EUROPEAN GLOBALISATION ADJUSTMENT FUND
Letter from the Chairman to James Plaskitt
MP, Parliamentary Under-Secretary of State, Department for Work
Thank you for your letter dated 21 July 2006
which did not reach us in time to be considered before Parliament
rose before the Summer Recess. It was considered by Sub-Committee
G on 12 October.
We are grateful to you for reiterating the Government's
position and note that negotiations are continuing in preparation
for the possibility of political agreement at the December Employment
We have already made our views clear in my letter
to you dated 12 May 2006
and will look to you to continue to bear those considerations
in mind as negotiations proceed. That being so, we do not want
to go into the details at this stage. On the other hand, we note
that one element of the intervention criteria is that there should
be a minimum of 1,000 job losses in any given company or sector.
We understand that this is causing some understandable difficulties
for smaller Member States and suggest that it might be worth considering
whether that it would be farier if the requirement were to be
expressed as a percentage of local or sectoral employment levels.
We will continue to retain the document under
scrutiny and must ask you to ensure that we are given a full report
on the state of negotiations in good time before decisions are
needed at the December Council.
12 October 2006
Letter from James Plaskitt MP to the Chairman
I wrote to both Scrutiny Committees in March
of this year.
My Explanatory Memorandum (EM) outlined the content of the Commission's
proposed regulation creating the European Globalisation Fund (EGF)
and set out the UK position. In response you requested an update
on negotiations prior to parliamentary summer recess, which I
provided. In addition at the start of July I wrote to inform you
that the proposal's financial statement had been revised and we
were examining its content closely. I provided a further update
in early October of my detailed objectives for the remainder of
This letter explains the positive changes the
UK has been able to secure to the Commission text creating the
EGF and requests that you release the proposal from scrutiny in
advance of the December Employment, Social Policy, Health and
Consumer Affairs Council (ESPHCA) where the dossier is listed
for political agreement.
The Finnish presidency has a mandate from the
Council to try and achieve a first reading deal with the European
Parliament (EP) in advance of ESPHCA. Discussions between the
Presidency and the Parliament are ongoing but are not focused
on altering parts of the text important to the UK. Therefore,
I am content that the EGF text as it now stands achieves the UK
negotiating aims as laid out in the EM and my subsequent updates
to the Scrutiny Committees.
The UK's overall negotiating objectives outlined
in my EM were:
To ensure that measures supported
under the EGF did not undermine existing national policies or
overlap with other European Union funding streams such as the
Structural and Cohesion Funds. The UK has defended language
in the Commission proposal to ensure Member States (as part of
the application process (article 5(d))) provide information on
the complementarity of actions undertaken by EGF with those financed
by structural funds. There is also a further safeguard in article
6.5 ensuring EGF actions do not also receive money from other
community financial instruments.
To ensure that the intervention
criteria, funding and monitoring arrangements are sufficiently
well defined so as to ensure that implementation of the EGF is
consistent with the original conception of the fund agreed to
at the Hampton Court Informal and the December 2005 Council. I
am happy that the intervention criteria are clear, fair and will
target EGF actions specifically towards those workers most affected
by sudden, significant and unforeseeable shocks resulting from
globalisation. I have examined the financial statement provisions
and I am content that the commitments proposed are in-line with
those in the Inter-Institutional Agreement.
Our detailed priority areas for amendment in
The removal of all wage subsidies
and in work income supplements from the eligible actions. The
UK has succeeded in the removal of the wording on in work income
supplements. The emphasis in this article is now firmly on funding
active labour market measures designed at getting people made
redundant back into work.
To continue to argue that the
number of redundancies required to trigger the fund in the intervention
criteria be set at a number consistent with the funds objectives
to focus on significant shocks. The UK came to agreement at
working group and COREPER level that a sufficiently high number
was 1,000 redundancies and that this figure needed to be stated
in both article 2(a) and (b).
To argue that the number of months
that the redundancies have to occur (stated in the intervention
criteria) should be low enough to indicate a sudden and unforeseeable
shock. The 1,000 redundancies must occur over a four month
period in article 2(a) and a nine month period in 2(b). The slightly
longer period in article 2(b) reflects the likelihood that redundancies
across a number of small and medium size enterprises may occur
more gradually as the ripple effect of a single global shock hits
individual businesses across a sector.
We also pursued these secondary objectives:
Reduce the need for a Safeguard
Clause in the intervention criteria (which was presented as part
of a compromise proposal), of this is unavoidable, ensure that
the circumstances in which it could be applied were clearly defined.
I noted the point of concern you raised in your correspondence
of 12 October regarding smaller member states access to the fund.
The safeguard clause (now included as part of article 2) will
ensure that the Commission can use a degree of discretion towards
bids that do not quite meet the criteria laid out in 2(a) and
(b), up to 15% of the fund will be payable in this way. This should
ensure smaller member states can access the fund if they have
a redundancy linked to a global shock that has significant impact
on their labour market but does not quite meet the criteria.
That there is no annual reivew
of the EGF in 2008. The Commission are committed to an annual
review in 2008 to satisfy themselves the fund is working effectively.
A requirement that applications
to the fund must rigorously demonstrate that there is a direct
link between the sudden, significant and unforeseeable global
shock. The UK supported language in article 5 which requires
as part of the application process that the Member State provide
a "reasoned analysis of the link between the planned redundancies
and the major structural changes in world trade patterns".
The intervention criteria also clearly define the circumstances
in which the redundancies must occur.
In addition to these changes the UK has supported
calls for the inclusion of an end date for the fund. This
will mean EGF must be renegotiated as part of the wider Financial
Perspectives in 2013. The inclusion of an expiry date is consistent
with other Structural and Cohesion Funds.
I believe the UK has achieved its principle
aims for negotiations on the EGF regulation and I would like to
support the proposal when it comes to ESPHCA in December. I therefore
request the document be released to allow the UK to lift its Parliamentary
Scrutiny reserve at the Council.
Unfortunately the European Parliament will not
vote on the EGF text until 29 November immediately before ESPHCA.
I will forward the compromise text on as soon as I have it but
the final version of the regulation may not be available in advance
of the Council. There should be no dramatic changes between the
document for agreement at EP and the text to be agreed at ESPHCA
a day later.
I will make the final text of the regulation
available to the Committee at the earliest possible opportunity
once I have received it from the Commission.
16 November 2006
Letter from the Chairman to James Plaskitt
Thank you for your letter of 16 November which
was considered by Sub Committee G at its meeting of 23 November.
The Committee notes that its concerns in relation
to the potential impact upon smaller Member States of the 1,000
redundancies minimum threshold have been allayed by the agreement
brokered between the European Parliament and the Council. Equally,
we are glad that the wording of the Regulation is such that access
to funds must be well reasoned and complementary to existing funding
Given that the agreement reached appears to
be a balanced one and it is important that the Fund be operational
as from 1 January 2007, we are releasing the dossier from scrutiny
and look forward to receiving the final text of the Regulation
from you at the earliest possible opportunity.
23 November 2006
126 Correspondence with Ministers, 40th Report of Session
2006-07, HL Paper 187, pp 484-485. Back
Correspondence with Ministers, 40th Report of Session 2006-07,
HL Paper 187, p 484. Back
Refers to Explanatory Memorandum. Back