Brexit: Gibraltar - Question for Short Debate

– in the House of Lords at 8:21 pm on 21 March 2017.

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Photo of Lord Boswell of Aynho Lord Boswell of Aynho Chair, European Union Committee, Principal Deputy Chairman of Committees, Chair, European Union Committee

My Lords, I am delighted to have this opportunity to debate our report and I am hugely grateful to the business managers for making time available at such short notice. This short debate is particularly timely given the presence tonight in the Gallery of the Chief Minister of Gibraltar, the honourable Fabian Picardo, who gave eloquent evidence to our inquiry, and the Deputy Chief Minister, the honourable Dr Joseph Garcia. Although I cannot of course direct my remarks formally in their direction, perhaps I may say to the House at large that I hope they found our report constructive and helpful. I underline my committee’s continuing openness to dialogue with the Gibraltarian Government and people.

As our report states very clearly, Gibraltar is part of the European Union and its citizens were able to vote in the referendum last June. Just under 96% of votes cast in Gibraltar were to remain—but Gibraltar, as a dependent territory of the United Kingdom, is now set to leave. In these circumstances, particularly, the United Kingdom Government, I suggest, have a unique moral responsibility to ensure that Gibraltar does not suffer as a result of a Brexit that its people almost unanimously opposed. I hope that the Minister will acknowledge that responsibility tonight.

There can be no question that Gibraltar has benefited hugely during our membership of the EU. I say “during” rather than “as a result of” our membership because I do not wish to assert any necessary causality. But we just have to remind ourselves of the position in the 1970s, when Spain was still under the rule of General Franco and the border was closed, to see that Gibraltar today, with its vibrant, service-based economy, is in a far better place. The existence of an open border, which allows more than 10,000 workers—40% of the total workforce in Gibraltar—to cross from Spain every day, is absolutely fundamental to Gibraltar’s long-term prosperity, as it is to that of Andalusia, the neighbouring region of Spain.

We urge the Government here to do everything possible to maintain Gibraltar’s access to that pool of cross-border workers. That will require intense diplomacy with Spain, the European Union institutions and the other 26 member states, which have played an important part in promoting dialogue between Gibraltar and Spain and which have a strong interest in maintaining the prosperity and stability of Gibraltar going forward. That diplomacy will become even more important after our withdrawal, when United Kingdom Ministers have ceased to participate in regular European Council meetings, and have lost that forum for frequent and informal dialogue with their Spanish counterparts.

I do not underestimate the challenges that the Government may face. Some are technical. The Government will need to explore the options in legal terms for maintaining a free-flowing frontier and we flag up the Chief Minister’s suggestion to us that the Local Border Traffic Regulation could provide a suitable basis for this. We also note that in the area of policing, the land frontier becoming part of the European Union’s external border could create difficulties. As in the case of the Irish land border, close co-operation between police forces on both sides of the border and flexible extradition arrangements will be vital.

There are other important issues such as aviation, Gibraltar’s access to the single market in services, particularly financial services, and Gibraltar’s territorial waters. I am sure that other noble Lords will touch on some of these tonight and I look forward to their contributions to this debate. Reaching solutions on these issues, in particular on the vital issue of the border, will require compromises on all sides and I hope that the Minister in responding to this debate will take the opportunity to outline the Government’s approach in more detail than we have heard thus far.

However, on one key issue no compromise is possible. The Government have made a commitment never to enter into sovereignty discussions against the will of the Gibraltarian people, and our Committee fully endorses that commitment. The reaction in Madrid immediately following the referendum was watched closely in Gibraltar and there is always the risk that someone will seek to inflame tensions with a view to their domestic political gain. The United Kingdom Government therefore need to be alert to any attempts by Spain to advance territorial claims over Gibraltar, by whatever means.

I emphasise that the rest of the European Union is potentially a useful ally in this process. The European Union and its member states have invested in Gibraltar. They have a real stake in the stability and prosperity of neighbouring states, and will not take kindly to any attempt by Spain to derail a Brexit deal over Gibraltar. It would be unwise and potentially counterproductive for the Government here to try to play off Spain against the other 26 member states. I hope that the Minister will agree that, as we approach the Article 50 negotiations, the last thing the Government should do is to try to undermine the unified approach of the EU 27. The challenge, in contrast, is to identify common interests and shared practical solutions that will underpin a durable continuing partnership.

Within the United Kingdom that partnership has to be built up across our constituent nations and regions. It needs to embrace Gibraltar, the Crown dependencies and the other British Overseas Territories, which each have a distinctive constitutional relationship with the United Kingdom and European Union. There also needs to be a partnership between the United Kingdom and European Union—that is, the whole European Union, including Spain—if we are to maintain a fruitful relationship for the future. It is important to acknowledge the strong bilateral relationship that the United Kingdom enjoys with Spain and to accept that that relationship should not be seen solely through the prism of the dispute over Gibraltar.

I will end as I began. Our view is that the United Kingdom Government have a unique moral responsibility to ensure that Gibraltar’s voice is heard and its interests respected as we approach Brexit and beyond. I look forward to the noble Baroness’s reply, in which I hope that she will clearly set out how the Government plan to fulfil that responsibility.

Photo of Viscount Younger of Leckie Viscount Younger of Leckie Lord in Waiting (HM Household) (Whip), Lords Spokesperson (Department for Education) (Higher Education)

My Lords, timings are particularly tight for this 90-minute debate and I therefore request that Back-Bench speeches are wound up as the Clock reaches four minutes, and no later.

Photo of Lord Selkirk of Douglas Lord Selkirk of Douglas Conservative 8:29, 21 March 2017

My Lords, it is a great pleasure to follow the noble Lord, Lord Boswell, the chairman of the EU Select Committee, on the needs of Gibraltar, which must not be overlooked. It has long been popular to invoke the Rock of Gibraltar as a symbol of steadfastness and safety. Now, as a result of Brexit, the Government must strive vigorously to ensure that that massive limestone promontory, the territory that surrounds it and its infrastructure should remain in excellent condition and that the people will thrive.

Greek myths describe the Rock as one of the Pillars of Hercules. In more recent times, we have had 300 years of shared history to uphold after Gibraltar was ceded by Spain in the treaty of Utrecht in 1713. Since then, like the ravens at the Tower of London, the Barbary apes that live on the Rock have often been depicted as legendary guardians of Britain’s political fortunes. Well aware always of the need to boost morale, during the Second World War Winston Churchill was anxious that the apes, whose numbers had fallen as low as seven, were seen to continue to flourish. As the Battle of Arnhem was raging, he sent a message to the Colonial Secretary demanding that action be taken to ensure that the troop of animals on the Rock should total no fewer than 24.

To return to the present day, clearly the United Kingdom’s decision to leave the European Union has raised complex and hugely important issues for the Gibraltarians, who voted by 96% to remain in the EU. Almost immediately, the Spanish Government once more raised the vexed issue of possible joint sovereignty to allow Gibraltar to stay in the EU. However, this was angrily rejected by its Chief Minister, Fabian Picardo, who characterised it as the generosity of the “predator” towards a wounded prey. Borrowing words from President John F Kennedy’s inaugural speech in 1961, the Chief Minister movingly told the House of Commons Exiting the European Union Select Committee that:

“Gibraltar will pay any price, bear any burden and meet any hardship in the context of ensuring that we have a future that is bright and exclusively British post-Brexit.”

Gibraltar, through no wish of its own, finds itself on the front line of the consequences of our planned exit from the European Union. After Brexit, the UK will have two land borders with the EU: one between Northern Ireland and the Irish Republic and the other between Gibraltar and Spain. Currently, around 12,000 people cross that Spanish border every day to work in Gibraltar, making up 40% of the workforce there. I strongly support the report’s call for the maintenance of a frontier between Gibraltar and Spain which is as free flowing as possible following Brexit. It emphasises the need for all parties,

“to work together in good faith to reach an agreement that supports ongoing regional cooperation and trade, and avoids undue disruption to the lives of thousands of border residents who cross the frontier daily”.

The report also stresses—the noble Lord, Lord Boswell, made this point firmly a moment ago—that the Government of Gibraltar have placed their trust in the UK to negotiate on their behalf. It goes on to state that,

“the UK Government has a moral responsibility to ensure that Gibraltar’s voice is heard, and its interests respected, throughout the Brexit process”.

I believe that Britain’s negotiators must also be vigilant over any attempts by Spain to use the constitutional future of Gibraltar and the issue of sovereignty as a bargaining tool.

EU funding has played an important role in Gibraltar’s development in recent years. Does the Minister agree that there is an urgent need for the Government to clarify what kind of UK financial assistance will be available for projects in Gibraltar after Brexit, especially beyond 2020? After Brexit, can we also be assured that the Government will support opportunities for Gibraltar to benefit from any new trade deals which are negotiated by the UK in the future? In conclusion—I am on my last sentence—I hope the Minister will be able to promise us that in every way possible in the months ahead, the Government’s negotiators will shoulder their historic responsibility and work to secure the best possible outcome for this uniquely patriotic and enterprising British Overseas Territory.

Photo of Lord Anderson of Swansea Lord Anderson of Swansea Labour 8:35, 21 March 2017

My Lords, this is an admirable report, which sets out the key challenges facing Gibraltar after Brexit. The Government of Gibraltar recognise the complexity of the issue and call for a measured, multifaceted and indeed nuanced response. I will make but three observations.

First, any deal following Brexit will carry more risks and be less advantageous for Gibraltar than the status quo, hence the negotiations, in essence, will be about damage limitation. We have, as the noble Lord, Lord Boswell, stated, a moral responsibility: 96% of the people of Gibraltar voted to remain, and I am puzzled that certain Brexiteers such as Farage, who claim to be Commonwealth men, seem to indicate that they know the interests of Gibraltar better than the Chief Minister, Fabian Picardo, and the Deputy Chief Minister. What are the current benefits to Gibraltar, which led to such an overwhelming vote? The UK, as an insider, is its advocate in Brussels and of course in New York; in addition, UKRep is its eyes and ears in Brussels, placating at an early stage proposals which might harm the interests of Gibraltar. Clearly, these two roles will no longer be possible, at least to the current extent, when we are outsiders.

Secondly, what then are the principles on which we should embark on negotiations? Clearly, we have to listen very carefully to the concerns of Gibraltar over the single market, financial services and the border, and keep its Government wholly in touch with developments. To this end, the proposed joint ministerial council must help. We must also make crystal clear to our Spanish colleagues, with whom we otherwise have excellent bilateral relations, that there is no point in their seeking to make life more difficult for Gibraltarians after Brexit, as El País appears to suggest. Indeed, any such action would be counterproductive, as there is no question of the British Government countenancing a change without the agreement of Gibraltar. We also have to ascertain which EU benefits Gibraltar is likely to lose and consider ways and means of replacing them after Brexit. We should also stress the social and economic benefits to both Spain and Gibraltar of a frictionless border and be ready flexibly to search for new structures to facilitate future co-operation.

Thirdly, what are the prospects after Brexit? Who knows the likely spirit of our negotiations with our partners in the European Union? The Prime Minister’s priority is immigration, which is not relevant to Gibraltar, but not the single market, which is. Our aims and interests are best served if we seek to improve our bilateral relationship with Spain, emphasising the mutuality of interest. The heading of the final chapter of the report carries the warning to all of us: “An uncertain future”.

Photo of Lord Chidgey Lord Chidgey Liberal Democrat 8:39, 21 March 2017

My Lords, I too congratulate the noble Lord, Lord Boswell, and his committee on their report, called simply Brexit: Gibraltar. I make no apology for being a friend of Gibraltar, having been a member or officer of the All-Party Parliamentary Group for Gibraltar almost since it was established, some 20 years ago.

As a member of the Foreign Affairs Select Committee in the other place, I took part in the inquiry that revealed the attempt to pass the sovereignty of Gibraltar to Spain without first engaging with the UK Parliament. I had the privilege to be invited to act as an official observer to the 2002 referendum on whether Gibraltarians wished to remain British and reject joint sovereignty with Spain, in which 98% voted to remain. I have spoken at Gibraltar Day rallies in Casemates Square, addressing crowds of over 20,000 joyous Gibraltarians, fervently displaying their patriotic desire to remain British. Members of our family walked through the Alameda Gardens in the 1920s, watching the Rock Hotel being built. And I have stood beside the statue of the young Gibraltarian family, commemorating the deportation of many thousands of women and children to the UK for their safety during World War II, only for many to find their safe haven turned out to be London. Some were not allowed to return home until long after the war had ended.

Her Majesty’s Government of Gibraltar, have no doubt about the commitment of the UK Government and the British people towards protecting British sovereignty of Gibraltar, in accordance with that 2002 referendum. I agree that it is important, in the present uncertain climate, particularly given recent statements by Spanish Ministers, that this commitment continues to be publicly and robustly restated. Gibraltar has, since the early 18th century, been of great military significance to the UK’s defence strategy, following the ceding of Gibraltar to the UK in perpetuity, by the treaty of Utrecht.

While the UK is re-establishing an interest in projecting power east of Suez, access to Gibraltar’s airport and base, the harbour and the underground arsenal is integral to her ability to project power through the Indian and Pacific Oceans and beyond. There are two key issues for Gibraltar: the freedom to provide services and a free-flowing frontier. With regard to services, analysis shows that 90% of her financial services industry relies on trade with the UK. So far, the UK has committed to preserve and underpin the existing access to the UK markets. The UK Government have said they are prepared to look to extending the scope of market access into the UK, and take account of Gibraltar’s priorities, as they negotiate post-Brexit deals around the world.

The Government must ensure that Gibraltar attains the same level of access to the single market as covered in the scope of any trade deal the UK secures. It should be the duty of Parliament to oversee any draft deal that the Government bring back from the negotiating table and to ensure that this condition is met. It will be the duty of Parliament, to ensure that the Government stand ready to robustly defend Gibraltar, if Spain exerts heavy-handed border controls during the EU negotiations. A fluid border is essential to cater for the movement of cross-frontier workers.

Above all, there must be no attempt to compromise on Gibraltar’s sovereignty. Joint sovereignty was comprehensively rejected in the 2002 referendum by 98% of the population. Parliament must be on its guard to expose any attempt to hand over sovereignty to Spain through the side door while attention is diverted by wider Brexit issues.

Photo of Lord Luce Lord Luce Crossbench 8:42, 21 March 2017

I declare an interest as a former Governor of Gibraltar and as the current chancellor of the new University of Gibraltar. When I arrived as Governor, exactly 20 years ago this month, one of my tasks was to help and encourage Gibraltar to transform from a defence-oriented economy—although defence remains very important today—to a diversified economy, in which it could be financially more resilient. During that time this has happened. Today we have a resilient, strong economy: tourism, port and bunker services, online gaming and financial services are well regulated and transparent, in conformity with the standards expected by the European Union and the OECD. This transformation is being brought about and led by two notable people: Sir Peter Caruana, the former Chief Minister, and the present Chief Minister, Fabian Picardo, who may be listening to this debate.

Gibraltar has faced many challenges in the past 312 years under British sovereignty; now it faces Brexit. It faces the dangers of Brexit and I therefore welcome this report led by the noble Lord, Lord Boswell. It seems to me that there are three issues for Gibraltar. First, there is access to the single market. As we have heard, 90% of the financial services are with the United Kingdom. Secondly, there is the need for the free flow of people and goods on the frontier, with 12,000 people every day going into Gibraltar from Spain, 7,000 of them Spanish, with the EU Commission playing the role of arbitrator regarding the flow of people across the frontier. Thirdly, there is the need for co-operation in security and judicial matters—for example, the European arrest warrant.

Against that background we have this excellent report, published under the chairmanship of the noble Lord, Lord Boswell. I welcome the point that everyone—above all the noble Lord himself—has made, that Her Majesty’s Government have a moral responsibility to the people of Gibraltar. It goes without saying that Her Majesty’s Government must keep up the commitment on sovereignty but, as always, with the backing of this Parliament. However, there are other practical recommendations, such as keeping the UK and Gibraltar as a single state for the purposes of negotiation; suggesting that we should strengthen Gibraltar’s financial and business links with the UK; suggesting that Her Majesty’s Government should underpin EU funding arrangements in the future; and, if the frontier becomes an external one, taking up the Chief Minister’s suggestion of some kind of local traffic management plan that works in other areas.

Our relations with Spain would benefit enormously from collaboration across the frontier, Gibraltar contributing 25% of regional GDP in the local Spanish area and being the second highest employer in the region of Andalusia. The co-operation is enormous, as are the benefits, so the choice for Spain is quite straightforward: either return to the stale old Francoist bullying and use Gibraltar as a diversion for political problems, or recognise an overall mutual interest of close economic and political relations with the UK against the background of the EU negotiations and the achievements of the previous Spanish socialist Government in collaborating more closely with Gibraltar to the benefit of all in that region—Britain, Spain and Gibraltar. That must now be our aim.

Photo of The Bishop of Leeds The Bishop of Leeds Bishop 8:47, 21 March 2017

My Lords, I endorse all that has been said so eloquently. The report is excellent, but for me it raises a number of questions. The main one concerns the fact that throughout the referendum campaign, and subsequently, we have repeatedly heard statements such as, “We will get a good deal”, and, “We will do this and we will do that”, when in fact we do not hold the power in a lot of this—it will have to be negotiated. Despite urging that we get the best for Gibraltar, I want to be assured that the Government are stress-testing all the scenarios, including the worst-case ones. We owe it to the people of Gibraltar to do that because it was not done in preparation for the referendum itself.

If you look through the eyes of Spain, you find that it is not good enough for us simply to say, “We mustn’t compromise on sovereignty”. What if the Spanish hold out sovereignty, play a long game and say, “We’ll just sit this out. We won’t give equivalence”? What if the EU does not give us equivalent status? What if Spain wants to use sovereignty or cross-border access and frontier issues as a bargaining chip? We cannot simply stand there and say, “Well, you can’t”. I want to know that we are stress-testing this. Who has the power? After all, we have spoken of having a clean Brexit; what if the Spanish take us at our word? That has to be thought through and our response to it considered.

Particular questions are raised here. As I indicated, if the EU declines to give equivalent status after Brexit, what then? What is the cost to the UK, already alluded to in this debate, if Gibraltar is given no access in future to EU programmes? Has that been costed out? In paragraph 29 of the report, we read about the strong economic links to the UK, specifically the City, should the single market be infringed in some way. But what if the City effectively moves to Frankfurt or Paris? We keep saying, “Well, it won’t”, but what if it does? We do not hold all the cards.

Paragraph 36 says that, if access to the single market is restricted,

“the rest of the world beckons”.

So does outer space. It does not mean that we can get what we want. Where is the realism that comes from looking through the eyes of those who do not hold the best interests of the UK as their priority?

Paragraph 50 says that, for Spain to intensify border controls would be regarded as an “aggressive act”. Frankly, why should it not? It did not choose this. I suspect that, if the boot were on the other foot, we might be rather aggressive as well.

I just want to be reassured that these scenarios are being stress-tested in the way that they were not before we went into this business in the first place. We owe it to the people of Gibraltar.

Photo of Baroness Hooper Baroness Hooper Deputy Chairman of Committees, Deputy Speaker (Lords) 8:50, 21 March 2017

My Lords, I declare an interest as honorary president of the Friends of Gibraltar. This is a UK-based group which brings together Gibraltarians and others who have lived and served in Gibraltar and who are concerned about keeping in touch with what is going on on the Rock, politically, economically and especially in terms of its history and heritage. I am also a long-standing member of the All-Party Parliamentary Group for Gibraltar.

As an erstwhile member of the European Union Committee, I congratulate my noble friend Lord Boswell on the way in which he introduced this debate and his committee for its comprehensive, first class report. It succinctly and clearly covers the economic, border and sovereignty issues and the uncertainties resulting from our referendum decision. Although all our overseas territories have been affected in one way or another by Brexit, Gibraltar is the only one in Europe and is most at risk. I had always hoped that, under the umbrella of the European Union, it would have been possible to sort out some of the challenges and issues with Spain which have made life so difficult for Gibraltar in the past.

I also know Spain well and have many friends there. I find it hard to believe that the Spanish Government would try to exert undue pressure and heavy-handed controls during the period of the Brexit negotiations or, indeed, once we are out. I understand the fears. We have all had experience of the past, such as the queues and delays at the border and the airport problems. Let us hope that the newly arrived Spanish ambassador to this country will be watching or at least listening to this debate and the signals it sends out.

I welcome in particular the setting up of the dedicated joint ministerial council, and I trust that it will ensure, to some extent, a less uncertain feeling about the future for Gibraltarians. I hope that it will also give the Government of Gibraltar the realisation that the United Kingdom Government are giving Gibraltar a special place and space in the negotiations.

As has already been said, the key issue for Gibraltar is access to the single market and services, as well as the border issues and air flights. If a week is a long time in politics, two years gives us an opportunity to use ingenuity, imagination and circumstances as they change to find a solution. This has to be the main concern of the joint ministerial council. If the Minister could give us more information as to the council’s agenda, that would be very welcome.

My special interest in Gibraltar started when, after the first direct elections to the European Parliament in 1979, as a newly elected MEP, I was asked to be one of a small cross-party group to keep an eye on Gibraltar’s interests. That was when Sir Joshua Hassan was First Minister, and the late Lord Bethell led the group. At that time, the big issue for Gibraltarians was voting rights to the European Parliament. Eventually, a solution was found. I hope that those MEPs who benefit from Gibraltarian votes are also looking to protect Gibraltar’s interests.

It seems to me that anyone who knows Gibraltar loves Gibraltar and its people, and that must augur well for the future. Loyalty should be repaid by loyalty.

Photo of Lord Hoyle Lord Hoyle Labour 8:54, 21 March 2017

I am very pleased indeed to follow the noble Baroness: I know what a firm friend indeed she is of Gibraltar. I thank the noble Lord, Lord Boswell, for an excellent report. It gives us this opportunity to ensure that the needs of Gibraltar are not forgotten.

First, I must declare an interest in Gibraltar: an interest of which I am very proud. I am a freeman of Gibraltar. I announce that with great pride here tonight. I am not suggesting for a moment that the Government have forgotten or will forget Gibraltar; nevertheless, it is essential that we put the case here tonight and keep reminding them that Gibraltar is part of the negotiation, as well as us.

When we say that 96% of them voted to remain in Europe in 2016, we must not forget that in 2002, 98% voted to stay with us in Britain. They made their position very clear: yes, they want to remain and have access to the European market if that is possible, but, above all else, they want to remain with us. They are remarkable people. When we think about it, it is not long ago that they were totally dependent on defence. They have now turned around the economy so they are no longer dependent just on defence; financial services are very important to them. Some 90% of those depend on access to the British market, but we must not forget the other 10% which are very important to Gibraltar.

It cannot be repeated often enough that the border is essential to the economy. It has been said—but there is nothing wrong in repeating it—that every day 12,000 people cross the border to work in Gibraltar, 7,000 of whom are Spanish citizens. Gibraltar is the second biggest contributor to the GDP of the neighbouring region of Spain. So it is of great benefit to the Spanish people and the adjoining region. Emphasising that is very important.

We have been talking about the economy, but let us not forget that every year, 10 million people visit Gibraltar, and many of them come across that border. When we are having discussions with Spain—we have been good friends and allies of theirs—it is right that we put that point to them. We have heard that they have said—I do not know quite what this means and the Minister may explain it to me—that waving a passport will not be sufficient. If producing a passport is not sufficient, what are they talking about? Are they talking about limited visas? That is why this debate is essential.

I will finish by saying that the people of Gibraltar have always been good friends of the country. They want to remain in this country and we must not let them down in our negotiations on Brexit.

Photo of Viscount Waverley Viscount Waverley Crossbench 8:58, 21 March 2017

My Lords, the Gibraltar quagmire is easy to define but mighty difficult to resolve. The cocktail of complexities is varied and impacts on all participants. The challenges of a determined Madrid, the time immemorial socialist province of Andalusia and that mother of all complexities, the Brexit negotiations, combine to defy easy resolution.

I see one of five possible alternatives. First, the tempting old adage, “When in doubt, do nothing” seems in the circumstances unsustainable and should be discounted. Secondly, we could revisit 2004 when the El País editorial of the tercentenary, advocating the benefits of tripartite talks, were given more credence as both Madrid and London then hosted socialist Governments. Thirdly, we could bring balance to the table and recognise that there is indeed a fourth participant of equal standing to the people of Gibraltar: namely the people of Andalusia. Fourthly, we could constitute confidence-building initiatives resulting from regular civil society-led discussions, possibly with bilateral members as observers.

Red lines should be removed to allow co-operation through civil society to take centre ground to define and develop mutually beneficial goals and objectives. An important consideration is that discussions and decisions should reflect the wishes of the people most affected. Consent is key. The status quo is not an option now that the Brexit negotiations are about to begin. After all, as has been said throughout this evening, 96% voting to remain does suggest a willingness to engage. While first and foremost it is clearly for the people of the region to decide, I firmly believe that Gibraltar’s future long-term prosperity must be rooted in mutually beneficial regional co-operation.

Might I then suggest that the centre ground of Seville be a convenient location for talks, and possibly also an ideal location for a long-overdue Gibraltar representative office? A view held in certain quarters among Spanish politicians has suggested that sovereignty need not be on the table. Rather, matters including the environment, free exchange of financial information and police co-operation—from terrorism to drugs—were considered more essential. Some time ago it had been agreed that access to medical assistance was on the table, including reciprocal recipient and donor transplant exchange using Andalusian hospitals.

Interestingly, the socialist parliamentary group in the Cortes, the Congress of Deputies, through its deputy for the province of Cadiz, presented on 9 March just past a non-legislative proposal in relation to the commercial customs checkpoint at La Línea de la Concepción and the non-commercial frontier checkpoint with Gibraltar. This will be submitted to debate and vote in the Committee for Foreign Affairs and Co-operation, possibly as early as next week. If it passes that hurdle, it could proceed to a vote and possible adoption by the Cortes as a whole. This is a development inviting close scrutiny and continued interest.

The noble Lord, Lord Boswell, might wish to consider forwarding his committee’s report to Spanish local and national officials most exercised with Gibraltar, including the Parliaments in Madrid and Seville. Engagement, after all, is everything at this critical juncture. I have little doubt that HMG recognise the anomalies and possible complicating consequences of the country at large voting to leave. HMG will not wish to have their overall Brexit negotiation strategy frustrated but will also not wish to be held hostage to this complex issue. Positive results can come from dialogue and could divert looming dark clouds.

Photo of Baroness Harris of Richmond Baroness Harris of Richmond Deputy Chairman of Committees, Deputy Speaker (Lords) 9:03, 21 March 2017

My Lords, I join other noble Lords in thanking the noble Lord, Lord Boswell of Aynho, and his committee for this excellent report on the challenges facing Gibraltar—and the UK—after the decision to leave the European Union. As the report says—I quote from the summary—

“Negotiating on Gibraltar’s behalf, the UK Government will be responsible for ensuring that Gibraltar’s voice is heard, and its interests respected, throughout the Brexit process. The UK also has a responsibility to support Gibraltar in benefiting from any opportunities that arise following Brexit, including by participating in any new international trade deals”.

My interest in Gibraltar stems from having helped the Gibraltar Defence Police a number of years ago to come to a happier place when it was being threatened—I use the word advisedly—at that time with a merger with the Royal Gibraltar Police, in itself a seemingly reasonable move. Unfortunately, it was anything but, and was being handled appallingly by our own MoD and the commander-in-chief on the Rock at that time. Fortunately, a change of Government in Gibraltar, and a change of personnel at the highest level—plus some timely and much welcome advice—helped calm things down and a few years later we found an amicable move towards the merging of the two forces, which undertake different duties, to the mutual satisfaction and benefit of the security of Gibraltar and its citizens.

I mention this as Gibraltar is a dependent territory of the UK, as the report says. We have an absolute responsibility and a fundamental duty to ensure its security—militarily and economically—once we leave the EU. Chapter 3 of the report talks about the frontier with Spain. As we have heard, this is one of the most important areas we have to address. Gibraltar’s strategic location affords the Royal Navy unique naval intelligence, including the ability to monitor nuclear-capable submarines, which is crucial for our contribution to NATO. Spain has consistently sought to detract from Gibraltar’s military role, especially as it provides services to the US and NATO, and believes it is better placed to control the Strait of Gibraltar than the UK, and so displace the UK’s strategic role in the region. Spain encroaches on British Gibraltar territorial waters frequently and this poses a very real threat to our global military and strategic interests.

Brexit also poses an enormous challenge to the economic status quo in Gibraltar. As we have heard, at present more than 12,000 people cross the border daily for work, making up 40% of the entire Gibraltar workforce. As noted in paragraph 48 of the report, any arbitrary closing of the border will cause enormous harm, and an abrupt exit from the single market—which this Government seem intent on inflicting—will have dire consequences for Gibraltar, with an immediate 10% loss of business. We must consider the needs of the Government and residents of Gibraltar, who have put their trust and loyalty in the UK. We have an absolute moral duty to do that, as the report states in paragraph 110. At the moment, Gibraltar is fearful of the future, as there is absolutely no clarity on how we will actually leave the EU. If the Government persist in telling us that they cannot divulge their negotiating stance, how does that help Gibraltarians? Do they have to spend the next few years wondering what their future will be?

Given the issues we face, we must ensure a smooth and productive working relationship between the Governments of the UK and Gibraltar. This report highlights with utter clarity the realities of this need and I commend it wholeheartedly. We must recognise the inextricable bonds between the people of the UK and the people of Gibraltar, whether at the governmental, military or community level. Our histories are intertwined and we must redouble our efforts to ensure that our futures remain so.

Photo of Lord Hannay of Chiswick Lord Hannay of Chiswick Crossbench 9:07, 21 March 2017

My Lords, I begin by declaring an interest, albeit one lost in the mists of time and, indeed, outside the timeframe covered by the excellent report which we are debating this evening. A little over 45 years ago, I was part of the team which negotiated the terms of the UK’s—and thus Gibraltar’s—accession to the European Communities. In truth, we got a Goldilocks deal for Gibraltar: outside the customs union, exempted from the requirement to introduce a value added tax and inside what became, over the years, the biggest single market in the world. That deal has stood the test of time, which is attested to by the fact that 96% of Gibraltarians voted to remain last June. To complete my declaration of interests, some 35 years ago I was sent to Madrid by Lord Hurd of Westwell—then Minister for Europe at the FCO—to persuade the Spanish Government that they needed to open their border with Gibraltar if there was to be any chance of their EU accession treaty being ratified by this Parliament. The Spanish Government were so persuaded, and the border was reopened.

This declaration of interests is no vanity project. It reflects the reality, recognised by the Gibraltarians themselves, that Britain’s—and thus their—membership of the EU has been the basic cornerstone of their prosperity today. That cornerstone is, alas, about to be removed. I do not know whether those who campaigned for Britain to leave the EU really understood what their success might mean for Gibraltar. Given that many of them are among the most vociferous parliamentary supporters of Gibraltar, if they did understand then this was a shameful act of betrayal. But let us give them the benefit of the doubt: they acted in ignorance. They threw Gibraltar under the wheels of that infamous battle bus, without having a clue what they were doing. They broke it, and we own it.

What can be done? Well, there is no doubt what would be best for Gibraltar—that is, the status quo. But the status quo is not on offer, because Gibraltar’s status depends on the UK’s status. If noble Lords do not believe that, they should read the treaties of Utrecht and of Rome and our own accession treaty. We are set to become a third country in 2019—and Gibraltar’s border with Spain is set to become an external border of the EU, with all that implies. The Prime Minister has stated that she excludes the possibility of Britain remaining in the single market.

So what can be obtained for Gibraltar from an EU shorn of our membership? That remains to be seen in the negotiations about to begin but—in one of those superbly British understatements—the report we are debating, in paragraph 111, states:

“We note, however, that Spanish opposition may present an insuperable barrier to any perceived special treatment for Gibraltar”.

There you have it; the report did not need to say a word more than that. I wish the Government well in their endeavours to save something from this unintended shipwreck, but I do not envy them. Next time the Foreign Secretary makes one of his “sunlit uplands” speeches about Brexit, or says that it will be perfectly okay if there is no deal, he might first take a look towards the Rock of Gibraltar—at the dark clouds gathering there, caused by the very success of his own endeavour to remove us from the European Union.

Photo of Lord Suri Lord Suri Conservative 9:12, 21 March 2017

My Lords, this report made for fascinating reading. So often in the debate that has engulfed this place and another place, we are told of the importance of keeping a soft border on the island of Ireland. However, Gibraltar is, as the Under-Secretary of State in DExEU said, “part of the British family”. I was gladdened to see the Under-Secretary travel over to Gibraltar recently to restate his commitments.

Ensuring the softest possible border between Gibraltar and Spain must remain a priority of the Government, and I am pleased to see them take it seriously. The Spanish Government have used Brexit as another opportunity to call for joint sovereignty over the Rock, but I repeat again the words of the Treaty of Utrecht, which cedes to the Crown,

“the full and entire propriety of the town and castle of Gibraltar, together with the port, fortifications, and forts thereunto belonging; and he”— the Catholic king—

“gives up the said propriety to be held and enjoyed absolutely with all manner of right for ever”.

This report covers a number of important points. I welcomed the submission by the Government that EU funding commitments would be guaranteed by the Treasury until 2020. However, given that the final deal, if there is one, will come into force at roughly the same time, I would wish to see a more long-term commitment, perhaps until 2025, in order to start, post Brexit, with a clearer base and offer more certainty.

As I have called for before in relation to arts funding here, this report is refreshingly clear on the risks faced by Gibraltar especially from any cliff-edge removal from the single market. This should further focus minds on the importance of having a short-term transitional deal, about which both the Secretary of State for DExEU and the Prime Minister have signalled in favour. The fundamental point is that Gibraltarians were given a vote in the referendum and are being brought out despite being the most pro-remain voting district. The ultimate responsibility for ensuring that Gibraltar does not suffer lies with the Government. If its access to the single market is limited and prosperity is threatened, the Government should be prepared to further open up the British single market to ease financial pressure. In any case, the vast majority of Gibraltar’s business in the single market is with the UK.

The border with Spain is already fairly hard, given that Gibraltar is out of the Schengen zone and the customs union. It should be borne in mind that people having the freedom of movement to work in industries such as financial services and online gaming remains an abiding concern. If Spain were to make it harder for Spanish citizens to go to well-paid, secure jobs in Gibraltar, that would be an act of extreme pettiness, but it should not be ruled out. However, it would be surprising, given the ameliorating tone that Spanish diplomats and their Prime Minister have taken, calling for “calm” and “good negotiations” with reference to Article 8 of the Treaty on European Union.

Overall, I welcome the assurances given by the Government on funding and keeping sovereignty with the Crown, and I think that the focus of this report on negotiating as a single state with no bilateral Spanish talks is sensible, as is the rejection of a microstate-style status. The Government ought to bear in mind their responsibility to Gibraltar, and I have all confidence that they will.

Photo of Lord West of Spithead Lord West of Spithead Labour 9:16, 21 March 2017

My Lords, I first visited Gibraltar by sea in September 1948 and have done so dozens of times since, and I know it well. I intend to speak only on the military significance of Gibraltar to the United Kingdom, the United States and NATO in this troubled and ever more chaotic and dangerous world.

Gibraltar commands one of the world’s seven key strategic global choke points for maritime trade. It is a southern outpost of Europe facing the north African littoral, from which we are able to monitor all surface and sub-surface traffic through the strait, and it is important in tension and war but also in combating terrorism. One thousand miles closer to the Mediterranean, the Middle East, the South Atlantic and the West Indies than the United Kingdom, its strategically important location has proved invaluable for three centuries.

With large dry docks, as well as oil fuel and ammunition storage supported by air links to the UK, its maintenance capability has proved of crucial importance on numerous occasions. Gibraltar’s naval docks and storage facilities are important today, with British and US nuclear submarines frequently visiting the Z-berths. Indeed, the US would like to make more use of Gibraltar, preferring it for security reasons to Rota, but it is constrained by the Spanish attitude to such visits.

Gibraltar’s position makes it important in combating Islamic terrorism based in the Sahel or north African littoral. It is also a useful base from which to conduct trials and training in rather more benign sea conditions than are found around the western UK. Our military presence on the Rock has been reduced to a minimum but is sufficient to ensure maintenance of sovereignty. Having said that, I believe that the Gibraltar squadron boats need to be rather more powerful and heavier, so possibly should be enhanced.

The constant infringement of Gibraltar’s territorial seas by Spanish vessels is completely inexcusable, not least as she is a NATO ally. It is to be hoped that Brexit will not be used as a reason to heighten tensions, because it is extremely dangerous when you do that sort of thing: things can escalate and go beyond what anyone wanted.

In purely military terms, Gibraltar and its brave, resolute people are important to the security and stability of our nation and NATO in this very dangerous world.

Photo of Baroness Butler-Sloss Baroness Butler-Sloss Crossbench 9:18, 21 March 2017

My Lords, it is always a great pleasure to follow the noble Lord, Lord West of Spithead, who, I notice, has been engaged in something of a marathon with this, his second speech this evening.

I first went to Gibraltar in 1949 as a teenager with my father, and I have been going there ever since. I very much admired the report produced by the committee chaired by the noble Lord, Lord Boswell, as well as his very valuable speech at the beginning of this useful debate. I am a vice-chairman of the Anglo-Gibraltar parliamentary group, of which I am proud to be a member.

Gibraltar, as we all know, has a special position as part of the European Union—but, as we also know, is set to leave. It is staunchly British in its support of the United Kingdom and is a thriving centre of excellence, despite Spain’s constant interference and incursions, which the noble Baroness, Lady Harris, mentioned. It is abundantly clear that during the Brexit negotiations and post Brexit we must publicly and effectively support Gibraltar in all the situations that may arise in which that will be necessary, including continuing threats from Spain. The Government have, I am glad to say, promised again and again to do so, and they must carry out their promise. That is something that others have said, and I just follow.

I would also like to speak briefly about something completely different—the Criminal Finances Bill, which I think has its Committee stage next week. Gibraltar, which is potentially affected by it, is happy with the intentions of the Bill, but is understandably concerned about possible amendments. Some were tabled in the Commons, but fortunately they were unsuccessful.

Gibraltar has a commitment to transparency in the financial services sector, and is used as an example for other jurisdictions. It is committed to the central register of beneficial ownership under the EU anti-money laundering directive; it works closely with the United Kingdom Government on financial issues; it has an excellent record on the exchange of information, recognised by the OECD; and it has the same rating on that as the United Kingdom. I am sure that we in this House all hope that Gibraltar will remain a strong financial centre, whatever may happen in the future.

I must therefore tell Members of this House that it is very important that inappropriate amendments, which are being suggested by some Members, should not be allowed to have any adverse implications for Gibraltar. This measure must not be allowed to be to the detriment of Gibraltar. I therefore ask your Lordships to watch what any amendments tabled to the Criminal Finances Bill actually say. We must be sure that they are not passed—because if they are, there will be an opportunity for Spain to denigrate Gibraltar’s financial services, which would obviously be to the detriment of Gibraltar. We must not allow Spain that opportunity.

Photo of The Earl of Dundee The Earl of Dundee Conservative 9:22, 21 March 2017

My Lords, I begin by thanking the noble Lord, Lord Boswell of Aynho, and his committee for their excellent report. In referring to our obligations toward Gibraltar, I shall talk briefly about the sovereignty question and how it connects to certain obvious economic priorities, yet how both matters together perhaps call for a new approach and structure, which we should now start to devise.

On sovereignty, the key aspect is the preference of the Gibraltarian people. They are fiercely loyal to the United Kingdom. Post Brexit that is still the position, although, as has already been said, 96% supported the case for the UK to remain in the EU. Correctly, the report endorses the UK Government’s view. This is to reject Spain’s proposal for joint sovereignty as the only way for Gibraltar to retain its relationship with the EU—for it does not want joint sovereignty.

This, of course, sets the main theme, which is that of principle and the expression of democratic will. Clearly these transcend economic and other issues. Nor in any case are they necessarily even inconsistent with other considerations. Democracy and human rights also form the priorities of the affiliation of 47 member states, including Spain, of the Council of Europe—of which the UK, post Brexit, remains an important member. Does my noble friend the Minister therefore agree that it is within this simultaneous context of principle and mutual practical advantage that dialogue and understanding between the UK and Spain should now be progressed?

There is also the need to protect sovereignty, not just immediately but in the long term. The report draws attention to that distinction, and to Gibraltar’s later vulnerability when, post Brexit, the UK is “out of the room”. In view of this, what steps will the Government take under international law to help prevent the undermining of Gibraltar’s future preferences?

No doubt economic anxiety will persist for as long as it takes new deals to be struck. Yet does my noble friend concur that there are a few commitments which, if now given by our Government, would serve considerably to reduce Gibraltar’s current plight of economic uncertainty? Such are also recommended by the report.

First, there should be clarification of what future UK-based funding beyond 2020 can be accessed by Gibraltar if it should not be able to benefit from EU programmes after Brexit. Secondly, arising from our moral duty towards it, emphasised by the noble Lord, Lord Boswell, and others, there should be an undertaking that, post Brexit, any new international trade deals for us will also be designed to benefit Gibraltar. Thirdly, there should be an early and timely negotiation with Spain jointly to endorse the local border traffic regulation, EC 1931/2006, and as pointed out by the noble Lord, Lord Luce, so guarantee the movement of labour between Spain and Gibraltar, in which regard Spain, Andalusia and the Campo de Gibraltar region stand to gain along with Gibraltar itself.

Then there is a much wider priority shared by Spain and the UK: joint co-operation on security and policing reflecting the importance of the European arrest warrant, to which the noble Lord, Lord Luce, has referred, and which prevents those wanted for crimes from escaping justice by crossing the EU’s external border, in either direction.

Does my noble friend concur that detailed government attention to these various matters, as advocated by the report and as strongly supported by many of us today, would in itself help a great deal to construct a new and lasting framework? Within which our responsibilities can be discharged, good practice advanced and Gibraltar’s sovereignty and economy best protected.

Photo of The Earl of Kinnoull The Earl of Kinnoull Crossbench 9:26, 21 March 2017

My Lords, it is a pleasure to follow the noble Earl, Lord Dundee, who spoke with his customary acumen and clarity. I remind the House that I am a member of the EU Select Committee. I start by thanking the Select Committee staff for the sustained high quality of their output. I note that this was the 11th Brexit report, which now number 15, that has been produced since 24 June last year, with more in the pipeline. I also pay tribute to the noble Lord, Lord Boswell, for his leadership of the EU committee structure and his continued and continuous good humour.

I want to make just three brief comments tonight. The first relates to the context of the report, and in particular the special nature of the relationship between citizens of the UK and those of Spain. I dare say that there are many here tonight who have, as I have, a long history of enjoyable experience of both business and leisure in Spain. While I hang no argument on that, this proximity is borne out by the numbers: 310,000 UK citizens live in Spain and 125,000 Spaniards live in this country. In addition, there was much evidence in our inquiry of this citizen engagement, not just the economic interdependence described by many noble Lords tonight but friendliness at the citizen level, including that described in paragraph 58 for instance: unofficial and commendable police and customs co-operation. It would be a travesty if politicians mucked this up and a great detriment to many lives. Can the Minister confirm that this citizen-led warmth will be hammered home during the Brexit discussions?

The second area that I want to touch briefly on is the way in which the Gibraltarians are approaching matters. In evidence, we met three in person, including the Chief Minister and the Deputy Chief Minister, who are here tonight. Other Gibraltarians gave us written evidence. Their contributions were without exception measured, constructive and helpful, while remaining strong in advancing Gibraltar’s position. It would be very helpful if the Minister recognised that and confirmed that the Government will maintain their current level of engagement with Gibraltar during the Brexit process.

My third and final point concerns the local border traffic regulation. In our report we discuss this from paragraph 62 onwards and describe it in detail in box 1 and appendix 3. In the time available for our inquiry, we were not able to take any evidence on how such agreements are working elsewhere. However, our staff did reference a 94-page report, a copy of which I have with me, published in November 2012, and the news is good. The report, Ex Borea Lux?, on cross-border co-operation on the EU’s eastern border, was prepared by the Institute for Stability and Development and funded by the Finnish and Norwegian Governments. It details the experience of a number of successful situations where local border traffic agreements have been concluded, particularly between Finland and Russia and Poland and Russia. Will the Minister comment on the use of this regulation as a potential route to consider for the Gibraltar/Spain land border post Brexit?

Photo of Lord Collins of Highbury Lord Collins of Highbury Opposition Whip (Lords), Shadow Spokesperson (Foreign and Commonwealth Affairs), Shadow Spokesperson (International Development) 9:30, 21 March 2017

My Lords, I too thank the noble Lord, Lord Boswell, for his excellent introduction and for the excellent report of your Lordships’ sub-committee. I also welcome the Chief Minister, the Deputy Chief Minister and other representatives from Gibraltar who are here tonight.

My first visit to Gibraltar was in 1984, just prior to Spain fully reopening the border. I was there to meet T&G representatives of the 6,000 Moroccan workers who were then critical in maintaining the economy of Gibraltar. As we have heard, over recent decades the development of Gibraltar’s economy has been underpinned by access to the EU single market and the pool of more than 10,000 workers who cross daily into Gibraltar.

However, what matters most to Gibraltar, and will do in the future, is access to the UK market for its services. Britain and Spain have a mutual interest in good relations. We invest and trade with each other on a huge scale. According to a leaked report to El País from the Spanish Brexit commission, the UK’s departure from the EU will leave Spain hugely exposed economically, with tourism and the food, pharmaceutical and automotive industries being hit the hardest, together with the innumerable repercussions for the hundreds of thousands of Britons who live in Spain and the hundreds of thousands of Spaniards in the UK. I declare an interest as one of those citizens is my husband.

I hope the committee’s aspirations for all parties to work together positively and pragmatically to secure an agreement that reflects all their economic interests will be the primary factor in negotiations, rather than what Spanish sources allegedly told El País, which was simply not to do mutual damage. The framework behind the Brexit negotiations must be the absolute commitment of the UK Government never to enter into sovereignty discussions against the will of the Gibraltar people.

In their White Paper on Brexit, the Government said that Gibraltar’s interests and priorities will be expressed and understood through the new joint ministerial council. At the conclusion of its second meeting held only a few weeks ago, the Minister, Robin Walker, promised to continue engagement with Gibraltar throughout the negotiations. It is vital that the people of Gibraltar have confidence in that process and that its Government are fully involved. Will the Minister give us more detail on the engagement process once Article 50 has been triggered next week? What priority will be given to Gibraltar in the Government’s formal notice to trigger Article 50? Will the Gibraltarian Government be part of the negotiation team when matters affecting them are considered?

EU membership has seen police and judicial co-operation. What priority will the Government give to this in the negotiations to ensure that the border with Spain cannot again be exploited by those seeking to evade justice? As my noble friend Lord West said, we should not forget the military importance of Gibraltar and its brave and resolute people for the security and stability of the dangerous world in which we now live.

Photo of Baroness Goldie Baroness Goldie Lord in Waiting (HM Household) (Whip), Baroness in Waiting (HM Household) (Whip) 9:34, 21 March 2017

My Lords, I begin by thanking the noble Lord, Lord Boswell of Aynho, for tabling this debate. I also thank the European Union Committee for its report, Brexit: Gibraltar, which provides a valuable analysis of the opportunities and challenges presented to Gibraltar by the UK’s decision to leave the European Union. The Department for Exiting the European Union is considering the findings of the report and will publish its response in the coming months—I hope sooner rather than later. I also thank noble Lords for their contributions to this debate, which has been fascinating.

As noble Lords will know, my honourable friend Robin Walker, the Member for Worcester and the Parliamentary Under-Secretary of State at the Department for Exiting the European Union, appeared before the committee in February of this year to discuss the extensive engagement with the Government of Gibraltar that has taken place since the referendum. We remain steadfast in our support of Gibraltar, its people and its economy—the referendum has not changed that—and we have committed to fully involve Gibraltar to ensure that its priorities are properly taken into account as we prepare to leave the EU. It is, as the report rightly notes, the Government’s responsibility to ensure this, and I can reassure noble Lords that it is a responsibility that we take very seriously. I wish in particular to reassure the noble Lord, Lord Boswell, on that point.

This is demonstrated by the fact that the Prime Minister met the Chief Minister of Gibraltar on the day she took office, and has had regular engagement since. As a number of your Lordships pointed out, the Government have established a new joint ministerial council for Gibraltar which is chaired by the Member for Worcester. It brings together Ministers from the UK Government and the Government of Gibraltar to discuss the opportunities and the challenges presented by EU exit. The first meeting took place on 7 December and the second on 1 March 2017, with both DExEU and FCO Ministers taking part alongside the Chief Minister of Gibraltar, the Deputy Chief Minister and the Attorney-General. I know that the honourable Mr Picardo, his deputy and the Gibraltarian Attorney-General are taking a keen and tangible interest in these proceedings. Perhaps I may also say what a pleasure it was to meet them earlier this evening.

There has been a wide range of other engagements with the Government of Gibraltar at both official and ministerial level. The Secretary of State for International Trade met with the Chief Minister of Gibraltar on Monday to discuss the valued links between our economies, and just last week the Parliamentary Under-Secretary visited Gibraltar to get a first-hand view of its unique context and to speak to representatives from across its thriving economy, from the business community to the trade unions. The Chief Minister of Gibraltar said of the visit that it,

“symbolised the relationship that exists between the Governments of Gibraltar and the UK, and is a clear reflection of the real action there is on the real pledge that Gibraltar would be fully involved in exiting the European Union”.

Mr Picardo also said that Gibraltar has had access to the highest levels of the UK Government and believes that that access will continue. I hope that that reassures your Lordships, not least the noble Lord, Lord Collins, who expressed a particular interest in how this process is working. I hope that it demonstrates that this is not just a close but an informed relationship.

Through our engagement with the Government of Gibraltar we have built an understanding of Gibraltar’s particular priorities in the EU exit. We welcome this report as an important contribution to that process and we are pleased with its finding that the Government of Gibraltar have been satisfied with the UK Government’s engagement to date. Let me reassure the noble Earl, Lord Kinnoull, that we very much welcome that relationship. It is positive and it is important.

Let me turn now to some of the issues and priorities raised both in the report and by noble Lords over the course of this debate. Perhaps not surprisingly, the economy featured consistently. There are challenges and opportunities which EU exit presents to Gibraltar’s economy. Gibraltar is rightly proud of the strong economy it has built for itself. It has the fourth highest GDP per capita and the second lowest unemployment rate in the world. The committee heard how Gibraltar’s economy has been transformed in recent decades from one dominated by military spending to a thriving and resilient economy based on financial services, tourism and commercial port services. That is testament to the hard work, creativity and ingenuity of all Gibraltarians. If I may say so, it is testament also to that vision of 20 years ago conceived by the noble Lord, Lord Luce, to whom I pay tribute.

The noble Lord, Lord Hannay, with some justification, described Gibraltar’s position in the EU as a “Goldilocks deal”. I do not disagree; it is a fairly accurate description. But I also observe that the UK has been an important support and bolster in that relationship. The UK remains and Gibraltar remains—and with that tandem of talent I am unable to share the pessimism of the noble Lord, Lord Hannay.

On market access, the report highlights the strong links between the economies of Gibraltar and the UK, particularly when it comes to financial services. For example, as others mentioned, 20% of UK car insurance policies are underwritten in Gibraltar and around 90% of Gibraltar’s trade is with the UK. The Government are clear that we should work together to maintain and strengthen these economic bonds after we leave the European Union. When it comes to financial services it is important that the strong mechanisms already underpinning Gibraltar’s access to the UK market are enshrined in UK law. That is worth remembering. The Government’s clear intention is to maintain that access.

We have also agreed that, together with the Government of Gibraltar, we will take into account the priorities of Gibraltar and the other overseas territories as the UK looks to establish new trade and investment opportunities with the wider world. This is a very important aspect of what lies ahead. The Secretary of State for International Development confirmed this position to the Chief Minister of Gibraltar during their meeting yesterday. I hope that that reassures the noble Lord, Lord Anderson, that we approach these matters positively. It was an issue to which my noble friend Lord Dundee also referred.

On the issue of access, the Government have been clear that Britain is seeking a new, strong partnership with the European Union: a partnership that maintains the close relationship we have with member states and builds further on them for both the UK and Gibraltar. Although we are not seeking to maintain membership of the single market, this agreement should allow for the freest possible trade in goods and services between the UK and EU member states. The Government are confident that if we approach these upcoming negotiations in a spirit of good will, we can deliver a positive outcome that works for all, including Gibraltar. The noble and learned Baroness, Lady Butler-Sloss, raised a somewhat technical issue to which I confess I do not have the answer: I apologise for that. I undertake to write to her to provide clarification. I noted her concern about what possible amendments to the Criminal Finances Bill might mean and I will ensure that we look at that.

A number of issues were raised in relation to EU funding. My noble friends Lord Selkirk and Lord Dundee wanted to know what lies ahead, post Brexit. I am afraid that that is not something I can comment on in detail; it is too early to say what the position of Gibraltar and the other overseas territories may be in regard to such funding, but we will continue to work closely with the Government of Gibraltar to understand their concerns in this important area.

Not surprisingly, many contributors referred to the issue of the Gibraltar-Spain border. We recognise the importance of a well-functioning border to the economy, as well as to the surrounding Spanish region and to the thousands of Spanish workers who cross the border every day. We are clear that politically motivated delays are unacceptable. They cause serious problems for people on both sides of the border and we stand ready to work with the Government of Gibraltar and the Government of Spain to ensure that the border continues to function well after we leave the European Union. We approach these negotiations with good faith and determination and in a spirt of good will.

A number of contributors raised points and I hope that I have answered them. The noble Lord, Lord Boswell, made the point about the importance of the border very powerfully, as did my noble friend Lord Suri and others. The issue of the Local Border Traffic Regulation was raised by the noble Lords, Lord Boswell, Lord Luce and Lord Hoyle, my noble friend Lord Dundee and the noble Earl, Lord Kinnoull. The UK Government are working with the Government of Gibraltar to consider all options on the crucial issue of the border. As the committee noted in its report, the Local Border Traffic Regulation would, of course, require commitment from Spain.

The noble Lord, Lord Luce, also raised the issue of police and judicial co-operation, as did my noble friend Lord Dundee. That is a very important area. We have been clear that we will do what is necessary to keep our people safe. One of the 12 objectives for the negotiations ahead is to seek a strong and close relationship, with a focus on operational and practical cross-border co-operation, to fight crime and terrorism.

By way of encouragement I can say that there have been some very good examples of how that partnership with Spain and Gibraltar has been working. Spanish and Gibraltarian agencies often co-operate to tackle issues such as drug smuggling. In January of this year, approximately €4 million-worth of cannabis was seized in a joint operation on the waters. So there is a mutuality of interest in trying to make these positive arrangements continue.

The issue that came out of the debate perhaps more cogently than any other was that of sovereignty. A number of noble Lords referred to this. I want to reiterate that the UK has reaffirmed its double-lock sovereignty commitment to Gibraltar. We will never enter into arrangements by which the people of Gibraltar would pass under the sovereignty of another State against their freely and democratically expressed wishes, nor will we enter into a process of sovereignty negotiations with which Gibraltar is not content. We will, in short, continue to stand beside Gibraltar and its people. That is the metaphorical foundation of the Rock. My noble friend Lord Selkirk made a colourful analogy when he equated the steadfastness of the Rock with the steadfastness of our relationship with Gibraltar and its people. I could not have put it better.

I am conscious of time, which is a pity as there are important issues here that I wanted to cover. The noble Lord, Lord West, asked about the strategic significance of Gibraltar in relation to defence and free maritime passage. If he will permit it, I will write to him in fuller detail on the points that he raised. Questions were also asked about the general intentions of Spain. My colleague, my noble friend Lady Hooper, made a very helpful comment in that respect, echoed by others, that is that there is a mutuality of interest in the negotiations for both Spain and the UK. That has been reiterated by the Spanish Government. The indications are that they wish to take a pragmatic and constructive approach. The Prime Minister of Spain has said that he is confident that the Government in Madrid are sitting squarely behind the objective of achieving a positive relationship between the UK and the EU after Brexit.

In conclusion, this has been an important and interesting debate, with many positive and helpful suggestions. I am sorry that I have not been able to deal in detail with all the points raised by noble Lords. I would like to end on a note of optimism. I was aware that the noble Lord, Lord Luce, is currently Chancellor of the University of Gibraltar. I had a look at its motto: “Scientia est Clavis ad Successum”. I know that noble Lords are all scholars of Latin and do not require a translation, but it is simple: “Knowledge is the key to success”.

I suggest that knowledge by the UK of what Gibraltar and the Gibraltarian people need, knowledge of what our EU partners wish to achieve and their knowledge of what we seek to achieve make a good starting point for how we embark on these vital negotiations. If we approach these matters based on knowledge, all will benefit. The UK will benefit—and if the UK benefits, Gibraltar, too, will benefit.

House adjourned at 9.48 pm.