Meeting Summary
The Committee looks at the significance of EU proposals and decides whether to clear the document from scrutiny or withhold clearance and ask questions of the Government. The Committee also has the power to recommend documents for debate.
Brexit-related issues
The Committee is now looking at documents in the light of the UK’s decision to withdraw from the EU. Issues are explored in greater detail in report chapters and, where appropriate, in the summaries below. The Committee notes that in the current week the following issues and questions have arisen in documents or in correspondence with Ministers:
- Consumer contract rights and the sale of goods,
- The Committee has asked the Treasury to confirm whether EU rules that required the Government to count the liabilities of arm’s length public bodies like Network Rail as part of public debt will be maintained after Brexit, having considered a recent report by the European Commission on the EU’s statistical standards for public debt and deficits,
- The relevance to the UK under all Brexit scenarios of amendments to the Batteries Directive designed to support the emergence of electric vehicles,
- The proposed Council Decision to conclude and sign the EU-UK Withdrawal Agreement
- Ministers need to explain why they failed to make a meaningful reference to Brexit in a document on EU Batteries Policy despite the inclusion of relevant legislation in the Northern Ireland Backstop
- As the UK is not fully compliant with existing EU air quality, nature protection and water quality standards, it would struggle to comply with any “non-regression” requirement to at least apply EU environmental law in force at the time of Brexit or at the end of any implementation period
Summary
Consumer contract rights and new Directive on the Sale of Goods
The proposed Directive on consumer contract rights and the sale of goods was adopted on 15 April 2019, following the Committee granting a scrutiny waiver on 6 February 2019. The new Directive extends to offline sales of goods as well as online and distances sales. This broad scope reflects the concerns of the UK and other Member States about the possibility of different contractual rules for online and offline sales. The Committee has already cleared from scrutiny a connected proposal for a Directive on contracts for the supply of digital content since the negotiations on that proposal were always more advanced. The period for implementing both proposals in national law is two years.
The Government is reporting back following adoption and responding to questions we have asked previously. These include Brexit-related questions covering “deal”, “no deal” and “future relationship” scenarios. Broadly speaking, it seems that UK consumer protection in relation to the sale of goods has been maintained. In some instances, rights would be strengthened if the Directive had to be implemented by the UK. This is balanced by some corresponding extra obligations for consumers.
The UK would only have to implement the Directive in the event of an extended transition period (to 31 December 2021 or 2022) under a ratified Withdrawal Agreement. Beyond this, the Government says that any kind of alignment depends on the future relationship to be negotiated, though points to its commitment to maintaining high levels of consumer protection in its related White Paper.
Cleared from scrutiny; drawn to the attention of Business, Energy and Industrial Strategy Committee
Transparency of Government finances after Brexit
The European Scrutiny Committee has considered a recent report by the European Commission on the EU’s post-crisis rules for the calculation and transparency of Government debt of EU countries under the Stability & Growth Pact. Noting that the EU legislation enshrining the so-called ‘ESA 2010’ standards into UK law—as well as accompanying EU-wide guidance which forced the Treasury to add Network Rail’s £30 billion of debt to the Government’s books five years ago—could cease to apply after Brexit, the Committee has asked the Treasury to clarify whether the current rules (and their interpretation as it relates to arm’s length bodies like Network Rail) will be maintained even in a ‘no deal’ Brexit scenario.
Cleared from scrutiny; further information requested; drawn to the attention of the Public Accounts Committee, the Public Administration and Constitutional Affairs Committee and the Treasury Committee
New powers for OLAF, the EU’s anti-fraud body
The Committee has decided to retain under scrutiny a controversial EU proposal to give more powers to OLAF, the European Commission’s anti-fraud body, to investigate cases of VAT fraud independently in any EU Member State. The Commission is seeking such powers because a small part of the EU’s revenues is calculated on the basis of each Member State’s VAT base, meaning tax fraud of this kind could theoretically impact on the EU budget. The Government opposes the proposal, but in a recent letter has indicated it is willing to accept limited investigatory powers for OLAF in relation to Value Added Tax as a compromise to avoid even more expansive powers being agreed instead. Negotiations with the European Parliament on the final legislation are due to begin this autumn and may be protracted.
The exact implications of any new powers for OLAF for the UK in the context of Brexit remain unclear. The body is likely to have some jurisdiction if the UK were to participate in any EU funding programmes, like the Framework Programme for Research, as a ‘third’ (non-EU) country and potentially also under any new customs and VAT agreements with the EU after Brexit. The Committee has also noted that OLAF would retain its investigatory powers in Northern Ireland even after Brexit under the controversial ‘backstop’ in the draft Withdrawal Agreement and has asked the Treasury to clarify the extent of OLAF’s jurisdiction in the UK should the backstop ever take effect.
Not cleared from scrutiny; further information requested; drawn to the attention of the Northern Ireland Affairs Committee
Third mobility package: electronic freight transport information
The proposed Regulation on ‘electronic freight transport information’ would create an obligation for public authorities in Member States to accept freight transport/information documents in electronic form. The substance of the proposal relates to setting the technical specifications deemed necessary to facilitate the achievement of this obligation.
The proposal was last considered by the Committee on 1 May 2019. Since this time, Transport Minister (Jesse Norman MP) has written in response to the questions the Committee raised in its Sixty-fourth Report to the House. These were mainly technical in nature relating, for example, to the data interoperability standards to be utilised by the new ‘e-Freight’ platform. The Minister requests a scrutiny waiver so that the Government may support a General Approach likely to be sought on the proposal at the 6 June Transport Council. The Committee grants this waiver on the grounds that the Government’s position on the proposal is clear and has been fully explained.
Not cleared from scrutiny; further information requested; but scrutiny waiver granted for a General Approach to be sought at 6 June Transport Council
Youth employment Initiative: Increasing resources for 2019
The Regulation under scrutiny was adopted on 17 April 2019. It increases the specific budgetary allocation of resources available for the ‘Youth Employment Initiative’ (YEI) in 2019. The YEI is one of the Union’s main financial resources used in support of national measures aimed at implementing the EU’s ‘Youth Guarantee’ schemes.
The Regulation is mainly technical in nature, however, owing to issues with its handling by the lead Department (Work and Pensions) and the poor quality of correspondence from the responsible Minister (Alok Sharma MP), the Committee retains the file under scrutiny pending satisfactory answers to a number of related questions.
Not cleared from scrutiny; further information requested
Communication on tackling online disinformation
The European Commission is gradually progressing its workstream on tackling online disinformation. Having previously set out its thinking in a Communication in April 2018, and subsequently developed a Code of Practice to which key stakeholders have signed up, in December 2018 it published a report on the implementation of the previous Communication and a more detailed Action Plan. The Action Plan proposed to increase resourcing for the European External Action Service’s activities which aim at tackling disinformation, to focus its cooperative efforts with partners on the Union’s Eastern and Southern Neighbourhood and in the Western Balkans, and to create a dedicated Rapid Alert System. The Commission concluded that the Code of Practice on disinformation is being implemented by its signatories but is concerned by the platforms’ failure to provide specific benchmarks to measure progress.
The Minister for Digital at the Department for Digital, Culture, Media and Sport (Margot James MP) took the view in her Explanatory Memorandum that the actions which were proposed did not apply to the UK as it would have left the EU by the time the European Parliament elections (at which some of the Commission’s proposals were partly directed) took place. Given that the UK is in any case now taking part in the European Elections, the Committee sought further information from officials at DCMS about whether the UK had started to engage with the Action Plan. They clarified that, when it became apparent that the UK was taking part in the European elections, the Government modified its approach: it is now taking part in the Rapid Alert System and has received assurances from the signatories of the Code that the actions they have taken are also being applied to the UK.
The Committee cleared the document from scrutiny on the basis that it was non-legislative and further proposals would be brought forward in the coming months, through which it would continue to scrutinise this topical issue.
Cleared from scrutiny; drawn to the attention of the Digital, Culture, Media and Sport Select Committee
EU Batteries Policy
The EU sets out its approach to supporting the batteries sector, recognising the strategic importance of the sector in light of the likely demands of electric vehicles and renewable electricity storage. While the Ministers are supportive of the EU’s approach, neither Minister commits to particular changes to EU regulation that might be helpful. The Committee is disappointed that neither Minister mentions Brexit in any meaningful way, despite the fact that the Batteries Directive falls within the Northern Ireland Backstop. The Committee therefore asks the Ministers to: explain the omission; offer their analysis of the EU regulatory changes that the UK would like to see; and confirm that the UK will pro-actively engage with the Commission rather than passively awaiting legislative proposals.
Not cleared; further information requested; drawn to the attention of the Business, Energy and Industrial Strategy Committee, the Environment, Food and Rural Affairs Committee and the Environmental Audit Committee
Proposed Council Decisions to sign and conclude the EU-UK Withdrawal Agreement
The Committee first scrutinised the adopted Council Decision to sign the draft Withdrawal Agreement and the proposed Decision to conclude in its Report of 8 March: “The draft EU-UK Withdrawal Agreement: key legal and political questions”. This chapter now also scrutinises two new documents: the (now) adopted Council Decision to amend the previous adopted Decision to sign and a revised Council Decision to conclude the Withdrawal Agreement.
These new documents reflect technical changes to the “coming into force” provisions of the Withdrawal Agreement which were necessary following the two recent extensions of the Article 50 period. References to the Withdrawal Agreement coming into force on 29 March 2019 have been removed. They have been replaced with language reflecting the extension of the Article 50 period but without reference to a fixed date.
In addition to scrutinising these changes, the deposit of the new documents presents the Committee with the opportunity to address relevant aspects of the Government’s response to the Committee’s Report of 8 March. These include the role of the European Parliament in respect of the functioning of the Withdrawal Agreement. Particularly in relation to decision-making in the Joint Committee concerning key decisions such as the extension of the transition period and the termination of the backstop.
Retaining the newer proposals under scrutiny; further information requested; drawn to the attention of the Exiting the EU Committee
EU Environmental Implementation Review 2019
The Commission reports that the UK has made good progress since 2017 in its implementation of EU environmental rules, but that it remains below certain EU air quality, nature protection and water quality standards. Responding to the Minister’s contention that the UK will not be subject to this Review in the future, the Committee observes that the Commission is likely to remain active in assessing UK environmental policy compliance due to probable requirements that the UK must at least comply with those EU environmental standards in force at the point of Brexit or at the end of any implementation period. As the Committee notes, the UK is not currently in a position to meet any such requirement. The Committee also asks the Minister to comment on the Commission’s observation that there has been weak integration of environmental and agricultural policy goals.
Cleared; further information requested; drawn to the attention of the Environment, Food and Rural Affairs Committee and the Environmental Audit Committee
Strengthening the European Border and Coast Guard Agency and combating document and identity fraud
The European Parliament and the Council have concluded negotiations on a proposed Regulation which would significantly enhance the operational capability of the European Border and Coast Guard Agency (the successor to Frontex). The UK is not entitled to participate in the proposed Regulation as it forms part of the Schengen rules on external border controls which do not apply to the UK. The proposal includes provisions on operational cooperation and the exchange of information with third (non-EU) countries which will be relevant for the UK once it leaves the EU. Under these provisions, any bilateral agreements concerning the management of an external EU border concluded by an EU Member State and a third country must comply with EU and international law on human rights and refugee protection, including the EU Charter of Fundamental Rights. The European Scrutiny Committee asks the Government to confirm that the juxtaposed border controls carried out by UK Border Force officers in Belgium and France (which are underpinned by bilateral treaties) will fall within the scope of these provisions, meaning that the UK will be under an indirect obligation to comply with the EU Charter, even after leaving the EU, or otherwise put at risk the continuation of juxtaposed controls on EU territory. The Committee also asks the Government whether it intends to continue participating in the EU’s false and authentic documents database (“FADO”) or to exercise its right under the Schengen Protocol to opt out.
Document (a)—the proposed Regulation on the European Border and Coast Guard—cleared from scrutiny; further information requested. Document (b)—the proposed FADO Regulation—not cleared from scrutiny; further information requested. Both documents drawn to the attention of the Home Affairs Committee
EU laws on legal migration: fitness check
The Commission Staff Working Document sets out the findings of a “fitness check” of nine EU Directives concerning the status and rights of third country nationals living and working in the EU. The Directives do not apply to the UK; nor do they currently apply to UK nationals who live in another EU Member State as they are covered by EU free movement and citizenship law. This will change once the UK leaves the EU and any post-exit transition period has ended. UK nationals who move to an EU Member State after Brexit will be treated as third country nationals. As immigration policy is an area of shared competence under the EU Treaties, UK nationals are likely to be subject both to EU and national laws on legal migration. Understanding the complex interplay between these laws, the rights they confer and how they can be enforced will be a significant challenge. The Commission Staff Working Document examines how EU rules have been implemented and applied by Member States, identifies gaps or inconsistencies, and considers what further action may be needed to improve the overall coherence and effectiveness of the legislation. The Commission concludes that there is scope for further simplification and streamlining of the law to enhance consistency and legal certainty. Whilst the Government highlights the “potentially positive consequences for UK nationals” post-Brexit if EU rules on the status and rights of third country nationals are strengthened, the European Scruitny Committee injects a note of caution. An enhancement of rights cannot be taken for granted. Any proposed changes to EU law may produce negotiating outcomes on the entry, residence and rights of third country nationals which are more rather than less restrictive. Nor can it be assumed that EU legal migration laws will continue to operate on a non-reciprocal basis (meaning that where they apply, Member States are not entitled to treat certain third country nationals less favourably because their country of origin does not provide similar rights for EU citizens). In developing its own polices on the legal migration of EU citizens to the UK after Brexit, the Government will therefore need to be mindful of the risk that any restrictions it introduces may be replicated in national and EU laws applicable to UK and other third country nationals post-exit.
Cleared from scrutiny; drawn to the attention of the Home Affairs Committee
Eurojust: Agreement on Criminal Justice Cooperation with Denmark
The EU Agency for Criminal Justice Cooperation, “Eurojust”, was established in 2002. Operating alongside Europol in The Hague, Eurojust helps to coordinate the work of national investigating and prosecuting authorities in combating serious cross-border crime. A new Eurojust Regulation will take effect in December 2019. Denmark participates fully in Eurojust but cannot participate in the new Regulation as it has an opt-out of all EU justice and home affairs measures adopted after the Lisbon Treaty entered into force in December 2009. The proposed Council Implementing Decision would give the Council’s formal approval to an Agreement on Criminal Justice Cooperation between Eurojust and Denmark. Without the Agreement, Denmark would be unable to maintain operational cooperation with Eurojust beyond December 2019. The approach taken is unorthodox—Denmark is treated as a third (non-EU) country so that Eurojust has the legal power to negotiate an agreement—but the terms of its future cooperation with Eurojust are more favourable than those envisaged for other third countries. A similar approach was taken in 2017 when Europol concluded an Agreement on Operational and Strategic Cooperation with Denmark. The European Scrutiny Committee expressed some reservations then which apply equally now. Whilst it seems clear in this case that the imperative to maintain operational cooperation has prevailed over other legal and political considerations, the Committee notes that the bespoke arrangements agreed with Denmark are unlikely to provide a suitable model for the UK as they depend on a series of requirements—continued membership of the EU, full participation in Schengen, recognition of the jurisdiction of the EU Court of Justice—which the UK will be unable or the Government unwilling to meet following the UK’s exit from the EU.
Cleared from scrutiny; drawn to the attention of the Home Affairs Committee and the Justice Committee
European Labour Authority
Negotiations have advanced rapidly on a proposal to establish a new European Labour Authority (ELA). The Authority would have no regulatory or enforcement powers over Member States or individual businesses but would amalgamate various existing EU-level functions related to the free movement of labour—such as coordination of social security systems and cooperation to tackle undeclared work—into one body. The Council and EP have agreed a final compromise text which is expected to be formally adopted at the EPSCO Council on 13 June. The Government is content with the outcome of negotiations, underlining that the role envisaged for the new Authority would not encroach on Member State competence or on national employment and social laws. The European Scrutiny Committee renews the scrutiny waiver it granted in March so that the Government can support the proposed Regulation at the June Employment, Social Policy, Health and Consumer Affairs (EPSCO) Council. It notes that there are practical reasons for the UK to cooperate with the ELA after leaving the EU and that the final text includes some small but beneficial changes for the UK which should make this easier. The Government is asked to report back on the outcome of the EPSCO Council explaining how the UK voted on the Regulation itself and on a related decision determining where the ELA should be based; and why the role envisaged for the ELA in seeking to resolve “cross-border labour market disruptions” has been removed from the final compromise text and whether the Government supported its removal.
Not cleared from scrutiny; scrutiny waiver granted; further information requested; drawn to the attention of the Business, Energy and Industrial Strategy Committee and the Work and Pensions Committee.
Documents drawn to the attention of select committees:
(‘NC’ indicates document is ‘not cleared’ from scrutiny; ‘C’ indicates document is ‘cleared’)
Business, Energy and Industrial Strategy Committee: EU Batteries Policy [(a)(b) Commission Reports; (c) Commission Staff Working Document (NC)]; Digital Single Market: Consumer contract rights for the sale of goods [Proposed Directive (C)]; European Labour Authority [Proposed Regulation (NC; scrutiny waiver granted)]
Committee on Exiting the European Union: The draft EU-UK Withdrawal Agreement [Proposed Decisions (a)-(b) (C); (c)-(d) (NC)]
Digital, Culture, Media and Sport Committee: Online disinformation [Commission Report (C)]
Environment, Food and Rural Affairs Committee: EU Batteries Policy [(a)(b) Commission Reports; (c) Commission Staff Working Document (NC)]; EU Environmental Implementation Review 2019 [Commission Communication (C)]
Environmental Audit Committee: EU Batteries Policy [(a)(b) Commission Reports; (c) Commission Staff Working Document (NC)]; EU Environmental Implementation Review 2019 [Commission Communication (C)]
Home Affairs Committee: Strengthening the European Border and Coast Guard Agency and combating document and identity fraud [(a) Proposed Regulation (C); (b) Proposed Regulation (NC)]; Eurojust: Agreement on Criminal Justice Cooperation with Denmark [Proposed Decision (C)]; EU laws on legal migration: fitness check [Commission Staff Working Document (C)]
Justice Committee: Eurojust: Agreement on Criminal Justice Cooperation with Denmark [Proposed Decision (C)]
Northern Ireland Affairs Committee: EU anti-fraud body OLAF: new powers [Proposed Regulation (NC; scrutiny waiver granted)]
Public Accounts Committee: Transparency of Government finances after Brexit [Commission Report (C)]
Public Administration and Constitutional Affairs Committee: Transparency of Government finances after Brexit [Commission Report (C)]
Treasury Committee: Transparency of Government finances after Brexit [Commission Report (C)]
Work and Pensions Committee: European Labour Authority [Proposed Regulation (NC; scrutiny waiver granted)]
Published: 11 June 2019