PRIME Minister Johnson’s “cheap day return” visit to Orkney and Lossiemouth on Thursday, following his “sunlit uplands” delivery to the 1922 Committee of Tory backbenchers on Wednesday, served to obscure the real significance of the European Union’s Economic Recovery Package, agreed at the European Council on Tuesday.

Although perhaps limited alongside other EU spending – its new borrowing is only about 5% of EU GDP – this has been justifiably called the EU’s “Hamilton Moment”.

Like Alexander Hamilton’s agreement in 1790 with Thomas Jefferson and James Madison that northern US states’ debts should be federalised, the EU has now established the basis of a federal debt transfer mechanism and will issue sovereign bonds. 

As an EU member, an independent Scotland would have been a major beneficiary. And this is the second time Scotland has missed out big time because of London. 

On Tuesday, the European Council of Ministers agreed that, alongside its €1.07 trillion 2021 to 2027 basic budget, with agreed contributions from each member state, the European Commission will borrow up to €750 billion in the financial markets. This will include €390bn in grants – transfers within the European Union totalling about 3% of the EU’s GDP.

There is a core component of €313bn grants, called the European Recovery and Resilience Facility, and a further €77bn in grants for topping up EU Budget Programmes.

These include HORIZON – under which Scotland universities have been a major beneficiary – rural development and the Just Transition Fund, which is a Green New Deal in the making. Until July 2018, Scottish higher education had received €533 million or 11.2% of total UK receipts.

Countries’ allocations of EU recovery money are based on economic harm from Covid-19. Spain and Italy could receive about 5% of their GDP over 
the next three years. Based on a 2019 GDP of £180bn, at 3% Scotland might have received about £5.4bn.

In comparison, the UK Treasury’s latest Covid allocation for 2020 to Scotland, Wales and Northern Ireland is only £3.7bn. What has also been largely overlooked is the intervention at 4am on Tuesday from Sanna Marin, the social democrat Prime Minister of Finland, which broke an impasse among EU states.

While probably not aligning herself with the “Frugal Four” – Netherlands, Denmark, Sweden and Austria – it might easily have been a role Nicola Sturgeon played. Finland’s population of 5.5m is the same as Scotland’s. 
The European Council agreement was based on the Treaty on the Functioning of the European Union under the Treaty of Lisbon in 2007.

This includes articles declaring that the EU has the right to “provide itself with the means necessary to attain its objectives and carry through its policies”.

In effect, this means the creation of an EU federal deficit, probably the biggest constitutional leap since the introduction of the euro in 1999. 

This is the start of an EU’s “own resources” fund, where initially member states will make levies on plastic waste, perhaps to be extended to a “carbon border adjustment mechanism” and a digital levy.

In principle, these represent common European taxes. While all this has still finally to be agreed by national parliaments and the European Parliament, it begins turning the European Union into the kind of federal redistribution machine Scotland would be happier to join. 

Europe watchers, including the author, have no doubt that if London had still been involved, this deal would not have been reached. Colleagues in Brussels remember David Cameron’s opposition to the 2014-20 EU Budget, from which Scotland has been a major beneficiary.

Without London, politically the EU has become a more progressive place. 
But for Scotland, last week’s even closer parallel is with the 1990s and EU Commission president Jacques Delors’s proposal for a European Social Charter. In 1989 Delors, established a social economy unit to fund an expansion of labour market policies after massive job losses in the 1970s and 1980s – a situation not unlike now.

JOHN Major’s Conservative government opted out of the Social Chapter as a condition of signing the 1992 Treaty of Maastricht. Initial negotiations for a Social Chapter included European Council recommendation 92/441/EEC on common criteria concerning sufficient resources and social assistance in social protection systems.

This recommendation proposed that: “Persons residing in the European Union should have access to sufficient resources and assistance to live in a manner compatible with human dignity.”

But through London opposition, mention of social exclusion was significantly reduced in the Treaty, with this council recommendation left out. After 1997, although the Tory Blair government signed the Treaty of Amsterdam, the UK never recovered this territory. This is especially relevant for Scotland, where a newly devolved government would soon develop policies like those of other mainland European member states, using the European Social Fund under the Social Chapter.

The Agreement on Social Policy included in the Treaty of Amsterdam in July 1997 only requested the Commission “encourage co-operation between the member states and facilitate the coordination of their action as regards social policy (Article 140)”.
This was further downgraded by the Luxembourg Summit in December 1997, which launched the European Employment Strategy, requiring publication of national action plans for reducing unemployment, under which member states only had to exchange information about their employment policies.

Although EU policy aspirations and documents could be accessed by the Scottish Government, it had no role in their discussion and was forced to develop its own policies within programmes negotiated by London. After this, the arrival of new member states in 2004 and other issues meant 
work on employment and social protection policy became less important.

Under the Treaty of Lisbon in 2007, work for social inclusion and protection was transferred to the Social Protection Committee as an advisory body to employment and social affairs ministers. 

For Scotland, all this meant a reduced role in EU policy making for 30 years – from the 1992 initial council recommendation till complete exclusion from the whole process at the end of 2020. Rejoining the EU as an independent Member State is a priority. 

Les Huckfield is a former Labour minister and an academic, researcher and activist.