Select Committee on European Scrutiny Minutes of Evidence

Examination of Witnesses (Questions 1-19)




  1. Minister, welcome again to the European Scrutiny Committee. I wonder if I could kick off. What are the Government's priorities for reform of the Council? Are you in favour of the responsibilities of the General Affairs Council being split into two separate councils? If you are, do you envisage one of these councils being responsible for defence as well as foreign affairs?

  (Peter Hain) Thank you, Chairman. I see Council reform as absolutely central to the future reform of the European Union. The Prime Minister has made this our priority in terms of redesigning the institutional political architecture of Europe, which we are going to do in part at the Seville Council in June but in a longer time frame during the discussions for the Future of Europe Convention where I sit as the Government representative. Essentially, and I will come directly to your question about the General Affairs Council, we want to see the Council playing a much more politically-strategic role, giving the leadership which Europe needs, which it is not doing at the moment—and this has been widely acknowledged, including by the high representative, Javier Solana, who produced a paper for the Barcelona Council and in a joint letter which our Prime Minister and Chancellor Schröder wrote. We want to see the European Council itself, the heads of government, giving decisive strategic leadership, not getting bogged down in some of the detailed issues that they have done, and as part of this, looking at a reformed presidency system, so that we do not have the instability and discontinuity inherent in the six-monthly rotation. As far as the General Affairs Council is concerned, we support the idea of a reorganisation of the GAC which, and I have sat on it myself, is a rather uncomfortable mix between a foreign ministers council and a council which is attempting to manage the general affairs of the European Union. So we favour the separation of the GAC into a genuinely foreign ministers council on the one hand, given the way Europe is now much more prominently engaged in foreign policy issues than ever before, and on the other a body which could be called a general affairs council still, I would imagine, which would prepare for European Council meetings, take many of the detailed decisions which are now dumped on the agenda of the European Council, and therefore allow the European Council itself to focus on the really big issues and provide the political leadership necessary for driving Europe forward. In respect of defence, there is already a decision, as you will be aware, Chairman, that defence ministers can meet in the GAC defence formation, which is a different issue from this particular matter. I would just make one other point, I would not rule out there being a separate defence ministers council of ministers formation in any reorganisation of the Council, and I would be happy to go into that area if you wish to press me on it, since with European Security and Defence Policy now pushing forward there may well be a case for a separate council of ministers formation specifically to consider defence matters.

  2. You mentioned there possibly reforming the presidency, have you any firm views on how you would reform the presidency?
  (Peter Hain) We start from the principle that, first of all, the presidency of the European Council should really be driving the political agenda of Europe in a way it is not at the moment, so what we would like to see is the European Council electing its president for a longer time frame than six months. It might be as long as five years to coincide with the full length of the Commission, but that is a matter for discussion and I would be interested in the Committee's views on that. Then a reduced number of council minister formations underneath, from the present number to perhaps ten or 12. Then different countries on a rotating basis allocated taking the chairs of perhaps one or two at a time for a longer period than six months, enabling the president of the council, in a sort of team presidency approach, and enabling also countries to have more of a stake in the presidency system than, with an enlarged European Union of 25, you would have under the six-monthly rotation system, when you come round once every 12½ years or eight times a century. So the idea is to get a team presidency which has more continuity, more strategic direction and more political clout, frankly. As against that, there is an attachment by a number of countries, especially the newer ones—and of course we have the prospect of ten new countries coming in by early 2004 with the decisions due at the Copenhagen Council in the middle of December—to their place in the sun. They like the idea of having a stake at the top table of Europe. Well, they will get a stake more regularly than if the six-monthly system continued. We suggested the idea of a host country where the six-monthly rotation would remain so that perhaps the informal council for heads of government, and maybe one or two other council of minister formations, could meet in the host country. But they would not be the presidency. The presidency might be organised according to the description which I gave you earlier. That would then give each country and their people a stake. It would mean in the case of the newer countries, Europe would come to Slovenia or Latvia or Malta or wherever it might be, which I think helps binds the institutions closer to the people of those countries, and of course we would be in the queue as well as would every other Member State.

Angus Robertson

  3. Minister, welcome to the Committee. There is a debate in our smaller, medium-sized neighbouring countries on this issue about how often small and medium-sized countries would chair such revolving responsibilities in the Council of Ministers. Is the UK Government position that you believe all countries in the European Union have an equality of status and all countries should have equal chairmanship rights?
  (Peter Hain) Yes, that is our position. We do not distinguish in respect of rights to chair Council of Ministers meetings or indeed in terms of the team presidency approach which I suggested. If we went for the model I suggest and, say, you had around five countries in a team presidency underneath the elected president of the Council, then smaller countries would be as entitled to assume the position chairing council of ministers meetings and therefore being in the team presidency as would larger countries. Indeed I think it is really important that with nine smaller countries coming in, Poland being the large one, if the enlargement negotiations remain on track and they all qualify, their rights are respected.

Mr Cash

  4. You have given us a very candid and broad brush illustration of the direction which the Government clearly wants to take European integration, five-year presidencies as a possibility but you seem to suggest it might be a good idea, and of course the whole question of defence and foreign policy and, as you said, the development of that in the context of the CFSP. In the context of the decision making process, what is the driving force for the increased integration in these areas? Why is it thought to be a good idea and whose policies would ultimately decide the outcome? Which policies would be adopted in terms, for example, of the majority vote which presumably would accompany the development of these integrationist policies?
  (Peter Hain) Chairman, I was described as candid by my friend, Bill, and I hope I am always candid with the Committee, and I hope the Committee values that. What is important is the model first of all that we have in mind for the future development of Europe, and our model as a government is our vision of a Europe of independent nation states rather than some kind of federal superstate.

  5. But subject to majority voting?
  (Peter Hain) Majority voting is widely at the moment conceded by all governments in the great majority of cases following the Single Market Act—

  6. That is quite different. The single market is different from European governance.
  (Peter Hain) Well, the single market matters as part of the governance of Europe and indeed a very, very important part of what the European Union is all about. There are a number of red lines on qualified majority voting—foreign policy for example, defence policy in the sense of committing our soldiers to war. I do not think a British Government, or for that matter any other European Government, would take a decision to volunteer its men and conceivably women to fight or assume a defensive role, in the Balkans or wherever it might be, on the basis of Community decision making. Foreign policy, defence policy, treaty changes, taxation, social security, borders, these are matters of vital national interest where I think we should not proceed by qualified majority voting. But, as I think I explained to the Committee last time, if you look at the anti-terrorist measures which have been adopted since 11 September, a number of third pillar items on justice and home affairs have been moved into Community competence and can proceed with qualified majority voting because it is in our interests to do that, to stop asylum shopping, to stop the situation where people can come in across the borders, as they do, and camp out on the other side of the Channel Tunnel at Sangatte. As I explained to the Committee last time, that is an example where there would be a British self-interest in getting exactly the same procedures, exactly the same systems, exactly the same regulations, right across Europe so people could not asylum-shop to end up in Britain, if that is where they wanted to go. If I just conclude, it is an important point, you are implying integrationism is some sort of pejorative term. We are not interested in integrationism for its own sake. There are people in Europe who are but we are not. I think we are now flowing with the great tide of opinion in Europe which is against the idea of a federal superstate, wants the nation state to be the foundation and building block of Europe. I think the force is with us, if I may put it that way, and talking to representatives in the European Convention chaired by Giscard d'Estaing, it is very apparent that is the majority view.


  7. Minister, I was intrigued by an earlier comment on your views of the reform of the presidency. I am tempted to prolong our discussions on that—
  (Peter Hain) I would be happy to.

  8. So would I. I am sure it is something we will return to in the not too distant future. I wonder if we could stay on QMV. In his joint letter with the German Chancellor, the Prime Minister proposed that decisions under Treaty bases subject to qualified majority voting should be decided by QMV at European Councils. What is the prospect of this being included in Solana's Report proposing specific measures for adoption at Seville?
  (Peter Hain) This is something that we are quite keen on. If we take the example of the sites, we had at Laeken the unedifying spectacle of a squabble amongst the leaders of Europe as to which agency would be sited in their own country, and it broke down in the end for a number of reasons, including the fact Italy wanted the Food Standards Agency based in Parma because Prime Minister Berlosconi reckoned they had the best ham in the world and therefore that, ipso facto, defined where this Food Standards Agency should be. Finland took a different view. That is an example of an issue and a handling of it which did Europe no good at all. In fact it was very damaging for the image of Europe in the public's mind. It should have been handled by qualified majority voting and if it had been, without everybody holding a veto as to which particular part of the action they could claim, then we could have made sensible decisions. I guess decisions like that should be prepared for in the General Affairs Council. That is a concrete example.

  9. Will the report by the Council Secretary-General on specific measures to reform the Council be submitted to us for scrutiny before it is put to the General Affairs Council?
  (Peter Hain) Sir Stephen Wall, the Prime Minister's European adviser and a very distinguished Foreign Office official, has been entrusted with negotiating with the Spanish Presidency to try and get as much movement here as we can by the time of the Seville Council, and obviously we would want to report on that. There are, of course, a number of views on it and if the Committee is able to consider this matter and let me have its views before Seville, which is in the third week in June, I would happily feed that in. There are then a number of other matters requiring treaty change, such as the election of the president of the European Council for a longer term appointment, the election of chairs of the Council of Ministers for a longer term, the team presidency of the kind I have described. Those would require treaty change so could not actually be implemented until the next Intergovernmental Conference, which is scheduled for 2004, so there is a bit of time for scrutiny before then.

Mr Cash

  10. You have just mentioned treaty change which could arise after the Convention, in the context of majority voting, et cetera, what is the Government's view about the question of changing the unanimity rule for the purposes of treaty amendment?
  (Peter Hain) We are against it.

Jim Dobbin

  11. Good morning, Minister. The aim of the Lisbon Process as far as economic reform is concerned was to create a strong and dynamic Europe which was sustainable, and of course the creation of more and more jobs of better quality. Do you think that expectations were raised too far as far as jobs were concerned on that particular issue? As regards the economic reform, how much progress has been made?
  (Peter Hain) As you will be aware, the Lisbon economic reform agenda, which was essentially a British agenda adopted unanimously but, frankly, with varying degrees of enthusiasm in some areas, especially energy which I will return to, was absolutely crucial to making Europe more competitive. Europe is around 40 per cent less competitive in productivity terms than the USA for example, and with the competitive threat from the Far East, China in particular, Europe needs to be more competitive. That is why this ten year programme aimed at creating 20 million more jobs, to create in Europe the world's most advanced information technology society, was established. We have already created over the last few years 5 million of those jobs, although there has been an economic slow-down happening more recently. There has been progress. For instance, in telecommunications liberalisation, the price of long distance phone calls has fallen by half across the European Union over the last couple of years. So there is progress. We did make important progress on energy, on financial services, and on other matters which I am happy to go into, but it was absolutely crucial at Barcelona, after the process appeared to stall at Stockholm the year before under the Swedish Presidency, that the impetus was regained, and indeed that was the case.

  12. The Commission is in the process of presenting proposals to reinforce economic policy co-ordination in 2003, how do you think co-ordinating economic policy can be reinforced further without national economic sovereignty being undermined?
  (Peter Hain) First of all, taxation, for example, is a matter of national economic policy, and as far as we are concerned it will remain that way. That is not exactly a unanimous view across Europe but it is certainly a big majority view. On economic policy co-ordination, it is important for example we pursue the Lisbon Agenda, and we made progress on this at Barcelona, following many of the policies we have adopted in the last five years as a Labour Government, investing more in skills, up-grading our educational base and so on. So there is co-ordination of policy to that extent, though there is no Community competence in educational skills so it is a matter of co-ordination of policy. Of course, the countries in the euro-zone effectively do co-ordinate their policy because they have a common interest rate, and the decisions on that level obviously affect wider macro-economic policy. So in terms of modernising the infrastructure, whether in financial services, whether in research and development, whether in reducing the burden of regulation on small businesses, whether in labour market reform, all these areas are areas where we can co-ordinate economic policy, some of them at micro-level rather than necessarily at macro-level. I would like to see the commitment to full employment which we have made our standard under this Government in Britain being adopted right across Europe as well.

Mr Connarty

  13. Welcome, Peter, to the Committee. One of the concerns that I have and a number of people have is that the agreements which have been advanced across Europe are in some areas seriously disadvantaging the United Kingdom. One example is in financial services. I have certainly been reading material from the financial services industry which is concerned that the way we implement the regulations—I think somebody called it "goldplating"—actually causes great disadvantages to the financial services industry in both London and Edinburgh. So the question is, what safeguards do we have? Similarly, there is the present state of chaos in the air traffic control industry and open skies, for example, which proposes a three-year licensing period when we have in fact struck a deal based on 30-year licensing for what I think is a botched-up method of part-privatisation of air traffic control, that will in fact disadvantage the industry in the UK. I am going to come back later with a specific question on other examples. It is basically the way they are implemented. Other governments protect their big players and we do not. What safeguards can we have that this Barcelona Agreement will be rolled out on an equal basis across Europe without once again the UK ending up disadvantaged in some key areas?
  (Peter Hain) For example, through energy liberalisation, where we got—

  14. I am going to come back to energy liberalisation.
  (Peter Hain) In that case I will hold my fire until that point. I think you have made a very fair point about goldplating. We have an honourable tradition in British Governments of implementing things as the text says we should do, and that is not always done elsewhere, to be frank. But looking at things in the round, bearing that in mind and I have been very open in my answer to you about it, Britain has not done too badly, in fact we have done rather well since we have been in Europe, and we have done rather well, especially if I may say so, in the last five years, whatever hindrances that problem might have produced. If you look at the opportunities, for example, for the financial services industry, where Barcelona saw an important step towards the completion of the single market by 2005, that will give our savers better returns and our businesses access to cheaper capital and an ability for Britain's financial institutions, which are pre-eminent in the world, to find extra business and make extra returns right across the European single market. The seven key directives which were agreed will be adopted by the end of the year and it is estimated that completing the single market in financial services will boost European GDP by 0.5 per cent, including in Britain. So that is a concrete example of how we actually gain out of it. The energy decision was another one. On the single skies initiative, a quarter of European flights were delayed by 15 minutes or more in 2000, and even a 25 per cent reduction in these delays would save the air transport industry and the public £1.5 billion a year. So these measures are all to our advantage and that is why we agree them.

Mr Tynan

  15. It would appear there is an opportunity for some kind of consistency between the objectives on the Social Agenda and Employment Agenda as regards the European Union. You have made the point as regards full employment, there was in the Conclusions a re-emphasis on full employment as an essential goal of economic and social policies. Did the Council in your view strike a satisfactory balance between its concern to raise the employment rate and that of preserving social protection?
  (Peter Hain) I think so. I know there was a lot of debate around Barcelona, to which you may be referring, saying that a neo-liberal agenda had been adopted and we had become as a government a party to that. I think that is wrong and is far too simplistic. The most important right in this area is the right to work, and the whole cornerstone of the labour market reform agenda adopted in Barcelona and the economic programme in which it was situated, is to create full employment, as we have pretty well moved towards achieving here in Britain, to make it easier to get work, to create greater job flexibility but at the same time to underpin that with vital labour market social standards, provided by the Social Chapter, provided under a number of EU Directives and indeed our own legislation. So I think the balance is about right. We are not adopting an American hire-and-fire neo-liberal economic policy, and certainly not on labour market policy, but we are wanting to make it easier for people to get work and easier for companies to gain the greatest productivity from their staff underpinned by high social standards.

  16. Do you believe there is a trade-off between moving towards a more competitive and dynamic economy on the one hand and greater social cohesion on the other?
  (Peter Hain) I think the two go hand in hand. I do not accept that you have to dump social standards and employee rights and standards in the quest for greater economic efficiency. I think you have to reduce rigidities and inflexibilities in the system because it enables businesses to do better and the economy to do better and, as we have seen in the last five years, more than a million more jobs have been created in Britain as we have followed this agenda, but there are also more trade unionists in Britain than there were in 1997. What strikes me, comparing our record across Europe, is that we have things to learn in respect of investment, we are still lagging on investment, in productivity terms we are still behind Germany and France, in our skills base and in our research and development levels. However, in terms of employability and employment compare us with France, for instance, which is very much in the news this week, French unemployment is 9 per cent where ours is 5 per cent, although France's rate has been coming down. So it is possible, and indeed that is our objective as a Labour Government, to have high social standards and a foundation of minimum employment standards with the right to work being paramount and people being given the opportunity to work.

  17. You say in your letter on the Synthesis Report that the summit set the framework for the 2002 mid-term reviews of the Employment Strategy. What exactly did you mean by that?
  (Peter Hain) Simply that we would want to keep under review Europe's ability to reach a target of full employment at a time when unemployment across Europe and outside Europe has been rising. It is not a universal picture in every country and the problems in East Germany have weighed very heavily on this picture, but it is the case that the world slow-down since 11 September has meant that Europe has been going through a difficult time in employment terms and therefore we wanted to keep under review the extent to which we were achieving the full employment objective and whether the policies necessary to secure that were being implemented.

  18. Do you think the Council reinforced the Employment Strategy? How do you think they improved the EU's chances of meeting its goal of full employment by 2010?
  (Peter Hain) By adopting this range of measures from energy liberalisation to cut energy costs, although I do not want to dwell on that too much, to financial services liberalisation, labour market reform, all of these matters, underpinned by sound macro-economic policies, I think that will position Europe much better for the future.

Angus Robertson

  19. Can I move on to the role of the social partners. In a previous life, when I lived on the Continent, I was a member of a Works Council for a number of years and active in social partnership in Austria, which has a very developed social partner model. Part of the recent discussions have been for reinforcement of social cohesion through social partnership. My observation is that the UK is light years behind the social partnership model in Germany, Austria and other countries, and I would be interested in your thoughts about how the social partnership model might be enhanced in the UK.
  (Peter Hain) This is something which is continuously being addressed by colleagues in Government, especially by the Secretary of State for Trade & Industry and the Minister of State responsible. It is something that I personally am very strongly in favour of. I think you get a more productive, healthier economy especially in a modern context where skills, employee commitment and high levels of education and participation in business are so crucial to their success. The old caricature of, as it were, authoritarian management on the one hand and a remote workforce which does what it is told on the other, cannot work in the modern world, and therefore the principle of social partnership is very important.

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