Examination of Witnesses (Questions 20-39)|
MP AND MR
WEDNESDAY 24 APRIL 2002
20. So with a greater emphasis laid on it at
the European level, that might have a positive influence on the
UK so we can catch up in that regard perhaps?
(Peter Hain) We have implemented a whole series of
directives in this area, most recently on inflation and consultation
last year, but we have to constantly balance progress there with
the need for creating a flexible economy capable of coping with
the competitive pressures which are changing more often than year
by year in some respects. If we do not do that, if we create a
rigid model, then we will not succeed. I think there are some
lessons which others in Europe are drawing from our own success,
though I would not want to be too immodest about it. We still,
as I indicated earlier, have a lot to learn from our European
partners. For all the criticism, for example, of Germany being
a failing economy, Britain I do not think, not even under this
Labour Government, could have borne the burden of re-unification,
so there are lessons to be learnt but I think we have a pretty
good record to take forward.
21. I must say I am very interested in what
you are saying; I always am.
(Peter Hain) I find what you are saying very interesting
22. That is very kind of you. It is a mutual
admiration society, even though we come from different angles.
On this business of co-ordinating sound economic policies and
your references to the other countries, and one perhaps has to
look at France and, as you mentioned, Germany, surely you see
a connection between the apparent success of the UK economic policy
over the last number of years and the fact we are in fact not
constrained to the same extent as other countries which are in
the euro-zone by policies which have tended to slow their economic
growth. One part of that is over-regulation, another part is the
social agenda which is bound in by treaty changes which effectively,
one would say though I would not agree with, simply cannot be
changed. Do you not agree that the apparent success of the British
economy over the last decade since we came out of the Exchange
Rate Mechanism, for example, is associated with our having a degree
of control over our economic decision-making processes? By being
locked in, if I may dare suggest to you, to far too great an extent,
in other words going for co-ordination as we read in the questions
which are being put rather than co-operation, what is actually
happening is that slowly Britain is losing its advantage, and
really what we need to do is ensure that we do not get locked
into further regressive, less enterprising, less competitive policies.
By continuing to follow the process that other countries are pursuing,
they themselves are getting into deep trouble, which is actually
leading, regrettably, to the rather dark forces of extreme right
wing policy-making or attempts to build on the fact there is high
unemployment, there are stresses, which are being created by pursuing
these extremely unenterprising policies?
(Peter Hain) I do not think we should be too complacent
about the British record. We have a good record over the last
five years but in France, for example, their growth and economic
record over recent years has been pretty comparable to Britain's.
The European average is dragged down mainly by the legacy of East
Germany, and, yes, we do very well against the European average.
But if you disentangle some of the Member States from the average,
against other countries (and I give France as an example and there
will be others) we are not that far ahead, we have a lot of catching
up to do, not least the legacy left by the Government which you
supported last time. We are catching up. I would make this point,
co-ordinating and co-operating over economic policy is a voluntary
matter not a treaty competence in that sense.
23. The Maastricht criteria are a requirement
on this Government, irrespective of whether we are in monetary
union or not.
(Peter Hain) I do not know if we want to spend too
much time travelling down this road, though I am happy to do so.
24. Don't be tempted, Minister!
(Peter Hain) The point is this, I think we should
just take a deep breath occasionally, if I may say so, Bill, on
these sorts of questions and just look at the facts rather than
the dogma. The constraints being followed by the euro-zone countries
are the sort of constraints which, as the Chancellor announced
in his Budget speech last week, the British economy is meeting.
So we have not done too badly meeting the Maastricht criteria,
25. Looking at the statement under section 32
of the Presidency Conclusions from Barcelona, it says, "Early
retirement incentives for individuals and the introduction of
early retirement schemes by companies should be reduced. Efforts
should be stepped up to increase opportunities for older workers
to remain in the labour market . . . ", which is all very
well, but it goes on later to say, "A progressive increase
of about 5 years in the effective average age at which people
stop working in the European Union should be sought by 2010".
That is only eight years away, to increase the working life of
the population by five years. First, I have to say that the argument
for this seems very thin. There are going to be progress reports
but I am not sure the logic has been explained to the working
population of the UK or anywhere else in Europe as to why they
should work five years longer before retiring. How realistic is
that recommendation? You might say a word about why they want
to do it. Is it just to save paying out state pensions?
(Peter Hain) I do not think it is that, though pensions
is a whole other issue and there are difficulties across Europe.
I think it is an issue which has been widely discussed here in
Britain, including under our Government, that a lot of skilled
people leave the labour market earlier than perhaps they should,
and they should be given the right to stay on, not as it were
dragooned into staying on but given the right to stay on and contribute
their skills to the economy and the prosperity that that generates
both for them and for the rest of us. There is an additional problem
that we have a whole trend of ageing populations across Europe,
leading to labour shortages. I am sure we could all think of friends
and friends of friends who leave the labour market when they are
well able to, and indeed want to, contribute but because the retirement
age is too low are not able to do so. I can think of people who
leave the Civil Service whose expertise is greatly missed when
they reach 60, for instance, though we are talking about the private
sector in the main here.
26. How does the UK compare with the rest of
Europe on this matter? What specific action do you think the Government
should be taking to comply with this Directive?
(Peter Hain) Again, this is not a matter for me, it
is a matter for other Government colleagues. To be perfectly frank,
I do not have a table in front of me giving me an exact comparison.
I do not know whether Kim, my colleague, does, but I am happy
to write to the Committee about that if that would be help with
27. It does seem to me we are a long way from
the aspiration to the reality, and I am not sure that people understand
why we want to do it or what the effect will be on them and how
the Government intends to bring it about. So I think it is important
that the Government does develop its policy. Can I move on to
energy, which you are keen to talk about and I am keen to ask
about. The reality of the so-called energy liberalisation is that
a French company supplies electricity to No 10 Downing Street
because the French energy company bought London Electricity
(Peter Hain) And these lights, I suspect.
28. I assume so. The problem is that there is
no access to French domestic energy markets for people outside
France. This is quite deliberate, they clearly ring-fenced their
big players to build up their muscle before the liberalisation
took place. Since it appears the French may well have decided
well before Barcelona to agree to open up commercial and industrial
energy markets, would it be correct to conclude that on this issue
they did not make any significant concessions?
(Peter Hain) No. I think a major advance was made
in Barcelona. We secured, as you say, that all non-household customers
would be free to choose their supplier by 2004, which means over
60 per cent of the European Union energy market is on track to
be liberalised. We have never got that before. It was an important
achievement. Equally important was that the decision will be taken
by qualified majority voting before spring next year to open up
the remainder of these markets. I stress qualified majority voting
even though it will cause Bill Cash's hackles to rise because
France will not be able to veto it, and it is important we establish
full reciprocity. As you say, British companies, Centrica, TXU
and others have not been able to get into the French market or
the German market, whereas EDF, the French publicly-controlled
energy company, is able to buy up pretty well whoever it likes
here in Britain. This lack of reciprocity has not been acceptable,
so we have achieved that break through. On household markets that
will come a little later down the road, but there has been a big
advance there too. It is on its way. We have never achieved that
before. Can I just say why it is important? Sometimes people do
not follow, in the sort of "anorak" nature of the technicalities,
that gas prices in Britain are 36 per cent lower than in France
and 43 per cent lower than in Germany. So we are talking about
not just big opportunities for British companies but big opportunities
for European industrial and domestic consumers to get cheaper
gas prices and therefore make Europe more competitive, which is
what this agenda is all about.
29. There is another lobby, of course, which
argues that low energy prices are causing problems with the environment,
that we do not price energy high enough in this country compared
with Denmark, which has a different view of whether energy should
be used in the way we use it. So we have a different lobby saying
that we should be using less energy but it is too cheap. But that
is not where I wanted to take you, Minister. We can discuss that
on a personal basis later.
(Peter Hain) I was Energy Minister, so you can take
me down that road if you want to.
30. Yes, it is often good to look over old files
and see all the things you believed in then.
(Peter Hain) Uncomfortable sometimes.
31. In your letter you say that agreement was
reached that a decision would be taken on the issue of full liberalisation
of energy markets before spring 2003. Clearly, apart from the
French, the Germans have concerns in this area because they seem
to have a different approach. They are again seeking to build
up the muscle of their Government interests in different markets
as they did with Deutsche Post, as you know, so that when liberalisation
comes they are much better at succeeding in the market. How confident
are you that when that vote comes, you are going to get full liberalisation,
because there does seem to be an ability on the part of some governments
in Europe to stall? I think at the moment France is 65-68 per
cent liberalised but it is quite clearly protecting a large slice
of its market, and there are indigenous political reasons why
they fight so hard. How confident are you that we will get full
liberalisation agreed, not necessarily getting it in 2003 but
agreeing it in 2003, and what timescale do you see for its implementation?
(Peter Hain) I am very confident, because Germany
supported the Barcelona outcome. If it came to an actual vote
in 2003 on household energy liberalisation, it would be 14:1,
if France camps on the position it has traditionally done. But
it has already moved significantly. I think that once the current
electoral cycle is out of the way, there will be more movement.
It is in French consumers' interests that this should take place
as much as it is in British companies' interests and in the interests
of the whole of Europe to get much more competitive energy markets.
If I may add one other point to your question, I think the way
you deal with energy costs is not by artificially raising them
but by developing forms of environmentally-friendly energy, increasing
insulation and so on, which discourages wasteful energy use.
32. I am sure that is the case. Can I move on
to the debate about eEurope and ICT. Interestingly, I read the
latest pamphlet from the Institute of Economic Affairs which argued
that the ICT boom in the US actually gave it a five points advantage
in terms of productivity per man hour worked in the US and they
appear to be pulling ahead of us again, whereas we had been doing
better against the US benchmarking in terms of productivity. One
of the things we did have as an advantage was that since 1997,
not just in the public sector but in the private sector, we seem
to have put a larger element of training into every employee's
skill base. We had therefore advanced quite a lot in productivity,
of ICT. I followed the Lisbon process on that field very closely.
We have a report coming later today on that specific area. To
what extent should the Government take action at the EU level
on promoting access to the internet, because it does seem to be
very uneven, rather than leaving it to markets to develop according
to popular demand, and to self-regulation to police the industry?
For example, I note that Germany has 2 million people using broadband
and the UK has only 250,000. We tend to spend our time urging
the private market to do it when in fact other countries do it
centrally. There is some question of how much money Germany invested
as a government in getting that result and how much they left
it to the private market. It seems that the European model is
based upon letting the private market do it, whereas if any country
really wants to fight its corner and strengthen its hand with
liberalisation it needs to have an investment plan. The EU does
not seem to have an investment plan, it has an aspiration and
a target and hopes the market will deliver. How much do you think
the Government should take action at EU level to push internet
use and try and balance out this advantage which the US clearly
has had over us in the last few years?
(Peter Hain) I acknowledge your interest and expertise
in this matter and it is really important that that is the case,
because I was one of those back in the early 1980s who thought
that when Kenneth Baker wired Britain, or tried to somewhat disastrously,
he should have gone for broadband then, which would have put us
in pole position. At any rate, that did not happen. Europe does
not have a bad record, there are more Europeans connected to the
internet than there are Americans, but we have to catch up, you
are absolutely right, and that is why the Lisbon Agenda and the
current EU strategy was intended and is intended to deliver Europe
as a higher quality information society, the best in the world.
What we want to see is a follow-up strategy from Barcelona focused
on agreeing a new broadband technology strategy. I think other
Member States are agreed on this. In terms of our own specific
targets that is probably a question that should be addressed to
colleagues in Government. We did agree to deliver broadband technology
across the European Union by 2005 and that, as you know, means
Internet access at ten times the present speed. We agreed to boost
our commitment to research and development towards a target of
three per cent of GDP which is a significant increase by 2010.
These moves will encourage us to get to where you want to get
to, an objective which I share and which we should be pursuing
right across Europe, including in Britain, with great urgency.
33. Minister, you said earlier on that education
is an area where there is policy co-ordination and an area where
there has been a push for more co-ordination has been on language
teaching and the agreement was reached that language teaching
should start earlier. I am a bit intrigued how that stands in
contrast to the Government's Green Paper which has called for
an end to compulsory language teaching in England beyond 14. Scotland
is no better than that, the level of foreign language learning
is going through the floor. Is it not kind of ironic that we are
shifting the balance to learning languages earlier, which seems
to me to be very positive, but we seem to be ending it earlier?
(Peter Hain) If I am allowed to speak for the Secretary
of State for Education, and I will choose my words carefully in
doing that, I think that is a misrepresentation of what the policy
is. If you look at the language learning pamphlet which was published
at the same time as the Green Paper, 14-19 Extending Opportunities,
Raising Standards, which is a consultative document and the
consultation ends at the end of May, it basically was wrestling
with the problem of trying to teach languages to disgruntled 14
year olds as compared with shifting, as I understand it, interest
in language and catching the enthusiasm of the younger school
pupils so that primary school foreign language training and development
would be given a much greater priority, thereby helping to catch
school pupils at a much earlier age when they pick up languages
enormously easily and take them through into secondary school.
I think that is the strategy but I agree with you that our foreign
languages standards in Britain are dreadful. Just because English
is becoming the language of Europe, as it is, and the language
of the world, but certainly the language of Europe with the candidate
countries all speaking English, that should not absolve us from
our own responsibilities to take modern foreign languages forward,
which I think the Government strategy is doing. I noticed this
of the Candidates in the European Convention, they do not speak
other languages, they do not speak French, for example, as much
as English, so I think the English are coming in that sense across
34. Do you not think for that reason that it
might be an idea to have a look at what is happening in Ireland,
an English speaking country where their foreign language teaching
has gone through the roof in the last five years? We do not seem
to have managed that this side of the Irish Sea.
(Peter Hain) That is why the Government's Green Paper
has been brought out, because we are seized of this problem. The
truth is that although we have a tendency to become lazy because
English has become the language of IT and the language of modern
international business, it is increasingly spoken across the world,
the fact is more foreign language expertise would give our own
businesses a much greater head start in winning contracts across
Europe, for instance, and our own citizens much better opportunities.
35. I perhaps ought to declare an interest as
I received a residential scholarship, a British Council Scholarship,
to study at the university in Denmark. I see that in the Presidency
Conclusions, and I am sure this will please my colleague, Mr Cash,
that the Council wishes to continue to promote European dimensions
of education, improve people's basic skills and also enhance Internet
twinning with a partner school elsewhere in Europe. I can see
there is some merit in that and I personally do find it quite
difficult moving back from Brussels to the UK to find that without
subscribing to a rather expensive satellite service you cannot
get, for example, French, Danish, Belgian television. I take the
point entirely that if we have a skilled workforce in languages
it enables our businesses to compete much better but there is
an awful lot culturally that you can learn through television.
We seem to be the only country that has a mono-lingual television
service. Is there any way in which the Government could see fit
through its broadband strategy, perhaps by bringing forward the
analogue switch-off, to enable us to have access to foreign language
(Peter Hain) I must say I am very taken with the point
that you make and very interested in the policy implications and
I will ensure that it is drawn to the attention of the Secretary
of State, the relevant Secretaries of State, together with the
relevant text of the transcript of this Committee. I think you
are right. Forty million Britons will visit the rest of Europe
this year on business or cultural or tourist trips and, even if
you take account of multiple trips, around half the population
is going to go to Western Europe and a language expertise facility
would be a great advantage.
36. Minister, what specific steps would the
Government like the European Union to take now in respect of the
(Peter Hain) I have just returned from Valencia where
we had an important meeting with the Euro-Med countries at a Euro-Med
Conference and we play a very active role as the European Union
with our High Representative, Javier Solana, being a very respected
interlocutor, in seeking to promote negotiations between both
the Palestinians and the Israelis, I cannot claim with much more
success than anybody else has had. We need only look at the visit
paid recently by Secretary of State Colin Powell from the USA.
It is a constant source of discussion at the European Union level
and high level missions are constantly engaging with the Israelis
and the Palestinians. Europe, of course, provides virtually all
of the Palestinian Authority's development assistancethese
have been very largely destroyed by the Israeli defence forcesto
enable them to develop an infrastructure in Palestine. Europe
has actually got a proud record on that but not a successful one
in terms of promoting negotiations, which are the only way forward.
37. Do you not agree with these three out of
the four largest political groups in the European Parliament,
including the European Socialists, the Liberals and the Greens,
that the time has come to actually step up the pressure on the
Israeli Government vis a vis their military incursion into
Palestinian areas and seek the suspension of the association agreement
that was not backed by the UK Government at the last Council of
Ministers' meeting? Is that something that you might want to think
about supporting now?
(Peter Hain) It was not backed, you are quite right,
nor was it backed by a majority of other Member States at that
meeting. Until we have achieved a situation where suicide bombings
end and Jenin-type incursions by the Israeli Defence Force end
as well, we are not going to get circumstances in which we can
promote the negotiations which in the end will be the only guarantee
for Israel's security on the one hand and Palestinian rights and
justice for Palestinians on the other.
38. Minister, it does seem that unfortunately
we do not have any influence on suicide bombers but we should
have some considerable influence on the Israeli Government and
we do not seem to be using that influence other than seeking agreements
that we know will have to come anyway but which no side is wanting
to seek to achieve. They have just cocked a snook at the European
Union, they have now cocked a snook at the UN and some of us see
no end to it. We see the British Government and the American Government
making excuses for them and it just goes on and on and on. We
do not see any solution to it at all and it is getting rather
depressing what is happening in the diplomatic field from our
point of view.
(Peter Hain) It is enormously depressing but I do
not think it is fair to say that we are making excuses for it.
For example, the Foreign Secretary was one of the first to call
for an inquiry into what happened at Jenin and those awful events.
That has been secured, although it has now run into some difficulties.
We have been trying, not with fantastic success, in fact with
very little success, but none of these have been successful, this
is the bleak reality, we have been trying to do everything that
we can to create circumstances in which negotiations can take
place of the kind that I have described. But it has not been an
heroic story and it has not been a successful story. But I do
not think gestures, including ending the association agreement
or imposing sanctions, as others have asked for, at this stage
would achieve anything with the Israeli Government on the one
hand in its present cast of mind, and on the other with suicide
bombings happening. It is not easy to know what to do and there
is no point in me pretending otherwise. But I agree with you that
it is desperately, desperately depressing as somebody who has
supported the rights of the Palestinians over many decades.
39. I think everyone shares the frustration
that you feel as well as ourselves. I understand the Palestine
infrastructure, which was created by the use of UN aid, has been
totally destroyed. My concern is that it has been said that aid
will not go into Palestine until there is a peace settlement.
What is the situation as regards helping build the infrastructure
in Palestine? Do we have to wait until there is a cease-fire or
are they actively engaged in trying to create that situation at
the present time?
(Peter Hain) We are trying to do this and it has been
part of our consistent policy, Britain's and the European Union's,
to demand that Israel withdraws from the Occupied Territories
but also to insist that the Palestinian Authority does all that
it can, and it has not been doing all that it can although its
capacity to do so has been virtually destroyed, to stop the suicide
bombings. Notwithstanding the horror that I share about the events
in Jenin, I do think that suicide bombings create a siege atmosphere
in any community which means that you get the kind of over-reaction
that you have got. That is not to justify it in any way at all,
it is simply to describe reality. The Palestinians are gaining
nothing by suicide bombings except greater destruction and greater
horror for their own people. Israel is not achieving its objective
of security for its own state and its own people by its policies.
These policies are all failing. American policy has failed, European
policy has failed, Israeli Government policy has failed, the policy
of the Arab States has failed, the policy of the Palestinian leadership
has failed. This is an abject and depressing saga of failure on
all sides. We have got to get through it.