Lord Callanan
That this House takes note of the statement by the Prime Minister repeated by the Lord Privy Seal on 15 November relating to the European Union exit negotiations.
Baroness Goldie (Con)
My Lords, this will be an extremely interesting and important debate. It is a long one and time constraints are very restrictive. I ask your Lordships please to observe the speaking limit for Back-Benchers of four minutes. If the Clock shows four and the noble Lord or noble Baroness shows no sign of sitting down, I may have to attend to that physical exercise for him or her.
The Minister of State, Department for Exiting the European Union (Lord Callanan) (Con)
I am sure that nobody wishes to incur the wrath of my noble friend Lady Goldie.
My Lords, as the Prime Minister set out in her Statement last week, we have now agreed the provisional terms of our exit from the European Union, set out in the draft withdrawal agreement. We have also agreed the broad terms of our future relationship, as set out in the outline political declaration, also published last week. Both the UK and the EU are now preparing in earnest for a special European Council taking place this Sunday 25 November, where we hope to be able to agree the full political declaration on our future relationship.
Before I speak further about the draft withdrawal agreement, I am sure that noble Lords will have noted the appointments last Friday of my honourable friend the Member for North East Cambridgeshire as Secretary of State for Exiting the European Union and of my honourable friend the Member for Spelthorne as Parliamentary Under-Secretary of State in the Department for Exiting the European Union. I look forward to working with both colleagues as the whole Government deliver on a Brexit deal that honours the result of the referendum and takes the country from strength to strength, but I must add that both the UK and the EU have reiterated, time and again, that nothing is agreed until everything is agreed. To that end, we will not sign a withdrawal agreement without a full political declaration and we will ensure that Parliament can make an informed decision and that business and citizens have a clear understanding of our future relationship.
What we agreed last week is a draft treaty that means that we will leave the EU in a smooth and orderly way on 29 March 2019 and sets the framework for a future relationship that delivers in our national interest. It takes back control of our borders, our laws and our money; it protects jobs, security and the integrity of the United Kingdom; and it delivers in ways that many said could simply not be done. The outline political declaration sets out an arrangement that is superior for our country than options such as Canada-plus, Norway-minus or even Norway-plus—a more ambitious free trade agreement than the EU has agreed with any other country. On security co-operation, the outline political declaration sets out a breadth and depth of co-operation also beyond anything the EU has agreed with any other country.
I shall now set out the details of the agreement. First, the full legal text of the withdrawal agreement has now been agreed in principle. It sets out the terms on which the UK will leave the EU on 29 March 2019. We have secured the rights of the more than 3 million EU citizens living in the UK and around 1 million UK nationals living in other countries in the EU. We have agreed a time-limited implementation period that ensures that businesses have to plan for only one set of changes. We have agreed protocols to ensure that Gibraltar and the sovereign base areas in Cyprus are covered by the withdrawal agreement and we have agreed a fair financial settlement, estimated to be far lower than the figures many mentioned at the start of these negotiations.
As the Prime Minister has made clear since the start, we have been committed to ensuring that our exit from the EU addresses the issue of the border between Northern Ireland and Ireland. We believe that this issue can best be solved through our future relationship with the EU, but the withdrawal agreement provides an insurance policy, meaning that should the new relationship not be ready in time for the end of the implementation period, there will still be no hard border between Ireland and Northern Ireland. As noble Lords will know, the original suggestion from the EU was not acceptable, as it would have resulted in a customs border in the Irish Sea and cast doubt upon the integrity of our United Kingdom, so last month the Prime Minister set out for the House the four steps we needed to take. This is what we have now done, and the EU has made a number of concessions towards our position.
First, the EU proposal for a Northern Ireland-only customs solution has been dropped and replaced with a new UK-wide temporary customs arrangement that protects the integrity of our precious union. Secondly, we have created an option for a single, time-limited extension of the implementation period as an alternative to bringing in the backstop. As we have said many times, we do not want to extend the implementation period and we do not believe that we will need to do so. This is an insurance policy, but if it happens that at the end of 2020 our future relationship is not quite ready, then the UK will be able to make a choice between the UK-wide temporary customs arrangement and a short extension of the implementation period.
Thirdly, the withdrawal agreement commits both parties to use their best endeavours to ensure that this insurance policy is never used. In the unlikely event that it is needed, if we choose the backstop the withdrawal agreement is explicit that the backstop is temporary and that the Article 50 legal base cannot provide for a permanent relationship. There is also a mechanism by which the backstop can be terminated. Finally, we have ensured full continued access for Northern Ireland’s businesses to the whole of the UK internal market.
Lord Howard of Lympne (Con)
I am very grateful to my noble friend for giving way. Under Article 50, the United Kingdom has a unilateral, untrammelled right to leave the European Union. Under the backstop provisions of the withdrawal agreement, the United Kingdom can leave only with the consent of the European Union. How can that be described as taking back control?
Lord Callanan
There are mechanisms to bring the backstop to an end but my noble friend is right that they would need to be mutually agreed. A joint committee has been set up and independent arbitration is foreseen within that, to which we can apply the solutions. They are set out in the agreement. I would be happy to write to my noble friend with further details but I understand the point he is making.
The Brexit discussions have been about acting in the national interest and that has necessarily involved making what we believe to be the right choices, not the easy ones. By resolving this issue, we are now able to move on to finalising the details of an ambitious future partnership. The outline political declaration we have agreed sets out the basis for these negotiations, and we will negotiate intensively ahead of the European Council this weekend to turn this into a full future framework.
Under the future relationship we will see an end to free movement. As the Prime Minister stated yesterday at the CBI conference, we will have our own new skills-based immigration system, based not on the country people come from but on what they can contribute to our United Kingdom. We have worked hard to deliver for the economy—to deliver a deal that puts jobs, livelihoods, prosperity and opportunity first. This is what Brexit should be about: getting a good deal that unlocks the opportunity of a brighter future for this country and all our people.
Lord Forsyth of Drumlean (Con)
I am most grateful to my noble friend. Just going back to the point about the position of Northern Ireland, given that the backstop in the agreement provides for a different regulatory regime in Northern Ireland, why is this not creating a border down the Irish Sea?
Lord Callanan
This is only within the backstop itself. As I said, we hope that the backstop will not be required and that we will be able to put in place future arrangements that will render the backstop unnecessary. There are some regulatory differences now between Great Britain and Northern Ireland. But it is true that under the backstop, if it comes into operation, Northern Ireland will align with many parts of the single market acquis that are necessary for the creation of a borderless Ireland.
The declaration reached common ground on services and investment, including financial services. It also ensures that we will be leaving the common agricultural policy and the common fisheries policy. The UK will become an independent coastal state once again.
We have been able to agree on key elements which will help keep our people safe. These include effective extradition arrangements, as well as mechanisms for data exchange on passenger name records, DNA, fingerprints and vehicle registration data. We have also agreed a close and flexible partnership on foreign, security and defence policy.
Lord Davies of Stamford (Lab)
I am very grateful to the Minister for giving way. What precisely are the arrangements on financial services that have been agreed? I have failed to find any concrete measures in the large amount of paper in front of us.
Lord Callanan
I have a copy of the document here. There are three paragraphs on financial services in the outline declaration. The noble Lord will find them on page 2. I could happily read them out but time is short. Obviously, we will be fleshing out the future partnership document this week and we hope to publish more details on that shortly.
Lord Davies of Stamford
That document does not contain any specific measures at all.
Lord Callanan
It contains measures for protecting financial stability and market integrity, and for the commencement of an equivalence assessment, which is extremely important to many in financial services. But, as I said, this is one of the things that we are fleshing out. This is an outline declaration and the final details are being negotiated as we speak.
Lord Callanan
I am happy to give way but this is all subtracting from the time that is available for the rest of the debate.
Lord Liddle
The Minister suggested to his noble friends that the Northern Ireland arrangement was temporary. Why then is it said in the political declaration that what is set out in the backstop is the basis for the future economic relationship between Britain and the EU? Can the Minister explain that inconsistency?
Lord Callanan
It is actually stated in the withdrawal agreement that the backstop is intended to be temporary and is not intended to be a basis for the future relationship. But it says in the future partnership document that the future relationship will build on the customs arrangements that are outlined within the backstop facility. I will let the noble Lord make his own interpretation of those words.
We have worked hard to deliver the result of the referendum and to ensure that the UK leaves the EU on 29 March 2019. We have made a decisive breakthrough. Once a final deal is agreed, we will bring it to the Commons for what is being called a meaningful vote, and of course there will be an opportunity in this House for extensive further debate. The Government understand that the British people want us to get this done and to get on with addressing the other issues they care about: creating more good jobs in every part of the UK; helping our NHS provide first-class care; and focusing our efforts on building a brighter future for our country.
The choice is clear: we can choose to leave with no deal or we can choose to unite and support the best deal that can be negotiated—this deal. It is a deal that ends free movement; that takes back control of our borders, laws and money; that delivers a free trade area for goods with zero tariffs, to benefit our manufacturers; that retains the security co-operation to keep our people safe; and that protects jobs in the United Kingdom. This deal honours the integrity of our United Kingdom. It delivers on the referendum result. It delivers the Brexit that the British people voted for. I beg to move.
The Advocate-General for Scotland (Lord Keen of Elie) (Con)
My Lords, this has been an extensive and interesting debate. I remind noble Lords that it is a debate on the Statement made by the Prime Minister relating to European Union exit, although it has ranged much more widely than that, as we have noticed. In the time available, I will endeavour to address the points raised by noble Lords, but I hope they will forgive me if I do not manage to address each and every point raised by the, I think, 56 speakers we have had so far.
It is clear that we have made a decisive step forward. We have agreed in principle the terms of the United Kingdom’s exit from the European Union, as set out in the withdrawal agreement—or, in the words of the noble Baroness, Lady Hayter, a smooth and orderly exit. We have also agreed the broad terms of our future relationship, as set out in the outline political declaration. It is just that. It is no more than a political declaration at this stage, but that process is not complete and the Prime Minister will be meeting Mr Juncker in the next few days to take that further forward.
Lord Keen of Elie
No, I am not taking interventions because of the time available. I am sorry.
All this puts us close to a Brexit deal—a deal that takes back control of our borders, our laws and our money, while at the same time seeking to protect jobs, security and, indeed, the integrity of the United Kingdom. It is a deal that brings the country together—a deal that realises the benefits of Brexit and then lets us focus on other issues.
Let me touch upon several points that have been raised during the debate. There was the question of citizens’ rights. What we intend to do there is to protect the rights of the more than 3 million EU citizens living in the United Kingdom and about 1 million UK nationals living in the EU. In respect of that we intend to bring forward an immigration Bill, which will be the subject of consideration.
The question of students was raised by the noble Baroness, Lady Smith of Newnham. We have clearly taken a position with regard to EU students in this country, and it is our belief that in due course, in the course of negotiation, we will achieve a reciprocal undertaking from the EU 27 but that has not yet been achieved.
There is the implementation period, which provides a bridge to the future relationship and will allow businesses to continue trading as now until the end of 2020. There is also the financial settlement—a fair financial settlement for UK taxpayers, which is estimated at between £35 billion and £39 billion. Let me be clear in response to my noble friends Lord Forsyth and Lord True: that is not a price. As was pointed out by the noble Lord, Lord Butler, it is an estimate of a determination of our outstanding obligations on a net basis. There are sums that will fall due during the implementation period; there are sums that we have committed to meet in respect of obligations of the EU; indeed, there will be sums coming back from the EU over time, including from the European Investment Bank and the European Central Bank.
Lord Forsyth of Drumlean
You have 25 minutes. The point I made in my speech about the price was that we would be in a transition period or implementation period, although there seems little to implement, and in that period we would have no say in our affairs yet were still expected to pay the £10 billion per year. If we did not have that period, then we would not pay the £20 billion.
Lord Keen of Elie
Let us be clear: if during this implementation period—this transition or time-limited period—we are to have the continuing benefits of membership of the single market and the customs union, and of the other institutions during that two-year period, then there is a price to be paid. In addition, EU obligations have been incurred—for example, those in respect of Turkey. Having undertaken those obligations we will, as a matter of international law, meet them. I reiterate: it is not a price but a matter of discharging our obligations.
With regard to Northern Ireland, as part of our solution to ensure that no hard border between Northern Ireland and Ireland emerges, in the unlikely event that more time is needed to finalise the future relationship, there are two options: the implementation period could be extended for a limited time, or we could bring in the backstop. The backstop as now agreed replaces the EU’s proposal for a Northern Ireland-only customs “backstop to the backstop” with a UK-wide solution, respecting the constitutional and economic integrity of the United Kingdom.
The withdrawal agreement legally commits both sides to use best endeavours to ensure that the backstop is never used. If either side fails to do so, this could be referred to an independent arbitration panel. I stress that it is an independent arbitration panel; it will comprise five members, two selected by the United Kingdom, two selected by the EU and a fifth, wholly independent arbitrator, selected by those parties, to resolve any dispute in that regard.
I would also observe, and I will come back to this in the light of a question from the noble and learned Lord, Lord Goldsmith, that as he observed, the use of the term “best endeavours” gives rise to an obligation. It may be regarded as a good faith obligation, but it is an enforceable obligation. It may be breached, and it may be determined by an arbitration panel. That mechanism is, as I believe the noble Lord, Lord Anderson of Ipswich, observed, a fair means of seeking to resolve disputes with regard to the backstop.
I turn to some of the observations that have been made during the course of the debate and the questions raised. The noble Baroness, Lady Hayter of Kentish Town, said that no one believes that the agreement will get a majority in the Commons. With great respect, the noble Lord, Lord Desai, either as a realistic optimist or a realistic pessimist, observed that he anticipated that it will pass. Of course, much of that lies in the hands of the Labour Party in the House of Commons. If the Labour Party wishes to avoid a no-deal Brexit, it has the means to do that by being prepared to see this final agreement on withdrawal pass through the Commons, so the answer lies in the hands of Labour as much as it does in the hands of any other party in the House of Commons.
As regards the suggestion of further negotiation that the noble Baroness referred to, that, as my noble friend Lady Altmann observed, is fantasy. It is not going to occur and indeed, I believe my noble friend Lord Cormack made the same observation.
With regard to the future relationship, it cannot at this stage be taken beyond a political commitment. The EU 27 are not, prior to our leaving the institution of the European Union on 29 March 2019, in a position to conclude an agreement with regard to the future relationship, so what we have is a statement of political intent, a political statement or undertaking. The noble Baroness said that this is a political statement without guarantees. Of course, that is a truism because political statements do not come with guarantees. That is why they are called political statements. That is where we are at present as we take that matter forward.
I think it is fair to say that the noble Baroness, Lady Ludford, did not have a good word to say about anyone on this side of the House, but it seemed to me that she fundamentally confused the objective of the withdrawal agreement with the issue of our future relationship. At present, we are concerned with the withdrawal agreement, not with the final determination of the future relationship.
The noble Lord, Lord Dykes, began by saying very candidly that we should not leave and then he suggested that we should have what a number of noble Lords referred to as a people’s vote, which is another term for a second referendum. He said that the remain option should be an option in that second referendum. I remind the noble Lord that the remain option was an option in the last referendum.
The noble Lord, Lord Morrow, addressed issues with regard to Northern Ireland. Clearly there are sensitive issues here. He suggested that we should leave the EU in the same way that we joined. There has been a span of 45 years since we joined the EU, and a great deal has happened in both the politics and the economics of the island of Ireland in that 45-year period. I do not accept the suggestion that Northern Ireland is somehow going to be subservient. It will be subject to those elements required to maintain the open border in Ireland. I do not believe that anyone would wish to see that open border threatened. In my submission, it does not indicate, as he suggested, that Dublin or Brussels holds a veto on the backstop. The backstop is one of two alternatives, and the backstop itself is subject to the dispute resolution process in the withdrawal agreement, subject to the obligation of best endeavours. I again emphasise the use of term obligation in respect of best endeavours. My noble friend Lord King of Bridgwater pointed out, and I entirely concur, that a second referendum is not a realistic prospect. It simply does not engage with our democratic process.
Lord Keen of Elie
I must say I am a Burkean as far as representative democracy is concerned. That is how our constitution operates. There are exceptions so far as referenda are concerned.
Lord Keen of Elie
It is suggested that my party had the first one. I believe Harold Wilson had a referendum over the EU rather before my party, but I may be mistaken about that. I am obliged to the noble Baroness.
It is said by the noble Lord, Lord Reid of Cardowan, that we have arrived at an impasse. We have not. We have arrived at an agreement, and it is one that will go before the House of Commons in the near future.
The noble Lord, Lord Steel of Aikwood, talked about crashing out without a deal, and we have had references to car crashes and catastrophes. Such arguments are not improved by overstatement. That, with respect, is what has been happening, perhaps at both ends of the spectrum, with regard to the debate on this matter and it takes away from the factual issue. It plays into what the noble and learned Lord, Lord Goldsmith, referred to as the “storytelling” that can sometimes fog proper decision-making in this context.
The noble Lord, Lord Steel, also referred to “a defective deal, at great expense”. Again I remind him that the sum of £35 billion to £38 billion is not a great expense; it is a negotiated means of meeting our outstanding obligations under international law, and that is what we intend to do.
The noble Lord, Lord Browne of Belmont, also raised the question of Northern Ireland. Again I emphasise that the issue of the backstop, even if it comes into play, will be subject to the obligations of “best endeavours” and to the independent arbitration process provided for in the withdrawal agreement. I also note that there is no limitation at all upon the movement of goods from Northern Ireland to the remainder of Great Britain. That movement remains wholly unimpeded by these terms.
My noble friend Lord Bridges of Headley referred to the political declaration. Of course, as he later observed, it is not yet complete, which is why we must wait to see the outcome of further discussions regarding the political declaration in order to see where we are going to be. It is certainly not the time to anticipate what that outcome might be.
Lord Bridges of Headley
My Lords, I understand that it is premature, but could my noble friend therefore refute the proposition put forward by the EU’s deputy negotiator that the political declaration means that the customs union will be the basis of the relationship?
Lord Keen of Elie
The withdrawal agreement has expressed the terms for the implementation period and the present political declaration has indicated where negotiations will begin, but where they will end is a wholly different matter. It is a case of saying that it is a work in progress and we will have to await the outcome of that further negotiation.
Lord Wallace of Saltaire
My Lords, the document that we had from the Government to say where we are now said the negotiations on the political statement would be finished by the end of November, which is the end of next week. Can he confirm whether that is expected to be the case and when it may come to Parliament for us to debate, or is he saying that it will be much longer delayed?
Lord Keen of Elie
My understanding, as I said before, is that the Prime Minister is going to be meeting with Mr Juncker in the very foreseeable future and that the discussions are going to be taken forward. As to when the final political statement will be concluded, I cannot give a specific date but the intention is, as previously stated, that it should be available by the end of November. I cannot say when it will come before Parliament; at this stage I cannot give a definitive date from the Dispatch Box, but I am quite willing to write to the noble Lord if I have any further information on that point.
The noble Lord, Lord Kerr of Kinlochard, mentioned Article 50 and has previously observed that he had a hand in its drafting. As a general rule of law, one does not submit subjective evidence over the construction of a contractual provision, and there are very good and compelling reasons for that. However, I note what he has to say about the idea of the EU 27 being prepared to stop the clock. With great respect, it appears to me that the indication is: “Let us get on with it. Let us go forward. We have an agreement for withdrawal. Let us implement that. Let us then address how you are going to leave”—because we are going to leave the European Union on 29 March 2019.
The noble Lord, Lord McCrea of Magherafelt and Cookstown, made his maiden speech today. I thank him for that and compliment him on his contribution to the debate. It was suggested that he should not have used a maiden speech to be controversial, but I would not take issue on that. It is a matter of deep concern to the noble Lord and his fellow Peers from Northern Ireland that we should address the matter of the border and the integrity of the union in this context, and I fully understand his concerns, but I cannot accept that Northern Ireland is either a hostage or a sacrifice in the circumstances. Far from it: our concerns lie in maintaining the union. In so far as he suggested that a hard border was a fictitious idea and could be managed, I do not disagree with him. That is one reason why we anticipate that the backstop will not be required. But, as it is, the people of the United Kingdom of Great Britain and Northern Ireland have spoken as a United Kingdom, and their decision is that we should leave the European Union.
The noble Lord, Lord Carlile of Berriew, pointed out that the role of Parliament must be remembered. Like him, perhaps, I am a Burkean on the issue of representative democracy. He said, and I agree, that there should be no running back to the people. It is for Parliament to consider the present withdrawal agreement. It is for Parliament to accept or reject that withdrawal agreement. It is for Parliament to address the consequences of its actions, and it answers to the people in a representative democracy. I agree with much of what he said about the process that we should be going through in this context.
Lord Carlile of Berriew
I am very grateful to the noble and learned Lord for giving way, but on that point, dredging up his experience of representative democracy, does he agree that when a Government put forward a proposition in the House of Commons and it is defeated, the normal course is to revert to the status quo ante?
Lord Keen of Elie
That might be the normal course, but it is not the invariable course. We have to look forward to how the Government will proceed in the context of the present process, where they present their agreement to the House of Commons, where it will be subject to consideration. I shall not anticipate that outcome, although, like the noble Lord, Lord Desai, I take the view that there is every prospect that the House of Commons, having examined this agreement —I am amazed at how many people commented on it before they could conceivably have read its 580 pages—will find that it takes us forward towards the goal that we were set as a result of the referendum.
Lord Hannay of Chiswick
As the noble and learned Lord seems to be drawing to the end of his remarks and has not yet answered my question, I wondered whether he would have a shot at it now. I asked how he would construe the provision that the arbitration panel may not rule on a matter which involves the interpretation of EU law, but must pass it to the European Court of Justice.
The whole of the withdrawal treaty will become European Union law on the day it is ratified. It is no good the noble and learned Lord shaking his head. In its view, it will become European Union law. There will be binding obligations under European Union law. Irrespective of that, how does he construe that provision?
Lord Keen of Elie
I am obliged to the noble Lord for reminding me of his question. Under the provisions of the withdrawal agreement, if there is a question as to the interpretation of a point of EU law, the interpretation must be given by the arbitration panel to the Court of Justice of the European Union, which will determine that point. The application of that interpretation of European law will be a matter for the arbitration panel, not the court. That is why we have an independent arbitration panel and it is why I took issue with the way in which the noble Lord sought to characterise the matter. At the end of the day, the issues that the arbitration panel will be addressing will, no doubt, involve mixed questions of fact and law. The panel will be masters of the fact, apply the law and make a determination on that mixed basis.
I am told that I have three minutes left. That being so—I know that noble Lords would want me to have another 30 minutes—I will quickly go through some of the issues which were touched upon but which I have not yet addressed. Many noble Lords talked about a people’s referendum. I hope that I have made the point that that simply does not accord with our democratic principles, nor does it reflect the will of the people when they voted in the referendum. I was quite taken by the observation of the noble Lord, Lord Warner. He said that only 38% of the electorate voted to leave. That is 17.4 million people and, under our democratic traditions, is what we call a majority.
Lord Warner
Does the Minister accept that the proportion of the electorate that voted to leave, 38%, is less than the requirement for 40% of an electorate to call a strike in many public services?
Lord Keen of Elie
My Lords, we are not talking about a strike in public services. Whether the figure is 38% or not, it represents a majority and that is where we are.
The noble Baroness, Lady Bull, raised a series of questions about citizens’ rights. I quite understand her concern, particularly in the context of educational institutions. We are bringing forward an immigration Bill. Once that has been brought forward and laid, we will be in a position to address comment and criticism with regard to its terms.
Lord Keen of Elie
Every year is a new year.
The noble Lord, Lord Judd, made the prescient point that the political declaration is vital and that until we have that declaration we will not have a clear picture of where we are going to be with our future relationship. This is a staged process. We have the withdrawal agreement in draft; we are capable of taking that forward. We are capable of having a Brexit that works for both the EU 27 and ourselves. We will have an implementation period and we will then have the opportunity to lay out the precise terms of our future relationship with the EU 27.
The noble Lord, Lord Anderson of Ipswich, talked about an extension of the Article 50 process. It is not the policy of this Government that the Article 50 process should be interrupted. Notice has been given; the date of exit is determined; we will follow that through to a conclusion. The noble Lord, Lord Inglewood, raised a number of issues relating to Written Questions. I do not have the answer, but I will arrange for a letter to be written and will put a copy in the Library. I do not know what the present status of various Questions to that department is.
Finally, the noble Lord, Lord Dobbs, referred to a deliberate act of punishment on the part of the EU. I cannot accept that. The EU 27 are negotiating in the best interests of the EU 27. We are negotiating in the interests of the entire United Kingdom. It is going to be a demanding negotiation but, at the end of the day, we will have an ongoing, civilised and mutually beneficial relationship with the EU 27 after we have left.
I am obliged to noble Lords for their attention.