Brexit: Financial Settlement

Lord Kerr of Kinlochard Excerpts

Tuesday 11th September 2018 Lords Chamber

[Lord Callanan]

Of course, we will respect our legal obligations. We are a law-abiding nation; that goes without question. But there are several conflicting legal opinions as to our liabilities. Your Lordships’ House held a committee of inquiry under the chairmanship of the noble Baroness, Lady Falkner, on which I was privileged to serve. Its conclusion was:

“On the basis of the legal opinions we have considered, we conclude that, as a matter of EU law, Article 50 TEU allows the UK to leave the EU without being liable for outstanding financial obligations under the EU budget and related financial instruments”.


There are alternative legal opinions—in fact, I have spent the morning reading most of them—but it is a complicated area of law. Of course, we want none of these scenarios to come to pass; we want to reach an agreement. Indeed, we have reached an agreement, and we will honour our commitments within the context of the withdrawal agreement.

[Lord Kerr of Kinlochard (CB)]

Did the Minister notice that the head of the NAO has said, formally and on the record, that we will be responsible for paying the bills whether or not there is a withdrawal agreement? Does he accept that the costs of £39 billion are the costs of past commitments, not of future access? They are computed as the cost of the commitments we have already entered into. Is he seriously contemplating that the UK would become a defaulted state?

[Lord Callanan]

At the risk of repeating myself, I said we will honour our legal commitments, but it is a complicated legal area. There are some great legal brains in this House who would, no doubt, want to opine on the matter, but there are different opinions. Ultimately, I suspect this will come down to a matter of politics. We do not want to get into a dispute on these matters and so we have negotiated a settlement. It is hugely complicated, there are a number of different financial areas involved, but we remain confident that we will reach a withdrawal agreement and meet those commitments.