Scotland: Independence Referendum

Lord Kerr of Kinlochard Excerpts

Thursday 30th January 2014 Lords Chamber

[Lord Kerr of Kinlochard (CB)]

My Lords, I first offer a warm welcome to the noble Baroness, Lady Goldie, of Bishopton, which is famous in Scotland for its Royal Ordnance factory. It is clear that we have a big, new gun in our armoury, here in this House.

I offer my congratulations to the noble Lord, Lord Lang, on his brilliant speech. I need not speak to what I was going to talk about, because two propositions are already absolutely agreed: first, that Scotland would be worse off without the union; and, secondly, that the rest of the union would be greatly worse off without the Scots. That has been absolutely agreed this afternoon. I think that every speaker before the noble Lord, Lord Crickhowell, was a Scotsman, which may have something to do with that, but both propositions are true. It is also true that the Scots are a notably modest race.

I will address a slightly different proposition. Supposing that one got the wrong answer and the Scots decide to go for secession, what would be the responsibility of the United Kingdom? The angle I will touch on—I am sorry, but it will not enhance my reputation in the House—is the task of ensuring that the Scots get into the European Union. That is a very difficult task, which would be the responsibility of all of us, including the United Kingdom Government.

Of course, the route in that was suggested by the First Minister in his White Paper and all his oratory does not work. However, I will not go into Article 48 versus Article 49 again; the verdict is clear, so I do not have to. The President of the European Council, the President of the Commission and all heads of government and Foreign Ministers who have addressed this question so far are clear that the route in would be via an application for membership once the country became independent. That poses a problem, for three reasons. First, the European Commission cannot negotiate with the applicant until an application is received, and only a sovereign state can be an applicant. Secondly, all member states have to agree the terms which have been negotiated. Thirdly, all member states have to get them ratified in their countries. If you cannot sign the treaty because you are not yet a sovereign state, you cannot pre-negotiate the terms of that treaty, at least formally.

What is the way around that? One needs to find a way around it because, as the noble Lord, Lord Lang, said, we all have an interest in a prosperous Scotland, and we all have a moral responsibility toward the Scottish farmers, fishermen and exporters, the enterprises and the individuals whose legitimate expectations would be dashed and whose rights would go if there was a hiatus between Scotland’s secession from this union and its accession to the European Union. On the face of it, there is quite a high probability that that might arise. My solution is that it would be the United Kingdom Government’s job to attempt to negotiate informally the terms of Scotland’s entry into the European Union and the transitional arrangements for the period before all three stages of that process were complete and the treaty was ratified.

Three conditions would have to be met. First, a great many of the Scottish Government’s negotiating positions would have to be abandoned straightaway. One could not negotiate the impossible. An example is the question of the rebate. It is impossible as an applicant to secure the agreement of all member states, many of whom are much poorer than you, that you should not have to pay the full subscription. Therefore, an applicant Scotland would not secure a rebate. The UK rebate would go down, because UK GNP and the VAT base would go down; UK receipts would go down; and the rebate, which rebates two-thirds of the difference between the two, would also go down. Therefore, there would be a reduction in the rebate here. It is absurd for Mr Salmond to tell us that in addition to having a reduction in the UK, Thatcher rebate, we must write a cheque and send some money to Edinburgh so that it gets a rebate too. That does not work; we could not possibly pay twice, so that position would have to go. There is no point in an applicant country going to Brussels and saying, “I would need a rebate”.

The second condition is that the divorce terms would have to be absolutely clear. I am sure that the Council would be unwilling to allow the Commission to negotiate with a country that has not yet defined what its independence is. What independence means in terms of frontiers and currency would have to be clear. The Scottish and United Kingdom Governments would have to agree a precise scenario before any negotiations could start. Even then, the lawyers might object to the start of the negotiation, saying, “They aren’t sovereign”, so the negotiations would have to be conducted by a UK team flying the union jack. You cannot stop members of the Council negotiating with the Commission. They would have to operate on agreed instructions from the London Government and the Edinburgh Government. Even so, they might have a very hard task, because some member states could wish, if the occasion arises, to make the Scottish path to membership of the European Union as difficult as possible in order to dissuade secession movements in their own countries. That is the best I can come up with, and it is not certain that the road I am describing would be open. However, it would be the UK’s responsibility to try.

Edinburgh needs to become much more realistic, and we could not wash our hands of the problem. If the Scots say that they want to be independent, we have an interest and a responsibility to try to get them into the European Union as quickly as can be arranged. It will be extremely difficult. We all now have a responsibility to make clear to the Scots, before they vote, that there is a real risk of a hiatus—of falling into a costly crack between secession from this union and accession to the European Union.