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Mr. Steen: The interesting thing about Spain is that it gets £8 million a day from the EU, but, in spite of all that public subsidy, it does not succeed.
Mr. Duncan Smith: My hon. Friend makes yet another powerful point. The same applies to Germany, which has rising unemployment, and France. Having taken hard decisions--from changing the nature of pension rights to deregulating and making the work force more flexible--the Government are seeing those successes bear fruit. It would be a tragedy if we allowed that to change by implementing the directive.
Although there are practical reasons why implementation would be a disaster, there is also a principle involved. If we allow this matter to go through, and if we do not make it clear to the Commission and to our colleagues in Europe that we will not accept it and that we are prepared to do almost anything to stop it, a flood of further regulation will follow the directive. That regulation would restrict the flexibility of the British work force, and would bring it into line with the sclerotic and declining state of employment in Europe. That is why, for once, the principle is critical. Even though it is said that the situation is not as bad as some make out, the principle makes it devastating.
My right hon. Friend the Minister must demonstrate that he will resist implementation at all costs, because behind it lie increased holiday rights for fathers, increased regulations on employers on sex discrimination, more stifling controls on part-time workers, workers' privacy regulations, and restrictions on an employer's ability to dismiss employees. It goes on--the catalogue is endless.
Another matter of social policy which may even affect the would-be move to a single currency is the issue of pensions. We have made our pensions provision flexible by putting it out into the private sector. Funds have been provided, and people now have security for the future in a way that they never did before. In Europe, none of that is happening. I understand that an estimated £10 trillion-worth of liability exists across Europe, and that would be imported to this country were we to go down the road of a single currency. The process of social policy is about moving us to the lowest common denominator that exists across Europe.
We must make it clear that there is no point in putting a line in the sand and having an opt-out, if we accept that that opt-out can be bypassed by treaty obligations. We must make it clear that we will not only resist implementation but will absolutely refuse to allow it to happen. We must also seek a different relationship with Europe.
Mr. Bernard Jenkin (Colchester, North):
I shall be extremely brief. I congratulate my hon. Friend the Member for Chingford (Mr. Duncan Smith) on securing
My hon. Friend will recall that we assembled some comments taken from debates on the treaty in a pamphlet that we called "Game, Set and Match?" In a debate on 20 January 1993, he said:
I congratulate my right hon. Friend the Minister on a tiny ray of hope in "A Partnership of Nations", the Government's White Paper on European policy, in which paragraph 20 states:
The Minister of State, Foreign and Commonwealth Office (Mr. Jeremy Hanley):
I am honoured to be replying to the debate that my hon. Friend the Member for Chingford (Mr. Duncan Smith) has had the good fortune to secure. I am grateful for his welcome.
The Government's position on European social policy is already well known to the House. Since the Maastricht negotiations in 1991, the UK has been in a unique position in Europe. We and our European partners have taken separate paths as far as increasing the burden on businesses of social legislation is concerned. I think my hon. Friend the Member for Chingford will agree that the path taken by the UK is the better one.
I need only cite as evidence the decisions by LG and Siemens to locate major new manufacturing facilities in the UK to demonstrate that our policy is working. We are by far the most attractive destination for overseas investment in Europe. A significant factor in those investment decisions is our social opt-out. Though we participate to the full in the single market, we have chosen not to be bound by commitments taken on by our partners under the agreement of the Fourteen on social policy.
There is some confusion about what our opt-out means. It is not correct that we are not bound by any elements of European social policy. The European Union treaty has always contained several provisions relating to social policy, such as health and safety and equal treatment: we
are bound by them, and we honour them in full. In fact, the UK has a much better record than most member states on that.
However, we are not bound by any agreements concluded by the Fourteen under the Maastricht social agreement, such as the European works councils directives. Some sections of the press have trumpeted the fact that, in spite of that, some British multinational companies have decided to adopt works councils. The crucial point is that those companies had the freedom to choose, and made their decisions voluntarily. It is vital for businesses that they, not Government, make such decisions.
Another example is the directive on parental leave, to which my hon. Friend referred, which was also recently agreed by the Fourteen. British companies are, of course, free to provide generous benefits for employees after the birth of their children, but we will not force them to incur high costs, regardless of their ability to meet them, by relinquishing our social opt-out. The most likely result would be not higher social standards but higher unemployment.
The UK's flexible and deregulated labour market encourages employment and growth. We want it to continue to do so. Had the UK signed up to the social chapter, legislation on working conditions could have been imposed on us by qualified majority, whatever the views of the British Government, employers and workers. That is why the Government will not sign up to the terms of the Maastricht social chapter. We certainly could not sign up to the social chapter and then control it.
Mr. Walter Sweeney (Vale of Glamorgan)
rose--
Mr. Hanley:
I am sorry, but I do not have long. If I have time, I will come back to my hon. Friend.
We could not pick and choose the bits of the social chapter that suit us. The moment we signed up, the scale of legislation would undoubtedly increase, and Britain would be overruled on many matters vital to our economy.
What do we believe to be the European Community's legitimate role in social policy? It is certainly not the case that we see no role for the European Community at all in employment or social matters. There is vital work that the Community can do, but its social policy and employment agenda must be founded on three important principles.
The first is competitiveness. Significant and sustainable growth is impossible in an uncompetitive economy. If Community businesses are not able to maintain and improve their competitiveness, jobs will not be created in the Community but be increasingly located outside it. Europe will not be able to compete in the global marketplace. Many provisions of the agreement of the Fourteen on social policy will lead directly to a loss of competitiveness. Many British and foreign businesses also believe that.
Secondly, we insist on diversity. That is, or should be, one of the Community's greatest strengths. The diversity of our institutions, traditions and legislation is as great in employment and the labour market as in almost any other sphere, and it must be respected. No one can believe that the measures necessary to combat unemployment in Greece or Spain are the same as those required in Britain. Are the problems of regulating working practices the
same in Sweden as they are in Portugal? I think not. Unnecessary harmonisation risks raising costs and damaging competitiveness.
The third essential is subsidiarity. European social policy must respect the division of legal competence between the Community and member states that is laid down in the treaties, and the principle of subsidiarity that is now enshrined in them. Much of the action required to combat unemployment must be, and often can only be, undertaken by member states themselves. The Community's role is to support and complement action by them, not to try to supplant that action altogether or to tell them what action they must take.
When the treaty on European Union was concluded, the UK succeeded in including the principle of subsidiarity in its text. In the current intergovernmental conference to consider treaty changes, the UK will make proposals to entrench subsidiarity still further.
"Therefore, the route that I have demonstrated leaves the door open for substantial Community interference in social policy, effectively undermining our exclusion from the social chapter."
In the same debate, I said:
"Even though we may wish to opt out of the 48-hour working week directive . . . it is impossible to imagine a situation in which, 11 member states having voted for a particular directive, the court will not rule against us if we continue to defy that directive."--[Official Report, 20 January 1993; Vol. 217, c. 413-22.]
It is clear that we are not saying anything new, and what we said was not startling then--everyone else in Europe was saying pretty much the same thing.
"The Government is considering ideas for limiting the scope of Community action".
That may not have been enough for my right hon. Friend the Member for Wells (Mr. Heathcoat-Amory)--who made it clear that he did not believe that our European policy is working--but that is what we must pin our hopes upon if we are to stop European social policy wrecking our economy.
12.48 pm
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