UK-EU Common Understanding Negotiations

Lord Wallace of Saltaire Excerpts

Thursday 18th December 2025 Lords Chamber

[The Earl of Courtown (Con)]

My Lords, there is little doubt across the House that the opportunity to live, study and work abroad can bring real benefits for young people. It enables them to experience different cultures, encounter new ways of thinking, build confidence and form relationships and friendships that can last a lifetime. Those objectives are, in themselves, entirely laudable. However, good intentions are not enough. If this arrangement is to command confidence, it must be fair, accessible and genuinely mutually beneficial. It is therefore right that we scrutinise carefully both the financial and practical implications of what His Majesty’s Government have agreed.

One of the most immediate questions raised by this announcement is whether it will represent genuine value for money for the British taxpayer. It is concerning that the Government have been unable to define any cap on the number of EU students who may come to the United Kingdom under this arrangement, nor have they ruled out a wider youth mobility scheme that could further increase the inflow of young people from the EU. Under the proposed deal, European students would be able to study in the UK for up to a year while continuing to pay tuition fees to their home institutions.

When this scheme last operated, the imbalance was stark. In 2018, almost 32,000 young people came to the UK through Erasmus, compared with around 17,000 UK students who travelled in the opposite direction. The result was an estimated net cost to the UK taxpayer of more than £200 million per year. The media reported this morning that the total cost to the British taxpayer from this new scheme could be as high as £8.75 billion. At a time when young people in this country are already facing rising living costs, spiralling unemployment and diminished opportunities to buy homes and to save and invest their money—problems largely stemming from this Government’s own policy choices—we must be extremely careful about entering into arrangements that risk British taxpayers subsidising European students to study here.

Whether or not a taxpayer’s own child benefits from this scheme, the cost is borne by everyone. If parents across the country are being asked to help fund opportunities for other people’s children to study abroad, we must be confident and able to demonstrate that this delivers benefits not just for the individual participant but for the country as a whole. What assurances can the Minister give the House that this will not again become an asymmetrical arrangement? Can she guarantee that participation in Erasmus+ from 2027 will not result in a net cost to the British taxpayer of the kind we saw previously? Can she please tell us how value for money for the taxpayer will be assessed and communicated?

Closely linked to this is the question of equitable access. It is easy to predict who is most likely to benefit from schemes of this nature: those who studied languages at school and travelled abroad with their families, and whose educational and social background already equip them to take advantage of international opportunities. Without careful design, Erasmus risks becoming little more than a publicly subsidised gap year for young people who already enjoy significant privilege. Although the Government have said that financial support will be available for disadvantaged students, funding alone is insufficient if those disadvantaged students are unaware of the scheme, lack institutional encouragement or do not see it as something for people like them. Can the Minister set out how the Government will ensure that this scheme is actively promoted and supported in schools, colleges and universities serving disadvantaged communities? What concrete steps will be taken to ensure that those who would benefit most from international mobility are not, once again, the least likely to access it?

I would also welcome the Government’s response on how the new arrangement will sit alongside existing UK mobility programmes. The United Kingdom currently operates the Turing scheme, which was designed to expand opportunities for students to study and work abroad, well beyond the European Union. Against that background, it would be helpful for the House to understand what the future holds for the Turing scheme once association with Erasmus+ begins in 2027. I hope, therefore, that the Minister can tell us how, in choosing to reassociate with Erasmus+, the Government intend to preserve the broader international reach that Turing was specifically designed to support. Will opportunities for global mobility beyond Europe be maintained at their current level, or do the Government envisage a narrowing of focus back towards the EU alone?

As I indicated earlier, this scheme must be able to not only deliver benefits but demonstrate clearly that it represents value for money for the taxpayer. Although the Government have outlined the initial cost of association, experience tells us that such programmes can become significantly more expensive over time, particularly where participation is uneven or demand exceeds expectations. It would therefore be reassuring to hear what safeguards are in place to prevent costs escalating in the years ahead.

The Government have said that rejoining Erasmus will cost £570 million in 2027 for a one-year membership but declined to say what the future costs will be. Can the Minister now tell us what they will be? It is reported that Brussels plans to increase funding for the scheme from 2028 by more than 50%, from around €26 billion to €41 billion. This, plus the extra costs associated with joining EU programmes after Brexit, means the bloc could charge Britain £1.25 billion a year between 2028 and 2034. Can the Minister confirm whether these figures are correct?

Also, if participation once again becomes markedly unbalanced, with substantially more students coming to the UK than travelling abroad, what mechanisms will exist to address that? Will the Government be able to renegotiate the terms of participation, adjust financial contributions or take corrective action to ensure that the UK is not locked into a persistently disadvantageous position? Can the Minister tell us what projected cost this programme will have to universities, which may lose out on international student fees as a result of this policy?

Finally, there will understandably be concern in this House and beyond that this EU reset could amount to a gradual reversal of the settlement reached when the United Kingdom left the European Union. What protections are in place to ensure that the UK is not drawn into open-ended financial commitments, regulatory alignment or governance structures over which it has limited control? Crucially, what clear mechanisms exist for the UK to withdraw or adjust its participation should this arrangement cease to serve our national interest?

There is broad consensus across this House that international mobility can be a powerful force for good, but good will must be matched by responsibility. If this scheme is to succeed, it must deliver value for money, widen opportunity rather than entrench privilege, and sit comfortably within a UK-EU relationship based on co-operation without dependency. I look forward to the Minister’s response on these points and to greater clarity on how the Government intend to ensure that this agreement works not just in theory but in practice for young people across the whole United Kingdom.

[Lord Wallace of Saltaire (LD)]

My Lords, we on these Benches welcome the Statement and the achievement. We regret only that the Government are moving so slowly. I note that this means we differ considerably from the Conservative Front Bench, although I was relieved that the noble Earl’s words were a little less hysterical than the front pages of the Telegraph and the Mail today. If we are going to pursue the reset further, as my party strongly supports, and move towards dynamic alignment across the board—and, therefore, closer association with the customs union, which will have to come next—the Government will need to change their language and spend more time discussing the benefits as against the costs, which my Conservative colleague, the Telegraph and the Mail have stressed so heavily this morning.

I declare an interest. I taught many students from other European Union countries in my last two jobs in universities, one of whom is the President of his country and extremely active on European security; a number of others are now in leading positions in public life in their countries and good friends of the United Kingdom. That is one of the benefits we get from exchanges. On the imbalance we had last time, an active scheme to encourage British students to spend time in other countries would be of enormous benefit to this country. It would lead to people who understand other countries, can do business with them, understand their politics and then enter public service here or elsewhere, to our mutual benefit.

I regret the language of the Statement. It is defensive and therefore wrong. It talks about only “the national interest” and “sovereignty”. I am sure the Minister will agree that the only country in the world that is fully sovereign is North Korea. In other countries, sovereignty has to be compromised by international co-operation. As the leader of Reform in effect makes clear, the alternative to membership of the European Union is not full sovereignty but dependence on the United States, which is not an easy alternative at the present time.

I suggest that the Government should be talking about shared interests, common security, the benefits as against the costs and the fact that our contributions helped save this country money in many ways. When the Conservative Government took us out of the European Union, we had to set up separate agencies and recruit additional public servants. We lost the European Medicines Agency in London, which was a great boon to our pharmaceutical industry, and a number of other things. The benefits absolutely need to be stressed and I encourage the Minister to say to her colleagues, in particular Nick Thomas-Symonds, that the sort of language they are using will not persuade the bulk of the British public that we need to be closer to the European Union.

We now know, on very strong evidence, that we have lost a lot of economic growth since we have left, which means we have also lost tax revenue. On goods and services, we know that we need to go back to closer relations. I encourage the Minister to go further.

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

My Lords, maybe this was not the Statement to bring some Christmas good will, cheer and unanimity across your Lordships’ House. It is a good thing that my language, I hope, will be both positive for the noble Lord, Lord Wallace, and slightly more circumspect for the noble Earl, Lord Courtown. I thank both noble Lords. We will continue to rehearse these arguments, as we have done for many years since the referendum, as we seek to undertake our reset. A number of important issues have been raised, which I will address in some detail. I will also reflect on Hansard to see which questions I have missed, either intentionally or by accident—never intentionally, as I am being reminded—and will write in due course.

I would like to engage with this in a spirit of good will. This is a positive thing we are doing: £500 million of additional investment in our young people in one year. It is something to be celebrated. I will engage in the promise of positivity at this time of year and I view it as my own Hanukkah miracle. I will touch on some of the issues raised.

On the UK-EU summit, our manifesto promised to reset our relationships with our European partners to improve our diplomatic, economic and security co-operation following Brexit. Earlier this year we hosted the first annual UK-EU summit, where the Prime Minister and the European Commission President welcomed our new strategic partnership and a landmark deal that is good for bills, borders and jobs. That is what we are seeking to deliver—a partnership that enables us to tackle the shared challenges we face, to boost the prosperity, safety and security of both our peoples, and to help strengthen European-wide defences.

I turn to the core of the announcement. We have made good progress on talks with the EU since the summit, working to implement the joint commitments we made in May. I am therefore pleased to inform the House that, yesterday, the UK and the European Commission concluded negotiations for the UK’s association to Erasmus+ from 2027 for one year—with, as I said, £500 million of investment in our young people. Our association to the programme will open up opportunities for learners, educators, youth workers, sports sector professionals and communities of all ages in our education, training, youth and sport sectors, for both the professionals who work in these sectors and, crucially, our young people. Participants can travel to any European Union member state and to several countries outside it, opening doors to tens of thousands of people across the UK, renewing our people ties with Europe and beyond.

At the summit, we also agreed to work towards participation in Erasmus+ on the basis that there will be a fair balance between our financial contribution and the number of UK participants receiving funding. We are pleased that the EU has agreed financial terms—a 30% discount in 2027 compared with the default terms in the trade and co-operation agreement. This is a fair balance between our contribution and the benefits of the programme. It has also been agreed that the UK’s participation in the programme will be reviewed 10 months after our association, which will include data on the demand for funding in the UK. Any continued participation will be informed by our experience of association in 2027. The Government will now work quickly to ensure that there is maximum take-up across all sectors and groups and that the benefits of our association to Erasmus+ can be felt.

The noble Earl, Lord Courtown, raised an important issue about people’s awareness of the scheme. I live in Stoke-on-Trent, and we must make sure that people from up and down the country are able to access these schemes, so that it is not, as historically it could have been considered, a boost for middle-class children, but is accessible to everyone. Many Members of your Lordships’ House have associations with further education facilities and schools up and down the country; there is a responsibility on each of us to make sure that people are aware of this scheme. I urge all noble Lords to reach out to their communities. The funding streams open in October 2026 and we have time to make sure that people can access this. One of the things I was most delighted to see yesterday was a quotation from the Association of School and College Leaders, which was delighted about this scheme.

The Turing scheme has wider international reach since we left Erasmus, though it was not the scheme that we left. I reassure noble Lords that the Turing scheme will be operating as normal next year and that we will continue to learn lessons from it. Any future decisions on Turing will be brought forward to your Lordships’ House in due course. On international fees to the EU, I am not sure that is something that I recognise, but I will reflect on the noble Earl’s exact question and come back to him.

On today’s coverage in the Mail and Telegraph, it will not surprise noble Lords that I anticipated such a question. The reality is that the European Union has not yet determined any costings for the next scheme, so nobody recognises the numbers that were in the papers today because no such scheme has been rolled out with any such budget. We have been clear to commit to 2027. We will make sure that it works and proves to be good value for money for the United Kingdom and is of huge value to our young people. We will continue to negotiate with the European Union on next steps.

The noble Earl raised the youth experience scheme. As I have made clear in other debates in your Lordships’ House, the Government recognise the value of such schemes. One of the things I find exceptionally difficult when we discuss youth mobility schemes is that the previous Government signed a youth mobility scheme with Uruguay. I do not understand why a youth mobility scheme with the European Union is so contrary to our values that we would not want one. If we can have one with 13 other countries, we can have one with the European Union.

On the Labour Party’s red lines in our manifesto, I hate to disappoint the noble Lord but we have been very clear that we are not rejoining the customs union. Our manifesto set out exactly what we were prepared to do in our negotiations. All our negotiations are through the prism of our red lines. We will not be returning to the single market, the customs union or freedom of movement.

On whether the UK is becoming a rule-taker, we have made a choice to align in some areas where it makes sense for our national interest. The EU has accepted that there will need to be a number of areas in which we need to retain our own rules as we make alignment going forward. The details of these are all subject to negotiation. We will be involved in forming the regulations that apply to the UK at every stage, and Members of your Lordships’ House will have appropriate scrutiny arrangements in place.

I will finish on a positive. The expected financial benefits for our economy from having a closer relationship with the European Union are hugely significant. The SPS and carbon-pricing agreements which we are currently negotiating will add nearly £9 billion a year to the UK economy by 2040. The carbon-pricing deal avoids the risk of UK businesses paying tax to the EU on £7 billion-worth of trade. We are seeking to reset our relationship based on what is best in our national interest as a sovereign country. The European Union is our biggest trade partner and the biggest source of economic growth for this country. We continue to work closely with it, in a spirit of good will at this time of year.