Documents considered by the Committee on 18 April 2018 Contents

6Location of the European Medicines Agency and European Banking Authority

Committee’s assessment

Politically important

Committee’s decision

Cleared from scrutiny; further information requested

Document details

(a) Proposal for a Regulation amending Regulation (EU) No. 1093/2010 as regards the location of the seat of the European Banking Authority; (b) Proposal for a Regulation amending Regulation (EC) No 726/2004 as regards the location of the seat of the European Medicines Agency

Legal base

(a) Article 114 TFEU, QMV, Ordinary legislative procedure; (b) Articles 114 and 168(4)(c) TFEU, QMV, Ordinary legislative procedure

Department

Health and Social Care and Treasury

Document Numbers

(a) (39291), 15264/17, COM(17) 734; (b) (39292), 15263/17, COM(17) 735

Summary and Committee’s conclusions

6.1As a consequence of the UK’s withdrawal from the EU, those EU Agencies with a seat in the UK must re-locate. The remaining EU countries (EU-27) decided on 20 November 2017 that the European Medicines Agency (EMA) should move from London to Amsterdam and that the European Banking Authority (EBA) should move from London to Paris. The Commission accordingly proposed the necessary legislative amendments, which must be agreed by the European Parliament and Council.

6.2We first considered both of these proposals at our meeting of 10 January 2018, when we asked about any potential obstacles to agreement and whether the UK argued that the Agencies should not be re-located.

6.3Ministers from both the Department for Health and Social Care and the Treasury have responded, reminding the Committee that the Government will not give a “running commentary on the negotiations” and identifying no obstacles to adoption of this legislation. The Parliamentary Under Secretary of State for Health (Lord O’Shaughnessy) requests that the proposal to amend the EMA Regulation be cleared from scrutiny.

6.4Since Lord O’Shaughnessy wrote to us, the European Parliament has adopted its position on the re-location of the EMA, expressing concern about the process of identifying the new location but nevertheless allowing inter-institutional negotiations on the final text to commence. Consideration of the EBA re-location is progressing at a slower pace.

6.5These are uncontentious proposals and, as such, we are content to clear them from scrutiny. We would nevertheless welcome further information regarding:

Full details of the documents

(a) Proposal for a Regulation amending Regulation (EU) No 1093/2010 as regards the location of the seat of the European Banking Authority: (39291), 15264/17, COM(17) 734; (b) Proposal for a Regulation amending Regulation (EC) No 726/2004 as regards the location of the seat of the European Medicines Agency: (39292), 15263/17, COM(17) 735.

Background

6.6The Joint UK-EU Report on the first phase of the exit negotiations noted that the UK had offered to discuss with Union Agencies located in London how they might facilitate their relocation, in particular as regards reducing the withdrawal costs.

6.7The annual accounts of the EMA for the financial year 2016 disclosed an estimated €448 million (£395 million)130 rent for the remaining rental period between 2017 and 2039 as a contingent liability,131 given that the rental contract does not include any exit clauses. While contingent liabilities in relation to other relocation costs are yet to be determined by the EMA, press reports in early August 2017 based on a private EMA briefing to MEPs put the total cost at over £500 million.132 By contrast, the EBA’s rental contract has a break-clause and so the relocation costs are likely to be substantially less.

6.8In their Explanatory Memoranda, the Parliamentary Under Secretary of State for Health (Lord O’Shaughnessy) and the then Economic Secretary to the Treasury (Stephen Barclay) did not object to the EU’s decision to relocate either the EMA or the EBA.

6.9Lord O’Shaughnessy noted that the Commission’s explanation of its proposal on the EMA included a “Budgetary Implications” section in which it asserted that relocation would have budgetary implications, not least due to the early termination of the lease in London. The Government observed that the budgetary section did not form part of the legislative change and so should not have been referenced by the Commission. This was particularly so, said the Minister, because relocation costs had not yet been resolved in the exit negotiations.

6.10As both proposals remained under scrutiny, the Government abstained from voting at the meeting of EU Ambassadors (COREPER) on 11 December 2017. A joint Commission-UK statement noted that adoption of the proposals would be without prejudice to the UK or EU positions on the costs of relocating the EMA and EBA.

6.11At our meeting of 10 January 2018, we noted the Government’s objection to the Commission’s reference to the budgetary implications of relocating the EMA. While we considered it reasonable for the Commission to reference the potential budgetary consequence, we agreed that the Commission statement should have more clearly indicated that payment of the costs was subject to ongoing negotiations.

6.12Noting that the Department for Exiting the EU had reportedly said in mid-April 2017133 that no decisions had been taken on the question of moving the Agencies out of the UK, we asked whether the UK did indeed seek to retain the Agencies during the negotiations.

6.13Finally, we asked whether the Government had identified any appetite in the European Parliament to amend the Regulations at all, or if the proposals were likely to pass swiftly through both institutions.

Letter of 8 March 2018 from Lord O’Shaughnessy (regarding the EMA)

6.14On whether the UK sought to retain the Agencies during negotiations, the Minister says:

“The Government has been clear that we will not provide a running commentary on negotiations. While the location of the European Union’s agencies, including the European Medicines Agency, is for the European Union to determine, the Government is continuing to discuss with them how cooperation and regulation in these areas can best continue.”

6.15Concerning the progress of the proposals through the European Parliament, the Minister notes that both proposals are passing through the Council and European Parliament processes as expected.

Letter of 28 March from John Glen (regarding the EBA)

6.16The Minister repeats the response from Lord O’Shaughnessy concerning the UK’s approach to retention of the Agencies and the Government’s intention to continue discussions on how cooperation and regulation in these areas can best continue going forward.

6.17On the progress of the legislation through the institutions, the Minister notes that the ordinary legislative procedure is being followed and that, regardless of what amendments may be put forward over the current period, the Government still expects the proposal to progress with Paris as the seat.

Previous Committee Reports

Ninth Report HC 342–ix (2017–19), chapter 6 (10 January 2018).


130 €1 = £0.88415 or £1 = €1.13103 as at 28 February.

131 Subject to the outcome of the withdrawal negotiations.

132 ‘Relocation cost for European Medicines Agency hits €600m after lease bungle’, The Times, 2 August 2017.

133 ‘London battles to keep hold of two main EU agencies’, Financial Times, 16 April 2017.




Published: 24 April 2018