Scotland's Membership of the EU

House of Commons Scottish Affairs Committee The Referendum on Separation for Scotland: Scotland’s Membership of the EU Twelfth Report of Session 2013–14 HC 1241 House of Commons Scottish Affairs Committee The Referendum on Separation for Scotland: Scotland’s Membership of the EU Twelfth Report of Session 2013–14 Report, together with formal minutes Ordered by the House of Commons to be printed 13 May 2014 HC 1241 Published on 27 May 2014 by authority of the House of Commons London: The Stationery Office Limited £0.00 The Scottish Affairs Committee The Scottish Affairs Committee is appointed by the House of Commons to examine the expenditure, administration, and policy of the Scotland Office (including (i) relations with the Scottish Parliament and (ii) administration and expenditure of the offices of the Advocate General for Scotland (but excluding individual cases and advice given within government by the Advocate General)). Current membership Mr Ian Davidson MP (Labour/Co-op, Glasgow South West) (Chair) Mike Crockart MP (Liberal Democrat, Edinburgh West) Jim McGovern MP (Labour, Dundee West) Graeme Morrice MP (Labour, Livingston) Pamela Nash MP (Labour, Airdrie and Shotts) Sir Jim Paice MP (Conservative, South East Cambridgeshire) Simon Reevell MP (Conservative, Dewsbury) Mr Alan Reid MP (Liberal Democrat, Argyll and Bute) Lindsay Roy MP (Labour, Glenrothes) Dr Eilidh Whiteford MP (Scottish National Party, Banff and Buchan) The following Members were also Members of the Committee during the Parliament: Fiona Bruce MP (Conservative, Congleton) Mike Freer MP (Conservative, Finchley and Golders Green) Cathy Jamieson MP (Labour/Co-op, Kilmarnock and Loudoun) Mrs Eleanor Laing MP (Conservative, Epping Forest) Mark Menzies MP (Conservative, Fylde) Iain McKenzie MP (Labour, Inverclyde) David Mowat MP (Conservative, Warrington South) Fiona O’Donnell MP (Labour, East Lothian) Julian Smith MP (Conservative, Skipton and Ripon) Powers The committee is one of the departmental select committees, the powers of which are set out in House of Commons Standing Orders, principally in SO No 152. These are available on the internet via www.parliament.uk. Publication The Reports and evidence of the Committee are published by The Stationery Office by Order of the House. All publications of the Committee (including press notices) are on the internet at www.parliament.uk/scotaffcom. A list of Reports of the Committee in the present parliament is at the back of this volume. The Reports of the Committee, the formal minutes relating to that report, oral evidence taken and some or all written evidence are available in a printed volume. Additional written evidence may be published on the internet only. Committee staff The current staff of the Committee are Rebecca Davies (Clerk), Rhiannon Hollis (Clerk), Phil Jones (Committee Specialist), Alasdair Mackenzie (Committee Specialist) Tom Barker (Assistant Policy Analyst), Helena Ali (Senior Committee Assistant) and Rosie Tate (Committee Assistant). Contacts All correspondence should be addressed to the Clerk of the Scottish Affairs Committee, House of Commons, 7 Millbank, London SW1P 3JA. The telephone number for general enquiries is 020 7219 6123; the Committee’s email address is [email protected] The Referendum on Separation for Scotland: Scotland’s Membership of the EU 1 Contents Report Page Summary 3 Conclusions and recommendations 5 1 Introduction 9 2 Becoming an EU Member State 13 The route to membership: accession or amendment? 13 Disagreement 14 The Article 48 process 15 Timetable 17 Pressures on the timetable 17 What happens after 18 months? 20 3 Conditions of membership 23 Opt-outs 23 The Euro 24 Schengen 26 Justice and Home Affairs 27 VAT 28 Student fees 28 4 Contributions to and receipts from the EU budget 30 The rebate 30 CAP payments 31 Structural Funds 33 Net position of a Scottish Member State 33 5 Conclusion 35 Appendix 1: Correspondence from Rt Hon David Lidington 37 Letter from Rt Hon David Lidington, Minister of State for Europe, 30 April 2014 37 Formal Minutes 41 Witnesses 42 List of Reports from the Committee during the current Parliament 43 The Referendum on Separation for Scotland: Scotland’s Membership of the EU 3 Summary Today Scotland’s interests in the European Union are represented by the UK which, as one of the largest Member States, has the voting power and leverage to influence decisions to the benefit of Scotland. In leaving the UK, a separate Scotland would lose this advantage. A separate Scotland is likely to have its application to join the EU accepted – but not within the timetable, nor with the terms, that the Scottish Government is proposing. Complex negotiations would be required, both with the UK and the EU, and any agreement would have to be ratified by 28 Member States. Indeed, it is much more likely that a separate Scotland would have an interim period outside the EU, with uncertain interim arrangements, than that the process of joining would be completed within the Scottish Government’s self-imposed timetable of 18 months. The Scottish Government’s proposal that Article 48 of the Treaty on European Union could be used to provide for Scottish membership is not supported by any other EU state; senior EU figures have ruled it out and it is opposed by the United Kingdom Government – which would, under this process, have to initiate it. In any case, an Article 48 application would not necessarily be any faster than the accepted accession route under Article 49. We do not believe it credible that the Scottish Government would be able to achieve the terms of entry that it seeks. Whether in relation to Schengen, justice, payments under the CAP, or a commitment to join the Euro, the Scottish Government does not adequately acknowledge the scale of the difficulty which would be encountered in seeking better terms than have been achieved by other recent applicants. The additional and exceptional demand for the ability to discriminate against UK students with respect to tuition fees would be voted against by the UK Government and is therefore almost certain not to be met. Furthermore, the self-imposed deadline greatly weakens the Scottish Government’s position in any negotiations. We regret that insufficient attention has been paid by the Scottish Government to the need to negotiate the UK’s retention of VAT zero rating on a wide range of goods, such as food, children’s clothes, books and newspapers. Even the imposition of the EU minimum rate of 5%, rather than the standard rate of 15%, would be a heavy burden on Scottish families. The Scottish Government does not seem to understand the UK’s budget rebate. As a separate Member State, not only would Scotland cease to benefit from the UK rebate (currently worth in the region of £300 million per year to Scotland) but it would have to contribute to it. Together, this would put an additional cost of approximately £900 on Scottish households over the budgetary period. Thus we believe that the Scottish Government’s objectives of achieving the wide range of opt-outs and beneficial special deals which the UK has secured are not credible and, when taken with the restricted timetable, are unachievable. In these circumstances we believe the Scottish Government has to provide Scottish voters with a much more realistic alternative perspective of how joining the EU would be achieved, and what its likely terms and timetable would be. The Referendum on Separation for Scotland: Scotland’s Membership of the EU 5 Conclusions and recommendations Becoming an EU Member State 1. In the event of separation, Scotland’s future membership of the European Union, on appropriate terms, would be in the national interests of the UK. Furthermore, we have heard no evidence that any other Member State would regard it as contrary to their national interest, subject to acceptable terms. (Paragraph 25) 2. The Scottish Government’s preferred route to becoming a member of the EU is through Treaty amendment under Article 48. Under this process the Scottish Government would depend on the UK Government instigating negotiations on Scotland’s behalf. Not only has the UK Government described the prospect of using Article 48 as “utterly implausible” but, in the unlikely event that it is used, the UK Government could not be expected to raise issues that would be to the detriment of the citizens of England, Wales and Northern Ireland. Key objectives identified made by the Scottish Government in its White Paper would not, therefore, be realised. (Paragraph 26) 3. Under the Article 49 process Scotland would have to be outside the EU to apply for membership. For this reason, the Scottish Government favours Treaty amendment under Article 48 but it is unclear whether this is permissible under EU law or acceptable to Member States. There is therefore every likelihood that, in event of a Yes vote, if the Scottish Government continues to insist on an independence date of 24 March 2016 Scotland will temporarily be outside of the European Union – with significant implications for the Scottish people. However, we can find no evidence that the Scottish Government has communicated this risk to the people of Scotland. The Scottish Government should publish the legal advice it has received on a separate Scotland’s membership of the European Union as a matter of urgency. (Paragraph 27) 4. It is misleading for the Scottish Government to claim that on 24 March 2016 Scotland could be both a separate state and a Member State of the European Union. There are a number of clear risks to the Scottish Government’s strategy to gain membership of the EU, all of which are overlooked in the White Paper, and which make the 18-month timetable unbelievable. The Scottish Government’s attitude to becoming a member of the EU appears based on the sentiment, as articulated by Fiona Hyslop MSP, that “where there’s a political will, there will be a way”.

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