Cologne European Council (Hansard, 2 December 1999)

§ Mr. Bercow
To ask the Chancellor of the Exchequer if he will make a statement on the future role of the European central bank in employment policy, pursuant to the Cologne Summit, with particular reference to the macro-economic dialogue. [101028]

§ Miss Melanie Johnson
It is recognised in the UK and across the EU that long-term, sustainable job creation requires a macro-economic climate of stability and steady growth. The addition to the European Employment Pact at the Cologne European Council of a macro-economic dialogue is a recognition of this fact. As Annexe I of the Cologne Conclusions makes clear, the dialogue is intended to bea confidence building and confidential exchange of ideas among a variety of policy actors for a better understanding of the best way to achieve macro-economic stability and hence facilitate long-term job creation. The European central bank, along with governments and social partners, will play an important role in these discussions.

§ Mr. Bercow
To ask the Chancellor of the Exchequer if he will define the combat of harmful tax competition as referred to in section 22 of the Cologne Council Conclusions; and what measures are currently under discussion at EU level on this issue. [101031]

§ Dawn Primarolo
The conclusions of the ECOFIN Council meeting on 1 December 1997 concerning taxation policy state that there is aneed for coordinated action at European level to tackle harmful tax competition in order to help achieve certain objectives such as reducing the continuing distortions in the single market, preventing excessive losses of tax revenue or getting tax structures to develop in a more employment friendly way". There have been regular discussions in the Council of the proposed "tax package".

§ Mr. Bercow
To ask the Chancellor of the Exchequer if the UK will be subject to the provisions of section 19 of the Cologne Council Conclusions on(a) increased policy co-ordination, (b) dialogue between the social partners, (c) dialogue with the European Central Bank and (d) development of the European Employment Pact. [101029]

§ Miss Melanie Johnson
Section 19 of the Cologne Conclusions refers to the Council's adoption of Broad Economic Policy Guidelines of member states and the Community. The UK Government support the use of non-binding Broad Economic Policy Guidelines as a means of developing a co-ordinated macro-economic policy mix. They welcome the involvement of a variety of relevant policy actors—including both sides of industry and the ECB—in this process through the macroeconomic dialogue, agreed at the Cologne Council as a third prong in the European Employment Pact.

§ Mr. Bercow
To ask the Chancellor of the Exchequer what measures are understood by(a) limitation of the burden imposed on low-skilled and low-paid workers and 319W (b) characterising retirement provision by responsibility towards future generations, in the report to the European Council at the Cologne Summit on the European Employment Pact. [101026]

§ Miss Melanie Johnson
The European Employment Pact recognises the importance of improving the incentives for people to work and ensuring that employment policies are sustainable. An appropriate incentive structure is one that reduces the burdens of tax on low-paid workers and ensures that they are better off in work than on benefits. The Government have implemented a number of reform measures to put this into place. The Working Families Tax Credit, reforms to National Insurance Contributions, the new 10p rate of income tax and the cut in the basic rate to 22p all reduce the burden of tax on labour, and help to ensure work pays for everyone. A long-term approach to fiscal sustainability must include a strategy to cope with demographic change, including population aging. To this end, member states—the UK included—have an interest in pursuing fiscal and budgetary policies which respect the objectives of the Stability and Growth Pact.

§ Mr. Bercow
To ask the Chancellor of the Exchequer if he will make a statement on, and clarify the intent of, section 24 of the Cologne Presidency Conclusions. [101032]

§ Miss Melanie Johnson
Section 24 of the Presidency Conclusions from the Cologne European Council relates to a proposal enabling member states to introduce a lower VAT rate on labour-intensive services for a three-year trial period beginning in January 2000. With a view to making the taxation system more employment friendly, member states are invited, without obligation, to examine this proposal.

§ Mr. Bercow
To ask the Chancellor of the Exchequer if he will make a statement on the implementation of appropriate wage development, as called for in section 20 of the Cologne Presidency Conclusions; which sectors of employment are referred to; what his policy is thereto; and what his Department defines as appropriate. [101030]

§ Miss Melanie Johnson
The maintenance of "appropriate wage development", in the context of section 20 of the Cologne European Council conclusions is an essential factor in achieving macro-economic stability, in particular in keeping control of inflation. As section 20 makes clear, this is particularly imperative for the Euro 11 (the group of countries adopting the Euro in the first wave). The Cologne Conclusions do not bind the Government to specific policy measures on wage developments; however, the Government believe it is important that wage developments across all sectors reflect productivity and labour market conditions and accord with the aim of maintaining low inflation and a stable macro-economic climate.