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Update on the Progress of EU Exit Negotiations

Volume 783: debated on Tuesday 5 September 2017


My Lords, with the leave of the House I will now repeat a Statement made by my right honourable friend the Secretary of State for Exiting the European Union. The Statement is as follows.

“Mr Speaker, I will now update the House on the two rounds of negotiations with the EU which took place in July and August. While at times these negotiations have been tough, it is clear that we have made concrete progress on many of the most important issues. I would like to thank all our officials who have been working hard at home, as well as out in Brussels, to make this happen.

Colleagues will have received my letter following the July negotiating round, dated 9 August. I set out the dynamics of that round in some detail. These rounds were not at this stage about establishing jointly agreed legal text. Rather, they were about reaching a detailed understanding of each side’s position, understanding where there might be room for compromise and beginning to drill down into technical detail on a number of issues. During both rounds discussions took place on all four areas, including the specific issues relating to the rights of citizens on both sides; Northern Ireland and Ireland; the question of a financial settlement; and a number of technical separation issues. I will speak briefly about each area in turn.

Making progress on citizens’ rights has been an area of focus for both negotiation rounds and we took significant steps forward in both July and August. We have published a joint technical paper which sets out our respective positions in more detail, updated following the August round. This underlines the significant alignment between our positions and also provides clarity on areas where we have not as yet reached agreement. In July we achieved a high degree of convergence on the scope of our proposals on residence and social security; the eligibility criteria for those who will benefit from residence rights under the scope of the withdrawal agreement; and a shared commitment to make the citizens’ application process as efficient and streamlined as possible. In August we agreed to protect the rights of frontier workers; to cover future social security contributions for those citizens covered by the withdrawal agreement; to maintain the right of British citizens in the EU 27 to set up and manage a business within their member state of residence, and vice versa; and that we should protect existing healthcare rights and arrangements for EU 27 citizens in the UK and UK nationals in the EU. These are the European Health Insurance—or EHIC—arrangements.

These areas of agreement are good news. They may sound technical but they matter enormously to individuals. The agreement on healthcare rights, for example, will mean that British pensioners living in the EU will continue to have their healthcare arrangements protected both where they live and when they travel to another member state, where they will still be able to use an EHIC card. On mutual recognition of qualifications, we have made progress in protecting the recognition of qualifications for British citizens resident in the EU 27 and EU 27 citizens in the UK. In fact, each one of these areas of agreement is reciprocal: they will work for Brits in the EU and the EU 27 in the UK. These areas of agreement help provide certainty and clarity for EU 27 citizens in the UK and UK citizens in the EU 27. They will make a tangible difference to these people’s lives. I hope everyone recognises the importance of that.

The outcomes of these discussions demonstrate that we have delivered on our commitment to put citizens first and to give them as much certainty as early as possible in this process. Of course, there remain areas of difference which we continue to work on. For example, we will need to have further discussions on the specified cut-off date, on future family reunion and on the broader issue of compliance on enforcement. Progress on these areas will require flexibility and pragmatism from both sides.

During the summer negotiating rounds a number of issues emerged in the EU offer that will need further consideration. For example, the EU does not plan to maintain the existing voting rights for UK nationals living in the EU. We have made it clear that we stand ready to protect the rights of EU nationals living in the UK to stand and vote in municipal elections. Similarly, the EU proposals would not allow UK citizens currently resident in the EU to retain their rights if they move within the EU.

Even in areas where there has been progress, more is needed. While the EU has agreed to recognise the qualifications of UK citizens resident in the EU, and vice versa, we believe this should go further. This recognition must extend to students who are currently studying for a qualification; it must apply to onward movement by UK citizens in the EU; and it should extend more broadly to protect the livelihoods of thousands of people which depend on qualifications which will be gained before we exit the EU. In these areas the EU’s proposals fall short of ensuring that UK citizens in the EU and EU citizens in the UK can continue to live their lives broadly as they do now.

On separation issues—a very technical area—we have established a number of subgroups. They made progress in a number of specific areas, and drew on papers the UK published ahead of both rounds. I am pleased to say that we are close to agreement on our approach to post-exit privileges and immunities—on which we have published a position paper—which will benefit both the UK and EU to maintain after we leave. We have agreed on our mutual approach to confidentiality requirements on shared information post exit.

With respect to nuclear materials and safeguards, we held discussions on the need to resolve issues around the ownership of special fissile material and the responsibility for radioactive waste and spent fuel held both here and there. We reiterated a strong mutual interest in ensuring that the UK and the Euratom community continue to work closely together in the future as part of a comprehensive new partnership.

With respect to legal cases pending before the Court of Justice of the European Union, the parties discussed and made progress on the cut-off points for cases being defined as ‘pending’. There was also progress in discussions concerning the UK’s role before the court while these pending cases are being heard.

With respect to judicial co-operation in civil and commercial matters, and ongoing judicial co-operation in criminal matters, we made good progress on the principles of approach and the joint aim of providing legal certainty and avoiding unnecessary disruption to courts, businesses and families.

With respect to goods on the market, both parties reiterated the importance of providing legal certainty to businesses and consumers across the EU and the UK at the point of departure. We held discussions on the principles of an agreement and agreed that further exploration was needed of how these objectives would be achieved. In this area in particular we emphasised that the broader principles outlined in the UK’s position paper seek to minimise the type of uncertainty and disruption for business which we are all working to avoid.

We remain committed to making as much progress as possible on those issues that relate solely to our withdrawal, but our discussions this week have exposed yet again that the UK’s approach is substantially more flexible and pragmatic than that of the EU, as it avoids unnecessary disruption for businesses and consumers. I have urged the EU to be more imaginative and flexible in its approach to withdrawal on this point.

On Northern Ireland and Ireland, I am pleased to report that there has been significant, concrete progress in this vital area. The negotiation co-ordinators explored a number of issues, including both the Belfast—or Good Friday—agreement and the common travel area. In August, the group also held detailed discussions on the basis of the UK position paper. As both I and Michel Barnier said at last week’s press conference, there is a high degree of convergence on these key issues, and we agreed to work up shared principles on the common travel area. That is quite a major change. We also agreed to carry out further joint technical work on cross-border co-operation under the Belfast agreement. Of course, as I have said all along, the key issues in relation to cross-border economic co-operation and energy will need to form an integral part of discussions on the UK’s future relationship with the EU.

Finally, on the financial settlement, we have been clear that the UK and the EU will have financial obligations to each other that will survive our exit from the EU. In July the Commission set out the EU position. We have a duty to our taxpayers to interrogate that position rigorously. That is what we did, line by line. That may have been a shock, but that is what we did. At the August round we set out our analysis of the EU’s position. We also had in-depth discussions on the European Investment Bank and other off-budget issues.

It is clear that the two sides have very different legal stances. But as we said in the Article 50 letter, the settlement should be,

‘in accordance with the law and in the spirit of the United Kingdom's continuing partnership with the EU’.

Michel Barnier and I agreed that we do not anticipate making incremental progress on the final shape of a financial deal in every round. Generally, we should not underestimate the usefulness of the process so far, but it is also clear that there are still significant differences to be bridged in this sector.

Initial discussions were also held on governance and dispute resolution. These provided an opportunity to build a better shared understanding of the need for a reliable means of enforcing the withdrawal agreement and resolving any disputes that might arise under it.

Alongside the negotiations, we have also published a number of papers which set out our thinking regarding our future deep and special partnership with the EU. These future partnership papers are different from our papers that set out our position for the negotiations over our withdrawal agreement. Our future partnership papers are part of a concerted effort to pragmatically drive the progress we all want to see.

All along, we have argued that talks around our withdrawal cannot be treated in isolation from the future partnership we want. We can only resolve some of these issues with an eye on how the new partnership between us will work in the future. For example, on Northern Ireland it would be helpful to our shared objectives on avoiding a hard border to be able to begin discussions on how future customs arrangements will work. Furthermore, if we agree the comprehensive free trade agreement we are seeking as part of our future partnership, solutions in Northern Ireland are of course easier to deliver.

A second example is financial matters. As we have said, the days of making vast contributions every year to the EU budget will end when we leave. But there may be programmes that the UK wants to consider participating in as part of the new partnership we seek. Naturally, we need to work out which of these we might want to pursue. We need to discuss them as part of talks on both our withdrawal from the EU and our future as its long-standing friend and closest neighbour.

A third example is wider separation issues. While we are happy to negotiate and make progress on the separation issues, it is our long-term aim that ultimately many of these arrangements will not be necessary. With the clock ticking, it would not be in either of our interests to run aspects of the negotiations twice.

Last week, as we turned our consideration to the next round of talks, my message to the Commission was: let us continue to work together constructively to put people above process. To that end, my team will publish further papers in the coming weeks, continuing to set out our ambition for these negotiations and the new deep and special partnership the UK wants to build with the EU. Ultimately, businesses and citizens on both sides want us to move swiftly on to discussing our future partnership, and we want that to happen after the European Council in October, if possible.

As colleagues know, at the start of these negotiations, both sides agreed that the aim was to make progress on four key areas: citizens’ rights; the financial settlement; Northern Ireland and Ireland; and broader separation issues. We have been doing just that. I will not pretend that it is always easy or simple. I have always said that this negotiation would be tough, complex and, at times, confrontational. So it has proved. But we must not lose sight of our overarching aim: to build a deep and special new partnership with our closest neighbours and allies, while also building a truly global Britain that can forge new relationships with fast-growing economies around the world”.

My Lords, I thank the Minister for repeating the Statement. In fact, I welcome her back from what has been a busy summer for her—but as nothing to what is to come over the next 18 months. While any progress, however limited, with regard to EU citizens is welcome, how much better it would have been if the Government had heeded our call 12 months ago, made clear our commitment to those living here and got down to the details at that stage, rather than recently. The matter needs to be resolved urgently.

More broadly, however, the overall Statement is rather like a piece of lace trying to protect the Government’s modesty but with rather more gaps than fabric. The Minister’s office kindly sent me the future partnership papers over the summer and at times I wondered whether those rather bland papers—almost non-papers—really represented the true extent of the Government’s thinking, or simply the very least they dare get away with without waking the slumbering Rees-Mogg.

Just yesterday, the Irish Foreign Minister said that the Secretary of State’s plan for the Irish border,

“needs a lot more work”,

and that,

“unless there is progress on that issue, we are not going to get to phase two”.

The mood music from Brussels and across the capitals tells us it is very unlikely that the EU will decide in October that “sufficient progress” has been made to move on to the all-important talks on our future relationship with the EU—our nearest and largest market. So while David Davis claims he remains optimistic that a seamless trade deal can be struck with the EU, Michel Barnier speaks of “no decisive progress” and says that “frictionless trade” is not possible outside the single market and customs union.

Even the Government are unclear on how trade outside a customs union could be frictionless. They have dropped after just a few weeks their untested blue-sky thinking—it sounded more psychedelic to me—for a track-and-trace system, using technology and trust to replace customs controls. Anyway, we understand that the IT for any new customs checks is not anticipated until January 2019, just two months before our supposed departure date. We all know about government procurement of that size.

Looking beyond the EU, Liam Fox now seems to be saying that he is turning down free trade deals because we do not have the capacity to negotiate them, and that instead we should try to duplicate the EU’s trade relations with third countries, with a sort of rollover of existing deals. This cut-and-paste job is, I would have thought, hardly worth the efforts of a Fox negotiator, who is now without his Minister here in the Lords. In January, the Secretary of State claimed to be aiming for,

“a comprehensive free trade agreement and a comprehensive customs agreement that will deliver the exact same benefits as we have”.—[Official Report, Commons, 24/1/17; col. 169.]

Can the Minister let us have the Government’s current thinking on this?

Can the Minister also tell us where we are on a transitional agreement and whether the words she just used about not having to negotiate twice suggest that the transitional agreement will be on the same terms as now? I hope she and her colleagues have finally come to accept that there can be no bespoke transitional arrangement. There will be no time to negotiate that and the sensible thing is to remain in a customs union with the EU and operate single market rules, which are key to our vital industries, while the long-term relationship is agreed and given time to bed in. Can she also tell the House whether the Government will publish the Treasury’s analysis, which reportedly shows that the economic benefits of future free trade agreements will be less than the economic costs of leaving the customs union and single market?

Can the Minister also update the House on the involvement of the devolved authorities? The JMC, which brings together Scottish and Welsh Governments and, in theory, the Northern Ireland Government, has not met since February and will not convene again until mid-October, There has been no substantial response to the joint letters of 14 June and 23 June from the relevant Ministers, Mark Drakeford and Mike Russell. Despite the terms of reference for that JMC committee being to seek to agree a UK approach to Article 50 negotiations and to provide oversight of negotiations with the EU, the Government published their summer papers with absolutely no consultation and little advance warning. This means that the Scottish and Welsh Governments have had no opportunity to provide any oversight of the negotiations.

The clock is ticking. Industry, farmers, supermarkets, airlines, road haulage, lawyers and accountants are all coming to me; I am sure they are going to the Government as well. They are all concerned about the lack of clarity and certainty, while consumer representatives are getting virtually no access to Ministers and fear that their interests are being overlooked. It is not just the EU that has to decide whether “sufficient progress” has been made. This House and Parliament must do so, too, and question whether the direction of the Government’s thinking, as well as its speed, is up to the task ahead. I fear that this Statement offers little reassurance.

My Lords, I also thank the Minister for repeating the Statement. I am afraid the Government have shown themselves to be insufficiently prepared and, at times, even undisciplined and undignified in throwing insults at Brussels. They have rather squandered the 14 months since the referendum, including an unnecessary court battle to prevent parliamentary accountability and three months on an unnecessary general election.

There have been some steps forward, with the useful publication of the position papers—albeit in recess and given to the media several hours before they were made available to members of the public, including parliamentarians—and the acceptance of a transitional period, although without specifying how long the Government want that to be and with no acceptance of whether it would mean being in the customs union and the single market. Like the noble Baroness, Lady Hayter, I was intrigued by the reference in the Statement to it not being in either of our interests to run aspects of the negotiations twice. The only way I can see that happening, unless the Minister can contradict me, is if we stay in the customs union and single market during the transitional period and in the long term. There has also been some progress on EU citizens and an acceptance of some role for the European Court of Justice. In July, there was an acceptance of financial obligations from commitments made while we are a member state. These acceptances, however, were all inevitable. It would have been better if they had not had to be dragged out of the Government.

There are still, however, several impractical red lines and there have been some rather backward steps. The Home Office has sent letters to a significant number of EU nationals threatening them with immediate deportation, which hardly makes for good mood music for the negotiations, apart from being obviously distressing for those individuals. We have had a repeat from the Prime Minister of the “no deal is better than a bad deal” mantra, which we had hoped had been put to bed. There was an agreement on the sequencing of the talks; now that acceptance is put up in the air again by the Government. We understood that the Government had accepted the principle of the financial liabilities; now all that is also being challenged.

This fickleness and lack of reliability is fomenting some distrust of the Government. It makes it much harder for the EU to agree a linkage between the elements of the Article 50 divorce arrangements and the future relationship. For instance, if the Government would state the period of transition they seek, the status, in terms of the customs union and the single market, and what continuing contributions they propose to make in respect of that status, that might facilitate an agreement on the liabilities or the existing commitments. If the Government said that they wanted to stay in the customs union and the single market, that would at a stroke resolve many of the worries over Ireland we are in the course of debating this afternoon.

While the Government rather go round in circles, businesses are having to make relocation decisions now, affecting jobs, the pound drops and the economy slows. The Government keep reproaching the EU for not coming up with concrete suggestions for flexible solutions, but if the Government cannot specify what end goal they are seeking, how can we expect Brussels to come up with flexibility to fit what the Government want? It is Catch-22.

It was suggested that the customs solutions put forward in the paper about three weeks ago were innovative, but they were not practical or thought through, and even the Secretary of State called them blue-sky thinking a mere couple of weeks after the paper was published. That hardly gives a good solid basis on which Brussels can engage with those suggestions. If the Government have a strategy, as opposed to a series of delays, reactive statements and outbursts, will they share that strategy with Parliament and the British public? Are we not secondary to an audience of the ideologically obsessed hard Brexiteers in the Tory party’s ranks and outside them who are not happy? I see that Arron Banks is trying to unseat Tory MPs, including Amber Rudd. Perhaps that accounts for the Prime Minister repeating the “no deal” mantra. It is unhelpful and petulant to raise, even as a possibility, a chaotic, “falling off a cliff-edge” Brexit. Will the Government level with Parliament and the public and be honest about the fact that, as we are proposing to leave the EU club, the UK cannot expect to retain the full benefits of club membership? We cannot have our cake while eating it. The fact that they need us as much as we need them is untrue, and we need to compromise. It is up to Britain to set out in detail its preferred destination and how to get there. As one journalist put it:

“The departing ship is watched”—

by the EU—

“with both sadness and concern, but there is no rush to take on its navigation problems”.

Will the Government please tell us their proposed destination and how they are going to navigate?

The strategy of this Government is clear, straightforward and pragmatic. It is to ensure that we build a deep and special partnership with our closest neighbours and allies which is of benefit to the people of the EU 27 and the UK after we leave. This is the most momentous form of negotiation that I have experienced in my lifetime. It is a privilege to be at the Department for Exiting the European Union and to see the hard work that has been going on to deliver that path towards a successful legal decoupling while still remaining closest friends. Considerable progress has been made. I thank both noble Baronesses for their contributions and their questions and I will seek to amalgamate my answers to cover them.

The nature of negotiation which has been carried on by this country over centuries has varied from being on the battlefield in Tudor times against some who are now our dearest neighbours, Portugal and Spain, to negotiations, a matter of finding methods of agreement of convergence—not dictating, saying that we will agree to this only, but setting out reasoned proposals. That is work that has been done. There is going to be no delay. The department has been working with other departments across Whitehall to look at the ways in which we can publish our proposals and give options for the negotiations. That is clear in the customs paper, which proposes two options, one a highly streamlined approach which would ensure that the customs arrangement works as well as can be done with modern technology, and the other a new customs partnership with the EU. I heard what the noble Baronesses said about the fact that the Secretary of State has pointed out that there are problems in some of those, because there are always problems in finding new ways to deliver customs agreements, but they are not insuperable. That is why the pace of the negotiations has been deep and fast. Michel Barnier and we have made it clear that we are ready to make even more dates available for negotiations, if that is helpful, because we want to continue to make the progress that has already been achieved.

There is more to be done; that is absolutely right. The noble Baroness, Lady Hayter, referred to the Irish Minister saying that the Northern Ireland paper needs a lot of work. We agree, but we also say that we have made great progress, and Ireland agrees. We have received congratulations from Ireland about the progress that has been made. The summer papers are not vague. They provide a basis for negotiation, not for dictation.

The noble Baroness, Lady Hayter, asked about our position on a transitional agreement and implementation. Our position is set out clearly. From having carried out all the consultation with business—not only those businesses based here but international businesses—and consumers, we appreciate that there could be different lengths of time that different organisations and businesses need to achieve movement to a new relationship with the EU. Therefore, it is only by carrying out our negotiations with the European Union on our future relationship that we can finalise how long that implementation period would be. We have been clear that it will not go beyond the date of the next election.

With regard to the question asked by the noble Baroness, Lady Hayter, about publishing Treasury analysis, I say that it is not usually published. It is for government use, but I have made it clear before that we have carried out analysis of more than 50 sectors, and we will publish the list of what those sectors comprise. We continue to consult business and consumers, and I am very pleased that I am able to be part of that.

With regard to the devolved Administrations, we have throughout made it clear that it is essential that they are engaged at every stage. Whether it is the JMC—the next one is in October—person-to-person phone calls or visits, as carried out by my honourable friend Robin Walker this summer, they continue. He visited the Crown dependencies as well. It is not a matter of leaving it for meetings; it is a continuing conversation.

Throughout all this process we want to be in a position where, by setting out in our papers the implications of leaving the European Union but maintaining a strong trading relationship, we enable us and the EU 27 to avoid running negotiations twice. The noble Baroness, Lady Ludford, referred to this and asked whether this would mean that we would be staying in the customs union and the single market in the implementation period. That is not the answer to having a transition and implementation period. We are seeking a negotiation to see what that period would look like. It is does not mean that we stay in the single market with all the ceding to others the right to make decisions about our destiny.

I believe that the noble Baroness, Lady Ludford, said that we had challenged the principle of financial liabilities. No, we have not. In fact, we have maintained that we accept that there is not only a legal basis for the EU and us having to ensure that there are liabilities that need to be met but also a moral responsibility. My right honourable friend the Secretary of State made that absolutely clear in his press conference last week with Michel Barnier. But we do not hand the keys of the Treasury to the Commission. What we do, on a friendly but rigorous basis, is to work through with it, challenging the legal basis but also beyond that, the calculation of what should be paid and how and when. That, again, is woven into the nature of our future relationship with the European Union.

This has been a hard-working summer for all. I do not believe that Peers simply disappear into the ether and do nothing, and I know that many noble Lords have already read the papers and discussed them. I put on record my particular thanks to the noble Baronesses, Lady Hayter and Lady Ludford, and the Convenor of the Cross Benches, the noble and learned Lord, Lord Hope of Craighead, for agreeing to have conversations with me during the Summer Recess on these matters. It is only by doing that that we can deliver what this country needs.

My Lords, I very strongly welcome this Statement and in particular the stream of position papers that have come out throughout July. We have hardly had time to read all of them, the volume has been so great, but they set out extremely clearly—much more clearly than has been given credit in this House or elsewhere—the aims and objectives of Her Majesty’s Government in reaching constructive agreements with the rest of Europe. Would she agree in particular that the concept of customs partnership, which is developed in one of the recent papers, is really a vast improvement on being tied to the outdated customs union, which is a design of the 20th century and hardly fits into the modern pattern of trade at all—but which the Opposition have suddenly decided to cling to, for reasons which I cannot fully understand, although perhaps they can be explained?

I know some more position papers are coming, but I would ask for one more in particular which concentrates on the thoughts and contribution that Britain might make to the overall fundamental reform of European co-operation and the modernisation of the whole EU model, which is so obviously needed as the European continent as a whole faces colossal new challenges—notably, migration and refugees but many others as well. We need an entirely new pattern of co-operation to meet the 20th century in Europe, and through our deep and special relationship we can make that contribution. Could we have that set out as well as the other ideas that have already been presented to us?

My noble friend, as ever, speaks from great experience in these matters. I am very interested in his proposal about a paper looking at further EU reform and the new pattern of co-operation. I recall in our years in opposition together listening to him examining, in a very intellectual way, how we could change the way that the EU worked for the better of all. I am very interested and will certainly take that idea back.

I agree with my noble friend that a customs partnership is better than a customs union because a customs union means that one is not in a position to carry out trade deals. The Department for International Trade is ready, willing and very able to carry out those deals. Earlier on, the noble Baroness, Lady Hayter, seemed to think that it lacked capacity. However, since its formation, DIT has increased to a global workforce of more than 3,200. The trade policy group has quadrupled in size, and in June 2017 the department appointed a new chief trade negotiations adviser with over 25 years of experience. I was a little bit cheeky there, because what I really wanted to do is add to the record my thanks to my noble friend Lord Price. It has been an absolute joy to be able to work with him over the last year and a quarter. I was very keen on his appointment because before that, for one month only, I am pleased to say, I was Trade Minister while also doing the work at the Foreign and Commonwealth Office. He was super.

My Lords, I thank the noble Baroness for the Statement. It seems to me to show that her right honourable friend in the other place has learned the good old American advertising adage that, when you have a fairly dodgy product, you must accentuate the positive.

I have two questions. First, on the jurisdiction of the European Court of Justice, the paper that the Government have put on the table, which the noble Baroness referred to, is interesting. It is a piece of rather academic research on the possibilities, but does not say a single word about which are the Government’s preferences among those options. It invents a rather peculiar concept, which is “indirect jurisdiction”, if I understand it rightly, because I assume that the opposite of direct jurisdiction is indirect jurisdiction, which is apparently not so rebarbative as direct jurisdiction. Perhaps she could say something about the Government’s preferences among those choices.

Secondly, can the noble Baroness also say a little bit more about the implications of the Government’s support for the idea of some transitional period after March 2019 for the budgetary issues which are causing so much trouble now? It strikes me, not being all that arithmetically advanced, that in fact if we stayed among many of the workings of the European Union—not in the European Union—for a transitional period, that might make quite a big difference to the way that the financial issues would be handled. Perhaps she could confirm that that would be so.

My Lords, with regard to the first question about the Court of Justice of the European Union, we set out options without saying which we were going to come down firmly in favour of because we were putting forward options for discussion on the basis that, as I said earlier, in discussions you scope out where there can be some early agreement and build upon that. The noble Lord is of course right to raise the question about indirect jurisdiction. I would just add that there are areas where the Court of Justice of the European Union will continue to have some indirect jurisdiction after we leave the European Union if there is an agreement, as is currently developing, with regard to pending cases at the court itself. There is already built into the current structure of the withdrawal Bill and the negotiations some room where there would be indirect jurisdiction—but indirect jurisdiction is not something that would change the law in the United Kingdom or direct us how to change the law. Therein lies the difference.

With regard to a transitional period and the matter of budgetary issues, the multiannual financial framework of 2013 applies between 2014 and 2020. Therefore, what we are doing in challenging the paper which was put out by the European Union is to see whether there is a basis for saying that there are duties upon the UK to continue paying beyond 2019—whenever the date of leaving may be—and when there are not. Although I cannot at this stage answer the noble Lord directly, he raises the important issue that we are trying to flesh out in the way that we are not only challenging the basis on which the European Union has said that it has a legal basis for claiming contributions from this country to the EU but also saying that we need to look, during those negotiations, at the liabilities of the EU to the UK.

David Davis was quoted earlier in the House, in the course of the Ireland debate this afternoon, as saying that the best practical outcome to which we could realistically aspire was hard Brexit. Did he say that, or something along those lines? If so, what did he mean by it and is that the position of the Government?

My Lords, I cannot say that I heard him say that, but I have heard him say time and again, as he did indeed on the Marr show on Sunday, quite simply that he does not go in for talking about “hard” Brexit or “soft” Brexit. Neither do I; we both want a successful one for this country and the EU.

My Lords, picking up the Minister’s answer to the question from the noble Baroness, Lady Hayter, about the devolved Administrations, I think I heard her say that the JMC (EN), the ministerial committee set up with the devolved Administrations to co-ordinate Brexit positions, will meet next month. Is that true? I see the Minister nodding. Excellent; I am delighted to hear that. Why has it not met since February? Why was none of these 10 papers, these little essays that were sent out in the summer, seen in draft by the devolved Administrations? Why did they not see in draft the only serious negotiating paper that the Government have put forward, the interesting paper on citizens’ rights? Why are the Government so determined systematically to break the promises given to the devolved Administrations about close consultation? While she is at it, could the Minister please give us an example of a successful money negotiation where one of the parties refused to put forward any numbers?

My Lords, the EU has not put forward any numbers. This is a negotiation and, I would like to say, a good-natured one. Clearly there are occasions when people like to take certain positions in the press, but those who are negotiating know each other, work well with each other and want to come to a result that is good for all of us.

With regard to the devolved Administrations, there has been continuous conversation not only between Ministers but between officials, where so much of the detailed technical work can be done. That will continue. As soon as I was appointed, I attended one of the parallel meetings that happen with the devolved Administrations, the general committee that meets about Europe, not about the negotiations. It was a privilege to be able to talk to representatives of Scotland and Wales. It is of course a disappointment that we are not yet able to talk to representatives of Northern Ireland until the Executive issue is resolved.

My Lords, the Minister has given the impression that there is complete amity between Her Majesty’s Government and the Welsh Assembly in relation to all aspects of Brexit. The reports emanating from Cardiff seem to differ. Indeed, the impression given by Mr Carwyn Jones, the First Minister for Wales, is that indeed Wales is treated with a lofty disdain in the matter. Those are my words, not his, but I think that is the description that he has clearly given. Who is right in this matter?

My Lords, no one in this Government would treat any member of the Welsh Government with lofty disdain, and no one has; indeed, the leader of the Welsh Government has not made such an accusation. The devolved Administrations may have a short history in the history of this country but it is a very honourable one. There are matters that are devolved to them that they carry out punctiliously. Sometimes of course the process can be bumpy, as in all political life, and they get taken to task by their voters. We recognise fully the importance of engaging with them, and we will continue to do so.

My Lords, the Minister said, in reading out the Statement from the Secretary of State, that,

“we have been clear that the UK and the EU will have financial obligations to each other that will survive our exit from the EU. In July the Commission set out the EU position. We have a duty to our taxpayers to interrogate that position rigorously. That is what we did, line by line”.

The Minister suggested that the European Commission had not brought forward any numbers. What on earth has been discussed line by line? Is this all fantasy?

The noble Baroness is of course right to pursue the matter of what has been discussed. There was an over three-hour presentation by the UK technical group challenging line by line the treaty basis—the various regulations and directives, all of which were listed in the paper to which Monsieur Barnier referred in last week’s press conference, at which I believe I heard him say that the Commission had a link to the legal bases for all on that list. In fact that was not quite accurate; there are two entries in the published list where there is no reference. That is what we are testing; the Commission goes and looks at the exact wording of the treaty, but what we are saying is that one needs to look also at how that is applied to people as well. Still, we are also challenging the legal basis itself.

My Lords, will the Minister confirm that the EU side is continuing to insist that EU citizens in the UK after Brexit should continue to have the same free-movement rights as they have now, guaranteed by the European Court of Justice? If so, does she recognise that this would put EU citizens in a position of having much better rights with regard to bringing spouses and independent relatives into the UK than British citizens? Do the Government believe that this could remotely be acceptable to the public, or indeed feasible?

The noble Lord is right in his presumption that the European Commission is currently saying that the EU citizens who remain here should have better rights regarding bringing family members in in future than would be available to British citizens. Again, this is an area where we are looking very carefully at the detail. We have tried to ensure that families who are here at the time of leaving can ensure that they continue to operate as a family. It is a matter of how you define that. That is what our paper was doing earlier this year. I can say to the noble Lord that we are looking carefully at these issues. It is important that, overall, people should be able to get on with their lives. My goodness, they can be so complicated. Our family structures are so different and etiolated these days. It takes a lot of technical detail to be able to discuss how to resolve a way forward for both sides.

My Lords, may I raise a technical economic, rather than political, point? It is a reality that a pound or a euro today is worth more than a pound or a euro in a year’s time. In looking at these complex financial arrangements regarding the exit payment and so on, we need to agree two things. First, what we are going to use in the negotiations as the base date? Secondly, and importantly, what is the rate of discount—the allowance for the time value of money? Unless we agree on those two points, the figures are going to be very difficult to reconcile.

My noble friend has made a very valid point, and he certainly has much better experience in these matters than I do. I am aware that the Treasury was well represented at the discussions last week, and I will ensure that his comments are brought to its attention. I am also aware that the paper issued by the European Commission required that any money paid by the UK to the EU should be in euros.

My Lords, I cannot avoid the observation that “strong and stable” has now been replaced by “deep and special”. If deep and special is the objective then clearly foreign affairs, defence, security and the exchange of intelligence will be very important components of that relationship. I do not see any reference to those matters within the four corners of the Statement. Are they being discussed, and to what extent?

My Lords, the noble Lord is absolutely right. I assure him that this is not the sum total; papers will come out in future. Discussions have been held across government about how we will be able to take forward the matter of common defence and security policy in particular. We want to be able to show that not only do we want to continue the co-operation that we have but we want to strengthen and deepen it too. I hope the noble Lord will not have to wait too long to see some better information than I have given in that snapshot.