UK and EU Relations

Lord Hutton of Furness Excerpts

Tuesday 12th September 2017 Lords Chamber

[Lord Hutton of Furness (Lab)]

My Lords, I bring the attention of your Lordships’ House to the interests I have declared in the register. I am chairman of the Nuclear Industry Association. It probably follows on from that that no one will be surprised to learn that I will confine my remarks largely to the decision which Ministers have made to take the United Kingdom out of membership of the European Atomic Energy Community. These follow the remarks of the noble Lord, Lord Teverson, and the noble Viscount, Lord Ridley.

It is probably true to say that the decision to leave the Euratom treaty was one of the unintended consequences of the referendum. I do not recall a single supporter of the leave campaign banging their fists on the table and saying: “The UK must leave the Euratom treaty”. No one mentioned it, and for a perfectly good reason. The UK’s membership of this treaty has been the bedrock on which our nuclear industry has thrived and to which it owes its pre-eminent position today as one of the leading nuclear nations trading in goods and services, fissile and other material around the world. It has been essential for the growth of our nuclear industry. It is worth a little bit of context: the nuclear industry makes the same contribution to the UK economy as aerospace does, in terms of jobs, wealth creation and the taxes it pays to the Treasury. We should do all we can to protect and secure this strategic industry.

I welcome the publication of the Government’s position paper on exiting the Euratom treaty. It sets out six high-level principles and it is very difficult to pick an argument with any one of them because it is all common sense. No one in their right mind wants to see such an industry compromised or its trade around the world affected by a rash and badly implemented decision to leave this fundamentally important legal instrument. To answer the noble Lord, Lord Robathan, the principles are fine but there are still two fundamental problems at play. First, how are we going to achieve these principles in the most effective way? There is nothing in the position paper which gives an answer to that. Secondly, and more significantly, how are we going to do all the things which are necessary to do that in the 18 months that we have left before we leave the treaty?

It is worth reminding ourselves what we have got to do if the Government’s high-level principles are to be secured. We have got to agree a replacement voluntary offer safeguards agreement with the International Atomic Energy Authority. It would be useful if the Minister could tell us when she envisages this being in place. The particular problem is that we are going to have to renegotiate a number of nuclear co-operation agreements with our nuclear partners: the Euratom community itself, China, the United States, Canada, Australia, South Korea and Kazakhstan. What progress has been made on these new bilateral agreements? As a lawyer, I always study the precedents. Looking at the precedent established in the United States, in particular, these nuclear co-operation agreements have the status of international treaties and have to be approved by the United States Congress. Any student of politics will tell you that there has never been a treaty like this agreed by Congress in 18 months. So what do we do?

We clearly also need to clarify the validation of the UK’s current bilateral nuclear co-operation agreements with Japan and other states. Has that process begun yet? The Government must also set out the process for the movement of nuclear materials—goods, people, information and services—to be agreed, when we leave the treaty, with the Euratom Supply Agency. Have we made any headway with that? We have to agree also a new funding arrangement for the UK’s involvement in future fusion research and under the wider European Union nuclear R&D programme—

[Lord Robathan]

I am very grateful to the noble Lord who speaks with real authority on this. I understand the Swiss are associate members of Euratom. Would that be one way forward?

[Lord Hutton of Furness]

It certainly could be one way forward, but it has been ruled out by Ministers to date. It might well be that the best outcome is some form of associate membership. No one in this House, or outside this House, wants to see any harm done to the nuclear industry by leaving the Euratom treaty. But, if we are going to avoid that outcome, Ministers will have to show considerably more pragmatism than they have done to date in making sure harm is not caused to the industry in the way that the Article 50 negotiations are handled. The most obvious need of all, given the difficulties in negotiating these agreements, is that we do not actually leave the Euratom treaty until all the nuclear co-operation agreements are in place and are legally robust.

Trade in nuclear goods and services is different to trade in goods elsewhere. Unless there is a clear, robust legal framework for the movement of goods and services in nuclear materials, in most jurisdictions that we trade with, that trade becomes instantly illegal. It is a cliff edge which is much more apparent and real than the consequences and dangers of exiting the European Union without an agreement on future trade arrangements under Article 50. This is the ultimate cliff edge. If there is no agreement with other nuclear states within the 18-month period we have left, we are in a serious position. I urge the Minister and her colleagues in the Government not only to confirm tonight that they are willing to be pragmatic and look at extending the transitional periods of membership of the Euratom treaty, but to keep this House more fully updated on the progress of these important negotiations.

--- Later in debate ---

[The Minister of State, Department for Exiting the European Union (Baroness Anelay of St Johns) (Con)]

My Lords, I am grateful to all noble Lords who have taken part in the debate. We have certainly heard, I will not say a full range of views, but pretty much everything that has been said in the past year has been said in a different way today—and with verve, because this House deeply cares about these matters. So do I, and so do the Government. That is why I said at the beginning that I wanted this to be part of the parliamentary engagement that builds up so that we have feedback.

I was discussing that this morning with the noble Baroness the Leader of the Opposition, as she was kind enough to mention in her opening speech. I felt that it was not just a case of having debate after debate—although we will have them. Other Members throughout the House can promise that we will, because they will put down those matters for debate. I said that I really did want to hear from Peers. That can be done in several different ways, not just in the more structured ways such as debates, Questions for Short Debate or Statements, but I want to find a way that will enable all noble Lords to feel that they have had the opportunity to participate—and I hope that the sturdy nearly 50 who have done so today will continue to stay with it throughout. In fact, I think that they will promise that they will. Thank goodness, because that is what we intend to do with the negotiations.

That is the whole point about this process: it is a negotiation. The frustration that I can feel in the House about the fact that we cannot be more open about the detail is a frustration that we too feel. We would like to be more open too, but the very nature of negotiations, and the confidentiality, works for the participants on both sides—both for the European Commission and for us.

Whatever has been painted in the press about hostility, and whatever comments have been made about people’s character, there has been a really good relationship between the negotiators on both sides. I was grateful for the earlier reference to the fact that Michel Barnier has paid tribute to the professionalism of the UK negotiators, and I pay tribute to the professionalism of the EU negotiators. We are very fortunate in how they do their work, often against a background of sniping from the press. I shall not comment on other criticism, but there certainly has been sniping from the press, and it continues.

I must say how pleased I was to hear from my noble friend Lord Bridges today. I was much happier to hear from him when he was sitting beside me, but if I cannot have that, having him sitting behind me will just have to do for the moment. I wish him continued success in his new life—I shall not say “next life”, because that sounds as if I am expecting him to pop off.

Critically, this is a serious matter of parliamentary involvement. May I pick one specific item up immediately? The noble Baroness, Lady Hayter, said that she thought there had been a change in our view of our commitment to a meaningful vote. That has not changed. “Expect and intend” has always been the position that we have taken, and the reason for that is a practical one. I asked, when I went to the department, why those words were used. I am afraid the reason is straightforward, if one thinks about it. We do not dictate the date on which the European Parliament holds its vote. If it suddenly decided to do that while this House was in recess, we would have to seek the advice of the House. We do not recall Parliament in such circumstances. So clearly, we expect and intend. We are talking about next autumn, and we do not know when the European Parliament will have its vote. We want to have our vote before it does. That is exactly what we set out, and I do not think I can be clearer than that. “Expect and intend” means that we are maintaining our commitment to Parliament.

Our commitment to Parliament is certainly to assist with scrutiny wherever we possibly can. I was worried that the noble Lord, Lord Newby—I nearly said “my noble friend” again; I am getting back into bad habits, or good ones, perhaps—somehow thought that my right honourable friend the Secretary of State had given a commitment to the Select Committee to appear after every round. He did not. He gave a commitment to work out the balance of the way in which that reporting could take place. We have a very strong sense of our responsibility, which he has stated repeatedly in his letters to chairs of committees, and we want to carry it out. However, there are committees in both Houses, and he has just accepted the invitation to appear before the newly formed Brexit committee in the Commons. We will continue to service committees as best we can. The way in which my department is set up to deliver the negotiations means that the officials who support Ministers who appear in front of committees are also the negotiators. Therefore, when they are doing their absolutely valuable work here to support parliamentary scrutiny, it necessarily has an impact on negotiations. So it is balancing that while making sure that we do not let Parliament down, because that is not the way forward.

Nor shall we let down the devolved Administrations, and we do not intend to do so. There has been engagement throughout. There can always be more—of course, there can. It is not a case, of course, that the devolved Administrations are part of the negotiations, because they do not have that competence in the constitutional sense, but we have engagement and that will continue. As I mentioned last week in this House, very shortly there will be another meeting of the specialised JMC that it just invites the devolved Administrations to talk about the European negotiations. There is the other committee, which I have the honour to chair, that looks at European issues more broadly.

Throughout all of this, I understand some of the frustrations of noble Lords. I will continue to look for ways of finding where we can give more information in a more timely way. By the way, the publication date is the date on the papers. They are published to assist with the negotiations. It is not done just to make life difficult for this House when it is about to have a debate. It is because it has been timed to coincide with some of the negotiations that are going ahead.

Throughout there has been a determination from both the UK and the Commission that we should come to an agreement that is good for both of us. There is not hostility on that, and there is certainly not foot-dragging.

I was asked specifically whether the negotiating dates had been changed. Indeed, they have, but it is a joint agreement between the UK and the European Commission to start the fourth round on 25 September. The reason why is to give time for the negotiators to have more flexibility to make progress in the September round, which was highlighted in the August round. On some of the issues discussed there, we are close to reaching legal text status. I hope at some stage to be able to set that out, but clearly that would be an advance. It may not be on some of the high profile issues, but it is certainly on issues that are core to all the discussions we have had. It is right that my right honourable friend the Prime Minister has called for some flexibility in making sure that, if we need to have more dates to continue negotiating, we should find a way of doing that. We stand ready to work with the Commission to find more dates to do so.

Looking at some of the issues that were raised, clearly Northern Ireland was very much first on the list for so many people. The noble Lord, Lord Jay, rightly asked, “What next?”. If I can assist him in some small part—I wish I could tell him that everything has been resolved, but it is a case of getting it right throughout—what I can say is that there is a high degree of convergence on the key issues of the common travel area and safeguarding the Good Friday agreement, and we are working on how the text should look.

What has been agreed on the Good Friday/Belfast agreement is that we will carry out further joint technical work. The noble Lord will realise the implications of that, and it means that we will take steps forward. There was agreement on both sides on the benefit of further technical discussion on the GFA—protecting citizenship rights enshrined in the GFA and the permanent birth right of the people of Northern Ireland to identify themselves and be accepted as British, Irish, or both. We both agree that that should continue. So, again, these are technical steps. When I asked where we were not converging, the answer was none. We are converging on all the major issues, so that is the, “What next?”.

There were three particularly important speeches today—those of the noble Lords, Lord Hutton and Lord Teverson, and my noble friend Lady Bloomfield—in that they addressed the issues of Euratom in a very practical way. The question was put again: why are we leaving Euratom when clearly we all agree that its work is essential and we need to be part of it? Again, I repeat what my noble friend Lord Bridges and I have said. We are leaving because Euratom and the EU share a common institutional framework, including the European Court of Justice, a role for the Commission and decision-making in the Council, which makes them uniquely legally joined. Because of that, when we leave the EU, we have to leave Euratom at the same time. We have said that we want to look very carefully at how we form an agreement to still be able to carry out the responsibilities we have heretofore.

The noble Lord, Lord Teverson, raised the issue of associate membership. We are looking at what we want to achieve rather than the mechanism; that will be important. What it will be called I cannot say, but certainly there are alternatives available, including bilateral agreements. The noble Lord raised some extremely interesting and very helpful points.

My noble friend Lord Ridley exposed some of the misinformation in the press about what leaving Euratom really means. It will not mean that the UK loses access to radioactive isotopes for medical use. I refer to that because I thought his speech was exemplary in giving detail on those matters.

Euratom is one of the separation issues being discussed. They are confidentiality, access to information, privileges, immunities, pending cases before the ECJ and, indeed, Euratom. In some of those areas we are now ready to move towards legal text.

[Lord Hutton of Furness]

I am exceptionally grateful to the Minister for giving way. Before she moves on, will she confirm that the UK will not leave the Euratom treaty until and unless those replacement bilateral nuclear co-operation agreements have been negotiated and are in place?

[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.