Overview of conclusions
Introduction
1.The coronavirus outbreak is now global, necessitating intensive cooperation between the UK and other countries to limit its spread, secure adequate supplies of medical equipment, develop the most effective treatment plans, and cushion the wider economic shock triggered by the pandemic. The Committee takes note of the European Commission’s paper of 13 March on the EU’s “coordinated economic response” to the COVID-19 pandemic. (Paragraph 6)
2.On the basis of the assessment of the potential or actual implications of the EU’s response to the pandemic for the UK set out in this Report, the Committee asks the Government to provide the requested information and clarifications into its forthcoming Explanatory Memoranda on the EU documents referred to.11In particular, the Committee expects the Government to explain which of the EU’s policy measures adopted in response to the crisis are applicable to, or will be applied by, the UK, and to provide an assessment of their expected impact on the UK. (Paragraph 7)
3.The European Scrutiny Committee is aware of course that the COVID-19 policy response of public authorities in the UK and the EU will continue to develop rapidly in the coming days and weeks, and this Report therefore only provides a snapshot of the EU’s approach at the time of it being agreed. The Committee will keep any further developments in the EU’s response to COVID-19 under review and report to the House again when necessary. (Paragraph 8)
Movement of people and goods
4.Given that both the EU’s Civil Protection Mechanism and EWRS have taken on renewed importance and focus given the potential for the coronavirus outbreak to last many months, potentially beyond the scheduled end of the post-Brexit transition period, we ask the Government to provide an update on its assessment of the costs and benefits with respect to continued UK participation in these EU systems after the end of the transition, and to clarify what form of formalised “cooperation” it is seeking with the EU on health security more generally. (Paragraph 12)
5.The Commission’s Guidelines on border management seek to strike a balance between justified checks at the EU’s borders, both internal and external, to limit the spread of coronavirus, and the effective functioning of the Single Market so that essential transport, travel and supply chains within the Schengen zone are not disrupted. However, they are advisory and, as such, create no legal obligations. We would nonetheless welcome the Government’s view on their content and impact on the operation of supply chains for essential goods. We are particularly interested to hear whether the Government intends to follow the guidelines on health screening and checks at the UK border. (Paragraph 18)
6.When it comes to the management and control of its external borders, the UK is not bound by the rules applicable to EU Member States and countries associated with the Schengen rulebook. The decision taken by EU and Schengen states to introduce a temporary restriction on entry is nonetheless pertinent to the UK because it recommends action which goes beyond the formal powers conferred on the EU by the EU Treaties and therefore depends on countries voluntarily agreeing to coordinate their response to reduce the spread of COVID-19. We ask the Government to clarify whether it considers that the coordinated entry restrictions agreed by the Schengen states are an appropriate response to the COVID-19 epidemic, whether the Government will consider applying the same or similar restrictions on travel to the UK, and to what extent the UK is coordinating with EU partners (especially Ireland) in determining its own response. (Paragraph 22)
7.The European Commission has introduced a new mechanism to enable Member States to limit the export of personal protective equipment (PPE) to preserve a supply within the EU. In responding to our Report, we ask the Government to explain whether it agrees with the Commission’s assessment that existing stocks of PPE and manufacturing capabilities within the EU are insufficient to meet demand; whether it also agrees that the introduction of a prior authorisation requirement is a necessary and proportionate response to the COVID-19 epidemic; effect it will have on supplies of personal protective equipment in the United Kingdom; and whether/how it will affect export businesses in the UK. (Paragraph 27)
8.The EU in February and March 2020 also launched a joint procurement exercise for protective equipment and coronavirus testing supplies, to build up sufficient stockpiles and obtain them more cheaply than its individual Member States could. The UK, during the transition, is eligible to participate in such joint acquisition schemes. Given reports of inadequate supplies of medical equipment for frontline hospital staff in the UK, we ask the Government to clarify whether the UK is participating in the procurement exercises and, if not, to stipulate the reasons why. (Paragraph 28)
Economic support measures
9.The Committee notes the potential knock-on effects on the stability of the banking sector of the economic damage caused by COVID-19 if borrowers begin to default on their loans on a large scale. We note that at present neither the Government nor the EU appears to consider legal changes to regulation or supervision of the banking sector necessary at EU level. We would welcome the Government’s confirmation of this assessment. (Paragraph 33)
10.In the context of the transition period, we ask the Government to explain whether the Government was sighted of the draft Temporary Framework for exceptional State aid measures when it was circulated by the Commission to the EU’s Member States on 17 March, or in any event before its final publication; set out its position on this new emergency approach to EU competition rules; and clarify whether its views were taken in account when the Commission finalised the formal Framework. (Paragraph 40)
11.The Committee takes note of the Commission’s triggering of the flexibilities in applying the public debt and deficit adjustments EU countries were required to make under the Stability and Growth Pact following the COVID-19 crisis. It further notes that these EU measures have no implications for the Treasury’s fiscal response, due to the UK’s non-participation in the euro and its opt-out from key elements of the Pact. (Paragraph 43)
12.The Government called on the EU to amend the Airport Slots Regulation in view of the drop in demand for air travel caused by COVID-19 and will therefore, in principle, have welcomed the recent European Commission proposal to that effect. We ask the Government to include in its forthcoming Explanatory Memorandum on the proposal its assessment of whether it goes far enough in terms of the amount of time for which slot allocation rules would be relaxed, or whether a suspension is required and set out how it is engaging with the European Commission and the other EU institutions to ensure its views on the proposal are accounted for in the legislative process. (Paragraph 49)
Financial assistance from the EU budget
13.The Committee has taken note of the European Commission’s €37 billion Coronavirus Response Investment Initiative, and its aim of redirecting EU structural funds to assist Member States in addressing the impact of COVID-19. (Paragraph 54)
14.Under the Withdrawal Agreement, the UK remains eligible to be awarded EU funds until the end of 2020. However, the Government has not made clear if it will seek to make use of the €555 million (£509 million) of funding the Commission has proposed to make available for COVID-19 related projects specifically, nor how it intends to spend all or part of the additional €2.4 billion of unallocated structural fund allocation for 2020 the UK has left. We therefore ask the Government, in its forthcoming Explanatory Memorandum on the Commission proposal, to explain its position on the potential benefits of the proposed changes to the allocation of EU structural funds, and indicate to what extent the UK is likely to switch its remaining EU structural funding away from other projects to deal with the repercussions of the coronavirus. (Paragraph 55)
15.The Committee notes the increased financial support provided by the European Commission for research into COVID-19. However, it remains unclear how exactly the UK’s exit from the EU’s pharmaceutical legal framework and the European Medicines Agency may affect the availability of any new vaccine or treatments, for coronavirus or other emerging health threats, in the UK beyond the end of the post-Brexit transition period. Given the technicalities of this topic, we consider the Health & Social Care Committee may wish to give it further consideration as part of its current inquiry into the UK’s preparedness for the coronavirus pandemic. (Paragraph 57)
16.As part of the Withdrawal Agreement on its exit from the EU, the UK remains eligible to apply for funding to help with its economic response to the pandemic from both the EU Solidarity and Globalisation Adjustment Funds, to which it is still contributing to financially. However, the Government has never applied for support from the latter; the overall value of any assistance received would be affected by the UK rebate mechanism; and the total financial support the two Funds deliver is dwarfed by the fiscal measures at the disposal of individual countries.74We ask the Government to clarify if it intends to apply for either the EU Solidarity Fund or Globalisation Adjustment Fund as part of its COVID-19 response. (Paragraph 59)
11 Where the Committee has raised questions in relation to EU documents that are not formally deposited for scrutiny, notably the Commission’s guidelines on border management and or the use of the EU’s Civil Protection Mechanism and Early Warning & Response System (all discussed in chapter 2), we ask the Government to incorporate its response into the Explanatory Memorandum on either the Commission Communication of 13 March 2020 setting out the EU’s general approach to COVID-19, or in a Memorandum on any related document which is subject to scrutiny.
74 The purpose of the UK rebate is, in essence, to reduce the extent of the UK’s net contribution to the EU budget by closing the gap between what the Treasury must pay under the EU’s “Own Resources Decision” and what the UK as a whole (both private and public sector) has received back in EU funding. It follows that an increase in EU funding for use by the Treasury, such as a Solidarity Fund grant, closes that net payment gap a little and therefore reduces the value of the UK rebate to the Government.
Published: 1 April 2020