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Road Traffic Reduction (National Targets) Bill

Brought from the Commons; read a first time, and to be printed.

27 Apr 1998 : Column 12

European Communities (Amendment) Bill

3.7 p.m.

Lord Whitty: My Lords, I beg to move that the House do now again resolve itself into Committee on this Bill.

Moved, That the House do now again resolve itself into Committee.--(Lord Whitty.)

On Question, Motion agreed to.

House in Committee accordingly.


Resumed debate on Clause 1: Amendment No. 10.

Lord Bruce of Donington: The Committee will recall that Amendment No. 10 deals specifically with the items set out in the new Title VI on page 29 of the Amsterdam Treaty, to which, with the Committee's permission, I should like to refer. There can be no question that this section of the treaty puts unemployment on the agenda. But to be on the agenda is quite insufficient to deal with the situation that currently confronts us. At the moment there are 19 million unemployed people in the European Union and the figure is rising, if account is taken of the United Kingdom statistics which, presumably, are to be corrected. The figure will rise to probably 20 million.

On previous occasions--and I do not propose to do so this afternoon--I have drawn your Lordships' attention to the undesirable economic and social effects of large-scale unemployment developing in Europe. Those of us who have memories that go back before the last war will know perfectly well that the rise of fascism in Europe, and Nazism in particular, were powerfully assisted by large-scale unemployment at that time. That produced considerable unrest and resulted in the formation and strengthening of the Nazi movement in Germany with consequences of which we are all well aware.

So it is only right and proper that, with unemployment developing in Europe on the existing scale and showing no signs of diminution--in fact, rather the reverse--those who participated in the deliberations leading up to the adoption of the Treaty of Amsterdam were bound to have that consideration in mind.

Members of the Committee will see from new Title VI that adequate testimony is paid to this subject. For example, Article 109o refers to,

    "Member States, through their employment policies, shall contribute to the achievement of the objectives referred to in Article 109n",

which is the previous article. That states,

    "Member States and the Community shall ... work towards developing a coordinated strategy for employment".

Article 109o, paragraph 2, continues:

    "Member States shall have regard [to] promoting employment as a matter of common concern".

Article 109p states:

    "The Community shall contribute to a high level of employment by encouraging cooperation between Member States".

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Perhaps more importantly, paragraph 2 of the same article states:

    "The objective of a high level of employment shall be taken into consideration".

Article 109q says:

    "The European Council ... shall each year draw up guidelines which the Member States shall take into account"--

I put the words "shall take into account" in parenthesis for the purposes of my present argument--

    "in their employment policies. These guidelines shall be consistent with the broad guidelines adopted pursuant to Article 103(2)".

So no one can say that adequate consideration was not given to the matter.

The trouble is that at best consideration of the problem of unemployment,

    "shall be taken into consideration",

whereas the situation in Europe requires that it should be a principal priority at this time, affecting as it does the lives and fortunes of thousands of people in each of the member states, including our own. Politicians are prone to announce very good intentions. I speak in terms which I trust represent broadly consensus politics across the Chamber because consensus politics are very much in vogue these days. No one can query the sentiment which, for political purposes, is given wide circulation in the press and the broadcasting media. But the question is: what is to be done about it? It is not simply a question of having regard to the situation.

Members of the Committee may suffer a variety of emotions from time to time. We all know what "taking into account" means as distinct from forming a firm conviction leading to a springboard to action. I can sympathise, and I trust that your Lordships will also sympathise, with members of the Government and the Opposition--I believe in consensus politics for this purpose--who may have had the utmost good intentions.

The difficulties are the factors which diminish the prospects of employment. They are not merely matters to which some regard has to be paid. They appear in the Maastricht and Amsterdam treaties. Those treaties lay down economic formulae against which there is no argument. We have abdicated that responsibility; it has gone to the Bank of England. There is no argument as to what has to be done. All these matters are laid down.

We must have regard to the mathematical formulae set out in the Maastricht Treaty; we have to look to deficit financing as well. We have also to consider the recent deal as regards economic and mathematical formulae enshrined in the stability pact. In other words, our hands are already tied by treaties to which we have put our signature and which, in accordance with the procedures normally adopted in the Community as a whole, are now enshrined in our own law.

Members of the Committee will be well aware of the numerous fudges which have taken place over the past few weeks in forcing member states, sometimes successfully and sometimes otherwise, to adopt the deflationary policies which are quite explicit in the Maastricht Treaty and in the stability pact. These are

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the actualities of the situation rather than the aspirations which we might legitimately have, bearing in mind the humanities and social policy generally.

So we are in some difficulty. I trust that neither my own Government nor those who have a consensus with them on the other side of the House will seek to cast these matters aside or try to prove that, after all, Maastricht meant nothing and that the deflationary policies originally set out in the Delors Report and in the European Agenda 2000 can be lightly cast aside. They are part of our daily lives. Due to other factors which are not relevant for the purpose of this amendment, but which many of us hope to discuss later, they are not subject to democratic control either.

We are caught completely outside the variations that could be made to policy as a result of democratic considerations of these matters. We are, literally, in the hands of the machine--and it is a machine which is being administered effectively on matters on which I hope to be able to enlarge later which ensure that the will is enforced. We are in the midst of deflationary policies which will be pursued with the utmost ruthlessness and which make any consideration--sympathetic or otherwise--of the solutions of the unemployment problem a mere exercise in academics, which I am sure will please those academics who may be present this afternoon.

Lord Moynihan: Before turning to some of the important issues which the noble Lord has raised, we on these Benches would like to wish the noble Lord, Lord Shore, a speedy recovery from his illness. Having heard the noble Lord speak earlier at Committee stage, it strikes me that he must be well below par to be absent from our proceedings today. It would have been his deep desire to participate. All of us--those who echo his words as well as those who oppose them--recognise the significant contribution that he has made to date to our Committee proceedings. I know that all noble Lords wish him well.

After a brief introduction to the important issues which we shall be debating in these amendments, I intend to focus on the employment chapter in order to enable other noble Lords to reflect on that chapter. Then, with the permission of the Committee, within the same group of amendments, I should like to consider the social chapter in detail. The reason for that is that the Amsterdam Treaty marks the point at which this Government became full signatories to the European social model, composed of the social chapter and the new employment chapter. In our view, that provides for a centralised European employment programme. This is an area where the Opposition accept that the Government were not negligent in their negotiations at Amsterdam but rather deeply misguided. On this issue, we are in genuine disagreement and that is why I have tabled an amendment and new clauses to oppose both measures.

On these Benches, we believe that there is an inherent contradiction between the social chapter and the employment chapter, on the one hand, and the needs of a competitive, flexible economy, on the other, but apparently the Government do not think so. Perhaps the

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Government do not recognise that contradiction because, collectively, they share the opinion of the Minister of State in another place, who has confessed, perhaps in another example of truth spoken in jest of which this Government are so fond, that he does not believe statistics. He said:

    "I had the misfortune to study economics for four years. That experience taught me never to believe statistics".--[Official Report, Commons, 12/11/97; col. 998.]

That presumably helps to suppress the inconvenient facts that we have signed up to the European Social Model exactly at a time when unemployment is falling in the UK and rising in the rest of Europe; that one-third of all investment into the EU flows into the UK; and that Britain has created more jobs in the past four years under the previous government than all the major countries of Europe put together.

Since 1992, the UK has enjoyed the longest and strongest recovery of any major European country. I should point out that unemployment in the UK is significantly lower than the EU average and is lower than in Germany, France, Italy, Spain, Belgium, Greece, Ireland and Sweden. The UK has a higher proportion of its working age population in work than any other major EU country. The UK has the lowest labour overheads in the EU. For every £100 paid in wages, employers must add non-wage costs, such as employer's social security contributions and health insurance, of £32 in Germany; £34 in Spain; £41 in Italy; but only £18 in the UK.

The strike rate in the UK has been lower than the EU average for each of the last nine years. Over the last international economic cycle (1982-93) fixed investment growth in the UK was more than in any other major European economy. The burden of tax, public spending and public debt in the UK is lower than in any other major European economy. Over the past 20 years, that story has been underpinned by the fact that the United States has created 36 million new jobs, of which 31 million were in the private sector. Over the same period, only 8 million jobs were created in the EU, with no increase in private sector employment.

Taken individually, any one of those points would make a compelling case. Taken together, they conclusively prove that unless Europe cuts its social costs and frees up its labour markets, it will be outpriced and outperformed by the rest of the world, ensuring that the unacceptable levels of employment and unemployment persist. Red tape and regulation are a regime that Europe can no longer afford to keep in place.

Does the Minister disagree with that scenario? Does he feel that we should apply a strong socialist employment policy on top of that success story? Does he believe that marginal differences in price, quality and delivery can make all the difference between winning orders and losing them; between creating jobs and destroying them; and between building prosperity and undermining it in the global economy; or does the Minister agree with the Minister of State in another

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place who apparently discerns no link between competitiveness and the social chapter, for he said:

    "Competitiveness is a different issue [from the social chapter], about securing products, new designs, new production systems and breaking into new markets"?--[Official Report, Commons, 4/12/97; cols. 566-7.]

Many of us on this side of the Committee are greatly cheered by the Government's seemingly wholehearted conversion to the principles of labour market flexibility, competitiveness and open markets and fewer burdens on business. But we only hear those comments; we do not see them echoed in policy when it comes to the adoption of the employment and social chapters by this Government. I fear that once the rhetoric of the social chapter is stripped away, the best result for the Government would be an empty page.

Agreement in principle with our European partners on the need for job creation will be very different from agreement in detail on how to achieve that goal. That will not come easily, and although it is most commendable, the practical conversion of some of our European colleagues to the new orthodoxy of the past four years may require a road to Damascus to achieve it, particularly bearing in mind that the Prime Minister of France, Lionel Josping was elected on a platform of cutting the working week.

From these Benches, it will come as no surprise to hear that we agree without reservation that creating the right climate for jobs for Europe's 18 million unemployed people should be one of Europe's highest priorities. Unemployment is Europe's worst disease. Job creation should be a priority for Britain's presidency.

I should like the Minister to give the Committee one concrete example of how he expects measures under the employment and social chapters to increase labour market flexibility and competitiveness and to create jobs. I doubt whether he can guarantee that no jobs will be lost as a result of those measures. However, I shall listen carefully to what he has to say on that because I should like to consider the implications of the measures introduced by the employment chapter. The treaty may,

    "for the first time recognise that employment and growth result from the flexibility that comes with skills, not the inflexibility that comes with over-regulation".

But how many jobs will that create? How many jobs were created in Europe as a result of the Prime Minister's so-called employment summit last November?

Treaties, summits and governments do not create jobs. It is businesses, entrepreneurs and risk takers free from the burden of bureaucracy who create jobs. Creating the right conditions for employment is primarily a national responsibility. No one should pretend that jobs can be willed into being simply by legislating for them in a treaty. The key to creating new employment in Europe is to improve competitiveness and productivity and strip away unnecessary regulation. It is on this stage that the UK should have a leading role to play in Europe. The implementation of British ideas and strategies for success should be at the top of the European jobs agenda.

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I have some specific questions on those articles of the treaty that deal with the employment chapter and make member states' employment policies a matter for common concern. Article 109p, paragraph 2, establishes the objective of a high level of employment as a consideration in formulating and implementing Community policies. Can the Minister tell the Committee what common figures member states have agreed upon to define a high level of employment? Could this have future implications for the single currency, given that the Maastricht criteria do not take into account unemployment figures? New Article 109r in the employment chapter allows the adoption of incentive measures designed to encourage co-operation between member states on the basis of Article 189b; that is, the co-decision procedure involving the European Parliament and qualified majority voting. Can the Minister tell us of what these incentive measures might consist? Furthermore, can he give a tight definition of areas where EU money may be spent to reassure us that this is not simply old-style interventionism disguised under the rhetoric of laissez-faire?

Can the Minister also give some examples of the co-operation between member states which is to be encouraged? Can he also give an assurance that British businesses and workers will not be used as guinea pigs for unproductive, potentially costly and ultimately futile pilot projects and that we shall not be put in a position of having to pay for unnecessary and unproductive employment programmes?

The European Council will consider the employment situation each year and adopt conclusions. Article 109q, paragraph 2, provides for the Council on the basis of those conclusions to draw up guidelines for member states to take into account in their employment policies. Can the Minister give an indication of what those guidelines will consist? Can the Minister guarantee that such guidelines in such a chapter, which require member states to make employment policies a matter of common concern and to co-ordinate their actions in that respect within the Council, cannot be used to impose on this country an employment policy to which we are opposed?

Furthermore, each member state is required to provide the Council and the Commission with an annual report on the principal measures taken to implement its employment policy in the light of those guidelines. Given that the Council acting by qualified majority on a recommendation from the Commission on the basis of those reports can make recommendations to a member state, what assurances can the Minister give that a future British Government will not have to support and implement inappropriate, unrealistic and even job-destroying policies? In what circumstances does the Minister envisage such recommendations being made? These are detailed questions about an employment policy which goes to the very heart of our market which over the past 10 to 15 years has attempted to strip away the bureaucracy that inevitably jeopardises job creation, productivity and the growth that is essential to the success of a modern and productive economy. To impose yet further employment and social chapter measures and intervention into the market place is counterproductive to growth and successful competition in an increasingly

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competitive global market for the marginal investment dollar. The figures that I have provided both about the United Kingdom's policies and their impact over the past 15 years, the American situation, and the stark comparison with the inherent problems of the socialist model in Europe in these areas, provide proof of the need to do exactly the opposite of what the employment chapter and the social chapter that we are considering now will achieve.

Does the Minister believe that on the principles that I have set out, the annual report to implement an employment policy in the light of Article 109 will be beneficial? What good will it do to increase employment? Given that the Council, acting by qualified majority on the recommendations that are made as a result of that report, can have a far-reaching and deep impact on UK job creation, how do the Government intend to counter many of those policies that have so clearly not worked within Europe and which, through the Commission, can now be imposed on UK businesses as a result of signing up to the employment chapter?

In what circumstances does the Minister envisage such recommendations being made? Would it be when a member state had breached an agreed treaty objective, in which case Council recommendations would presumably carry considerable authority? Could this result in the British Government being hauled before the European Court of Justice, which could then interpret the employment chapter's provisions as placing a duty on the British Government to pursue employment policies dictated by other EU states which could well be against Britain's national interests?

In the light of all that I have set out, who now will have final responsibility for Britain's employment policy? Will it be the British Government accountable to British workers who are the very people to be affected by any changes in policy? I can only conclude that the answer is presumably this: not if our employment policies are to be "a matter for common concern" for all member states.

As I said at the beginning of my intervention, I intend to turn to the social chapter at a later stage of the consideration of the clauses which are now being considered by the Committee.

3.30 p.m.

Baroness Williams of Crosby: I echo strongly the words of the noble Lord, Lord Moynihan, with regard to the regret felt by all noble Lords about the illness of the noble Lord, Lord Shore of Stepney. The noble Lord, Lord Shore of Stepney, is a splendid contender on these issues. He is a man who has bravely expressed his views on many occasions out of a deep sense of loyalty and patriotism to his country. I know that I speak for many when I say that we all hope that the noble Lord will soon be back in his accustomed place contributing to these debates in his unique and remarkable way. Having said that, that is probably the point at which any further agreement with the noble Lord ceases.

I begin by saying a few words about employment policy. I shall then deal with the amendments to social policy. First, I believe it is absolutely clear that Title VI as set out in the Treaty of Amsterdam is specifically an

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intergovernmental policy. Article 109r specifically states that no attempt is being made to harmonise the laws or practices of member states. The other sections of Title VI refer over and over again to an attempt to establish co-ordinated action on employment policy, to exchange information and to try to indicate best practice--in other words, to attempt to deal with this difficult problem by calling upon the experience of each member state. Speaking as someone who for many years has been engaged in OECD employment policies, I can see remarkably little difference between Title VI and that which the OECD constantly adjures upon its many member states: the importance of co-ordination of information and best practice.

I find it difficult to conjure up the kind of ghosts and wraiths that are being conjured up in this debate. I do not believe that there is any serious substance in them. However there is a strong case for co-ordination and the exchange of best practice in this field of all fields, because none of us has the obvious answers. In many instances the best practice in one country can become the initial stages of an imitation, a copying, in another country, which can bring benefits to all.

There is another consideration. The business world is increasingly dominated by multinational companies which will try to achieve the same practices in the fields of training, employment, promotion and skill in all their subsidiaries throughout many different European countries. It is therefore important that governments as well as multinationals and other large companies can co-ordinate their policies and practices in a way most beneficial to the citizens of Europe. For example, Article 109 refers to the exchange of information and best practice. In that context I must declare an interest as the chairman of the Regional Jobs Competition for the EU, where we are constantly engaged in trying to bring the best practice from one area to other countries, very often bringing the best practice in the UK--Scotland, the north east and the south west--to the attention of countries such as Spain or the Netherlands where a similar problem of a declining industrial base has to be dealt with. I can see no possible damage in that and every possible good, including a great deal of good for those who are most innovative and entrepreneurial in our own country.

Secondly, increasingly, under earlier provisions of the treaty, there is a greater mobility of skilled and qualified people, so what can possibly be the objection to trying to co-ordinate and to bring together training for skill? Surely we want to see a similar exchange of young people, a similar widening of opportunities for those whose training and education lie essentially in the vocational and skill areas to that which most noble Lords have broadly accepted for the exchange of university students under the Erasmus scheme.

That brings me to the first question that I want to ask the Minister. Will he tell us something about the attempts to widen the opportunities for young people who are training in advanced skills, to exchange their experience and work in other countries, so that we have a situation similar to that which now exists under the Erasmus scheme for university students?

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Secondly, it is appropriate that there should be an annual report to the Council and to the Commission, but here I have some sympathy with those who have tabled Amendment No. 28. On these Benches, we believe that it would be wise to make that same report available to the European Parliament and to national parliaments. There seems no reason why it should not be made available. In that context I wish to commend Her Majesty's Government for having already made clear their own employment policies and for making them available to members of the public before the Cardiff summit looks at the comparative achievements of all the different countries in the Community.

With great respect, I found the arguments of the noble Lord, Lord Moynihan, which depended apparently on the argument that in Britain everything is as it should be, that we were the most competitive, most brilliant in performance, and most sharp-edged in pricing, a little strange in view of the fact that we are still contending with serious balance of payment problems at a time when countries which he criticises strongly, such as Germany, bound from one month to the next from one balance of payments surplus to the next. No one in this Chamber can pretend that Germany does not have serious problems. So she does. No one can be true to the facts if they do not recognise also that Germany, despite the social model--some of us would say partly because of it--has a remarkable record of economic achievement.

Finally, I shall address a few remarks to social policy so that I do not have to detain your Lordships again. The Social Charter and the social protocol have been exaggerated out of all possible proportion in the debates that have taken place over the past few years. The total number of directives under the social protocol amounts at present to one directive on consultation with work forces; one directive on maternity leave; and one on parental leave.

It is no good talking about the importance of family life, about the need to improve the upbringing of young people, and then to take no steps to try to create a world of work in which such things are possible. Parental leave is right because men and women alike should take responsibility for their children; it is right that there should be consultation between management and workforces. I find it incredible that one should still have to argue that that is in some way a deeply counter-productive and reactionary policy. It is right that the treatment of part-time workers in terms of working conditions and opportunities should be similar to those of full-time workers.

Surely we want a society where there is a competitive, entrepreneurial, imaginative and innovative industry, but one that exists within the tenets of a compassionate, responsible and decent society. That compassionate, responsible and decent society means that we have to give priority to high employment and to a compassionate social policy. Alongside our undoubted achievements in areas of competition, innovation and entrepreneurship, it is tragically true that Britain has the highest proportion of children in poverty, the highest proportion of families in poverty, and one of the most rapidly growing unequal structures of income

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distribution to be found anywhere in Europe. That is not something of which to be proud. We need British entrepreneurial attitudes within a social model that will enable all people in society to recognise the responsibility that each has to the others.

3.45 p.m.

Lord Monson: From these Benches I, too, wish the noble Lord, Lord Shore of Stepney, whom we all admire, a speedy recovery. Although I am not remotely capable of matching his eloquence, I should like to pick up two or three of the points made by the noble Lord, Lord Moynihan, in his most interesting speech. I should like to have been a fly on the wall when Articles 125 and 130, dealing with employment, were being hammered out.

Which EU governments can seriously believe that EU unemployment can be reduced by "co-ordinated strategies" or "the issuing of guidelines"? We all know why unemployment is so high in the highly regulated continental economies with their burdensome social costs and, more often than not, their high minimum wages. It does not require the creation of costly quangoes, such as the treaty envisages, to discover that. Naturally any national government and parliament will respond to the wishes of their own electorates and do their best to maximise employment for their own people, first and foremost.

Under those circumstances--assuming that they are determined to keep their high social costs and their high minimum wages--there is only one way in which high continental unemployment can be reduced in the short-term, although certainly not in the longer term; that is, by the introduction of protectionism. Overt protectionism is of course forbidden by the GATT, but there is plenty of scope for covert, indirect protectionism. We have only to think about the way in which the French channelled Japanese and other Asian electronics imports to a small customs post in the inland town of Poitiers, thereby delaying them by several months, to realise that.

That protectionism is what the French have always wanted to keep out goods from Asia, the Americas, Australasia, and so forth. The French even managed to infect the late Jimmy Goldsmith with that virus. Now it appears that even the Germans seem to be moving to some extent in the French direction in so far as they seem anxious and, indeed, ready to keep out eastern European manufactured goods and agricultural products. Is that, one wonders, the direction in which those who have formulated the employment articles hope the so-called co-ordinated strategy will lead?

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