UK-EU Relationship (European Affairs Committee Report)

Baroness Neville-Rolfe Excerpts

Wednesday 20th September 2023 Lords Chamber

[The Minister of State, Cabinet Office (Baroness Neville-Rolfe) (Con)]

My Lords, I particularly thank the noble Earl, Lord Kinnoull, and all noble Lords on the European Affairs Committee for their wide-ranging report. I take this opportunity on behalf of the Government—and, I believe, the whole House—to thank the noble Earl for his skilled chairing of the committee since 2019 and the collaborative approach he has taken to engaging with the Government. He has deservedly gone on to become Convenor of the Cross Benches, and we will all benefit from his calm, wise and intelligent leadership. I am sorry that the new chair, the noble Lord, Lord Ricketts, is absent today, but delighted that he is in Paris to celebrate His Majesty the King’s first official visit to France.

I am also extremely grateful to all noble Lords who have taken part in today’s debate for their insightful contributions, which are a tribute to the report and its authors. My noble friend Lord Howell of Guildford was right to emphasise how much the EU has changed and the changing context in which it operates. My noble friend Lord Jackson of Peterborough pointed out that there will be a new College of Commissioners next year and elections in various places.

We are committed to a mature, constructive relationship with all our international partners. That, of course, includes the European Union. As we stated in our response to the report in June, we intend to realise fully the potential of the trade and co-operation agreement, including in a range of crucial areas such as energy, trade, security and AI.

I cannot agree with view of Brexit expressed by the noble Lord, Lord Collins of Highbury. Brexit has brought us an independent trade policy, the growth of our green and digital industries, the introduction of sanctions legislation, early approval of the Covid vaccine, and a points-based immigration system.

To return to the report, relations have improved, and continue to do so, under this Government. In particular, I am pleased to say that the UK and EU already enjoy close collaboration and co-operation in their support for Ukraine and over the imposition of sanctions against Russia. I was particularly pleased that, on 7 September, the UK and the EU announced agreement for UK association to Horizon Europe and Copernicus. UK scientists will now have access to the world’s largest research collaboration programme. This will help to ensure that we are on track to deliver on our ambition to grow the economy and make the UK a science and technology superpower. It has indeed taken time because, as some have said, the Prime Minister was rightly determined to ensure that the deal was in the UK’s national interest, strengthening UK science and delivering value for money for UK taxpayers. We are looking forward to working closely with European and international partners to maximise collaboration under these excellent programmes. We have the same approach as on the Windsor Framework—I agree with the noble Lord, Lord Liddle, that this was a major step forward—of getting into the detail and doing what is right for Britain, resisting pressure to accept a boilerplate deal no matter what the terms, and delivering terms that work for us.

As we highlighted in our correspondence with the committee, tackling illegal immigration is a top priority for the Government. We continue to seek EU co-operation in tackling illegal migration—a common challenge, of course, as we can see the boats crossing both the Mediterranean and the channel. The UK-FRONTEX working arrangement, which is currently under negotiation, is an example of joint working on what is clearly a pan-European issue that requires a joined-up effort.

I have dealt with the EU all my working life. I started in the rather powerful cereals management committee as a civil servant in 1974, and eventually was the UK Minister in the Competitiveness Council for three years, where my French opposite number was a certain Emmanuel Macron. I then served with great pleasure with some noble Lords who are here this evening on the EU Committee. I therefore understand the value of engaging the EU while being clear about our interests. Accordingly, I agree with the committee and the noble Earl, Lord Kinnoull, on the importance of maintaining a regular dialogue. We will continue to do so under the formal treaty framework—for example, the Partnership Council, which the Foreign Secretary attended in March —or in the technical committees, which oversee implementation, and through other avenues, such as the dialogue established by the memorandum of understanding on financial services. I should say in passing that I noted my noble friend Lady Lawlor’s concerns that we should retain our own legal traditions in financial services.

On the importance of dialogue, the Prime Minister also engages at leader level with our EU and European partners on a regular basis at multilateral fora, the G7, the G20 and more recently with the European Political Community, which brings together the whole European continent. Indeed, the UK will host the fourth EPC summit in 2024, as my noble friend Lord Balfe pointed out.

However, I am not convinced that we should seek extra meetings, as proposed by the committee. As the Foreign Secretary said in his letter to the committee, the frequency of meetings should not be seen as a measure of success. What matters is outcomes. Noble Lords must remember that like other third countries, albeit we are special because of our mutual history, we must focus our demands on what really matters to our people and our businesses.

The TCA has now underpinned our trade and wider relationship with the EU for more than two years. Its committees meet regularly—more than 40 times since the beginning of 2021, with 15 more planned over the next few months. There is also extensive engagement with the EU and with individual member states outside the TCA structures. For example, the Deputy Prime Minister, Oliver Dowden, was in Italy last week and spoke on security and AI at the Pontignano conference. To pick up a point made by the noble Earl, Lord Kinnoull, we work hard to make engagement warm and trusting where appropriate. As my noble friend Lord Lamont said, improving our relationship with the EU is not betraying Brexit. I think there was agreement on that point.

The committee’s report rightly focused on our foreign, security and defence relationship with the EU. As our integrated review refresh makes clear, although we have left the European Union, the UK retains a significant role and stake in the future of our home region. It is essential that we work together to respond to common geopolitical threats and in support of our shared values of freedom and democracy.

In response to points made by a number of noble Lords—including my noble friend Lord Lamont, the noble Lords, Lord Wallace of Saltaire and Lord Hannay, and the noble Baroness, Lady Ludford—let me say that we do not currently consider that bringing co-operation on these matters into a formalised structure would lead to more effective co-ordination. We are focused on the substance of our co-operation and what we want to achieve together where our interests align, rather than the form. Close co-operation is vital in, for example, developing military mobility, crisis response, resilience and countering disinformation and hybrid threats where NATO and the EU have complementary strengths and tools.

The UK’s focus is strongly on strengthening our foreign and security policy relationship with the EU on Ukraine. As my noble friend Lord Tugendhat said, that is very important and likely to be important well into the future. The UK-hosted Ukraine Recovery Conference was a shining example of what can be achieved. We must remain steadfast in our support.

I say this in response to the noble Lord, Lord Wallace of Saltaire: our approach is essentially practical. Our co-ordination with the EU demonstrates our shared commitment to European security. We are working closely not only on PESCO, where the UK is negotiating terms to better enable us to shape the rules on cross-border military transport, but on providing Ukraine with military training, equipment, cyber resilience, humanitarian and economic support, sanctions, energy resilience and countering Russian disinformation.

On the question from the noble Earl, Lord Kinnoull, about the formalisation of sanctions co-operation, it is our view that our existing arrangements for co-ordinating sanctions with the EU are working well. However, I wish to pick up a point made by the noble Baroness, Lady Blackstone. The UK, along with our international partners, has the largest, most rigorous package of sanctions ever imposed on a major economy. I think it is fair to say that we surprised Russia with the scale and level of international unity on sanctions. We will continue our efforts to combat circumvention.

Our officials are in regular contact with EU institutions and member states. We co-operate on all elements of sanctions policy, from design to implementation. Although we constantly keep our processes under review, we do not assess that a more formal arrangement would improve co-ordination. Furthermore, the enhanced partnership between the US Office of Foreign Assets Control and the UK Office of Financial Sanctions Implementation reflects the closely corresponding function of those organisations within our respective systems. That is the answer: this structural similarity is not present in the case of the EU, which has no equivalent.

More broadly, we look forward to establishing dialogues on the important areas of cybersecurity and counter- terrorism.

Close co-operation on energy security between the UK and the EU is crucial as Europe decouples from Russian hydrocarbons. We expect to continue proactively engaging on planning for next winter and beyond, ensuring stable energy supplies while reaching our respective decarbonisation goals. We are also pleased to have resumed participation in the North Seas Energy Cooperation with both the EU and other friends. Exploiting the huge renewable potential of the region will boost European energy production, enhance our energy security and support the transition to net zero.

I am afraid that I cannot agree with the noble Baroness, Lady Ludford. Today, the Prime Minister reiterated our commitment to net zero by 2050 and set out a path for achieving it in a fair, proportionate way. Our new approach is pragmatic, proportionate and realistic because the key is maintaining the British people’s consent on reaching net zero by 2050. I think people will come to understand that.

The Government are committed to working with partners such as the EU to find international solutions to carbon leakage, an issue that was raised by the committee. We are following developments on the CBAM closely ahead of the transitional reporting phase, which will launch on 1 October, and engaging with the Commission to discuss technical considerations relevant to UK manufacturers. The UK raised the CBAM at the Trade Specialised Committee on Goods in 2021 and 2022 and is currently in discussion with the EU on the agenda for this autumn’s committees. The noble Lord, Lord Hannay, will be glad to know that the Government have consulted on measures to combat carbon leakage, will consider the responses carefully and will issue a response in due course.

The UK has ambitious carbon pricing through our emissions trading scheme and carbon price support mechanism. The TCA commits the UK to co-operating on carbon pricing; discussions on this issue would be covered by the Trade Specialised Committee on Level Playing Field for Open and Fair Competition and Sustainable Development. We remain open to the possibility of linking the UK ETS internationally and continue to work collaboratively with a range of like-minded nations to tackle our shared climate challenges. We will update noble Lords in due course. I will write to the noble Baroness, Lady Blackstone, on the subject of energy flows but I think she is probably aware of the interconnector arrangements that we have.

The issue of mobility is an important part of our relationship with the EU. The withdrawal agreement provided for the protection of the rights of more than 5 million EU citizens to remain indefinitely in the UK, as well as to work and access public services as they did before the UK left the EU. Since leaving, the Government have focused the immigration system towards securing the skilled labour that businesses need to stay competitive and innovative.

The Government agree on the value of cultural and educational exchanges between the UK and other nations and will continue to support opportunities for young people, which have featured in the comments of several noble Lords this evening. We are exploring new bilateral youth mobility schemes with international partners, including our European neighbours. In response to the request from the noble Earl, Lord Kinnoull, for an update on discussions with the EU and member states, he will understand that I cannot go into detail but there are live discussions and I can confirm that Parliament will be updated as appropriate; I hope that will also be welcome to the noble Baroness, Lady Bull. We already have 10 youth mobility scheme agreements with other international partners, including Canada, New Zealand and Japan. We recently agreed arrangements with Andorra and Uruguay. The majority of EU member states have working holiday agreements with third countries so we continue to explore the possibilities.

We also recognise the enormous contribution of the UK’s creative and cultural industries. Since we left the EU, we have engaged with EU member states on entry requirements and the difficult issue of touring artists, which we used to discuss when I was on the committee. Now, only three member states—Portugal, Malta, and Cyprus—do not offer any visa or work permit-free routes.

Noble Lords have talked about Erasmus+. The Government chose not to participate in Erasmus+ for the 2021-27 programme, deciding instead to introduce a global scheme and provide more opportunities for students from disadvantaged backgrounds. The Turing scheme now funds 40,000 placements in 160 destinations across the world. The Government believe that it is right to prioritise funding outbound mobilities under the scheme at the present time. As the report made clear, there have been considerable benefits for that, including for disadvantaged students.

As my noble friend Lord Howard of Rising said, Brexit has allowed the UK to carve out its own trade policy. As an independent trading nation, we now have 70 trade agreements in place, including new deals with the Comprehensive and Progressive Agreement for Trans-Pacific Partnership, with Australia, with New Zealand and through the new Singapore partnership, which was mentioned during the debate. The freedom to strike such deals opens up many new opportunities in goods as well as services, our exports of which reached record highs in 2022 under current prices. We should of course celebrate the facts that the TCA is the world’s biggest zero-tariff, zero-quota FTA and that the EU collectively remains our largest trading partner.

A number of noble Lords mentioned our border target operating model, which was published in August. It set out our new approach to how security and SPS controls would be risk based and benefit from our new ambitious single trade window, which is designed to simplify and digitalise border trade in goods, and help smaller businesses. The noble Viscount, Lord Waverley, referred to it. We continue to work with stakeholders to prepare and we updated the House in a definitive Written Statement at the beginning of September.

The noble Baroness, Lady Ritchie of Downpatrick, raised some questions and concerns about small businesses. There has been a small delay to help businesses to adapt, which will also minimise the inflationary impact. I confirm that we did discuss these matters with the EU and member state veterinarians and there were extensive discussions with trade bodies.

The committee recommended that the Government should seek an agreement with the EU on SPS controls. The Government are open to this and, with the advent of the BTOM, there is more incentive for a deal. However, it must be based on equivalence and not on alignment to EU rules.

As several noble Lords said, the leader of the Opposition recently called for a much closer trading relationship with the EU. This is puzzling and, my experience would suggest, naive. It also risks returning us to the divisions of the past seven years after the referendum instead of focusing, as we should, on our national priorities. The Government’s approach, building incrementally on what we have already achieved, is much more likely to bear fruit.

We have heard a range of opinions in this place. Many—I think most—think that leaving the European Union was a mistake and that we should be binding ourselves closer to the EU. Others favour divergence. The Government are taking a pragmatic approach. We believe in a mature relationship with the EU— maximising the TCA, tackling shared geostrategic challenges such as Russian aggression against Ukraine, which has brought the defenders of democracy together, and respectfully disagreeing on areas where we have different views. That is the best approach for the UK.

I am grateful to noble Lords for this debate. The House will be glad to know that the Foreign Secretary will be addressing members of the European Affairs Committee in an evidence session in October.

[Viscount Waverley (CB)]

My Lords, I clearly cannot speak for Portugal, but I understand that it is looking for reciprocal arrangements in the matters to which the noble Baroness referred.

[Baroness Neville-Rolfe (Con)]

I thank the noble Viscount for that information. Perhaps we could have a word on the detail.