Brexit: Financial Settlement

Lord Bates Excerpts

Monday 13th November 2017 Lords Chamber

[Lord Spicer]

To ask Her Majesty’s Government what estimates they have made of the impact on the eventual financial settlement with the European Union of those European Union assets towards which the United Kingdom made a financial contribution and which at Brexit will remain part of the European Union.

[The Minister of State, Department for International Development (Lord Bates) (Con)]

My Lords, the treatment of the European Union’s assets will need to be agreed as part of the negotiations. The Government are now performing a line-by-line analysis of our potential commitments. We recognise that the UK has obligations towards the EU and the EU has obligations towards the UK.

[Lord Spicer (Con)]

My Lords, have we not got it exactly the wrong way round with Brussels? How on earth are we meant to decide on the financial matters before we know the more general direction of what has been proposed?

[Lord Bates]

That fits very much with what the Prime Minister said in her Florence speech on 22 September, when she said that nothing is agreed until everything is agreed. We see this very much as a single negotiation. We want all of the elements to it agreed—and an important part of that will be the financial settlement.

[Lord Rooker (Lab)]

How can you negotiate on a legal obligation?

[Lord Bates]

Forgive me?

[Lord Rooker]

The Minister said it was a question of negotiation. Surely the question of the finance is a legal obligation. How can you negotiate on a legal obligation?

[Lord Bates]

There are parts of that which are related to it. We have said that we want to be fair in the exit and some elements cover, for example, pensions and liabilities for ongoing programmes. Indeed, as the Prime Minister set out in her Florence speech, no country should have pay in more during the current budget cycle and no country should receive less. That is a generous way of recognising that we have obligations, but as part of a wider negotiation.

[Lord Bridges of Headley (Con)]

My Lords, following on from my noble friend Lord Spicer’s question, does the Minister agree that Monsieur Barnier’s position today seems entirely contradictory to the position he set out in the negotiating guidelines published in April, which state:

“In accordance with the principle that nothing is agreed until everything is agreed, individual items cannot be settled separately”?

[Lord Bates]

My noble friend has great experience in this area. He draws my attention to a significant part of the setting out of the principles which the Prime Minister’s speech of 22 September chimed with exactly. Some of the comments coming from the other side do not necessarily recognise that, so it is good to be reminded of it.

[Baroness Smith of Newnham (LD)]

My Lords, in light of the fact that sterling has fallen yet again, does the Minister agree that EU denominated liabilities will increase the greater government uncertainty and instabilities? Is anyone in control? Is it not time for the Prime Minister to get a grip?

[Lord Bates]

She has a grip. That grip was demonstrated in her Florence speech, where she set out our negotiating position, which is very strong and fair. Any settlement would of course be denominated in euros as the currency—we recognise that—but that, too, needs to be taken into account as we agree what the final settlement should be as part of the wider negotiations.

[Lord Cormack (Con)]

My Lords, the Prime Minister may well have a grip. That is good, but some of us are absolutely fed up to the back teeth of reading, as we did this morning, of two Cabinet Ministers publishing their attack on a third. This is appalling, and something up with which she should not put.

[Lord Bates]

I think my noble friend would recognise that there can be full and frank negotiations in Cabinet between colleagues.

[Noble Lords]

Oh!

[Lord Bates]

There is no doubt that the entire Cabinet signed off on the position of the Florence speech, and that remains the position David Davis is pursuing with vigour and ability in Brussels at present.

[Lord Davies of Oldham (Lab)]

My Lords, the temptation to follow the noble Lord, Lord Cormack, is almost overwhelming, but on this occasion I will resist, to return to the main issue of the Question. We in the Labour Party accept the referendum result, but we will seek to remove the concept of “no deal”, which wrecks confidence as far as British business is concerned. The Minister refers to the fact that other noble Lords have had experience at the Dispatch Box on Treasury matters, but they do not last very long, do they?

[Lord Bates]

I had the benefit of seeing the faces of the noble Lord’s colleagues behind him when he was asking that question, which reminds us that the negotiation is not necessarily easy for any of us, in any party. Where do the Opposition stand on free movement and the single market? The only thing they seem to agree on is that we ought to sign up to whatever is put in front of us. We are saying no—this is a negotiation and we have the right to say no.

[Lord Tugendhat (Con)]

My Lords, does my noble friend agree that these matters are very complicated, that it is very important for the United Kingdom to get the best deal it can and that in putting a date in the Bill, the Government are handing negotiating cards to the other side and making it much more difficult for them to secure their own objective?

[Lord Bates]

I beg to disagree with my noble friend, although I recognise his immense experience in this area. All that has been proposed is to make explicit what has been implicit and what has been set out in the Florence speech and all the way through the process, ever since Article 50 was triggered.

[Lord Grocott (Lab)]

My Lords, we are back to the question of finance. Can the Minister confirm that over the past 40 years, we have been huge net contributors to EU funds? Can he also confirm that we are currently being asked to pay large sums of money to depart the EU? I wonder if he could get someone from the Commission to come along and explain to the British people—who I think would find it difficult to understand— that the more we pay into the organisation, the more it costs to get out.

[Lord Bates]

The noble Lord is absolutely right in pointing to the fact that there are assets of the European Union. Those are highlighted in the consolidated report and account, the difficulty with which is that it shows assets of £162 billion, but liabilities of £234 billion. In agreeing what our share of the assets is, we also have to be fair and recognise that there may be some concomitant responsibility for some of the liabilities.

[Lord Wigley (PC)]

My Lords, further to the point made a moment ago about the date being written into the Bill, does that not mean that on that date in March 2019, if all is not agreed at that point, nothing is agreed, and we would leave without even any semblance of a security agreement?

[Lord Bates]

That is a fact that should be borne in mind by all parties for the negotiation.