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

Baroness Anderson of Stoke-on-Trent Excerpts

Thursday 26th February 2026 Lords Chamber

[Baroness in Waiting/Government Whip (Baroness Anderson of Stoke-on-Trent) (Lab)]

My Lords, I thank all noble Lords on the European Affairs Committee for their wide-ranging and considered report. I take this opportunity on behalf of the Government, and, I believe, the whole House, to especially thank the noble Lord, Lord Ricketts, for securing the debate and for his skilled chairing of the committee. He has proved himself to be the eternal diplomat—something I am not known for. Since the general election, the collaborative approach he has taken to engaging with the Government has been very welcome. I welcome the noble and gallant Lord, Lord Stirrup, as the new chair of the committee, and look forward to continuing our constructive engagement.

I am also extremely grateful to all noble Lords who have taken part in today’s debate for their insightful contributions—whether I agreed with them or not—which are a tribute to the report and its authors. I will attempt to answer all the questions raised, but with 34 contributions, I will also reflect on Hansard and respond to any issues I miss; the scale and range of our debate means that I will struggle to respond within the time.

This report was an important opportunity to look at the positive progress the Government have made on our manifesto commitment. While welcoming the progress that has been made, it asks important questions on areas such as the security and defence partnership, the SPS agreement, linkage of our emissions trading scheme, a youth experience scheme and potential participation in the EU internal electricity market. It also highlights the important role of Parliament in scrutinising existing and future agreements with the EU.

On progress to date, when the Government were elected, it was with a clear manifesto commitment to reset relations with our European partners. That meant tearing down unnecessary barriers to trade and increasing national security through strong borders and greater international co-operation. I do not wish to bring forth the wrath of the noble Lord, Lord Hannay, by using the phrase red lines; I want to be clear that there is no return within our red lines to the single market or customs union, and no return to freedom of movement. I gently remind the noble Lord, Lord Frost, and the noble Baroness, Lady Lawlor, that our red lines were clear in our manifesto. I reassure the noble Lord, Lord Empey, that we were clear on what that meant.

As your Lordships’ House knows, at the UK-EU summit in May last year, the Government agreed a new strategic partnership with the EU. This strategic partnership will unlock huge benefits for the UK, reducing barriers to trade, accelerating economic growth and keeping us secure in an uncertain world. It is good for bills, good for our borders and good for jobs. We took this decision—exercising our sovereignty—to strike a deal in the national interest. We are making good progress on talks with the EU since the summit to implement the joint commitments made.

I wrote down the name of every noble Lord who mentioned the issue of security and defence, but as it is over 20 names, noble Lords will have to bear with me. I was listening, and I am very grateful for their contributions. At the recent summit, we secured a new security and defence partnership agreement. As the noble Lord, Lord Barrow, reminded us, it is all the more salient this week as we mark four years since Putin’s illegal invasion of Ukraine. This agreement represents a joint commitment to European security built on the long-standing commitment of the UK to support Ukraine and our cross-continent work to protect our NATO allies. We continue to step up on European security, including through leading the coalition of the willing for Ukraine.

This sits alongside the defence co-operation agreements we have struck with our other European partners. Last year the Prime Minister refreshed the Lancaster House agreements with France, deepening our defence and security co-operation, including nuclear co-operation through the Northwood declaration. The Prime Minister also signed the Kensington treaty with Germany, a generational shift in our relationship which broadens our co-operation across defence and security issues, building on the Trinity House agreement.

We are working quickly with the EU to implement our security and defence partnership and have already stepped up our co-operation on supporting Ukraine, tackling hybrid threats and increasing stability in the Western Balkans. Our co-operation is already delivering results. We have worked together to maximise the impact of sanctions on Russia, including jointly lowering the crude oil price cap to curb Moscow’s energy revenues. We also worked with the EU to ensure a successful UK-hosted Berlin process on the Western Balkans in October to promote regional co-operation and deliver security and growth.

Since agreement of the partnership, we have also established senior, structured dialogues with EU counterparts. This is all to ensure that co-operation delivers tangible benefits to European security. We remain fully committed to our continued close co-operation with the EU and European partners to strengthen European security and maintain unwavering support for Ukraine.

As the Prime Minister said at the Munich Security Conference:

“We want to work together to lead a generational shift in defence industrial cooperation … We must come together to … build a joint European defence industry”


and

“go beyond the historic steps that we took at last year’s UK-EU summit to build the formidable productive power and innovative strength that we need”.

Obviously, this then takes us to the questions on SAFE, which were raised by many members of your Lordships’ House, but specifically by the noble Lords, Lord Ricketts and Lord Moynihan, and the noble and gallant Lord, Lord Stirrup. The security and defence partnership unlocked the possibility for enhanced UK participation in the Security Action for Europe scheme, also known as SAFE. We entered those discussions with the EU in good faith. We were prepared to make a fair financial contribution that reflected the potential for a mutually beneficial relationship and value for the UK taxpayer. It is disappointing that we were unable to come to an agreement, but we have always said that we will not sign any deals unless they are in our national interest. The UK’s defence industry continues to have access to SAFE under standard third-country terms. UK companies will be able to participate in and benefit from SAFE contracts to provide up to 35% of their content.

Issues related to Erasmus and the youth experience scheme were raised by the noble Duke, the Duke of Wellington. Since this report’s publication, the Government have reached an agreement with the European Commission for the UK’s association to Erasmus+ in 2027, fulfilling a key commitment made at the summit. In response to the noble Lord, Lord Elliott, on the benefits of Erasmus, association will open up world-class opportunities for learners, educators and young people, as well as youth workers, sports sector professionals and communities of all ages across the UK. We expect that over 100,000 people could benefit from participation in 2027. We will work with the national agency to encourage people to sign up when applications open, and we welcome the focus of the Erasmus scheme on disfranchised communities.

We will further strengthen the people-to-people ties between the UK and the EU by creating opportunities for young people to travel, to take up short-term work or study, to broaden their horizons, and to get to know new people and places through the establishment of a balanced youth experience scheme with the EU. We are also currently negotiating the parameters of the scheme with the EU and aim to conclude these negotiations by the time of the next summit.

On the costings that were touched on, the UK will contribute around £570 million to the Erasmus+ programme in 2027. This is down from the approximately £810 million we would have paid under default terms. The UK will receive most of that money back to distribute among the UK beneficiaries, which will also have the opportunity to compete for grants from a £1 billion central pot directly managed by the European Commission. This is a good deal for the UK. We have negotiated financial terms which reflect a fair balance between the UK’s financial contribution and the number of UK participants receiving funding.

Noble Lords rightly challenged me on the issues relating to touring artists. This was a manifesto commitment. To reassure the noble and gallant Lord, Lord Stirrup, because this issue was in our manifesto we are consistent and clear on its importance. Just as we recognised at the UK-EU summit the importance of opportunities for young people, we also jointly recognise the value of travel and of cultural and artistic exchanges, including the activities of touring artists. We will continue our efforts to support travel and cultural exchange, and we are exploring how best to improve arrangements for touring across the European continent with the EU and member states. We are determined to make progress, including on the ambition to agree improvements as soon as possible.

I will answer specific questions on some of these issues, if noble Lords will bear with me. The issue of electricity and trade was raised by several noble Lords. Following last year’s summit, the UK and EU have also concluded exploratory talks on the UK’s participation in the EU’s internal electricity market. Participating in the EU’s electricity market will have tangible benefits for the people of the UK, driving down energy costs and protecting consumers against volatile fossil fuel markets. We are now in the process of negotiating a UK-EU electricity agreement.

I move on to the SPS agreement, a key issue raised by many Members of your Lordships’ House. To reassure noble Lords, especially the noble Baroness, Lady Suttie, and the noble Duke, the Duke of Wellington, we are moving at pace on these negotiations. I love the phrase, “at pace”; it is good Civil Service language. The committee’s report also contained recommendations on next steps for the agreement. Let me be clear: the UK is the EU’s largest market for agri-food and vice versa. UK agri-food exports to the EU were worth £14.1 billion in 2024, while UK imports from the EU were worth £45.5 billion in the same year. Agri-food producers are among those most affected by increased paperwork and checks associated with exporting to the EU, as we were reminded by the noble Lord, Lord Inglewood. A food and drink agreement will change that, boosting our exports and cutting costs for importers. We are working with Defra on negotiations and implementation of the agreement. The implementation of the SPS deal will be a matter for Defra.

Let me be clear: the Government believe that in some areas, such as SPS, it is in our national interest to align our rules with the EU. This is a sovereign choice that we make because it will cut paperwork, costs and barriers that have a negative impact on our businesses and consumers every day. We know that there are trade-offs with that approach, but we believe they are worth it. To reassure noble Lords, as agreed with the EU, we will have decision-shaping rights when new EU policies are made. Parliament will rightly have a say on those new rules. Any disputes will be overseen by an independent arbitration panel, not the European Court of Justice. Of course, many of the rules that we expect to be in scope of the agreement already exist in UK statute, with minor divergence between the UK and the EU since we left in 2020. This reflects the fact that we are like-minded trading partners with mutually high standards.

I say to the noble Lord, Lord Redwood, that we may have to agree to disagree on the issue of growth, as deeper economic integration is in all our interests. We must look at where we can move closer to the single market in other sectors, as well as where that would work for both sides.

I move on to the ETS and CBAM. British businesses and consumers will also feel the benefit of linking our carbon markets, cutting costs, making it cheaper for UK companies to move to greener energy and once again saving the EU carbon border adjustment mechanism charge being paid on £7 billion-worth of UK goods exports to the EU. Where the UK needs access to EU agencies or databases to make the agreements set out in the common understanding a reality, it is reasonable that the UK pays for these services. For example, the UK should make a fair contribution towards the running costs of the EU agencies, systems and databases that administer the food, drink and carbon market linking deals. We will negotiate the details of any financial contributions with the EU. The food, drink and carbon market linking measures alone are set to add up to £9 billion a year to the UK economy by 2040 in a significant boost for growth. We aim to conclude negotiations on these areas by the time of the next summit.

The Government will introduce primary legislation later this year to ensure that we can deliver these agreements and that the benefits can be felt as soon as possible. It is important that Parliament has its say, so where we are making commitments to introduce new laws, Parliament will, as always, play its role in scrutinising the legislation that implements those commitments—I think we have many hours in your Lordships’ House ahead of us. The precise timing and details of legislative agreements are naturally subject to the course of more detailed negotiations that are taking place. We look forward to working with Parliament on the exact arrangements for scrutiny of the legislation as negotiations continue.

Noble Lords will appreciate that we cannot talk about the European Union and our relationships with it without touching on the Windsor Framework—something I feel somewhat informed about by many Members of your Lordships’ House. I enjoy being educated about this issue. I reiterate that we are committed to implementing the Windsor Framework in good faith and protecting the UK internal market. I express my gratitude to my noble friend Lord Murphy for his comprehensive review of the Windsor Framework and thank him for reminding us of the impact on Northern Ireland. I reassure him that I hope we will act speedily on the SPS agreement and the other recommendations in his report.

The insights provided by my noble friend are the direct result of his personal investment in the process and his extensive outreach to groups and individuals across the board. While the issues around making this work are incredibly charged in Northern Ireland and here, all noble Lords, especially the noble Lords, Lord Dodds and Lord Empey, have constructively engaged to make sure that we can get a way through.

I move to some of the specifics raised. The noble Lord, Lord Ricketts, asked me about the UK cohesion payments to the EU. We accept the principle that, when the UK participates in an EU instrument, programme or other activity, we should make a fair financial contribution to its budget to cover the costs of our participation. In December, the European Commission set out a proposal to the European Council to open negotiations with the UK on the financial contribution of the UK towards reducing economic and social disparities between regions of the union. This does not represent a proposal by the Government and the details of any contribution would be subject to negotiation.

My noble friend Lady Ashton and others touched on law enforcement and judicial co-operation. The summit package aims to strengthen our law enforcement and judicial co-operation capabilities, making our streets safer and ensuring that criminals are brought to justice. It will support our police officers and help enhance our intelligence and investigative capabilities against murderers, rapists and drug smugglers, including via facial imagery. It will also help ensure that investigations are equipped with the full facts of a suspect’s criminal history and that those are fully utilised to protect UK citizens from harm.

The noble Lord, Lord Barrow, asked about the second-generation Schengen Information System, SIS II. At the May 2025 UK-EU summit, we were pleased to agree a package which enabled further work to be undertaken with the EU to strengthen our law enforcement through new data exchange capabilities. The Government committed in their manifesto to ensure access to real-time intelligence. While at the UK-EU summit it was not possible to secure references to real-time, reciprocal alert sharing for border security and law enforcement processes, the summit represented an opportunity to further strengthen our capabilities, co-operation and relationship.

Many Members of your Lordships’ House, but specifically the noble Lord, Lord Jay, touched on defence spending—a subject that I, as an honorary captain of the Royal Navy, am particularly exercised about too. As the PM said in his Munich speech:

“To meet the wider threat, it is clear that we are going to have to spend more faster”.


We have shown our collective intent in this regard with the historic agreement to increase spending to 5% on security and defence. Noble Lords have had and will continue to have the opportunity to discuss that with my noble friend Lord Coaker on many future occasions.

On the White Paper—a genuine issue raised by the noble Lords, Lord Jackson of Peterborough and Lord Taylor of Warwick, and the noble Baroness, Lady Finn—the Government’s manifesto on which we were elected was clear on our approach to resetting relations with the EU, including negotiating an SPS agreement to prevent unnecessary border checks and to help reduce pressure on prices. At the UK-EU summit in May last year, the Prime Minister announced a new strategic partnership with the EU, underpinned by the common understanding. The common understanding sets out an agenda in writing for strength and co-operation with the EU across safety, security and economic prosperity.

The noble Lord, Lord Taylor of Warwick, and the noble Baroness, Lady Lane-Fox, rightly asked about AI. We have had a number of good discussions with the EU on AI, including through the committees established under the trade and co-operation agreement, and are now in discussions with our EU partners about how we take forward further collaboration on AI and other digital issues. If the noble Baroness will indulge me, I will write to her on the specific questions at the end of her speech.

The noble Lord, Lord Wallace of Saltaire, asked about training for civil servants. The FCDO has a dedicated team leading work to build Europe capability across government. We are keeping our learning offer under regular review to ensure that we are partnering and influencing the EU and European allies in the most effective way.

I was surprised by one of the questions from the noble Baroness, Lady Ludford, about free movement by the back door and how the European youth experience scheme could be regarded as such. To reassure her, the youth mobility arrangements are clearly not freedom of movement. They are based on strict control; they are subject to a visa requirement, capped and time limited. We already have agreements with 13 other countries, and no one has suggested that we have freedom of movement with them. Any scheme will be subject to an allotted number of places, and we have made it clear that this will be in line with the UK’s existing schemes with countries such as Australia and New Zealand. They will have limits on numbers and length of stay and will be subject to a visa application so that we can decide—

[Baroness Ludford (LD)]

I evidently did not make myself clear. I did not say that the Government want free movement inwards, but, as I understand it, are asking for British citizens who go under the youth experience scheme to the continent to be able to move freely between different EU member states. That is free movement inside the EU for Brits, but it is not reciprocal, because we are only one country.

[Baroness Anderson of Stoke-on-Trent (Lab)]

The scheme will have a cap and quota both ways. On fisheries, I will write to the noble Baroness about her specific point because I am aware that I am out of time.

There are a couple of important final points, if your Lordships’ House will indulge me. The noble Lord, Lord Tugendhat, may enjoy the comments of the President of the European Parliament, Roberta Metsola, in yesterday’s Telegraph about how the European Union feels about next steps. I advise him to read her op-ed. The noble Baroness, Lady Suttie, and the noble Lord, Lord Barrow, asked me about European Union membership for Ukraine. That is a matter for EU members, and we are no longer one. The noble Lord, Lord Taylor, asked about the date of the next summit. We are in discussions with the EU on timings, but it will be this year.

I thank the noble Lord, Lord Kerr, for his suggestions in the defence space and, most importantly, for referencing one of my personal political heroes, Denis Healey. The noble Lord, Lord Wallace, spoke about wider engagement across Europe with European politicians. I think it is fair to say that the Prime Minister has actively sought to engage in this space and to make sure that we have solid relationships. He has also been a strong advocate, at least throughout the time I have known him, for making sure that we all as parliamentarians engage with our sister parties across the European Union and beyond.

The noble Earl, Lord Clancarty, asked me about Erasmus beyond 2027. The scheme does not yet exist, which is why we have joined year one. We will review after year one whether we will have further issues. I will write to him on group passports. On the youth experience scheme, I cannot comment on the details of ongoing negotiations, but I am sure we will be discussing it at great length in your Lordships’ House when I can.

The Government remain committed to strengthening our strategic partnership with the European Union and delivering real results for the people of the UK while sticking to the red lines set out in our manifesto. As the committee notes in its report, strengthening the UK-EU strategic partnership is an ongoing process. The summit in 2025 was the first in a series of annual summits and, as the Prime Minister set out in his speech at the Munich Security Conference recently, we must look at what more we can do with the EU. I reassure noble Lords that although I understand that we have many different views in your Lordships’ House, I think the one thing that we all agree on, especially in such a volatile world, is that having positive relationships with our neighbours is a very good idea.