Previous SectionIndexHome Page

Mr. Cash: After that robust knockabout by the hon. Member for Ealing, North (Mr. Pound), perhaps we should return to some of the more fundamental questions in examining the nature of the provisions. I have heard

3 Dec 1997 : Column 418

much talk about relative hourly costs for production workers, and I thought that it might be useful to mention the most recent figures comparing costs in, for example, Germany, France, Italy and the United Kingdom. On a baseline figure of 100 for hourly labour costs in 1997, the figure for Germany is 145, for France it is 93, for Italy it is 92 and for the United Kingdom it is 80. That gives one a simple snapshot of the differentials between wage rates in other countries under the provisions of the social chapter and the kind of manoeuvring that is taking place with a view to trying to undercut the United Kingdom. Fundamentally, that is what the issue is mostly about.

Let no hon. Member imagine that the arrangements for the social chapter have been designed simply to enhance the benefits of those in other parts of Europe. There is an ulterior motive to ensure that higher labour costs are applied in the UK so as to raise our wage levels and put us--from the point of view of other European countries--on more of a level playing field. For the UK, the bottom line is that we have a substantial differential advantage at the moment, which is one of the reasons why we are doing relatively well.

The same argument applies to the minimum wage, to which the Government are committed. The figures for the Liverpool model, which I have been given by Professor Patrick Minford, suggest that the direct effect of the proposals

That would mean a substantial increase in costs to the UK.

Mr. Radice: Pay is excluded from the social chapter.

Mr. Cash: Yes, but the hon. Gentleman knows perfectly well that the Government are introducing proposals for a minimum wage. That is what I am dealing with. The hourly rate at which the Commission arrives has to be reflected by movements similar to those in respect of the code of conduct for what is described as "harmful tax competition", which is the new method whereby the Commission achieves a degree of harmonisation across the board--achieving in national legislation proposals which are commensurate with the kind of playing field that the Commission wants to create in Europe as a whole.

On the costs of the social chapter, Professor Minford points out that general gross domestic product would be depressed by a staggering 20 per cent., with consequences for unemployment that the model cannot effectively quantify, so far is it from even the worst United Kingdom experience. That is devastatingly bad news. If the Government want to challenge the Liverpool model and the arguments of Professor Minford, I have no doubt that he would be only too delighted to take them on. He says:

That is published information--[Interruption.] It is all very well for the hon. Member for North Durham (Mr. Radice) to laugh. As Chairman of the Treasury Committee, he may wish to ask Professor Minford to appear before the Committee and to examine such questions. That would be the responsible way of going about the matter, rather than proceeding on the basis of the advantages that claimed for the social chapter and the

3 Dec 1997 : Column 419

arguments that go with it. I suggest that there should be a proper debate rather than the kind of banter that we heard during the speech of the hon. Member for Ealing, North.

Mr. Radice: I am sure that members of the Treasury Committee would be delighted if Professor Minford appeared before the Committee when we consider issues such as economic and monetary union. No doubt he would talk about the issues to which the hon. Gentleman has referred. Of course, models depend on what assumptions one feeds in: if one feeds in incorrect assumptions, one gets incorrect results.

Mr. Cash: I would say much the same of reports that have poured out of the European Commission such as the Cecchini report, "One Market One Money," and all the other junk that has been generated. They have effectively been written backwards because all the Commission ever wanted was to arrive at the conclusions from which it started. That is the worry. I would agree with the hon. Gentleman if he were prepared to conduct a completely objective analysis in the Treasury Committee. I suspect, however, that he has been appointed Chairman of that Committee precisely because the Government do not want an objective analysis. The hon. Gentleman is well known for coming from where he started, and I assure him that I know where he will end up.

I come now to questions on the impact that the process towards European economic and monetary integration has had on the British economy, the consequences of the exchange rate mechanism and the advantages that we have had since we came out, which I am sure that the hon. Member for North Durham would not want to dodge. I should like to believe that he could apply the same criteria to the advantages that we have had since we left the ERM to the advantages that we are enjoying while we are out of the social chapter.

I am well aware that relatively few provisions of the social chapter are as yet to be incorporated--it is a softly softly catchee monkey operation. Having served on the Select Committee on European Legislation for the past 14 years, I have seen stuff such as this as it has come forward in a series of proposals. There is masses of legislation in the pipeline. It is a fraud on this debate and on the people of this country to pretend that the issue gravitates only around questions relating to works councils and the like.

I turn to a comparison that we can genuinely make between economies elsewhere in Europe and economies at the present time both in the United Kingdom and--so far as a reasonable comparison can be made--in the United States. There is no doubt that outside the social chapter, with union legislation under Baroness Thatcher, changes have been made as a result of which we are truly competitive in the world.

Since 1974, unemployment in the European Community has increased. That is very significant. From 1974 to the present day, unemployment has risen from 2.5 per cent. to an average of about 11.5 per cent. The issue is not just one of adopting a chauvinistic or party political point of view on one side of the Committee or the other. In the national interest, it cannot be right for us to ignore the reality that unemployment in Europe has risen since 1974 by such an amount.

There is the most appalling youth unemployment in countries such as Spain, where it is running at about 35 per cent., Italy where it is 33 per cent., and France

3 Dec 1997 : Column 420

where it is 28 per cent. It is monstrous that people should be subjected to such misery and deprivation as a result of policies that have been pursued in Europe over the past 20 years in the process of so-called ever closer union. As I said the other day, the process is in fact ever closer division.

The policies are causing deprivation, hardship and unemployment. I cannot for the life of me understand how, in a trivial exercise called the jobs summit last week, Labour Members could possibly imagine that they would be able to claw back the dangers to the people of this country--including their own constituents--that what I have just described represents. Believe me, it will come to haunt them.

As has been mentioned, 31 million jobs have been created over the past 20 years in the United States compared with zero in Europe. Do not Labour Members realise that there must be a lesson to be learnt from that? Why are they involved in the Gadarene rush towards creating massive unemployment and greater difficulty for the people of this country? I shall give way to my right hon. Friend the Member for Haltemprice and Howden (Mr. Davis)--or at least I think that I am about to. I thought that he was rising and wanted to say something.

Mr. David Davis (Haltemprice and Howden): My hon. Friend has provoked me to speak rather than my asking him to give way. I apologise to him for intervening in the middle of his speech. If the social chapter is so minor and unimportant, as Labour Members claim, why was our joining the social chapter raised at the top of the agenda at every Council of Ministers that I attended? The continental countries were clear about wanting us to join so that more could be added to it without further disadvantaging them.

7.30 pm

Mr. Cash: My right hon. Friend, with his immense experience, makes a telling point. The real reason why the other countries have been so anxious to impose the social chapter on us is that they want to ensure that the United Kingdom does not get a competitive advantage in the ever-increasing legal area of employment. I should not really say this, but in a funny way it is quite a good ruse from their point of view, if they get away with it. Unfortunately, not only are the Government prepared to run with that ruse, but they are prepared to advocate it. They want to destroy jobs in the United Kingdom.

That is what is going on in the coal industry. In my Adjournment debate the other day, I pointed out that the German coal producers are getting as much as £5 billion a year. State aid is tied up with the social chapter and employment policy. Why are the so-called new Labour Government anxious to drive out good, honest, hard-working miners in my constituency and elsewhere in the United Kingdom on the altar of the ideology of the European Coal and Steel Community--which stinks--giving the Germans the opportunity to pay their miners £5 billion a year? What are the Government doing about that? That is social policy. That is where they are destroying United Kingdom jobs and creating advantages for people elsewhere.

I have always supported the notion of a single market, but I do not support gross differentials, gross unfairness and a complete lack of competition. That is the problem.

3 Dec 1997 : Column 421

That is why I am so concerned about the behaviour of a Labour Government that got in on the basis of a vast mistake that was made over the exchange rate mechanism. We broke promises on that, tied up with monetary union and other issues. Perhaps the British people had notquite connected that with domestic issues. A Labour Government ride into that vacuum and go around destroying jobs, such as the 5,000 that they are about to ditch in the coal industry, although I heard the Prime Minister attempting desperately to hang on to the cliff edge by making some promises this afternoon. We know that his commitment to a 20 per cent. cut in emissions is at the root of the problem and the Labour party's embarrassment.

The social chapter is about employment policy and the manner in which we create jobs. By signing up to it, we shall take away the advantages that have been built up by the Conservatives over the past 18 years. I find that very depressing. I hope that the people of this country will take note of the arguments of Conservative Members, although I am experienced enough in this place to know that the best way to keep a secret is to make a speech in the House of Commons.

The European Commission's figures on the effects of the social chapter show that regulation has shackled employers. Greater flexibility to respond to market conditions is essential if jobs are to be created. According to the European Commission, non-wage labour costs add an average of 30 per cent. to employment costs in the European Community. The figure approaches 50 per cent. in Germany, France, Italy and Belgium, but it is only 19 per cent. in the United Kingdom, where health care and much of welfare spending is paid for by general taxation. Many other member states are searching for alternatives to high payroll taxes because of the damage that they inflict on employment opportunities and are looking for ways to put the costs of social benefits on the general taxation budget.

The provisions of the social chapter and the employment title are nothing more than pieces of paper that will cause incredible damage to people in my constituency and throughout the United Kingdom. I trust and believe that they will cause a great deal of embarrassment to the Government, who are inviting the chaos, the disorder and the implosion of the European Community that the measures will cause.

Next Section

IndexHome Page