European University Institute (EU Exit) Regulations 2022

Motion to Approve

Moved by

That the draft Regulations laid before the House on 17 October be approved.

My Lords, I thank the Joint Committee on Statutory Instruments and the Secondary Legislation Scrutiny Committee for considering this draft legislation.

The primary purpose of this statutory instrument is to reflect in domestic law the fact that the UK is no longer a member of the European University Institute convention since the UK left the European Union. It does so by ensuring that no rights, powers, liabilities, obligations, restrictions, remedies and procedures that derive from the European University Institute convention are retained on the UK statute book through the provisions of the European Union (Withdrawal) Act 2018. The exception to this is where their retention is appropriate or supports a period of reasonable adjustment for staff. Where rights are saved relating to the legal proceedings immunity and an income tax privilege for UK-linked institute staff, this instrument will establish the circumstances after which they no longer apply.

The European University Institute in Florence is an international centre for postgraduate and postdoctoral studies and research with a European focus. It was established by an international convention in 1972, which the UK signed in 1975. The convention states that accession to the convention is restricted to EU member states. When the UK ceased to be one, our formal membership of the institute also ended.

While the UK’s membership of the convention ceased on EU exit, we put in place an extension of the previous arrangements beyond the end of the transition period until 31 December 2022. This was to ensure that UK staff and students at the institute could continue in their posts and with their studies while we considered options for a future relationship with the institute.

After a series of constructive and detailed negotiations between the UK and the institute that has taken place over 18 months, it has not been possible to conclude an agreement to define future UK engagement at this time. Our focus now is on confirming the status of UK-linked staff and UK-funded students at the institute as soon as possible. The UK will take appropriate measures to allow current students to continue their studies at the institute. We will continue to pay the grants we have committed to for students who have started courses already.

The Government value the work of the European University Institute and the long and close collaboration we have shared. Many talented UK students have studied for PhDs at the institute, with financial support from the UK Government, and it is an important forum for collaboration on education and research. I reassure noble Lords that the UK remains committed to strong research collaboration with our European partners. We continue to work together constructively with the institute to reach an agreed settlement that provides for current staff and students. Once that is concluded, we look forward to returning to the question of our future relationship with the institute.

My Lords, I completely understand the need for this statutory instrument, given that it has not proved possible to negotiate a formal post-Brexit relationship between the UK and the European University Institute—although it is very welcome that appointments to academic posts at the EUI will remain nationality blind. I also understand that this SI is unamendable, which is regrettable because I would like to flag up one specific concern and ask the Minister whether there is any way in which she is able and willing to follow it up.

The problem arises that academic staff are generally employed at the EUI on one or other form of rolling contract. As the SI is currently phrased, the staff concerned would lose the exemption from UK tax liability as and when they renew their employment contracts. In other words, it is a serious change to their terms and conditions. This would also produce some inequities between academic staff. Some of them would lose the exemption at the end of this calendar year, whereas others on renewed or extended contracts in different circumstances would enjoy that exemption for up to five years.

In view of this, Regulation 7 of the SI could easily have been amended to replace the term “does not include” renewals and extensions with saying that it includes them. It would mean that employees could continue to benefit from the tax situation for whatever their period of employment at the EUI is, and it would still only be available to those employed there before the regulations came into force. Moreover, all academic contracts at the EUI are finite, so this would not have given rise to an indefinite commitment on the part of the UK. Overall, this would have made a big difference to a relatively small group of people.

As it stands, the statutory instrument may well have unintended negative consequence for the UK and the UK’s relationship with the EUI. Many UK-linked colleagues spend more than 90 days in the UK and would therefore be liable to UK tax if the tax exemption were to expire. It would not be financially viable, in all cases, for these colleagues to continue to work at the EUI in this situation. They may, therefore, have to choose whether to cut their links with the UK, including their UK universities, or to cut short their employment with the EUI. Either way, it is quite possible that links between the UK and the EUI could be substantially weakened, to the detriment of both the UK and the EUI. So I ask again whether the Minister can find any way at all to iron out what might look like a small wrinkle but would be quite a considerable change to the terms and conditions of a relatively small group of people for a finite period.

My Lords, the noble Baroness, Lady Coussins, has set out the position very clearly. We are indebted to my friend Professor Dame Helen Wallace—the wife of my noble friend Lord Wallace of Saltaire—who has worked for many years at the EUI and was very concerned about these provisions on behalf on the staff who work there. As the Minister said, it has been an excellent institute; it has provided some really valuable work for the UK, as well as the EU, and we are loath to see that disappear. So I urge her to make sure that we negotiate as well as we can to see how far we can continue to work with the EUI.

I endorse what the noble Baroness, Lady Coussins, said about the very simple amendment of changing “does not include” to “does include”. I realise that SIs are pretty much unamendable, but if there is any way that this could be done, it would make a very significant difference to a group of people who have long worked on our behalf with the EU and the academics there. It is a shame; it is one of the consequences of Brexit, which occasionally we just have to put up with, but it seems that this will disadvantage both the academic staff and the students at this amazing institute.

My Lords, this affects a very small number of people, yet it seems manifestly unfair as between those people. I do not understand why it was necessary to negotiate a cessation of terms and conditions that bore, in very differentiated ways, on different current members of staff of the EUI. I remind noble Lords that the “EU” in EUI does not stand for “European Union” but for the first two words of the European University Institute.

We regret that we have had to get to this stage, but we understand why the Government are bringing forward this measure today. Could the Minister perhaps update us on where we are with the Brexit freedoms Bill? It strikes me that this is the sort of thing that we are actually managing to deal with as and when it comes up, whereas the Government, at one point, had an intention to introduce a single piece of legislation. However, that all seems to have gone a bit quiet. It was a mad idea, but perhaps the Minister could write to us—if she cannot respond today—on how the Government will proceed. Doing it this way, although not perfect, at least has the benefit of the Government being able to consider each measure as we go, and it allows other Members of this House and another place to assist the Government in their deliberations.

I listened carefully to the Minister’s introduction to the SI. Can she make it clear whether the Government have failed to negotiate our continued involvement, or decided that that is not something they want? Intriguingly, she said that we might return to this, so may I press her to be explicit about the Government’s intention? Is it their policy objective to re-establish the previous arrangements?

I echo what the noble Baroness, Lady Coussins, said about the 35 members of staff. How long is the adjustment period to be? I agree with those who have said that, although this is a small number of people, we have responsibilities to them.

I thank all noble Lords for their contributions to this debate, and I shall endeavour to respond to the issues that have been raised. The noble Baronesses, Lady Coussins, Lady Garden and Lady O’Neill, all asked whether there was an option to replace “does not include” with “includes” in Regulation 7. I understand their concerns in that regard.

While the UK’s membership of the European University Institute convention ceased on EU exit, we put in place an extension of the previous arrangements with the EUI beyond the end of the transition period, until 31 December this year. This was to protect the status of UK-linked staff and students at the EUI, so that they could continue in their posts and with their studies while we considered options for a future relationship with the institute.

The Government’s long-standing policy is to grant privileges and immunities only when there is a demonstrated and robust functional need for the running of the institution, and never solely for personal benefit. In this case, in the absence of a negotiated international treaty compelling the Government to do so, we are unable to continue to grant privileges and immunities to EUI staff and students, including the UK-linked ones. The saving of the income tax privilege and the legal proceedings immunity for current staff is as considered appropriate and/or intended to give a reasonable period for those staff at the EUI to adjust, and they will be saved in relation to the current term of their employment contract, without extension. While we appreciate that some individuals may not have as long a period to adjust as others, the policy represented by this statutory instrument compares favourably with other situations where privileges and immunities have been removed. In such cases, a standard adjustment period of 30 days is usually afforded, regardless of the individual’s employment situation.

The noble Baroness, Lady Chapman of Darlington, asked me some broader questions about our position on keeping the conversation open—if I can frame it like that—regarding the EUI. As she knows, and as I said in my opening remarks, we have negotiated in good faith and constructively, and hope that we will be in a position to have further constructive conversations in future. I will need, as the noble Baroness kindly suggested, to write to her in relation to the Brexit freedoms Bill.

Motion agreed.