotland were an independent country, it could decide not to be a member of the EU but a member of EFTA or the European Economic Area. It could get into treaty relationships with Iceland, Norway and perhaps Denmark in light of the Faroes with all the fish and oil that is lurking about between the four countries and form some kind of northern alliance, and then it could enter into trading arrangements with the EU.

Q53 Simon Reevell: Presumably, on your analysis, you could have a situation where Scotland sought EU membership and the remainder of the UK did not and sought European free trade rights; it would apply either way.

Patrick Layden: That is another possibility. It would be a matter of the politics at the time whether the rest of the UK felt comfortable just continuing to be a member if the European Commission is right or wanted to apply for membership if I am right. They would have to make that decision.

Professor Scott: It is important to distinguish what we are talking about. Is it EFTA or the European Economic Area? EFTA comprises four countries: Iceland, Norway, Liechtenstein and Switzerland. In this scenario Scotland would have to apply to the Council of EFTA and be admitted unanimously by it. That would be apparently quite straightforward because the obligations of EFTA membership are much less onerous, but there are obligations covering competition law, state aid and so on. There would also probably be a budget requirement, as Norway pays the European Union’s budget a considerable amount of money, as indeed does Switzerland. EFTA is one option, should Scotland decide to go that way. The European Economic Area is another option, which would include full access to the internal market, including financial services. That would be a more onerous obligation, because then Scotland, like Norway but not like Switzerland, which is not within the European Economic Area for reasons relating to financial services, would have to adopt and accept all of the acquis communautaire laws, including those on financial services, having made no contribution to making those laws, and pay a significant subvention to the EU budget.

These are two quite different things. EFTA and European Economic Area membership is not within Scotland’s gift in that scenario. Again, it would have to apply, and there would have to be a treaty signed between the European Union and Scotland. A bilateral with Denmark would not be possible because Denmark is within the European Economic Area.

Q54 Simon Reevell: But, in terms of the degree of involvement, if you like, the smaller, easier option or whatever is EFTA; the option beyond that is European Economic Area; and the option beyond that is EU membership. I put that a little crudely, but they stack up in that direction.

Professor Scott: That is entirely right. You can be within EFTA and the EEA; they are not mutually exclusive, because Norway is a member of two.

Q55 Simon Reevell: Mr Layden, on your analysis, the same would apply to the United Kingdom, which by then would not include Scotland.

Patrick Layden: Yes, if it chose to do that. It could do it today. If the UK decided to leave the European Union tomorrow and seek to enter into some arrangement with one or other of these organisations, that is obviously competent.

Q56 Simon Reevell: If you know how to achieve that, Mr Layden, you must drop me a note. I have a number of colleagues who would like to read it.

Patrick Layden: All I can tell you is that the European law is in article 50.

Q57 Iain McKenzie: Do you agree or disagree that Scotland after separation would be very unlikely to meet the convergence criteria for immediate membership of the single currency?

Professor Scott: There are two points. One is that under the current position of the Scottish Government it is unlikely to meet the criteria because you would have to have a separate currency. As far as I am aware, this Government’s position in Scotland is to retain sterling as its currency. It would not have its own currency and it could not go in. It does not have its own independent central bank. At the moment it would have to establish that; it could do that without having its own currency, but that would be a requirement. It would almost certainly meet price stability; it would meet interest rate stability almost certainly, because everything is at zero. Whether it would meet the fiscal stability conditions, the 60% debt and 3% deficit, depends on where we are in 2014 and 2015. Frankly, we do not know because things are moving rather rapidly. I doubt that many countries by 2014 will meet those criteria, even those who are inside the euro as is, but, given that I understand there is no intention to seek euro membership, it will not arise. The direct answer to your question is that at the present time it would not meet the criteria.

Q58 Iain McKenzie: Because of the currency.

Professor Scott: Because of the currency and perhaps because of the fiscal position, but we cannot forecast that with any certainty at all just now. It would also have to be in the exchange rate mechanism for two years and show stability within the exchange rate mechanism. Self-evidently, in 2014, 2015 and 2016, without a separate currency, it could not meet that condition. Technically, it would violate the Copenhagen conditions to get into the single currency and could not join. It would have to have a currency for two years under the present rules that was stable within the ERM. It would have to join the ERM and then be stable within it for two years before it met the treaty requirements.

Q59 Chair: On your analysis, if Scotland wished to join the euro post- separation, there is a stage when Scotland would have to have its own currency.

Professor Scott: That is certainly the case just now, unless they timed it with the UK and the UK decided that it would.

Q60 Chair: No; leave that aside.

Professor Scott: Leaving that aside, if Scotland wished to join the euro, then under the treaty just now strictly interpreted-this may change because treaties can change-it would have to have its own currency, which would have to be within the ERM, which is voluntary. The Commission is quite clear about that, as is the central bank. It could have its own currency without going into the ERM and therefore would never have to join the euro, because it would never meet the conditions set out in the treaty. In answer to your question, yes, it would have to have its own currency.

Q61 Chair: If Scotland wished to move from having sterling, it would have to have its own currency and central bank, and then jump through a series of hoops, which involve shadowing the ERM or being involved in the ERM, and then would move on.

Professor Scott: Right.

Q62 Chair: There is no way in which it could move directly from one to the other, as it were.

Professor Scott: Not without the agreement of all member states.

Q63 Chair: Unless the treaty is changed of course.

Professor Scott: It is conceivable that Scotland could go along and plead a special case and the other 27 or 28, or however many member states there are, unanimously could agree on a protocol to amend the treaty for that one case. That is perfectly feasible legally, but, as the treaty stands just now, in the absence of a specific protocol for that particular issue, that would be the case.

Q64 Iain McKenzie: Mr Layden, on the legality of it, how important legally do you regard the obligation of any new accession state to the EU to join the single currency?

Patrick Layden: It is a formal obligation. Every new member state is expected to take on the euro. There are practical difficulties, as Drew has said, but the default position is that acceding member states will adopt the euro.

Q65 Iain McKenzie: Would Scotland be able to adopt the UK opt-out?

Patrick Layden: That is the question. It is another of these assumptions that we make because we have a UK-Scoto-centric view of the world. Of course we can take on the UK’s opt-out because it would be in our interests to do that, yes, but will the other member states agree to that? I do not know. Maybe they will; maybe they will be put off by the difficulties that Drew has mentioned in getting us through the ERM and into the euro. Maybe they will say, "No. We want a clear statement in principle from the Scots that they will join the euro." Personally, I do not know whether the euro as we know it will be in existence in the next three weeks, never mind the next three years.

Q66 Iain McKenzie: Could we adopt the Swedish position of saying yes but never really getting anywhere with adoption?

Patrick Layden: You could. Whether or not that was acceptable would depend on how you negotiated with the European Commission. It might say, "Yes, of course"; it might say, "Maybe"; it might say, "No, certainly not." We cannot control that position. There are precedents. Sweden is a precedent for not joining; the UK is a precedent for staying out. We cannot control the process. We would be applying to join, and the European Commission, with the other member states, would say, "These are the terms upon which we will accept you", and we either accept them or not.

Q67 Chair: This is unknown and unknowable, essentially.

Patrick Layden: Yes.

Q68 Chair: That short-circuits things quite a bit then.

Professor Scott: I do not agree that it is unknowable. This is an anomaly. There is no other way to put it. In the absence of an ability legally, which is not in the treaty, to require a country to join the exchange rate mechanism, the European Commission cannot enforce membership of the euro. It simply can’t. That is an anomalous situation, but the Commission has made clear time and again, as has the central bank-if you consult the website, you will see this-that it is entirely up to a member state if it wishes to join the ERM. The alternative would be chaotic. You would be requiring an independent Scotland in this scenario to introduce a new currency. There is no legal basis in the treaty to require Scotland to do that. So it is not unknowable; it is utterly clear. The Swedish position has never been challenged by the Commission, and that is since 1995. It is not that the Swedes are deliberately avoiding some of the rules; they simply will not join the exchange rate mechanism. As long as they do not join the exchange rate mechanism, which cannot be foisted upon them, they are not able to satisfy the legal conditions to join the single currency. So you have a stalemate.

Q69 Chair: I think the point being made was slightly different. The question is not one of enforcement but getting a commitment to join. For example, as I understand it, Croatia is making a commitment or promise to join at an indeterminate time in the future, and all these other steps will have to be gone through. I think Iain is seeking clarification on whether or not such a rule is likely to apply to Scotland, leaving aside the issues of implementation. Scotland could agree in bad faith, presumably, that if it has to tick the box saying it will join the euro eventually, it can say, "Yes. We will tick that box but we have no intention of doing it because you can’t force us to set up our own central bank and participate in the ERM." Is that not correct?

Professor Scott: In my scenario you have the opt-out, as I said before. Technically, you could argue that the UK has committed to the single currency; it just cannot be forced upon it. The derogation can’t be withdrawn by the European Union. The opt-out does not say that Britain will never join the euro; it simply says that this provision does not apply to Britain. Successive UK Governments-I think it is still the position-have said they will join the euro when the time is right.

Q70 Iain McKenzie: Presumably, Scotland would need to state a clear intention to join. At the moment the UK is not stating that.

Professor Scott: In my scenario Scotland would not have to state that intention because it would inherit the opt-out from the current situation.

Q71 Chair: Am I right in thinking that so much of this is unknowable in the sense that, while we can discuss legalities, existing treaties and so on, so much of this is just politics. What we have today can quite easily be changed by a consensus tomorrow, and it will depend ultimately upon a process of haggling, discussion, trade-offs and so on and so forth within the European Union. We see what is happening just now with Hollande and Merkel discussing the future of the euro. Treaties will be torn up, rewritten and reinterpreted depending on the political situation. It will be exactly the same situation for Scotland and the rest of the UK. Therefore, all of this is, as it were, unknowable. It would be a political decision if the rest of the EU stood aside and let the European Court of Justice implement it. Doing nothing is a decision in those circumstances. Is that a fair analysis?

Patrick Layden: I think it is. As Drew said earlier-I think he said it earlier, but, if he did not, it is true anyway-there is no provision in the treaty for somebody to withdraw from the euro, but all it takes is 27 member states and 27 Chancellors of the Exchequer sitting round a table slightly larger than this saying, "Let’s have a protocol that provides for Greece to withdraw gracefully from the euro", and it will become European law, and therefore it can happen. You are absolutely right. I can think of legal barriers to simply assuming that life will go on as we would like it to, but, at the end of the day, there will be a negotiation that will take into account any matters which those negotiating wish it to, and it will produce a result. Once the result has arrived and it has been ratified by 26, 27, 28 member states, depending on your point of view, then it will become European law.

Professor Scott: This question is not that contingent. I think the question about an independent Scotland’s continuation of membership of the EU is not in that sense unknowable. I am utterly sure that it is a foregone conclusion that Scotland would remain inside the European Union, as would the rest of the UK, unless one or other party seeks to leave. I see no unknowability about that personally. That is my view.

Chair: We wanted to get you here to get that view. We were aware that that was your line on these matters.

Q72 Lindsay Roy: To pick up another possible area of contention-the UK budget rebate-is it your view that Scotland would be entitled to a proportion of that if it became a separate member state of the EU?

Professor Scott: That is my view. Perhaps I may say something on this point. I have been looking at the Parliament paper "Scotland, Independence and the EU". Page 10 gives figures, which, if they were right, would make a number of Conservative Members of Parliament quite happy. If I am right in my interpretation, it shows the UK contribution to the European Union as £13.2 million, given a per capita head of £50 per year. I think that should be "billion".

Q73 Chair: Is this the Library’s paper?

Professor Scott: Yes; it is the table to the bottom right of page 10. Unless I have an earlier copy, I read that as the gross contribution being £13.2 million. I think you will find the gross contribution of the UK is £13.2 billion.

Q74 Chair: You just can’t get the staff these days. I blame the Government.

Professor Scott: If it was £13.2 million, there would be no debate about the European Union in this Parliament. I would urge you to correct that. The net per capita figures for the UK, England and Scotland are wildly out as a result.

Q75 Chair: I confess I had not spotted that myself.

Professor Scott: The reason I am saying that is that, as an academic and teacher of students, my students will read this, as will most students, and think this is definitive work; it will become true by repetition. I looked at it only just before I came down. I do not mean to impugn the Library staff, but I do think there is something quite wildly wrong here.

Chair: The staff here will no doubt transmit this view to the Library and it will be corrected as soon as possible, if it is indeed an error.

Q76 Lindsay Roy: Perhaps you would go back to my point.

Professor Scott: My view is that the budget rebate would continue.

Q77 Lindsay Roy: On the basis of proportionality.

Professor Scott: On a GDP/GNP proportionality basis. You cannot change the obligations or privileges of EU citizens because of something that happens to the states, so I do not see any ground for changing that, unless a Scottish or UK Government ahead of any independence were moved to change the rebate themselves, which in my view would be advisable.

Q78 Lindsay Roy: Do you share that view, Mr Layden?

Patrick Layden: No. I take the view that both Scotland and the rest of the UK would be applying to join again; that is my view. If you take the Commission’s last stated view, certainly Scotland would be applying to join again. If I were the European Commission or any other member state, I would say, "Now is the time to get rid of this ridiculous rebate. If these blighters want to join again, the rebate has to go."

Q79 Lindsay Roy: What are the chances of Scotland negotiating a rebate on its own in these circumstances?

Patrick Layden: Small, I would have thought.

Q80 Lindsay Roy: How small?

Patrick Layden: Very small.

Q81 Lindsay Roy: Minuscule.

Patrick Layden: Oh yes; non-existent.

Professor Scott: Zero is the answer.

Q82 Lindsay Roy: That is helpful clarification.

Professor Scott: I agree. If Scotland were applying for membership as a new country, the chances of getting this would be zero because it is indefensible. This was negotiated in 1984 when the UK economy was very weak compared with the average. The UK economy is now being subsidised by some of the weakest countries in Europe, which, frankly, is outrageous, but that is a political decision.

Q83 Chair: Indeed it is. Perhaps I may clarify a point related to Schengen. Presumably, the same arguments apply. Drew, your view would be that, if they are both in, they both inherit Schengen, and, if they want to depart from it, that is another matter, is it not? Patrick, the question of Schengen is something the EU would want to negotiate. That is part of the process of whether or not the UK continues to have its exemption from Schengen, is it not? There are so many of these things. You have two consistent positions, and then everything can be applied through the relevant template.

Patrick Layden: Yes. If either Scotland or RUK had to apply, the default position for new applicants is that the Schengen rules apply. There is a protocol relating to Schengen. Protocol 19 to the Treaty of Lisbon provides: "For the purposes of the negotiations for the admission of new Member States into the European Union, the Schengen acquis and further measures taken by the institutions within its scope shall be regarded as an acquis which must be accepted in full by all States candidates for admission." The starting position would be that Schengen would apply to Scotland if Scotland applied to become a member. You could speculate that, if that were to happen, the Irish might want to consider whether they really thought it was a good idea to keep the common travel area the way it is now; and the rest of the UK would have to think about how important it was to it to have long queues at the immigration desks at Heathrow, or whether now was the time to do what the rest of Europe is doing and allow free movement across the borders, but, yes, it would be an issue.

Q84 Chair: If we accept that your position is correct, Scotland is in a much weaker negotiating position than the rest of the UK in relation to exercising its will on things like Schengen, on the basis that Scotland is less needed by the EU than the rest of the UK given the size of the market and everything else.

Patrick Layden: We have a lot of fish.

Q85 Chair: A lot of fish and oil but not much else.

Patrick Layden: We have the sturdy independence, resource and efforts of the Scottish people. I do not think I would downplay that, but it would not cut very much ice with the European Union.

Q86 Chair: In a less elegant way, that was the point I was making.

Professor Scott: We need to be clear where we are coming from on Schengen. The EU has denied, for example, Bulgaria admission to Schengen because it is unclear about the border controls. Schengen is a privilege in a sense more than an obligation. Ireland’s position on Schengen was brokered because of the single travel area within the UK, and that was respected. It would seem bizarre for the European Commission to demand that long-standing free movement across borders were somehow interfered with to enlighten borders that were not being used that often relative to the one they are closing down. That would not make sense from an EU perspective. The same would apply, in my view, to Scotland. Were they to insist on Scotland joining Schengen, they would have to insist on Scotland policing borders in a way that was satisfactory in the conditions of Schengen. As we have seen with other countries, the Dutch vetoed Bulgarian accession to Schengen on the grounds that they did not believe the borders were sufficiently secure.

We have to get away from the idea that every element of the treaty is an obligation that the Commission is determined to enforce. Every obligation of the treaty is an opportunity. In a sense the Commission is trying to facilitate. Certainly, Schengen is an opportunity because it cuts business and tourist costs; it gets rid of messy borders, but I see no interest at all in the Commission demanding that an independent Scotland, or indeed Ireland at present, must join Schengen and erect border controls given that it has no power to do so.

Q87 Chair: There is no doubt that the Commission would wish to see Britain’s opt-out from Schengen removed.

Professor Scott: I have not heard that officially stated; so I think there is a doubt. I have never heard the Commission pronounce on that. I stand to be corrected again, but I have never heard the Commission state it would like to see Britain’s opt-out removed.

Q88 Chair: The UK wishes to retain its Schengen opt-out on the basis that it does not wish to encourage enormous amounts of illegal immigration.

Professor Scott: That is the UK’s position.

Q89 Chair: That is a perfectly reasonable position.

Professor Scott: I do not think the Commission takes issue with that position. In fact the Commission welcomes the UK’s participation in other elements of the JHA agenda when the UK deems it appropriate to be engaged. I think the Commission is entirely flexible here. I have never heard the Commission express frustration, irritation or anything else about the UK’s position on Schengen.

Q90 Chair: Let’s clarify what the implications would be in the unlikely event, on your view, that Scotland joined Schengen and the rest of the UK remained outside. Would all the obligations to police the border fall on the rest of the UK in a sense, because they are the people who do not want to have the travel area, rather than on Scotland, because people coming from the rest of the UK are not a problem for Scotland in a Schengen environment, but it is a problem for the rest of the UK with people coming from Scotland? Is that correct?

Professor Scott: Yes. Scotland would have to guarantee to police its borders.

Q91 Chair: It would have to police its external borders with the rest of the world, as it were, but not so much its border with England, would it?

Professor Scott: Why not, because then individuals in England could simply drive up the M74, get on a flight and enter through a Schengen corridor in Brussels? Scotland would have to be able to guarantee to the European Commission, the way the Bulgarians have to, that its non-Schengen borders are secure. If I travel to Brussels from Edinburgh, I have to go through passport control. The Belgian immigration authorities are obliged to provide that channel for me.

Q92 Chair: If Scotland was within Schengen and the rest of the UK was outside, there would then be an EU obligation upon Scotland to have border controls with the rest of these islands, and then it would be a choice for England and Wales as to whether or not they wished to do that or the rest of the UK.

Professor Scott: That is my understanding. The burden would fall on the country who wished to join Schengen.

Q93 Chair: Fine. We are simply seeking the truth. On this particular occasion I am not making a point.

Patrick Layden: This is one of those things where there is a clear treaty provision, which was the one I read out a minute ago: "… the Schengen acquis and further measures taken by the institutions within its scope shall be regarded as an acquis which must be accepted in full by all States candidates for admission." So the default position is that Scotland would be in the free movement provisions of Schengen. As Drew says, that means we would have to have satisfactory external border controls, as you were saying, Chair, to make sure that third-country nationals did not sneak into the EU through our porous airports, or ordinary ports for that matter. Whether or not the rest of the UK wanted to impose border controls to prevent people from Scotland sneaking into England and Wales down the M74 would be a matter for them. For them, at the moment they do, and that is why we have border controls at Heathrow. Those are there only because of the opt-out that the UK has secured to the free travel provisions. If you did not have that opt-out and we were part of Schengen for all purposes, then you would not need those. You would simply say, "If this person is coming from an EU port, he can just come and go."

Q94 Chair: Or, more importantly, you would not have all the barriers at the rail tunnel.

Patrick Layden: Yes.

Chair: I think we understand that completely.

Q95 Lindsay Roy: To turn to the charter of fundamental rights under domestic Scottish law if there was a separate Scotland, are there aspects of Scottish law which would require a derogation from aspects of the charter, if such a derogation could be negotiated?

Patrick Layden: I do not think so and, no, I do not think there are aspects of Scots law that would need to be changed. There is a possibility in relation to article 50, which is the double jeopardy provision and which is in different terms from the obligation under the European convention on human rights about double jeopardy. The UK has not signed up to the European convention position on double jeopardy, but it has signed up to the position under the charter of fundamental rights. There may be a question there, but it has not arisen yet. I see no prospect whatsoever of negotiating a derogation from any aspect of the charter of fundamental rights, whatever it means.

Professor Scott: I have no comment. It is not within my expertise.

Lindsay Roy: That is very helpful, Mr Layden.

Q96 Chair: The latest news from the Library, can I tell you, is that they say that all the figures are correct, but instead of the gross showing a pound sign followed by "m" it should be "bn"? It is billions, but the net per capita and everything else is all correct, or the figures are correct, they say.

Professor Scott: I would question that. It is a long time since I have done long division. If I divide 13.2 billion by 55 million, I get 240. I am an old person, so the population is 55 million.

Q97 Chair: We will follow that up as well. As I said, you just can’t get the staff these days. It was never like this under the Labour Government. The things that we got from the Library were always perfect in those days.

Professor Scott: I think you will find the figures are wrong.

Q98 Lindsay Roy: You will get a prize for spotting it.

Professor Scott: It is self-interest, because my students will be saying, "I don’t think this is right."

Q99 Chair: So, your students use papers from the House of Commons Library as notes.

Professor Scott: My students use as notes anything I do not give them.

Q100 Chair: I want to turn to one other particular point which Iain touched on earlier. Irrespective of your positions about how Scotland gets into the EU, if indeed it does so, I want to be clear about the treaty obligations with which Scotland would have to comply. We have touched on some of them already. I want to clarify whether or not in your view there is an obligation to have a financial services regulator and energy regulator, and whether or not there is anything else like that which Scotland would have to establish. To be fair, if you cannot provide them off the top of your head, perhaps you will be able to give us a note later. I am sure it is the sort of thing you have in a cupboard at home, but it would be helpful for us.

Professor Scott: I think that is a very good question, as most of them have been, and it is a very important one. You are right. When it comes to energy, telecommunications and financial services, my reading of the treaty and the subsidiary legislation is that Scotland would have to establish independent regulatory authorities. That raises a raft of other questions that I think are very important, but the short answer to your question is that, as the EU develops as a regulatory union, the regulatory shadow, particularly in the area of financial services, is getting larger, rightly so in my view. One of the provisions in the new regulatory architecture of the EU is that member states establish independent regulatory authorities that are able to ensure compliance on the part of financial services industries within their country.

Q101 Chair: The Scottish Government have said that on separation they would want to inherit, as it were, the Bank of England and have it as the bank of last resort. My understanding is that they also want the Bank of England as a financial regulator. In these circumstances is it possible to have the Bank of England as a financial regulator but also a separate Scottish financial regulator, or is there a precedent for the EU saying that in these circumstances the Bank of England will cover as both?

Professor Scott: There is no precedent that I know of. My particular view is that the priority here is to ensure the coherence of a single UK financial services sector so that there are no impediments to financial service trade across a new border. I do not think this is technically problematic, but it would require that in essence the rest of the UK and Scotland agreed on the financial services regulations that prevailed in the UK, most of which would be coming down from the EU in any event, and ensured absolute compliance and equality of effect in both jurisdictions so that there were no arbitrage opportunities within the island of the UK. I think that is very important. As I say, I think it can be done and I could give you chapter and verse on how it could be done, but it would require the agreement of the Bank of England as the principal, though not the sole, financial services regulator, because it will have its own financial services authorities beneath it.

Q102 Chair: But would the EU regulations stipulate that it was not acceptable to have the regulator in one country acting as the regulator in another-that is, essentially the rest of the UK regulator acting as the regulator for Scotland as well? That was the point I was raising about the extent to which EU regulations or rules would insist upon things like separate telecommunications, power-

Professor Scott: The objective of the Commission is to establish within each member state a financial services authority that is responsible for overseeing the implementation of its financial services regulations. As long as the regulations are compliant-it does not matter where they originate, because many will come from Brussels anyway-there is no difficulty legally that I could see in Scotland accepting the UK version of the EU regulations, assuming they comply, which they would have to do anyway. I know of no precedent, but I cannot see any reason why that would be an insuperable problem. It would have to be something that was addressed.

Mike Freer: I think the word you are looking for is "outsourcing".

Q103 Chair: That was exactly the point. I was not sure whether or not the EU would allow outsourcing, as it were, of various responsibilities, like nuclear regulation. There is a whole host of things.

Professor Scott: The minimum requirement on the UK will be given by Brussels; that will be the framework. If the UK then opts to have its own tweak on regulations in areas that perhaps are not regulated, Scotland would need to follow that. That would not incur an EU dimension because it would be extra-EU. The EU dimension will prevail for all countries, so in that sense Scotland will be doing nothing different from the rest of the UK; it would just be ensuring that in the transposition of those laws it was identical, essentially.

Q104 Mike Freer: Could they choose the Bank of France instead of the Bank of England?

Professor Scott: Again, this is not a matter that Scotland can decide in that sense. It would have to have an agreement with the regulatory authorities. Again, the interests of both players are to retain the integrity of the UK single financial area, because there are massive cross-border movements. I am one of the financial services.

Q105 Chair: That is right, but part of the discussion we have been having with others is about clarifying what advantage there is to the rest of the UK and the Bank of England in being the lender of last resort to Scotland, what controls would be necessary, and to what extent that would effectively curtail any semblance of independence in that particular area. There would be no question of separation there; it would all be run from London.

Professor Scott: From Brussels. I have always distinguished between constitutional independence and effective independence and I have been doing so all my professional life. While we may be independent constitutionally over interest rates or the exchange rate, constitutionally as the UK we are certainly not independent over these things in any effective sense, because what happens in the rest of the world affects us. I do not draw the distinction that constitutional independence must mean unilateral autonomy over every instrument. It does not, it never will do and it never can do. This is an area where the EU, which is pooled sovereignty, is the top canine. I think the European Commission is driving forward the regulatory framework for the financial services sector in the future. No matter what constellation these islands resolve into, provided they stay within the EU, they will all have to adopt, implement and enforce EU obligations on financial services. My only point is that, if the UK decides to regulate extra-EU, outside the EU’s orbit, then in my view it would be very important for an independent Scotland to follow, negotiate or discuss these regulations with the rest of the UK so as not to fragment what is a very successful and important single financial area. The objective is clear to me.

Q106 Chair: I understand that.

Patrick Layden: I have a feeling that, whether or not it is sensible-I accept it is-for an independent Scotland to carry on with sterling and the Bank of England as the lender of last resort, when it comes to the question of ensuring the implementation of EU financial regulations, the Commission will want a financial regulator in Scotland. The financial regulator in Scotland may simply be finding out what is being done in London today and then doing it in Scotland, but it will have to be an independent, separate body accountable to the EU. We may well be able to negotiate a deal with the rest of the UK that we can carry on with sterling, but it will set the rules under which we are going to operate. That would be an internal arrangement.

It may well be we could sell that to or persuade the rest of the European Union that was okay because of our particular historical situation, but the Commission is liable to want a definable separate body in each member state to whom it can look for implementation of the obligations. Whether the version we use is the same as the English one will not matter; it will be for us to make sure that we implement it, and it will expect somebody in Scotland to be responsible for that. The same applies to things like telecommunications, the nuclear industry and anything else. There is a very limited extent to which we could say, "We do this through London." It is not a coherent position if you are saying that you are an independent state.

Q107 Chair: That is very helpful. I had not thought of the EU as the top canine, but it is a parallel that has its merits. Do my colleagues have any other questions? I think we have covered most of it. Are there any other answers you have prepared for questions we have not asked? Is there anything that you are bursting to tell us that we have not covered?

Patrick Layden: I think it would be very unwise. There is one about the JHA opt-out. Under Title VI of the previous treaty a number of criminal law and other evidential matters were agreed unanimously by the Council and were not subject to the ordinary legislative procedure. Following the Treaty of Lisbon, all those measures will be brought into the ordinary legislative process of the treaty. There is a five-year transitional period, which ends in 2014. On 1 December 2014 they all become part of the acquis. The UK negotiated an opt-out. At some stage, but not later than six months before 1 December 2014, the UK can indicate to the rest of the member states, to the Commission, that it will not be bound by those measures. There are 133 of them. If the UK does that, a whole lot of carefully agreed measures will not apply to the UK as at 1 December 2014. If either the rest of the UK or Scotland applied to join the Union thereafter, the position of those 133 measures would be a matter which they would want to negotiate about. I certainly would not like to predict that they would agree that we could remain outside those measures. I do not know.

Q108 Chair: But that is not an issue that would arise under your scenario.

Patrick Layden: No. It would not arise under that scenario because life would just carry on.

Chair: That is a helpful point. We had not thought of that. Is there anything else? Thank you very much. Once you have left us, if there is anything that occurs to you that you wish you had told us, or you think perhaps you were not as full as you should have been in your answers, by all means feel free to send us more. We intend to hear further witnesses on this general area, and I suspect this whole debate will run and run. Thank you very much for your early contributions to our discussions on the EU.

Examination of Witnesses

Witnesses: Kenny Jordan, CSEU Regional Secretary, Duncan McPhee, Unite Senior Shop Steward, BAE Systems, Scotstoun, Raymond Duguid, Unite Senior Shop Steward, Babcock Marine, Rosyth, and Eric McLeod, GMB Senior Shop Steward, Babcock Marine, Rosyth, gave evidence.

Q109 Chair: Gentlemen, welcome to this meeting of the Scottish Affairs Select Committee. As you know, we have arranged this especially to meet you following your meeting with Peter Luff, Defence Procurement Minister, and David Mundell, junior Scottish Office Minister.

We are conducting a series of inquiries into the impact of separation upon Scotland, and we are particularly interested in defence and related matters. We understand that you have been meeting the Ministers today about this subject. We are due to meet the Ministers after the Whit holiday, but we would welcome the opportunity to hear from you how your meeting went with the Minister today, and what you believe is the future for defence-related industries, particularly shipbuilding, under separation. I think it would be helpful if, first, you introduced yourselves and told us who you are and where you are from, and then we will go on to discuss the details.

Duncan McPhee: I am Duncan McPhee, the Unite trade union convenor at BAE Systems Scotstoun shipyard in Glasgow.

Kenny Jordan: I am Kenny Jordan, regional secretary of the CSEU in Scotland.

Raymond Duguid: I am Raymond Duguid, chair of the DIJC, which is the Dockyard Industrial Joint Council, for Babcock at Rosyth.

Eric McLeod: I am Eric McLeod, GMB convenor at Babcock in Rosyth.

Q110 Chair: Have you sorted out who is speaking on behalf of yourselves?

Kenny Jordan: I think we will have the usual back four, if you like, to deal with the subject of defence, which is normal.

Q111 Lindsay Roy: Who is the sweeper?

Kenny Jordan: It is twin sets of centre-halves. We did request to meet with the Minister earlier today. The subject was, in essence, shipbuilding with the possible effect of a referendum or what a separate Scotland could mean to shipbuilding-but not only shipbuilding. We posed the question of what effect it would have on the broader defence-related industry in Scotland. I have to congratulate the Minister for being candid in his answers and quite clearly because of the situation. To quote, if we have a separate Scotland, it is clear there will be less defence jobs in Scotland.

As the CSEU in Scotland, we are obviously concerned that we want to see a future for our members and our members in industry. Today’s meeting quite clearly pointed out to us that, if Scotland becomes separate, because of the ramifications of being able to bid for future orders, that would be thwarted and would reduce the opportunity for work to be placed not only in Scottish shipyards but in other establishments throughout Scotland. Therefore, it is with great anxiety that we go back to Scotland. If this is the evidence of a possible separate Scotland, then our intention would be to question the Scottish Government about their alternative to possible job losses for our members.

Q112 Lindsay Roy: You said there would be less jobs. I take it that the whole thing would be decimated. Would that be an accurate interpretation?

Raymond Duguid: I think the Minister said that, if Scotland was independent, it could not bid for the Type 26, for instance. No one in Scotland could bid to build the Type 26, so that would decimate it.

Q113 Chair: That is very helpful, but, to be absolutely clear, the Minister was saying that no one in Scotland would be able to bid for the Type 26.

Duncan McPhee: I asked that specific question. At the moment, on the Clyde we are building parts of an aircraft carrier and finishing off the Type 45 destroyer programme. The successor to those contracts will be the Type 26, which will be the backbone of the Royal Navy. The specific question that was asked to get the UK Government’s position on this was, "In an independent Scotland will we be allowed to tender for the contracts?" It was made quite clear that we would not because we will be a foreign country. I believe that under article 346, if they were considering placing that order in a foreign country, it would have to be opened up EU-wide and possibly worldwide. From that I took it quite clearly that we would not be able, basically, to tender in Scotland for the Type 26 contract.

We also asked about the future MARS ships-the complex part of that contract. We believe, under the TOBA between BAE Systems and the MOD, infill work comes in between the carrier and the start of the Type 26. We believe that would also fall into that realm. Clearly, there would be no infill work and no Type 26 work, and that, certainly on the Clyde, is our workload because we have no export work. That, to me, would mean that, unless an independent Scottish Government could provide equivalent-type orders, we would be greatly reduced or completely finished as a shipbuilding industry.

Q114 Chair: May I clarify whether or not the Minister indicated where the ships would be built?

Raymond Duguid: His words were that BAE Systems had a TOBA and they would be built in BAE Systems’ yards, but not in Scotland as it would be a foreign country.

Q115 Chair: If the Clyde yards lose the infill for MARS and the Type 26 work, is there sufficient other work available to them at the moment to keep the yards going?

Duncan McPhee: There is absolutely no other work on the horizon at the moment. As trade unions we constantly discuss with the company trying to get into the export market, which is a difficult one. You need Government support as well for that, but export work in the defence industry only supplements the core work. The core work in the UK always has been and will be MOD contracts. That can be a springboard to get exports, but without the basic Type 26 or MARS contracts it is extremely unlikely you could secure only export work.

Q116 Chair: For the record, to be clear about the export work, as a Member covering part of the area, I was aware of the idea that there would be some export models of the Type 26. Is it inevitable that they have to be built in the same yards as the Royal Navy’s Type 26, or could we have a situation where the export work is done in Scotland and the domestic Royal Navy work is done in England?

Raymond Duguid: In theory you could but in practice you could not, because you would need the skill base on the Type 26 Royal Navy work to carry it over into export work. It would be nigh-on impossible to separate the UK contract from the export contract because you would lose the skill base and be uncompetitive.

Q117 Lindsay Roy: Did you get any indication from the Minister about the implications for Rosyth?

Raymond Duguid: Yes. He said that for surface ship repair and refit work Rosyth was best placed for the maintenance of carriers. That is the yard that is building and assembling them. Obviously, in an independent Scotland that would not happen either.

Q118 Lindsay Roy: That would go.

Raymond Duguid: The work would stay within the UK-what is left of the UK.

Q119 Lindsay Roy: The rest of the UK.

Raymond Duguid: Because we would be a foreign country. It was pointed out that there was the Kingdom of Fife and we could be a principality, but I think that was stretching it.

Q120 Lindsay Roy: Therefore, what would be the impact on Rosyth in terms of manpower and womanpower?

Raymond Duguid: Babcock is looking for commercial work as we speak post-2020, after carrier, but none of that work is secured. We need the opportunity. Refit and ship repair is our core work; that is the bedrock on which we can build a business, so we need that.

Q121 Chair: Refitting and repair for whom?

Raymond Duguid: For the Royal Navy.

Q122 Chair: Only for the Royal Navy.

Raymond Duguid: The only person we do refitting and repair for at the moment is the Royal Navy.

Q123 Lindsay Roy: That is the bread and butter.

Raymond Duguid: Yes; that is the foundation on which to build a commercial business.

Q124 Chair: It is not just the foundation. Am I right in thinking that at the moment it is the only work you are doing?

Raymond Duguid: It is the only work in the yard at this present time, yes. We have got blast doors for a nuclear company, and towards the end of the year we have modules for Sellafield, but they are small contracts at the moment.

Q125 Chair: Is there a world market for repair that you would be able to access? Would you be able to fill the order books by doing ship repair for other people?

Raymond Duguid: At the moment Rosyth cannot compete with other yards in the UK for non-military ships. We deal with high-end, high-technology combative ships. We cannot compete with A&P on the Tyne or A&P down in the south of England for RFAs, far less commercial tankers and stuff.

Q126 Iain McKenzie: Do you see yourselves as specialised?

Raymond Duguid: We specialise in the high end.

Q127 Iain McKenzie: Diversification would be extremely difficult for you.

Raymond Duguid: Yes.

Q128 Chair: We heard earlier from Duncan about the possibility of export orders being around and the Clyde’s difficulty in doing that. Is there any market out there for export repairs, as it were, and people sending ships to you?

Raymond Duguid: All I can say is that we have not had any yet.

Q129 Chair: Is there a world market whereby different navies send ships to other countries, or do they all repair them in their own countries?

Raymond Duguid: They tend to keep them as a sovereign activity, which is what happens in the UK. One interesting statement made by the Minister was that the UK had not built a Royal Naval ship outside the UK in 50 years, and most countries are very similar. He pointed out that Turkey and Brazil were starting to get into these markets as well and build their own. America builds its own.

Q130 Chair: Has the rest of the UK got the capacity without Rosyth to undertake the maintenance of the ships that you would normally deal with and the renovation of the carrier?

Raymond Duguid: Yes, definitely.

Q131 Chair: So they can cope without you.

Raymond Duguid: Yes.

Q132 Chair: Is there anything you want to add about shipbuilding just in case there was anything we had not touched on? That seems pretty clear.

Iain McKenzie: Duncan, to be absolutely clear about the Clyde shipyards, what you are saying is that you will not be able to tender for the Type 26 contracts.

Duncan McPhee: Yes.

Q133 Iain McKenzie: In effect, if you can’t do that tender, if you do not have that workload to bridge the gap, which you are now coming up to, in your opinion is that a closure scenario for these yards?

Duncan McPhee: It will definitely be a closure scenario, because, as I have already said, no yard relies solely on export work; it just does not happen. That is always a supplementary to anything. Just to touch on exports, it is getting harder and harder to win exports because most countries now want to do their stuff inhouse. BAE Systems, which is a global company, is involved in discussions with Brazil and places like that, but the deals are basically design-to-buy and they will be constructed within their own sovereign countries. That is now happening worldwide. Without your core Government market you do not have anything. On the Clyde, at the moment we have a six-ship Type 45 contract. Ship 5 will be delivered to the Royal Navy in July. We are on the last one, and that will not last much longer. After that, we are doing some carrier work, but, after carrier, there will be nothing at all. Yes, I would say it would mean the closure of shipbuilding on the Clyde.

Kenny Jordan: It should also be borne in mind that, if the yards were to close, we would lose the supply network that surrounds it. It would not just be the loss of the yards but the loss of an industry in the west of Scotland.

Q134 Chair: Why should the supply network that presently supplies the Clyde yards not carry on supplying wherever the Type 26s are built in future?

Kenny Jordan: There would be logistical problems. Contracted labour is supplied to the yards, so it is not just the core work force.

Q135 Lindsay Roy: Presumably, if it is high tech and high skill, you have good contacts with local colleges of education, like Carnegie College in Dunfermline. What is the throughput of new apprentices and reskilling and upskilling of the work force at the present time?

Raymond Duguid: Currently, in Rosyth about 170 are going through apprenticeships. We have in the region of 15 to 20 graduates as well. We have just struck a deal with a company whereby we are planning to upskill and cross-skill the entire industrial work force to bring in composite team working and make it more efficient and affordable, and to push on and try and get more commercial work into the yard. For these colleges we are there again as a foundation for them also.

Q136 Lindsay Roy: Is that mirrored in Govan in Glasgow?

Duncan McPhee: Yes. We have had a massive programme.1 We have recruited about 700 apprentices over the last decade; it is massive. We have a graduate programme every year as well, and that is continuing. We would lose that as well. To make a point on the supply chain, when we asked him about that, he also said that the supply chain into these ships would be ordered within the UK as well. Orders for radars and stuff like that would also have to be placed within the sovereign state as well. That would hit some of the big suppliers we have for MOD contracts within Scotland. There are a lot of companies within the defence industry in the supply chain.

Q137 Chair: To be clear again, the firms in Scotland who would be supplying the Type 26 build will not be able to supply the Type 26 if it is built in England from Scotland.

Duncan McPhee: Yes.

Q138 Chair: They would either lose the contracts altogether or have to relocate into the sovereign state of the rest of the United Kingdom.

Duncan McPhee: Yes. An example of that would be SELEX. That is one company based in Scotland that would be in that position.

Kenny Jordan: Companies like that who at the moment are in the supply chain for these contracts have establishments in England and other parts of the UK anyway. It is more than likely that they would relocate to those sites so they could tender for the contracts. I think it is obvious what would happen.

Q139 Chair: To be clear for the record on one particular point which I think you have enunciated, it has been suggested that you are so good that the British Government would have to buy things from you. There is nobody else as good as you are. Presumably, you raised this point with the Minister. What was his response to these sorts of points?

Kenny Jordan: His response was that there were no guarantees in a separate Scotland that they would continue to build ships; there was no guarantee.

Raymond Duguid: I think he did actually say that we were very good at what we do, but he made the point that the UK has not bought a Royal Navy ship from outwith the UK in 50 years and they do not intend to start. We would be outwith that power.

Lindsay Roy: It could not be clearer than that.

Q140 Chair: It certainly has the merit of clarity, does it not? Did you move on to defence purchases other than shipbuilding, and did he say anything about those?

Kenny Jordan: The meeting really did not give time to broaden it as far as we could, but we broached the subject of broad defence-related manufacture. He quite clearly gave the message that with a separate Scotland there will be less defence jobs, meaning right through the spectrum.

Raymond Duguid: The words he used were that 10,000 jobs were at risk in Scotland.

Duncan McPhee: I took that to mean that any MoD contracts would not be going to companies in Scotland because they would have to go within the UK. All of us in this room know the variety of companies that we have spread across Scotland in different parts of the defence industry who do MOD contracts. Unless they can get replacement work I do not see a great future there either.

Chair: I think we have just about covered everything.

Q141 Lindsay Roy: I would be keen to find out if there has been any approach from the Scottish Government to you about the possibility of defence jobs, if there were indeed a separate Scotland.

Kenny Jordan: There has been no approach as yet, no.

Q142 Lindsay Roy: None at all.

Kenny Jordan: No.

Duncan McPhee: I don’t think they have thought about it.

Q143 Lindsay Roy: So there is no indication about what kind of defence provision there would be for a separate Scotland at all.

Kenny Jordan: The only indication we have is the recently published thinking on perhaps what a Scottish navy might look like, which is obviously nothing like what we see being produced at the Clyde at the moment.

Duncan McPhee: The last SNP comment I saw was that they believed the skill base was that good that the MOD would continue to order in Scotland. It has been made quite clear to me that that will not be happening. I am actually glad that we are now getting some clarity, because this is a very important issue given the jobs that are involved. As far as I am concerned, we are moving on to the academic debate about independence, but the real stuff is about jobs and people’s lives. I have certainly got the UK view. I would like to ask the SNP, "That’s the UK policy. How are you going to protect the defence industry in Scotland? Where are your contracts going to come from? How much will they be?" I am certainly looking forward to asking that question.

Kenny Jordan: As I said earlier, we are mandated from our members to expose this debate on the effects of a possible separate Scotland. Part of that mandate is to press the Scottish Government for answers about their industrial policy.

Q144 Lindsay Roy: Are you surprised that you have to take the initiative in approaching the Scottish Government, as opposed to the Scottish Government talking to you?

Kenny Jordan: Maybe it is not "surprised"; it is what gets on the front page of the newspapers that takes priority.

Q145 Lindsay Roy: Hopefully this will be a headline tomorrow.

Raymond Duguid: Each one of the companies we work for has bases in England. Potentially, these companies will not lose the work; we will just lose the jobs. Being Scottish, the worrying thing for me is that this is going to cost Scottish jobs. Babcock and BAE Systems have got sites in England that will carry on doing the work, and it is our work because we are best at it and are best placed to do it. The Minister said that, but we need to be part of the UK.

Lindsay Roy: You have done exceptionally well continuously in gaining these contracts.

Q146 Iain McKenzie: The position that has now been made clear to you by the Government is not shared by the SNP’s spokesperson on defence, who still seems to be of the opinion that you would be able to procure work from the UK and other countries around the world. You have clearly been told that you will not be allowed to tender for UK contracts, and you have said it would be nigh-on impossible to get any other contracts from round the world, certainly in the defence field, to the standard you are building to.

Kenny Jordan: Yes, absolutely.

Duncan McPhee: Yes.

Raymond Duguid: Yes.

Eric McLeod: Yes.

Q147 Lindsay Roy: How many jobs are we talking about?

Kenny Jordan: There are 1,700 to 2,000 at Rosyth.

Duncan McPhee: Yes. There are 3,000 direct employees on the Clyde.

Kenny Jordan: Plus supply chain jobs. I think there was a figure once stated of up to 16,000 jobs.

Q148 Iain McKenzie: You would think there would be an announcement from the SNP/Scottish Government on their-

Kenny Jordan: No; it is just what has been mentioned in the press.

Q149 Iain McKenzie: Almost in passing.

Kenny Jordan: There was a launch of a paper yesterday from an academic who forecast the needs of a Scottish defence policy.

Q150 Iain McKenzie: Did it go into any detail on the size of navy or type of ships that may be required?

Kenny Jordan: They are small ships, no submarines and definitely no carriers.

Q151 Iain McKenzie: There were no aircraft carriers, I would imagine.

Kenny Jordan: No aircraft carriers.

Chair: I think that has just about covered everything we can at the moment. We have already discussed what we might do, and we will be putting out a press release after this, indicating that we are concerned about what we have heard from you. We are seeing the Minister in three weeks’ time.

However, as a Committee, it would be our intention to announce that we shall be particularly pursuing this issue. We will be seeking clarification from the companies involved and would want to visit some of the defence establishments just to gain further information about the numbers of jobs involved in all of this. In due course we will be seeking clarification from academic experts but also from the Scottish Government about their plans in relation to employment in defence. In terms of the formal side of the meeting, unless there are any further points, I draw things to a close and thank you very much for coming.