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Mr. Spring: I beg to move, That the clause be read a Second time.

It is now four years since the Government abandoned the opt-out from the social chapter. It is time for an assessment of its impact. New clause 6 would provide for just such an assessment on a regular basis.

The treaty of Nice further extends the social chapter in article 137 TEC by adding two new fields to the list of those in which the Community


is a new item. It is already reflected to an extent in the existing provision on "social protection of workers". However, crucially, that is decided unanimously. The new provision is different because it will be decided by QMV.

The Government point out of course that QMV under the new provisions is limited to co-operation between the member states, and that harmonisation of their laws and regulations is explicitly excluded. Yet this will encourage the EU to put pressure on Governments to conform to so-called best practice when social protection systems are not considered "modern" enough.

New clause 6 would not prevent the new provision from being implemented. It would, however, provide for a regular report on the evolution of the social chapter as a whole. If the Government are as sanguine as they claim about the social agenda in the EU, they presumably support the new clause. It would, after all, provide them with another opportunity to set out all the beneficial, deregulating measures that they claim that Europe is introducing. We wait for that with bated breath.

A brief look at how the social chapter has developed over the last four years highlights why Opposition Members have serious concerns. We were told that signing the social chapter, with the attendant loss of the UK veto, simply did not matter. In 1995, the Prime Minister, then Leader of the Opposition, told the Confederation of British Industry that each piece of legislation under the social chapter would be judged on its merits. He said that he had

That was in November 1995.

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On Second Reading of the Bill to ratify the Amsterdam treaty, the then Foreign Secretary reassured the House about the effect of signing up to the social chapter. He said:

He was particularly at pains to reassure the House about the then draft proposals for a general framework for informing and consulting employees—the so-called national works councils directive. On this, he said, the Government would

That was his promise in 1997. Repeatedly, in recent months, the Government have reiterated both their opposition to the works councils directive and their confidence that they would be able to block it. Then, days after the general election, at the Employment and Social Policy Council on 11 June, the Government had to give in. Of course Ministers claim that the amendments that they achieved on issues such as the transition period mean that the text is now acceptable. So much for the principle that such issues are not for the EU to decide.

6.45 pm

In reality, of course, the Government had no choice but to accept the directive, because their blocking minority had melted away—at the end of what the Department of Trade and Industry briefing to MEPs euphemistically described as "long and difficult negotiations". With that experience presumably fresh in the collective ministerial mind, is it not inexplicable and inexcusable that they are about to make the same mistake again, both with a general extension of QMV at Nice and specifically in relation to social measures? Does that not underline the need for regular reports on these matters? Instead of agreeing to extend the social chapter, as they did at Nice, the Government should be assessing the damage that is being caused by the articles already agreed.

Does the Minister agree that the momentum on social policy continues to grow? Belgium's note on its presidency priorities states that it will

In the light of concerns expressed by employer organisations and others, bland Government assurances are no longer sufficient. It is time for a clear, open and honest assessment of the effects of the social chapter at times of economic downturn as well as of growth, and of new measures such as national works councils agreed under it.

At Lisbon, the Prime Minister made a speech in which he painted a picture of a modern, outward-going Europe. He talked about benchmarking and the future of high technology, and of a Europe that was open to competition in a liberalising and deregulated way. The following week, that vision was rejected by the French Prime Minister, who talked about reinforcing the social agenda. The social agenda and the ethos that obtains now in the

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EU is out of date in a modern economy. I ask therefore that the Minister make clear to the Committee the implications of that.

Peter Hain: I apologise for missing the first moments of the hon. Gentleman's speech. New clause 6, which calls for a twice-yearly report to Parliament, is unnecessary. Both this House and another place already have arrangements for scrutinising legislative and other proposals that come from Europe, including those under article 137 of the treaty establishing the European Community. That is why we reject the new clause. Scrutiny procedures are already more than adequate.

Social policy matters. It makes sense to work together where we can improve the lives of our citizens. That is why the treaty establishing the European Community includes provisions that allow for that. I remind the hon. Member for West Suffolk (Mr. Spring) and the rest of the Opposition that since Britain, under this Labour Government, signed up to the allegedly job-destroying, uncompetitive social chapter, we have created more than 1 million jobs in this country.

Mr. Spring: The Government did?

Peter Hain: The Government have produced the macro and micro-economic conditions in which more than 1 million jobs have been created. In comparison, unemployment rose to more than 3 million when the Tory Government were in office.

Mr. Spring: I hesitate to intervene, but the extent of job creation under the last Government was greater than during the last Parliament, under Labour. That is a fact.

Peter Hain: I am not sure whether we should go too far into that matter under your chairmanship, Sir Alan, but the truth is that unemployment rose to a record post-war high of more than 3 million during the 18 years when the Conservative Government were in office. I do not deny that unemployment started to decline towards the end of that period, but we now have an excellent record of falling unemployment. Employment has risen to an historic high in Britain while the social chapter has been in force.

Mr. Cash: Will the Minister give way?

Peter Hain: Not at the moment; I shall make a little progress, then I shall happily give way if there is time.

On social policy issues, the Nice treaty essentially reordered the Amsterdam treaty. Voting by unanimity was retained in the following key areas: social security and the social protection of workers; protection of workers where their employment contracts are terminated; representation and collective defence of the interests of workers and employers; and conditions of employment for third- country nationals who legally reside in the Community.

One new provision is the addition of a reference to the modernisation of social protection systems, which can take place by qualified majority voting. Such action is limited to the adoption of measures designed to encourage co-operation between member states and does not include legislation—for example, national action plans that

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involve the exchange of best practice among member states along the same lines as the social exclusion action plans.

The Conservative party says that it is worried about expenditure, but changes that involve more national expenditure on such issues can be made only under article 137(1)(c) on social security and social protection of workers, which is still subject to unanimity and on which Britain can use its veto. Those are the old social chapter provisions and the Commission has yet to introduce any proposal under that article. Pay, the right of association, and the right to strike or to impose lock-outs continue to be excluded from the provisions of article 137.

Article 137(4) has been amended to make it clear that any proposals agreed must not affect the right of member states to define the fundamental principles of their social security systems and must not significantly affect the financial equilibrium of national systems—an important and welcome clarification.

As I am in a generous mood, I happily give way to the hon. Member for Stone (Mr. Cash).

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