European Union Social Chapter

HL Deb 21 May 2004 vol 661 cc1027-44

12.52 p.m.

Lord Lea of Crondall rose to ask Her Majesty's Government what benefits have been gained by people at work in Britain arising from the signing of the European Union Social Chapter in 1997.

The noble Lord said: My Lords, the undoubted impact of the Social Chapter over the past 10 years, and in particular since the Labour Government signed up to it in their first major act when they were elected in May 1997, is thanks to careful groundwork—above all, by Jacques Delors when President of the Commission in the late 1980s. He recognised that there must be complementarity between economic and social policy if the aim is to create an internationally competitive and socially just society, which, in turn, means an economy able to handle rapid structural change with confidence and support across the Community. Therefore, we had the Single European Act and the Social Chapter and, later, the move to economic and monetary union, with huge implications for the creation of one Community.

I know that some of that is anathema to one kind of English mind-set. The question whether the European Union, under whatever label, was to be just a single market or not just a single market has been the counterpoint of debate over the whole of the past 50 years—indeed, for as long as most people can remember. Surely no one can now doubt that where we cross cultures and languages, with all the stresses of history and consciousness, we need co-operation between the civil society institutions—by far the most significant in this sphere of social and employment policy being the trade unions.

Therefore, although I shall concentrate today on the past 10 years, we can all recall landmark legislation over a much longer timescale, including in the social field. For example, it is well over 20 years since we accepted obligations on employers to give equal pay for work of equal value. Let us remind ourselves of something else from Europe that we now take for granted: the protection of terms and conditions of employment when businesses change hands, whether in the public or private sectors. All 28 million people in Britain at work are covered by that in one way or another.

In recent years, the TUC has had no doubts about the importance of the European dimension to the development of employment rights in Britain—certainly not since the historic address by Jacques Delors to the Trades Union Congress in Bournemouth in 1988. That commitment to co-operation in depth across Europe has been confirmed by the fact that John Monks last year agreed to be translated from General Secretary of the TUC in London to General Secretary of the European TUC in Brussels.

The European Trades Union Confederation of some 50 million members in 35 European countries is also the social partner for negotiations under the Maastricht Treaty, which we know as the Social Chapter. It so happens that I was involved in the exercise from the start, participating in a series of private meetings with Mitterrand, Kohl, Gonzalez, Andreotti, and so on, before Maastricht so that we knew we would succeed there.

Given the tradition of political discourse in Britain, it is not surprising that there was sniping against the Social Chapter right from the start—not least from the Conservative Party, and Michael Howard in particular.

It was on this issue that he threatened to resign his post as Employment Secretary in John Major's government when the possibility of the British government signing up to some form of agreement was mooted at Maastricht in 1991.

It was as if the sky would fall in—in Rupert Murdoch's case, some of us sometimes wished that it had. But I think it is fair to say that that has not been the consequence of us signing the Social Chapter when Labour came to power in 1997. Those were the days before some of our colleagues became even more in thrall to Mr Murdoch than had previously been the case. The new rights have been widely accepted and, indeed, have become popular—in Bristol, Birmingham, Belfast and Berwick-upon-Tweed. The implicit question now, indeed, is: what was all the fuss about?

The EU has been an innovator in a number of ways, which I shall enumerate, but the essential procedure is itself remarkably bold. I quote the relevant clause of Maastricht: Should management and labour so desire, the dialogue between them at Community level may lead to contractual relations, including agreements".

The procedure is that, if such agreements are reached, they are then submitted to the Council of Ministers. But it should be noted that in one respect the employers have a veto in the sense that they are involved with the trade unions in the negotiations, with a number of consequential advantages—not least the fact that employers can live with the result, otherwise they would not have reached the agreement.

The substantive range of agreements covers very wide and varied fields, some broad themes of which can be identified: making working life more friendly for women, for example, and the related issues of what we now call "work/life balance". These precepts have been given a massive boost by the measures on parental leave, working time and part-time workers. I shall spell some of that out.

Not all the measures affect all 28 million people at work in Britain—certainly not all at once. But I say without fear of contradiction that every worker in Britain benefits from the generally improved framework conditions affecting the quality of the contract of employment. There are now 6 million part-time workers in this country, all benefiting from the European Part-Time Work Directive, which provides that they are not to be treated any less favourably pro rata than full-time employees.

Incidentally, some 10 years ago, the European Commission started to dub these provisions as legislation for "atypical" workers. Some of us pointed out, tongue in cheek, that, the way things were going, the atypical workers would soon become more typical than the formerly typical workers, and I sense that quip becoming true.

Although the Working Time Directive was not introduced under the Social Chapter—it came earlier via a different route—it is often put into this category. I estimate that some 10 million workers are benefiting from the four weeks' paid holiday. The majority of manual workers never had such rights and many were not covered by collective agreements. The same is true of many millions of white-collar office and shop workers; Easy Jet must have seen it all coming.

In my local pub I have heard people say that they are now moving from the bogus self-employment status prevalent in the construction industry to proper contracts of employment precisely because they will have four weeks holiday paid upfront. Workers on short-term contracts are now receiving the pro rata rights and benefits of workers on open-ended contracts.

All in all we are talking about a huge improvement in the quality of contracts of employment. Take the right to 14 weeks' maternity leave, which most do not realise stemmed from Brussels, or the right to three months' unpaid parental leave or time off for urgent family commitments, also negotiated under the Social Chapter. All those advances assisted the changing economic structure of part-time work and work on fixed-term contracts by recognising those as mainstream employment affecting many millions of people at work in Britain.

I would like to make one further point before concluding. I am sure that the argument will be made that we should be quite capable of making such reforms in Britain on our own and that they should have nothing to do with Brussels. I hope that the answer to that is obvious. As every trade union official in the country can testify, employers will always cite international competitiveness as the reason why we cannot do that kind of thing on our own. The fact is that it is enormously beneficial in the area where we conduct most of our trade—the EU—to have progress on social measures on a concerted basis. By the way, the EU has a trade surplus with the rest of the world, unlike the US, but that is a wider story.

The next measure to be introduced is on information and consultation rights. It is extremely timely. All the surveys show that in Britain we are way behind as regards keeping workers in touch and getting feedback from them on a whole range of issues, from technology to training and pension planning. When that is phased in, to the point where all undertakings of over 50 workers are included, it will cover three-quarters of all employees, as and when those measures are triggered into effect, industry by industry. Potentially, about 21 million workers out of 28 million workers in Britain will be covered.

In itself that is a very significant further shift from a purely voluntary system of employment relations in Britain to one with a broad framework of minimum statutory rules. It will mean that employers will need to be more systematic in their explanations of their future prospects and plans.

I think it was Frankie Howerd—not Michael Howard—in one of those "Carry On" films who, not noticing that there were several Roman legions marching in his direction, asked the rhetorical question, "What have the Romans ever done for us?". In our case, the answer is quite a lot. I think it is very timely for people at work in Bristol, Birmingham, Belfast or Berwick-upon-Tweed to show their appreciation for what has been achieved so far and to resolve to keep this good work going in conjunction with a Labour government in the future.

1.3 p.m.

Baroness Dean of Thornton-le-Fylde

My Lords, I very much welcome the opportunity for this short debate. I thank my noble friend Lord Lea for initiating it.

In discussing people at work, I think that it is appropriate today to refer to the sad passing of my friend—he was a friend—Lord Murray this morning. He was an enormous figure in this House. He was quiet, but nevertheless a man of enormous intellect and integrity. He gained the respect of anyone with whom he came into contact. He was brought to the trade union movement by his profound Christian beliefs and that led him into a life of service for working people and society as a whole in Britain. I am sure that all noble Lords will agree that he will be sadly missed as a Member of this House.

The debate deals with the European Union Social Chapter, as it has become known. It was agreed in 1991, but not until a couple of months after the Labour Government were elected in 1997 did the UK sign up to it. My noble friend covered a great deal of the detail of the Social Chapter and I shall not take up more time of the House by duplicating that. It covers essential areas.

I want to deal with the benefits to the working people of Britain and to Britain itself. The Social Chapter covers not only those in work but also their families and it covers benefits to employers. It brings into the workplace a civilising environment for relationships between employees and employers. Many good employers have brought about some of the changes initiated by the Social Chapter.

As my noble friend has rightly said, quite often in negotiations I would suggest matters, such as equality or pensions, and be told, "That cannot be done because the competitors down the road will not do that; they will undercut us and we shall lose jobs". Alternatively, if the competitors down the road were prepared to do it, it could not be done because we were in competition with Europe. If the matter were laid down in law, the situation would be different. At national level, governments of the day would often say, "We cannot do that because we are in competition internationally".

Here we have a proposal that comes from an initial idea in Europe, which was about the single market, although for me it was about much more: it was about a peaceful Europe, a Europe that would be a civilised place in which to live, making life better for all members of the Community.

I regard the Social Chapter as being more than just rights for people at work. It has assisted considerably those on occupational pensions. I gather that Britain is the only country in Europe to have an anti-racial discrimination law. That is a very progressive law and it is good to see that initiated by the Social Chapter. There is the change to the burden of proof—our law was very short on that. Last year was the year of disability in Europe, identifying the special needs of people with disabilities. There is a whole range of other matters.

One key area is the term "social partnership". Part of Britain's economic problems have arisen because too often the place of wealth generation—the workplace—has not been a place of social partnership, but a place of strife. It has been almost a battleground, with "them" and "us". The Social Chapter brought about a whole environment, including the introduction of social partnership, which the TUC always supported, as I did. I could see that those for whom I was privileged to be union officer would be better off in successful companies because successful companies can afford to be good companies. No one wants to work for a failing company. That is at the heart of what the Social Chapter is about and why there have been benefits for working people.

There is a whole range of activities and areas of protection, which are national issues, international issues and issues of a single market. I take the point made by my noble friend Lord Lea about the opposition and it will be interesting to hear what is said in response to the debate. But I think opposition is difficult to come by because we now have the benefit of hindsight. We now do not have a situation of being told, "This will not work; it will bankrupt the country and it will put companies out of business", because we now have the benefit of hindsight. Today over 70 per cent of our population is in work and that is little short of the highest number of people ever in employment. Certainly in numbers, there are more people in work today than ever before—more than 28 million people.

So I believe that it is about a step-by-step incremental approach, about having a workplace environment where we can have these discussions and where we can move forward with companies. It is also about engendering what is absolutely needed in work today in Britain, and that is looking to the future. Because of the demographic trends, because of globalisation, Britain today needs more than ever a knowledge-based society in which employees have a loyalty to the company born no longer out of the fact that they have a job for life, because that does not happen, but out of a need for training. However, it also concerns what is contained in the partnership between them as employees and the company: what compact the company will enter into to ensure that they want to stay with the company. Yes, training is a factor, but so are family-friendly policies. Pensions are another— controversial at present, I agree.

Discrimination is another area. The number of women in employment in Britain is growing. We have among the highest proportion outside the Scandinavian countries of women in work today. That will not change. My goodness, we do not want it to change; if it does, it will affect the economic viability of Britain.

In conclusion, I welcome the debate. We need to have more of this kind of debate to get a balance in the European discussions that we will, it is to be hoped, have in Britain, which, unfortunately, until now have taken place in closed arenas such as this one. I do not suggest that people are excluded from the debate, but we need to spread the discussion about Europe more widely and have a more balanced discussion then we have been able to achieve in the country thus far. So I welcome the debate and look forward to hearing the response from the three Front Benches.

1.10 p.m.

Lord Maclennan of Rogart

My Lords, I begin by associating myself and my noble friends with the words of the noble Baroness, Lady Dean of Thornton-le-Fylde, about the passing of Lord Murray. He was indeed a statesman of the Labour movement. During what in my lifetime must be regarded as the most tempestuous and confrontational period, he never lost a sense of the dignity of labour, which he personified. We shall all remember him with pride and sadness at his passing.

I am also enormously grateful to the noble Lord, Lord Lea. for introducing this extremely timely debate. For it takes place against a background in which the prevailing mood of the British people emphatically emphasises what are perceived to be the disadvantages of the European Union. It is so important that we do not take for granted the great, abiding benefits that have come in the daily lives of many people as a result of European Union initiatives, especially in the field of the workplace, which affect all our citizens in so many aspects. It is right to recall those in some detail, as did the noble Lord, Lord Lea; and, indeed, as I wish to do.

As this country is being asked effectively to accept the continuance of that role of the European Union or to reject it—for we should be in no doubt that the loss of the referendum by those who advocate it would be seen as, and in practical terms be, a discontinuity of damaging proportions to our relations with the European Union—we should remember that those positive benefits, and others to come, are what the great debate will be about. If we reflect on the development of social policy in Britain during the past two decades, few of us would doubt the valuable impetus for reform that has come from the European Union.

I parenthetically recall one occasion—not strictly about employment law policy—in which I had personal involvement as a junior Minister in the Labour government of the day. Despite the wishes of some Ministers, that government shied away from the banning of corporal punishment in the classroom and it was left to the European Court of Justice to declare it unlawful.

More startlingly and publicly, other noble Lords may recall the debate in 1983 when the late Alan Clark introduced the order to give effect to the European Court of Justice ruling in a case about equal pay for work of equal value. One remembers well his personal attempts to distance himself from the impact of what was being done and his distaste for the fact that it was the necessary consequence of European Union law. Who could doubt that it would never have happened under the government led by the noble Baroness, Lady Thatcher, without that requirement of law?

Europe has provided the thrust for reform, but in so many ways Britain has tended to be the laggard. The lesson, which some Ministers still have not learnt, is that our partners will no longer accept that Britain should be permitted to act as the drag anchor when they are agreed on how to advance. One sometimes has the impression that Ministers regard the European Union as a mortally weakened bull in the ring, maddened by every pass of the Foreign Secretary's red-lined cape under its nose. Our partners are wise enough to recognise that the grandstand before which such behaviour is conducted is back home and has been softened up by the press to accept those predictable rituals for what they are—archaic, death-dealing entertainments.

As he embarks on the current negotiations on the convention, including discussion of the Charter of Human Rights, which widely touches on issues of employment law and social policy, I do not doubt that the Prime Minister will be conscious that if Britain seeks to step off the moving travelator towards improving the condition of life of our citizens, the European Union will go on. We shall he left in the position of the late petitioner, seeking to catch up, as was the case when the Labour Government came to office in May 1997 and embarked upon the catch-up provision over the Social Chapter.

It is worth recalling what happened. It is also worth remembering how the present leader of the Official Opposition fought tooth and nail against the Social Chapter of the Maastricht treaty and how he resisted every attempt to enhance the European Union's competence in that sphere. Fortunately, he and his colleagues were firmly rejected in the opinion polls.

However, there was a catching-up operation to be done by the new government, which included: the introduction of the right to four weeks' paid holiday a year, one day off a week and a general limit of 48 hours in the working week, 13 hours in the working day and eight hours in night work—a directive that had been introduced in 1993 for the rest of the European Union. It involved, belatedly, introducing the right to three months' unpaid parental leave and to time off for urgent family reasons. It involved the requirement for undertakings or groups of undertakings with at least 1,000 employees located in the European economic area and at least one establishment employing a minimum of 100 workers in each of two member states to establish works councils. It involved the extension to Britain of the right of part-time employees not to be treated less favourably than those working on a full-time basis.

Subsequently, further measures were introduced, not as catch-up provisions but measures in whose shaping we were able to take part, having subscribed belatedly to the Social Chapter and effected the revision of the European Community Treaty to encompass it. It included the right of fixed-term workers not to be treated less favourably than comparable permanent workers; the right to four weeks' paid holiday a year; and the extension of limits on working time to the excluded sectors: transport, sea fishing, offshore industries and junior doctors.

One remembers also how under the race discrimination directive new rules were introduced for the benefit of our citizens: on the burden of proof in race discrimination cases and the removal of the exemption covering racial discrimination in employment in a private household. Indeed, many scandals on that front have been brought to the public's attention. It also involved the prohibition of discrimination in employment on the grounds of religion or belief or sexual orientation, giving effect to the European Employment Directive 2000/78/EC of November 2000. There remains more in the pipeline. There is the age discrimination strand of the European Employment Directive 2000/78/EC, which requires that regulations be enforced prohibiting discrimination on the grounds of age by 2 December 2006.

There are other measures, but I was advised not to weary the House by putting too much on the record. Nevertheless, they are significant matters, whose provenance it is right to remember. It is also right to remember the threat to their continuing enactment at this time, when we hear so much bilious rhetoric poured upon the work of the European Union by those who seek to return this country to the status of an offshore island dragged along in the wake of the United States. Those matters have been addressed comprehensively and with a forward-looking sense of purpose in the draft treaty on the European constitution.

The draft treaty sets out clearly the shared competence of the European Union in respect of social policy. Article 13(2) sets out those aspects dealt with in Part 3 of the constitution. It is clearly intended to subserve the definitions of the objectives of the European Union as set out in Article 3(3) of Part 1 of the constitution. It is in part a social Union. The original philosophy underlying its establishment—that the social dimension, referred to in the preamble to the Treaty of Rome, could be brought about merely by improving the mobility and freedoms in the Union—was not enough. It had to be directly assisted by legislative activity that was social in purpose. One could not rely solely on the freeing of the market to bring about those changes. No doubt the theory will continue to be argued by the ideologues and self-interested individuals who seek to present their case for protecting their own employment practices by invoking arguments of a less obviously selfish nature.

It is my judgment that that argument has now effectively been decided in the European Union. The Union has a social dimension, and the issue is not whether it should have competence in the sphere, but precisely how it should exercise those competences, and, where it is necessary or helpful to do so, to avoid distortions of the marketplace and to encourage the laggards to take action where it is required. I have no doubt that the Minister will be ready robustly to reject the suggestion, with which we lived before 1997, that the introduction of such changes in our employment law would have a disastrous effect on British competitiveness. The actuality is that Britain is among the more competitive countries in the global economy. Evidently our position has not been hampered one whit by the adoption of those important social measures in the workplace.

I congratulate the Government on their record of innovation so far and look to them to be equally robust in providing, through the convention's draft treaty, the means to continue this benign development of our own law.

1.27 p.m.

Lord Howell of Guildford

My Lords, I share with noble Lords regret and sadness at the passing of Lord Murray of Epping Forest, who we remember as Len Murray. Obviously, my view of how to better society differed from his in some ways, but we served together on the National Economic Development Council at the beginning of the 1980s and got on extremely well. I had some very valuable discussions with him and we found common ground, although I confess that it was not all common ground. He was a very great figure and will be missed.

The Unstarred Question initiated by the noble Lord, Lord Lea, takes me down memory lane into past battles. When I saw the debate listed I tried to think why we all felt so deeply about some of the issues raised by the Social Chapter, which, as part of the social aspirations of the European Community, were there from the Treaty of Rome onwards. There is nothing very new about the original social and economic aspirations. But it must be recalled, as I am sure the noble Lord, Lord Lea, can, that in the atmosphere of the 1970s, and perhaps the 1980s, the whole country was assailed and appalled by the ways in which militant trade unionism of a certain kind—the noble Lord, Lord Lea, was utterly disassociated with that aspect—abused workers' rights. Proper rights and well-established and fought-for rights were openly and flagrantly abused, and as a result dreadful cruelties were imposed on the most vulnerable members of society and this country was brought to its knees, culminating in the winter of discontent. Those who had questions in their minds, and still may look critically at the piling on of more social rights of this, that and the other kind, as particularly instanced in the present Charter of Fundamental Rights'—which will apparently be part of this new constitution, if it happens—have a fair case to make.

Certainly, for the first half of my political life, this country was constantly embroiled in bad industrial relations in contrast to more recent times, and suffered appalling disruptions of normal daily life and work, which we could not stand. They turned us into the sick man of Europe in those days, something that we ceased to be during the 1980s and 1990s. I am not sure that many people of older generations will either forget or forgive what was done so irresponsibly and unaccountably to our country in those terrible days. We never want to see that period come back again. I look with a little unease when I hear the loud-voiced claims of those inside vital public services that their rights must be upheld even at the expense of grave and direct disruption and possible danger to human life. It is sad that that attitude persists even to this day.

That certainly explains why Social Chapter debates were so intense in the past. It explains why the present Government—the Labour Government—are fighting so hard at this minute to resist new legal rights on top of our own extensive armoury of worker rights, and to resist them being imposed through legal status being given to the new Charter of Fundamental Rights in the new constitution. The Government—from the Prime Minister downwards—promised that would not happen. It looks to me as though it will happen. I hope that Ministers will win the battle and stand on the ground on which they said that they would stand. Frankly, it looks to me as though that battle is already lost, unless the whole constitution is sunk. I, for one, think that outcome is now highly likely. I was bold enough to write in the International Herald Tribune a few weeks ago predicting that the rush for trying to get a draft by 17 June was like the rather wild horseman running at the fence too fast, stirrups flying, and those pushing this course of action were riding for a fall. That fall is about to come.

All this goes along with the concurrent push—in a sense this is the next phase of the Social Chapter story—to make the UK give up its exemption from the 48-hour working week directive. Of course, 48 hours sounds like a long time to work, and it is a perfectly desirable limit to have on some kinds of work. Surely—this is part of a more general theme that I shall develop—this is something to be negotiated with employers or left to individuals to choose freely if they want to work longer. In a modern, service-based economy, hours are bound to be flexible and unpredictable to fit in with the other aspects of people's lives, such as leisure, work and family duties.

In the professions, jobs must be finished, even if it means working through the weekend or through the night. Services must be delivered and deals completed overnight. The doctrine of trying to apply a central control of hours must be a huge error in modern economic conditions. The French Government have found out just how appallingly damaging their 35-hour working week has proved to be. It is no doubt one of the factors that have brought the French economy to the virtual coma and stagnation that it now faces. All those thoughts are raised by going back over the Social Chapter. I supported it, although I was not a member of that government. That was what the government were thinking about when they sought the opt-out of the Social Chapter at the time of the Maastricht Treaty.

A second matter raised in this debate was touched on by the noble Lord, Lord Lea, and the noble Baroness, Lady Dean. Many aspects of the social and labour legislation that govern work practices in this country are thoroughly admirable. I have often felt—standing aside from party politics for a time—that in some areas one party or another, including my own at times, could have pushed these things much more vigorously. I am not too sure that I include in that approval the point raised by the noble Lord, Lord Lea, about the advances in status of part-timers. A lot of part-timers may have a better deal, but I wonder how many part-timers are not part-timers at all, as a result of employers saying, "This is really too difficult for us; we would rather not get involved in these additional obligations". I do not know. It is a balance and a debate that will no doubt go on and never be fully resolved. In some areas, it is fair to say that my party has been a pioneer in social legislation. Why, oh why, do we so definitely need a supra-national body to impose these laws and carry forward proper working conditions for working people? What is wrong with our own legislative and social aspirations? They were powerful enough in the past. Why can we not do it on our own?

I accept, if anyone wishes to point out, that in the past employers in some areas of the United Kingdom—certainly in the 19th century and maybe the 20th century as well—behaved like idiots and did not pursue the conditions for their workers that would have been in their own interests and would have raised their productivity. I have always personally held it against the employing fraternity of Britain that we were much too slow—and may be still too slow—to see a much wider ownership of capital. I mean turning earners into owners, and bringing to everyone—but everyone—the dignity and security of ownership that is often assumed by the middle classes and the employer classes to be their privilege. That is nonsense. The dignity and security of ownership should be everyone's. I would like to have seen much more legislation encouraging that in this country from either government, but I have not seen it, and I have not seen it from Brussels either.

If Europe is such a necessary driver to social and employment legislation, why did the Labour Party for most of its existence oppose membership of the European Community? It is the only party that ever has. My party has never opposed membership. For most of my political life, the Labour Party was dead against it, vigorously against it, argued against it, and yet here we are being told that it is a necessary driver of social legislation. That is putting it much too strongly. It contributes here and there, but to put it at the centre of the drive for social improvement cannot be right—

Lord Lea of Crondall

My Lords, I am most grateful to the noble Lord for giving way. On that point, the principle of socialism in one country was a precept that began to be questioned precisely because of some of the factors that we have been discussing this morning. I do not know whether the noble Lord would agree with that, or whether he is a "socialism in one country" man himself.

Lord Howell of Guildford

My Lords, the noble Lord has touched on an even more fascinating point—how socialist was the early Labour Party? That is the question. I agree with him. These are fascinating discussions about the universality of socialism. The noble Lord will remember the very strong stand that the Labour Party took 30 or 40 years ago—20 years ago, even—against involvement in the European Union, which was widely regarded as a free market, capitalist plot. There is still time to change, and we see that attitudes can change.

The Library kindly gave me a list of the rights affecting employment that have emanated from European Union law in the past seven years. I take that period because it is the time-span that others mentioned and because it is roughly the period since the chapter was signed up to by the incoming Labour Government, as one of their first acts. It is a long list. It includes directives on length of holidays; parental leave; works councils; treatment of transsexuals; part-time employees; and all kinds of prohibitions on discrimination. I heartily support the prohibitions on discrimination. I get more and more in favour of prohibiting age discrimination, as time goes on. There are directives on working-time rights for air crews and on all aspects of consulting and informing employees and so on.

Those are all matters that should be attended to vigorously on their merits, but, in each case, I ask why there must be a centralising and standardising EU-wide template placed on it. Why centralise and standardise throughout the diverse European continent? That question still stands unanswered. In the network age, the aim of management seeking to promote good relations between employers and employees and create successful and highly productive firms is to decentralise and allow variety, which makes the question more relevant than in the past.

Unlike the noble Lord, Lord Lea of Crondall, who has been at the centre of such affairs for many years, I see little in the original Social Chapter, as devised, conceived and embedded in the Maastricht amendments to the Treaty of Rome, that we could not have done for ourselves and probably done better. I see a great deal that we should have avoided and that still has the potential to damage our economy, our well-being and the prosperity of our people.

At some stage, as we survey the high unemployment and economic stagnation throughout the euro-zone, the lesson will have to be learnt that the best social legislation should come from the bottom up, from the grass roots. Ideally, it should be home-grown, even if, thereafter, one seeks collaboration and intimate international co-operation to harmonise it. It must be recognised that that should be the source of the best improving social legislation, of which we always need more. In an age of increasing variety and diversity, the imposition of central norms and rigid rules and more central norms and more rigid rules through the proposed—and unnecessary—constitution will take the peoples of Europe backwards, not forward to the standard of living that should rightly be theirs.

1.43 p.m.

The Parliamentary Under-Secretary of State, Department of Trade and Industry (Lord Sainsbury of Turville)

My Lords, it has been an interesting debate. I thank my noble friend Lord Lea of Crondall for raising such an important issue and for describing some of the history of the Social Chapter and the benefits that have flowed from it for people at work in this country.

I also endorse the views expressed by my noble friend Lady Dean of Thornton-le-Fylde about Lord Murray of Epping Forest. He was a man of very great integrity who, during his career, had to deal with many difficult political issues. He was respected by everyone who had to deal with him and by everyone in the House. We mourn his passing very much.

First, I must say to my noble friend Lord Lea of Crondall that I welcome the appointment of John Monks as general secretary of the ETUC. I agree that it will be of enormous benefit to measures agreed in Europe, and it is good that we have, at the heart of the debate, someone who can take account of the different traditions and practices of labour markets in Europe. Our system of voluntary agreements between trade unions and employers is different from the Scandinavian model, which is different from the German model, which is different from the French model and so on. It is encouraging to have someone at the heart of the debate with such experience.

The Government's 1997 election manifesto committed a Labour government to accept the Social Chapter. We did so at the European Council at Amsterdam in June 1997, when we ended the UK opt-out. The Social Chapter allows for directives to be agreed in a range of fields, including working conditions, information and consultation and equality between men and women. Some of those stem from agreements between the social partners in Europe and from business organisations working alongside unions. The Social Chapter does not allow for directives on pay, the right of association, the right to strike or the right to impose lock-outs. Those are rightly left to member states to determine. There will be no EU minimum wage under the Social Chapter, and there will be no directives from Brussels undermining our national laws on strikes and collective action. The new constitution retains this position.

Why did we sign up to the Social Chapter? We signed up because it was a good opportunity to implement certain standards of fair treatment to which all employees should be entitled. Social justice has always been at the heart of our approach. We have common values with other member states: tackling poverty, removing discrimination and combating social exclusion.

People at work in Britain have benefited enormously from the Social Chapter by having their employment rights extended. They now have the right to parental leave, which gives parents the right to 13 weeks' unpaid leave at the birth or adoption of a child. Because of the Social Chapter, part-time workers are entitled to the same pro-rata terms and conditions of employment as full-time workers, thereby removing any discrimination and improving the quality of part-time jobs. That benefits Britain's 6 million part-time employees, many of whom are women. It is only right that part-time workers should be on an equal footing with their full-time colleagues.

The noble Lord, Lord Howell of Guildford, said that there might be fewer part-time workers as a result. There is a careful and sensible balance to be struck. If we push the argument too far, we will reduce the number of part-time workers, who play a critical economic role. Equally, however, if we do not have good conditions, people who, often, can decide whether or not to work will not take advantage of part-time work. I think that the right balance has been struck.

We now have rights under the fixed-term work directive that provide equal treatment and prevent the abuse of fixed-term contracts. People should not have to put up with the uncertainty of an endless succession of fixed-term contracts. Those on fixed-term contracts should not be paid less for doing the same work. The Social Chapter makes it easier for women to tackle unfair treatment in the workplace. Once a prima facie case has been made in an employment tribunal claim, the burden of proof is placed on the defendant—usually the employer—who will need to demonstrate that sex discrimination has not occurred.

The European works council directive requires companies with at least 1,000 employees in total and at least 150 workers in each of two member states to establish structures for consulting workers on issues that affect them. In addition, the information and consultation of employees directive, to be implemented in the UK by March 2005, establishes a right to new minimum standards for workforce communication and involvement in large firms.

We do not see such measures as burdens; we see them as protecting fundamental rights. Millions of workers have gained from the improvement to their life. There is no evidence that the changes have adversely affected the economy. There has been no loss of flexibility in the labour market.

Our critics predicted that those regulations would destroy jobs. I am very happy to follow the prediction made by the noble Lord, Lord Maclennan, in robustly rejecting those fears of disaster. As my noble friend Lady Dean pointed out, we have the benefit of hindsight. We can see that the fears of those who predicted a disaster have not come to pass. Today, we have the lowest levels of unemployment for 30 years. Employment is at a record level; that is, up by more than 1.7 million since May 1997.

We have succeeded on both scores. We have proved that provided the implementation is right, there does not have to be a contradiction between job creation and greater rights at work. We have kept burdens on business to a minimum. We need to separate the administration costs—the red tape element which we want to eliminate—from the costs of the actual benefits that workers receive. The administration cost of benefits of the directives that we have implemented under the Social Chapter are extremely low. Leaving aside the Working Time Directive, the annual recurring implementation costs are less than £750,000 across the whole of the economy, but under the directive—the right to 20 days paid leave, rest breaks and a maximum working week—the annual administration costs are only £10 million. That is less than one penny per worker per week.

The main costs to employers stem, quite simply, from the benefits that are provided to employees: that is between £50 million and £83 million for parental leave; between £170 million and £370 million for giving fixed-time workers the same rights as full-time workers; and the cost of giving people 20 days paid annual leave., which is something that is now taken for granted and, indeed, exceeded by many employers. The total cost of all measures that we have introduced amounts to less than 1 per cent of the annual bill.

The 2002 OECD report was right. The UK is at the forefront of regulatory reform in the OECD. It noted that entrepreneurs face a better business and regulatory environment in the UK than in most other OECD countries. At the same time, I agree with my noble friend Lady Dean when she said that the Social Chapter has had a civilising force.

I agree with the noble Lord, Lord Maclennan, about the timeliness of this debate. This is a time when some people want to stoke up, feed and take advantage of a short-sighted fearful nationalism. It is important to have a rational debate about the benefits and the advantages of the EU.

However, I disagree with the noble Lord on the position of the UK in Europe. Increasingly, the UK is seen as taking a lead on many issues that are of great concern to the members of the EU, particularly as regards job creation. The other agenda for the people of this country, which is of key importance, is that alongside the improvement of social conditions we also keep our flexibility.

Lord Maclennan of Rogart

My Lords, for the avoidance of doubt, I was speaking historically of such matters as our exclusion from the euro-zone and the Schengen agreement. I was not seeking to cast doubt on the energy of the Minister or his colleagues in the area that we are talking about today.

Lord Sainsbury of Turville

My Lords, I appreciate that comment. I think that we have now a new approach to Europe, which is much more in tune with the debate within Europe today on how those factors are balanced.

The noble Lord, Lord Howell of Guildford, in a very thoughtful and cogent speech, explained why members of his party had opposed the Social Chapter in the past. However, I do not think that trips down memory lane are always the best guide to current policy making in Europe. Today, we must face the issues that concern us and get the right balance between the social dimension and flexibility in the economy. That is the balance for which we must strive. We should look at the issues on the basis of today's realities rather than battles that have been fought before.

My noble friend Lord Lea dealt well with the argument put forward by the noble Lord, Lord Howell, on why it is necessary to have a European initiative on some issues. He rightly said that employers will always cite international competitiveness as the objection to improvement. Therefore, there is a case for European action to move things forward.

We signed up to the Social Chapter to show that we wanted to be part of social Europe and to provide basic rights in the workplace without burdening business.

The Government believe that a fair and flexible labour market is essential for job creation. It benefits both employers and workers, enabling business to adapt to changes in the market while providing opportunities for participation in the labour market for workers who might otherwise be excluded. It improves choice for all.

Employers complain of burdensome European regulation. Does anyone really think that 20 days paid leave each year is excessive; or that it is unfair for part-time workers to get the same treatment as full-time workers; or that we should not have basic parental leave provisions that enable people to reconcile work and family responsibilities; or that workers should hear on the radio that they have lost their jobs?

The Government will use the implementation of the information and consultation directive to contribute to their promotion of high performance work places and partnerships and of ongoing genuine dialogue between employers and employees and to enhancing the contribution of everyone involved in the business to the benefit of the company itself and all its staff.

Let us not forget the benefits that these laws generate, including employer benefits from protection from less scrupulous competitors, from better motivated staff, and from lower staff turnover. They need to draw from the full pool of talent available and promote diversity and choice. Exclusion from workers from any group does not make economic sense.

That a typical worker does not fit the normal pattern of nine-to-five, five-days-a-week, working for a single employer throughout one career should be regarded as a positive and not a negative feature of the dynamic labour market. A variety of working hours provides choice that suits employees and employers. Agency work acts as a good entry point to enable people to gain work place experience and to develop skills. But that must be made an attractive option by providing adequate protection.

If we are to maintain our high level of employment, we need to have both a flexible and a fair labour market. We have the most flexible labour market in Europe. We can see the benefit of that in our employment position today. Flexibility is also now near the top of the EU agenda. The EU is looking at how labour markets can be made more flexible across Europe. Europe needs an adaptable workforce which has the skills training and mobility that are necessary to cope with change. Labour market reform must focus on those issues.

This Government have shown consistently that social justice goes hand in hand with economic progress. Our constructive adoption of measures under the Social Chapter have benefited many and have allowed us to maintain our competitive advantage. I am delighted that my noble friend Lord Lea and this debate have drawn attention to the very real benefits that have been gained by people at work in this country.

House adjourned at two minutes before two o'clock.