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The Lord Privy Seal (Lord Richard): My Lords, with the leave of the House, I should now like to repeat a Statement made in another place by my right honourable friend the Prime Minister on the special European Council on employment in Luxembourg on 21st November which was attended by my right honourable friends the Prime Minister and the Foreign Secretary. The Council's conclusions have been placed in the Library. The Statement is as follows:
"Let me make it clear at the outset that we are not creating new EU competences or new EU spending programmes, although we have agreed some useful redeployment of existing resources. What we can agree at European level is the broad lines of a practical approach to job creation. We can commit ourselves to finding and following best practice wherever appropriate. What we therefore sought and agreed was a set of common practical objectives to be enshrined in non-binding guidelines for national employment policies.
"At the heart of Europe's new approach is the need to create the right macroeconomic framework and to move more rapidly on the structural reform of labour markets. Removing barriers to the completion of the single market remains crucial, but the role of small firms in creating jobs is now recognised as central, as is the need to create a simpler regulatory and administrative environment for business. These are all ideas which we have promoted and to which we can subscribe wholeheartedly.
"There were three points at the heart of our discussions: first, an adaptable and skilled workforce responsive to economic change. The emphasis must be on education, skills, technology and an active employment service. We need flexibility, not in the sense of hire and fire management but in the sense of businesses and employees being able to respond to new and changing economic conditions. Secondly, there is entrepreneurship, especially small business. This is where many of the new jobs we need must come from, and we must nurture this sector. Thirdly, we must tackle structural unemployment. This cannot be lowered simply by demand management. We want neither laissez-faire nor old-style state intervention but targeted measures specifically directed at the long-term and young unemployed.
"Under adaptability, the Council endorsed the idea of modernising work organisation, including flexible working arrangements to help companies be both productive and competitive. In an important step forward, it also agreed to examine any new regulations to make sure they reduce barriers to employment and help labour markets adapt to structural economic changes. This was a particular British initiative.
"Under entrepreneurship, the focus was the vital role of small and medium-sized enterprises. It was agreed that member states should make starting and running businesses easier by reducing the overhead costs and administrative burdens, in particular of taking on extra staff. More widely, it was agreed that taxation and benefit systems should be made more employment friendly, for example by reducing the tax burden on both labour and other non-wage labour costs where they are at levels which hinder job creation. Some countries are keen to consider the reduction of VAT on labour-intensive services not exposed to cross-border competition.
"To tackle structural unemployment, the Council agreed an approach based on employability. There should be specific commitments to improve the ability of individuals to get and retain jobs, with special emphasis on youth and long-term unemployment. In particular, all member states undertook to offer a fresh start in terms of training or similar measures to all young people unemployed for six months and all adults unemployed for 12 months. A specific target of 20 per cent. was set for the number of unemployed benefiting from active measures to improve their employability. There was also extra emphasis on ensuring that young people do not leave the school system too early and inadequately equipped for the jobs market.
"The Council also emphasised the importance of equal opportunities. In particular, there should be commitments aimed at tackling gender inequality, making it easier for parents to reconcile work and family life and addressing the problems of the disabled in the workplace.
"The actual guidelines setting out these practical objectives and commitments in more detail will be adopted by the end of the year. It will then be for member states to prepare national action plans on how they intend converting these into action. These plans will be subject to scrutiny by other partners. Each member state will be able to apply them in accordance with national circumstances but will be expected to address all the objectives in one way or another. We will review progress first at the Cardiff European Council in June.
"The Luxembourg Council also welcomed extra mobilisation of the resources of the European Investment Bank to improve economic performance. One billion ecu from the bank's reserves will be used over three years to finance new initiatives to help high tech SMEs. Of this, 125 million ecu has already been earmarked for a new European technology facility. The EIB is also starting to lend in the health, education and environment sectors and is stepping up its support for trans-European network projects. In addition, the European Council agreed in principle to redeploy 450 million ecu from the existing EC budget over three years to help job creation, again particularly supporting innovative and job-creating small and medium-sized enterprises. These financial measures will be helpful, but they of course play only a supporting role: reform of labour and product markets is the real key to improving Europe's employment performance.
"The Jobs Summit marks Europe's commitment to a new approach to create jobs and security for the future, not the old-fashioned free-for-all resulting in widespread social exclusion, nor loading more costs and regulations onto business, but a third way: investing in people, in their skills, in small businesses, and setting a stable, long-term framework for business and industry to plan for the future and create jobs. Education and training are the keys. The so-called European social model is being refocussed, based on a modern approach of reform, flexibility and investment in people. We aim to involve both sides of industry fully in this approach.
"We will use the UK Presidency next year to ensure that this is carried through in order to make a real difference to employment, employability and social inclusion. Luxembourg agreed an approach for the long term. Effective follow-up is vital.
"At Amsterdam we showed how a united British Government with a clear direction in Europe could make Britain's voice heard. At Luxembourg we showed how a constructive British approach could result in a new direction on tackling unemployment, an approach based on competitiveness, employability and labour market reform, combining job creation with a fair and cohesive society.
"We recognised at a European level the terrible personal damage which occurs each time an individual who is willing and anxious to work is still unable to find a job through no fault of his own. That is why this Labour Government are working for a Europe that is working for jobs. This approach is right for Britain, right for Europe and right for the people of Europe."
Viscount Cranborne: My Lords, the whole House will be grateful to the Leader of the House for repeating the Statement. I apologise that I appear to have given him my cold which must have made the job more onerous than usual. I hope that he will rapidly recover.
We welcome the fact that the European leaders discussed unemployment in Luxembourg. As has been pointed out on all sides of this House over many years, it is the greatest problem facing western Europe and, as the Statement says, Europe's young people in particular. Of course we welcome many of the aspirations expressed in the final communique, particularly measures such as the plan to do more to help the disabled and the aspiration to reduce the tax burden on wage and non-wage costs.
However, there are a number of matters to which I wish to draw attention. First, it is a pity that this huge practical problem was not addressed by our partners in Europe a little earlier. After all, your Lordships will remember that the previous Prime Minister, Mr. Major, was constantly pressing on our European colleagues the need to turn away from costly interventionist strategies and so help business and employment to grow. He received precious little support from the Labour Party at the time.
Secondly, when joblessness is addressed at a summit, it produces, perhaps typically for any summit of this kind, what appears to be a miasma of rhetoric rather than real, firm conclusions. Judging from the press reports we have read on the results of the summit and in view of references to "rows and confusion", one must ask oneself whether the heads of government are not to be congratulated on being able to agree a joint communique at all. Therefore, is this merely a papering over of the cracks or is there real substance behind it? Shall we really be able to look forward to action of the kind we have been advocating, which certainly the Prime Minister seems to have taken to heart, at least in part?
In that context, it was instructive that the French and British Prime Ministers occasionally, in their comments, appeared to have been at entirely different conferences. M. Jospin hailed it as a triumph for what he called a social Europe in which there would be more stated interventionism to create jobs. That is rather different from the rhetoric we heard from the Leader of the House this afternoon. Do the British Government retain a veto on social and employment affairs to prevent the kind of ideas which M. Jospin appears to be proposing? If the answer is anything but an unqualified "yes", the prospects for jobs in this country can only be damaged.
I was glad to have the comfort of those words given the news we heard this morning; namely, that the independent council of economic advisers in Germany--the so-called five wise men--has warned that German unemployment may well pass 5 million this winter. I am sure that the Leader of the House will remember that the previous government scrupulously resisted the European model of more regulation and European Union interference in employment policy. We were criticised for that from the Benches opposite but the results entirely vindicate our stand. After all, our unemployment levels are lower than those of all our major European partners. Youth unemployment is falling at a rate that the Government's loftily named welfare to work programme never envisaged, long before government measures have come into effect. Small businesses are being formed and are expanding at a rate which would be the envy of most of our competitors. In fact, they are the envy of most of our competitors if newspaper reports are correct about the number of French businesses and individuals coming to settle in this country. One might think that even the Prime Minister, who so enthusiastically attacked each and every one of our measures in government, might have had the spirit to defend that British model without equivocation, instead of talking in--what has become a rather hackneyed phrase in my party--the third way.
What is that third way? It sounds like a stale rhetorical device, a path between laissez-faire economics and old-style intervention and protectionism. It smacks of the worst excesses of the mixed economy of the 1970s, cloaking policies which are pernicious in their effects with anodyne declarations against sin and in favour of motherhood.
It is true that the Prime Minister makes a nod in the direction of flexibility and deregulation, and we must welcome that. But the reality of the past five years is that experience has shown that the British route of deregulation is the best way to job creation and that the European route of regulation is a job destroyer. Therefore, I can see why the Prime Minister talks of businesses being able to respond to new conditions. I can see that very clearly. But then why does he shackle them with the social chapter that need never have been signed in the first place?
I can see why the Prime Minister talks of nurturing the small business sector. We are all in favour of that. But if so, why is he planning to hit many in that sector with a minimum wage and the working time directive? Equally, I can see why he talks of tackling structural unemployment. In that case, having inherited an economy which was the best job creator in Europe, why is he planning to tie Britain into a Europe-wide employment model?
Once more, I fear that there is a huge disparity between government words and deeds on the ground. For all we have heard today, is not the reality that all the actions the Government have taken since May will
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