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Mr. Vernon Coaker (Gedling): Does the hon. Gentleman agree that we have not a central plan, but a co-ordinated strategy? We are not dictating to people, but working together to achieve common goals.
6.45 pm
Mr. Brady: I thank the hon. Gentleman for his point. I fear that the treaty is open to different interpretations, given the way in which it has been drafted, and the Commission's view of its effect in practice. The public relations information that has been put out gives the impression of a co-ordinated strategy, but I do not believe that that is the truth of the treaty.
The treaty sets out a new area of EU expenditure. Article 129 deals with incentive measures. Although it does not implement a rigid blueprint that must be accepted by and imposed on all member states, it gives the Commission the power to direct those incentive payments towards the member states that do the bidding of the Commission or of the majority in the European Union. Because of the different employment practices in this country compared with those in much of the rest of Europe, there is a great danger that incentive payments will be directed elsewhere rather than to the more flexible and effective UK economy.
Article 130 establishes a new Employment Committee. That is another way of centralising, controlling and creating uniformity across the member states, and lies uneasily with the suggestion that there is a drive for greater flexibility in European labour markets. I believe that it is a blueprint for harmonisation of employment law. The hon. Member for Ilford, South hinted at that, and it
comes back to economic and monetary union. It is widely accepted that economic and monetary union will require fiscal harmonisation to avoid competitive tax rates. Similarly, many people in the European Union believe that lower social costs attached to business gives an unfair competitive advantage. They may give a competitive advantage. They certainly give British business a competitive advantage at the moment, which is one of the reasons why our unemployment rate is so much lower than that of many of our European partners.
Mr. Bercow:
I entirely agree with my hon. Friend. Is he aware that the 1989 social charter, to the principles of which this country is now committed, refers to leave that must "progressively be harmonised"? Does he agree that that is not only consistent with what he is saying, but is in direct conflict with the point made by the hon. Member for Gedling (Mr. Coaker)?
Mr. Brady:
I thank my hon. Friend for his contribution. With customary eloquence and clarity, he has put the point rather better than I did.
The approach to harmonisation that seems to have escaped Labour Members is clearly set out in the treaty. The Commission will produce guidelines, which will be agreed by qualified majority voting, so the British Government will have no right of veto. Those guidelines may be contrary to the practice of employment policy in this country. I understand that the guidelines will be approved in the next couple of weeks, or so the Social Affairs Commissioner expects. Member states will then be called on to establish national action plans. At that point, I might agree with the hon. Member for Gedling, because member states could be asked to produce national action plans. However, the treaty does something entirely different: it requires those action plans to come back to the centre. By qualified majority voting, the institutions may make recommendations to member states that could be contrary to the policy, practice or intentions of our elected Government.
It is slightly disingenuous to suggest that the treaty is a decentralising measure which gives greater freedom and flexibility. It does not. Article 127 states:
Some people may say that that is all very well--if we raise standards in the EU as a whole, that is a good thing. Of course it is, but I question, first, whether it is possible to raise standards in the EU as a whole by placing social costs on business throughout the EU and, secondly, whether it is in the UK's interests to sacrifice its more competitive social costs.
Buzz words appear throughout the employment sections and the rest of the treaty: employability, entrepreneurship, adaptability, equal opportunities and
flexibility. Most of us would happily agree with all those things, but, on Monday, I had the great advantage of joining members of the Select Committee on Education and Employment on a trip to Brussels to meet Mr. Flynn, the Social Affairs Commissioner. I had the opportunity to question him on what some of those words mean. Again, I heard a different interpretation of English language, which is the result of far more than the distance of the Irish sea. Indeed, some of my antecedents come from the same emerald isle.
I was filled with admiration for the way in which Mr. Flynn avoided my questions, but some remarkable things emerged. Talking about flexibility and adaptability, I put the question to him directly: does focusing our policy on flexibility and adaptability to improve employment conditions throughout Europe mean that we have seen the last of Europewide harmonisation, through directives such as the working time directive, which increased social costs throughout Europe? "No," said Mr. Flynn, so there is no question about that.
Then I pursued Mr. Flynn on the question of flexibility. "What does it mean?" I asked. He said, "We are talking not about flexibility"--I hope that the Committee will be grateful for the fact that I am resisting the temptation to impersonate him--"but about positive flexibility." I pursued him a little on the definition of positive flexibility. I only wish that, on a Wednesday, we had the opportunity to pursue the Prime Minister in the same open way, so that he actually gave answers and the details behind the policy, which sometimes give the game away, rather than just words, which sometimes obscure the meaning.
It emerged that positive flexibility can mean more, not less regulation. Notably, Mr. Flynn gave one example: under its new flexibility policy, the Commission would, as a matter of urgency, be pressing to remove the current exemptions from the working time directive. Therefore, particularly in relation to transport work, flexibility in the context of the Amsterdam treaty means increased employment costs and more restrictions on working hours. It also means bringing forward the directive on part-time work as a matter of urgency. Again, sometimes, the interpretation of the treaty by Ministers and by those far more senior people in the hierarchy--the Commissioners in Brussels--is different from that commonly understood from their use of words.
Employability is difficult to define, but I am not sure that I even understood the definition that the Commissioner gave. He said that, rather than use the word "employability", he would prefer to use the term "partnership gap". In that instance, I was completely floored. I cannot say what it meant: it did not appear to have any meaning whatever.
I return to the incentive payments and the way in which it is possible for the Commission and the European institutions to force member states into line in the interpretation of social and employment policy. It is important to note that, in the new round of structural fund expenditure, 10 per cent. of the funds--a lot of money--will be kept in a reserve fund. It seems that that will be spent in member states that perform according to the Commission's wishes: the Commission will spend money in member states that perform well according to the treaty standards in article 127.
Why will that money be reserved? Is it to reward countries that do something that is not in the guidelines set out by the Commission, but that--as with the UK--achieves better results than countries that do? Or is it to encourage--or support perhaps--countries that find that their economies are less effective and that have lower employment, precisely because they observe the terms of the Commission guidelines? It is clear that the Commission will not be rewarding countries that adopt a freer, more flexible approach.
The policy set out in the treaty will not lead us towards a more flexible employment model or to more job creation, on which the UK has an excellent record. I asked Mr. Flynn for an example of a country that best summed up his model of positive flexibility. I had in mind the UK, which has of course a much better unemployment record than most other member states, or even--this was perhaps a little hopeful--the United States, but he held out Denmark as the best example of flexibility to which we should all lean, a country which has extraordinarily high taxation and social costs attached to business.
"The Community shall contribute to a high level of employment by encouraging cooperation between Member States and by supporting and, if necessary, complementing their action."
That puts an obligation on member states to complement what other member states are doing. That is a very interesting treaty obligation. It does not suggest that the United Kingdom or any other member state could operate its own, independent, flexible labour market conditions. The treaty clearly intends to create a single entity in European labour policy, whereby member states should seek to improve not their own competitive position, but that of the European Union.
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