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working conditions, information and consultation of workers and equality between men and women in the labour market and at work. References to equal opportunities for men and women appear in the original treaty of 1957. One must remember that a great deal of this is aspirational. It will not come into immediate effect, but it is what hon. Members have been pledging their allegiance to as a desirable objective. It will not have instant impact. Are those the things that we find intolerable and that would make our industrial costs so high?7 pm
I could go on at length, but as far as I can see there is nothing significant in the chapter to which the Government might object. I understand that the Government might have reservatiions about the fact that the social agreement would enhance the role of organised management and labour in implementing European Community legislation. The Liberal Democrats have reservations in that area too, but such generalities would not lead us to throw out the whole lot. After all, the provision is at the direct request of management and labour, and I remind hon. Members that the agreement excludes pay, the right of association and the right to strike. The agreement
"Shall not prevent any Member state from maintaining or introducing more stringent protective measures compatible with the Treaty". In other words, despite erroneous observations to the contrary, there is absolutely no question of dropping our standards. That was also misunderstood in the Danish referendum.
So what is it that is so unacceptable? I still do not understand. There is no doubt, as the hon. Member for Cirencester and Tewkesbury virtually conceded, that the opt-out has created quite a bit of confusion. Officials in Brussels foresee great difficulties in administration. Two social chapters will be operating simultaneously. The hon. Gentleman recognises that that will mean fun times for jobbing lawyers. The Foreign Secretary, if I may say so, was not terribly specific. He said that social costs were too high in Europe, that that was reducing overall European competitivity and he argued that that will create unemployment--and that this must be avoided. We should have no part in it.
I find it unacceptable and undesirable that the Government have considerably weakened the situation of the low paid. The number of people in that category is increasing all the time. Consider a case described in a press release issued by the Inverness citizens advice bureau. The lady who manages the bureau cited an example of a family with two children, aged 12 and 14. The husband had been unemployed for six months. He had had an offer of employment as a security guard. Hon. Members would be wise to discover what sort of wages security guards in their own constituencies are paid, because sometimes they are appalling. Since we are in an employers' market, not only are the wages low, but often the conditions in which people have to work are unacceptable. That is what social chapters are for. They are to try to maintain minimum standards and not allow them to drop and drop.
The husband was offered a job as a security guard with a take-home pay of £88. In addition, he receives family credit and child benefit totalling £83. From this total income, he has to pay mortgage costs of £65, food, and band C council tax. If he does not take the job, the family
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will continue on income support, which gives them £122.95, plus mortgage interest payment of £52. The basic point is that, on income support plus other allowances, the family would receive £20 a week more than if the father took the job. The lady in Inverness tells me that the CAB has been seeing at least 40 clients a week who want to know whether they might be worse off working than they are remaining on income support.The Government have told us a great deal about work dodgers on social security benefits. There is, however, no doubt that basic social security benefits are not high--people who say that they are are quite wrong. What worries me is the Government's general approach to the Community's attempt to introduce minimum protections. It is, after all, the responsibility of t Democrats in which the latter criticised what he saw as the risk of Community-wide wage bargaining. That criticism still holds good. We were all rather quick to suggest that such bargaining might develop, however. I do not think it will, and it would not be good if it did--at least for a long time to come. My right hon. Friend's criticism certainly did not imply a rejection of the whole social chapter. Liberal Democrats also do not happen to regard minimum wage legislation as the most cost-effective means of achieving protection against exploitative wages. We argue for minimum earnings, which might involve state top-ups, and which are less likely to have an adverse effect on employment. Such disagreement concerns how to achieve an objective, not the objective itself. It does not mean a rejection of the attempt to agree on a common structure.
This evening, I shall leave aside the potent argument developed by several hon. Members, most notably in a previous debate by the hon. Member for Chingford (Mr. Duncan-Smith). That argument holds that competition rules, as enforced by the Court of Justice, will achieve the objectives of the social chapter if the opt-out produces the competitive edge that the Government claim it might. The upshot will be that we will arrive at the same objective in any event. The Government came back from the Maastricht negotiations with two fallacies. First, they said that it was wonderful that the nasty word "federal" was not to be included in the treaty--not that that makes a tuppenny bit of difference to anything. Secondly, they said that they had opted out of the social chapter, thereby avoiding creeping socialism and corporatism imported from the continent. It was almost as if the Government thought that the social chapter had been devised to create mass unemployment and apply as many interfering rules and regulations as possible.
The purpose, on the contrary, is to ensure basic minimum standards of social policy all over the Community. I regard that as a good objective.
Mr. Quentin Davies : It is always a great pleasure to follow the hon. Member for Inverness, Nairn and Lochaber (Sir R. Johnston). I almost fell into the trap into which so many of my colleagues have fallen in these debates--of referring to him as a right hon. Member. He is always listened to with great attention. I often agree with
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his judgments on foreign affairs, but he will not be surprised to learn that I sharply disagree with his support for the social chapter.I listened with considerable attention to the details the hon. Gentleman gave us of a family in his constituency who were earning more on income support than they would have been if the father had had a job. That should be a cause of great concern to hon. Members on both sides of the Committee.
My right hon. Friend the Foreign Secretary delivered a devastating critique of the arguments for the social chapter. I shall not repeat them. At a time when we should be increasingly concerned about our competitiveness vis-a - vis the rest of the world and particularly in relation to the emergent nations of Asia, Latin America and elsewhere, the European Community would be stark staring mad to do anything that would increase costs and reduce prospects for employment in western Europe.
It is absurd for well-known figures on the continent such as M. Calvet, the president of Peugeot, and Madam Cresson, the last French Prime Minister but one, regularly to say that, as the EC faces increasing competition from the far east and the Pacific rim, we should take protectionist measures to defend our industries. Almost in the same breath, such people endorse the absurdity of the social chapter which can only increase the gap between our labour costs and those of the countries that are competing with us.
Mr. Hoon : The politician that the hon. Gentleman cites is a socialist. Would he say that Chancellor Kohl was "stark staring mad" to accept the social chapter?
Mr. Davies : The irrationality at the heart of the thinking that has led to the social chapter deserves my strong epithet. The Foreign Secretary did not deal with an even more essential aspect of the matter--that the concept of a social chapter fundamentally conflicts with trying to create an integrated single market. Creating such a market from 12 different national markets would mean bringing together areas with different levels of average productivity. The difference in productivity between the countries of northern Europe such as the Federal Republic of Germany, the Netherlands and the Scandinavian countries and poor countries such as Greece is enormous. If there are no artificial barriers and there is a single currency, for which the Maastricht treaty provides, so that fragmented currencies do not provide a barrier to trade within the integrated single market, and the same labour costs are imposed throughout the Community, areas, regions and firms with lower productivity will be prevented from competing.
As the Foreign Secretary said, in many cases the social costs can be 50 per cent. of total labour costs. That can only be described as crazy. An integrated single market will contain regions with different productivity levels, and regions and firms with low productivity will not be able to survive because they will not be allowed to use lower labour costs to compensate for lower productivity. That is a fundamental contradiction and unless it is rapidly resolved the Community will pay an enormous price.
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Considerable unemployment will be created in parts of the Community that will no longer be able to compensate for lower productivity. I hope that in an integrated single market there would be considerable productivity gains everywhere and increasing convergence in productivity. But for that to happen there must be an inducement for investment in the lower productivity areas where factory costs and the cost of labour and land are lower. That new investment will generate higher productivity and, in time, an integrated economy will emerge. That is exactly the mechanism which has worked so successfully over the past 100 years in the United States of America. In the 1950s and 1960s, industry moved from high-productivity, high-wage areas of the Ohio basin, Chicago and the north-east to California and the west coast. In the past 20 years, the deep south, traditionally a low-productivity, low-wage area, has benefited. 7.15 pmIf employers in Mississippi, Alabama or Louisiana had been told, "You must pay the same social costs and adopt exactly the same working practices as industries in Pennsylvania, Ohio and Illinois", investment would never have gone to the deep south. It would have remained the depressed area which it was for a long time and which it has markedly ceased to be. There is a fundamental economic contradiction at the heart of the suggestion that a social chapter can be combined with the ambition to achieve an integrated single market. That has not been mentioned in the debate, but I hope that we shall focus on it if we take a further look at the social chapter proposal after the Bill receives Royal Assent.
What is the origin of the thinking that produces that extraordinary self- contradictory proposal? It is the same as the thinking behind the double illusion that has led the Labour party and socialist parties in other European countries such as France to devise proposals such as the statutory minimum wage which is
self-destructive and has now self-destructed. The first illusion is that we can legislate or regulate our way to prosperity. If only we could give everybody better working conditions, higher wages, and a higher standard of living by trooping through the Division Lobby I am sure that every hon. Member would do so enthusiastically. We could say, "Let benefits and wages be doubled, trebled or quadrupled." What a wonderful world that would be.
The second illusion sets aside the fundamental principle of economics that when prices are increased, demand is reduced. It follows that if the price of labour is increased, the demand for it will fall. If social or other costs are loaded to the cost of labour, fewer people will be hired and people who would otherwise be employed will be out of a job. Following such a course is economic nonsense and has the makings of human disappointment and tragedy. Those fundamental issues are at the heart of the debate and I am confident that when hon. Members, including the hon. Member for Inverness, Nairn and Lochaber, who usually believes in economic rationality, have considered them, they will, in their wisdom, reject the social chapter.
Sir Russell Johnston : I have been listening carefully to the hon. Gentleman. Nothing in the social chapter suggests, for example, that, in some mysterious way, we must compel the Netherlands and Portugal to have equal
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wages. It is not a question of producing overnight some standard, imposed solution. The hon. Gentleman is putting up Aunt Sallies and then knocking them down.Mr. Davies : I am grateful for that intervention because it enables me to set right a common misunderstanding. Throughout my speech, I have been careful to talk about social costs. I did not talk about the attempt to harmonise wages. As we have already heard from my right hon. Friend the Foreign Secretary, in many cases social costs have got to the point when they represent at least 50 per cent. of the costs of labour--a significant element. I hope that the hon. Gentleman, who is a reasonable man--that is not true of everyone who sits on the Opposition Benches--will agree that the essential total cost of labour determines the demand for labour and, therefore, the level of employment, and that we must all be seriously concerned about that.
Mr. George Robertson : The Foreign Secretary's analysis was remarkable. The criticism was not an attack on the high standards of Europe in terms of non-wage employment costs, but a comparison between the Community and the outside world, a fair comparison to make. However the hon. Gentleman and the Foreign Secretary should reflect on the fact that of the countries in the Community that apparently, in the eyes of the Conservative party, suffer from a disadvantage vis-a -vis the far east, the people who are benefiting--the economies that are the strongest in the European Community--are those of countries such as Germany, which believe in high standards. They may have high social costs, but they are prospering and benefiting because they are investing in people and not simply lowering standards and harming the future.
Mr. Davies : With your indulgence, Mr. Lofthouse, I shall extend by a couple of minutes the time in which I intend to make my speech. I should like to deal with the two important points raised in those interventions. The hon. Member for Inverness, Nairn and Lochaber, who speaks for the Liberal Democrats, said that I should remember that the treaty does not lay down any specific requirements to increase certain costs. However, it produces a framework that makes much more likely that increase in costs.
The hon. Member for Hamilton (Mr. Robertson) demonstrated another common misunderstanding, based on an error into which it is easy to fall-- confusing the chicken with the egg. The argument that he was pursuing goes roughly as follows : Germany has a high level of social costs and is a prosperous country ; therefore, a high level of social costs cannot prevent a country from becoming prosperous. Germany had a prosperous economy and the highest productivity levels in Europe 20 or 30 years ago, when its socialist Governments began, in the 1960s, to build up the expensive social network from which Germany has suffered--or, if one prefers, has enjoyed-- ever since.
When productivity gains are achieved, and a society or a state becomes prosperous, it is open to that society to appropriate those productivity gains in a multiplicity of different ways. They can be appropriated by increasing consumption, by increasing investment or by increasing what one might call social consumption--in other words, social costs and benefits. It has been possible for Germany to do all three, but that does not mean to say that if one
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starts simply by imposing on other countries the level of social costs of the Germans they will be able to compete at all. I fear that the effect of trying to extend German-type levels of social costs to lower productivity areas that are struggling to catch up and reach German levels of productivity and prosperity would be fatal to their chances of doing so.When the hon. Member for Hamilton becomes a millionaire, he will be able to take his wife to Cartier to buy her some extremely expensive jewellery, or to buy a Rolls-Royce or a Ferrari, and still be prosperous. However, should he now, on his parliamentary salary, make the same purchases, he might end up in a bankruptcy court and never achieve a decent level of life in his old age. That is an appropriate analogy and the lesson that he should draw.
Mr. John Butcher (Coventry, South-West) : My hon. Friend is putting forward an excellent case, but he may be understating it. In recent years we have seen diaspora of jobs out of Germany. The biggest recipient of jobs from Germany within Europe, in terms of its measured outward investment in the Community, is the United Kingdom. German industrialists are thinking seriously about the pretty pass that the on-costs of social legislation in recent years have brought them to. They have had 40 brilliant years, but they are about to undo all that, and we shall be the beneficiaries.
Mr. Davies : I am grateful to my hon. Friend, who effectively reinforces my point. Even the most prosperous countries can over-extend themselves in the burden of social costs that they are prepared to undertake. As he rightly says, German industry and employment are suffering from that phenomenon. How much more disastrous it would be for the Community as a whole if the evil of the social chapter were extended throughout the Community and into this country.
Mr. George Stevenson (Stoke-on-Trent, South) : My hon. Friend the Member for Hamilton (Mr. Robertson) has been reported as describing new clause 75 as a time bomb and new clause 74 as an iceberg. I hope that the time bomb will not blow up the iceberg. I am fearful of the Government's motive in accepting new clause 74.
Mr. Stevenson : It has been described as cowardice and a retreat. My hon. Friend the Member for Ashfield (Mr. Hoon) said that it put the Government in a dilemma. I hope that it does, but if there is one thing that I am prepared to accept about even this Government, it is that they are not entirely daft--nearly, but not entirely--and I cannot for the life of me accept that they are prepared to roll over and play dead on the whole issue of the social protocol.
The Government have consistently opposed the social protocol. They will not have it at any price. They must have been greatly relieved when the opportunity to vote on amendment No. 27 was not afforded to the Committee. To judge by their posture towards new clause 74, they would have us believe that it poses few, if any, problems for them. It may be that the Government have judged that new clause 74 allows them another opportunity to dash into a bolthole so as to avoid defeat. I do not know. Unlike my hon. Friend the Member for Ashfield (Mr. Hoon), I am not prepared to speculate about the Government's
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thinking. I have been disappointed many times in the past by their change of mind, because of the collapse of their discredited policies. I am not, therefore, prepared to trust them from this day to tomorrow morning. Others may speculate if they wish, but I am not prepared to do so.Why is there this apparent contradiction in the Government's thinking? They are certain, I believe, that if amendment No. 27 had been put to a vote, it would have resulted in their defeat. Nevertheless, the Government are prepared to risk defeat by accepting new clause 74.
Mr. George Robertson : They have no choice.
Mr. Stevenson : I hope that my hon. Friend is correct.
Mr. Hoon : My hon. Friend is keen on amendment No. 27, but the Government have said that they will take not the slightest notice of it and that they will proceed to ratify, whatever happens to it. What good does that do Opposition Members, who are keen to see the social chapter enacted?
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Mr. Stevenson : I shall attempt to respond to that question in detail as I develop my speech. Again, though, I am not encouraged by the Government's determination to use whatever legal mechanisms are available to them to avoid defeat on amendment No. 27 or by their acceptance of new clause 74, which they believe will enable them to avoid what they have wanted to avoid all along--defeat at the hands of the House of Commons on the social protocol.
Mr. George Robertson : I should hate my hon. Friend to go too far down that road. If he looks at the matter dispassionately, he will see the Government's dilemma. If new clause 74 were put to a vote, the Government would be defeated, without any shadow of a doubt. Tory rebels could have voted for it in the sure and certain knowledge that it was meaningless at this point, because the crunch comes on the motion that is consequential upon new clause 74. The Government knew that they would be defeated. Having learnt the lesson of amendment No. 28 on the Committee of the Regions, the Government decided--as happened with new clauses 1 and 2 and amendment No. 420--to avoid defeat by not putting amendments to the vote.
The Government hope and believe that on the motion consequential upon new clause 74 they will not be defeated, because Conservative Members will not dare to vote with the Opposition for something so intimately tied to the social chapter. As I made clear in my speech, the Opposition amendment will make it clear that the treaty cannot and will not be ratified unless the protocol on social policy is adopted. If the Tory rebels vote with us, either the social chapter will be adopted or the treaty will not be ratified--they will make a choice and we will make a choice. That is what is in front of us as a possibility. The Government would face sure and certain defeat if new clause 75 were put to a vote. That is why they accept it, and for no other reason.
Mr. Stevenson : I hope that my hon. Friend is correct. As I develop my speech, if I am allowed to do so, I hope
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to make that point. Even if my hon. Friend does not accept what I say, I hope that he understands my cynicism about the Government's intentions.Amendment No. 27 was not put to a vote. New clause 75 then arrived on the scene. After that, new clause 74 arrived on the scene. Many of us believe that new clause 74 is not an alternative to amendment No. 27. I must stress that fact. We must press for a vote on amendment No. 27 on Report. I realise that that decision is for Madam Speaker. There is a danger that if the Government accept new clause 74, as they have said that they will, the pressure for a vote on amendment No. 27 on Report will be weakened. If the Government hope that their acceptance of new clause 74 will remove the need for a vote on amendment No. 27, I am confident that Madam Speaker will note that possibility and will also note how important it is that there should be a vote on amendment No. 27 on Report.
The Government believe that if they table a motion after new clause 74 has been agreed to, they will--if they are lucky--be back in the driving seat, which will allow them to dictate the outcome. There can be every expectation that the motion will be carefully worded. It will probably be innocuous. The Government no doubt believe that the battle will then have been won. It will not have been won, though, for I do not believe that Members of Parliament will simply roll over and play dead and accept that sleight of hand.
It was only when the Government faced defeat on amendment No. 27 that we were told that it was irrelevant and was not a problem for the Government. If new clause 74 is agreed to and the Opposition amendment is adopted, the Government's position will become untenable, not for legal reasons but because of our position within the European Community. They will be unable to hide behind the Danish referendum, as they have done in the past, for the Danes want the protocol on social policy.
I am sure that hon. Members will be delighted to know that I am not a lawyer--I am not sure whether that is a benefit or a
disadvantage--but after new clause 74 has been agreed the House will have an opportunity to demand that the protocol be accepted by the House of Commons and also to demand that it becomes part of the Maastricht treaty.
Mr. Michael Fabricant (Mid-Staffordshire) : I am very much aware of the unemployment rates in Stoke-on-Trent, South. I do not know whether the hon. Gentleman went, as I and many hon. Members from both sides of the House of Commons did, to Nomura International bank two or three months ago. I remember one Opposition Member asking the Sony and Nissan representatives what was the single most important factor that kept them in the United Kingdom, as opposed to going anywhere else in Europe. Both of them said that it was because they could avoid the social chapter here.
Mr. Fabricant : The hon. Gentleman then says, "Ah." I am referring to what the managing directors of the Sony and Nissan divisions here specifically said. I remember it clearly.
Mr. George Robertson : That is not so.
Mr. Fabricant : I do not recall the hon. Gentleman being at Nomura.
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I do not understand the hon. Member for Stoke-on-Trent, South (Mr. Stevenson). He is speaking about various clauses and trying to impute motives to the Government, but at the end of the day--The First Deputy Chairman of Ways and Means (Mr. Geoffrey Lofthouse) : Order
Mr. Fabricant : My question is--
The First Deputy Chairman : Order. That was supposed to be an intervention, not a speech.
Mr. Stevenson : I am grateful for your efforts, Mr. Lofthouse. I was quite happy to try to respond to the right hon. Member for Mid- Staffordshire--
Mr. Fabricant : Hon. Member. Right hon. next week.
Mr. Stevenson : I apologise. I meant the hon. Member for Mid- Staffordshire (Mr. Fabricant). I was quite happy to try to respond to him, but I am afraid that I was unable to determine exactly what his question was. I said that I was not a lawyer. I believe that the Government's position will be untenable as a result of the acceptance of new clause 74 and, I hope, by the House's acceptance of the amendment that the Opposition intend to move. That will not be because the House will have accepted the amendment and the new clause, because during the debate the Government have shown their disregard for the opinions of the House : the Government's position will be untenable because other member states will not allow them to hide behind their opposition to the social protocol when the House has said something entirely different. I believe that other member states will insist that the Government accept the terms of the social protocol. As other hon. Members have suggested, that could quickly be done at an intergovernmental conference.
I am one of the Opposition Members who was worried about the tabling of new clauses 74 and 75 because I believed, and I still do, that the Government have been given the opportunity to slip off the hook. Why else are they accepting new clause 74 so readily? Perhaps too many Members of the House are prepared to accept the Maastricht treaty at any price.
My worries go to the heart of the treaty, because I believe that it and the Bill are seriously flawed. I say that quite openly, but I must make it clear that my concerns are not those expressed by Conservative Members who argue that we should not have the treaty or the Bill because of some outdated notion of sovereignty, and because they believe that their raw market philosophy is the way forward. A different concept and a different vision have been accepted by all the other 11 member states, and we should press for that. We should look for policies which enhance employment and growth in the EC, and we should insist on policies which promote social justice. We should not look to support a treaty and a Bill based on discredited monetarist theory. A positive social policy is essential. My hon. Friend the Member for Hamilton says that new clause 74 means that the crunch is coming. I profoundly hope that he is right, and I believe that he is. I have been discouraged by listening to the speeches by Conservative Members today, because they have made it clear that the Government's attitude has not changed one iota.
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I hope that the acceptance of new clause 75 and the debate on it, which will include the other amendment that the Opposition mean to table, will give the House the opportunity to insist that the social protocol be incorporated. I use the word "hope" rather than the word "expect", but right hon. and hon. Members who want the social protocol to be incorporated will have another opportunity to vote accordingly.Mr. Jenkin : I am grateful for having been able to catch your eye, Mr. Lofthouse. I follow the hon. Member for Stoke-on-Trent, South (Mr. Stevenson), and I believe that we must respect his sincere and well-argued view. He believes in higher social protection, but he, in turn, must accept that that incurs additional costs. If Britain can put itself at a commercial advantage by avoiding those costs, we can make our workers in this country better off in the long term. That argument is at the core of the debate.
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I am grateful to my right hon. and hon. Friends on the Front Bench who have seen the Committee stage through night after night, and I want to pass on a message of thanks to them. They have put up with a great deal and remained courteous and responsive to all interventions at all times. I am especially grateful for the polite way in which they have continued to deal with me.
I am sorry that neither the Foreign Secretary nor the Minister of State is in his place, because what I intend to say relates to the exchanges that took place at the beginning of the debate. As the Committee will recall, we were talking then about what we are seeking to avoid ; what measures we were not to have as a result of the opt-out arrangements, and what additional measures we would have to put up with. I want to talk about one of those arrangements, the European works council directive.
The hon. Member--I hope that one day he will be the right hon. Member, and perhaps even one day the noble Lord--for Inverness, Nairn and Lochaber (Sir R. Johnston) said how far away must be the day when there will be Europewide wage negotiations. He does not appear to be aware of the European works council directive. Under the current arrangements, even though there is a fairly strong social element in the existing EC under the treaty of Rome, we have managed to keep kicking that directive into the long grass.
Under the directive, a company with 1,000 or more employees in the European Community, with a base with 100 or more employees in two or more member states, has to set up a works council. The body is to be set up by agreement between management and employees, but where no agreement comes into force minimum legislative requirements will come into play. Those relate to a European works council's competence and its composition, and provide for annual information, meetings and consultation rights, with the cost being borne by the company. I am indebted to the Library for briefing me on the matter.
Briefly, the requirements are that there would have to be annual meetings of the management, to be informed of such matters as the group's financial situation, production and sales, employment situation and investment prospects. The council would have to be consulted about any management proposal likely to have "serious consequences" for employees' interests. Those would include
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relocations, mergers, reorganisations and changes in working methods--that is, all the things for which we in this country have a different culture.Mr. Stevenson rose --
Mr. Jenkin : I give way briefly to the hon. Gentleman.
Mr. Stevenson : I assume that the hon. Gentleman will know that the proposed European works council directive, which he is worried about, is one of the priorities of the Danish presidency. The hon. Gentleman has made his views on the proposed directive clear to us. He rightly says that it is about information and consultation. If he is not in favour of that, presumably he is in favour of practices such as those employed at Dagenham, when Ford moved production to Belgium and told its employees about it by sticking a notice on the factory gates. Is he in favour of that method, or is he in favour of consultation?
Mr. Jenkin : The hon. Gentleman would not know the advantage that I have in that regard. I used to work for the Ford Motor Company, which has its good poi industrial relations. It is culturally acceptable in other countries. They should be allowed to do their own thing ; we should be allowed to do ours. That is what the opt-out from the social chapter is all about.
In the European Community there are some 900 enterprises with more than 1,000 employees that would be affected by the European works council directive, and subsidiaries with more than 100 employees. Approximately one third of those organisations have their headquarters based in this country, and half of the top 100 of these organisations are based in this country or are British companies. We have a lot at stake in that directive ; it greatly affects us. The Confederation of British Industry, which is in favour of the Maastricht treaty, has detailed all the objections to the European works council directive. It is opposed to the European works council directive because it
"fails to achieve its stated purpose of improving the provision of information to and consultation of employees in Community scale undertakings, since it would impose uniform structures on an area in which flexibility of approach is essential
fails to recognise the need for diversity in this area and the wide range of practice currently prevailing in the Community ... would introduce, a costly and slow moving process."
Some estimates have suggested it would cost some companies up to £1 million annually to implement the proposals. It could and would impact adversely on the employee relations in some companies where there is not that legislative tradition. Maybe consultation continues on a widespread basis already, but it is not legislated for, and that is what is different.
"It creates a forum for cross-border collective bargaining which could have arbitrary effects."
It would have upward effects on wages in the European Community, which would be bad for jobs. It
"concentrates influence in the hands of employee representatives". That is a priority of the Labour party, but it is not ours. We want to concentrate power in the hands of individual employees.
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So what is likely to happen as we ratify the Maastricht treaty? It has been our veto which has stopped these directives. Once the treaty is ratified, the European works council directive will go ahead in the other 11 member states. Fine, you may say ; that is no problem of ours because they are imposing costs upon themselves. But what about those British companies that have subsidiaries in other member states? They are going to have to establish European works councils, and then there will be blurred edges--and the European Court of Justice loves blurred edges.What about the status of the employment bases in the United Kingdom that should not be covered by this directive but is perhaps part of the arrangements of the directive that apply to other member states? It is a complicated and difficult situation to resolve. For example, if a company has one base in the United Kingdom and one in France, would the French implementation of the European works council directive mean that we would have to have a European works council? How would that apply? It would be in the hands of the court. How is the court likely to interpret such a position?
It is interesting to look at the thoughts of the Commission on Britain's opt-out from the social chapter. I quote from a speech by Mr. Padraig Flynn who spoke at the Copenhagen conference on the role of the social partners on 15 March. He said :
"The Charter sets out the basic elements of a future community social policy but we cannot ignore the fact that it has a flaw : it is only signed by eleven Member States and this fact foreshadowed the outcome of the Maastricht negotiations with the United Kingdom's opt out of the social chapter.
All of us sincerely hope that this is only a temporary phenomenon and that, in due course, the present or some future British government will feel able to reconsider that position."
So it is clear what he is looking forward to--that there should be 12 social partners.
Hoover, Nestle , DAF-Leyland and Digital are the cases where President Mitterrand complained about social dumping. He stated : "These cases raise so many issues that they alone could serve as suitable case studies for a dispassionate analysis of the problems of developing a coherent common market in which economic and social questions become virtually indistinguishable."
How, then, are we going to distinguish social policy from commercial policy --where we have majority voting and all the single market stuff which is put through by majority voting--when the person initiating the policy of the Commission is determined to make it indistinguishable from social policy? It will not be up to us. Mr. Flynn then said :
"I think that the social partners have to pursue new rules and new approaches which can better contribute to the creation of wealth and the greater competitiveness of firms, the safeguarding of existing levels of employment and the creation of new jobs, and, thereby, to a significant and lasting reduction of unemployment. I intend to issue a Green Paper later in the year to open a debate "
So the great social machine of Brussels is just about to roll out of the station again. Unfortunately, as the former Foreign Secretary Lord Howe used to say, we have put ourselves at the back of the van. We are nowhere near the driving cab because we have lost the veto on social policy by opting out. That has very serious consequences. Mr. Flynn concluded :
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"Social policy is a vital part of the process of union. I want to see it at the centre of the debate on economic and monetary union " That is getting muddled up with another issue." on convergence and on growth. It is not an optional extra or the icing on the cake. But it does put people first and that is what the Community itself must increasingly do if it is to attract the popular support needed for the next steps of integration."
Here we have a full-blooded federalist speech which is going to drive a coach and horses through the social chapter opt-out. I wish to conclude by returning to that crucial debate which took place on 27 January about the way in which the social chapter will operate. When my right hon. Friend the Minister of State was dealing with the speech made previously by my hon. Friend the Member for Chingford (Mr. Duncan-Smith), he mentioned three cases. My hon. Friend mentioned these three cases in a subsequent speech about the court--and he dealt with them very well--but the story continues to move on. Nothing stands still in the European Community.
One of those cases was a very significant one. It was an Equal Opportunities Commission NICs case, decided in July 1992, of the Secretary of State for Social Security versus the Equal Opportunities Commission. The Equal Opportunities Commission was suing through the European Court that there should be equality of national insurance contributions for the purposes of state pensions.
I am told that all the advice was that we would lose. I understand that my right hon. Friend the Secretary of State for Social Services took the matter to Cabinet in order to get permission to go ahead with the case because the legal advice was that we would lose. But his excellent lawyers probably told him that this is a political court, and referred to the consequences of enforcing this particular law according to the precedents. We are talking about the equal treatment directive--79/7/EEC--which affected the Barber case. The forecast was that we would lose, but the Government inexplicably won.
The Government won because a derogation which had been constantly chipped away and removed from previous rulings was suddenly reinstated with a new importance. The reason for that was that if we had lost the case at the end of July, it would have needed an immediate and retrospective change to our social security legislation, the recall of Parliament to implement it immediately and a political crisis that could have severely jeopardised the ratification process in this country. The court, therefore, mindful of the political atmosphere--or the mood of the Community, as my right hon. Friend the Minister of State would say--took care not to cause such a political crisis.
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