UK Open to Discussing EU Cohesion Fund Payments for Access to Electricity Market

Britain is prepared to talk about paying into infrastructure schemes in the poorer parts of the European Union in exchange for access to the European electricity market. That is the position of Hamish Falconer, the cabinet minister in charge of renegotiating the UK's relationship with the bloc, who spoke to the Guardian on Monday.

Falconer said he was sure the two sides would take up the question after this month's summit. The British government, he stressed, has not signed up to the idea. Five European leaders had said over the weekend that they welcomed the UK's wish to join the electricity market but that Britain would have to pay into a so-called cohesion fund to do it. "We have not accepted that principle," Falconer said, adding that he understood this was what the EU had asked for. "Again, this is something no doubt we will discuss."

The cohesion fund exists to promote economic development in the bloc's poorer regions. That makes the subject politically delicate in London, where officials will be wary of any arrangement in which British taxpayers' money ends up financing infrastructure in central and eastern Europe. The talks sit within a broader push. Andy Burnham, the prime minister, has said he wants a much closer relationship with the EU and has even raised the possibility of rejoining as a full member. Senior figures in Brussels have said they are keen to discuss that, but they also want the UK to start paying for access to the European schemes it says it wants.

The defence fund shows how such negotiations can fail. Last year, talks on Britain joining the EU's €150bn (£125bn) defence fund collapsed over the size of the UK contribution. The UK had wanted to be part of the first round of the Security Action for Europe (Safe) fund, a low-interest loan scheme within the EU's effort to grow defence spending by €800bn. EU officials suggested an entry fee of up to €6bn, far above the administrative fee the government had expected. Falconer called it "a real shame" that the UK was not part of the scheme, said the terms were clearly ones Britain could not agree, and said many of Britain's friends in the EU felt the same. He hopes for a "Safe2" that the UK could join on reasonable terms.

Next week's summit, on 20 November, is keenly anticipated. Falconer hopes it will go "some real distance in undoing some of the harm that Brexit has done". Negotiators hope to sign deals on food and drink, carbon emissions and youth mobility.

The youth mobility scheme has a crucial sticking point: demands for home tuition fees for EU students at UK universities. The Guardian reported last week that the UK was prepared to spend up to £450m a year to give EU students discounted fees if Brussels allowed Britain access to the Made in Europe industrial programme. Falconer acknowledged that several member states want it made easier, and cheaper, for EU students to come to Britain. That, he said, falls outside the common understanding and would need different arrangements from those envisaged when talks began. He said there is real interest on the EU side and that the UK is engaging, but he would not discuss details.

He was more openly positive about Erasmus+. The UK left the student exchange scheme under Boris Johnson's Brexit deal in 2020 and will return next year, with participation open not just to universities but to schools and colleges. Falconer hopes applications for young British people will open around the start of the summit.

He rejected Nigel Farage's criticism of Erasmus and the youth mobility scheme as opening the door to uncontrolled immigration. Young people travelling, studying and taking part in exchanges make a big difference to lives, he said, and he called Farage "a big old grinch" who should "give his head a bit of a wobble". What to watch next is what the summit delivers on 20 November, and whether the cohesion fund question arrives at the table afterwards.