Resetting the UK-EU Relationship (European Affairs Committee Report)

Given all those circumstances, I am very grateful to all the members of the committee who contributed through this long inquiry. We all owe a particular debt of gratitude to our committee staff: Jarek Wisniewski, Brigid Fowler, Tim Mitchell, Tabitha Brown and Luisa Jaime Nunez, assisted by our press adviser Louise Shewey. I also want to thank our national parliament representative Jack Sheldon and his assistant Maherban Lidher for the vital work they do in liaising between this House and European parliamentarians.

The Government are right to have dropped the misleading term “reset”. The UK-EU relationship will be a continual process of adjustment and adaptation. There is no end point. Even since we finished our report three months ago, there have been further significant developments, driven largely by the increasingly stark reality that we Europeans can simply no longer depend on the US as our ally.

I will not try to summarise the detail of the snapshot that we gave in our report as of last November. I want to focus on the issues that will arise in implementation of the various agreements now under negotiation, and then to range a bit more widely to consider where we go from here, especially in the light of the Prime Minister’s interesting Munich speech of 14 February.

Let me start with security and defence co-operation with the EU. This is, of course, the area where progress is most urgently needed in the face of Putin’s war in Ukraine, now entering its fifth year, and Trump’s total unpredictability. Our report welcomes the security and defence partnership which the Government concluded at the 2025 summit, but that is only an enabler. Closer consultations are useful, of course, but translating them into real improvements in military capability is much more difficult. That was all too obvious when the negotiations for the UK to participate in the €150 billion SAFE defence investment programme broke down in December. The sticking point, as noble Lords will remember, was a completely unreasonable EU demand for an entry fee running to several billion pounds. This was a remarkably short-sighted EU position, given the geopolitics, and one with which many member states were unhappy. Since then, there have been suggestions in the media that the Government plan to reopen discussions, with the aim of participating in SAFE on more reasonable terms. Can the Minister tell us whether that is the case?

Staying with our report, we also looked at the area of police and law enforcement co-operation. The key here is more automation and streamlining of data sharing between law enforcement communities. A specific example arises when the Government have to decide whether to participate in the updated version of the Prüm database, which will have facial image data as well as the existing database of fingerprints and DNA. That will be an important decision that I am sure Parliament will need to scrutinise carefully.

On the economic issues, most of our witnesses supported the Government’s manifesto commitment to negotiate agreements on sanitary and phytosanitary checks on food and animal products, and on the emissions trading system. Our witnesses were also clear that the electricity trading scheme proposals outlined in the trade and co-operation agreement simply would not work. They therefore supported the idea of exploring UK access to the EU single market for electricity trading. That is now under way, as is a negotiation.

Our report lays out the implications of agreements in these areas of UK access to the single market. In particular, they will require dynamic alignment with EU regulations as they change, subject to any exceptions that are carved out in the negotiations. This will raise important issues for Parliament. We are promised a Bill soon, which will be interesting. The SPS agreement is likely to involve a continuous process of alignment, much of it highly technical, with each change potentially having an impact on businesses across the UK. How will Parliament exercise any useful scrutiny of this constant drip of administrative change? I guess that, at the very least, the European Affairs Committee will need more staff to keep abreast of the constantly changing regulatory landscape.

Agreements with the EU will have other implications as well. In particular, the UK will have to make a financial contribution. In the case of SPS and ETS, the 2025 summit agreed that payments would go towards EU costs in running the schemes, which seems fair enough, but the Commission’s draft negotiating mandate on electricity market trading introduces the idea of “cohesion funding”—in other words, British payments to reduce disparities between EU regions. Norway makes such cohesion payments directly to projects in poorer regions. If the Minister could give us more detail on whether that would also be the UK’s approach to the inevitable demand for cohesion funding when we seek to apply for single market access in other sectors, that would be interesting.

Two aspects of the trade and co-operation agreement were set to expire in June 2026: the arrangements on fisheries, and on trade and investment in energy. The May summit agreed to roll over the existing access for EU fishermen to UK waters for 12 years, but agreed to extend the energy title only one year at a time. That fisheries deal was strongly criticised by many of our witnesses, particularly those from the fishing industry. The committee also had serious doubts about the process. Within one month of the deal being struck, it had been enacted by the Specialised Committee on Fisheries, with no opportunity for parliamentary scrutiny. I should add that the Scottish salmon industry was very pleased at the prospect of an SPS agreement, given its export-orientated business.

On the cultural front, our report welcomed the prospect of the UK associating with Erasmus+ from 2027. Agreement on that has now been reached, which is good news for young people across the UK and the EU. Negotiations are also under way for a youth experience scheme. Is the Minister confident that a deal can be struck on that in time for the next summit, planned for May?

I note that both schemes were EU, not UK, negotiating objectives. I welcome that progress is being made, but it is disappointing that there has been no progress, as far as I can tell, on the UK’s one priority in the cultural field—a deal to help touring artists. That enjoys widespread support in both Houses of Parliament and the European Parliament, given the discussions that we have had in the Parliamentary Partnership Assembly. I hope that the Minister can update us on how the Government are planning to break the logjam on touring artists.

In conclusion, I want to spend some time on the wider context for the future UK-EU relationship. My view as we went through this inquiry was that the Government’s level of ambition, even as extended at the May summit, was not nearly bold enough. Our witnesses were unanimous that, even if all the highly technical negotiations now under way were successful, the economic impact would be marginal, if positive. The Government predict a boost of around £9 billion in total by 2040, which is not much for a £3 trillion economy. The reality is, as Mark Carney put it so well in Davos, that we now live in a world where the great powers are using

“economic integration as weapons, tariffs as leverage, financial infrastructure as coercion, supply chains as vulnerabilities”.

In that world, marginal benefits are nowhere near enough.

The Prime Minister, in his excellent Munich speech, seemed to agree. He saw closer UK-EU economic relations as part of the answer, setting the aim of “deeper economic integration” and moving

“closer to the single market in other sectors”.

If the Minister could give us any details on which sectors, that would be interesting. I welcome the aspiration to move closer to the single market, but the EU will need to respond to that. The failure of the SAFE negotiations and the restrictive rules now under discussion around its “made in Europe” initiative remind us that, for the EU institutions, the UK is still a third country. They are tending to apply their rules pretty inflexibly despite a mutual interest in working together.

The reality is that the hard strategic choices facing European nations, including Britain, will not be made in the UK-EU framework. Again, the Prime Minister recognised that in Munich. He talked of the need to step up work with like-minded allies on options for a collective approach to defence financing. He said:

“We must come together to integrate our capabilities on spending and procurement and build a joint European defence industry”.

He added that we should “turbocharge our defence production”. Again, any detail on that important new initiative would be interesting. It sounds as if the idea is to mobilise a wider group of European countries, going well beyond the EU, leap-frogging the stalemate over SAFE. There must be a question over whether there is room for two separate defence financing initiatives, but I welcome the willingness to think big in facing up to the new reality that we will have to take much more responsibility for our own security.

Trump is dismissive of international law and sees no value in allies. His treatment of Denmark over Greenland has broken all the bonds of trust which have kept NATO together for 75 years. New forms of co-operation among like-minded middle powers are therefore urgently needed to deal with a hostile Russia and an indifferent America. Such groupings tend to take shape under the pressure of great events and do not necessarily follow the blueprints set out in foreign ministries. It may be that this coalition of the willing, which has done such interesting work under UK-French leadership in supporting Ukraine, can grow into a load-bearing forum for wider strategic thinking outside NATO. For the moment, it is informal and unstructured, but it has a very interesting membership covering many European countries and Asian allies. I am sure that other noble Lords will have wisdom to bring to bear on this crucial subject.

Whatever the shape of the future, we need a turbocharging of our relationships with our closest neighbours in the EU, who share our values and interests. That will need more vision and more consistent political focus on both sides than we have had so far, but it is an objective that becomes more important every month, given the international situation that we face. I look forward to the debate and to the Minister’s comments. I beg to move.

It was therefore very disappointing to see UK companies excluded from full participation in the SAFE mechanism. This was a significant setback for the kind of integrated defence-industrial enterprise we shall need on this continent if we are to develop the strategic capabilities for which we are still overreliant on the United States and in which the UK should play a leading role. We must do better going forward. But if we are to do better and play a leading role, we must recognise that, in terms of defence, we are increasingly viewed as something of a paper tiger, even among our closest friends in the EU. We talk a good game but seem less and less able to play one. That is not exactly a leadership position.

In Munich recently, the Prime Minister said that European nations need to increase defence spending further and faster. Amen to that, but where is the UK action to match the rhetoric? We need to argue for a much more coherent approach to defence-industrial capability within Europe as a whole. But if we are to convince, we must at the very least put our money where our mouth is.

One of the greatest practical losses was access to SIS II, the information-sharing system among not only EU member states but Norway, Iceland, Switzerland and Liechtenstein. This gives real-time information sharing from police databases. Until Brexit, it was used an estimated 600 million times a year by the UK. We can of course use Interpol red notices and information systems, but they are less efficient. We need to find ways to streamline and access information more easily and to share knowledge across the continent. Crime does not stop at borders, and criminals rely to an extent on the clunkiness and the gaps to pursue their activities. We were told that the real prize would be the signing of a multilateral agreement with EU member states that would enable alert sharing through the I-LEAP platform. While it would not restore information sharing in full, it would be much better.

We all know that the European arrest warrant was used after the attempted bombings after 7/7 claimed the lives of 52 people and injured more than 700. The suspect was taken in Rome and extradited to the UK using the European arrest warrant. The Minister at the time, Andy Burnham, told your Lordships’ committee in 2006 that this case

“very well illustrated the potential benefits … of the smooth functioning of this system”.

It is not and was not perfect, and other cases have not been as swiftly dealt with, but to quote the Lords report, it

“has a key role to play in the fight against terrorism and in bringing those accused of serious crime to justice”.

Our law enforcement witnesses have asked us to find ways to recognise the European arrest warrant as a valid request. As one of our witnesses said, give us

“the agility that organised crime exercises”.

We owe it to their professionalism and dedication to get this done, and soon.

In the past the UK played a pivotal role in driving EU enlargement, which we always regarded as a process for positive change. Clearly, our influence on these matters is now much diminished, but what is the Government’s position on a fast-track approach to Ukrainian membership of the EU? Might such an approach also be in the UK’s best interest?

We on these Benches favour the closest possible relations with our European partners. The Government should be congratulated on removing some of the toxicity of the years immediately following Brexit, but I now hope that they can begin to match the positive words with concrete actions and courage.

Businesses, as the Federation of Small Businesses’ report recently said, face massive bureaucracy and compliance costs. The Trader Support Service is already costing half a billion pounds of public money, just to help traders negotiate this labyrinthine process. We have to accept that this is not what sovereignty in a modern country looks like; it is what colonialism looks like. The principle of consent that lies at the heart of the Northern Ireland political settlement is being devastatingly eroded day by day. Legal changes imposed without that consent have altered Northern Ireland’s place within the UK internal market.

When we discuss the issues of the UK-EU relationship, we must not turn our eyes away from the fundamental problem that faces us in this United Kingdom, which is the democratic denial of consent to British citizens in this country in the 21st century. This needs to be continually highlighted because it is going to lead to real problems—not just for Northern Ireland but for this whole country.

Secondly, it has also been raised that defence and warfare have totally changed, requiring completely different politics from what we discussed 10 years ago. As many of us predicted 30 years ago, drones have transformed the system and nature of war, and the disposition of trenches and troops. The use of AI is coming along, which will transform it even further.

Thirdly, the whole of Europe, including the EU, is underwater on debt at a level and scale which has never been seen before in history. The euro is weakening. We must be very careful not to be involved in all this before we understand what is really happening.

Finally, we must get ahead with rebuilding the global governance which we set up in 1945 from the rubble of the Second World War. It is now out of date, out of time and in great trouble. It requires a new architecture to provide us with a shell of protection—the shield under which we can reform ourselves. Britain played a major part in 1945. I cannot see that major part being played in 2026.