Resetting the UK-EU Relationship (European Affairs Committee Report)
(1 day, 16 hours ago)
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Lord Ricketts
That this House takes note of the Report from the European Affairs Committee Unfinished Business: Resetting the UK-EU relationship (1st Report, HL Paper 202).
Lord in Waiting/Government Whip (Lord Katz) (Lab)
My Lords, before the first debate gets under way, I want to highlight the four-minute advisory time for Back-Bench contributions. This is designed to ensure that the debate can finish within three hours, in line with the usual timings for Thursday debates and so that the House can rise at a reasonable time this evening. I therefore urge noble Lords to keep their remarks within four minutes to meet those aims.
Lord Ricketts (CB)
My Lords, I am delighted to lead this debate on the report from the European Affairs Committee, which it was my privilege to chair until last month, when I handed the baton to the noble and gallant Lord, Lord Stirrup. I am glad to see such a distinguished group of people in the Chamber to debate this report, which shows how salient the issue is right now. I thank the Government for getting their response to us in a timely way, which enables us to hold the debate now in good time and at an important moment.
This was not an entirely straightforward report to produce. We thought it was essential that the House have an overall assessment of what used to be known as the reset, which is, after all, the Government’s flagship policy towards the EU. As the only committee of Parliament conducting systematic scrutiny of the Government’s European policy, we concluded that we were the right people to do it.
It was a long inquiry which covered a wide range of complex issues. We found it quite difficult to get our heads around exactly what the reset covered, since the Government did not produce a White Paper on their negotiating objectives. Initially, we had only the Labour Party manifesto to go on. We also found that we were aiming at a moving target, because in the course of our work, the range of the reset increased. A number of important areas were added at the May 2025 UK-EU summit.
Members of the committee held deep and very different convictions about what the reset should cover, and indeed on whether it was necessary at all. Although we strove to find a consensus, that proved elusive. We therefore took the unusual, although not unprecedented, step of voting on the committee’s report. As a chair, I would always prefer to have a reconciliation of differences, but if that is not possible without a meaningless fudge, I think it more useful to the House to have different views clearly set out. Members will have seen that in appendix 9 of the report there is an alternative summary and the outcome of the voting on it.
Given all those circumstances, I am very grateful to all the members of the committee who contributed through this long inquiry. We all owe a particular debt of gratitude to our committee staff: Jarek Wisniewski, Brigid Fowler, Tim Mitchell, Tabitha Brown and Luisa Jaime Nunez, assisted by our press adviser Louise Shewey. I also want to thank our national parliament representative Jack Sheldon and his assistant Maherban Lidher for the vital work they do in liaising between this House and European parliamentarians.
The Government are right to have dropped the misleading term “reset”. The UK-EU relationship will be a continual process of adjustment and adaptation. There is no end point. Even since we finished our report three months ago, there have been further significant developments, driven largely by the increasingly stark reality that we Europeans can simply no longer depend on the US as our ally.
I will not try to summarise the detail of the snapshot that we gave in our report as of last November. I want to focus on the issues that will arise in implementation of the various agreements now under negotiation, and then to range a bit more widely to consider where we go from here, especially in the light of the Prime Minister’s interesting Munich speech of 14 February.
Let me start with security and defence co-operation with the EU. This is, of course, the area where progress is most urgently needed in the face of Putin’s war in Ukraine, now entering its fifth year, and Trump’s total unpredictability. Our report welcomes the security and defence partnership which the Government concluded at the 2025 summit, but that is only an enabler. Closer consultations are useful, of course, but translating them into real improvements in military capability is much more difficult. That was all too obvious when the negotiations for the UK to participate in the €150 billion SAFE defence investment programme broke down in December. The sticking point, as noble Lords will remember, was a completely unreasonable EU demand for an entry fee running to several billion pounds. This was a remarkably short-sighted EU position, given the geopolitics, and one with which many member states were unhappy. Since then, there have been suggestions in the media that the Government plan to reopen discussions, with the aim of participating in SAFE on more reasonable terms. Can the Minister tell us whether that is the case?
Staying with our report, we also looked at the area of police and law enforcement co-operation. The key here is more automation and streamlining of data sharing between law enforcement communities. A specific example arises when the Government have to decide whether to participate in the updated version of the Prüm database, which will have facial image data as well as the existing database of fingerprints and DNA. That will be an important decision that I am sure Parliament will need to scrutinise carefully.
On the economic issues, most of our witnesses supported the Government’s manifesto commitment to negotiate agreements on sanitary and phytosanitary checks on food and animal products, and on the emissions trading system. Our witnesses were also clear that the electricity trading scheme proposals outlined in the trade and co-operation agreement simply would not work. They therefore supported the idea of exploring UK access to the EU single market for electricity trading. That is now under way, as is a negotiation.
Our report lays out the implications of agreements in these areas of UK access to the single market. In particular, they will require dynamic alignment with EU regulations as they change, subject to any exceptions that are carved out in the negotiations. This will raise important issues for Parliament. We are promised a Bill soon, which will be interesting. The SPS agreement is likely to involve a continuous process of alignment, much of it highly technical, with each change potentially having an impact on businesses across the UK. How will Parliament exercise any useful scrutiny of this constant drip of administrative change? I guess that, at the very least, the European Affairs Committee will need more staff to keep abreast of the constantly changing regulatory landscape.
Agreements with the EU will have other implications as well. In particular, the UK will have to make a financial contribution. In the case of SPS and ETS, the 2025 summit agreed that payments would go towards EU costs in running the schemes, which seems fair enough, but the Commission’s draft negotiating mandate on electricity market trading introduces the idea of “cohesion funding”—in other words, British payments to reduce disparities between EU regions. Norway makes such cohesion payments directly to projects in poorer regions. If the Minister could give us more detail on whether that would also be the UK’s approach to the inevitable demand for cohesion funding when we seek to apply for single market access in other sectors, that would be interesting.
Two aspects of the trade and co-operation agreement were set to expire in June 2026: the arrangements on fisheries, and on trade and investment in energy. The May summit agreed to roll over the existing access for EU fishermen to UK waters for 12 years, but agreed to extend the energy title only one year at a time. That fisheries deal was strongly criticised by many of our witnesses, particularly those from the fishing industry. The committee also had serious doubts about the process. Within one month of the deal being struck, it had been enacted by the Specialised Committee on Fisheries, with no opportunity for parliamentary scrutiny. I should add that the Scottish salmon industry was very pleased at the prospect of an SPS agreement, given its export-orientated business.
On the cultural front, our report welcomed the prospect of the UK associating with Erasmus+ from 2027. Agreement on that has now been reached, which is good news for young people across the UK and the EU. Negotiations are also under way for a youth experience scheme. Is the Minister confident that a deal can be struck on that in time for the next summit, planned for May?
I note that both schemes were EU, not UK, negotiating objectives. I welcome that progress is being made, but it is disappointing that there has been no progress, as far as I can tell, on the UK’s one priority in the cultural field—a deal to help touring artists. That enjoys widespread support in both Houses of Parliament and the European Parliament, given the discussions that we have had in the Parliamentary Partnership Assembly. I hope that the Minister can update us on how the Government are planning to break the logjam on touring artists.
In conclusion, I want to spend some time on the wider context for the future UK-EU relationship. My view as we went through this inquiry was that the Government’s level of ambition, even as extended at the May summit, was not nearly bold enough. Our witnesses were unanimous that, even if all the highly technical negotiations now under way were successful, the economic impact would be marginal, if positive. The Government predict a boost of around £9 billion in total by 2040, which is not much for a £3 trillion economy. The reality is, as Mark Carney put it so well in Davos, that we now live in a world where the great powers are using
“economic integration as weapons, tariffs as leverage, financial infrastructure as coercion, supply chains as vulnerabilities”.
In that world, marginal benefits are nowhere near enough.
The Prime Minister, in his excellent Munich speech, seemed to agree. He saw closer UK-EU economic relations as part of the answer, setting the aim of “deeper economic integration” and moving
“closer to the single market in other sectors”.
If the Minister could give us any details on which sectors, that would be interesting. I welcome the aspiration to move closer to the single market, but the EU will need to respond to that. The failure of the SAFE negotiations and the restrictive rules now under discussion around its “made in Europe” initiative remind us that, for the EU institutions, the UK is still a third country. They are tending to apply their rules pretty inflexibly despite a mutual interest in working together.
The reality is that the hard strategic choices facing European nations, including Britain, will not be made in the UK-EU framework. Again, the Prime Minister recognised that in Munich. He talked of the need to step up work with like-minded allies on options for a collective approach to defence financing. He said:
“We must come together to integrate our capabilities on spending and procurement and build a joint European defence industry”.
He added that we should “turbocharge our defence production”. Again, any detail on that important new initiative would be interesting. It sounds as if the idea is to mobilise a wider group of European countries, going well beyond the EU, leap-frogging the stalemate over SAFE. There must be a question over whether there is room for two separate defence financing initiatives, but I welcome the willingness to think big in facing up to the new reality that we will have to take much more responsibility for our own security.
Trump is dismissive of international law and sees no value in allies. His treatment of Denmark over Greenland has broken all the bonds of trust which have kept NATO together for 75 years. New forms of co-operation among like-minded middle powers are therefore urgently needed to deal with a hostile Russia and an indifferent America. Such groupings tend to take shape under the pressure of great events and do not necessarily follow the blueprints set out in foreign ministries. It may be that this coalition of the willing, which has done such interesting work under UK-French leadership in supporting Ukraine, can grow into a load-bearing forum for wider strategic thinking outside NATO. For the moment, it is informal and unstructured, but it has a very interesting membership covering many European countries and Asian allies. I am sure that other noble Lords will have wisdom to bring to bear on this crucial subject.
Whatever the shape of the future, we need a turbocharging of our relationships with our closest neighbours in the EU, who share our values and interests. That will need more vision and more consistent political focus on both sides than we have had so far, but it is an objective that becomes more important every month, given the international situation that we face. I look forward to the debate and to the Minister’s comments. I beg to move.
Lord Stirrup (CB)
My Lords, I add my thanks to all the witnesses who contributed to this report, to the committee staff who worked so hard to bring it together and, not least, to the noble Lord, Lord Ricketts, for his excellent chairmanship and clear and comprehensive introduction to the report. In the limited time available, I shall mainly confine myself to a few brief comments on one of the many important issues covered in the report: European security.
Before I do so, I want to register a quick point on the vexed matter of touring artists, on which others will no doubt wish to elaborate. A couple of weeks ago, I met with representatives of the European Parliament’s culture committee. They had just come from DCMS, where they had been told that the problems faced by our artists seeking to perform in Europe were not a priority issue for the UK. That is certainly not the view that Ministers have rightly expressed from the Dispatch Box. I suggest to the Government that we might do better in our negotiations with the EU if we sent rather more consistent messages.
I go back to the security and defence partnership. This was the area that seemed to hold most promise in the run-up to the UK-EU summit last May, since the threat looming over the European continent—not just over the EU—seemed to give us common cause despite any Brexit hangover on either side. In the event, it turned out to be the area of perhaps greatest disappointment.
Defence is, of course, not an EU competence, but neither is it strictly a national responsibility. Our necessarily corporate approach to defence in Europe is given substance through NATO, but even the alliance cannot address what is perhaps our most urgent military challenge today. This is not increasing the number of ships, soldiers or aircraft, important though those things are. The priority is to create an innovative, agile and rapidly scalable defence-industrial base across Europe. I am not just talking about traditional defence industries; we have seen in Ukraine how important the normally civilian-orientated sector can be in time of conflict. Without such an industrial hinterland, our Armed Forces will quickly become impotent in any sustained conflict through lack of the wherewithal to fight. Developing such capacity is where the EU can—and has started to—play a part. But it is about European defence, not EU defence. Frankly, the latter is a meaningless, not to say dangerous, concept.
It was therefore very disappointing to see UK companies excluded from full participation in the SAFE mechanism. This was a significant setback for the kind of integrated defence-industrial enterprise we shall need on this continent if we are to develop the strategic capabilities for which we are still overreliant on the United States and in which the UK should play a leading role. We must do better going forward. But if we are to do better and play a leading role, we must recognise that, in terms of defence, we are increasingly viewed as something of a paper tiger, even among our closest friends in the EU. We talk a good game but seem less and less able to play one. That is not exactly a leadership position.
In Munich recently, the Prime Minister said that European nations need to increase defence spending further and faster. Amen to that, but where is the UK action to match the rhetoric? We need to argue for a much more coherent approach to defence-industrial capability within Europe as a whole. But if we are to convince, we must at the very least put our money where our mouth is.
Baroness Ashton of Upholland (Lab)
My Lords, I also thank the noble Lord, Lord Ricketts, for his measured, calm chairmanship of the European Affairs Committee, and I welcome his successor, the noble and gallant Lord, Lord Stirrup, whose military experience will, I am sure, be up to dealing with the lot of us.
I served in Brussels for six years, the only woman Britain ever sent as a commissioner. After being the first woman to take on the trade portfolio, I became the first High Representative for Foreign Affairs and Security Policy, responsible, among many other things, for leading the Iran nuclear talks, Europe’s response to the beginning of the Russian invasion of Ukraine and up to 10 military and civilian missions. I also set up the European External Action Service.
In my short contribution to this debate, I want to focus on collaboration on law enforcement and intelligence gathering. The committee was fortunate to hear from witnesses from the Crown Prosecution Service, the National Crime Agency and the National Police Chiefs’ Council. We asked them about Part 3 of the TCA covering law enforcement and judicial co-operation in criminal matters. This gives the UK unprecedented access compared with any other third country, but of course falls short of the access we would gain as a member state. Our interest in the committee was in how effective this has been and where more could be done to increase that effectiveness.
Our witnesses told us that aspects of their work were more challenging and cumbersome than before, within a system that is process-heavy. There was limited opportunity to automate, meaning that a lot of manual processes had to be deployed. I want to be clear: they were not suggesting that the system was broken, nor that they were unable to achieve what they needed to do, but it took longer, required more bureaucracy, relied on 27 bilateral relationships rather than one overarching one and was just a little bit harder. Their analysis was summed up by them in one word, “clunky”—a very diplomatic way of saying that it is harder now than it used to be.
One of the greatest practical losses was access to SIS II, the information-sharing system among not only EU member states but Norway, Iceland, Switzerland and Liechtenstein. This gives real-time information sharing from police databases. Until Brexit, it was used an estimated 600 million times a year by the UK. We can of course use Interpol red notices and information systems, but they are less efficient. We need to find ways to streamline and access information more easily and to share knowledge across the continent. Crime does not stop at borders, and criminals rely to an extent on the clunkiness and the gaps to pursue their activities. We were told that the real prize would be the signing of a multilateral agreement with EU member states that would enable alert sharing through the I-LEAP platform. While it would not restore information sharing in full, it would be much better.
We all know that the European arrest warrant was used after the attempted bombings after 7/7 claimed the lives of 52 people and injured more than 700. The suspect was taken in Rome and extradited to the UK using the European arrest warrant. The Minister at the time, Andy Burnham, told your Lordships’ committee in 2006 that this case
“very well illustrated the potential benefits … of the smooth functioning of this system”.
It is not and was not perfect, and other cases have not been as swiftly dealt with, but to quote the Lords report, it
“has a key role to play in the fight against terrorism and in bringing those accused of serious crime to justice”.
Our law enforcement witnesses have asked us to find ways to recognise the European arrest warrant as a valid request. As one of our witnesses said, give us
“the agility that organised crime exercises”.
We owe it to their professionalism and dedication to get this done, and soon.
Lord Tugendhat (Con)
My Lords, it is a pleasure to speak after the noble Baroness, whose service in Brussels was so distinguished and whose experience of the Commission is so much more recent than mine. I believe that this report has the potential to transform British politics. If the reset is successful, it will set us on a path to creating a new relationship with the EU that marks a break with the past and reflects the realities of the present, a relationship that has a life of its own and is not a road to something else, a relationship that will evolve in response to the needs and interests of the two parties, not in accordance with some predetermined and underlying plan. As it progresses, so its ambitions can increase, and the sooner the better.
This is vital and in the national interest. On the one hand, in a threatening and uncertain world, our defence and security interests are intimately bound up with those of our EU neighbours. On the other, the EU, one of the world’s three great trading blocs and the one nearest to us, is by far our largest trading partner. Yet there are those in this country who are so obsessed with the Brexit battles that instead of looking for a new beginning, they present any change in the situation as a plot to subvert the result of the Brexit referendum. We must move on from that attitude.
As I said in a debate a few weeks ago, I believe the policy being pursued by the Government, on which this report makes a number of helpful suggestions, is on the right path—by which I mean the pursuit of agreements with the EU on a range of specific and often technical issues that create a balance of tangible benefits for both sides. If the two sides can do that successfully, it will create a habit of co-operation on the basis of which the new relationship can be built. This report is a constructive contribution to that end; I just hope that the EU will be able to respond in the same spirit. Its own agenda is so full, and its recent record of reaching the internal consensus required to carry forward difficult ventures is not encouraging. The question is: can it, as well as we, rise to the challenge of our times? Will it shake the hand that the Government are extending?
Baroness Suttie (LD)
My Lords, I too congratulate the noble Lord, Lord Ricketts. It is a credit to his diplomatic chairing skills, as well as the excellent committee staff, that we were able in the end to produce this excellent and comprehensive report. The committee began its work on this inquiry a little over a year ago, when President Trump had just started his second term. This week, we have marked the fourth anniversary of the devastating war in Ukraine. It is through the prism of those two events that we have to view the reset of our relations with the European Union.
June this year will see the 10th anniversary of the EU referendum. It is now quite hard to find anyone, on either side of the argument, who believes that the process and outcomes following Brexit have been positive—not least because of the strain it has put on the unity of this country, perhaps most of all in Northern Ireland. Resetting our relationship with the EU is not just a good thing to do; it is increasingly a necessity—for our economy, our trade and our security.
Last year’s summit in May was welcome but so far has been longer on rhetoric than tangible outcomes. A commitment to an SPS agreement is welcome and could do much to boost trade. However, it would be helpful to know from the Minister whether the Government expect substantial progress to be made on that agreement in time for this year’s EU-UK summit.
As the noble Lord, Lord Ricketts, said, with an SPS agreement comes the issue of dynamic alignment. This raises important questions of parliamentary oversight and transparency and of how to feed into the EU’s policy development process at an earlier stage. It would be good to hear in the Minister’s closing remarks more details of the Government’s thinking in this regard. In particular, is it the intention to substantially increase the UK’s influencing capacity in Brussels? How, in practical terms, do the Government intend to ensure parliamentary oversight, particularly in the House of Commons, which no longer has a European affairs committee?
In the past the UK played a pivotal role in driving EU enlargement, which we always regarded as a process for positive change. Clearly, our influence on these matters is now much diminished, but what is the Government’s position on a fast-track approach to Ukrainian membership of the EU? Might such an approach also be in the UK’s best interest?
We on these Benches favour the closest possible relations with our European partners. The Government should be congratulated on removing some of the toxicity of the years immediately following Brexit, but I now hope that they can begin to match the positive words with concrete actions and courage.
Lord Dodds of Duncairn (DUP)
My Lords, I welcome the publication of this report, but the process in these negotiations is very uncertain and it remains to be seen whether the outcome will be in the best interests of the United Kingdom. The report suggests that the Government have made a good start but, for Northern Ireland, that assessment simply does not reflect reality, as the noble Baroness who has just spoken mentioned.
I am very much aware that the committee’s remit was not to discuss Northern Ireland, because there is a separate Northern Ireland Scrutiny Committee within your Lordships’ House which looks at that matter. However, in the context of this debate, it is important that we reflect the fact that we have the Windsor Framework/protocol, which impacts not just on Northern Ireland’s trade, politics and constitutional position but directly on the United Kingdom, because the Government have made it clear that they are preparing to align in order to avoid divergence with Northern Ireland in many respects. In our view, unless the Windsor Framework/protocol is fundamentally dealt with, there can be no genuine reset of relations with the UK.
Some might say, “Well, things are settled”, but as we were reminded by noble Lord, Lord Bew, earlier in Question Time, the situation in Northern Ireland is far from settled. When there comes a point when this issue of the Windsor Framework/protocol and our relationship with the EU remains unresolved and the Northern Ireland Assembly and other institutions are in peril, people in this House and in the other place will say, “How did we get to this place?”
The reality is that unless we deal with the issue of the Windsor Framework and its economic detriment for Northern Ireland, its constitutional detriment and the denial of democracy, we will inevitably reach that place. I think that at that point, this House will say that we need to take these matters much more seriously, because the Windsor Framework leaves large volumes of EU law in place over Northern Ireland. There is no democratic control. It preserves a customs border down the Irish Sea between one part of the United Kingdom and the other. It maintains a role for a foreign court in the internal trade of the United Kingdom and embeds regulatory divergence inside our own country, as the backstop proposals would have done as well. This is not normal or sustainable in any modern democracy and it is not compatible with equal citizenship within the United Kingdom.
Businesses, as the Federation of Small Businesses’ report recently said, face massive bureaucracy and compliance costs. The Trader Support Service is already costing half a billion pounds of public money, just to help traders negotiate this labyrinthine process. We have to accept that this is not what sovereignty in a modern country looks like; it is what colonialism looks like. The principle of consent that lies at the heart of the Northern Ireland political settlement is being devastatingly eroded day by day. Legal changes imposed without that consent have altered Northern Ireland’s place within the UK internal market.
When we discuss the issues of the UK-EU relationship, we must not turn our eyes away from the fundamental problem that faces us in this United Kingdom, which is the democratic denial of consent to British citizens in this country in the 21st century. This needs to be continually highlighted because it is going to lead to real problems—not just for Northern Ireland but for this whole country.
Lord Howell of Guildford (Con)
My Lords, I am very glad that the title of the excellent report we are discussing refers to a “reset”. Indeed, there seems general agreement in all the documents, including the Government’s response, that it is a reset, which we can define very widely. It is certainly “unfinished business” and certainly raises issues, as the noble Lord, Lord Ricketts, rightly said, of wider geopolitical significance.
Some of us have been at this issue for, in my case, over half a century, long before we actually joined the European Union, or European Community as it was then called—or was it the European Economic Community or Common Market? I cannot remember; there have been so many changes. It has dominated the lives of many of us in and out of politics and public affairs for well more than half a century, before the treaty of Rome. To try to add anything in four minutes is a bit of an insult to the wisdom of this report and to the proverbial skills of the noble Lord, Lord Ricketts. I suppose that, until we can change this extraordinary Lords procedure, which I think we should somehow try a bit harder to do, we are stuck with it.
What are the evolving changes? Obviously, everyone is pointing out that the whole show—the whole European Union—like everyone else, is in a new world context and operating under new pressures. It is very different from the body that we left when we left the customs union and Common Market arrangements some years ago.
The new factors include, first, security, as has already been pointed out in the excellent opening speeches, and the new problems of changing security. People talk about what will happen with Ukraine and whether we should do this, that or the other, but there is no outcome in Ukraine in prospect. Meanwhile, Russia is moving to a new situation and beginning to raise agitations and undertake more hybrid activities with the Baltic states, which are our friends. They have not been given nearly enough attention in our view of our partners in the sort of Europe that should lie ahead. It is going to come anyway; it is no use saying that we are just an applicant to rejoin certain aspects, as it were, without the cards. We have enormous cards. We belong with the middle nations that Mr Carney talked about the other day. We have immense pressures to mobilise, if we use them carefully. The Baltic states are our friends and Russia is busily working to disturb them—not by military invasion, but by all kinds of other activities—and cause additional problems, even though they may not see any more than we do to the Ukraine situation.
Secondly, it has also been raised that defence and warfare have totally changed, requiring completely different politics from what we discussed 10 years ago. As many of us predicted 30 years ago, drones have transformed the system and nature of war, and the disposition of trenches and troops. The use of AI is coming along, which will transform it even further.
Thirdly, the whole of Europe, including the EU, is underwater on debt at a level and scale which has never been seen before in history. The euro is weakening. We must be very careful not to be involved in all this before we understand what is really happening.
Finally, we must get ahead with rebuilding the global governance which we set up in 1945 from the rubble of the Second World War. It is now out of date, out of time and in great trouble. It requires a new architecture to provide us with a shell of protection—the shield under which we can reform ourselves. Britain played a major part in 1945. I cannot see that major part being played in 2026.
The Duke of Wellington (CB)
My Lords, I pay tribute to the noble Lord, Lord Ricketts, who has chaired the European Affairs Committee for the past three years. He skilfully led us to a consensus on most occasions, and all members of the committee are grateful to him.
The Government were elected on a manifesto to reset this country’s relationship with the European Union, and I very much support that objective. Departure from the EU has affected the lives of so many people who wish to trade with, travel to, or work or study in the EU. There is no doubt that it is in the national interest to improve our relations with the European Union. I commend the work of Nick Thomas-Symonds in the Cabinet Office, who has responsibility in the Government. He has twice come to the committee with Stephen Doughty in the Foreign Office, thus demonstrating close co-operation between the two departments on this matter.
I will comment, in the very brief time allowed, on just two elements of the negotiations. The first is the need to reach a new sanitary and phytosanitary agreement. For food producers—farmers and fishermen—and for food processors, this is important and urgent. Fresh, perishable food cannot wait for 48 hours while checks and paperwork are completed. Food processors of non-perishable products can be held up in customs for weeks. Importers in the EU will, very understandably, eventually prefer to buy from elsewhere in the EU or from countries that are not subject to the same regulations as we are. It is disappointing that even the Minister does not expect a new SPS agreement to be operational until the second half of 2027. I simply urge the Minister to do everything possible to hasten this agreement, which is so important to the food and drinks industries.
The second element is the youth experience scheme. For young people to travel for study or work experience is beneficial both for the individual and for this country. This works both ways. The fact that so many foreigners who have gone on to become leaders in business, politics, academia or the military have spent part of their education or youth in this country contributes enormously to the soft power of the United Kingdom. I therefore congratulate the Government on having as an important policy objective the reset and improvement of our relations with the EU. They have already achieved a considerable change in approach in Brussels and a willingness there to negotiate. I am sure that they will have much public support to pursue this policy with vigour and imagination.
Lord Redwood (Con)
I welcome the Government’s emphasis on growth and I look forward to future debates when we can exchange positive ideas on how to get more people into work, have better-paid jobs and extend investment in these islands. However, I must say to the Government that the measures currently being discussed, often in secret without proper text, are very worrying. They will either add nothing at all to our growth rate or, worse still, they will subtract from it and do damage. Look at what will happen to our fishing industry now that, for many more years, so much of the catch will be offered to continental super-trawlers and other vessels. This has delayed the rebuilding of the British fishing industry and means that we do not get all the inward investment and domestic investment in fish processing and food processing that would follow from having more catch landed in the United Kingdom.
Or look at the idea that we should join the carbon taxes and emissions scheme and the electricity scheme of the European Union. It would be another ratcheting up of the costs of electricity and energy in this country. Their carbon taxes are higher even than our high ones. Are not our carbon taxes doing enough damage already? Does the Front Bench opposite not see the factories closing and the plants being destroyed by ultra-high energy prices? Yet they want to volunteer for more of the same and take it out of our control.
If the Government decide to offer large new sums of money to the European Union, as they usually seem to when they visit Brussels, it will all be borrowed money. We are in a time of stress in our public finances; we are not looking for new ways to spend money. The more they spend giving it to Brussels, the more it will be resented by many people here in the United Kingdom and the more it will mean that those high levels of borrowing keep our interest rates above those of our competitors and stifle private investment and private growth, which is what we so clearly need.
We do not need to look forward, or even to forecast, to know what will happen with ever closer alignment to the European Union, because we have lived through it. In the 20 years that elapsed before we joined the European Economic Community, our economy grew at 3.4% per year: a very good rate of growth. In the 20 years of our early membership when we were a member of the European customs union, until the full single market was declared in 1992, our growth rate slumped to 1.76%. Of course it did, because we took all the tariffs off the things that the European continent was good at and just watched as it laid waste to so much of our industry, with all those closures, and we did not get the market opening on the services that drive the success of our economy. So of course that is what happened.
If you then roll the camera forward to our years in the single market, from 1992 to 2020, our growth rate fell again, even compared with the poor performance when we were just in the customs union. Again, of course it did, because of the anti-innovation, high-cost spirit of so many of those regulations. The last thing we need for a growth strategy now is more laws made in Europe. We know that they do not work; we know that they slow us down. Why do we want to link to the part of the world that is growing so slowly, when our great friends and allies in the United States of America are growing at twice the pace of the European Union? We seem to be negative about them and positive about joining the slow lane. We should not want to join the slow lane. This set of negotiations is bad for Britain and bad for growth.
Baroness Hayter of Kentish Town (Lab)
My Lords, it was a pleasure to serve under the chairmanship of the noble Lord, Lord Ricketts, who had a difficult task indeed. His choice of title is apposite, first, because resetting our relationship is a continual process, not a single act, so it is rightly unfinished business, but, secondly, because he had to preside over some unfinished disagreements as to whether Brexit was good or bad. A quick look at the committee’s membership—with the noble Lord, Lord Frost, and myself sitting side by side—rather describes the task that faced him, as he has referenced.
As a result, the report is perhaps a little more factual than prescriptive, and we were unable to fully welcome the Government’s move to rebuild trust and to boost trade with the EU and its advances over defence, Ukraine and the USA. Labour’s reset should be judged against the 2024 manifesto that sought to
“deepen ties with our European friends, neighbours and allies”,
and to make the UK
“a leading nation in Europe… with an improved… relationship with our European partners”
without crossing Labour’s red lines.
The May 2025 summit witnessed a new strategic partnership alongside an agenda for greater co-operation with the EU in relation to safety, security and economic prosperity. When we visited Brussels, we saw how the atmospherics had already changed. We were no longer hearing about “us” and “you”, but much more about “we”: about a common endeavour based on trust and a joint approach to work on major challenges. And challenges there are, with Ukraine, or rather Russia, being perhaps the greatest.
Besides that, however, we have the impulsive US presidency, especially its impact on the rules-based trading framework, which also necessitates a European response that goes beyond the EU, to encompass both us and the EEA, with our shared approach to the rule of law and respect for treaties. The security and defence partnership was significant in itself, but also for the potential for closer industrial and strategic working. It is disappointing that SAFE has not yet progressed; I hope that it may, and I endorse every word of the committee’s new chair, the noble and gallant Lord, Lord Stirrup. Security is also about organised crime, illegal migration, people trafficking and threats to our borders. We hope, therefore, for further intelligence and data sharing, and closer policing integration, as outlined by my noble friend Lady Ashton.
Much as I hated Brexit, I knew that we had to make it work via a closer, trusting and evolving relationship with the 27. The Government’s reset agenda, and their open and positive approach to the EU, form the right approach for a mutually beneficial relationship, as the noble Lord, Lord Tugendhat, the noble Duke, the Duke of Wellington, and others have stressed. Oddly, both Putin and Trump have made this more likely by forcing us to work together on Ukraine and in response to the USA’s new politics. I believe that we are in a better position with the EU than we were in July 2024, so we should welcome the start of this reset.
Lord Frost (Non-Afl)
My Lords, as I follow the noble Baroness, Lady Hayter, noble Lords will get an encapsulation of the difficulties that the noble Lord, Lord Ricketts, had in chairing our committee. He had a very difficult task, and the disagreements were very strong. As he noted, I could not endorse the report in the end, and I summarised what I felt it ought to have said in Appendix 9, kindly supported by the noble Lord, Lord Jackson, and the noble Baroness, Lady Nicholson.
I said in Appendix 9 that the reset was “somewhat unsatisfactory” and that I did not believe
“that the Government has made the best possible use of its negotiating hand”.
That is the least that one can say—and now that I am not using committee language I think I can say that the outcomes were so poor that even poor negotiating cannot explain the point we have got to; there is more going on.
For one thing, I do not think that the Government are really being honest with us about what they are trying to do. On the one hand, we hear about the red lines on the single market and customs union; on the other hand, the Prime Minister says that we have to keep moving towards a closer relationship. His Ministers muse about joining the customs union, and the Business Secretary said yesterday that being aligned is “where the magic happens”.
The truth is that we know that everybody on the Labour Benches opposite really wants to be back in the EU or in the single market/customs union simulacrum of that. The only thing holding them back is that they won an election on promising not to, and that presents them with a problem. They know that they cannot get back in one go; they know that it will take time and that the solution is to approach it slowly, bit by bit, with one thing leading to another—the Monnet method in a different context. That is what we are seeing.
First, we are joining bits of the single market—on SPS, ETS and electricity—but it is claimed that we are not joining the single market. We have joined bits of customs, such as the CBAM—the carbon border adjustment mechanism—which will expand out of our control. We have started opening migration doors again, with the work experience scheme, and we start paying for it all—Erasmus, the nebulous future Bill on single market access, SAFE and much more. This direction of travel is the only way to understand what otherwise one might think were quite amateur night negotiating tactics.
The truth is that the Government do not care about concessions—they care only about the destination. They just want to get close to the EU, and they are prepared to do so on any terms that are available. How else are we supposed to understand why they have agreed subordination—again—of this Parliament to EU laws as the only way to improve food, agriculture and electricity trading? We know that it did not have to be done that way—they have chosen to do it that way. How else are we to understand the shameful giveaway on fisheries for nothing more than a statement communiqué? How else are we to understand the failure to get anything on matters of interest to Britain in return for these concessions other than the much-vaunted access to e-gates, barely touched on in our committee report, which the EU regards with such contempt that it has not even bothered to deliver it—the one thing that came out of this nine months later?
This approach is dangerous. The truth is that we are not going to succeed as a country if, outside the EU, we just do what the EU does. Yet hitching us to EU policy regimes is going to leave us in that situation. I am sorry to say that the committee’s report does not come close to acknowledging these issues, and that is why I cannot support it. What it should have said is quite simple: this is a dangerous reset; it is being done in a dangerous way; and this country’s independence is not safe in this Government’s hands.
Baroness Coffey (Con)
My Lords, it is nearly a decade since 23 June 2016, when I voted to remain, and campaigned to stay in the European Union, partly because I did not want to spend the next 10 years of my parliamentary career having to deal with all the issues that came about as a consequence of Brexit. But I am a democrat; I still am. That is why, when I was appointed by my noble friend Lady May of Maidenhead to go into Defra, where I worked for three years, we continued to go to the European Council and to respect and interact with all the different regulations that were going through—but also starting to plan how best to leave.
There is no doubt that I would have agreed with the summary statement put out in Appendix 9, but I appreciate that the committee was not unanimous in its report and I certainly did not support the alternative summary. It is important to try to get a sense from the Government—having had these manifesto commitments to not go back into the single market or the customs union and not have freedom of movement—as to why they think that having the SPS does not drive a coach and horses through the single market.
One of the constant issues in the early years of negotiation was that we could not be a rule-taker if we were not a rule-maker. That continues to be the real problem that is being put forward by the Government. I am conscious already that the only reform that they have approved as a consequence of Brexit is to put VAT on school fees, which they would not have been allowed to do if we were still part of the European Union.
It comes back to some of the differences, where often the UK was not necessarily a sole voice but a leading voice in trying to address quite a lot of not just environmental regulations but chemical regulations, all these different ones, to which we brought our sense of our large economy—this was often how so much was negotiated. For heaven’s sake, the fishing agreements were negotiated with countries that had no fish being taken out of the sea. But that was done because they could use it as leverage on many other issues. I appreciate that we have a former Permanent Representative to the European Union in the Chamber. I am looking at the noble Lord, Lord Barrow, who went to Brussels as one of our representatives after the referendum result.
One of the things that I have found frustrating in this whole debate, not just on this report but more generally, is the continued gaslighting. We need to be honest with the British public. The Labour Party has been driving a coach around Manchester ahead of the by-election today, repeating the lie that £350 million per week has not gone into the NHS. It has. It happened when my noble friend Lady May of Maidenhead was Prime Minister. We put the money in then. It is that sort of approach, the rewriting of history, that is one of the reasons why this will continue to be a thorn in the challenge of trying to do what is best for Britain.
That, of course, is to have a very strong relationship with the European Union. But since then, we have joined the CPTPP and other free trade agreements. We should be taking more advantage. Frankly, if it had not been for Covid, in many ways, we would have got on with a lot of the freedoms. But it was due to Covid and not being part of the European Union that we were the first country in the world to be able to authorise a vaccine and deploy it successfully.
I am afraid that this report will continue to be somewhat controversial and quite divisive—not necessarily between political parties. I appreciate that many of my noble friends would love to rejoin the European Union tomorrow. There is an element of reminding ourselves, as part of this reset relationship, that we would not go back in on the same terms that we left. To try to pretend otherwise, I am afraid, is not displaying the candour which this debate deserves.
Lord Jay of Ewelme (CB)
My Lords, this is a full and comprehensive report from the European Affairs Committee, although perhaps controversial, as the noble Baroness has just said. I might also say that the noble Lord, Lord Frost, and I worked amicably together in the Foreign Office many years ago, and it is good to be speaking after him today.
What I want to do in this debate today is to say just a few words about defence. Let me start by saying that the UK’s relationship with the US on defence and on security is exceptionally close and should remain so. Our submarine nuclear deterrent is unsustainable without US support. Much of our military equipment is made in the US and is dependent on American spare parts, and we have a close and important intelligence relationship too. For the last 50 years and more, that relationship has gone hand in glove with NATO, and let us hope that that continues, not least, as others have said already, in supporting Ukraine. But NATO depends heavily on the US and, at least at present, the US is, alas, an uncertain ally, so a closer security and defence relationship with the EU makes sense, and the EU-UK Security and Defence Partnership is a good start.
However, the Government’s response to the committee’s excellent report describes the security and defence partnership as
“a structured framework for cooperation”.
Structured frameworks are necessary, but it is what goes into them that matters. Let us hope that flexibility on both sides, as suggested perhaps in Munich recently, leads to a sensible agreement, including on SAFE, on which, like the noble Lord Ricketts, I hope the Minister can bring us up to date.
Let us hope, too, that this developing UK-EU relationship on security and defence can work closely and effectively with NATO. We hope that that is the ideal, but we cannot be sure. NATO is facing uncertainty, as I said, and the EU is essentially an economic construct with nimbleness not exactly its watchword—on that point I perhaps agree with the noble Lord, Lord Redwood; I do not agree with him on many things, but I probably agree with him on that. As the nature of defence changes, as the noble and gallant Lord, Lord Stirrup, mentioned, we need a more informal, nimbler, less bureaucratic association, a coalition of the willing. That is developing fast, with the UK, France and Germany at its core and Poland, the Baltic states and, outside the EU, Canada working with it too. But all this needs money—money that is needed for our security. The Prime Minister has promised it. I hope that the Minister can confirm that that promise is not a chimera, a bubble without substance, but a firm commitment to provide men and up-to-date equipment soon.
Lord Jackson of Peterborough (Con)
My Lords, this is an important report, not least because we are the only committee with the bespoke role of looking at the relationships between the United Kingdom and the EU. There was mainly consensus in this report, notwithstanding appendix 9, as my noble friend Lord Frost said, which contains the alternative summary. The consensus was around the Government’s failure to outline a clear and comprehensive negotiating mandate, perhaps by way of a White Paper, which obviously undermined the ability of the committee and the House more widely to exercise proper scrutiny and oversight.
There was a reason for having an alternative summary, and it was because in essence some of us believed that the Government’s policy, even measured by their own measures, was incoherent, insubstantial and deliberately obfuscatory. Kind words butter no parsnips. The Government failed to leverage strong negotiating hands in, say, defence, security and fishing, despite the UK being number two in the world for soft power and being pre-eminent in defence, for instance. They unilaterally surrendered those advantages with very little to show for it, such as on the fisheries deal. I have to say, in all fairness and balance, that I think the EU made a strategic miscalculation over SAFE, and hopefully those negotiations will be more fruitful.
In areas such as mutual recognition of professional qualifications and touring artists, they have made little or no progress despite being in the manifesto. They have capitulated on key areas to support the EU strategic objectives in policy areas absent from the manifesto, such as Erasmus+, the 12-year fisheries deal and the electricity trading scheme. Most egregious is a commitment to improving the SPS regime, which is of course laudable in reducing friction at the border, that has morphed into a full-blown commitment to dynamic alignment which is likely to cost, according to the Growth Commission in its report published this week, £15 billion to the economy. Currently, it is a system and regime that costs the EU itself €39 billion a year. The Government have not themselves yet produced any information on legislation, costings, the likely commitment of cohesion funds or an impact assessment. In a number of areas, the Government’s proposals are opaque, including, for instance, those on economic impact and carve-outs. A good example is gene editing, which the National Farmers’ Union has pressed for over the last few months. We are no nearer to understanding the global impact on UK sovereignty, the nebulous concept of “decision-shaping”, the status of governance in respect of dispute resolution and the likely role of the European Court of Justice.
Finally, can the Minister say what legal form the new agreements will take? What commitment will the Government make to parliamentary sovereignty and oversight of the new arrangements? What carve-outs will be sought in the new dynamic alignment regime? What are the likely costs to be borne in order to participate in SAFE and the new partial membership of the single market? What stance will the Government take on the new trade and co-operation review due this year?
Our committee will be pressing the Government on all these issues and will hold them to their commitment to their red lines, not least in our forthcoming inquiry into dynamic alignment. They will not have a free pass to subvert Brexit and take us back into the European Union by subterfuge and sleight of hand.
Lord Liddle (Lab)
My Lords, I join in the congratulations to the noble Lord, Lord Ricketts, on the excellent report he has produced, which is exactly what I would expect of a committee which he chaired. However, our debate today has shown the difficulties he had in producing a consensus, because there are clearly many Members opposite who do not want to move beyond the Brexit debate or see a closer relationship with our friends and allies in the European Union. They seem completely oblivious to the economic cost of what Brexit has brought—virtually every estimate is at least 4% of GDP—and the fact that the public now believes overwhelmingly that Brexit was a mistake.
We need this reset of the relationship and to get closer. I will make three brief points about what I think is necessary if it is going to succeed. First, all the issues to do with a closer relationship with Europe are extremely complex. What you need is a top Whitehall team in every department working on these issues and, at the centre of government, someone bringing all these people together to hammer out differences between departments, and a very strong permanent representation in Brussels. I believe these things have weakened since Brexit. I experienced it for seven and a half years when I was in Downing Street and saw how effective it was, but we must rebuild these institutional capacities if we are going to make a success of the relationship.
Secondly, we must be willing, if we want much greater access to the single market, to make meaningful contributions financially. I am not talking about the nonsense of the €7 billion, which came up in the ridiculous arguments about SAFE, but we have to be prepared to pay more to the budget than simply administrative costs. The French, Germans, Dutch, Swedes and others are significant net contributors to the EU budget. The reason why it is necessary is that in order to get the weaker members of the union to co-operate in the single market there has to be some kind of measure of cohesion, and we will have to pay into that.
Thirdly, the Government have got to make the case to the country much more strongly for why we need to get closer to Europe. It is necessary to convince our European partners of our seriousness. Making the case at home will help convince them of our seriousness. At the same time, for us as the Labour Party, it will help unite at home the opposition to the far-right populism that is such a danger to this whole venture.
In a way, the 2016 arguments for Europe are completely redundant. The world has changed enormously in the last decade. Economically, we have Trump tariffs, the rise of China and a world of greater instability. We need to be part of the EU.
Lord Liddle (Lab)
I am finishing—and it is an advisory speaking time.
On defence, we face huge challenges. The transatlantic alliance now hangs by a very insecure thread, in my view. We have to be much closer to our European allies and partners and we have to get closer to Europe. We need to explain why to the British public, in economic terms, to give us greater security against China and the United States’ tariffs, and in defence terms.
Lord Barrow (CB)
My Lords, I will seek to be quick, not just because we were advised to be so but because I find myself in former permanent representative corner, and going first in this company is a bit dangerous.
I have a few quick points, not least as a new member of the European Affairs Committee, under the martial leadership of the noble and gallant Lord, Lord Stirrup, with whose remarks I fully associate myself. I extend my thanks to the noble Lord, Lord Ricketts, for the report we have in front of us, including the clear statement that the reset is a process, not an event. When I was in Brussels talking to those missions, which were third-country missions at that time, all of them said that all meaningful third-country relationships with the EU are unfinished business, in perpetuity. In that context, I join the noble Baroness, Lady Suttie, in asking the Government what their assessment is of the possibility of Ukraine’s membership of the EU and the consequences for UK interests of such a move.
I welcome the breadth of the agenda for the UK and the EU. This demonstrates a strength of ambition and good relations at the top on both sides. However, as many in this Chamber know, and as we saw with SAFE, while that is necessary at the top it is not always sufficient. Delivery will be difficult. Although we have had the welcome news on the Gibraltar negotiations, which I very much commend, that took many years—maybe that was the fault of some of us negotiating it—and we need more rapid progress.
I would therefore like the Minister to share her assessment of progress ahead of the summit in relation to two areas. The first is law enforcement co-operation, and I join everyone, including the noble Baroness, Lady Ashton, who highlighted that. It was one of the most frustrating areas of the negotiations in which I took part. There was clear, direct and mutual benefit for citizens in the UK and the EU, but we were unable to do all that I felt we could do. Can the Minister update us on possible progress, including on existing measures such as SIS II and Prüm—which the noble Lord, Lord Ricketts, mentioned—or any new innovations?
The second area on which I would welcome an update is defence co-operation. What happened with SAFE was regrettable, although saying no in negotiations is sometimes as necessary, important and valuable as saying yes. I politely suggest to some of my friends in Brussels that, if your position leads to the noble Lord, Lord Ricketts, leading the charge, with trenchant criticism in the media, something has gone wrong with your position. However, there is still scope for co-operation in the security area, as the noble Lord, Lord Jay, advocated. As the report notes, that includes the European Defence Agency, perhaps the Ukraine loan scheme, and even SAFE or a potential SAFE II. However, like the report, I am more sceptical about UK participation in CSDP missions under current third country rules.
As many noble Lords have said, all of this is part of a much bigger question: how will we, across Europe, respond to the present evident security challenge and what will the UK role be in that response? As was made obvious at the Munich Security Conference, Europe wants to do more, the US wants Europe to do more and Ukraine chides us for not doing more—but how is that response to be delivered? The report rightly notes consensus on NATO as the cornerstone of our defence, but are we to deliver that response through NATO mechanisms, alongside a patchwork including the coalition of the willing and maybe JEF, EU-UK co-operation and the welcome intensified E3 co-operation?
Alternatively, as others have said, should there be some new security architecture as a vehicle to galvanise and focus efforts? For instance, Carl Bildt recently advocated reviving the WEU—I am not sure whether that would be the answer that would commend itself, but the question still needs answering. I do not ask the Minister to answer it today, but we need an answer soon, not least if the UK is to play the role that we want to play in this. Can she seek to answer that question urgently, not least because this week we mark the fourth anniversary of the war in Ukraine and the terrible suffering that continues there?
Lord Taylor of Warwick (Non-Afl)
My Lords, I thank the noble Lord, Lord Ricketts, for introducing this important debate. My thanks also go to the European Affairs Committee for producing such a comprehensive report.
For more than 40 years, the UK was part of the European Union. The famous soul music song “We Are Family” was cited by some to describe that relationship—but wedlock eventually became padlock. As a result of Brexit, the British people decided to adopt another tune. This could best be described by the rock supergroup Queen’s anthem, “I Want to Break Free”.
As the report points out, Brexit is a process, not an event. It is in everyone’s interest that progress is made. About 45% of UK exports go to the EU, and 53% of our imports are from the EU. I had the privilege of speaking at an Inter-Parliamentary Union event in Geneva some years ago, where I raised the issue of tariffs. I described tariffs as a way to promote trade or a weapon to prevent trade. It is ironic that tariffs are once again a worldwide topical issue. It is important that the EU and the UK strive to maintain a zero-tariff and zero-quota relationship.
One of the lessons of history is that we do not learn lessons from history. It is interesting that, throughout the Bible, there is a theme of one empire after another eventually overreaching itself and gradually collapsing. In the Old Testament, there were the Egyptians, followed by the Assyrians, the Babylonians and, finally, the Persian Empire. In the New Testament, there was the powerful and mighty Roman Empire. All these empires eventually fell because national independence proved more durable than empire.
I have some questions for the Minister, arising from the committee’s report. First, why did the Government not produce a White Paper setting out their objectives concerning resetting our relationship with the EU? Surely, that would have helped the committee’s task of holding the Government to account. As the committee noted:
“We were scrutinising a ‘moving target’ throughout, and have continued to do so as we prepared this report”.
I am a vice-chairman of the All-Party Parliamentary Group on Artificial Intelligence. The report alludes to data protection and cyber security issues. AI is changing all aspects of the modern world. What progress are the Government making with the EU concerning AI-related issues, including data protection, cyber security and AI regulation?
The first duty of any Government is to protect their people. What progress are the Government making with the EU concerning defence-related issues and NATO? Young people represent our future. What progress are the Government making on rejoining the European Erasmus programme, which provides valuable education and training? Are we still on course to rejoin by next year? What date has been set for the next UK-EU summit? When the Cabinet Minister, Nick Thomas-Symonds, gave evidence to the committee last year, he said that it would be “sometime in 2026”, but when will that summit be?
I believe that resetting a positive relationship with the EU can work; but if we fail to plan, we plan to fail. There are those who spread fear that this reset will never work, but fear is that darkroom where only negatives are developed. We must not be like the paranoid patient who visits his doctor, to be told, “Please listen, you’ve got hypochondria”, and who replies, “Oh no, not that as well”. It is said that every story has “a beginning, a muddle and an end”. So it is with this Brexit process. However, when fear knocks at the door, let us answer it with faith.
Baroness Lawlor (Con)
My Lords, the Government’s EU trade reset has failed to achieve its three main trade objectives, on which I will focus. There has been no agreement on the mutual recognition of professional qualifications and no end to the restrictions on UK touring artists, about which we have heard more today. Also, instead of a veterinary agreement, which the Government announced in their manifesto and trailed publicly for two years, they have agreed to reimpose EU SPS law on agri-foods, with dynamic regulatory alignment for the agri-food sector and a role for the Court of Justice of the European Union. The manifesto pledge not to return to the EU, the single market or the customs union has thus been broken.
Moreover, as we have heard today, the Government have caved in to the EU’s demands for long-term fishing access to UK waters and promise to work towards a youth mobility scheme, now called a youth experience scheme. Up to 70 million EU youths could seek to avail themselves of this scheme.
The report follows the Government’s line in seeing the reset as an emerging process—its title is Unfinished Business. There is no assessment of the costs to the UK economy of dynamic alignment for agri-foods, although an assessment from the Growth Commission this week, made by 13 independent economists, suggested that the hit would be £15 billion. Nor is there any analysis of the economic and trade impact of returning to EU regulatory alignment on trade and the economy or on our relationships with other trading partners. We now have, apart from the EU, 40 trade agreements with 70 trading partners.
The SPS sign-up to regulatory alignment will bring legal challenges, because we have changed the basis for agri-foods in this country and the law on them. There is nothing here to consider the repercussions on Britain’s democracy of the breach of a manifesto pledge, at a time when confidence with the established order and politicians is at an all-time low, right across Europe and in this country.
The alternative summary by the noble Lord, Lord Frost, and other co-signatories highlights two failures: the Government’s failure to make the best possible use of their negotiating hand, and the committee’s failure to do its duty to scrutinise and assess that policy and make clear the reality of the reset. The presence of this alternative summary highlights the problems the consensus approach creates for scrutiny. It suggests what I, as a member of the committee from the outset of its investigation, came to consider: that if we had a diversity of views from members and from witnesses, and we tolerated it, we might produce a more useful and critical report. That is our job in the Select Committee: to scrutinise on behalf of Parliament and the taxpayer what the Government are doing in legislation.
Lord Kerr of Kinlochard (CB)
It is an excellent report and very well presented, but I wonder why the negotiation has to be so transactional, so timid and so slow. What could be done to speed it up? I suspect that one of the reasons is that the Commission negotiators are the same guys who were involved in the Brexit negotiation, and it may be that our current negotiators suffer for the sins of their predecessors.
We also suffer from a degree of timidity in what we are putting forward, and the other side suffers from a bit of excessive ambition. I do not think we should be paying contributions into the EU budget, that it is right to try to charge us €10 billion to join SAFE, or that it is right to try to charge us for integration into the EU electricity market. These things are a common benefit—they suit both sides—so why should we pay?
What should we do to speed things up? A common Cross-Bench speech is emerging today, because I think we have to play the security card—in fact, we need to play it anyway. I would like to see the negotiations become more top down, and I would like to look at the big picture. The prophet there was Mark Carney. We are indeed seeing a serious transatlantic rupture. Of course, we must retain as much as we possibly can of the NATO architecture, but within it we need to build new, all-European structures and capabilities. I agree with the noble Lord, Lord Ricketts, that the coalition of the willing is the place to start, but we need an E3 blueprint. Why E3? Because it exists, because we work well with the French—our military works well with the French—and because German defence spending has taken off and is set to surpass ours and that of the French put together.
It was another Healey, Denis Healey, working with Helmut Schmidt, who created the NATO Eurogroup and developed the NATO Nuclear Planning Group. The need for big-picture thinking about European defence is much greater now than it was then. Now, economic security is the EU’s business—energy security, not military security—but a British initiative in the military sphere leading to an E3 security blueprint could transform the atmosphere in the EU Council, with two provisos. First, there must be no direct linkage, explicit or implicit—we must not repeat Prime Minister May’s mistake—and, secondly, that is provided we back our words with action.
The noble and gallant Lord, Lord Stirrup, was absolutely right. Our friends—just like our foes, I fear—know that our uniform numbers and stockpiles are too low and our forces hollowed out. We talk a good game but we are living on history and reputation. We are not investing enough. We are where the Poles were when Putin invaded Ukraine. Four years ago, Poland was spending 2.2% of GDP on defence. Today it is 4.8% and rising, because the Poles know that Putin would not stop at Ukraine. If our financial commitment rose to match theirs and the Germans’, and if the Healeys and Schmidts of today could produce an E3 plan, our friends in Brussels would be more likely to override the transactional technicians and identify common interests. Anyway, upping our defence spending is what we need to do, because we are at a 1938 moment and need to respond, with or without Trump, to the Putin challenge. That is the big picture.
Lord Empey (UUP)
My Lords, in his opening remarks, the noble Lord, Lord Ricketts, pointed out that the European Affairs Committee is the only committee in Parliament looking in detail at these matters. Given the direction of travel, the concept of a reset and the manifesto commitments made, while of course it is entirely its own business, it is extraordinary that the other place does not have a committee specifically looking at these matters. It is entirely a matter for the other place, but it seems odd to me.
Reset is, to some extent, in the eye of the beholder. It can mean sensible and practical co-operation or, for some, on the other hand, as we have seen from some of the contributions today, another slidy way of getting back into the European Union in one form or another. We held a referendum in 2016 and, irrespective of what side of the argument one was on—the noble Lord, Lord Murphy, will know from his experience that people like me were worried about the direction of travel and what would happen, particularly in Northern Ireland, where we share a border with an EU country—we went to the Prime Minister of the day to establish the negotiating position and came away clearly of the view that no such position existed. Consequently, we have ended up in the constitutional and economic sludge through which we are wading as a result of the arrangements that we are now working in. The point I am making is that if a Government or party feel that they want to take a different trajectory and go back into the European Union, they should have the guts to stand up and say so, because we are undermining trust, and that is a mistake.
The SPS has been raised on a number of occasions. To me and other colleagues, in effect we have been in this position for some years now. People do not seem to recognise the implications, because it means that people in Brussels will be deciding what regulations to determine how we do our business. That is the inevitable consequence. We will be a rule-taker with no meaningful influence and not a decision-maker. Let us be honest with each other: that is what this means.
From a local perspective in Northern Ireland, as I said, you join us in the sludge because we will then all be in the same boat. Under no circumstances will we have anybody effectively taking a decision for us in this or the other place. It will be taken away from us elsewhere. If that is what we want, we should say so. But bear in mind that there is no way of avoiding the fact that parliamentary sovereignty is going to be transferred in significant quantities to the European Union.
The fishing has been mentioned, and we have the tobacco and vape things, on which growing numbers of European countries are likely to challenge our decisions. On the referendum, I know that situations have changed—we can all see that—but we had a referendum in Scotland, and a decision was taken to remain within the UK. If we say that in 10 years we can avoid the decision we took on the European Union, the nationalists will say the same thing for the independence referendum, so we are digging a hole for ourselves.
Lord Murphy of Torfaen (Lab)
My Lords, I very much welcome the report of the committee, very ably introduced by the noble Lord, Lord Ricketts. I particularly welcome the aspects on Erasmus, electricity and, of course, defence and security.
I want to make some reference in my brief remarks—to follow the noble Lords, Lord Empey and Lord Dodds—to Northern Ireland, and to remind your Lordships’ House that the protocol developed after Brexit was very badly negotiated. It led eventually to the complete destruction of the Assembly and the Executive in Northern Ireland because of the differences of views. After that, of course, it was succeeded by the Windsor Framework, which was definitely an improvement, but it still did not satisfy everybody in Northern Ireland because it is very difficult, constitutionally, for unionism to accept what the noble Lord, Lord Empey, has just referred to. Nationalists, however, took a different view; indeed, there was a majority in favour of staying in the European Union when the referendum was held. However, the difficulties have to be addressed.
Last year the Government asked me to review the Windsor Framework, which I did: I came up with 16 or 17 recommendations to try to improve its working, because there is no doubt that the burdens placed on Northern Ireland businesses, large, medium and small, are huge. Those recommendations included one regarding SPS. I know the constitutional question is different from the practical issues I was trying to address, and that is perhaps for another time, important as that constitutional issue is. However, businesses said to me that they regarded the SPS as extremely important in trying to ensure that the burdens they currently face would be removed.
My plea to the Government and my noble friend the Minister is that they act speedily on the recommendations I made, which have all been accepted by the Government. I hope, too, that the European Union will be speedy in the negotiations. I have enormous confidence in my right honourable friend the Paymaster-General, Nick Thomas-Symonds, not least because he succeeded me as the Member of Parliament for Torfaen.
Lord Hannay of Chiswick (CB)
My Lords, the report we are debating today, so ably introduced by my noble friend Lord Ricketts, is an important one, as it marks the first six months of the follow-up and implementation of the UK-EU summit last May. It is important, too, because our debate marks the beginning of the run-up to the probable next summit this summer, which will hopefully register the conclusion of some, if not all, of the negotiations already begun and the engaging of new steps.
The report is also notable because it records the vote against the attempt by one of the co-authors of the trade and co-operation agreement—the noble Lord, Lord Frost—to emasculate its conclusions and recommendations. Let us be grateful for small mercies.
The top priority, I suggest, along with many others, must be the security of Europe and the restoration of a strengthened deterrent against Russian aggression such as has been unleashed on Ukraine—a deterrent based on a far more effective European pillar of NATO than we have had hitherto. Fortunately, talks on security are resuming now after an unfortunate setback, and our own Government are refusing to take no for an answer. I welcome that.
There are of course plenty of critics of the reset, but they need to be able to answer some of the following questions. Do they seriously discount the benefits to our agri-food exporters of an SPS agreement lifting the costly and time-consuming checks at the EU border? Do they ignore the lightening of the burden on Northern Ireland’s commercial operators from such a veterinary agreement? Do they not think that a youth mobility scheme would benefit both sides, supplementing the decision to join the Erasmus+ scheme, which we, like many other third countries, should never have left in the first place? Is there not clear mutual benefit in linking our and the EU’s emissions trading schemes, or in ensuring that the cross-border admission schemes we are both setting up to deal with carbon content—the CBAMs—are broadly equivalent, thus avoiding creating new non-tariff barriers and seeing exports from third countries being diverted to us? Is there not mutual benefit, too, in more energy interconnectors, as foreseen by the recent Hamburg meeting, and a more integrated electricity market? Should we not rejoin the pan-European rules of origin convention? All these questions and more are hard to answer in the negative, although some in this Chamber have no difficulty in doing so. If they cannot be so answered convincingly, are they not more the fruit of unthinking obstruction? To suggest that they are somehow betraying Brexit is the height of absurd.
Two catchwords, one on each side of the UK/EU divide, seem to be heavily overused. The first is the description of UK objectives as “cherry picking”. In reality, every negotiator tries to achieve their own prime objectives. The EU Commission certainly does—or at least it did when I was a Commission negotiator in the 1970s. Every negotiator recognises that there is a successful negotiation only where there is a balance of mutual benefit, including some form of continuous alignment and financial contributions to joint objectives. The second of the two problems I see in the way people address these issues is the incessant repetition of “red lines”. Naturally, both sides have such limits to their negotiating flexibility, but endless repetition is merely a recipe for not thinking things through and a disincentive to those on the other side to subject their own limits to critical scrutiny. So I make a plea for a reduction in the brandishing of those two facile catchphrases—“cherry picking” and “red lines”—and for a sharper focus in the phase ahead on where we can agree common ground, not on where we cannot.
Lord Moynihan of Chelsea (Con)
My Lords, before commencing, I, too, protest the four-minute limit—hardly enough time to clear one’s throat, although quite a few noble Lords seem to have happily breezed through it. Given that time limit, I shall discuss only one matter: the so-far aborted—as described by the noble and gallant Lord, Lord Stirrup—negotiations to join the SAFE project.
In the face of a changed world, the UK, the EU and the US must work together in an adult way to ensure that the West has the best possible defence capabilities, avoiding national self-interest or mercantilism. Yet the European Commission, in classic mode, demanded that Britain should pay an entrance fee of up to nearly €7 billion before it could join SAFE. As the noble Lord, Lord Ricketts, put it, that was totally unreasonable. Canada paid €10 million: 1/700th of that. Allegedly, we could get it all back in contracts, but there were no guarantees whatever that we would get any contracts at all. I found no published analysis from the Commission, HM Treasury, the MoD, RUSI, the IFS or any parliamentary committee demonstrating how that €7 billion outlay could ever be recouped. Contra the noble Lord, Lord Liddle, EU member states do not pay: au contraire, France is given—loaned—€16 billion for SAFE. So why, as the noble Lord, Lord Kerr, asked, should we, an equal partner in this, pay?
It is not just the money. There are profound contractual problems with SAFE. The EU demands exclusive design authority and strategic autonomy, likely compelling UK firms to transfer their proprietary technical know-how to the EU. Cash equal to 10% of our entire annual defence budget would be handed over, with no guaranteed return, loss of valuable IP and no reciprocal market opening, for the privilege of becoming merely a subcontractor, allowed to take no more than 35% of any contract. Yet Europe is irreplaceably dependent on the UK’s defence capability. We have capabilities that no EU member state can replicate: nuclear, intelligence, surveillance, target acquisition, advanced air combat, long-range strikes, air-to-air refuelling and submarine-building expertise that is unmatched in Europe.
As the noble Lord, Lord Jay of Ewelme, just said, the UK’s defence relationship with the United States, including Five Eyes, is key for us and for Europe, across virtually every capability. AUKUS, for example, includes co-operation with the US on AI, quantum, cyber, hypersonic and electronic warfare. That relationship with the US is highly important for our economy too, with over 20,000 direct and 94,000 indirect jobs with US-owned firms.
So why is France—for it is France, not Germany—trying so hard to ensure that we refuse to join, or to extort us if we do? Does it not care about the existential threat to western Europe? These safe negotiations embody a view that is hostile to creating the best possible defence for Europe, treating the UK not as an equal partner in this important task but as a supplicant to be fleeced. If this is how the EU allows itself to behave on defence, how can we expect it will behave in the negotiations on SPS or energy? Let the Government, let our country, beware.
Baroness Bennett of Manor Castle (GP)
My Lords, I thank the noble Lord, Lord Ricketts, and the committee, for the report and the noble Lord for his clear, calm introduction to it. As he said, and as the noble Lord, Lord Kerr of Kinlochard, agreed, President Trump has broken the bonds of trust and we can no longer depend on the US as our ally, over Greenland and many other matters. That has put the UK and the EU in a very different position compared with where we were in 2016. As a middle-ranking power in an uncertain world, we need to tighten the bonds that have been severed and frayed with the EU and, we must not forget, with the rest of the world, the majority of which is not the US, China or Russia. With the right approach of humility, generosity and realism, we can work in partnership to tackle the many crises we face.
I know that others will cover in detail the utter failure by successive Governments to deal with the critical, often career-threatening, impacts of Brexit on our creative community. That makes us all poorer, not just financially but culturally, with the huge loss to young people of Erasmus+ which now, happily, is to be restored. However, I will focus on an issue that is crucial to the reset and to the public and environmental health of the UK, to which the committee paid only glancing attention. That is not a criticism. As the noble Lord, Lord Ricketts, said, there are many highly technical areas that will need to be sorted and Parliament will struggle to have proper oversight of them. This is one of those areas, fitting under the sanitary and phytosanitary standards label: the regulation of pharmaceuticals and chemicals.
The EU is prohibiting the import of animal products from countries that routinely use antibiotics for growth promotion. This will take effect in September. We banned these practices domestically in 2006, yet the UK has not committed to the same rule for imports. Last November, I asked the Government in a Written Question whether the UK would align with these EU import rules. They stopped short of committing to an import ban. Hopefully, this will come with the SPS negotiations, but we need it now. I am not expecting a Dispatch Box declaration, but please will the Government make this a priority?
The public and environmental health gap extends particularly to water. The EU’s 2024 urban wastewater treatment directive mandates advanced treatment of urban wastewater to remove pharmaceutical residues, microplastics and other pollutants, along with harmonised antimicrobial resistance monitoring and producer responsibility schemes. What a contrast to “Dirty Business”, a recent television programme on this issue which provided an account that has horrified so many. Here we have no legally binding requirements for water companies to monitor emerging pollutants, including microplastics, antimicrobial residues or resistant bacteria or genes in effluent. The noble Lord, Lord Empey, spoke about being a rule taker. If others consistently have better rules, why do we not take those rules?
On chemicals, the UK is also falling behind. Since we left EU REACH, the EU has adopted 13 new restrictions and initiated 24 more. The UK has begun only three. We are trailing EU protections on chemicals, including the planned restrictions covering the 10,000 PFAS, the forever chemicals. We are subject to a cocktail of chemicals, of particular concern to the health of our young. We have begun action on only one PFAS restriction, despite civil society calling for alignment with the EU. The EU is also ahead of us on pesticides. Brexit has left us in this area, as in so many others, worse off—left behind and less healthy, with our environment dirtier and without the precautionary principle that we so urgently need to restore.
Lord Wallace of Saltaire (LD)
My Lords, I express my sympathy to the noble Baroness, Lady Finn, who has to wind up and present a coherent, responsible and constructive opposition position on this for the Conservative Party after hearing several speeches from behind her that would have done very well for members of Reform. I want to take from this report the comment that this is a process, not an event, and to make three points about the domestic conditions of a successful reset process.
First, as the noble Lord, Lord Liddle, said, we need to rebuild expertise within Whitehall, including training in other major European languages and multilateral negotiation. I am old enough to remember, when we first joined the European Community, the scale of the task of familiarising civil servants with the multilateral style of EU meetings and the skills required to negotiate successfully for British interests in that context. Whitehall developed an expert cadre of European specialists, familiar with not just EU regulations but the complexities of other countries’ domestic priorities. That pool of expertise has now been dispersed, and I hear from officials that fluency in French, German, Italian or Spanish is not highly valued in Whitehall. As we again work to build closer relations with our European neighbours, what efforts are the Government now making to rebuild negotiating and language skills and knowledge about both the EU’s institutions and other member Governments across our public service, from Defra to DESNZ to the MoD?
Secondly, Ministers and parliamentarians of all parties need to rebuild wider links with political parties and policy advisers in other member states. I was struck when I was in the coalition Government by how much closer and wider were the links that my Conservative colleagues had with Washington politicians and think tanks than with those from France, Germany, the Netherlands or Italy. That was partly a result of the unfortunate decision of the noble Lord, Lord Cameron of Chipping Norton, to withdraw the Conservatives from the European People’s Party. I recall many occasions in the Foreign Office when I personally knew some of the Ministers we were meeting in Berlin, The Hague, Copenhagen and Brussels as fellow members of the Liberal International, and my Conservative colleagues did not. I hope the Labour Government are better than their predecessor in promoting international contacts with our neighbours, but are they planning any new initiatives in this sphere?
Thirdly, we need the Government to lead a national conversation on why closer relations with our European partners and their institutions are now central to our national interests. Political leadership is about changing the political agenda to tell the public that we are no longer in a world in which we can balance between the USA and Europe, let alone, as Reform is currently suggesting, imagine a “new Elizabethan age” in which British ships will sail away from Europe across the Indian Ocean and the Pacific, or put our trust in trade with China as the noble Lord, Lord Redwood, seems to be suggesting. The reset we need will not go far unless the Government carry the public with them and the Conservative Party resists retreating into imperial nostalgia or simple dependency on Trump’s Republican America.
Lord Inglewood (CB)
My Lords, as I look back over the last decade in Brexit Britain, I am ever more convinced that the arguments for Britain’s wholehearted engagement with mainland Europe are as strong now as they were when I first, in the late 1960s, became a supporter of this country joining the European Economic Community.
Brexit is not an endorsement of treating the European Union as a political leper or pretending either that our near neighbours do not exist or that we do not share a whole range of interests with them. Rather, it indicated that our then way of doing the necessary business with them—at least, this was the case on polling day—did not command the country’s support. Against that background, the national interest demands that we find a different way of conducting that business which is acceptable not only to us but to our interlocutors, who need to have a firm belief in our good faith. No doubt that is much easier said than done.
This excellent report, Unfinished Business: Resetting the UK-EU Relationship, mostly spells out what nowadays might be described as the elite high-level aspect of much of this. As this debate has shown, current geopolitical circumstances show this is a priority. At the same time, we should think about some of the more domestic implications.
I say this because for a number of years I chaired the Cumbria Local Enterprise Partnership. There are many less high-level and “politically sexy”, but nevertheless very important, issues which need to be taken into account. The point of business is business. The business of business is business and the closer it is to home, the better. Many SMEs I know of which had integrated EU-wide supply-chain businesses found they could no longer compete because of tariffs and bureaucracy. The rules of cabotage have seriously diminished opportunities for hauliers, because the truck that you send abroad has to come home. The current crisis in agriculture, in which I am engaged, owes a great deal to what was agreed as part of leaving. All this amounts to the loss of real jobs and negative growth, affecting real people with great immediacy all the time across the whole country.
It is commonplace to say that one of the reasons for our current national distrust with politics goes back to alienation from the European Union, because it was so distant and failed to understand much of the real world away from the glitzy centre. It is a view I do not entirely share. At least as significant was the estrangement of UK national politics from the European aspect. UK political parties and the House of Commons as a whole always, it seemed to me, resented it. I speak as someone who served for 10 years in the European Parliament with a dual mandate. Rather surprisingly, I was elected on a Sunday and inherited a peerage the following Thursday—neither of which is now possible.
As the report rightly points out, resetting this relationship is an ongoing process, but that process has to provide emotional buy-in by the UK political establishment and the wider public as a whole so that it becomes part of the political normal, to avoid a repeat of last time. The past, as advice to retail investors always points out, is not necessarily a good guide to future performance. But, as this report points out, it has to be the starting point, recognising, as the Greek philosopher Heraclitus said all those years ago, that no man can stand in the same river twice, since both the man and the river are not the same the second time round. Nevertheless, the national interest demands that we get into the water.
Baroness Meyer (Con)
My Lords, today’s debate is ultimately about the national interest. Would a closer relationship with the EU best serve the UK’s economic and strategic needs as an outward-looking global nation? The Chancellor has described stronger EU ties as the country’s “biggest prize”, but would they materially improve growth and living standards? How much would they cost the taxpayer and what trade-offs would be required?
Since leaving the customs union, we have regained important freedoms. I will not list them here as we have only four minutes and the list is too long. That flexibility matters, particularly in industries such as AI, life science and fintech, which will define our future prosperity. A customs union would require us to apply the EU’s external tariffs. It might reduce some of our trade bureaucracy, but not eliminate it. It would mean less autonomy while offering only partial market access. Take food prices for instance: we already trade tariff-free with the EU, and global sourcing from other countries, such as Australia and New Zealand, can keep costs down. We also no longer make regular net contributions to the EU budget—a substantial fiscal saving. Meanwhile, parts of the EU economy face high debt and slow growth. The EU will no doubt negotiate firmly in its own interest. On this occasion, considering that it has a big budget deficit and is angry towards the UK for leaving the European Union in the first place, it will negotiate particularly hard.
History shows that success in Brussels requires clarity and resolve. Margaret Thatcher secured a substantial rebate by being clear and firm, a big chunk of which Tony Blair later gave away under pressure from the member states. The 2016 negotiations under David Cameron showed just how difficult it is to secure concessions from Brussels. Recent experience, including Chagos and the current EU talks, raises serious doubts about whether this Government can really stand up for Britain’s best interests. The Prime Minister speaks of red lines on the single market and the customs union. How can we be confident, however, when the committee itself has pointed out that there are no clear negotiating objectives? Without a clear plan and a firm bottom line, red lines may sound strong, but they will no doubt prove to be flexible.
Regulatory alignment rarely comes without conditions, financial contributions, legal obligations or constraints on domestic policy. The Prosperity Institute has warned that such a reset could deliver limited gains and increase costs for British businesses. I therefore ask the Minister: what precisely are the benefits of this reset, and what is the price in money, control and flexibility? If growth is our objective, should we not prioritise domestic reform, competitiveness and broader global trade with the economies growing faster than the failing EU economies, which would truly benefit our long-term interest?
The Earl of Clancarty (CB)
My Lords, the title of the report is Unfinished Business, and the quicker we finish the business and properly cement our relationship with the EU, the better. It is becoming increasingly likely that our own democracy could be severely tested in the coming years, if we have a different Government. We need to have structures in place that are rock solid and not easily undone. A sympathetic relationship with the EU, to which so much import is given today, will be the first thing swept away. There needs to be a rock-solid commitment to all the European structures, which, contrary to what some claim, strengthen our sovereignty and help to protect our democracy—the two things are related—by virtue of being part of something larger than ourselves that is itself a democratic structure. If people believe that the EU is not perfect, we need to be in there making it so.
I will give some specifics. I welcome the Government’s agreement to rejoin Erasmus+ since the publication of this excellent report, led by the noble Lord, Lord Ricketts. First, will the Government not extend the time for committing to this scheme to give it the best chance of success? Ten months is too short a period to take a sounding, considering that the scheme needs to bed in and eligible groups need to be encouraged to reply. Secondly, there is the concern about travel restrictions, including visas and passports. Will the Government look at the possibility of group passports for school pupils, assuming school trips and exchanges will be a significant part of the scheme?
Almost 20 months into this Labour Government, there is still no tangible evidence of any improvement in the lot of musicians touring. Indeed, UK Music has made the point that customs bureaucracy in terms of visas and carnets have increased, meaning that things have actually gone backwards. What the noble and gallant Lord, Lord Stirrup, said earlier in this debate about the possible attitude of DCMS is worrying. As the Minister will know, and as DCMS should know, this is an urgent matter about which the sector is hugely concerned. There are also, of course, wider trade concerns for all the arts and creative industries, with ongoing losses in job opportunities and huge monetary losses, including what we have lost in not rejoining Creative Europe. The Government absolutely need to rethink that, both for that reason and for the role it could play in helping to unblock progress in other areas.
Finally, perhaps the most intransigent problem of all for the creative industries and further afield is the huge difficulty of obtaining jobs in Europe. Artists and creators, from film actors to opera singers, now commonly face applications that insist on an EU passport, so that many fall at the first hurdle. I understand that this is a legally grey area but I ask the Minister: will the Government look at this, including in relation to the youth mobility scheme? What good is such a scheme if our young people continue to be shut out of jobs in Europe because of frankly understandable concerns from reputable potential employers, when the rest of the pool to draw from has no such relevant red tape or financial costs attached and, as important, there is no time element involved? Will the Government promise to look at this in a purely practical way, because it is the practicalities here that are crucial?
Lord Whitty (Lab)
My Lords, as the 29th speaker, I fear that many of my original points have disappeared, but the noble Lord, Lord Wallace, in particular, has inspired me to make a few more. I join others in commending the noble Lord who chaired this committee, and the committee itself, on getting over the refighting of the Brexit campaigns, which we have seen a bit of again today, to produce a report that at least has some signposts for the future.
I tried to insert some linguistic points here, to take the point made by the noble Lord, Lord Wallace. “Reset” in English means two different things. If you reset your telly, it means you are either putting it back to its original setting or resetting it to a new one. The title of this debate and report, Unfinished Business, suggests there is a finish, but there is no finish. We are actually going to go on developing a new relationship with Europe, which will not have a fixed terminal point. Therefore, resetting—continuing to reset and to positively engage with Europe—is what we need to focus on.
In that context, beyond the linguistic point, there is the need that the noble Lords, Lord Inglewood and Lord Wallace, underlined for us to engage, and not just with the institutions of the EU and the representatives of those institutions. As a committee we found ourselves very well received by those institutions in Brussels—but we also need a much more effective engagement with the member states. We thought we had already made a significant move forward with the proposals on the security and defence side, but the costs attachment that has now become evident—emanating, most people assume, from the French Government—indicates to us that we have to operate at the member state level effectively, as well as keeping doors open to Europe at the EU level. This Government have made a start on that, but we need to reinforce it. Although we supported the changes in the Whitehall structures for dealing with the EU and EU-related issues, they still need some significant strengthening.
My other point is that during this debate and the whole discussion, one important issue has hardly been mentioned at all—except negatively by the noble Lord, Lord Redwood. It relates to a need for Europe as a whole to address the issue of climate change and environmental change, particularly now that the Americans have effectively abdicated from that stage and nobody has clearly taken up the reins. Unless Europe, the UK and other positive states recommit to tackling climate change, all the stuff that we are negotiating today and all the structures in the world will be overwhelmed by a dramatic change to our climate and to how our industry and trade operate; it will become the major issue confronting Governments. That will happen not next year or the year after but within the next decade, and I believe that part of our re-engagement with Europe has to focus on starting again on the initiatives that were so well started in the Paris Agreement and on ensuring that we both make a contribution to tackling climate change and achieving something like net zero.
Lord Elliott of Mickle Fell (Con)
My Lords, as speaker number 31, I am relieved to have picked an aspect of the report that has yet to be discussed in much detail. I will use my time to concur with recommendation 24 of the report, which asks the Government to set out how joining Erasmus+ brings added value to the UK. I question whether this scheme, set up in 1987, aligns with the travel preferences of young people in 2027. I question the quality of the education that they will receive and its cost effectiveness.
I can appreciate how, in the immediate post-war period, young people were excited about studying in France, Germany and Italy. My father speaks fondly about his cycling tour around France between school and university. But that picture has changed dramatically. In 2024 a British Council survey found that the most attractive countries for 18 to 30 year-olds were Australia, the United States and Canada. That is backed up by the data. Of the 51,000 18 to 31 year-olds who left the UK in 2023, just 9,000 went to the EU. In contrast, 17,000 flew to the other side of the globe, to Australia and New Zealand, and 13,000 went to North America.
Perhaps we are joining Erasmus+ because the EU has the best universities in the world—but, again, that does not appear to be the case. According to the Times Higher Education supplement’s world university rankings for 2026, none of the top 25 universities is located in the EU. There are 16 in the United States, four in the UK, two in China and one each in Switzerland, Singapore and Canada. Zooming out to the top 50, the UK has more top universities than France, Germany, Italy and Spain combined.
If young people are not looking to the EU as somewhere they want to live, and if the world’s top universities are mainly located outside the EU, perhaps rejoining Erasmus+ is extremely good value for money—or, since the UK has proportionately more top universities, perhaps the EU is paying us to join the scheme. Sadly, this is not the case. Our membership fee for Erasmus+ is set to be £570 million in 2027. We paid £296 million for the scheme in 2019: just over £400 million with inflation. Despite the purported 30% discount negotiated by the Government, we are set to pay £170 million more in real terms than our contribution to the scheme in 2019. I hope that the person responsible for the negotiation is not going on holiday to Turkey this year to buy a carpet.
By contrast, with the same £570 million budget we could quintuple the size of the Turing scheme, which covers universities across the world, or we could keep the Turing scheme and create an additional 69,000 apprenticeships, which would do more to help the million NEETs struggling to find work. To conclude, the Government clearly need to be up front about the cost of joining Erasmus+ and why they deem it to be cost effective. We should not simply assume that a scheme set up in 1987 is still fit for purpose in 2027.
Baroness Lane-Fox of Soho (CB)
My Lords, I congratulate the noble Lord, Lord Ricketts, and the European Affairs Committee on their report. Our EU relationship has always concerned trade, regulation and security. What has changed is that each of these now runs through technology. Competitiveness, resilience and strategic influence increasingly depend on data, digital markets, infrastructure and talent. If this reset is to be durable, it must reflect that reality.
I want to emphasise four technology-related themes that underpin many of the committee’s recommendations. The first is scale. If we are serious about producing world-leading companies—firms that shape markets rather than follow them—scale is decisive. Advanced technology and AI businesses rely on large markets, secure cross-border data flows and regulatory clarity that enables rapid deployment. AI systems improve through real-world use. They learn from diverse users and datasets. Fragmentation does not just add friction; it shapes where capital flows and where growth ultimately anchors. The European Union represents a market of around 450 million people. For a British technology firm deciding where to expand engineering capacity or launch a new platform, predictable access to that market is strategically significant.
The second theme is talent. Frontier industries depend on people. AI researchers, engineers, chip designers and cyber specialists are globally mobile. The strength of our technology sector has long rested on the flow of European talent into our universities and start-ups, and on British talent collaborating across Europe. We have many examples of British companies with genuine global ambition. I declare an interest in one of them as non-executive director of Multiverse, which uses digital platforms to transform workforce skills across borders. There is also the autonomous vehicle developer Wayve, much in the news this week, which is advancing frontier AI systems that require diverse European testing environments at scale. These firms want to operate within integrated markets. The question is whether that integration will be as seamless as it can be with our nearest partner. Barriers to mobility may not show immediately in trade statistics, but over time they erode innovative capacity.
The third theme is standards and alignment. In digital markets, those who set standards shape outcomes. Rules governing AI, cyber security and data protection define the environment in which innovation occurs. We instinctively look to the United States when we think about technology leadership and, as many have said, it must remain an indispensable partner. Yet deeper transatlantic digital alignment has stalled recently, and some of the deals already announced are looking increasingly flaky. Meanwhile, Europe is not a peripheral AI player. It has serious research depth, industrial capacity and firms such as Mistral, Europe’s leading foundation model company. In a world where compute, standards and deployment scale matter, proximity matters too. The British firms serving European customers already work within European frameworks. The choice is whether we help shape those rules or simply adapt to them from the outside.
The final theme is resilience and security. Recent UK-EU discussions have rightly put cyber, emerging technologies and even shared AI and supercomputing on the agenda, but no European state, including our own, can secure that resilience alone. These steps still fall short of a comprehensive technology pillar in our relationship. The Prime Minister speaks often of Britain as an AI and technology superpower. That ambition cannot be delivered by domestic policy in isolation. Without a fuller reset of our technology relationship with the European Union on talent, regulation and data, as well as security, we will not reach the scale that that ambition implies. Are the Government prepared to put a serious technology negotiation at the heart of the future UK-EU relationship, rather than treating it all as individual, isolated initiatives?
Lord Lilley (Con)
My Lords, I congratulate the committee on trying to establish the Government’s reset negotiating objectives, which the Government have failed to publish. But the Government have published what they call an explainer. I have a copy of it here. It lists the items on the Government’s reset menu, but it is a menu without prices. I first came across that as a naive young man when I was invited to a very exclusive and expensive West End club. I embarrassed my hosts by asking the chief waiter why there were no prices on the menu, to which he replied, “If Monsieur needs to know the prices, Monsieur probably cannot afford to dine here”. That is the problem with this reset: we do not know the cost and, if we did, we would not want it. The Government know it.
At least the menu in that club gave a wide choice of dishes. With the EU, it is: “Take it or leave it. It’s the dish of the day, the chef’s special or, in the case of fish, the catch of the day”—and there is the catch: the EU said that it would not even initiate negotiations unless we first agreed not to increase our catch of our fish from our own waters for another 12 years. This supine Government enacted that irrevocably, even if all other aspects of the negotiations fail.
Although the explainer does not mention prices, the EU’s negotiating mandate reveals that we are expected to pay into the EU’s coffers for almost every item. For the SPS deal, we must pay the EU’s extra administrative costs for not carrying out checks on UK exports—quite why not checking goods involves extra costs beats me but, given that the EU exports four times as much food to us as we do to it, surely it should pay us for not checking its food.
On the carbon border adjustment mechanism, the EU insists that we pay its additional costs, despite the agreement eliminating calculation and charging for the carbon content of imports. This too mainly benefits the EU, since we produce few carbon-intensive goods, thanks to our crippling net-zero energy costs, which this agreement will enhance.
On Erasmus, the Government claim that the price is a 30% discount, but that is relative to the cost in future years. It is twice what we paid in 2019 and will be three times as much after the first year’s discount expires. The most egregious cost, however, is actually in the title of the EU negotiating mandate, which demands
“financial contribution of the United Kingdom towards reducing economic and social disparities between the regions of the Union”.
So we are to contribute to levelling up the EU with money that could, and should, be used to level up the UK.
Today, Secretary of State Kyle justified breaking Labour’s manifesto pledge of no return to the single market on the grounds that that is “where the magic happens”. He is, I am afraid, off with the fairies. As the Trade Secretary overseeing our entry into the single market, I too predicted that it would boost our exports, but over the ensuing 25 years our goods exports to the EU stagnated—growing at less than 1% a year—whereas goods exports to the 100 countries with which we traded just on WTO terms grew by 87%.
What drives trade is producing goods and services that people want to buy, then getting out and selling them, preferably in fast-growing markets. It is not submitting to EU rules, regulations and protectionism, which have made Europe the slowest-growing continent in the world.
Baroness Ludford (LD)
My Lords, I am delighted to take part in this debate. I have recently been chucked off the European Affairs Committee—due simply to my three years being up, I hasten to add, not for misbehaviour—but I participated fully and keenly in the preparation of this report. Although I am very happy to have found a berth on the equally absorbing and admirably chaired Northern Ireland Scrutiny Committee, I will very much miss the European Affairs Committee and pay tribute to its members and first-rate staff, who were named by the noble Lord, Lord Ricketts. Above all, I congratulate our then chairman, the noble Lord, Lord Ricketts, on his superb leadership of the committee, which he has also been rotated off, and his introductory speech. From my new committee berth, I take very seriously the problems for trade and business, and, indeed, the democratic deficit in Northern Ireland.
This country’s links with the EU are going in only one direction, a development I wholeheartedly support. EU Ambassador to the UK Pedro Serrano has said that the UK and the EU are “indispensable partners” and described the statement from last May’s summit as
“a new narrative for the relationship”.
The President of the European Parliament, Roberta Metsola, echoed similar sentiments in her visit in the last few days, including in a speech at Chatham House and at a reception held by Mr Speaker, to which he kindly invited me.
I believe the Prime Minister is serving this country and Europe well in fully supporting Ukraine and working with allies to that end. I applaud his speech at the recent Munich Security Conference, although, as far as we know, his welcome words have not secured UK participation in the SAFE project for defence capability improvements. Like other speakers, I look forward to hearing the Minister’s reply on this.
We saw recently in a poll for ITV that over 80% of 16 to 24 year-olds would vote to rejoin the EU in a new referendum. Only 17% of this age group would vote to stay outside, compared with an overwhelming 83% who would vote to rejoin. I am soon 75, but I intend to live long enough, even to 100, to see us rejoin the EU. I venture to suggest that the Prime Minister could reinvigorate his support through the EU question. Of course, the route to rejoin is not where we are now, but it will be before too long. The young, and politics, will see to that. I say to the noble Lord, Lord Elliott, that we would serve the young well if we ensured that they were not monolingual.
In a significant article for the Telegraph last November, Jeremy Warner wrote:
“Time to admit the truth: Brexit has been an unmitigated economic failure”,
confirming that
“from an economic perspective at least, Brexit has so far proved close to disastrous”.
The noble Lord, Lord Inglewood, illustrated some of the ways in which this is true. Therefore, no Government who cared about economic growth could avoid the need to seek a better trade relationship with the EU, which, from these Benches, we welcome, as far as it goes.
I would, though, sound a cautionary note, as others have done. I agree with the noble Lord, Lord Liddle, as well as my noble friend Lord Wallace of Saltaire, that the Government are going to have to be more candid and transparent with the public, sooner rather than later, about where they are headed. There is a limit to how much can be done piecemeal or by stealth, without placing it in a coherent framework and goal. I disagree with the noble Lord, Lord Whitty, that a process without a destination is satisfactory. If that coherence is not visible to the public, there risks being a lack of confidence or even a backlash, as well as loss of support for the Labour Party, although I will leave it to worry more than I do about that particular consequence.
The EU will be looking for, if not political consensus—which is unattainable, as we have well heard today—then a solid and consistent majority for better ties with the EU. In my opinion, the Government would do well to bring the public more into a conversation about where all this will be heading. As the noble Lord, Lord Ricketts, and others pointed out, there was no reset White Paper. While the Government have previously asserted that they will not cross their red lines of no single market or customs union participation and no freedom of movement, they are already not quite practising what they preach. The Prime Minister’s recently expressed goal of deeper economic integration with and closeness to the single market smudges the red lines—and I gather that the Business Secretary said something today—and that is gaslighting the public, which they never appreciate. For instance, we understand that in the negotiations on the youth experience scheme, the Government are seeking freedom for British participants to move from one member state to another. That would be particularly welcome in, for instance, the travel and hospitality sectors, but the term for this is in fact “free movement”.
We now have a list of half a dozen sectors in which closer links are being pursued. Some present themselves, such as security and the easing of SPS and veterinary controls, but would it not be wise to share more of the thinking behind the choice of all these areas, as well as the neglect of the important issue of touring artists and the lack of much emphasis on law enforcement?
As well as lack of clarity, there is a problem of lack of transparency and accountability. Both Brexit and the reset have given a lot of leeway to executive freedom over parliamentary authority. I suggest that this cannot go on. While intergovernmentalism outside formal structures can have its advantages, they say, it has its limitations and comes up against the need for Parliaments, as well as the public, to get a handle on what Governments are up to. It would be a great advantage, as my noble friend Lady Suttie said, if the other place was able to restore a European Affairs Committee to increase scrutiny and seek to keep the Government honest.
The European Parliament managed to make considerable progress when I was an MEP, from 1999 to 2014, in getting a grip on the member states’ liking for unaccountable intergovernmental arrangements, which is how the data-sharing Prüm arrangement started. Prüm is a database of biometric as well as other data, and there were a lot of rows about its content when it finally got “communitarised”. The data retention directive, which the Labour Government of 20 years ago policy-laundered through Brussels under the UK presidency, later came unstuck in the European Court of Justice. Therefore, firm foundations are a good investment. Trying to escape the kind of detailed scrutiny and joint legislative powers that Parliaments need but Foreign and Home Offices are not quite so keen on is only a short-term fix. The UK-EU relationship and reset have provided a context and pretext for slipping back to that executive comfort zone. I predict we could see some revolting parliamentarians on both sides of the channel—and I know the European Parliament is very upset that it is not included in the design of the SAFE system.
We hear the Government claiming that the reset will involve British influence on relevant laws through “decision-shaping”, but I would respond, tell that to the marines. No one who has been an MEP, as others in this House were, believes that a country can call any shots on EU laws from outside EU legislative co-decision structures.
I have a few words to finish, on a very important issue in UK-EU relations: citizens’ rights. The UK’s EU settlement scheme has largely been a success, although there remain some problematic issues such as the cancellation of pre-settled status for some without any appeal rights, the harsh treatment of a particular cohort of families with a British citizen but EU family members—which could yet become another Windrush scandal—the loss of funding for organisations to assist people with their applications, and, in particular, the Government’s insistence on digital-only proof and refusal to let holders have a paper document or card as proof of status. The platform of a largely successful EU settlement scheme in the UK entitles this Government to put more pressure on member states where there are problems for British citizens and to push the European Commission to monitor and intervene more effectively and with greater power than it currently does. I hope the Minister can tell us that the Government intend to do just that.
Baroness Finn (Con)
My Lords, I welcome this opportunity to debate the European Affairs Committee’s report on resetting the United Kingdom’s relationship with the European Union. I thank the noble Lord, Lord Ricketts, for setting out the current position with his customary clarity. I pay tribute to the committee members and the clerks, who have, as always, produced an outstanding report. As anyone who has served on a committee knows, it takes real skill to steer a single text through competing views and legitimate nuances. On that note, I am very grateful to the noble Lord, Lord Wallace, for his kind advice on how to reconcile disparate views within one’s own party—I know that that is a core Liberal Democrat skill.
I also wish to place on record a warm word for the noble Lord, Lord Frost. During the committee’s consideration, he circulated an alternative summary which, although not agreed, was thoughtful and well-argued and an important reminder that questions of sovereignty, democratic consent and national self-confidence sit beneath the technical detail. It strengthened the committee’s work by ensuring that those concerns were tested and heard.
The report is a serious assessment of the progress the Government have made in pursuing what they describe as a “closer, more cooperative relationship” with the European Union, while maintaining the position that there will be no return to the customs union, the single market or freedom of movement. As the noble Baroness, Lady Hayter, and the noble Lord, Lord Barrow, among others, have noted, this research is a process rather than a single event, so it is not possible to draw definitive conclusions at this stage. However, there are areas where the House would welcome further clarity from the Minister, particularly on objectives, costs and parliamentary scrutiny. Like my noble friend Lord Tugendhat, I hope that this debate can mark a shift from rehearsing 2016 to concentrating on how we secure practical co-operation without diluting the hard-won principle that decisions affecting the United Kingdom should be made with the consent of this sovereign Parliament.
The committee raises several concerns about the Government’s approach. Foremost is the absence of a clear, published plan before entering negotiations ahead of the UK-EU summit on 19 May 2025. The committee regretted that the Government did not produce a White Paper—a concern raised by the noble Lord, Lord Taylor of Warwick, and my noble friend Lady Meyer—or a similar document setting out their objectives. That matters. Without clarity on aims, red lines and trade-offs, Parliament and the public are left to infer strategy after the fact.
Contrast this with the European Union’s more clearly articulated priorities. In the summit documents, the parties committed to work towards a balanced youth experience scheme and UK association with Erasmus+ on terms to be agreed, and they reached political agreement to extend existing reciprocal fisheries access arrangements for a further 12 years to June 2038. Whatever one’s views of the merits, these are substantial policy directions, and they carry costs, constraints and distributional consequences. As the noble Lord, Lord Frost, and my noble friend Lady Coffey made clear, honesty matters.
On fisheries, it is important to be precise. This is not a return to the common fisheries policy but a long extension of reciprocal access arrangements under the trade and co-operation agreement. The committee recorded evidence that the length of the agreement was at the outer limits of what many in the sector expected, and it criticised the absence of a meaningful assessment of impact and the limited Explanatory Memorandum provided to Parliament before the agreement was reached and enacted. That is exactly the wrong way round.
On Erasmus+, I welcome opportunities for young people in universities, but we must be candid about the bill and the balance of advantage, a case very well made by my noble friend Lord Elliott of Mickle Fell. Since the committee reported, the Government have announced that the UK will join Erasmus+ from 2027, with a contribution of around £570 million for the 2027-28 academic year. It is therefore vital that Ministers set out transparently the criteria by which they judge this to be value for money, how participation will complement domestic schemes and what safeguards exist should costs rise in future budget cycles.
On the proposed youth experience scheme welcomed by the noble Duke, the Duke of Wellington, the Government have said that it would be capped and visa-based, and the common understanding speaks of numbers acceptable to both sides. This is not, on its own, a sufficient description for Parliament to scrutinise. We need clarity about the proposed cap, duration, eligible activities, enforcement and interaction with the domestic labour market, especially when the Office for National Statistics estimates that around 946,000 people aged 16 to 24 were not in education, employment or training in mid-2025. Against that backdrop, Ministers should explain how the scheme will be designed so that it is balanced and controlled.
A number of noble Lords, including the noble and gallant Lord, Lord Stirrup, raised the lack of progress on helping UK artists touring in the UK. I hope the Minister can give an assurance that the Government will maintain focus on this very important area.
The Government will no doubt point to the proposed linking of the UK and EU emissions trading systems, yet it is a matter of record that since 2023, UK allowance prices have generally traded below EU prices. An analysis for the European Parliament noted periods in which the EU prices were over 60% higher than the UK carbon price in early 2025. Linking markets could therefore raise carbon costs for some UK firms by up to 15%, as my noble friend Lord Redwood pointed out, at least in the short term. The Government argue that linkage would also reduce exposure to the EU’s carbon border adjustment mechanism and provide greater market stability. Those are legitimate objectives, but Parliament needs the distributional analysis: who pays, who benefits, and on what timetable?
Many noble Lords, such as the noble Baroness, Lady Ashton, the noble and gallant Lord, Lord Stirrup, my noble friend Lord Howell and the noble Lord, Lord Jay, have raised the issue of defence. The much-discussed security and defence partnership is so far a framework of intent rather than a settled set of instruments. The committee identified potential access to SAFE as one of the key practical tests. The Government have said that they have not yet been able to conclude an agreement on terms they consider to be in the national interest. Press reporting has suggested that the EU sought a very substantial UK financial contribution, rightly criticised by the noble Lords, Lord Kerr of Kinlochard and Lord Ricketts, and my noble friend Lord Moynihan of Chelsea. Recent commentary has contrasted that with Canada’s participation fee, though comparisons are not straightforward and need careful unpacking. What matters for the UK is that if access to SAFE is genuinely central to the partnership, Ministers should set out the strategic benefit to the UK’s defence ecosystem, the likely costs and how UK industry will be treated under any rules on component origins and supply chains.
Of further concern is that prospective agreements on an SPS area, ETS linkage and possible participation in the EU internal electricity market are being explored on the basis of dynamic alignment with EU rules, along some form of decision-shaping role. The Government have said that disputes would be resolved by independent arbitration and that any role for the Court of Justice would be limited to the interpretation of EU law for an arbitration panel. Those assurances are welcome as far as they go, but as my noble friends Lord Jackson and Lady Lawlor have highlighted, the constitutional question remains: how will Parliament scrutinise, in real time, a system in which rules may evolve dynamically and the UK is not in the room when decisions are taken?
It is one thing for the Government to advocate a policy of closer alignment; it is quite another to proceed without giving Parliament the opportunity to examine objectives, costs, as my noble friend Lord Lilley highlighted, and legal consequences. The committee was right to call for stronger parliamentary scrutiny, including sight of draft texts where possible, explanatory material that genuinely explains trade-offs and a presumption that any major new agreement will be implemented through primary legislation. Given those concerns, will the Minister reassure the House on several points? First, will she confirm that the Government are not seeking a model that would restore general judicial oversight by the Court of Justice of the European Union over domestic law? Secondly, will she commit that any major agreement arising from the reset, whether on SPS, ETS linkage, mobility or defence, will be accompanied by a published impact assessment, including costings, and presented to Parliament in time for meaningful scrutiny before implementation? Thirdly, will she explain how decision-shaping will operate in practice and what arrangements the Government propose so that this House and the other place can scrutinise dynamic alignment effectively?
Any step towards the European Union should be taken with utmost caution and with full democratic transparency. Whatever our views of the referendum and its aftermath, the public rightly expect that Parliament, not private committees or opaque processes, will scrutinise agreements that shape regulation, taxation, borders and livelihoods. I hope the noble Baroness can provide the assurances the House is entitled to expect and commit to a reset that strengthens co-operation where it is in our interest, while safeguarding sovereignty, accountability and the primacy of Parliament.
Baroness in Waiting/Government Whip (Baroness Anderson of Stoke-on-Trent) (Lab)
My Lords, I thank all noble Lords on the European Affairs Committee for their wide-ranging and considered report. I take this opportunity on behalf of the Government, and, I believe, the whole House, to especially thank the noble Lord, Lord Ricketts, for securing the debate and for his skilled chairing of the committee. He has proved himself to be the eternal diplomat—something I am not known for. Since the general election, the collaborative approach he has taken to engaging with the Government has been very welcome. I welcome the noble and gallant Lord, Lord Stirrup, as the new chair of the committee, and look forward to continuing our constructive engagement.
I am also extremely grateful to all noble Lords who have taken part in today’s debate for their insightful contributions—whether I agreed with them or not—which are a tribute to the report and its authors. I will attempt to answer all the questions raised, but with 34 contributions, I will also reflect on Hansard and respond to any issues I miss; the scale and range of our debate means that I will struggle to respond within the time.
This report was an important opportunity to look at the positive progress the Government have made on our manifesto commitment. While welcoming the progress that has been made, it asks important questions on areas such as the security and defence partnership, the SPS agreement, linkage of our emissions trading scheme, a youth experience scheme and potential participation in the EU internal electricity market. It also highlights the important role of Parliament in scrutinising existing and future agreements with the EU.
On progress to date, when the Government were elected, it was with a clear manifesto commitment to reset relations with our European partners. That meant tearing down unnecessary barriers to trade and increasing national security through strong borders and greater international co-operation. I do not wish to bring forth the wrath of the noble Lord, Lord Hannay, by using the phrase red lines; I want to be clear that there is no return within our red lines to the single market or customs union, and no return to freedom of movement. I gently remind the noble Lord, Lord Frost, and the noble Baroness, Lady Lawlor, that our red lines were clear in our manifesto. I reassure the noble Lord, Lord Empey, that we were clear on what that meant.
As your Lordships’ House knows, at the UK-EU summit in May last year, the Government agreed a new strategic partnership with the EU. This strategic partnership will unlock huge benefits for the UK, reducing barriers to trade, accelerating economic growth and keeping us secure in an uncertain world. It is good for bills, good for our borders and good for jobs. We took this decision—exercising our sovereignty—to strike a deal in the national interest. We are making good progress on talks with the EU since the summit to implement the joint commitments made.
I wrote down the name of every noble Lord who mentioned the issue of security and defence, but as it is over 20 names, noble Lords will have to bear with me. I was listening, and I am very grateful for their contributions. At the recent summit, we secured a new security and defence partnership agreement. As the noble Lord, Lord Barrow, reminded us, it is all the more salient this week as we mark four years since Putin’s illegal invasion of Ukraine. This agreement represents a joint commitment to European security built on the long-standing commitment of the UK to support Ukraine and our cross-continent work to protect our NATO allies. We continue to step up on European security, including through leading the coalition of the willing for Ukraine.
This sits alongside the defence co-operation agreements we have struck with our other European partners. Last year the Prime Minister refreshed the Lancaster House agreements with France, deepening our defence and security co-operation, including nuclear co-operation through the Northwood declaration. The Prime Minister also signed the Kensington treaty with Germany, a generational shift in our relationship which broadens our co-operation across defence and security issues, building on the Trinity House agreement.
We are working quickly with the EU to implement our security and defence partnership and have already stepped up our co-operation on supporting Ukraine, tackling hybrid threats and increasing stability in the Western Balkans. Our co-operation is already delivering results. We have worked together to maximise the impact of sanctions on Russia, including jointly lowering the crude oil price cap to curb Moscow’s energy revenues. We also worked with the EU to ensure a successful UK-hosted Berlin process on the Western Balkans in October to promote regional co-operation and deliver security and growth.
Since agreement of the partnership, we have also established senior, structured dialogues with EU counterparts. This is all to ensure that co-operation delivers tangible benefits to European security. We remain fully committed to our continued close co-operation with the EU and European partners to strengthen European security and maintain unwavering support for Ukraine.
As the Prime Minister said at the Munich Security Conference:
“We want to work together to lead a generational shift in defence industrial cooperation … We must come together to … build a joint European defence industry”
and
“go beyond the historic steps that we took at last year’s UK-EU summit to build the formidable productive power and innovative strength that we need”.
Obviously, this then takes us to the questions on SAFE, which were raised by many members of your Lordships’ House, but specifically by the noble Lords, Lord Ricketts and Lord Moynihan, and the noble and gallant Lord, Lord Stirrup. The security and defence partnership unlocked the possibility for enhanced UK participation in the Security Action for Europe scheme, also known as SAFE. We entered those discussions with the EU in good faith. We were prepared to make a fair financial contribution that reflected the potential for a mutually beneficial relationship and value for the UK taxpayer. It is disappointing that we were unable to come to an agreement, but we have always said that we will not sign any deals unless they are in our national interest. The UK’s defence industry continues to have access to SAFE under standard third-country terms. UK companies will be able to participate in and benefit from SAFE contracts to provide up to 35% of their content.
Issues related to Erasmus and the youth experience scheme were raised by the noble Duke, the Duke of Wellington. Since this report’s publication, the Government have reached an agreement with the European Commission for the UK’s association to Erasmus+ in 2027, fulfilling a key commitment made at the summit. In response to the noble Lord, Lord Elliott, on the benefits of Erasmus, association will open up world-class opportunities for learners, educators and young people, as well as youth workers, sports sector professionals and communities of all ages across the UK. We expect that over 100,000 people could benefit from participation in 2027. We will work with the national agency to encourage people to sign up when applications open, and we welcome the focus of the Erasmus scheme on disfranchised communities.
We will further strengthen the people-to-people ties between the UK and the EU by creating opportunities for young people to travel, to take up short-term work or study, to broaden their horizons, and to get to know new people and places through the establishment of a balanced youth experience scheme with the EU. We are also currently negotiating the parameters of the scheme with the EU and aim to conclude these negotiations by the time of the next summit.
On the costings that were touched on, the UK will contribute around £570 million to the Erasmus+ programme in 2027. This is down from the approximately £810 million we would have paid under default terms. The UK will receive most of that money back to distribute among the UK beneficiaries, which will also have the opportunity to compete for grants from a £1 billion central pot directly managed by the European Commission. This is a good deal for the UK. We have negotiated financial terms which reflect a fair balance between the UK’s financial contribution and the number of UK participants receiving funding.
Noble Lords rightly challenged me on the issues relating to touring artists. This was a manifesto commitment. To reassure the noble and gallant Lord, Lord Stirrup, because this issue was in our manifesto we are consistent and clear on its importance. Just as we recognised at the UK-EU summit the importance of opportunities for young people, we also jointly recognise the value of travel and of cultural and artistic exchanges, including the activities of touring artists. We will continue our efforts to support travel and cultural exchange, and we are exploring how best to improve arrangements for touring across the European continent with the EU and member states. We are determined to make progress, including on the ambition to agree improvements as soon as possible.
I will answer specific questions on some of these issues, if noble Lords will bear with me. The issue of electricity and trade was raised by several noble Lords. Following last year’s summit, the UK and EU have also concluded exploratory talks on the UK’s participation in the EU’s internal electricity market. Participating in the EU’s electricity market will have tangible benefits for the people of the UK, driving down energy costs and protecting consumers against volatile fossil fuel markets. We are now in the process of negotiating a UK-EU electricity agreement.
I move on to the SPS agreement, a key issue raised by many Members of your Lordships’ House. To reassure noble Lords, especially the noble Baroness, Lady Suttie, and the noble Duke, the Duke of Wellington, we are moving at pace on these negotiations. I love the phrase, “at pace”; it is good Civil Service language. The committee’s report also contained recommendations on next steps for the agreement. Let me be clear: the UK is the EU’s largest market for agri-food and vice versa. UK agri-food exports to the EU were worth £14.1 billion in 2024, while UK imports from the EU were worth £45.5 billion in the same year. Agri-food producers are among those most affected by increased paperwork and checks associated with exporting to the EU, as we were reminded by the noble Lord, Lord Inglewood. A food and drink agreement will change that, boosting our exports and cutting costs for importers. We are working with Defra on negotiations and implementation of the agreement. The implementation of the SPS deal will be a matter for Defra.
Let me be clear: the Government believe that in some areas, such as SPS, it is in our national interest to align our rules with the EU. This is a sovereign choice that we make because it will cut paperwork, costs and barriers that have a negative impact on our businesses and consumers every day. We know that there are trade-offs with that approach, but we believe they are worth it. To reassure noble Lords, as agreed with the EU, we will have decision-shaping rights when new EU policies are made. Parliament will rightly have a say on those new rules. Any disputes will be overseen by an independent arbitration panel, not the European Court of Justice. Of course, many of the rules that we expect to be in scope of the agreement already exist in UK statute, with minor divergence between the UK and the EU since we left in 2020. This reflects the fact that we are like-minded trading partners with mutually high standards.
I say to the noble Lord, Lord Redwood, that we may have to agree to disagree on the issue of growth, as deeper economic integration is in all our interests. We must look at where we can move closer to the single market in other sectors, as well as where that would work for both sides.
I move on to the ETS and CBAM. British businesses and consumers will also feel the benefit of linking our carbon markets, cutting costs, making it cheaper for UK companies to move to greener energy and once again saving the EU carbon border adjustment mechanism charge being paid on £7 billion-worth of UK goods exports to the EU. Where the UK needs access to EU agencies or databases to make the agreements set out in the common understanding a reality, it is reasonable that the UK pays for these services. For example, the UK should make a fair contribution towards the running costs of the EU agencies, systems and databases that administer the food, drink and carbon market linking deals. We will negotiate the details of any financial contributions with the EU. The food, drink and carbon market linking measures alone are set to add up to £9 billion a year to the UK economy by 2040 in a significant boost for growth. We aim to conclude negotiations on these areas by the time of the next summit.
The Government will introduce primary legislation later this year to ensure that we can deliver these agreements and that the benefits can be felt as soon as possible. It is important that Parliament has its say, so where we are making commitments to introduce new laws, Parliament will, as always, play its role in scrutinising the legislation that implements those commitments—I think we have many hours in your Lordships’ House ahead of us. The precise timing and details of legislative agreements are naturally subject to the course of more detailed negotiations that are taking place. We look forward to working with Parliament on the exact arrangements for scrutiny of the legislation as negotiations continue.
Noble Lords will appreciate that we cannot talk about the European Union and our relationships with it without touching on the Windsor Framework—something I feel somewhat informed about by many Members of your Lordships’ House. I enjoy being educated about this issue. I reiterate that we are committed to implementing the Windsor Framework in good faith and protecting the UK internal market. I express my gratitude to my noble friend Lord Murphy for his comprehensive review of the Windsor Framework and thank him for reminding us of the impact on Northern Ireland. I reassure him that I hope we will act speedily on the SPS agreement and the other recommendations in his report.
The insights provided by my noble friend are the direct result of his personal investment in the process and his extensive outreach to groups and individuals across the board. While the issues around making this work are incredibly charged in Northern Ireland and here, all noble Lords, especially the noble Lords, Lord Dodds and Lord Empey, have constructively engaged to make sure that we can get a way through.
I move to some of the specifics raised. The noble Lord, Lord Ricketts, asked me about the UK cohesion payments to the EU. We accept the principle that, when the UK participates in an EU instrument, programme or other activity, we should make a fair financial contribution to its budget to cover the costs of our participation. In December, the European Commission set out a proposal to the European Council to open negotiations with the UK on the financial contribution of the UK towards reducing economic and social disparities between regions of the union. This does not represent a proposal by the Government and the details of any contribution would be subject to negotiation.
My noble friend Lady Ashton and others touched on law enforcement and judicial co-operation. The summit package aims to strengthen our law enforcement and judicial co-operation capabilities, making our streets safer and ensuring that criminals are brought to justice. It will support our police officers and help enhance our intelligence and investigative capabilities against murderers, rapists and drug smugglers, including via facial imagery. It will also help ensure that investigations are equipped with the full facts of a suspect’s criminal history and that those are fully utilised to protect UK citizens from harm.
The noble Lord, Lord Barrow, asked about the second-generation Schengen Information System, SIS II. At the May 2025 UK-EU summit, we were pleased to agree a package which enabled further work to be undertaken with the EU to strengthen our law enforcement through new data exchange capabilities. The Government committed in their manifesto to ensure access to real-time intelligence. While at the UK-EU summit it was not possible to secure references to real-time, reciprocal alert sharing for border security and law enforcement processes, the summit represented an opportunity to further strengthen our capabilities, co-operation and relationship.
Many Members of your Lordships’ House, but specifically the noble Lord, Lord Jay, touched on defence spending—a subject that I, as an honorary captain of the Royal Navy, am particularly exercised about too. As the PM said in his Munich speech:
“To meet the wider threat, it is clear that we are going to have to spend more faster”.
We have shown our collective intent in this regard with the historic agreement to increase spending to 5% on security and defence. Noble Lords have had and will continue to have the opportunity to discuss that with my noble friend Lord Coaker on many future occasions.
On the White Paper—a genuine issue raised by the noble Lords, Lord Jackson of Peterborough and Lord Taylor of Warwick, and the noble Baroness, Lady Finn—the Government’s manifesto on which we were elected was clear on our approach to resetting relations with the EU, including negotiating an SPS agreement to prevent unnecessary border checks and to help reduce pressure on prices. At the UK-EU summit in May last year, the Prime Minister announced a new strategic partnership with the EU, underpinned by the common understanding. The common understanding sets out an agenda in writing for strength and co-operation with the EU across safety, security and economic prosperity.
The noble Lord, Lord Taylor of Warwick, and the noble Baroness, Lady Lane-Fox, rightly asked about AI. We have had a number of good discussions with the EU on AI, including through the committees established under the trade and co-operation agreement, and are now in discussions with our EU partners about how we take forward further collaboration on AI and other digital issues. If the noble Baroness will indulge me, I will write to her on the specific questions at the end of her speech.
The noble Lord, Lord Wallace of Saltaire, asked about training for civil servants. The FCDO has a dedicated team leading work to build Europe capability across government. We are keeping our learning offer under regular review to ensure that we are partnering and influencing the EU and European allies in the most effective way.
I was surprised by one of the questions from the noble Baroness, Lady Ludford, about free movement by the back door and how the European youth experience scheme could be regarded as such. To reassure her, the youth mobility arrangements are clearly not freedom of movement. They are based on strict control; they are subject to a visa requirement, capped and time limited. We already have agreements with 13 other countries, and no one has suggested that we have freedom of movement with them. Any scheme will be subject to an allotted number of places, and we have made it clear that this will be in line with the UK’s existing schemes with countries such as Australia and New Zealand. They will have limits on numbers and length of stay and will be subject to a visa application so that we can decide—
Baroness Ludford (LD)
I evidently did not make myself clear. I did not say that the Government want free movement inwards, but, as I understand it, are asking for British citizens who go under the youth experience scheme to the continent to be able to move freely between different EU member states. That is free movement inside the EU for Brits, but it is not reciprocal, because we are only one country.
Baroness Anderson of Stoke-on-Trent (Lab)
The scheme will have a cap and quota both ways. On fisheries, I will write to the noble Baroness about her specific point because I am aware that I am out of time.
There are a couple of important final points, if your Lordships’ House will indulge me. The noble Lord, Lord Tugendhat, may enjoy the comments of the President of the European Parliament, Roberta Metsola, in yesterday’s Telegraph about how the European Union feels about next steps. I advise him to read her op-ed. The noble Baroness, Lady Suttie, and the noble Lord, Lord Barrow, asked me about European Union membership for Ukraine. That is a matter for EU members, and we are no longer one. The noble Lord, Lord Taylor, asked about the date of the next summit. We are in discussions with the EU on timings, but it will be this year.
I thank the noble Lord, Lord Kerr, for his suggestions in the defence space and, most importantly, for referencing one of my personal political heroes, Denis Healey. The noble Lord, Lord Wallace, spoke about wider engagement across Europe with European politicians. I think it is fair to say that the Prime Minister has actively sought to engage in this space and to make sure that we have solid relationships. He has also been a strong advocate, at least throughout the time I have known him, for making sure that we all as parliamentarians engage with our sister parties across the European Union and beyond.
The noble Earl, Lord Clancarty, asked me about Erasmus beyond 2027. The scheme does not yet exist, which is why we have joined year one. We will review after year one whether we will have further issues. I will write to him on group passports. On the youth experience scheme, I cannot comment on the details of ongoing negotiations, but I am sure we will be discussing it at great length in your Lordships’ House when I can.
The Government remain committed to strengthening our strategic partnership with the European Union and delivering real results for the people of the UK while sticking to the red lines set out in our manifesto. As the committee notes in its report, strengthening the UK-EU strategic partnership is an ongoing process. The summit in 2025 was the first in a series of annual summits and, as the Prime Minister set out in his speech at the Munich Security Conference recently, we must look at what more we can do with the EU. I reassure noble Lords that although I understand that we have many different views in your Lordships’ House, I think the one thing that we all agree on, especially in such a volatile world, is that having positive relationships with our neighbours is a very good idea.
Lord Ricketts (CB)
My Lords, I thank the Minister for such a comprehensive speech—delivered at pace, if I may say so—and I am glad that our report has stimulated such a wide-ranging and lively debate. Noble Lords will see that I am trying to be the eternal diplomat again. Many Members raised points that I did not have time to raise in my speech. I am left with the feeling that our title, Unfinished Business, was not that bad. It is unfinished in the sense that it will never be done, and in the sense that in British politics the issue of whether closer relations with the EU are in our interest is still live. That debate will continue in the months ahead, and one of the issues will be the legislation connected with dynamic alignment.
I think the big message from our debate is that the EU-UK relationship cannot be seen in a vacuum, isolated from the wider geopolitical upheaval. Indeed, it is encouraging the Government to go faster on the reset, which I welcome. I think there was widespread support in the debate for the idea that we should get closer to the EU on defence-industrial co-operation, if we can do so in a way that is in our interest, which requires the EU to think again about its entry ticket.
However, the real strategic decisions are not going to be taken in the EU, and I hope that the House will continue to discuss the issues that we touched on here. What is the right forum in the future to do that? We need to bear in mind the points made by a number of noble Lords that Britain’s leadership in a future forum for strategic decision-making in Europe depends on us having the defence resources rising at a pace to make us credible.
I personally think that a close and confident relationship with the EU is part of the response to the generational upheaval that we are facing. I am surprised that our debate did not produce a consensus on that point of view, but I think it was a valuable debate and I beg to move.