Resetting the UK-EU relationship: House of Lords European Affairs Committee report

Approximate read time: 30 minutes

On 26 February 2026, the House of Lords is scheduled to debate the House of Lords European Affairs Committee report ‘Unfinished business: Resetting the UK-EU relationship’ (12 November 2025, HL Paper 202 of session 2024–26).

1. What is the UK-EU reset?

1.1 Labour Party manifesto commitments

In its manifesto for the 2024 general election, Labour said it would “reset the relationship” with the EU, and “seek to deepen ties” with European partners.^[1] However, there would be “no return to the single market, the customs union or freedom of movement”. Instead, Labour said it would “work to improve the UK’s trade and investment relationship with the EU, by tearing down unnecessary barriers to trade”. Labour set out its intention to negotiate a veterinary agreement “to prevent unnecessary border checks and help tackle the cost of food” and an agreement on the mutual recognition of professional qualifications “to help open up markets for UK service exporters”.^[2]

1.2 UK-EU summit, May 2025

The UK and the EU held a joint summit in May 2025, the first since the UK left the EU. Together they issued a joint statement setting out their shared “global priorities for a new strategic partnership” and a ‘common understanding’ setting out a “renewed agenda” for UK-EU cooperation.^[3] They also announced a new UK-EU security and defence partnership.^[4]

The joint statement said there would be:

• regular high-level EU-UK meetings to consider joint strategic interests, particularly on economy and trade and justice and home affairs
• six-monthly meetings between the UK’s foreign and defence secretaries and the EU’s high representative for foreign affairs and security policy
• an annual summit to oversee implementation of the Withdrawal Agreement and the Trade and Cooperation Agreement (TCA), the two treaties setting out post-Brexit arrangements between the UK and the EU, and to drive progress on the common understanding

The common understanding document set out the conclusions of exploratory talks at the summit on areas “with the potential to strengthen bilateral cooperation” between the EU and the UK.^[5] This included an agreement for further work on:^[6]

• exploring in detail the possibility of the UK participating in the EU’s internal energy market
• establishing a common sanitary and phytosanitary (SPS) area under an agreement covering sanitary, phytosanitary, food safety and general consumer protection rules on agrifood products and the regulation of live animals, pesticides and organic products^[7]
• working towards linking the UK and EU carbon emissions trading systems (ETS)

The common understanding said that in any deal reached on these areas, there should be “dynamic alignment” by the UK with relevant EU rules. However, in the SPS agreement, there could be a short list of exceptions to dynamic alignment (sometimes referred to as ‘carve-outs’) as long as it did not lead to lower standards in Great Britain than in the EU, did not negatively affect EU products being sold in Great Britain and respected the principle that only goods compliant with EU rules could be brought into the EU. In each policy area, the UK would be able to make an ‘appropriate’ contribution to decision-shaping. For the SPS agreement and emissions trading, this is explicitly defined as contributing “appropriately for a country that is not a member of the European Union”.^[8] The agreements would be subject to arbitration-based dispute resolution, but there would be a role for the Court of Justice of the European Union (CJEU) as the authority for questions of EU law. Under any agreement on SPS or emissions trading, the UK would make an “appropriate financial contribution” to “support the relevant costs associated with the European Union’s work in this policy area”.^[9]

The common understanding also set out commitments related to mobility, including:^[10]

• to work towards a “balanced youth experience scheme” allowing young people from the EU to work, study, au-pair, volunteer or travel in the UK and vice versa, for a limited period of time and for an “overall number of participants […] acceptable to both sides”
• to work towards the UK associating to Erasmus+, an EU programme that supports education, youth, training and sport through mobility and international cooperation
• to set up dedicated dialogues on implementing the TCA’s provisions on business-related travel and the mutual recognition of professional qualifications^[11]

The common understanding also said the UK and the EU would reinforce, develop or improve cooperation in areas such as mutual legal assistance (that is, cooperation between states for obtaining assistance in investigating or prosecuting crimes), cooperation between Europol and the National Crime Agency, exchanging information on terrorism and other serious crimes, and exchanging biometric data and criminal records.^[12] The common understanding also highlighted a shared commitment to cooperate on the challenges posed by irregular migration.^[13]

The security and defence partnership set out a new non-binding framework for cooperation.^[14] This includes dialogue and consultation mechanisms, six-monthly dialogues between the foreign and defence secretaries and the EU high representative, and invitations for the UK to attend high-level EU meetings where appropriate. The two sides agreed to “maintain flexible and scalable engagement between relevant officials on areas of shared interest”, such as regional security issues, peace-building and crisis management, maritime security, security and defence initiatives and policies, space security, emerging disruptive technologies, cyber issues, countering hybrid threats and foreign interference, counter-terrorism and counter-extremism, non-proliferation, capacity building, and training.

The common understanding also said that in view of the security and defence partnership, the UK and the EU should “swiftly explore any possibilities for mutually beneficial enhanced cooperation created by the SAFE instrument”.^[15] ‘Security action for Europe’, or SAFE, is a €150bn programme financed by EU borrowing through which EU member states can apply for long-term loans to fund defence procurement.^[16]

2. European Affairs Committee report

The House of Lords European Affairs Committee launched an inquiry into the UK-EU reset in January 2025 and published its report in November 2025.^[17]

The committee said the reset of relations with the EU was “a process not an event”, with “no clarity about the endpoint”.^[18] It was “likely to be a longer-term process that will shape the post-Brexit UK-EU relationship”, but the report itself looked only at events up to October 2025.^[19]

2.1 May 2025 summit in the reset process

The first part of the report assessed the conduct and results of the government’s reset policy up to and including the outcomes of the May 2025 summit.^[20]

The committee found the government’s specific policy objectives had “evolved significantly over time”.^[21] Most of the witnesses from whom the committee had taken evidence agreed the government had identified areas where there was scope for a closer UK-EU relationship. However, the committee said there were also some doubts about the direction of travel of the security and defence agreement, aspects of the possible SPS agreement and the likelihood of real progress on touring artists and mutual recognition of professional qualifications. The committee found consensus among its witnesses that “the overall economic impact of the government’s reset objectives, if all were achieved, would be marginal, albeit positive”.

The committee also noted the government had not identified UK participation in the EU’s internal electricity market as an aim prior to the summit.^[22] It asked for information on how this came to be agreed as a summit outcome.

Overall, the committee concluded the government had made progress in achieving its reset objectives by negotiating a security pact with the EU and reaching agreement to “work towards” an SPS agreement and linking emissions trading schemes.^[23] However, the committee assessed there had been “little, if any, progress” on the government’s other objectives—further law enforcement cooperation, help for touring artists and mutual recognition of professional qualifications. The committee asked the government for further information about obstacles to progress on these issues and whether they were likely to be overcome in the near future.

2.2 Foreign policy, security, defence and law enforcement cooperation

The remainder of the committee’s report looked at matters for the government to consider as it took forward the summit agenda and prepared for the next summit in 2026.^[24]

The committee welcomed the security and defence partnership (SDP).^[25] It concluded that “at this early stage, it is perhaps inevitable that the partnership has so far amounted only to a set of aspirations, but its success will be measured by the degree to which it improves the overall defence and security of Europe”.^[26] The committee asked the government to explain what practical difference the SDP would make to the existing level of UK-EU dialogue, what specific capability improvements the government would be seeking, how it would monitor progress, and whether it planned to pursue a closer and even more formalised relationship than what was set out in the partnership document.

The committee also asked whether the government was seeking UK participation in EU common security and defence policy (CSDP) missions, and what progress had been made on the UK joining the EU’s permanent structured cooperation (PESCO) military mobility project and reaching an administrative agreement with the European Defence Agency (EDA).^[27] The PESCO military mobility project aims to enable the unhindered movement of military personnel and assets within the borders of the EU.^[28] The EDA’s core objective is to support cooperation among participating member states for the development of their defence capabilities.^[29] An administrative arrangement is a pre-requisite for non-EU member states to take part in EDA projects and programmes.

The committee viewed the UK’s potential participation in projects funded by SAFE as one of the key aspects of the SDP.^[30] It highlighted the importance of ensuring that any agreement “provides clear strategic benefits to the UK’s defence ecosystem” and that the cost implications were properly understood.

2.3 Trade and mobility

The committee asked the government to keep it informed about the ongoing negotiations for an SPS agreement, ETS linkage and a youth experience scheme. It argued this was important in terms of parliamentary scrutiny and transparency.^[31] The committee also asked the government specific questions about these policy areas, including about:^[32]

• how it planned to handle future UK exceptions to dynamic alignment, and UK-EU regulatory divergence that has already occurred, in relation to the prospective SPS agreement
• what the government would see as a fair financial cost to pay for the prospective SPS and EU linkage arrangements
• the timescale for concluding and implementing agreements on an SPS area and a youth experience scheme
• information about the basis for the government’s statement that a cap on numbers participating in the youth experience scheme has been agreed
• the dispute resolution mechanism in the SPS and ETS linkage agreements and the specific role of the CJEU

The committee concluded it was “unsatisfactory that no progress seems to have been made” on the challenges faced by UK artists seeking to tour in the EU.^[33] It called on the government to “step up the pace of work with the EU with the aim of an early agreement”. It also asked the government for an update on how UK-EU dialogues on the mutual recognition of professional qualifications were being taken forward and what evidence it had that the EU might change its position compared to the one it held during the TCA negotiation.^[34]

2.4 Implications for government and Parliament

The committee asked the government about the timing, process and scope of the TCA implementation review and how this would fit with the next UK-EU summit.^[35] Article 776 of the TCA provides for a review of the implementation of the agreement every five years, with the first review due in 2026.^[36]

The committee called on the government to facilitate parliamentary scrutiny of the new UK-EU agreements expected to arise from the May 2025 summit.^[37] The committee concluded that any dynamic alignment to EU rules required by the prospective SPS and ETS agreements would have “significant implications for Parliament”.^[38] It asked the government to set out how it envisaged a scrutiny system for dynamic alignment would work and how it planned to ensure Parliament could play a full scrutiny role.

3. Progress on the reset since the committee’s report

Since the committee’s report was published in November 2025, there have been varying degrees of progress on the commitments made at the May 2025 summit.

3.1 SAFE

In November 2025, the government said it had not been able to conclude an agreement with the EU to facilitate UK participation in the SAFE defence procurement programme.^[39] The government said it had entered the negotiations in good faith but had been unable to reach an agreement it considered to be in the national interest. The government said this was “disappointing”, but the UK defence industry would have access to SAFE under standard third country terms.

Procurement contracts funded through the SAFE programme must ensure that no more than 35% of component costs originate from third countries outside the EU, the European Economic Area, the European Free Trade Association area or Ukraine.^[40] The UK had been negotiating for a higher percentage to be able to come from UK defence companies.^[41] According to press reporting, although the UK was willing to pay millions of euros to participate in SAFE-funded joint procurements, it was not prepared to agree to a financial contribution in the billions, which was what the EU was reportedly seeking.

Prime Minister Sir Keir Starmer said in February 2026 that he would look again at UK participation in a second round of SAFE funding if it was in the national interest.^[42]

3.2 Erasmus+

In December 2025, the government announced the UK would join the Erasmus+ scheme from 2027.^[43] The UK will pay approximately £570mn to participate in the 2027/28 academic year, which the government has said represents a 30% discount compared to the default terms under the TCA. The government estimates over 100,000 people could benefit from the scheme in the first year. Participation beyond the first year would run into the EU’s next five-year ‘multiannual financial framework’ (budget cycle) and so would need to be negotiated in future. The government said any agreement for the UK to continue participation in future would need to be “based on a fair and balanced contribution”.

3.3 Ongoing negotiations

The UK and the EU published the outcome of their exploratory discussions on UK participation in the EU’s electricity market in December 2025. They agreed that close cooperation on electricity was in both sides’ interest, and they should work towards a formal electricity agreement.^[44] Under this electricity agreement, the UK would align dynamically to EU rules on the electricity market. It would also align to the promotion of renewables (including a target for the share of renewable energy in the UK’s total energy consumption comparable to the EU’s target), relevant EU environmental protection law and state aid (subsidy) rules targeting or materially affecting the electricity sector.

The following day, the European Commission published a draft EU negotiating position, which needs to be adopted by EU member states before formal negotiations can begin.^[45] The government anticipates this will be in early 2026.^[46] The European Commission’s text proposes that negotiations on UK participation in the EU’s internal energy market should also lead to negotiations on a legally binding mechanism for the UK to make a financial contribution towards reducing economic and social disparities between regions of the EU (known as ‘cohesion funding’).^[47] It recommends the UK’s contribution should be of “an appropriate level” that reflects the level of the UK’s participation in the EU’s internal market.

A UK contribution to EU cohesion funding was not mentioned in the common understanding or the joint document setting out the outcome of the exploratory discussions. The government has said that, as currently drafted, the European Commission proposal goes beyond the outcome of the exploratory talks, both in terms of the financial contribution and “in specifying that the electricity agreement will complement and, where necessary, disapply or suspend specific energy provisions of the TCA”.^[48] However, it also noted that the draft mandate “remains subject to EU internal processes and formal negotiations”. The government said it would “discuss in detailed negotiations with the EU how to ensure any and all financial contributions are appropriate”. The government has also said that to “unlock [the] benefits” of reduced costs of trading electricity with the EU, it is “prepared to make an appropriate and proportionate financial contribution to support relevant costs, such as accessing specific agencies or databases required for market participation”.^[49] It said “nothing has been agreed yet”, and it would negotiate to “ensure any contribution represents value for money for the UK taxpayer”.

Formal negotiations on an SPS agreement are under way.^[50] Nick Thomas-Symonds, minister for the constitution and EU relations, said he hoped they would be concluded by the time of the next UK-EU summit in 2026, with the agreement being implemented by the middle of 2027.^[51] The date of the next summit has not yet been announced, although at the May 2025 summit the two sides committed to meeting annually.^[52] In September 2025, Mr Thomas-Symonds suggested that agreeing areas where there would not be dynamic alignment to EU rules (sometimes referred to as ‘carve-outs’) would be the main focus of negotiations.^[53] According to press reporting, the UK’s desire for a carve-out on precision breeding is a “controversial” issue that has “bogged down” the talks.^[54]

The press has also reported that the EU is seeking a clause that would require the UK to pay “significant” financial compensation for terminating an SPS deal, as insurance against a future government reversing an agreement concluded by the current Labour government.^[55] The government has said that it is standard to have termination clauses in an international agreement.^[56]

Formal negotiations on linking the UK and EU emissions trading schemes and on establishing a youth experience scheme are also under way, with both sides hoping to conclude them by the time of the next UK-EU summit.^[57] According to press reporting, the EU wants there to be no cap on the number of young people who could participate in the scheme, for EU citizens to pay the same universities fees in the UK as domestic students, rather than the higher international student fees, and for EU students to be exempt from the immigration health surcharge that usually applies to visitors to the UK granted a visa for more than six months.^[58] The UK is reportedly insisting on a cap and is opposed to EU students paying ‘home’ fees at British universities.^[59]

The government is expected to introduce a bill to legislate for dynamic alignment to EU rules on SPS, carbon emissions trading and the electricity market that would be required by the new deals.^[60] Mr Thomas-Symonds has said the government aims to have passed the bill by the end of 2026, which may mean introducing it in the current session before the King’s Speech, although the date of introduction has not yet been set.^[61]

4. Government response to the committee report

4.1 May 2025 summit in the reset process

The government published its response to the committee’s report in January 2026.^[62] It said its focus for 2026 was “all about driving forward”, by finalising the SPS and ETS deals, securing a “balanced agreement” on a youth experience scheme, starting negotiations on joining the single electricity market and continuing cooperation through the security and defence partnership.^[63] The government said it was “building a valuable relationship with the EU that genuinely benefits Britain”.^[64] It argued that the SPS and ETS linking measures were “set to add nearly £9bn a year to the UK economy by 2040”.^[65]

The government explained that exploring UK participation in the EU’s internal electricity market had arisen from “a mutual recognition that a more efficient trading framework is in our shared interest”.^[66] The UK and the EU had committed in the TCA to developing new electricity trading arrangements for the day-ahead timeframe based on the concept of multi-region loose volume coupling (MRLVC). However, the government said that MRLVC “has many design challenges and industry is telling us that it will not be viable”.^[67] It was in response to these challenges that the UK and EU agreed at the May 2025 summit to explore in detail the UK’s possible participation in the EU’s internal electricity market. The government said this represented an effort to secure a more integrated and efficient long-term solution than the MRLVC arrangements that were foreseen in the TCA.

On the issues where the committee identified that the government had not made much progress, the government said the common understanding had recognised the value of travel and cultural and artistic exchanges, including the activities of touring artists.^[68] It also noted the common understanding had agreed to set up dedicated dialogues focusing on the mutual recognition of professional qualifications, and a number of areas where both sides would seek to enhance cooperation on law enforcement and justice issues. The government said it would not provide a “running commentary on the details of those future discussions” but said it would keep Parliament updated on significant developments.

4.2 Foreign policy, security, defence and law enforcement cooperation

The government said the security and defence partnership represented “a significant step forward in formalising and deepening” the UK’s engagement with the EU on shared security priorities.^[69] It argued that a structured framework for cooperation would enable a “more strategic and predictable approach”. It noted that the inaugural foreign and security dialogue between the foreign and defence secretaries and Kaja Kallas, the EU high representative for foreign affairs and security policy, took place in October 2025. The government said its current approach was “to implement the SDP ambitiously as the primary mechanism for cooperation on security and defence issues”.^[70] NATO remained the “cornerstone of our collective defence”, but the government said the SDP would “complement and reinforce NATO’s role”.^[71]

On participation in SAFE, the government repeated that it would only sign agreements that were in the national interest, and that it had been unable to reach one “that passed that test”.^[72] However, it said the UK and EU would “continue to explore possible mutual involvement in respective defence initiatives, regardless of participation in SAFE”.^[73]

The government said the SDP gave the UK the opportunity to cooperate further with, and explore participation in, EU CSDP civilian and military crisis management.^[74] It said officials were considering how best to cooperate and coordinate with the EU on military crisis management activity, particularly where this aligned with UK strategic interests and complemented the UK’s NATO commitments. The government outlined ways in which the UK was already engaging with the EU to support Ukraine. The government noted the SDP included the possibility of an administrative arrangement between the UK and the EDA and said that officials were continuing “working level exploratory discussions to boost broader defence industrial cooperation”.^[75] Officials were also continuing to progress discussions to advance the UK’s application to join the PESCO military mobility project.

4.3 Trade and mobility

Responding to the committee’s request to be kept informed about the progress of negotiations, the government said it took its commitment to parliamentary scrutiny “very seriously” and would “continue to be as open and transparent with Parliament as it can be whilst protecting its negotiating position”.^[76]

On the prospective SPS agreement, the government said the EU had accepted there would need to be a number of areas where the UK would retain its own rules, despite the general principle set out in the common understanding that the same rules would apply in the UK and the EU once an agreement was in place.^[77] The details of which areas the UK could retain its own rules in were subject to negotiation. However, the government said it had been “clear about the importance of being able to set high animal welfare standards, support public health, and support the use of new and innovative technologies”.

The government said the level of the UK’s financial contribution for the SPS and ETS linking agreements would also form part of the ongoing negotiations.^[78]

The government said it aimed to conclude negotiations on the youth experience scheme by the time of the next UK-EU summit.^[79] Responding to the committee’s question about the basis for saying agreement had been reached to cap the number of people who could participate in the scheme, the government pointed to the passage of the common understanding that made a commitment to “ensure that the overall number of participants is acceptable to both sides”. It said this wording reflected an agreement that “any scheme will be capped and subject to a visa requirement”. The government also stated that “the exact parameters of any scheme are subject to ongoing negotiation”.

On dispute resolution mechanisms, the government confirmed that any disputes would go to independent arbitration.^[80] The CJEU would have a limited role in assisting an independent arbitration panel and would not rule on the substantive outcome of a dispute.

The government said it would continue to explore how best to improve arrangements for touring artists across Europe with the EU and EU member states.^[81] It also said it was taking forward dialogues with EU counterparts about the recognition of professional qualifications and business mobility.^[82]

4.4 Implications for government and Parliament

Responding to the committee’s points about parliamentary scrutiny, the government said it was still in negotiations with the EU about how dynamic alignment would operate.^[83] It said implementing the agreements would require primary legislation, in which Parliament would play its normal role. The government said it would be in a position to set out more specific details as negotiations progressed. It emphasised that “no new rules will apply in the UK without the UK first agreeing to this” and said that Parliament “will rightly have a say in this process”.^[84] The government also pointed out that the common understanding stated that where the UK decides to align with EU rules as part of a new agreement, this would give due regard to the UK’s constitutional and parliamentary procedures.

In terms of the “decision-shaping” role the UK as a non-EU member state would have in EU legal acts, the government said the exact detail of how this would function in practice was subject to ongoing negotiations.^[85] The government said it would work with Parliament on the exact arrangements for scrutiny of that legislation and the agreement more broadly as the negotiations progressed.

On the review of the implementation of the TCA, the government said it was considering the next steps with the EU.^[86] Shortly after the government response was published, the UK and the EU referred to the TCA review in the joint statement they issued following a meeting of the TCA Partnership Council (the ministerial-level joint UK-EU body that oversees the TCA) that took place in early February 2026. The joint statement reiterated that they aimed to conclude negotiations on SPS and ETS agreements and a youth experience scheme by the time of the next UK-EU summit. It then continued:

In this light, the co-chairs [of the Partnership Council—Nick Thomas-Symonds and European Commissioner Maroš Šefčovič] also discussed the commitment under article 776 of the TCA to jointly review the implementation of the agreement. They acknowledged the evaluation of implementation already undertaken by both sides, the ongoing role of the specialised committees in considering and addressing new or outstanding points of implementation, and the agreement to hold annual summits. They also noted the importance of input from stakeholders, including the Parliamentary Partnership Assembly and the Domestic Advisory Groups.^[87]

5. House of Commons committee inquiries on the UK-EU reset

Two House of Commons committees have also recently undertaken inquiries on the UK-EU reset.

5.1 Environment, Food and Rural Affairs Committee

The House of Commons Environment, Food and Rural Affairs Committee published a report in February 2026 looking at how to make an SPS agreement with the EU work.^[88] The committee concluded an SPS agreement could deliver benefits for farmers, producers and consumers by reducing checks, costs and friction on agrifood trade. However, it called on the government to seek exemptions from dynamic alignment on animal welfare and precision breeding. It also expressed concern about EU rules on the presence of certain naturally occurring mycotoxins in fruit and vegetables and the use of certain pesticides applying in Great Britain, because these rules had been developed since Brexit and did not take account of GB-specific scientific evidence. The committee also stressed the need for realistic implementation periods for any agreement, honest communication with the public about the benefits and constraints of dynamic alignment, and a clear system of parliamentary scrutiny for what would be “a significant constitutional development”.

5.2 Foreign Affairs Committee

The House of Commons Foreign Affairs Committee opened an inquiry on the UK-EU reset in March 2025.^[89] The committee wrote to the prime minister a few days before the May 2025 summit, criticising “a perceived absence of a strategic vision from the government for the UK-EU relationship, with no coherent narrative tying its various objectives within the reset together”.^[90] At the time of writing, the committee had not yet published its report.

6. Read more

• House of Lords Library, ‘UK-EU relations: Proposals for customs union and connections with the EU single market’, 22 January 2026
• House of Commons Library, ‘UK-EU reset: Agreement on UK participation in the EU Erasmus+ programme’, 22 December 2025
• House of Commons Library, ‘The 2026 review of the Trade and Cooperation Agreement and the UK-EU reset’, 17 November 2025
• House of Commons Library, ‘The UK-EU Trade and Cooperation Agreement: Temporary business travel’, 29 July 2025
• House of Commons Library, ‘The UK-EU reset: Next steps after the May 2025 summit’, 29 July 2025

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