UK-EU Relations

12:51:00

With permission, Madam Deputy Speaker, I wish to make a statement on the UK’s relationship with the EU. On Monday, in Brussels, the Prime Minister attended an informal retreat with the 27 EU leaders and Presidents von der Leyen and Costa. This marked a clear step forward for this Government’s reset of the UK’s relationship with the EU. He is the first British Prime Minister to join a meeting of European Council members since the UK left the EU. The Prime Minister discussed the common threats that the UK and the EU face, and the value that closer UK-EU co-operation on security and defence could bring. These were points that he also discussed earlier in the day, when he met the Secretary-General of NATO. With the EU’s 27 leaders, the Prime Minister outlined a number of steps to increase co-operation on shared threats, including cross-border crime and illegal migration, while delivering growth and security at home. He called on Europe to step up and project strength, to keep up the pressure on Putin, alongside sustained military support to Ukraine, to put it in the strongest possible position this year. He set out a strong case for European security and defence: an ambitious UK-EU security partnership; a deeper role for Europe within NATO; the continued importance of small groups such as the joint expeditionary force; together with a continent-wide increase in defence investment. The Prime Minister was clear that the UK would play its full part in European defence and was ready to work together with the EU. On Tuesday, we announced that the UK will welcome the Presidents of the European Council and the European Commission to the UK for the first UK-EU leaders’ summit, which will take place on Monday 19 May. This first summit will provide an opportunity to further strengthen the relationship between the UK and the EU, for the benefit of all our people. On Tuesday, I attended the UK-EU forum in Brussels to discuss the shared challenges and opportunities facing the UK and the EU, opposite my EU counterpart, Maroš Šefčovič. I made the case that this Government will be guided by what I am calling “ruthless pragmatism” —working in the UK’s national interest to make people across the UK safer, more secure and more prosperous. The Government’s position is that it is in the British national interest to improve our economic, safety and security relationships with our nearest neighbours. We reject the ideological approach of the past and will take a hard-headed assessment of the British national interest. As the Leader of the Opposition recently said: “We announced that we would leave the European Union before we had a plan for growth outside the EU.” She said: “Those mistakes were made because we told people what they wanted to hear first and then tried to work it out later.” This Government will end that chaotic, dogmatic decision making. We should be guided by the principle of mutual benefit, finding collaborative solutions to our common problems. We should be open-minded to proposals that deliver better outcomes for the British people, within the manifesto on which this Government were elected. This Government have been clear that we are not hitting rewind. We are not undoing Brexit and we are not rejoining the single market or the customs union, but we are looking to make Brexit work in a ruthlessly pragmatic way. That is the spirit that we are taking into the discussions with the EU—not a zero-sum game, but a win-win for both sides, with people across the UK and the EU benefiting. Yesterday I met my EU counterpart, Maroš Šefčovič, and discussed how we can best work together to enhance co-operation in areas of mutual benefit. We are committed to staying in regular contact as we progress this work. This Government were elected on a mandate to increase national security through strong borders, to increase people’s safety and to increase prosperity through growth. Our European friends have mutual interest in those priorities. It is those priorities that form the three pillars of the reset in our relationship: security, safety and prosperity. And I am pleased to say that on all three of those issues we are making progress. And work is happening right across Government, from the Prime Minister to the Chancellor at the Eurogroup and the Foreign Secretary at the Foreign Affairs Council. There have been nearly 70 direct engagements between UK Ministers and their EU counterparts since we came into government, and we look forward to many more, including at the upcoming UK-EU summit. Some people make the false argument that we need to choose either America or Europe, but for this Government the UK’s national interest is paramount and demands that we work with both. The Prime Minister made the point on Monday evening that the world today is very different from that in 2016, and even in 2024. In this time of change, this Government are stepping up to build alliances in a bid to make people safer and more prosperous. That is the core of our national interest, and I commend this statement to the House.

I call the shadow Chancellor of the Duchy of Lancaster.

12:57:00

I thank the Paymaster General for advance sight of his statement, and I am grateful to him for coming to the House today to give us a rendition of the speech that he gave in Brussels on Tuesday—I am sure that it sounded even better accompanied by a cool glass of Belgian Chardonnay and the promise of a long continental lunch. I note that the Paymaster General described the Prime Minister’s meeting with 27 EU leaders this week as being an “informal retreat”. An informal retreat indeed—that is, one suspects, how these words will come to characterise this Government’s negotiations with the EU. The last Conservative Government took us out of the EU and, despite the attempts of the Labour party to frustrate the will of the people, into an era of our being a sovereign nation, which has brought major benefits. Under the Conservative Government, we secured more than 70 trade deals with other countries around the world and, since leaving the EU, UK trade has increased from about £1.04 trillion in 2015 to £1.74 trillion last year. We ended the supremacy of EU law, we delivered on our promise to leave the common fisheries policy, and we delivered the fastest vaccine roll-out in Europe. We turned a page, and it is vital that the Labour Government do not turn it back. The Paymaster General talks of ruthless pragmatism in our negotiations with the EU. I wonder whether this will be the same ruthless pragmatism that is bringing us the Chagos deal.Will it be the same ruthless pragmatism that has caused the Government to spend £9.4 billion a year on above-inflation pay rises for unionised sectors without any promise of reform? Perhaps it is the same ruthless pragmatism that saw the collapse of the £450 million AstraZeneca deal last week. When Labour negotiates, our country loses. I have a great deal of respect for the Paymaster General—I hope he will do better than his friends and colleagues. He has talked to us about security, safety and prosperity—all very nice, but enough of the platitudes, let us talk about the plan. What do the Government actually want from the negotiations? What are the tangible gains they hope to make, and what are their red lines? We have heard about the customs union and a single market, but he knows that that is not enough. He says the Government “are not hitting rewind”, but we know the Government are open to dynamic alignment and a role for the European Court of Justice because he has twice declined to rule that out in this House. Going back to the ECJ for GB would be completely unacceptable. On defence, the right hon. Gentleman mentioned the NATO Secretary-General’s plea to step up and project strength. Is that what the Government will do? I know the Secretary-General has been asking European countries for a marked increase in defence spending. What is the Government’s response to that? Will he confirm that NATO remains the cornerstone of our defence arrangements? There was no mention of fish. A word of advice to the right hon. Gentleman: fish are very important, and they will be very important in these negotiations. What is the Government’s position? Will he commit to there being no reduction in our current fishing rights? It is reported that our friends and allies in the French Republic have said that nothing can be negotiated until fish are negotiated. Will he confirm that he has told them firmly and politely, “Non”? There is no mention of free movement. I noticed the other day that the Home Secretary ruled out a youth mobility scheme. Is that Government policy or was that just the Home Office freelancing? I ask because last week in Westminster Hall the right hon. Gentleman seemed to be pretty open to the idea. What is the Government’s position? On the Pan-Euro-Mediterranean convention—PEM—a Minister told the “Today” programme on 23 January that the Government were “not seeking” to join PEM. Later that day, the right hon. Gentleman said that the Government “do not currently have any plans to join PEM”.—[Official Report, 23 January 2025; Vol. 760, c. 1091.] On 26 January, the Chancellor of the Exchequer said that the Government were considering joining PEM, but then on 3 February, the right hon. Gentleman said in answer to a written question from the hon. Member for East Londonderry (Mr Campbell) that the Government “do not currently have any plans”. I would be grateful if he could tell us what the Government’s position is, and if he cannot, perhaps he would be good enough just to make up another one. The Opposition believe there should be no backsliding on free movement or compulsory asylum transfers. We believe that no new money should be paid to the EU. We believe that no reduction in our current fishing rights should be given away. We believe in no rule-taking, dynamic alignment or European Court jurisdiction. We believe in no compromise on the primacy of NATO as the cornerstone of European security. That is what the Opposition believe; it is time for the Government to tell us what they believe. A future Government will not be bound by a bad Labour deal.

I thank the shadow Chancellor of the Duchy of Lancaster for his contribution. Of course NATO remains the cornerstone of our security; that has been a cross-party position for decades. He asks about plans and red lines. I refer him to our manifesto, which was put to the people last year, that contains those clear red lines of no return to freedom of movement, the single market or the customs union. He can see in that examples of what the Government are seeking to negotiate. The hon. Gentleman talks about negotiating international agreements. There are many people from whom I would take advice about international agreements, but I hope the House will forgive me if the Conservatives—the party that managed to send hundreds of millions of pounds to Rwanda and all they got in return was sending some volunteers and most of their Home Secretaries there—are not at the front of the queue for giving advice on how to negotiate international agreements. I give some credit to the Leader of the Opposition, who strikes a markedly different tone on this issue from that struck by the hon. Gentleman today. She admits freely that the last Government left without a plan for growth, and that, frankly, they ended up making it up as they went along. I was surprised that the hon. Gentleman did not begin his remarks by repeating that apology. Perhaps he has a different view than the one taken by his leader. The hon. Gentleman talks about the jurisdiction of the European Court of Justice, but he was part of a Government who negotiated a role for the European Court of Justice in the Windsor framework. He talks about standards. This Government are committed to the highest standards, whether that is on product safety, employment rights or consumer rights. We believe in a race to the top on standards, not the race to the bottom that would be the dream of the Conservatives. As the Government move forward, our test is the national interest. It is about making Britain safer, more secure and more prosperous. There is another test for the Leader of the Opposition, however. I see that she has put out a social media video about tests, which is worth a couple of minutes for mild entertainment if nothing else. The test for her is whether she will face down the ideologues in her party. Is she going to show some political courage and back the national interest, or is she just going to back down in the face of the ideologues in her party? On the basis of the hon. Gentleman’s contribution, I am not optimistic.

I call the Chair of the Business and Trade Committee.

I very much welcome the statement from my right hon. Friend, but the reality is that he has inherited a deal with the European Union that has knocked about 4% to 5% off our economic output each year. Certainly, the Business and Trade Committee heard in Brussels last week a clear message from the business community that we need to be as specific and as ambitious as we can be ahead of the reset summit with the President of the European Commission. What plans does the Paymaster General have to bring together the British business community and, indeed, the trade union community so that the Prime Minister can go into his summit with President von der Leyen clear-minded about just how ambitious our wealth creators want him to be?

The Chair of the Select Committee is entirely right about the involvement of civil society, trade unions and businesses. I am sure that he will have seen the comments of the managing director of food at Marks & Spencer only today, who said: “We wholeheartedly support the Government’s plan to negotiate a Veterinary Agreement; the benefits would be significant, there is no discernible downside, and we will offer whatever help we can to aid the negotiations.” There was a time when the Conservative party was on the side of business—clearly no more.

I call the Liberal Democrat spokesperson.

I thank the Minister for advance sight of his statement. I welcome much of the statement’s content—that the Government are serious in their commitment to resetting our broken relationship with the European Union—but what the Liberal Democrats want is action. The European Union is our closest neighbour and largest trading partner. I sense that the Minister knows that we have to get on with repairing the trading relationship which was so badly damaged under the former Conservative Government, so please let us get on and do it. The botched Brexit deal has been a complete disaster for our country, especially for small businesses, which have been held back by reams of red tape and new barriers to trade, costing our economy billions in lost exports. The Minister talks of pragmatic negotiation. Surely what is pragmatic is to drop the Government’s red lines and agree a new UK-EU customs union. It would be the single biggest step that the Government could take to unlock growth, and I cannot think of anything more pragmatic. Liberal Democrats will continue to call on the Government to do the right thing. We are also disappointed by the Home Secretary’s comments at the weekend on ruling out a youth mobility scheme. Does that represent the Government’s stance? A youth mobility deal would be good for our economy, especially our tourism and hospitality sectors, while providing young British people with the opportunity to work and study abroad. It would be a win-win. Not only that, it is what the British public want. New polling shows that two thirds of the UK population are in favour of such a scheme. Does the Minister not agree that introducing a youth mobility scheme is exactly the kind of pragmatic negotiation that the Government should be prioritising?

I am grateful as always for the contribution of the hon. Lady; we had a fine debate in Westminster Hall last week. All I would say to her about speed, though, is that this Government are acting on the red lines in our manifesto around the single market, customs union and freedom of movement, on which we were elected and which delivered this majority last July. I looked at the Liberal Democrats manifesto and its plans for the relationship with the European Union, and it contained four steps. If we were choosing to do this in four different phases, we would be moving a lot more slowly than we are at the moment, so I hope the hon. Lady will welcome the progress we are making. I know there is a lot of speculation on the issue of youth mobility. Of course, we consider sensible proposals in accordance with our red lines, but our position remains the same: there are no plans for a youth mobility scheme, and we have been clear that there will be no return to freedom of movement.

I guess I should not be surprised to hear the Conservatives trying to defend an impossibly bad deal for British business, which is why I am so relieved that the grown-ups are going to Europe and working out what is in the national interest. May I press the Minister on something that it is very clearly in the national interest to resolve with our European partners? National Grid estimates that it will cost the UK Exchequer £5 billion to £8 billion over this Parliament to have a differential emissions trading scheme between us and Europe. Pollution does not respect borders, and we all want to tackle the climate crisis. Can he confirm that resolving the issues around the carbon border adjustment mechanism will be on the agenda for the summit in May?

I am grateful to my hon. Friend, who I know has campaigned on this issue. Energy is very much a priority for the discussions—specifically the emissions trading scheme and linkage. The existing trade and co-operation agreement commits the UK and the EU to considering that.

The Minister rightly speaks about the importance of NATO, which is key to our defence strategy. However, I have real concerns about the negotiations taking place on the defence strategy and on working with the European Union. We on the NATO Parliamentary Assembly have often spoken about the role of PESCO—the permanent structured co-operation—and the procurement strategy. Different countries procuring different elements can run into some constitutional problems, which can be a problem over generations of procurement, and it is important that protocols are made now for how those two things interact. I ask the Minister not to sign up to European programmes without ensuring that we build in protocols, so that PESCO cannot undermine article 5 decisions. As it stands, the ideology of PESCO stands in the way of article 5 decisions. If the Minister would like to speak about this further, I would be happy to meet him.

I would be more than happy to speak to the right hon. Gentleman—I acknowledge his expertise in these matters. He refers to interoperability, which is hugely important. He will have seen that the Prime Minister met the Secretary-General of NATO on Monday. That sends out a signal that NATO remains absolutely fundamental; it is the foundation stone of post-war security and of our approach going forward. What we seek to do will be complementary to NATO, to build on our collective strength in these dangerous times.

British businesses are clear that they want the Government to cut paperwork, tackle the trade barriers that they face, and lower the cost of selling goods and services to our trading partners in the EU. The Leader of the Opposition said last week that the Conservative Government left the EU without a plan. Does the Minister agree that that is typical of the chaotic economic management of the Conservatives, and that once again it is up to the Labour Government to clean up their mess?

My hon. Friend is absolutely right. At least the Leader of the Opposition was candid about the chaotic decision making under the previous Government. Together with our friends and neighbours in the EU, we have over £800 billion-worth of trade. It is clearly in our national interest to lower trade barriers pragmatically in that space.

I am pleased that this Government are moving away from the ideological fantasies of the Conservative Government and taking a pragmatic approach to EU-UK relations. Passive divergence—doing nothing when regulations move forward in the EU—is increasingly a concern for British businesses. It leads to huge trade barriers in emissions trading, for example, which is badly hurting the UK economy. What does the Paymaster General propose to do about passive divergence?

We are not doing nothing. There are areas where this Government will be in a world-leading space. Let us look, for example, at what we are doing on employment rights and product safety. As I indicated earlier to the hon. Member for Brentwood and Ongar (Alex Burghart), the Government believe in a race to the top on standards, not a race to the bottom.

I welcome the increased number of British officers now working with Europol. Will the Minister tell me more about how we will work with our European partners to tackle transactional crimes such as people smuggling and drug trafficking?

My hon. Friend raises an important point. I am pleased that we have already increased our National Crime Agency presence at Europol. The speed with which we can share data is hugely important. When crimes are committed, those early hours and days are so important for catching those responsible. We want to work with the EU and international partners so that criminals have no place to hide on our continent.

Those in the fishing industry will have noted not only that the Minister did not mention fish in his statement, but that he did not respond to the question from the shadow Minister, my hon. Friend the Member for Brentwood and Ongar (Alex Burghart), about fishing. Will he give an assurance to those in the industry that there will be no sell-out—whether on fishing grounds, quotas, days at sea and so on—and that he will do absolutely nothing to worsen the industry?

The hon. Gentleman is right to mention fishing. I can tell him first and foremost that I will engage with the fishing industry and its representatives about the issues that they face, particularly in selling into European markets. We will of course advocate for the interests of our fishers, and ensure that we fulfil our legal obligations on the marine environment.

As a result of the previous Government’s bad deal, companies in my constituency tell me about the impact that the barriers to trade with the EU are having on their businesses, hitting profits and affecting jobs. Does the Minister agree that it would be foolhardy for this Government not to tackle those barriers and back British businesses?

My hon. Friend is absolutely right. We speak to businesses, and they want fewer barriers to trade. It is astonishing that the modern Conservative party does not seem to share that view.

I welcome the Minister’s statement on closer co-operation with the EU on defence and security, but on the day the Bank of England cut its growth forecast from 1.5% to 0.75%, does the Minister agree that the single biggest thing we could do to turbocharge our economy in the medium and longer-terms is to form a customs union with the EU?

We were elected on a manifesto that set out clear red lines, but of course there is significant economic advantage, not just to the United Kingdom but to citizens all across Europe, in the reset that we are now looking to take forward. Whether in making our citizens more prosperous, or in making them safer and more secure, that work will deliver for Britain.

I warmly welcome the Minister’s statement. Isn’t it nice to finally have a Government who want to work with, rather than alienate, our European partners? In that spirit, does he agree that there is a chasm between the thin, last-minute deal that the previous Government negotiated—which the Leader of the Opposition now derides as a deal “without a plan”—and the red lines that he and his Government have set out? That is the landing zone that I hope the Government will get to as soon as possible.

My hon. Friend is absolutely right. The chaos of the previous Government did extraordinary damage to this country on the international stage, and frankly it sullied our international reputation. I am pleased that the Leader of the Opposition at least understands the chaos that the Conservatives caused our economy. My hon. Friend is absolutely right: this Government take a completely different approach. We were elected on a manifesto that we will now seek to deliver.

I thank the Minister for his answers to all our questions—he always replies in a positive fashion. As for my question, he probably knows what is coming, but I will ask it anyway. The thorn in the side of any restoration of good faith with the EU lies in the abhorrent Northern Ireland protocol and the EU’s grip on Northern Ireland. That may well exclude Northern Ireland from any trade deals with the United States of America, with which we already have multimillion pound supply deals in place. Will the Minister confirm that allowing Northern Ireland to have her place in the United Kingdom, and an end to the game that is hurting the people of Northern Ireland both financially and constitutionally, are at the top of the agenda for good relations?

I would like to reassure the hon. Gentleman that Northern Ireland is always at the forefront of my mind. Since I came into office, I have visited Belfast twice; I chair the inter-ministerial group, which obviously includes the Minister and Deputy First Minister of Northern Ireland; and the Windsor framework taskforce sits within the Cabinet Office, so I can assure the hon. Gentleman that the interests of the people of Northern Ireland are fundamental to this Government. I would also suggest to him that successful negotiation of a sanitary and phytosanitary agreement would be of significant benefit to the people of Northern Ireland.

I welcome the Paymaster General’s statement today. I notice that he said that there are currently no plans for a youth mobility scheme with the European Union. As a former Erasmus student myself, may I urge him to look at the schemes that are already in place with countries ranging from South Korea to Uruguay, Australia and New Zealand, and the immense cultural, economic and societal benefits that come from those schemes, which do not rub up against the Government’s red lines on single market access, customs union membership or freedom of movement?

My hon. Friend makes a powerful point, and if we look back over recent decades, there have been many people in this House who have had the benefit of studying abroad. As my hon. Friend has also pointed to, though, the red lines upon which this Government were elected are fundamental.

I thank the Paymaster General for that statement.