Submission from CBI
The CBI is the national body which represents
the views of the UK-based business community to the UK government
and to other authorities in the UK, Europe and elsewhere. It is
an independent, non-party political organisation funded entirely
by its members in industry and commerce. The organisation has
a direct corporate membership employing over four million and
a trade association membership representing over six million of
the workforce.
We very much welcome this opportunity to set
out our views, based on the CBI's experience of lobbying in Westminster,
Whitehall and Brussels. It is becoming increasingly apparent that
a lack of timely scrutiny at national level is costly to British
business because frequently there is no formal opportunity to
put our case to UK parliamentarians. We are pleased the Modernisation
of the House of Commons Select Committee has identified this as
an area that requires re-thinking, and hope that our evidence
is a valuable addition to the inquiry.
SHORTFALLS IN
THE CURRENT
SYSTEM
1. There is little opportunity for outside
interest groups to make timely representations. It is of great
importance that outside organisations are engaged in debate on
European matters. All stakeholders should have the opportunity
to set out their views at a point in the European legislative
process when it is still possible to influence the outcome, but
our experience is that this is not the case at present. As a consequence,
British business is losing out because any opportunity to lobby
on European issues in Westminster is too little, too late. Whilst
the CBI is able to lobby Commissioners and MEPs directly thanks
to our Brussels office, there are many occasions where the potential
impact of a proposal on British business is huge, and yet UK Parliamentarians
remain in the dark. These are set out in more detail in the
Examples below.
2. Poor signposting. We would like
to see better sign-posting of up-coming legislation. Outside groups
should be warned early on of any Commission proposal, so that
they have time to react. Whilst we understand that this is as
much an issue for the Commission to resolve as UK Parliament,
it is an essential principle that any future scrutiny arrangement
within UK Parliament must prioritise.
3. Late involvement by UK Parliament.
All too frequently national parliamentarians only become aware
of a piece of European legislation, in particular the problems
associated with it, at its final stage of national implementation.
It is clearly far too late to do anything at this time. Greater
involvement of UK Parliament during the early stages of the development
of such legislation might well ensure that a large proportion
of the difficulties are resolved, or at the very least highlighted,
in advance of adoption by the Government. Any scrutiny by UK Parliament
of a Commission proposal must be early on—ideally prior
to the Commission producing a proposal, but at the very least
before the European Parliament beginning First Reading. Such an
arrangement would ensure that Government is fully informed of
Parliament's view, before it proceeds with any European Council
negotiations.
4. UK Government is able to `wash its
hands' of decisions that are taken in Brussels. At present
there appears to be little Ministerial accountability for negotiations
on key aspects of the European Council agenda. Without UK Parliament
having set out their position in advance, there is no yardstick
against which to measure what the Government has conceded and
achieved in European negotiations. This issue is now all the more
pertinent with the proposal, contained in the Constitutional Treaty,
to give National Parliaments a mandate for participating in the
EU legislative system.
5. UK MEPs lack accountability because
there is little interest from the public or parliament in what
they do. There is little direct interface between MEPs and
their `constituencies' and often, MEPs fail to make a connection
between an issue being debated at the EU level and its impacts
at the national level, both in terms of policy discussion and
any subsequent transposition and implementation. For business,
it is often only when MEPs are directly lobbied by business representatives
that they become fully cognisant of the impact of the issues being
debated. A lack of communication between MEPs and MPs can mean
that each individual is not kept fully informed of legislation
that will affect their constituents. To allow MPs to keep track
of European Affairs they should be receiving regular and easy-to-digest
briefing on past and upcoming business.
6. The situation is becoming more serious
with the increasing proportion of decisions affecting business
being taken at European level. The current Government estimates
that nearly 50% of all legislation debated in Parliament is EU
derived.[42]
This 50% is an overall figure, and for some sectors the proportion
is much higher. As the transfer of powers from the UK to the EU
continues, so the opposite transfer, from EU back to the UK does
not occur. Whilst this may be inevitable, it becomes increasingly
important for UK Parliament to seek to influence proceedings in
Brussels.
MEMORANDUM FROM
THE LEADER
OF THE
HOUSE OF
COMMONS
7. Peter Hain's paper "Scrutiny of
European Matters in the House of Commons" rightly acknowledges
that there are certain areas where UK Parliamentary scrutiny of
European Matters is insufficient. The experience of the CBI is
very much in accordance with the diagnosis he makes in paragraph
2 of the introduction. We agree that changes should be made to
the existing system to encourage greater involvement of Members
in European matters and to enhance the scrutiny process.
8. Joint European Grand Committee.
Specifically, we support the Government's proposal to establish
a new Joint European Grand Committee in which Ministers, and possibly
Commissioners could conduct statements, questions and debates,
and which MEPs could also attend. This Committee should serve
to raise the profile and exposure of European matters in Westminster,
and for this reason is welcomed.
9. Reform of the European Standing Committees.
We harbour a little more scepticism about the proposals to reform
the European Standing Committees. Whilst we agree that the present
system does need reforming, we also believe that the Scrutiny
Committee's idea to increase the number of Committees, thereby
allowing a higher degree of specialisation, should not be dismissed.
In the CBI, policy specialists deal with policy both from the
UK and Europe, and surely it makes sense for UK Parliament to
be organised in the same way. To create a separate policy area
of `Europe' requires such a degree of generalisation that its
effectiveness will be compromised.
10. It is not clear how stronger links between
the Scrutiny Committee and the Standing Committees, or abolishing
the core membership of the Standing Committees, as the paper suggests,
would make a difference to the effectiveness of the scrutiny process.
We do, however, support giving the Standing Committees power to
take evidence, as this would facilitate greater consultation of
outside interests.
11. The House of Lords. The House
of Lords appears to do a much better job scrutinising European
proposals. We believe that this is a consequence of the greater
specialisation that is made possible by having a larger number
of Committees. Peers can develop a degree of expertise thanks
to the more narrowly defined policy areas. Whilst duplication
of work done in the Lords is to be avoided, this does not discount
the possibility of establishing Committees covering similar areas
in the Commons. Perhaps it would also be worthwhile exploring
the option of Joint European Standing Committees.
12. Greater focus on the need for better
scrutiny. Overall it seems the proposals in Mr. Hain's paper
do not go far enough to tackle head-on the lack of scrutiny of
European matters. Whilst this may result indirectly from the higher
profile achieved by creating a new European Grand Committee, none
of the suggested changes would actually lead to more frequent
and in-depth discussions on the merits of a proposal that comes
from Brussels. Not only is this type of discussion necessary to
facilitate full scrutiny by UK Parliament, but so are other measures
not included in the paper, but touched on above. These include:
the involvement of outside interest; effective signposting of
upcoming matters; and involvement of UK Parliament at an early
stage when there is most leeway to influence the outcome.
EXAMPLES:
Case Study 1: The Commission's strategy on Waste
Prevention and Recycling
The European Commission released a strategy
on Waste Prevention and Recycling in May 2003. Although this is
still at an early stage, it opens the door for a whole host of
regulation on waste that is of great importance to CBI members.
In relation to waste prevention the possibility of targets was
raised, as was legislation such as the Integrated Pollution Prevention
Control Directive. It also suggests an EU wide recycling target
which may be met through tradable certificates.
The CBI met the Environment Directorates-General
and submitted a response to the consultation. DEFRA held a restricted
consultation of stakeholders, but some key bodies (such as the
EEF) were not included, and some key issues (such as the definition
of waste) were not discussed.
The European Scrutiny Committee considered the
document and concluded the following:
`This is an interesting document, in as much
as it provides an analysis of the current situation within the
Community in this area, together with a number of suggestions
regarding the direction which waste management policy might take
in future. For that reason, we are drawing it to the attention
of the House. However, we note that it will be followed by the
thematic strategy which it is seeking to develop, and that in
turn will presumably lead to specific legislative proposals in
certain areas. In view of this, we do not think any further consideration
of this subject is called for at present, and we are therefore
clearing the document.'
The CBI argues that this is precisely the time
when UK Parliament could usefully get involved. Waiting for specific
legislative proposals to surface from Brussels would be missing
a crucial opportunity to shape the direction of European Waste
Policy.
Case Study 2: Company Law and Corporate Governance
Action Plan
The Action Plan contains a series of measures
in the field of company law and corporate governance. Many of
these will have profound impacts on UK companies. Below is an
example, but the Action Plan covers a much wider area and it is
surprising that this has not been an area scrutinised by Parliament,
particularly because of the question of the transfer of additional
powers from Westminster to Brussels and because of the potential
overlap with various UK legislative proposals as part of the Company
Law Review, directors and auditors liability, etc.
Non-executive directors, annual corporate governance
statement and effect on UK's Combined Code
Various recommendations have been made that
corporate governance should be dealt with by national codes. The
UK recently revised its own Combined Code and some other member
states (eg Sweden) have only just introduced a code for the first
time. The Commission is proposing to bring forward a recommendation
in the autumn on non-executive directors, but the consultation
document covered so much detail that we cannot see how such a
detailed recommendation can be anything other than an attempt
to dictate the contents of national codes.
While the CBI supports the principle of a corporate
governance statement, as already exists in the UK, the recent
Commission consultation on amendment of the 4th and 7th company
law directives suggested requiring such a statement in a directive.
We believe that the contents of such a statement should be set
at national level and we strongly disagree with EU legislation
detailing what should be included in such statements. This would
require legislation in the UK, overriding the UK's Combined Code,
which is recognised as being both flexible and at the forefront
of corporate governance.
This would be an extremely useful area for UK
Parliament to be involved. There needs to be a better debate on
whether such decisions should be taken at national or European
level, and what level of detail is appropriate at EU and National
level.
Case Study 3: The European Court of Justice
Insufficient scrutiny by UK Parliament of EU
matters can have damaging and lasting implications. In particular,
the ECJ is now interpreting existing EU law, especially the basic
freedoms—free movement of goods, persons, services and capital—in
such a way as to erode Member States' tax regimes. Whilst there
is all round agreement that the UK's tax regime should remain
the sovereign jurisdiction of the UK, there appears to have been
no understanding at the time of the establishment of the ECJ that
its powers could stretch this far. The debate on the draft Constitutional
Treaty provides an opportunity to revisit the role of the ECJ
in tax and other matters of fundamental concern to business. However,
once again, the main parliamentary debate on the Constitution
will occur after the text has already been agreed by the Government
and at a stage when it is too late to make changes.
July 2004
42 http://www.cabinet-office.gov.uk/regulation/docs/europe/word/pqagssrep.doc. Back
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