§ 3.3 p.m.
§ Report received.
§ Clause 2 [Freedom of movement for workers]:
§ Lord Howell of Guildfordmoved the amendment:
Page 2, line 39, at end insert—
( ) In each of the first seven years after commencement of this Act, the Secretary of State shall publish and lay before both Houses of Parliament an annual report which shall set out the results of the monitoring of the regulations made under this Act, including details of—
§ The noble Lord said: My Lords, the amendment is two-sided. It seeks to ensure that Parliament is kept fully informed of the results of the monitoring of the progress of the Bill and the treaty—that is to say, the monitoring of the interests of the United Kingdom and the progress of our relations with the accession states as they continue to emerge from their weak state in the past under the tyranny of communism into fully-fledged members of the European Union.
§ In particular, we note in the Explanatory Notes that it is the Government's intention to monitor closely developments in the movement of workers, although not to place restrictions on them or to use the regulations in Clause 2. We wish to see monitoring of not only labour market developments but also of investment flows—who knows, there might even be migratory movements in the other direction—and our aim is to ensure that these matters are not forgotten. The discipline of reporting them to Parliament annually will ensure that this is so.12
§ So far as concerns labour movements into the United Kingdom, we have been assured that there are really no prospective problems. In my view, that is probably correct. The Government will monitor these matters closely but they do not propose to use any restrictions, although I gather a number of other EU member states do. The Home Office has informed us that between 5,000 and 13,000 migrant workers annually may come into the United Kingdom from the accession states. If they are skilled workers, that will be an obvious benefit. We need skilled workers and we welcome the contribution that they will make.
§ It is estimated that by 2010 we will have in this kingdom more than 12 million people above pensionable age. While I, for one, do not believe that pensionable age is a bar to work—indeed, I reject the whole concept of dependence over pensionable age— there is no doubt that if the newcomers are both skilled and younger they will help our economic growth and vitality, which at the moment, I am glad to say, continues to be considerable despite a heavy burden of restrictions and taxation. So we need to be carefully informed of what is happening on the inward side.
§ Another aspect of migrant worker movements relates to the Roma people. There are large numbers of these people in the accession states and even larger numbers in the potential accession states of the next round, notably in Bulgaria and Romania and, possibly, in Croatia. Unlike most working people in the accession states, these people will want to move. The mobility chances of most people in the accession states are rather low—they intend to stay where they are and to improve their lives—but the Roma people are mobile and will wish to move unless they are more effectively integrated into the countries where they presently reside. We should be kept informed about how their integration into those countries is progressing and, in particular, about what kind of assistance we can give, and how we can focus it, to be of help in encouraging the Roma people to stay where they are and to integrate into their communities. So that is one side of the purpose of the amendment.
§ On the other side, we wish to be kept informed of the help and encouragement we are giving to those countries which have survived the horrors of communism to grow into strong and prosperous European nations. The overall sums are not very large. The entire GDP of all the accession states adds up to 5 per cent of the GDP of the European Union and equals roughly the size of the economy of the Netherlands. It is not a massive addition to the European Union.
§ But it could grow considerably larger. Indeed, it may already be larger—these figures are always suspect—because there are also the grey and black economies which add considerable amounts to the GDP of the accession states. There is a huge inflow of remittances from people from these states, which are found are all over the world, including the United States and elsewhere in Europe. When we take account of the purchasing power for parity adjustment, it means the addition to the EU's GDP will be between 9 per cent and 10 per cent, not 5 per cent. In all probability, because these countries' costs are low, 13 their education and skills are high, their dynamism and incentives are great, and they are not totally committed to the cobweb of regulations in the euro-zone, they will grow much faster from a lower base than the more ponderous economies at the centre of western Europe.
§ Parliament will want to be kept informed and up to date on agricultural reform implications. The cost of accession states has been estimated to be an additional 22 billion euros in agricultural subsidies by 2007. They will make a small offsetting contribution, but this is bound to have an impact on the overall EU budget and our own budget contributions.
§ There is also the flow of foreign investment—FDI, so-called—into these countries. All these states are now attracting a considerable inward flow of investment. One thinks of the vast investment by Volkswagen in the Skoda works in the Czech Republic. Most investment is either German or Dutch—the UK content is very low indeed. It would be very valuable for Parliament to be kept informed on how, as we hope will be the case, the UK content rises as we begin to realise the enormous potential of these countries and their very dynamic workforces.
§ We need to be kept up to date with the way in which these countries are thinking about the future of Europe. The general view seems to be that they will welcome deregulation, resist tax harmonisation—as we are being urged to do by the Chancellor, Mr Gordon Brown, in his various articles in the Wall Street Journal—and generally be on the side of the more flexible, less centralised and less socialised form of Europe.
§ Finally, Parliament needs to keep an eye on the next waves of accession after the accession states covered in the treaty and in the Bill. That wave will almost certainly include Bulgaria—which is proving to be a very successful economy but which started from a very low base—and Romania, which still has some difficulties. Both countries are aiming for a 2007 or 2008 entry. Alongside them comes Croatia, and we need to keep a watch on the situation there. Beyond that lies the prospect of Turkey's membership, which will bring in 70 million extra people, mostly Muslim. That will change the European Union out of all recognition from its present form. By 2015, we could have 600 million people in the European Union. Reports and information on these matters, which are vital for the future of this country, need to be kept before us.
§ To sum up the underlying theme of our amendment: we believe the UK need have no fears about this enlargement, but we need to be kept regularly informed about these vital developments in the interests of ourselves and of the accession states. I beg to move.
§ 3.15 p.m.
§ Lord Wallace of Saltaire
My Lords, we on these Benches intended to give lukewarm support to the amendment on the grounds that it is difficult for us to stand against calls for further transparency and 14 information. However, I am a little puzzled by the speech of the noble Lord, Lord Howell of Guildford— it did not seem to relate directly to the amendment.
I suspect that I am one of the few people in either Chamber who reads the six-monthly reports to both Houses of Parliament on EU development, which were introduced, I suspect, by the Labour opposition many years ago on much the same basis. These reports are not debated and are scarcely read, but people thought it would be a good idea to have them.
I am hesitant about the amendment; it suggests that we should be worried about labour movement from east to west, or so I take proposed paragraph (a) to imply. I was relieved, therefore, to hear the noble Lord, Lord Howell, suggest that we do not expect very much movement. Indeed, all the evidence from previous enlargements has been that when states join the European Union, people go back to their own country rather than leave it. The Spanish began to move back to Spain, the Portuguese back to Portugal and the Greeks back to Greece. So long as their domestic economies enlarge, they are likely to stay in their own country. The problem that we face with regard to migration to the European Union is from those countries that are further out—from Ukraine, Moldova and north Africa.
The question of the Roma is something else. When the noble Lord mentioned the Roma, I was thinking that when I worked on a farm as a student, most of the people picking potatoes and calabrese were Roma from across Europe. Such a situation is not entirely new. I also recall that a number of farms in Britain have not able to get their crops picked this last season because the toughening up of casual work permits has meant there are no longer enough people inside the country to pick the crops available. The Roma question is an important and sensitive one; we need to deal with it with the enlargement countries, and I suggest that it should not build up into another Daily Mail campaign against the dreadful Continent.
The noble Lord then mentioned the grey and black economies. As I understand it, the grey and black economies of Italy, Spain and Greece are, if anything, a higher proportion of the economy than they are in Poland, the Czech Republic and Hungary. These are all questions, incidentally, on which the European Commission provides regular reports which are easily accessible to those of us who are willing to wade through them. Of course, the statistics are provided by that superb outfit, Eurostat, of which the Conservatives are extremely strong supporters in their current form.
We hope that flows of investment will go to the new countries. Incidentally, I understand that the Italian investment flows are fairly large, and so are those of Germany, the Netherlands and Austria. I regret that more British investment does not go to those countries. We need more growth inside the European Union. We hope that these countries will grow 5, 6 and 7 per cent a year in the foreseeable future, and that that will help to lift the German economy out of the recession in which it has been stuck for the past three or four years.
15 Given all of these factors, we on these Benches cannot support the amendment. We welcome regular reporting, but regular reporting is already provided by a range of functions. We do not think that we should be concerned about the "dangers" of emigration from the countries that are about to join. There is no evidence of that happening. I remember that in 1990 and 1991, a range of people and the British tabloid press suggested that the fall of the iron curtain would lead to millions and millions of people from eastern Europe coming to western Europe. The figure of 25 million appeared in several reports. It never happened, and it will not happen. Scare stories about immigration are something that we should all resist. Similarly, we hope, in terms of broad economic conditions, that these countries will grow, and we hope that they will help our economy to grow. On that basis, we on these Benches decline to support the amendment.
§ Lord Dubs
My Lords, the noble Lord, Lord Howell, said that we in this country have nothing to fear from the enlargement of the EU by 10 extra countries. I agree with him. More than that, however, we have a lot to gain through enlargement; I think the European Union will be better for the accession of these countries, in terms of what they have to bring and the message it gives to the people of Europe that we shall be a stronger Continent when these countries join.
I think that the amendment is unnecessary, however. I am pretty confident that this Government—or any British government—and the European Commission would provide the sort of information that the amendment seeks. I should have thought that it is not necessary to have this on the face of the Bill. However, I should like to emphasise one important point. Having visited the Czech Republic and Poland fairly recently and having tried to learn a lot about some of the other accession countries, it is my sense that British business is losing out in those countries. We have a lot of good will as a country, yet the German and Dutch industries, and others, are making the running. We are losing all—or many—of the benefits of enlargement, in terms of British companies being able to develop a worthwhile stake of investment in those countries. That is a pity.
Traditionally, there is a lot of good will towards Britain in those countries and a lot of willingness for us to do more business. Indeed, some people in those countries complain that our industry and business is not sufficiently interested in going into those countries. I very much hope that, if the noble Lord's amendment has done nothing else, it has given us the chance to highlight that. If we let that go on, we shall lose out. If the Germans get the lion's share of EU investment in Poland, for example, as they have at the moment, with that will go political influence. We will lose out both economically and in terms of political influence in the EU. I am not sure how much the Government can do to encourage British firms to 16 invest in those countries; they are already doing quite a lot, but it does not seem to be having quite the effect that it might have.
Having said that, I do not believe that the noble Lord's amendment is necessary and I am sure that he will withdraw it.
§ Lord Lea of Crondall
My Lords, I shall add briefly to the line of thought developed by my noble friend Lord Dubs. We carried out surveys under the European Trade Union Confederation of migration among the accession countries. Of course, I am referring to the accession countries, not to Albania, Russia or Ukraine. We found two interesting variables: first, the level of prosperity in the country and, secondly, the prospects for the future.
As regards the relative levels of prosperity, we found that there was not massive migration, unless the income gradient in a short geographical distance was more than about five to one. When Bratislava, relative to Vienna, which is next door, became more than five to one, very great pressures were put on the labour market. In addition, now that there have been increases in investment, productivity and production in countries such as Poland, Hungary and the Czech Republic, it is remarkable how people in those countries want to stay at home where they were brought up, because they have prospects for the future. The accession countries have those prospects precisely because they have already, ex hypothesi, jumped hurdles in the acquis communautaire to become accession countries.
Therefore, although monitoring of statistics is always to be supported, I would like to echo the line of thought of my noble friend Lord Dubs.
§ Lord Hannay of Chiswick
My Lords, I, too, would argue that for two reasons the amendment is unnecessary and—although I would not want to exaggerate this—undesirable.
First, every new country that enters the European Union has only one desire, above all others—to be thought of as a member state like all other member states. That was certainly our case, when we entered it. New member states do not want to be treated in a separate category or patted on the head when they do things well or chided when they do things badly. The systematic organisation of such a categorisation would not contribute to our relationship with those countries, nor would it contribute to making them feel welcome.
Secondly, as the noble Lord, Lord Howell, said, there is that dreadful phrase, coined by the Defense Secretary of the United States of America. Without asking for it, those countries were called "New Europe". Frankly, I can think of no title more likely to repel them from us and others than if we insist on referring to them as "New Europe", and expect them therefore to toe a particular line on foreign or economic policy. Along with the noble Lord, I happen 17 to think that they will often take that line, but telling them that they are part of something called "New Europe" will not make that more likely.
§ Baroness Carnegy of Lour
My Lords, of course we all hope that what the noble Lord has just said is how people will feel, and indeed I am sure that they will. I, for one, am hugely encouraged by what is happening in the countries of the next wave that are entering Europe.
Nevertheless, we must be realistic. I should have thought that the Government would have learned one lesson last week, in their decision about asylum seekers. We must be realistic about what is going on and accept that we need to keep an eye on it.
My noble friend Lord Howell of Guildford referred to the Roma people. I judge by what I have read in the press that large numbers of Roma people are saying that they want to come into other member states, and that they want to come here. It is very natural that they do. Do we know what the scale might be of that number of people? Of the 5,000 to 13,000 a year that the Government estimate may come from the new member states to this country, is there a proportion allowed for of Roma people? Does that figure include Roma people and, if so, what is the proportion—or are they a completely unknown quantity at the moment?
Countries in the future wave, such as Romania and Bulgaria, have a very large number of Roma people. Bulgaria in particular has a high percentage, and it seems likely that they may want to come here. People in this country will want to know about that, and the Government have a responsibility to keep an eye on the situation. I have no picture of what the effect of large numbers will be, but we should know. People will want to hear reports regularly. If the Government do not like the amendment, I hope that they will make a point of regularly reporting to the public who is coming, what they want to do and where they are. Will the Minister say a word about that?
§ 3.30 p.m.
§ Baroness Symons of Vernham Dean
My Lords, I am grateful to the noble Lord, Lord Howell of Guildford, for explaining his amendment. Like him, the Government take very seriously our obligation to monitor the impact of regulations made under Clause 2 of the Bill. However, the Government cannot accept the amendment, which we believe to be unnecessary and disproportionate.
Of course, arrangements for monitoring need to reflect the strong and credible assumptions on which the Government's policy is based. The evidence that informed our decision to open the labour market next year strongly suggests that free movement will not significantly increase migratory flows into the UK. Research studies suggest that the small net increase predicted for the aftermath of accession will be spread over the first decade after accession. History backs that up. The noble Lord, Lord Wallace of Saltaire, recalled that there were nearly three times as many Spaniards working in France when Spain joined the 18 European Community as there were 10 years after Spanish accession. The fears of mass emigration from Spain and Portugal that some entertained in the mid-1980s were simply not realised.
The labour market in this country already deals with an enormous flow in and out of work, with around 7 million people starting a new job every year. That dynamism means that the labour market can adjust to structural changes much larger than those implied by the regulations that we are discussing. Furthermore, we are in the longest period of sustained economic growth since quarterly records began in 1955. Employment is at record levels, up by over 1.5 million since 1997, and the underlying trend remains upwards. Recent unemployment figures are the best since the 1970s and the number of new vacancies coming up each month remains consistently high. Unemployment as measured by the ILO is less than 1.5 million, which is 5 per cent, while the UK claimant count stands at 929,800, which is 3.1 per cent. Both of those figures are at their lowest since 1975.
Our policy of sound economic management has delivered steady growth in the economy and in employment. Our active labour market policies, by helping jobseekers look for work, ensure that these new job opportunities are open to as wide a range of people as possible.
Moreover, throughout the existing member states of the European Union, demography points to a shortage of labour in very much the way that the noble Lord suggested, because everywhere the working age population is declining in relation to the non-working age population—and particularly the retired population. Birth rates are falling and so far there is no sign of a trend to later retirement, desirable though that may be for some.
In short, as the noble Lord, Lord Howell of Guildford, acknowledged, there is every indication that far from causing problems, we shall need workers from the new member states. We believe that the amendment is unnecessary because the problem simply is not great enough to merit it. We also think it is unnecessary because we believe that the plans in place are robust enough to deal with any changes in the future.
From 1st May next year the Department for Work and Pensions will monitor a range of existing measures of labour market performance in order to gauge whether the regulations have any impact on the United Kingdom labour market. Statistics will be drawn from already available and published data such as the Labour Force Survey, the claimant count, vacancies notified to JobcentrePlus, and so on. This information should give us an overview of the impact of the regulations. The department is currently working on a way to establish the monitoring framework.
In addition to this, the Government will hold informal consultations with key stakeholders such as the CBI, TUC and employers, to supplement the statistical data. We shall involve the regional and devolved authorities. We shall welcome representations initiated by other parties with a direct 19 interest. For example, the noble Lord mentioned the agriculture industry. It is important that that monitoring is widely spread. Monitoring in this fashion will take place across the seven years of the transitional period. The arrangements we have put in place are designed to be flexible and effective to enable Ministers to take decisions promptly where decisions are necessary.
In an earlier stage of our proceedings, the Government accepted the recommendation of your Lordships' Select Committee on Delegated Powers and Regulatory Reform, following correspondence with the noble Lord, Lord Dahrendorf. The Government's amendment, which was approved and now appears in the latest print of the Bill, will ensure that all regulations made under Clause 2 of the Bill are subject to resolutions of both Houses. It is the Government's practice, when laying draft regulations, to provide explanatory notes and, where appropriate, a regulatory impact assessment.
I give the House an assurance that, if it became clear as a result of monitoring that safeguards needed to be invoked through amending regulations, the Government would lay out the evidence in the explanatory notes and a regulatory impact assessment. Parliament would then be able to study and debate the evidence when it considered the resolutions on the amending regulations.
The Government's intentions for handling monitoring are proportionate and flexible and accord with the principle of utility. However, the amendment put forward by the noble Lord, Lord Howell, and the noble Baroness, Lady Rawlings, fails these tests.
First, the amendment is disproportionate and needlessly bureaucratic. As I argued earlier, there is no evidence to suggest that the risks associated with the Government's policy on free movement are at all serious. They do not justify the regular scrutiny and intense debate that the amendment presupposes. The risks do not justify the cost of formally producing and publishing an annual report and laying it before Parliament. The costs would not simply fall on the UK Government. Many stakeholders within the United Kingdom, including employers, would expect or be expected to make an input into the reports. I am a little surprised that the opposition are trying, through this amendment, to increase the regulatory burden within the UK in that way.
Secondly, the amendment is inflexible and does not satisfy the principle of utility. As I made abundantly clear today and at earlier stages, the Government take seriously the availability of safeguards. I hope your Lordships will recognise that I have made an unambiguous commitment today to let Parliament have the available evidence if, in the Government's view, it becomes necessary to invoke the safeguards. That commitment is more important than the production of an annual glossy report, which I do not believe would lead us very much further.
Thirdly, I am puzzled about paragraph (b) of the amendment. A lot of information about trade and investment flows is already in the public domain. The 20 ONS publishes such data annually in the so-called "Pink Book" and Foreign Direct Investment. It is questionable how much more we need to report on that issue.
I am also bound to say that there are drafting problems with the amendment which render it defective. However, I do not want to dwell on those because this is an issue of policy differences between us. I hope that I have gone some way to persuade your Lordships that the amendment is unnecessary.
As regards the point made about the Roma people, all candidates due to join in 2004, as well as Bulgaria and Romania, have fulfilled the Copenhagen political criteria for membership of which respect for human rights is an integral part. We recognise that all the candidate countries offer protection under the law to all their citizens but I am bound to say that Her Majesty's Government and the EU are working closely with candidate countries to address some of the problems that exist through legislation and development programmes. We are running a range of programmes using funds from DfID with our EU action plans, Global Opportunities Fund and the Global Conflict Prevention Pool to help accession countries set out their programmes specifically to target Roma communities. I assure the noble Baroness, Lady Carnegy, that our embassies in the accession states regularly monitor the situation of the Roma and report back to Her Majesty's Government, allowing us better to focus our actions thereby. The figures that the noble Lord mentioned in moving his amendment are already included in the Roma factors.
My noble friend Lord Dubs made some interesting points. I shall relay those to my colleagues in TPUK and British Trade International. Having been a trade Minister I believe that more work could be done in this area, although we have reached out to the accession countries in a structured way in the past year or so.
I refer to the telling argument here. I fear that an annual monitoring report to Parliament would be viewed with great anxiety by the new member states where the UK Government's policy has been widely applauded, I am happy to say. Of course, all the new member states accept our right to impose safeguards in the circumstances set out in the accession treaty. However, many will assume that the amendment would simply impose a new political condition on the Government's policy. They will fear that its proponents want to give Parliament an annual opportunity for questioning, reviewing or undermining the policy quite apart from the principles and safeguards that underpin it. In short, I fear that it may be seen by some—I emphasise "by some", only— in the accession countries as an additional political hurdle that has to be overcome every year.
I believe that your Lordships' House should give the new member states a clear sign of our confidence in the policy that we have before us and the safeguards already attached to it. It is now time for Parliament to give an unequivocal message of support to the new member states. I hope that the assurances I have given 21 are sufficient to persuade the noble Lord and the noble Baroness, Lady Rawlings, to withdraw the amendment.
§ Lord Howell of Guildford
My Lords, I am grateful to the noble Baroness and, indeed, to all noble Lords who spoke in this short debate on our amendment. I do not want to discuss dangers posed by large migrations of workers to which the noble Lord, Lord Wallace of Saltaire, referred. I do not believe that that will arise. However, as the noble Baroness said, we are clearly correct to monitor carefully all aspects of the situation and how the treaties are working, not merely in the labour market but in other areas as well. The purpose of the amendment is simply to keep those matters before the House.
I disagree with those who suggest that the smaller countries will be uncomfortable with the proposal. It is not the smaller countries which need reminding or patronising about their position; they are strong independent countries and they know perfectly well where they stand and what kind of Europe they want. However, we in this Parliament need reminding that we used to be the champions of eastern Europe, not just siding with the large countries—the "bully boys" as Austria calls them—but a genuine supporter of the smaller nations of central and eastern Europe. That is what we should become again.
I do not accept the negative interpretation of the amendment, but I accept the assurances and the commitment given by the noble Baroness this afternoon. I believe those will help assure ourselves and, indeed, these noble and gallant countries of east and central Europe that we have their interests at heart and that they will not be forgotten. However, in the light of what the noble Baroness said, I beg leave to withdraw the amendment.
§ Amendment, by leave, withdrawn.