Resetting the UK-EU Relationship (European Affairs Committee Report)

Baroness Finn Excerpts

Thursday 26th February 2026 Lords Chamber

[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.