Brexit and the EU Budget (EUC Report)

Lord De Mauley Excerpts

Thursday 6th April 2017 Lords Chamber

[Lord De Mauley (Con)]

My Lords, this is a report, of course to Parliament, and in particular to the House of Lords. If a Member of the Committee which prepared it is permitted to say this, it has been produced with considerable skill and care. If I may be forgiven for saying so, it appears to be a singularly significant cross-party House of Lords Select Committee report among many important cross-party House of Lords Select Committee reports. Indeed that fact was recognised by the press, which gave it more coverage than perhaps might ordinarily have been the case.

It is a report on a complex subject and does its best—quite a good best, I would argue, and I pay credit to our chairman, other Members and the clerks—to simplify that subject. However, it is in one sense unusual in that it has the potential to be really quite useful to those responsible for negotiating our departure from the European Union.

It contains legal advice that, in the event that no agreement has been reached between the United Kingdom and the European Union by the expiry of the two-year period specified under Article 50, the UK will be subject to no enforceable obligation to make any financial contribution at all to the European Union, and that while EU member states may seek to bring a case against us for payment of outstanding debts under principles of public international law, as the noble Baroness, Lady Falkner, said, international law is slow to litigate and hard to enforce, and it is doubtful that any international court or tribunal would have jurisdiction.

It does not say—again, as the noble Baroness said—that in any situation nothing should be paid, and indeed in my view, the Government may be well advised to pay something, if they can get an agreement to secure for the UK their key negotiating objectives. The good relationship the noble Baroness mentioned is important. The real significance of this is that it gives the EU considerable encouragement to reach an agreement, and to extend negotiations—although we must all hope that it will be possible to reach an agreement within the two years—if in due course it becomes apparent that no agreement is likely to be reached within that period, and if indeed it suits us.

I would argue that if this situation did not apply—that if no agreement has been reached by the expiry of the two-year period, the UK need pay nothing to the EU—there would be much less incentive on the EU to agree to anything. This is unlikely to be welcome news to Monsieur Barnier, who has suggested we might have to some €60 billion or even €70 billion.

The key question is how the Government should use this information. I am sure that they recognise the value of it as a negotiating chip—and, indeed, have taken their own legal advice. For me, a key question is going to be how much can be negotiated within the two-year period. It will be a tall order to complete negotiations within that period on a comprehensive free trade agreement, encompassing not only tariffs but, of vital importance, non-tariff barriers, including matters such as mutual recognition agreements and conformity assessment. Services, so important to our economy, also need to be addressed. To suggest that the exit terms must be settled before a trade agreement can be considered—this picks up on a point made by the noble Lord, Lord Hannay, in the PNQ earlier this morning, which of course I agree with—misses the point that what we are prepared to accept in exit terms may be affected by how good the trade deal is. So the information in our report may be helpful. I hope that Ministers, in carrying out this very difficult task, will make use of this in the most skilful way, and I wish them every success.