UK and EU Relations

Lord Hamilton of Epsom Excerpts

Tuesday 12th September 2017 Lords Chamber

[Lord Hamilton of Epsom (Con)]

My Lords, I would like to use my five minutes to talk about the progress of the negotiations with the EU or, perhaps more accurately, their lack of progress. Michel Barnier, the EU negotiator, has made it clear that he needs to see progress on three issues: the rights of EU citizens living in this country and British citizens living in the EU; the Irish border question; and, of course, the money.

It strikes me that if there was any political will behind it, agreement would already have been reached on the EU citizens. We want them to stay here and it cannot be impossible to find the means by which that happens. We do not have to agree to the jurisdiction of the European Court of Justice for its citizens who live in this country because that would admit that our legal system was rather inferior to that of the EU. I do not think that anybody in this House would really go along with that.

At the same time, the Irish border issue is one where there seems to be complete unanimity. Everybody seems to agree that we should continue with the frictionless border between the north and southern Ireland, which existed decades before anybody joined the EU. If there was any political will there, I believe that issue could have been solved. The problem is that if it were solved, that would create a template of frictionless borders which could then be applied to the rest of the EU. That would then draw the EU into the question of the next phase of discussing our trade relationships with it.

Then there is the money. I always think that the whole debate about how much we should pay the EU was rather snarled up at the beginning by its absurd claim that we should pay it €100 billion. Not unnaturally, the UK position seems to be to go back to the EU and say, “We will of course honour our international obligations, but produce us the evidence that we actually owe you money. If you do, we’d be more than happy to pay up if we are clearly liable for those debts”. That does not seem an irresponsible position to be in.

However, the problem is that the question of whether we are making progress on these issues is a subjective judgment in anybody’s language. I expect that the noble Lord, Lord Liddle, was right to say that the advice to be given to the Council of Ministers in October will be that insufficient progress has been made, so we will not be able to move on to the more serious issues of our future trading relationship with the EU.

The most important question put in this Chamber today came from my noble friend Lord Caithness. I repeat it to my noble friend the Minister: is it right that the United Kingdom made a proposal to the EU that we should have a rolling programme of negotiations, which should just continue, and that the EU turned this down by saying that we had to wait for the next scheduled meeting? If that is the case, it is quite clear that—as per the alarm bells sent ringing by my noble friend Lord Blencathra—it does not want an agreement but wants to push it right to the end of the period. If you have negotiations going on between two parties, one of which wants an agreement and one of which does not, it will clearly be very difficult to get an agreement. This brings us back to the remarks of the noble Lord, Lord Jay, who made it clear that we might reach the end of the period without any agreement because it has just been impossible to get any agreement during that period.

If there was an agreement, it does not follow that it will be ratified and agreed by the European Parliament, which might well take the view that it does not want to encourage anybody to leave the EU. It would therefore be very important not to approve it in the European Parliament. The agreement then has to go to 27 different countries in the EU. There are also something like 11 regional Governments—I do not know whether they all have a veto on it as well. So there are many hurdles to be cleared and it seems not inconceivable that we might end up, through no fault of our own, with no deal whatever.

There are moments when I feel quite sorry for Michel Barnier. He is trapped between businessmen and sensible people in the nation states, who want to go on trading with the United Kingdom, and lunatics in Brussels who want to punish anybody who has the nerve to leave the club.

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[Baroness Anelay of St Johns]

My Lords, the fact is that as we leave the European Union, we will leave Euratom. What I can say to the noble Lord and to the House is that a lot of work has been done, not only with respect to Euratom but with other international obligations, to scope out exactly what all our international agreements mean, whether any need to be replaced and, if they do, how they would be replaced and how that would be affected by our leaving the European Union. So although I cannot say specifically that the two would be contiguous, because we will leave Euratom on the date we leave the European Union, we are in the position whereby we cannot negotiate new agreements until we have left the European Union. However, we can carry out technical exploration of such agreements. Therefore it is important to know what kind of agreements we need to reach. Above all, we are making sure that we do not in any way compromise our current position as members of the European Union. We gave that undertaking and we will keep to it.

I was asked about the transitional implementation period. My noble friend Lady Neville-Rolfe looked very closely at that with great interest, because it is all about making sure that we enable those who are in business, as well as everybody else, to know that they do not have to go through the same process more than once. If we are leaving the European Union, they will not have to keep changing their processes in business. We have certainly heard from business about what an implementation period needs to look like. Different businesses think of different periods. We have said very firmly and clearly that an implementation period is something that we will need to negotiate with the European Union but that we do not see it going beyond the date of the next election. Of course, we are not in a position to be able to discuss the terms of an implementation period until we have reached the next stage, which is to look at what our future relationship with the European Union will be. Clearly, if anyone wishes to stay in both the single market and the customs union, it means that they have to accept the four freedoms. The Commission and the EU 27 made it very clear early on that those freedoms were not divisible.

There was a lot of strong feeling about the customs paper not being clear enough. By the way, I reminded myself the other day that blue-skies thinking was the way in which Apple started its rather special business; it is a way of testing out new ideas that can really take off and work. The real reason we put in alternatives is because that is what you do in a negotiation—test out alternatives.

I turn to money. I was challenged on many occasions to say that we should simply tell the European Union how we were going to work out what we owed. It is a two-way street: the European Union also has obligations to the UK. We recognise that we have obligations with both an international legal basis and a moral one. I am sure that noble Lords will have read the paper put out by the European Union. It is three and a half sheets of paper, two of which simply describe the fact that the UK owes something. It says that the debts ought to be shared out among all the people who need to take a share, without actually quantifying or saying how they were going to calculate that, or giving an idea of how they value certain premises—the wherewithal of the European Union. What is the value of the obligation that is owed? What it did do, which is helpful, is to carefully list, on one and a half pages, a whole load of reference to treaties and regulations saying, “This is the legal basis for us demanding money”. Not how much money or how it should be divided up, but why it wants some money.

I recognise how vital this is to the other EU 27. They face losing the third largest net contributor to the European Union. They have been given a bald choice: either they get less in the way of infrastructure funds, or they pay more. Neither is a particularly attractive option for them—and they have been told that, if they can find a third way to solve the problem, they should let the Commission know. This is a problem—these are our friends, and we want Europe to continue to succeed, so I understand the difficulty. However, our duty to the British people is to challenge the European Commission and say: “You say that that particular section of a treaty confers on the UK an obligation to pay. Let us first of all test that legal basis”. That was what was happening about two weeks ago. We were challenging the legal basis, not in a hostile way, but as lawyers do, by simply saying: “How does this work”? That is at the core of why there has been so much anxiety in Brussels. It is because we have different ways of doing things, not because we do not want to reach agreement. The UK way of doing things is to analyse, challenge, then agree. I promise this House that that is what we will do.

We have had two speeches from noble Lords who nearly always make me want to think and think again, as they did tonight. The first was my noble friend Lord Bridges, who said that we have to think what kind of society we want to build in this country as we leave the European Union. My noble friend Lord Howell of Guildford carefully set out how it is important to have an eye to the future and said that we need to challenge what that future is like. How do we look at the reform of institutions across Europe, which we have helped to build but which need to be resilient for the future? Whether it is Europe, the UK or this House, all of us want to be resilient for the future.

[Lord Hamilton of Epsom]

Before my noble friend sits down, could she answer the question put to her by my noble friend Lord Caithness and myself? Is it right that we offered the Commission the option of a rolling programme of negotiations and that this was turned down by the EU?

[Baroness Anelay of St Johns]

My Lords, I put the position very early on, in my winding-up speech, I hope, when I explained that the Prime Minister had made it clear that we were prepared now to ramp up the speed and increase the number of days for negotiation. That has not yet happened, but clearly what has happened is constructive and we now have time before 25 September for some of the technical agreements—which are right on the cusp of being made—to be sealed. That is to be welcomed. There is good will on both sides in this negotiation.