PARLIAMENTARY DEBATE
EU Relations - 4 December 2025 (Commons/Commons Chamber)

Since coming to office, the Government have secured a new strategic partnership with the EU to deliver on jobs, bills and borders. We are repairing the damage inflicted by the Conservatives’ botched Brexit deal, which left food businesses paying £200 on paperwork for every single consignment shipped in from the EU. We have made significant progress since our historic May summit, including negotiations on a food and drink deal, which will slash red tape for businesses and bring down prices for consumers.

Given that Brexit has left a £90 billion hole in the UK’s tax revenues and that small business owners in my constituency of North East Hampshire are telling me that the last two Budgets have been “catastrophic” for them, why are the Government not pursuing a bespoke UK-EU customs union to cut red tape, boost economic growth and support British businesses?

The Prime Minister was very clear in the House yesterday that we will be honouring our manifesto commitments on a single market and a customs union—we will not be rejoining those institutions. However, there is a great deal of work that can be done between the botched deal we inherited from the Conservatives—from their acrimonious relationship, when Britain and the European Union refused to talk to each other in the interests of either of them—and the new relationship that the Prime Minister has built with his counterparts in Europe to deliver for the people of the United Kingdom.

Recent efforts to secure UK participation in the EU’s Security Action for Europe initiative, which aims to strengthen defence capacity across the continent in response to escalating Russian threats, appear to have come to an end without agreement. While it is right that the UK only enters agreements that clearly support our national interest and represent value for money, we must continue to play a leading role in European security. Will the Minister outline how the Government intend to build momentum for renewed UK-EU co-operation in this area?

I thank my hon. Friend for his important question. The United Kingdom remains committed to our role in European security in the face of rising threats. As the House will know, the Prime Minister has led the coalition of the willing to combat Vladimir Putin’s aggression in Ukraine and has worked tirelessly to strengthen our relationships with our allies, including across Europe. We are working quickly with the EU to implement our ambitious security and defence partnership, and have already stepped up our co-operation on key issues such as tackling hybrid threats and our collective support to Ukraine.

On “The News Agents” podcast yesterday evening, the Deputy Prime Minister, when asked about a UK-EU customs arrangement, said

“that journey of travel…is self-evident”.

Given that the botched Brexit deal is costing the UK Exchequer £90 billion a year, can I ask what that self-evident journey means for the Government’s own red lines? Will the Government take the opportunity to take a giant leap on that journey by supporting my ten-minute rule Bill next Tuesday?

I have to confess that I have not listened to “The News Agents” podcast that the hon. Member refers to, but I know you will be pleased to hear, Mr Speaker, that what is self-evident is what is said in this House, not on podcasts. The Prime Minister was very clear yesterday on the position the Government hold in relation to a single market and a customs union, while also improving our trading and security relationships, which is what we will continue to deliver on.

The agreement in May included the restoration of the UK’s country-specific steel quota, but in October we saw new steel protection measures from the EU. Do the Government expect those quotas to be honoured after the article 28 GATT––general agreement on tariffs and trade—process, and will trade measures be set out prior to the steel strategy?

I thank my hon. Friend for his question. As he will understand, my right hon. Friend the Minister for the Cabinet Office is in discussions with counterparts in the European Union about the changing global landscape for steel. This Government are very clear that we should protect British steel and our capabilities to produce steel in the UK, while supporting exports and making sure that British steel is not undercut by cheap global imports from around the world.

I call the shadow Minister.

I am sure people will be pleased to hear that the Labour party is going to honour some of its manifesto commitments.

Last week, it was announced that the Government’s attempt to join the new EU defence fund had failed. This is a major setback for our relationship with the EU, and it is a major embarrassment for the Government. Since that time, no Minister has come to the House to explain what on earth has gone so horribly wrong, so perhaps the Chancellor of the Duchy of Lancaster can tell us: what has gone so horribly wrong?

First, regardless of the negotiation on SAFE, our collaboration with European partners is stronger than ever on defence and defence procurement. In relation to SAFE in particular, about which the hon. Member asked, this was always going to be a negotiation between the EU and the UK, and the UK Government rightly have to consider value for money considerations in return for how much access British industry has to the contracts being negotiated in Europe. Irrespective of the position on SAFE, I can confirm to the House that UK companies will still be able to take part in European procurement for defence equipment, with an up to 35% allowance for British components in those manufactured goods.

I admire the Chancellor of the Duchy of Lancaster’s chutzpah in answering. He pretends that this was in some way not a defeat, but a victory—many more such victories, and we are lost.

The House will remember that in May, No. 10 trumpeted a new agreement with the EU, which gave the EU privileged access to our fishing waters for 12 years—12 years—to

“pave the way for the UK defence industry to participate in the EU’s proposed new…defence fund”.

Now that the EU has killed off that deal with what the Chancellor of the Duchy of Lancaster rightly describes as an unreasonable demand for £5 billion, are we going to get our fish back?

The hon. Member will know that the agreement with the European Union was not just on one particular issue; it was a package of improvements in the relationship between the UK and the EU. He might want to welcome the agreement on food and drink regulation reforms, so we can get prices down on the shelves in British supermarkets, after they went through the roof under the last Conservative Administration.

I call the Liberal Democrat spokesperson.

Following threats from Donald Trump, earlier this week the Government announced that between £3 billion and £6 billion each year will be diverted from our NHS services into the pockets of pharmaceutical giants. The American Health Secretary, Robert F. Kennedy Jr., said the agreement shows Trump’s

“courage and leadership in demanding these reforms”

and that he puts Americans first. That will give no comfort to my Hazel Grove constituents, who rightly value our NHS and want to see it thrive. Does the Chancellor of the Duchy of Lancaster agree that we are more isolated from our European allies following Brexit, making us far too vulnerable to the threat of American tariffs? What will it take for the Government to rethink their red lines and protect the British people from further bullying from the White House, by agreeing a bespoke UK-EU customs union with our European neighbours?

The agreement reached on pharmaceuticals is a win for the United Kingdom. We have an enormously important sector for pharmaceutical research and development and production in the United Kingdom, which exports many of its products to the American market, so to have agreed the tariff arrangements with the United States is a win for UK pharma and the people who work in it. I would just point to the fact that the UK’s relationship with the United States, thanks to our Prime Minister, has been one of the most productive relationships in the world in securing trade and security agreements both for the UK and to support our allies around the world.

I note the right hon. Gentleman’s response. It may well be good for the pharma industry; my question was whether it is good for the NHS. Just four days ago, the Prime Minister said that the Brexit deal “significantly hurt our economy” and that we have to keep moving towards a closer relationship with the EU. I agree with the Prime Minister. A clear and welcome step for jobs and growth would be to create a bespoke customs union with the EU. The Liberal Democrats want to cut unnecessary red tape, support British businesses and deliver sustainable long-term economic growth. I am sure the Chancellor of the Duchy of Lancaster does, too. I agree with his earlier comment that what happens in this House matters, so will he at least agree not to block his colleagues on the Government Benches from backing the ten-minute rule Bill that my hon. Friend the Member for Surrey Heath (Dr Pinkerton) will move next Wednesday, which sets a path towards a bespoke EU-UK customs union—

Order. Honestly, you cannot go on and on. In fairness, we have to limit the amount of time. I am sure the Chancellor of the Duchy of Lancaster has got at least three of the questions.

Mr Speaker, there is obviously a great deal of interest on the Liberal Democrat Benches in their ten-minute rule Bill, which I look forward to reading in due course.