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

Lord Lilley Excerpts

Thursday 26th February 2026 Lords Chamber

[Lord Lilley (Con)]

My Lords, I congratulate the committee on trying to establish the Government’s reset negotiating objectives, which the Government have failed to publish. But the Government have published what they call an explainer. I have a copy of it here. It lists the items on the Government’s reset menu, but it is a menu without prices. I first came across that as a naive young man when I was invited to a very exclusive and expensive West End club. I embarrassed my hosts by asking the chief waiter why there were no prices on the menu, to which he replied, “If Monsieur needs to know the prices, Monsieur probably cannot afford to dine here”. That is the problem with this reset: we do not know the cost and, if we did, we would not want it. The Government know it.

At least the menu in that club gave a wide choice of dishes. With the EU, it is: “Take it or leave it. It’s the dish of the day, the chef’s special or, in the case of fish, the catch of the day”—and there is the catch: the EU said that it would not even initiate negotiations unless we first agreed not to increase our catch of our fish from our own waters for another 12 years. This supine Government enacted that irrevocably, even if all other aspects of the negotiations fail.

Although the explainer does not mention prices, the EU’s negotiating mandate reveals that we are expected to pay into the EU’s coffers for almost every item. For the SPS deal, we must pay the EU’s extra administrative costs for not carrying out checks on UK exports—quite why not checking goods involves extra costs beats me but, given that the EU exports four times as much food to us as we do to it, surely it should pay us for not checking its food.

On the carbon border adjustment mechanism, the EU insists that we pay its additional costs, despite the agreement eliminating calculation and charging for the carbon content of imports. This too mainly benefits the EU, since we produce few carbon-intensive goods, thanks to our crippling net-zero energy costs, which this agreement will enhance.

On Erasmus, the Government claim that the price is a 30% discount, but that is relative to the cost in future years. It is twice what we paid in 2019 and will be three times as much after the first year’s discount expires. The most egregious cost, however, is actually in the title of the EU negotiating mandate, which demands

“financial contribution of the United Kingdom towards reducing economic and social disparities between the regions of the Union”.

So we are to contribute to levelling up the EU with money that could, and should, be used to level up the UK.

Today, Secretary of State Kyle justified breaking Labour’s manifesto pledge of no return to the single market on the grounds that that is “where the magic happens”. He is, I am afraid, off with the fairies. As the Trade Secretary overseeing our entry into the single market, I too predicted that it would boost our exports, but over the ensuing 25 years our goods exports to the EU stagnated—growing at less than 1% a year—whereas goods exports to the 100 countries with which we traded just on WTO terms grew by 87%.

What drives trade is producing goods and services that people want to buy, then getting out and selling them, preferably in fast-growing markets. It is not submitting to EU rules, regulations and protectionism, which have made Europe the slowest-growing continent in the world.