UK-EU Relationship (European Affairs Committee Report)

Earl of Kinnoull Excerpts

Wednesday 20th September 2023 Lords Chamber

Moved by

[The Earl of Kinnoull]

That this House takes note of the Report from the European Affairs Committee The future UK-EU relationship (4th Report, HL Paper 184).

[The Earl of Kinnoull (CB)]

My Lords, the European Affairs Committee published our report, The future UK-EU relationship, on 29 April this year. We took oral evidence between October last year and March this year, hearing from 43 witnesses, finishing with the Minister for Europe, Leo Docherty MP. We also received 58 written submissions. The Government responded to the report on 28 June and to certain follow-up questions on 31 August. I am very grateful to the usual channels for expediting this debate today.

Put simply, the report looks at the overarching state of the relationship between the UK and the EU and how this might be developed into the future. This inquiry looks forward and not into the rear-view mirror. We did not address issues specific to Northern Ireland, including the Windsor Framework agreement. These are handled by our sister committee on the protocol.

The inquiry focused on four themes: the overall political, diplomatic and institutional relationship; the foreign policy, defence and security relationship; energy security and climate change; and the mobility of people. These do not comprise an exhaustive list of areas in which the UK-EU relationship could be developed. However, we as a committee believe that they are especially salient at the current juncture.

Here, and on behalf of the committee, I thank our staff: Jarek Wisniewski, Jack Sheldon, Nick Boorer, Tabitha Brown, Tim Mitchell and Louise Shewey. Their commitment and professionalism underpin everything in our report.

I start with the overall political, diplomatic and institutional relationship. It was unhappily the case that, during our inquiry, this was impacted by the impasse over the Northern Ireland protocol. Now, however, there are signs of improvement, not least with the recent welcome news on Horizon Europe.

The current institutional framework under the trade and co-operation agreement and the withdrawal agreement includes a total of 32 committees and working groups that bring together the Government and the Commission. Two of these committees are political, with the others essentially powered by officials. It is a double-headed structure, with two sets of committees reporting to one or other of the political committees, each of which is set up under its respective big agreement.

The committee felt that this huge apparatus was operational but not really operating. We recommended that there should be a “considerable increase” in the intensity of activity within these structures. We must optimise matters, and it is vital that the committees hum with activity to the mutual benefit of all concerned. Can the Minister give us an update on the 32 committees’ level of engagement and work, and assure the House that, from the UK side, at least, activity and warm relations are seen as a priority?

Our second theme was the foreign policy, defence and security relationship. We welcomed the “close and productive” co-operation between the UK and the EU following the Russian invasion of Ukraine, as well as the effective co-operation in the imposition of sanctions against Russia, but called for closer co-operation on their implementation and enforcement. We specifically proposed that the UK and the EU agree a memorandum of understanding on the imposition, implementation and enforcement of sanctions, complementary to the G7 enforcement co-ordination mechanism.

In its response, the Government said that they are not currently considering an MoU with the EU but that they

“will continue to review options to maximise the efficiency of our cooperation with the EU going forward”.

I ask the Minister: what factors are influencing the Government’s hesitation about this MoU on sanctions, which I assume would track the enhanced sanctions partnership agreement reached already between the Government and the US Treasury?

We heard a lot on having a structured framework for foreign and security policy. The report recommends that the UK and the EU should “deepen and improve” working relations on foreign and security policy, with some limited structured arrangements for ongoing co-operation. We thought that a purely ad hoc approach was not wise. We felt that any such structured arrangements should include provision for the UK Foreign Secretary to engage with the EU Foreign Affairs Council at least twice a year.

To date, the Government’s responses are none too clear on this. On 31 August, the Foreign Secretary said that

“both sides are focused on making sure our cooperation delivers, rather than on institutional changes”.

Can the Minister give some further clarity here? It seems to me that engagement at the General Affairs Council would improve the chances of delivery.

I turn to our third theme, which is energy security. This is obviously a wide area, and we focused on several specific topics in our report. The committee welcomed the close co-operation with the EU since the Russian invasion of Ukraine and noted that, in part thanks to this, there had been no disruption to energy trading. The report made various recommendations —for example, on the need for more interconnectors. I am glad that the government response materials have been positive on the recommendations. I look forward to others developing this vital area.

Turning to emissions trading schemes, the UK left the EU ETS at the end of the transition period. A separate UK ETS was established, which is very similar in design. This began trading in May 2021, and the carbon price has since broadly tracked the EU scheme. The UK scheme is around 10% of the size of the EU one. We saw

“significant mutual benefits to be gained”

from linking the schemes, citing the Swiss precedent. We recommended entering negotiations in what we called a “can-do spirit” and noted that a link would be

“easier to achieve sooner rather than later, given the possibility of greater divergence over time”.

The Government’s response says that they

“partially agree with the Committee’s recommendation”,

but it does not make clear which parts they agree with. A follow up in correspondence has not shed much new light on matters.

Commentators are now referring to a growing divergence between the UK and the EU’s Emissions Trading Scheme. As the Government have previously assured us that they are considering linking our respective systems, I ask the Minister: does this remain the case, and what steps are being taken to take this forward?

In December 2022, the EU Council agreed its general approach to a carbon border adjustment mechanism. A draft regulation is now progressing. The EU sees CBAM as a necessary part of its wider efforts to combat climate change. Without a CBAM in place, the EU foresees a risk of carbon leakage, whereby energy-intensive industries might relocate outside the EU and sell their goods back into the EU, effectively undercutting EU-based industry subject to carbon-reduction policies such as the EU ETS.

Under the EU’s current CBAM proposal, countries with an ETS linked to the EU’s would be excluded from such charges. As the UK and EU schemes are not currently linked, it is possible that CBAM could apply to UK-EU trade. I see no reason why the EU’s logic does not apply in reverse to the UK. All this of course strengthens the argument for linking ETSs. The Government have been consulting on measures to combat carbon leakage and their report on this area has not yet been published. Will the Minister say when we might expect the Government to provide an update on their position and where in the existing TCA committee structure CBAMs are being discussed?

The last section of our report examined the broad area of mobility of people, including the implications of the TCA’s provisions for both inward and outward business and professional mobility between the UK and the EU, but I will concentrate only on our work in the education and young persons sectors. The Government have made much of the Turing scheme, and we applauded it in its limited scope. However, we studied the Welsh Government’s Taith scheme. Indeed, we travelled to Cardiff. Introduced in 2022, Taith provides financial support for inbound educational group mobility. A Welsh organisation can apply for funding to send people out of Wales to another country and get funding to bring people to Wales. The Turing scheme provides funding for outbound mobility only. The Scottish Government have recently announced plans for a similar scheme to Taith, although details have not been provided. Of course, students in Northern Ireland can access Erasmus+.

We asked the Minister for Europe whether there are plans to introduce a scheme similar to Taith in England. He said the Government were

“open-minded and we look with great interest at the extent to which we might operate a similar scheme”.

In the most recent correspondence with the committee, the Foreign Secretary said,

“the Turing Scheme’s focus on outward mobility funding has not been a hindrance to forming partnerships between institutions, which may go some way to providing the kind of links the Committee is seeking”.

Three-quarters of the United Kingdom’s nations are already or will be establishing some form of reciprocal student exchange programme. Given the Minister for Europe’s admission that Erasmus+ has been “very beneficial” to the UK and the evidence that Taith has been successful in Wales, will the Minister comment on whether the Turing scheme will be enhanced?

The committee heard evidence that suggested that post-Brexit barriers to mobility between the UK and the EU, in both directions, have had an especially significant impact on young people, including workers and professionals in the early stages of their careers, as well as students across different educational levels. We recommended that the Government discuss with the Commission the possibility of an ambitious reciprocal youth mobility partnership, similar to the youth mobility schemes that the UK and EU member states enjoy with other jurisdictions, allowing young people to apply for fixed-term visas to travel and work. The Government’s response here was lacklustre, saying that the Government are

“exploring bilateral opportunities for reciprocal youth mobility schemes with international partners, including our European neighbours”.

Finally, will the Minister give us an update on discussions with the EU and individual EU member states about youth mobility partnerships?

There are many speakers and I look forward to the debate very much. I beg to move.

--- Later in debate ---

[The Earl of Kinnoull (CB)]

I thank the Minister who, as ever, gave a very polished performance. Her speech was rich in detail and I look forward to reading it tomorrow morning. I must say that I am always amazed by her capacity for hard work. I have been interacting with her this week and we all owe her a lot of thanks for that hard work and for that effective response.

I also thank everyone else who has spoken; it has been a most interesting and wide-ranging debate, which went all over the place. As this is my last report—my swansong, as someone said—I thank all the people who have been on the committee with me. I have actually been on it since before the Brexit vote, for more than seven years, and it has been enormous fun. Strong comments have been made across the table, at times, but the committee has always ended up in a good place, with good humour. I hope we have produced things that will have a long shelf life and will be helpful to those who seek to improve matters through the years.

I finally thank my noble friend Lord Ricketts, who has taken on a jolly difficult task. He asked me to say how sorry he is not to be here—as noble Lords will know, he is on duty at the state visit—but I suspect he only half-meant that because I am sure he is being very well fed. I will quiz him on that when he gets back.

I want to underline three points. The first was on the comments about these 32 committees. Yes, just the number of meetings is not going to do anything, but the committees do publish their agendas and minutes. So when we on the committee say that we do not feel that these committees, which are forums for mutual opportunity, are firing on all cylinders, we mean that we have been looking at the agendas and minutes, not just at how many times they have met. And, as I said, these are mutual things, so if we can follow them up, everyone will benefit.

Secondly, the most popular theme among the speakers was some form of co-operation on foreign policy, defence and security. I heard what the Minister said on this, but I and quite a lot of people around the House regret that. These people have a lot of experience of knowing that ad hocism brings risk, and it is risk that we do not need. We have spoken a lot about having, as an absolute minimum structure, the Foreign Secretary visiting the European Foreign Affairs Council twice a year. I did not think that was too much structure. Certainly, if I were the Foreign Secretary, I would want to meet my opposite numbers from other countries—at least the major countries—regularly. I want to stress that.

Finally, in the category “boring but important” is the whole saga that occupied about half my speech on ETS and CBAM. I am sorry to go into jargon. The thing is, the more you look at that and understand it, the more you realise that this is potentially quite a big problem and it is solvable—and solvable now, if there is a will. I do hope the Government will look at all that again. From the Minister’s speech, it did sound as though this is happening. Now that there are those, as I said, rather boring but really accurate and informative chapters of our report, that will tell you about the issue and I think it is something that we can solve.

We are fated to have a close relationship with Europe. The ties of blood, culture and history are so strong. I am not talking about a political relationship; but, as liberal democracies, that is something we share greatly with them. As the noble Lord, Lord Kerr, was saying, it is a pretty wintry world outside liberal democracies, which are rather rare. So we should stick together and use the very good apparatus we have built—the powerful trade and co-operation agreement, and others—to optimise things and build something friendly and proximate, and that will have to be dynamic. I beg to move.

Motion agreed.