Peter Jones: The EU membership plot thickens

WHETHER and how an independent Scotland will get into the European Union has become an incredibly tortuous question. The SNP, with the legal advice that never existed and the admission that entry was not automatic but had to be negotiated, has multiplied rather than cleared the confusion.

And now the Scottish Government has muddied the waters still more, raising the possibility that Scotland for four years would have some make-do, half-in, half-out relationship with the EU.

The latest difficulty arises from the publication last week of the most recent set of Government Expenditure and Revenue Scotland (GERS) figures covering 2011-12, which contained, for the first time, some numbers on what Scotland notionally pays to the EU.

Taking Scotland as part of the UK and without any share of North Sea oil, Scotland’s share of the UK payment to Brussels is reckoned to be £1,304 million. Payments by the EU back to Scotland – farming subsidies, structural fund awards, etc – total £800m, bringing the net payment down to £504m. There is a deduction for a share of the EU’s external aid budget (£85m) and finally there is the UK rebate, of which Scotland’s share is £295m. This brings the net cost to Scotland of being in the EU to £124m.

Now an independent Scotland would control most of North Sea oil. This affects the payments an independent Scotland would make to the EU, because the wealth created offshore would increase Scotland’s GDP, in 2011-12, from £124.7 billion to £150.9bn.

All member countries’ payments to the EU include a small percentage of VAT revenues and duties on some imports from outside the EU, but mostly comprise a fixed percentage (about 0.68 per cent in 2011-12) of GDP. So more GDP means more money going to Brussels. GERS calculates the increased payment in 2011-12 would have been £1,496m.

Take off all the deductions again, and that leaves a net payment of £378m, which is three times what Scotland pays as a non-North Sea controlling part of the UK.

But would Scotland continue getting a share of the UK rebate? If it doesn’t, that would increase the net payment to £673m, five times or an increase of £549m on what Scotland notionally pays just now. Small change it ain’t.

I put this to the Scottish Government and got a rather perplexing response. A spokeswoman told me: “GERS makes no assumption about whether an independent Scotland would receive a population share of the rebate. Indeed it makes no assumptions about what would happen to Scotland’s public finances post-independence.”

Oh really? Why then, did finance secretary John Swinney say of these latest figures: “Over the last year our stronger fiscal position would have seen Scotland better off to the tune of £824 per person, or £4.4bn in total. And over the last five years Scotland has been in a stronger financial position relative to the UK as a whole by a total of £12.6bn. This underlines the opportunities independence can deliver for the whole of Scotland to pursue a different path to the UK.”

If the spokeswoman is right, then Mr Swinney was talking nonsense. That can’t be right. And since the formula for national EU payments is fixed, the figures set out in GERS must be a reasonable approximation to what independent Scotland would pay the EU.

But let’s stick meantime with the SNP analysis. The Scottish Government’s spokeswoman said this about an independent Scotland and the UK budget rebate: “The EU Budget for 2014-2020 was agreed by EU finance ministers last month (subject to European Parliament approval).

“Up to the point of independence Scotland will continue to contribute to that budget as part of the UK and would then negotiate with the UK an appropriate division of that contribution (net of the rebate). In 2020 all aspects of the EU budget will be subject to fresh negotiations between all the member states including an independent Scotland.”

So that’s why the Scottish Government insists that an independent Scotland would continue getting a share of the UK rebate, up until 2020 at least. We would just be sharing the UK’s payments. This can only happen under two scenarios.

First, following a vote for independence in 2014, Scottish EU membership is negotiated with the EU, but the question of Scottish payments is not negotiated until 2020. This seems wholly improbable. Why would the EU go to all the bother of re-writing EU treaties to accommodate Scottish membership (without which Scotland cannot have a seat and votes in the European Council, a commissioner, etc), but ignore the question of what Scotland pays for the privilege? Why would the other 27 member states, who have to unanimously approve this re-writing, agree to that, especially when there is the prospect of extra money for the EU to spend at stake?

The Scottish Government’s answer appears to be that it would be so because the EU budget is set until 2020. It is true that the budget is set for seven-year periods, but it is also the case that it is not set in stone. In 2004, in the middle of the 2000-06 period, the budget was revised to accommodate enlargement of the EU by ten new members.

The second scenario is that there is no immediate negotiation of Scottish EU membership and Scotland is accommodated in the EU in the same way that the people and territory of the former East Germany were when that state was re-unified with West Germany in 1990. But the newly enlarged Germany had to make do with the old West Germany’s allocation of entitlements to votes and seats in the European parliament until they were increased at the Nice EU summit of 2000.

This surely cannot be what the Scottish Government intends. It means reaching a temporary agreement until 2020 with the UK to share the UK seat in the European Council, the UK’s votes, and maybe not having a Scottish commissioner – a sort of half-in, half-out EU membership. And of course, if David Cameron is re-elected in 2015, there might be a UK vote to leave the EU completely in 2017, leaving no UK membership to share.

This is just too bizarre. The Scottish Government, far from having its EU ducks in a row, doesn’t seem to know what its EU ducks are at all.