One of the more intriguing aspects of the EU debate has been the claim made by former Labour minister Tom Harris that a vote to leave the EU would transfer a raft of new powers, including over fishing and farming, to the Scottish government.
(Part of a fairly major volte-face by Harris on who should control what in Scotland, but let’s not get into that right now.)
On the face of it, this is a perfectly feasible possibility, since devolution was set up on a “reserved list” basis – any issues not specifically reserved to Westminster are devolved to the Scottish Parliament. In theory this would indeed mean that powers over farming and fishing would revert to Holyrood automatically upon exit from the EU.
But it’s not quite as simple as that.
Westminster, for one thing, ultimately calls all the shots over devolving any powers to Scotland. But even assuming good faith on the part of the UK government, there’s something else for Scots to ponder.
While it remains to be seen if the Scottish Government would or wouldn’t gain complete control over fishing and agriculture, there is one thing that’s not in doubt, and that’s the funding for those activities.
The UK contributed £13 billion to the EU budget in 2015, implying a Scottish share of £1.1 billion based on Scotland’s 8.4% of UK population. This figure is inclusive of the rebate negotiated by Margaret Thatcher in the 1980s.
But on top of this the UK still receives back over £4.5 billion in funding annually, leaving roughly £8.5 billion as the net cost of membership. This works out as £163 million a week; considerably less than the often quoted (and wrong) £350 million a week cited by ‘Leave’.
The alternative models to trade in the EU are via the European Economic Area (EEA) in Norway’s case, and through bilateral agreements for Switzerland.
The European Economic Area (EEA) brings together the EU Member States and three of the EFTA States (Iceland, Liechtenstein and Norway). It was established by the EEA Agreement, an international agreement which enables these three EFTA States to participate fully in the Single Market.
It covers the four freedoms – ie the free movement of goods, capital, services and persons, plus competition and state aid rules – in order to have EU legislation for the single market integrated into the EEA so that it applies throughout the whole area, ensuring uniform application of laws.
The EEA also covers policies such as consumer protection, company law, the environment, social policy, and statistics. In addition, it provides cooperation in several flanking policies such as research and technological development, education, training and youth development, employment, tourism, culture, civil protection, enterprise, entrepreneurship and on small and medium-sized enterprises.
It guarantees equal rights and obligations within the single market for citizens and economic operators in the EEA. This is important, as it ensures that trade and movement can be undertaken without hindrance throughout the community. If this was not in place then the EFTA countries could be faced with Trade Tariffs on their goods pushing up prices, and limitations on their people’s access to the EU thereby severely impacting upon the service industry.
However, access to the EU via the EEA means that the EFTA nations do not have any vote on drafting the laws to which they must adhere. Moving to the EEA option will leave the UK still having to adhere to most of the EU rules on freedom of movement and social protections.
Alternatively, and for the same access-to-market reason, the Swiss negotiated a series of bilateral agreements that took 10 years to put in place. However this also needed the Swiss to sign up to the majority of EU laws, including freedom of movement, and the negotiation process was described by the EU as complex and unwieldy to manage. It’s unlikely the EU will want to go down this route again, and Brexiters won’t want to wait 10 years anyway.
The main point in access to the EU through either of these means is that the core rules of the EU have been prerequisites to gaining agreement. It means that any country wishing to undertake this route MUST also agree to free movement of people, the main thing the Leave campaign is campaigning against.
Norway’s membership costs of EFTA/EEA versus the UK’s costs of EU membership were assessed in a 2013 House of Commons Library research paper.
From the House of Commons Library’s calculations above we can see that the estimated cost of entry to the EEA through EFTA would equate to about £6.85 billion, based on a £106 per capita cost for the UK’s 65 million people. This therefore reduces the financial benefit of leaving the EU down to £1.65 billion (with a Scottish share of roughly £138.6 million annually).
But that saving has to be weighed against the funding given to farmers and fisherman through the Common Agricultural Policy (CAP) and European Maritime and Fisheries Fund. Norway doesn’t get EU grants or CAP payments back like the UK does.
CAP payments to UK farmers alone amount to £2.88 billion a year, and can account for up to 60% of UK farmers’ income. This means that any savings provided by changing to EEA membership via EFTA would be wiped out by the loss in funding to UK farmers alone.
To counter this loss of earnings would require the UK government to implement its own subsidy program to maintain the industry. And here’s the rub: there’s no guarantee that this would happen.
In other words, while farming and fisheries may indeed be devolved to Holyrood by default with a Brexit (we can’t be sure), the real risk is that Holyrood gets control over the provision of Farming, Fishing and Structural Development, but the funding that went with these activities at EU level stays at Westminster.
The Scottish Government could be left “holding the baby” but with no money to pay for the baby’s shoes. And the UK government’s record of fair treatment for Scotland in the sector isn’t good.
This is the Catch 22 of devolution instead of independence. As an independent nation, Scotland would have control over all funds and could reassign as it pleased if it were to leave the EU. But as a devolved nation, Scotland must work within a fixed budget, and would find itself having responsibility for a whole raft of activities for which it has no funding agreed with Westminster.
The question for Scots farmers and fishermen, then, is whether they trust Brussels or London more to keep the payments coming.