Single European Act (Hansard, 25 January 1994)

§ Baroness Chalker of Wallasey
My Lords, yes, the overall working of the Single European Act is satisfactory. It has brought a number of benefits including completion of the single market and improved foreign policy co-operation.

§ Lord Barnett
My Lords, it is not clear to me how the noble Baroness can be content given the huge variation in VAT and duties. I speak as someone who is in favour of the single market being effective and indeed of the Maastricht agreement, but will she accept that it is quite impossible for the single market to succeed while the VAT and duty rates are so widely varying? For example, on whisky the French have half the rate that we do. In those circumstances, what does she plan to do to make sure that the single market really works?

§ Baroness Chalker of Wallasey
My Lords, the noble Lord, who knows far more than I about VAT and duties, having levied such high ones when he was at the Treasury many years ago, is probably in a very good position to give me some helpful suggestions. But he has not done so. We are aware that distortions can come from these duties; but that will be resolved over time and it is not something that can be done immediately. There are many other aspects of the single market which are working very much in Britain's favour.

Lord Bruce of Donington
My Lords, is the noble Baroness aware that at the time of the passing of the Single European Bill, my noble friend Lord Stoddart 878 and I were told by the Government, and indeed by some members of our own party, that unless the Single European Act came into operation, all kinds of dire consequences would follow and that unemployment in Europe would rise, as evidenced by the Cecchini Report of that time? Is she further aware that the more the Single European Act appears to be in operation, the worse economically Europe as a whole and our own country seem to have become as a consequence?

§ Baroness Chalker of Wallasey
My Lords, I really do not think even the noble Lord, Lord Bruce of Donington, can blame the Single European Act for those social costs which have been imposed heavily by many of the individual countries on their nations. We who have sought not to impose such heavy social costs on industry are the country coming first out of recession and most strongly.

§ Lord Thomson of Monifieth
My Lords, is the Minister aware that there are still some important gaps in the working of the single market? One of them is the rules regarding public procurement, particularly in the telecommunications field. If the Government could use their influence to make progress on that, it would be to Britain's benefit.

§ Baroness Chalker of Wallasey
My Lords, that is just indeed what we intend to do.

§ Lord Stoddart of Swindon
My Lords, the noble Baroness will remember, as my noble friend Lord Bruce pointed out, that the Cecchini Report said that if we did not have a single market, there would be economic difficulties; and that if we did, 5 million jobs would be created. What has happened is that we have had the economic disaster and we have lost 5 million jobs. Is it not a fact that the working of the Single European Act is going awry because many non-tariff barriers are being put in the way of our exports, particularly by France and Germany? My organisation, the Campaign for an Independent Britain, published a pamphlet before the passing of the Single European Act. It was called Single Market or Double Cross? We now know of course that we were double crossed.

§ Baroness Chalker of Wallasey
My Lords, there are few times when I feel a little annoyed by the noble Lord, but this is one of them. I shall say why. Without the Single European Act this country would have lost many more opportunities. I wonder how often people realise just how much investment has come to this country because we are a member of the European Community and because we have participated fully in the Single European Act and were in fact one of the first to do so. When the noble Lord speaks about a level playing field and non-tariff barriers, I say to him that, yes, there have been individual problems, but they are minimal compared with the successes which we have had as a country in competing with others. Where better enforcement of the single market legislation is needed, we have a special unit in the DTI to deal with that. We shall continue using that unit for Britain's best future.

§ Lord Gisborough
My Lords, does my noble friend know the amount of foreign investment in this country compared with the rest of Europe and whether that is related to the fact that we are in the Common Market?

§ Baroness Chalker of Wallasey
My Lords, the figures are very strong. Some one-third of Japanese and US investment in the European Community has come to this country as opposed to going to others, for the very simple reason that we are offering the best opportunities for those countries in the European Community.

§ Lord Ezra
My Lords, will the noble Baroness indicate what the Government are doing to stimulate industry to take advantage of the new opportunities in the single market? Whereas a year ago the DTI was conducting a very high profile campaign to this effect, its efforts in that direction have subsequently diminished. Is that correct?

§ Baroness Chalker of Wallasey
My Lords, the effort of the 1992 campaign was obviously to make every business in the country well aware of the open market which commenced at the beginning of 1993. I do not believe that any business which is looking to the future—most businesses have increased their export markets—could possibly be in any doubt about the opportunities. The DTI has special offices in each region to deal with business both within the Community and now in the wider economic area which the applicant countries to the European Community are fully engaged in.

§ Lord Eatwell
My Lords, further to the noble Baroness's answer to the supplementary question put by my noble friend Lord Barnett, will she confirm that the rates of VAT now levied by this Government are more than double the rates which were levied when he was at the Treasury?

§ Baroness Chalker of Wallasey
My Lords, so far as I know, rates throughout the Community have varied. While ours have gone up, if we are to meet what the noble Lord, Lord Barnett, said a moment ago, then we must work towards—although we may not quickly reach—common levels.

§ Lord Richard
My Lords, it was kind of the noble Baroness to agree (as indeed she had to) that VAT rates are higher now than they were when my noble friend was Chief Secretary to the Treasury. Since she could not resist the temptation of taking a swipe at the social attitudes and policies of other member states, apart from the United Kingdom, what is going to happen now when social policy is to be discussed? Under the terms of the Maastricht Treaty, are we to leave the room and leave the discussion on social policy to the other members or are we going to sit there supine and say nothing?

§ Baroness Chalker of Wallasey
My Lords, I firmly believe that we shall participate so far as we are able. But for the sake of Britain, we negotiated the opt-out from the social chapter. We shall not participate in the final decision if it is working against Britain's interests. That is why we had the opt-out. I was very interested to hear the noble Lord say what he did at the beginning of 880 his question. I have to conclude from that that if he is in agreement with his noble friend Lord Barnett, then he would be putting up VAT rates still further.

§ Lord Barnett
My Lords, the Government have had 15 years in which to reduce the VAT rate which I imposed, but they have done nothing about it. The question I was really asking was this: if the single market is to be effective (which I want) what are the Government doing to harmonise the rates? As I understand it, VAT harmonisation will not come until 1997 at the very earliest. So what are the Government doing about it? Has the noble Baroness seen the KPMG consultant's report—I am sure she has because she is smiling, and I am charming her now—which shows that 48 per cent. of exporters have seen no benefit from the single market?

§ Baroness Chalker of Wallasey
My Lords, perhaps I may first deal with the KPMG report. The noble Lord may know that I am a former market researcher. This is a survey which, on a self-selecting basis, got only a 5 per cent. response. While the company may have been satisfied with that, I, as a market research fellow, would not be. Neither would I be happy not to know what happened to the 52 per cent. which the noble Lord did not mention. When he speaks about VAT, we are going quite wide of his original Question. I remind the noble Lord that we have retained unanimity on all matters of taxation. That will enable us to prevent undesirable Community legislation if we so find it. We shall be working to find the best way to resolve taxation.

§ Lord Dormand of Easington
My Lords, is the noble Baroness aware—

Noble Lords
Next Question!

§ Lord Dormand of Easington
—that we are very concerned that such a pleasant lady should be so annoyed about what has happened, particularly when she is not normally like this? On a wider point, can she have words with her Chief Whip to say that it is really time that we had a full-scale debate on what is happening in Europe? I know that I am right in saying that in another place they have a full-scale debate every six months. It really is time that we did the same in your Lordships' House.

§ Baroness Chalker of Wallasey
My Lords, I am quite certain that my noble friend heard all that the noble Lord, Lord Dormand of Easington, had to say.