Beyond Brexit: Lords EU select committee conclusions and recommendations

You’d be forgiven for thinking the government prefers to avoid scrutiny at all costs. Whether it’s Brexit or covid, it’s been playing its cards close to its chest. Bills have been rushed through parliament at breakneck speed, and any criticism has been countered with suggestions that there is nothing to fear, as the government has it covered and can be trusted to do the right thing.

Those that welcomed the scrutiny provided by Hilary Benn’s House of Commons committee on the future relationship with EU – commonly referred to as the Brexit committee – were disappointed when it was disbanded in January.

The House of Lords equivalent – the EU select committee – is also about to close down, to be replaced by a new Lords European affairs committee. Whilst the chair and members of the new committee – expected to be formed at the beginning of April – are still unknown, it is likely that many of the existing members will move across to the new forum.

Beyond Brexit reports from the Lords EU select committee

Before they disband, the Lords committee, and its four subcommittees, have produced a final five reports, all under the heading ‘Beyond Brexit’. The reports each cover a different aspect of Brexit, and highlight areas of concern, with recommendations and suggestions on how those issues might be addressed.

Beyond Brexit report 1: the institutional framework

The first report, published on 22 March, speaks of “the haste with which the Trade and Co-operation Agreement (TCA) was agreed”, resulting in “many items of ‘unfinished business’”. Those items include “regulatory cooperation on financial services”, “suitable practical arrangements on asylum” and an agreement to complete negotiations “as soon as is reasonably practicable”.

In reference to the recent decision to unilaterally extend the ‘grace periods’, the committee concludes that the government “have so undermined trust that the possibility of ‘no deal’ – in other words, a failure to ratify the TCA – has now resurfaced”.

Beyond Brexit Scrutiny
Beyond Brexit Scrutiny

The committee call on the government “to commit to supporting effective scrutiny by both Houses”, including regular appearances of the minister overseeing relations before select committees. Given recent events, the committee recommends the government take all appropriate measures “in good faith to fulfil their obligations under the Agreement” and stresses the importance of rebuilding the trust “so undermined in recent times”.

Beyond Brexit report 2: food, environment, energy and health

The report expresses relief that the TCA achieved tariff and quota-free trade, though significant barriers to trade still exist. Those barriers have reduced the profitability of parts of Great Britain’s food and agriculture sectors, and the subcommittee recommends the government seek supplementary agreements with the EU.

But the committee is dismayed that the agrifood sector is facing “increased trade frictions” and says the sector is facing “very difficult challenges” thanks to increased paperwork and preparation required for food.

Beyond Brexit food exports
Beyond Brexit food exports

On fisheries, the committee disagree with the government assessment that UK fishers will have 25 percent more quota in five and a half years’ time, saying the real figure is just 16.6 percent, and that the species whose quota will increase are “not necessarily those of value to the UK fishing industry”.

The need to export to the EU has to be balanced against the desire to acquire more fishing rights. The report points out that many difficulties facing the fishing industry “are a direct result of the UK’s withdrawal from the EU and its new status as a third country and thus represent unavoidable, long-term impacts on the sector”.

Compromises on the environment and climate change are welcomed, though the committee voices concerns about “the enforceability of some provisions”. Concerns are also raised over the possibility of rises in electricity prices, and the government is urged to provide guidance on current and future plans for cross-border electricity trading.

Beyond Brexit social care
Beyond Brexit social care

On health, the committee appreciates the new arrangements for UK citizens when travelling, as well as the tariff-free exports of medicines and medical equipment.

But regarding staffing issues in the NHS and social care – exacerbated by the pandemic – the committee sees “no evidence of a credible plan from the government to address the shortage”. Although it supports measures to encourage more ‘homegrown’ care workers, it says that such measures “will take years to materialise, and the need is immediate”.

Beyond Brexit report 3: trade in services

With service industries accounting for 80 percent of the UK’s economic output in 2019, they are central to the economy. The report says that whilst the TCA is preferable to no agreement, “significant challenges remain”.

The financial sector contributes £132bn to the UK economy – that’s 6.9 percent of total economic output and more than 10 percent of UK tax receipts (2019/20). Exit from the passporting regime has already resulted in the movement of activity and jobs to the EU, which may, in time, lead to a further export of people and assets.

While the TCA alleviates some of the uncertainty for professional and business services, it represents “a major change from Single Market membership”. UK service providers are facing a “patchwork of complicated rules” which act as a barrier to trade, hitting smaller businesses the hardest. Tourism and travel sectors will be particularly hard hit, “undermining opportunities especially for young people”.

The committee recommends that the government does as much as possible to persuade and incentivise service providers to maintain their economic activity in the UK, as well as encouraging EU providers to establish themselves in the UK.

The lack of recognition of professional qualifications is “disappointing” and could affect many sectors. The committee urges the government to seek an agreement with the EU to resolve this issue.

The report does not recommend divergence from EU regulation for divergence’s sake alone, nor alignment for alignment’s sake.

Beyond Brexit services
Beyond Brexit services

The creative industry sector was worth over £100bn in 2019. It grew at twice the rate of the rest of the UK economy and employed over two million people. Beyond the financial benefits, the committee notes that a thriving creative industry brings “a sense of pride, community and joy, as well as promoting UK values and ‘soft power’ abroad”.

Beyond Brexit creative industries
Beyond Brexit creative industries

The committee was “deeply concerned” about the impact the loss of freedom of movement is having on the sector, making touring “prohibitively bureaucratic and expensive”. It urges the government to negotiate a bilateral and reciprocal agreement, as a matter of urgency, to make mobility arrangements for touring performers, creative teams and crews.

On research and education, the committee regrets the government’s decision not to participate in the Erasmus scheme, and draws attention to the shortcomings of the replacement Turing scheme – namely that it makes no provision for inbound student mobility and doesn’t cover tuition fees or travel costs. It also expresses concern about the costs of the new scheme and says there are “significant gaps in current proposals”.

The committee notes that a future relationship with the EU would be “critical to the continuing success of the UK’s research and education programme”.

Beyond Brexit report 4: trade in goods

The committee recognises that the TCA is preferable to a ‘no deal’ outcome, but that it “does not rectify significant regulatory, logistical and administrative barriers to trade arising from the UK’s status as a third country”. It suggests an “ambitious” approach to trade with the EU and urges both parties to work together in a “spirit of cooperation and openness”.

Beyond Brexit trade barriers
Beyond Brexit trade barriers

The government’s commitment to maintaining high labour and social standards is welcomed. Should any changes to these standards be considered in future, the report recommends caution, transparency and consultation.

Amongst the biggest issues facing traders are rules of origin requirements, which present both short-term administrative issues and long-term structural challenges. Businesses have had little time to adapt, and implementation has been exacerbated by administrative difficulties.

The government is advised to ensure full awareness of the need to follow the rules and to embark on a programme of industry engagement “to identify and pursue simplifications to adherence processes”. The rules of origin requirements mean that a substantial supply chain shift in certain sectors is likely, adding significant costs for many UK businesses, as well as exporters in developing countries.

Beyond Brexit rules of origin
Beyond Brexit rules of origin

Traders in animal and plant products have perhaps been hardest hit by additional red tape. Many of their products cannot be stockpiled and face the most stringent of checks. Physical sanitary and phytosanitary measures could become “a permanent barrier to trade”, unless both parties can agree mitigations to the current scheme.

The government is advised to seek agreement for a “trusted trader scheme” to enable some businesses to benefit from simplifications to customs or safety and security processes.

Funding for the development of physical customs infrastructure has been “insufficient”, and further funding should be released before checks are imposed. The government must adopt “a pragmatic approach to border inspection as new requirements are phased in”.

Guidance for traders needs to be easier for businesses to understand, “and honest about the complexity of some of the new requirements”. The committee recognises that the government is starting to take these messages on board, but further steps to improve the advice and support to businesses are needed.

Beyond Brexit report 5: policing, law enforcement and security

The final report, published on 26 March, welcomes provisions for the sharing of passenger record data between the UK and the EU, and for continued UK access to EU databases covering fingerprints, DNA and criminal records, and agreement on extradition arrangements.

Also welcome are commitments to the rule of law and the European Convention on Human Rights – described as “essential elements” of the TCA, and to data protection rights. Should the UK decide in future not to stay aligned with EU data protection rules, the agreements could be suspended, or even terminated.

The committee notes that an unavoidable consequence of the agreement is that it no longer provides the “same level of collaboration” as when the UK was an EU member state. The influence and leadership the UK previously enjoyed, in the shaping of instruments of EU law enforcement and judicial cooperation have ended.

Beyond Brexit Schengen Information System
Beyond Brexit Schengen Information System

One of the most significant consequences is the loss of the Schengen Information System, and the real-time access to data it provided. This data included persons/objects of interest, and wanted or missing persons.

The committee says there are many reasons “to be cautious” about drawing conclusions as to the effectiveness of the TCA in practice, noting that many of the provisions of the agreement are detailed, complex and untried.

The report highlights concerns over the government’s decision not to negotiate an agreement on future cooperation on family law. In 2017, the EU justice subcommittee warned of the effect on the lives of many UK citizens if important EU regulations on child maintenance, divorce and international child abduction were not replaced after Brexit.

The committee calls on the government to explain the delay in applying to join the Lugano Convention, and asks it to outline steps being taken to reach a resolution.

Beyond Brexit in summary

What comes across time and again in the five reports is the fact that there is much work still to be done. The importance of maintaining good relations with the EU cannot be understated.

Recent UK government actions have caused considerable friction and are counter-productive for a good working partnership. The government must make every effort to undo the damage and to rebuild trust and good will between the two parties.

In recent correspondence with Lisa Burton – Bremain in Spain vice-chair – EU select committee chair, Lord Kinnoull, said of the forthcoming replacement committee:

“The new structure is very much a continuity of the old, both in terms of a decent percentage of membership and of staff. The names of the new members are not yet public, and in any event, have to be agreed on by the House”.

We look forward to its establishment, and to the continuing scrutiny of life after Brexit and government actions.

As we approach 100 days of post-Brexit reality, we have already witnessed considerable harmful effects to the UK economy and trade, and negative impacts on lives and livelihoods. Thanks to the ‘grace periods’, many measures have yet to come into effect.

Even allowing for improvements in trade as companies adjust and come to grips with new requirements, any steps forward are unlikely to compensate for further steps backward as stricter measures start to bite.

Companies that have exported assets and jobs to protect their interests are unlikely to reverse measures already taken. Those EU (and in some cases UK) citizens that have emigrated thanks to stricter rules, and ill treatment, are unlikely to return.

Welcome to the sunny uplands of Brexit. It’s only going to get worse before it gets better.

If it gets better.

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