The choice for farmers

Alistair Carmichael addresses the National Farmers Union of Scotland AGM.

This was published under the 2010 to 2015 Conservative and Liberal Democrat coalition government

The Rt Hon Alistair  Carmichael

Thank you for that introduction Nigel, I am delighted to be here in Fife today.

I am especially pleased to be here in a momentous year for Scottish farmers – and for the whole of Scotland.

Looking back on 2013, it’s fair to say that last year was a landmark as well.

We saw the culmination of the long, arduous CAP negotiations – two-and-a-half years in the making, since the Commission released the first legislative proposals for consultation in June 2011.

It has been a long, tough journey with plenty of hard bargaining along the way. But we got there in the end.

I am well aware of the strength of feeling on the intra-UK CAP allocation. We took the view that, given the disparity of payment mechanisms and farm structures across the UK, the fairest approach was to share the 1.6% cut evenly.

In recognition of Scotland’s circumstances, Defra has agreed to pursue flexibility on coupled payments and carry out a review of allocations when the transition from historic to area-based payments was underway.

George will go into this in more detail, along with the steps we are pursuing to address concerns, in consultation with the NFUS.

But I would like to reflect that there were a lot of very solid Scottish wins at the conclusion of the CAP negotiations, including much-needed flexibility to address the slipper farmer problem and support for new entrants.

This wouldn’t have been possible without a concerted effort in Brussels by Defra Ministers, Scottish Government Ministers and by the industry itself.

A Scottish CAP

I’d like to focus on one central element – one that will affect Scottish farming for years to come, and in ways we haven’t begun to think about yet.

This year, for the first time ever, Scotland will benefit from a CAP that fully respects the decision-making structures we have here.

Negotiated by the UK Government, this guarantees full autonomy for the Scottish Parliament and Scottish Government to apply the CAP as they – and you – see fit:

  • Full autonomy to encourage new entrants into farming.
  • Full autonomy to tackle the problem of slipper farmers.
  • And full autonomy to take tough decisions over what funding mechanisms are best for Scotland’s incredibly diverse environment.

Our farmers and crofters are vital to sustaining production, maintaining our landscapes and supporting our local communities.

We have some of the finest arable land - vast amounts of beautiful, difficult rough grazing land – and everything in between.

With so much diversity of need within Scotland, it is right that decisions on agricultural policy are devolved in their entirety to the Scottish Parliament.

Allowing greater local accountability; and greater differentiation of treatment. It’s not easy to get the balance right.

In fact, coming here today, I confess I was tempted to make a few mischievous claims that Richard Lochhead hasn’t quite got everything right.

Particularly on the challenge of rough grazing land in parts of constituencies like mine.

But I respect the fact that those decisions are his to take and I will leave it to others better placed than me to scrutinise them.

The job isn’t finished by any means. The Scottish farming community now needs to explore what this autonomy can offer and how to make this work for you.


What are we doing at Westminster? At Westminster, the UK Government is also taking action that affects the wider economy, with an impact on your livelihoods.

The latest IMF forecast confirms that the UK is now the fastest growing major economy in Europe, outpacing competitors like France and Germany.

GDP figures have shown a sustained period of good news for the Scottish and UK economy, with the economy growing by 0.7% for the quarter and by 1.9% over 2013.

The Government’s long term economic plan is working. The economy is growing, the deficit is falling and jobs are being created.

And – with a very substantial proportion of rural MPs in the Government – we want to address pressures facing our rural economy and the communities that support it.

We are driving activity to improve and maintain vital services for rural communities such as access to broadband and protecting the universal postal service.

Scotland gets one-fifth of UK rural broadband funding – over £100 million of the UK-wide budget of £530 million.

Last year, we have helped the farmers get a fairer deal from the big supermarkets by introducing the Groceries Code Adjudicator, Christine Tacon, to oversee the relationship between supermarkets and suppliers.

This relationship has been imbalanced for too long and we want to make sure that the Adjudicator has teeth, ultimately to benefit producers at the start of the chain.

High fuel prices have been a problem experienced more harshly in rural areas.

For farmers, this is not just about your personal transportation, it has a material effect on your business – the larger the farm, the harder these costs will be felt.

Fuel rebate

We introduced the first UK rural fuel rebate scheme, securing permission from the European Commission to cut fuel duty by 5p a litre, trialling this first in the islands.

This has been well received, and last month we put in an application to the Commission to extend this to rural areas on the mainland as well.

If this is successful, this will be extended to 17 areas across the UK, 12 of which are in Scotland.

It would mean the UK was the first Member State to have an inland rebate scheme of this kind, and we are putting a lot of effort into making the case.

Independence debate

2014 will bring more challenges, as we implement the CAP and get the economy back on track.

But I would like to turn now to the decision facing us as Scots in September 2014. Make no mistake: this is the most important political debate of our life-times.

In seven months we will have the opportunity to cast our vote on the future of our country in a referendum on Scottish independence.

We will take the most fundamental collective decision that a nation can ever be asked to take: whether we stay part of the United Kingdom family or go it alone. That is Scotland’s choice.

Nobody in Scotland can afford to ignore the vote’s potential impact and I firmly believe that everyone must ensure they have the facts they need to make an informed choice.

There are many questions to ask and answers to give about the impact of such a permanent and irreversible step.

You won’t be surprised to hear that I believe we are better off as part of the UK, a political union that has served us well for 300 years.

This holds true for Scotland’s rural communities just as much as it does for our towns and cities. And in some cases, the arguments are even stronger.


Europe is the classic example. Unlike many audiences, I shouldn’t need to persuade anyone in this room of how important our EU membership is. And I don’t need to explain how difficult European negotiations can be.

You’re better acquainted than most with the machinations of Brussels and wranglings with our fellow Member States. So let me be blunt.

If we choose to become a new separate state, we choose to leave the UK. In doing so we would need to reapply to become a member of the EU in our own right. That is a question of law.

We set out the clear, legal position in the first of our analysis papers.

Unlike the nationalists, we also published our legal opinion backing this up.

The EU is a treaty-based organisation and the UK – not Scotland – is the contracting party to the Treaties of the EU.

The continuing UK – England, Wales and Northern Ireland – would be the same state as the existing UK, with the same international rights and obligations.

Its EU membership would continue on existing terms.

The Scottish Government denied this for a long time. They used to say that an independent Scotland would automatically be a member of the EU, that membership would be inherited. They used to say they had legal advice to back them up.

But eventually – the truth was forced out of them (only after spending thousands of pounds of taxpayers’ money I might add)

There was no legal advice. There is no automatic entry.

The Scottish Government now grudgingly accept that negotiations would be required for EU membership.

But they still fail to spell out the reality about that process.

Rather than applying in the same way that every other new member has under Article 49 of the Treaty of the European Union;

Seeking the unanimous support of the European Council, aving membership approved through an Accession Treaty and having the application ratified with the constitutional requirement of each existing Member State.

We are told by the Scottish Government in their White Paper that Scotland could become a new member of the EU by the ‘back door’.

The so-called “Article 48 route” is held up by the Scottish Government as the super highway to EU membership.

The fast track not only into the EU but also exactly the same rights and responsibilities that we currently enjoy as part of the UK.

But in reality this is a dead-end. Article 48 has never been used to expand membership of the EU.

There is no way round the law. A new state must apply, it would be no different for an independent Scotland.

This is not to say a new Scottish state could not or would not become an EU Member State.

But before the Scottish Government start excitedly quoting me on that, let me remind them that membership - and critically, the terms of membership - would have to be negotiated with 28 Member States.

And that is unavoidable, irrespective of what Article was used. This isn’t just our view.

It’s the view of the President of the European Council and the President of the European Commission.

It’s a view expressed by some of those 28 Member States with a veto and that an independent Scotland would have to negotiate with, including Spain.

Indeed it is a sign of how important an issue it is for them that the Spanish Prime Minister, Mariano Rajoy, came out with his firm view in November last year.

And it’s the view of expert lawyers like Jean-Claude Piris, the former director general of the EU Council’s legal service who gave evidence to Holyrood that “it would not be legally correct to try to use article 48”.

CAP allocation

So what could this actually mean for the CAP, for Scotland’s Single Farm Payments?

First of all, there are no guarantees that securing EU membership would be seamless nor that it could be completed within 18 months as the Scottish Government claims.

The Spanish Foreign Minister reinforced Spain’s firm view again last week that Scotland would have to take her turn.

No Plan B has been put forward by the Scottish Government to explain what they would do if they hit obstacles in negotiations or failed to meet timescales.

The people in this room well know how long and protracted EU negotiations can be and the consequences of inaction and delay. You know the latest CAP deal was two-and-a-half years in the making.

Membership negotiations for the most recent entrant, Croatia, took a decade. Now, it might be easier for Scotland to get all the necessary arrangements in place.

But it might not – particularly if we are trying to negotiate an exit from the UK as the same time.

A host of experts have concluded that this would be a complex undertaking – and one that is not in the gift of the Scottish Government or the UK Government. It would depend on all 28 existing Member States.

And it goes without saying - in this room at least - that any gap in membership could be devastating.

Secondly, there are no guarantees whatsoever over the terms of membership – including CAP payments. These would have be renegotiated and approved by all 28 Member States.

Last month the Foreign Office published its analysis of EU and international implications of independence.

This analysis was clear that no matter how much goodwill existed towards a newly independent Scotland, the reality is that national governments would act in accordance with their own national interest. Indeed they would have a duty to do so.

The Scottish Government claims that Scotland would automatically be entitled to a windfall in CAP funding. This bold claim ignores facts and political reality.

Ask yourself this: why would other Member States that have had to phase in Common Agricultural Policy receipts over ten years agree to an independent Scotland automatically receiving full payments from day one?

Not just that - but according to the Scottish Government – reopening the CAP deal and agreeing to give Scottish farmers increased payments too. That would mean newly joined countries like Croatia accepting to a deal that was never offered to them or their farmers.

And on the Scottish Government’s timetable this would require all 28 Member States to rip up the hard-fought EU budget ceilings agreed to 2020 and reduce their share of the budget in order to give Scotland more money.

I will leave it to George to set out the further financial analysis that has been done by the Treasury to cost the various scenarios. But to me – there is a gaping flaw in the Scottish Government’s argument.

On currency, pensions, EU membership – in all cases, they rely on everyone else falling into line, looking the other way, bending the rules – all to suit us. In my experience, that is not the way our European colleagues tend to do things.

Other economic benefits

It’s not just about EU membership.

Like every other business up and down the country, farmers would be affected by new administrative arrangements or controls on cross-border trade.

They would affected by uncertainty over our currency and pensions.

With the drive to boost exports, cutting our extensive presence overseas, as the Scottish Government proposes, makes no sense at all.

The UK global network represents Scotland worldwide, employing over 14,000 people in 267 Embassies, High Commissions and Consulates in over 150 countries.

Scottish businesses have an absolute right to representation by UK Trade and Investment’s 169 offices in over 100 countries, complemented by support from Scottish Development International offices in 16 of them.

The entire network is using their clout to protect our economic interests.

Promoting British and Scottish-branded food and drink internationally through UKTI’s GREAT campaign.

Fighting the case for producers in Europe during past crises and putting pressure on the Japanese authorities to remove unfair trade discrimination against beef exports.

Defending Scotch whisky against counterfeits, discriminatory or excessive taxation, trade barriers and other restrictions.

It is easier to unlock these deals with the draw of the larger UK economy, with our established reputation and with our presence on the ground.

This isn’t just good for the distilleries, it is good for the supply chain, the farmers producing the malt barley.

The Scottish Government proposes a much smaller network of 70-90 offices – scaling back Scotland’s overseas representation by at least two thirds.

We need to keep up momentum in established and emerging markets.

For an outward-looking nation, reducing overseas presence on this huge scale would be a backwards step.

Weigh up the evidence

I have said elsewhere that while the Scottish Government want people to believe that they have a vision, in fact what they proffer is a mirage.

Like all mirages, the closer you get, the less real it becomes.

Businesses throughout the country are taking a hard look at what this would mean for them.

Last week, business found its voice.

We heard publicly from the supermarkets, the oil industry, the financiers, the pension specialists, manufacturing industry – even the fashion industry. Farmers should be no different.

I urge you to weigh up the arguments affecting your business and examine the evidence – not just on CAP, but on currency, cross-border trade, exports.

You will discover that the Scottish Government’s White Paper is long on assertion and short on facts to back them up.

To keep everything the same, it relies on everyone else – the English, the Welsh, the Irish, and every other EU Member State - agreeing to do what suits Scotland.

In some cases, interests may well coincide. And in others – frankly, they would have to lose their senses to go along with what the Scottish Government proposes.

Negotiation by definition requires compromise.

We simply cannot afford to compromise on our currency, our unimpeded trade with the rest of the UK, the security of our banks, our pensions.


One final point to touch on is that I am heartened that this debate is not about our Scottishness.

That was a risk and there will always be a few folk out there who will try to present it in that way.

But with one of the strongest national identities in the world as part of the UK, there is no doubt that we have proud Scots on both sides of the argument – something that the UK and Scottish Governments can both agree on.

As part of the UK, our national identity has flourished, our economy is stronger and our societies are entirely integrated.

Today we have the best of both worlds – a devolved Government that can develop policies tailored to Scottish circumstances and being part of a larger UK which gives us greater stability, greater security and an unrivalled platform on the world stage.

We should aim for a stronger Scotland within the UK, with a positive future focussed on jobs and growth.

Make devolution work better, not throw it away.

The message I want to leave is that I am not asking you to agree with everything the UK Government says.

We are a democracy and it is right that the NFUS constantly pushes us to do more to represent your interests.

But the vote in September this year will be irreversible.

I am asking you as individuals and as businesses to evaluate the hard evidence - risk versus reward - and make an informed decision based on the facts.

A decision about what is best for you, for your family and for Scotland.

Thank you.

Published 10 February 2014