The Treasury has told Parliament that discussions have begun on a UK financial contribution to the European Union as part of talks on joining the EU’s internal electricity market, ahead of next week’s summit in Brussels.
The Economic Secretary, Lucy Rigby, said any contribution remained subject to negotiation, and that no payments had been made or agreed.
Ms Rigby was answering the Conservative MP Mike Wood, who had asked whether any of the receipts from payments to the EU Cohesion Fund would be allocated to Northern Ireland.
“As set out in the answer of 15 April, the UK is not currently contributing to EU Cohesion Funds as a consequence of the UK/EU reset,” she wrote in a written answer published on Wednesday. “Whilst discussions have begun on the EU’s proposal to establish a mechanism for a UK financial contribution towards reducing economic and social disparities between the regions of the Union as part of participation in the Internal Electricity Market, any UK financial contribution would be subject to negotiations with the EU, and no contributions have yet been made or agreed upon.”
That wording is new. In answers in April, September and October the Treasury said only that the EU was “seeking to establish” such a mechanism. On 26 October the energy minister Martin McCluskey told Mr Wood the Government was “engaging to understand the EU’s proposal.” Now the Treasury says discussions have begun.
Nothing has been agreed, and nothing has been paid. A day earlier, the EU relations minister Hamish Falconer told The Guardian that the Government had “not accepted that principle” of linking electricity market access to a cohesion payment. “I understand that that’s what the European Union have asked for, but the UK government hasn’t accepted,” he said. “Again, this is something no doubt we will discuss.”
The EU’s terms are already set out in formal mandates. In March the Council of the EU authorised the European Commission to open talks on two agreements at once: one on Britain joining the internal electricity market, and one on a permanent financial contribution towards reducing disparities between EU regions. The Council said both should “enter into force and apply simultaneously,” and that the payment should apply to the electricity deal “and any further agreement affording the UK access to the Union’s internal market.”
A Commission recommendation in December said the EU wants that bill calculated from its own spending on reducing regional disparities, “adjusted to reflect the relative size of the UK economy and the proportion of the internal market to which the United Kingdom participates.” The same document also called for a separate payment to support EU agencies and systems in that policy area. Asked in October whether cohesion payments would be in addition to the cost of joining the market, Mr McCluskey did not answer the point.
On the EU’s terms, the electricity deal would also require dynamic alignment, with Britain following relevant EU rules as they change, without a vote on them. The Commission has said the Court of Justice of the European Union should be the ultimate authority on questions of Union law.
There is a case for closer electricity trading. Mr McCluskey says the aim is to cut trading costs, strengthen energy security, drive North Sea investment and support Labour’s Clean Power 2030 target. This week the leaders of Belgium, Germany, Denmark, Luxembourg and the Netherlands wrote to the Commission and the European Council urging a swift deal, while insisting that a UK contribution “should be linked with the integration of the UK into the EU electricity market.” In a letter seen by Euronews, they asked both sides to agree at the summit on “a path towards the conclusion of these negotiations.”
On Northern Ireland, Ms Rigby noted only that the UK, the EU and Ireland already co-fund the Peace Plus programme under a 2023 agreement. That is an existing scheme, not a share of a new cohesion payment that has not been agreed.
Ministers have also refused to say what Britain will pay under Labour’s planned food and farming deal, which Brussels wants concluded at the same summit on 20 November. Britain is already due to pay about £570 million to rejoin Erasmus+ in 2027. The Treasury still will not produce a single estimate of net contributions to the EU after the reset.
The food deal, a carbon market link and a youth scheme are the package both sides hope to seal next week. The electricity talks are expected to run on after the summit. What they will cost, whether a cohesion payment would apply to later market-access deals, and whether Britain has now accepted the EU’s linking principle, are questions Labour has still not answered.
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