§ 'Her Majesty's Government shall make a half-yearly report to Parliament on the implementation of Article 2, paragraph 9 of the Treaty of Nice, setting out the United Kingdom legislative and employment implications of Article 137 TEC, as revised.'.—[Mr. Spring.]
§ Brought up, and read the First time.
§ Mr. SpringI beg to move, That the clause be read a Second time.
It is now four years since the Government abandoned the opt-out from the social chapter. It is time for an assessment of its impact. New clause 6 would provide for just such an assessment on a regular basis.
The treaty of Nice further extends the social chapter in article 137 TEC by adding two new fields to the list of those in which the Community
shall support and complement the activities of Member States".Themodernisation of social protection systemsis a new item. It is already reflected to an extent in the existing provision on "social protection of workers". However, crucially, that is decided unanimously. The new provision is different because it will be decided by QMV.The Government point out of course that QMV under the new provisions is limited to co-operation between the member states, and that harmonisation of their laws and regulations is explicitly excluded. Yet this will encourage the EU to put pressure on Governments to conform to so-called best practice when social protection systems are not considered "modern" enough.
New clause 6 would not prevent the new provision from being implemented. It would, however, provide for a regular report on the evolution of the social chapter as a whole. If the Government are as sanguine as they claim about the social agenda in the EU, they presumably support the new clause. It would, after all, provide them with another opportunity to set out all the beneficial, deregulating measures that they claim that Europe is introducing. We wait for that with bated breath.
A brief look at how the social chapter has developed over the last four years highlights why Opposition Members have serious concerns. We were told that signing the social chapter, with the attendant loss of the UK veto, simply did not matter. In 1995, the Prime Minister, then Leader of the Opposition, told the Confederation of British Industry that each piece of legislation under the social chapter would be judged on its merits. He said that he had
no intention whatever of agreeing to anything and everything that emerges from the EU".That was in November 1995.342 On Second Reading of the Bill to ratify the Amsterdam treaty, the then Foreign Secretary reassured the House about the effect of signing up to the social chapter. He said:
there is no danger of a flood of prescriptive, unrealistic regulations from Europe. There is a changed tone in Europe.He was particularly at pains to reassure the House about the then draft proposals for a general framework for informing and consulting employees—the so-called national works councils directive. On this, he said, the Government would
take our seat and make sure that the directive is amended in ways that reflect our thinking."—[Official Report, 12 November 1997; Vol. 300. c. 913–14.]That was his promise in 1997. Repeatedly, in recent months, the Government have reiterated both their opposition to the works councils directive and their confidence that they would be able to block it. Then, days after the general election, at the Employment and Social Policy Council on 11 June, the Government had to give in. Of course Ministers claim that the amendments that they achieved on issues such as the transition period mean that the text is now acceptable. So much for the principle that such issues are not for the EU to decide.6.45 pm
In reality, of course, the Government had no choice but to accept the directive, because their blocking minority had melted away—at the end of what the Department of Trade and Industry briefing to MEPs euphemistically described as "long and difficult negotiations". With that experience presumably fresh in the collective ministerial mind, is it not inexplicable and inexcusable that they are about to make the same mistake again, both with a general extension of QMV at Nice and specifically in relation to social measures? Does that not underline the need for regular reports on these matters? Instead of agreeing to extend the social chapter, as they did at Nice, the Government should be assessing the damage that is being caused by the articles already agreed.
Does the Minister agree that the momentum on social policy continues to grow? Belgium's note on its presidency priorities states that it will
include a strong social dimension and will pay special attention to the development of the European social model. Special emphasis will be put on quality of work, larger participation of employees with regard to economic mutations, equal opportunity, modernising social protection, combating social exclusion and poverty and the sustainability and re-financing of pensions".In the light of concerns expressed by employer organisations and others, bland Government assurances are no longer sufficient. It is time for a clear, open and honest assessment of the effects of the social chapter at times of economic downturn as well as of growth, and of new measures such as national works councils agreed under it.At Lisbon, the Prime Minister made a speech in which he painted a picture of a modern, outward-going Europe. He talked about benchmarking and the future of high technology, and of a Europe that was open to competition in a liberalising and deregulated way. The following week, that vision was rejected by the French Prime Minister, who talked about reinforcing the social agenda. The social agenda and the ethos that obtains now in the 343 EU is out of date in a modern economy. I ask therefore that the Minister make clear to the Committee the implications of that.
§ Peter HainI apologise for missing the first moments of the hon. Gentleman's speech. New clause 6, which calls for a twice-yearly report to Parliament, is unnecessary. Both this House and another place already have arrangements for scrutinising legislative and other proposals that come from Europe, including those under article 137 of the treaty establishing the European Community. That is why we reject the new clause. Scrutiny procedures are already more than adequate.
Social policy matters. It makes sense to work together where we can improve the lives of our citizens. That is why the treaty establishing the European Community includes provisions that allow for that. I remind the hon. Member for West Suffolk (Mr. Spring) and the rest of the Opposition that since Britain, under this Labour Government, signed up to the allegedly job-destroying, uncompetitive social chapter, we have created more than 1 million jobs in this country.
§ Mr. SpringThe Government did?
§ Peter HainThe Government have produced the macro and micro-economic conditions in which more than 1 million jobs have been created. In comparison, unemployment rose to more than 3 million when the Tory Government were in office.
§ Mr. SpringI hesitate to intervene, but the extent of job creation under the last Government was greater than during the last Parliament, under Labour. That is a fact.
§ Peter HainI am not sure whether we should go too far into that matter under your chairmanship, Sir Alan, but the truth is that unemployment rose to a record post-war high of more than 3 million during the 18 years when the Conservative Government were in office. I do not deny that unemployment started to decline towards the end of that period, but we now have an excellent record of falling unemployment. Employment has risen to an historic high in Britain while the social chapter has been in force.
§ Peter HainNot at the moment; I shall make a little progress, then I shall happily give way if there is time.
On social policy issues, the Nice treaty essentially reordered the Amsterdam treaty. Voting by unanimity was retained in the following key areas: social security and the social protection of workers; protection of workers where their employment contracts are terminated; representation and collective defence of the interests of workers and employers; and conditions of employment for third-country nationals who legally reside in the Community.
One new provision is the addition of a reference to the modernisation of social protection systems, which can take place by qualified majority voting. Such action is limited to the adoption of measures designed to encourage co-operation between member states and does not include legislation—for example, national action plans that 344 involve the exchange of best practice among member states along the same lines as the social exclusion action plans.
The Conservative party says that it is worried about expenditure, but changes that involve more national expenditure on such issues can be made only under article 137(1)(c) on social security and social protection of workers, which is still subject to unanimity and on which Britain can use its veto. Those are the old social chapter provisions and the Commission has yet to introduce any proposal under that article. Pay, the right of association, and the right to strike or to impose lock-outs continue to be excluded from the provisions of article 137.
Article 137(4) has been amended to make it clear that any proposals agreed must not affect the right of member states to define the fundamental principles of their social security systems and must not significantly affect the financial equilibrium of national systems—an important and welcome clarification.
As I am in a generous mood, I happily give way to the hon. Member for Stone (Mr. Cash).
§ Mr. CashI want to deal with the allegation that the Conservative party was somehow responsible for massive unemployment. Of course, the Minister will remember that one of the reasons why we got into serious difficulties with unemployment was the fact that we went into the fateful exchange rate mechanism. We have now left the ERM and my right hon. and learned Friend the Member for Rushcliffe (Mr. Clarke) was responsible for creating economic stability out of the ERM, but this Government will guarantee a return to it, because they are in favour of the principle of monetary union, and they will reincur the very problems that we managed to avoid only by withdrawing from that ridiculous system.
§ Peter HainThe Chancellor has made it clear that no entry into the ERM is planned, and it was, of course, a Conservative Government, supported by the hon. Gentleman, who took us into the ERM—a ridiculous policy when the value of the pound was ridiculously high, which caused many of the problems. I should correct the hon. Gentleman in a crucial respect: the massive increase in unemployment under the Thatcher Government occurred before we went into the ERM. The record high of more than 3 million people unemployed and the destruction of manufacturing jobs occurred in the early 1980s, well before the ERM. I shall go no further, except to say that the social chapter—which gave rise to the little tirade of the hon. Member for West Suffolk, and about which I had to correct him on several matters—is an important provision that has been to Britain's advantage and strengthened our competitiveness. The new clause is unnecessary, and I hope that the Committee will reject it.
§ Mr. Menzies CampbellI, too, believe that new clause 6 is unnecessary. The social chapter conferred on working people certain rights that they ought to have had in any event in well managed companies. In particular, the works councils directive allows consultation, and for employees to understand how companies work, which is entirely consistent with what modern business and management practice should be. Liberal Democrats have long supported works councils and the involvement and commitment that necessarily arises from the fact that 345 employees are more directly involved and understand the nature of the company for which they work and its problems.
It is worth remembering that we think that EU countries are blighted by over-generous social provision, but the United Kingdom's gross domestic product per capita is only 10th in the EU. Our living standards are 10th out of 15. Productivity in France and Germany is a fifth higher than in Britain. Given that reference has been made to the ERM, it is worth noting that since the launch of the single currency, employment growth in the eurozone has been twice as rapid as in Britain or the United States. Since 1997, in the eurozone, 4.7 million net new jobs have been created in economies that those who proposed the new clause would regard as being over-subject to social protection. With respect, the case in support of the new clause has not been made.
§ Mr. BercowThe Minister deployed his mellifluous tones and issued soothing bromides to the Committee in a fairly blatant bid to lull it into a false sense of security. I hope that my right hon. and hon. Friends will not be taken in by the sedulous propagation of his case. There is no reason why we should be becalmed by his words, because we do not have to look into the crystal ball when we can read the book. The Minister made an entirely spurious point about the social chapter's introduction coinciding with an increase in employment as though there were a causal link. He should understand—we shall seek to educate him so that he is aware of this in future—that the increase in employment has taken place not because of, but in spite of the contents of the European social chapter.
§ Peter HainThe burden of the hon. Gentleman's and the Opposition's case against the social chapter is that it stops employment growth, and prevents companies from succeeding and the economy from growing, but precisely the opposite has happened. I suggest not that the huge rise in employment or fall in unemployment has taken place because of the social chapter, but that it has not stopped it happening and that it has, in fact, assisted the country's well-being while it has happened.
§ Mr. BercowThe Minister's ill-informed view is typical of the complacency that is the hallmark of the Government's attitude. I shall have the concurrence of my right hon. and hon. Friends when I suggest that we are far too unambitious in this country. We could have done much better. We could have grown faster and employed more people and we could have had a more thriving small and medium-sized enterprise sector in this country and throughout the EU were it not for the depredations of the social chapter in particular, and of overarching, overzealous regulation by the EU in general. For example, if we consider the parental leave directive, we see what the costs to businesses are. If we consider the Part-time Workers (Prevention of Less Favourable Treatment) Regulations 2000, we recognise, as small business leaders do, how damaging they can be.
On informing and consulting workers, the Minister must make the conceptual leap from believing that such measures are good to contending that there is a case for their imposition on this country by the EU. Such matters 346 should be for individual businesses to determine or, alternatively, for democratically elected Members of this legislature to agree; they are not the proper business of the busybodies in the EU.
It being Seven o'clock, THE CHAIRMAN, pursuant to Orders [4 and 11 July], put forthwith the Question already proposed from the Chair.
Question accordingly negatived.
THE CHAIRMAN then proceeded to put forthwith the Question necessary for the disposal of the business to be concluded at that hour.