House of Commons - Documents considered by the Committee on 28 January 2009

Documents considered by the Committee on 28 January 2009 - European Scrutiny Committee Contents

10 The Lisbon Strategy

(30305)

17358/08

COM(08) 881

Commission Communication: Implementation Report for the Community Lisbon Programme 2008-2010

Legal base —

Document originated 16 December 2008

Deposited in Parliament 9 January 2009

Department HM Treasury

Basis of consideration EM of 17 January 2009

Previous Committee Report None

To be discussed in Council European Council of 19-20 March 2009

Committee's assessment Politically important

Committee's decision Not cleared; further information awaited

Background

10.1 The Lisbon Strategy is the economic reform strategy for the Community. It was launched in 2000, relaunched in 2005 with a sharper focus on growth and jobs and is due to come to an end in 2010. The strategy is largely delivered through Member State level policies, but there is a Community Lisbon Programme designed to complement these policies. At the relaunch in 2005 it was agreed that the Lisbon Strategy should be governed in three-year cycles. The second cycle runs from 2008 — 2010 and in December 2007 the Commission proposed for this cycle a revised Community Lisbon Programme with ten objectives:

the Commission to propose a renewed Social Agenda by mid-2008, particularly covering education, migration, and demographic evolutions and to help to address the skills gap by improving the monitoring and forecasting of future skills requirements;
the Commission to make proposals for a common policy on immigration in 2008;
the Community to adopt a Small Business Act to unlock the growth potential of SMEs throughout their life-cycle;
the Community to move towards the target to reduce Community administrative burdens by 25% by 2012 and implement an ambitious simplification programme;
the Community to strengthen the single market, increase competition in services, take further steps to integrate the financial services market and to strengthen existing supervisory arrangements and enhance Community cross-border financial crisis management;
the Community to make the "fifth freedom", the free movement of knowledge, a reality and create a genuine European Research Area;
the Community to improve the framework conditions for innovation, in particular for venture capital and intellectual property rights;
the Community to complete the internal market for energy and adopt the climate change package in order to put in place the framework to achieve at least a 20% reduction in greenhouse gas emissions and reach a 20% renewables energy share by 2020;
the Community to promote an industrial policy geared towards more sustainable production and consumption, focusing on renewable energies and low carbon and resource-efficient products, services and technologies; and
whilst working to conclude the Doha multilateral trade negotiations, the Community to negotiate bilaterally with key trading partners to open up new opportunities for international trade and investment, improve market access focusing on countries and sectors where significant barriers remain, and promote international regulatory cooperation.[33]

10.2 The Spring 2008 European Council invited the Commission, the European Parliament and the Council, within their spheres of competence, to take forward work on the ten objectives identified in the Community Lisbon Programme, whilst taking into account the priorities identified by the Council, in its various formations.[34]

The document

10.3 In this Communication the Commission summarises progress on the revised Community Lisbon Programme against the ten objectives. It considers the following to be the most important milestones:

Commission adoption of the Renewed Social Agenda, addressing the need to enhance employment opportunities and ensuring solidarity;[35]
the Commission adoption of the Small Business Act, setting policy priorities for easing life for and increasing the dynamism of SMEs;[36]
the adoption by the EP and Council of the Goods Package to boost the internal market and increase consumer protection;[37]
the Memorandum of Understanding, of 20 June 2008, on Co-operation between the Financial Supervisory Authorities, Central Banks and Finance Ministries of the EU on Cross-Border Financial Stability;[38]
the Commission has driven forward its better regulation agenda to cut unnecessary costs and remove obstacles to innovation;
the Commission adoption of the Climate Change and Renewable Energy Package[39] and the Sustainable Consumption, Production and Industry Action Plan;[40]
adoption by the Council and the European Parliament of the Modernised Customs Code and the e-Customs Decision to create a paperless environment for customs and trade;[41] and
substantially greater amounts of Community funding have been made available for growth and jobs through Cohesion Policy.

10.4 The Communication also draws attention to future actions that the Commission considers to be particularly important within the priority areas identified by the European Council in 2006.[42] These include:

Investing in people and modernising labour markets

the Council and the European Parliament adopting the proposals in the Social Agenda;
addressing the significant regulatory barriers that exist to the single labour market, including insufficient comparability and recognition of qualifications and major restrictions on the portability of pensions and social benefits;
revising the rules of the European Globalisation Fund[43] so that it can intervene more rapidly in key sectors; and
the Council adopting the blue card scheme to attract highly-skilled workers by May 2009.[44]

Unlocking business potential, especially of SMEs

implementation of the Small Business Act;
further simplifying the regulatory environment;
improving investment readiness and access to finance for SMEs;
removing the requirement on micro-enterprises to prepare annual accounts and limiting the capital requirements of the European private company to one euro.
swift adoption of the simplification programme, the Fast Track Action proposals and proposals to reduce administrative burden;[45]
implementation of the Services Directive;
strengthening single market policy, consumer policy and the enforcement of competition policy;
follow up to market monitoring and consumer monitoring;
adoption by the Council and the European Parliament of amendments to the Capital Requirements Directives,[46] Deposit Guarantee Schemes Directive,[47] changes to the accounting rules in the International Accounting Standards Regulation[48] and a proposal for a Regulation on Credit Rating Agencies;[49]
new proposals aimed at mitigating risks from derivatives and credit default swaps;
improving global cooperation on financial supervision and crisis management; and
completing and implementing the single framework for wholesale and investment markets.

Investing in knowledge and innovation

increased pooling of research resources;
implementation of the European Researchers' Partnership;[50]
implementation of the European framework for international science and technology cooperation;[51] and
mutual recognition of national frameworks for venture capital funds and the removal of existing regulatory and tax obstacles.

Energy and climate change

completion of the single energy market;[52] and
adopting the Commission proposal for reduced VAT rates for green products and services on an urgent basis.[53]

External Agenda

comprehensive bilateral trade agreements with key trading partners;
improving the effectiveness of the intellectual property rights enforcement system against counterfeiting; and
extending existing sectoral arrangements, for instance in the aviation sector.

The Government's view

10.5 In her Explanatory Memorandum of 17 January 2009 the Exchequer Secretary to the Treasury (Angela Eagle) says that the Government welcomes the progress that has been made in implementing the Community Lisbon Programme, in particular on the Small Business Act, the Climate Change and Renewable Energy Package and better regulation. She adds that the Government agrees that broadly the proposed future priority actions are the correct priorities. The Minister then makes more detailed comments in relation to the priority areas.

10.6 On investing in people and modernising labour markets, the Minister says that the Government:

welcomes the broad theme of opportunity, access and solidarity for Community citizens and the movement towards a modern Community social policy focused on the prosperity and wellbeing of all citizens, including marginalised groups;
is pleased to see the recognition of the important contribution of skills and education to the Social Agenda and supports the message that economic and social policies must mutually reinforce one another, with policies combining flexibility and fairness;
fully supports the European Qualifications Framework[54] and hopes that it can be implemented across the Community from 2010;
considers that the current Regulation for the European Globalisation Adjustment Fund provides an adequate framework for responding to the consequences of globalisation and that proposing significant changes to the Regulation will delay help to workers who lose their jobs;
welcomes the proposals to simplify and clarify the procedures for applying to the fund, especially in regard to supporting small labour markets, where no change to the Regulation is needed;
has not so far opted-in to Community measures on legal migration and will consider any future proposals for legislation in this area, taking into account the effect on UK immigration policy, including the Points Based System.

10.7 In relation to unlocking business potential, especially of SMEs, the Minister says that the Government:

welcomes the Small Business Act and the strong emphasis placed on it by the Commission — but the majority of measures that Member States are invited to implement are either already underway in the UK or could be taken forward within existing activities;
particularly welcomes the emphasis on embedding the 'Think Small First' principle in Community policy-making;
strongly welcomes the Commission's acknowledgement that further simplification initiatives, especially those that will help SMEs, are urgently needed;
is arguing that the administrative burden reduction target should be a net target to maximise its impact;
on regulation, encourages and supports the Commission in taking forward at the earliest possible date in 2009, its commitment to introduce an SME Test in its impact assessment processes and to use Common Commencement Dates;[55]
strongly supports the measures aimed at improving access to finance for SMEs — this is a priority area in the current economic climate;
encourages the Commission in its efforts to raise awareness of its funding programmes and in streamlining processes;
has welcomed the initiatives from the European Investment Bank and is working with UK banks to ensure that as much funding as possible comes to British small firms;
strongly welcomes the Commission's intention to adopt a proposal giving Member States the option to exempt micro-enterprises from the requirements of the accounting Directives, as it would mean that many could benefit from a reduction in costs when they need it most;
urges the Commission to adopt a proposal on this issue in early 2009;
agrees that the capital requirements for the European private company statute should be kept low and supports the figure of one euro;
strongly welcomes the Commission's commitment to extend the action programme on administrative burdens beyond the 41 legal acts currently being considered;
agrees that the comprehensive and timely implementation of the Services Directive by Member States by the December 2009 deadline is a priority to facilitate the cross-border establishment of service providers;
strongly supports a single market policy that recognises the importance of robust consumer and competition policy — Community consumers benefit from open, competitive markets that should be delivered through effective use of single market and competition powers;
supports the Commission's commitment to more evidence-based and impact driven policies and in particular market monitoring as a tool to facilitate a better functioning single market;
welcomes amendments to the Capital Requirements Directives, that are expected to enhance supervisory coordination and cooperation, improve the prudential standards and promote further convergence in the single market;
on the proposed amendments to the Deposit Guarantee Schemes Directive, welcomes increasing the minimum level of protection for depositors, faster payout when things go wrong and the move to 100 per cent guarantee of eligible deposits
is supportive of a Community registration scheme for Credit Rating Agencies, subject to resolving practical considerations — any proposed Regulation should be proportionate and principles based;
believes that the market for credit default swaps would benefit from the creation of a central counterparty for trades of credit default swaps. This would increase trade transparency, reduce counterparty risk, promote high quality risk management practices and make credit default swaps trading more robust;
is working with the Commission and other Member States to ensure that a central counterparty for credit default swaps comes online in 2009 and that any proposals that come forward are robust and increase market stability;
believes that there are lessons to be learned from the financial crisis, particularly for cross border groups, and is fully involved in international work underway in the G20;[56]
supports the Community's ongoing work on crisis management, supervision and procyclicality, given that, as a key global marketplace it has a key role to play in shaping the international response. It is important that the work at Community level remains in step with the international work underway in the G20 and Financial Stability Forum.[57] Any policy proposals would need to be underpinned by a market failure analysis and an impact assessment; and
is supportive of the principle of the single market for wholesale and investment markets.

10.8 Turning to investing in knowledge and innovation, the Minister says that the Government:

is supportive of the Joint Programming initiative as a Member State driven mechanism for improving the coordination of national research funding;[58]
while in principle supportive of the legal framework for the creation and operation of pan-Community research infrastructures, had concerns about the way in which exemptions from VAT and excise taxes for these structures were treated in the original text and hopes to see these resolved in future negotiations;[59]
welcomes the European Researchers' Partnership on career and mobility issues and will be working with stakeholders to develop a National Action Plan to implement the Partnership in the UK;
supports the strategic framework to improve coherence and effectiveness of the Community's science and technology engagement with third country partners and will be nominating a representative to the group charged with its implementation; and
welcomes efforts to identify and address tax obstacles that may hinder development of a larger Community market for venture capital and supports the principle that the Commission should work with Member States, respecting their national competences, to identify obstacles such as double taxation.

10.9 On energy and climate change the Minister says that the Government:

strongly welcomes the single market package — a properly functioning and regulated internal energy market is the best way of protecting consumers' interests, enhancing the Community's security of supply, encouraging investment in infrastructure and helping the Community to meet its climate change objectives; and
particularly welcomes the Commission's intention to adopt, on an urgent basis, a proposal for reduced VAT rates for green products and services.

10.10 On the external agenda the Minister says that the Government:

supports bilateral trade agreements with key trading partners and considers that the Commission should aim to ensure these provide building blocks for multilateral liberalisation;
strongly supports action to improve the effectiveness of intellectual property rights enforcement globally; and
welcomes continuing work on the Anti-Counterfeiting Trade Agreement[60] and EU-US Action Strategy on Enforcement.[61]

10.11 Finally the Minister tells us that this document "is subject to ongoing discussions in Council and its relevant preparatory bodies. The relevant formations of the Council will agree reports to the Spring European Council of 19-20 March 2009. The Spring European Council will adopt its view of the [Community Lisbon Programme] and be invited to endorse the reports from the Councils."

Conclusion

10.12 This Commission Communication covers a wide range of important Community activity, as evidenced by its consideration by several formations of the Council, in preparation for the next European Council. Before considering the document further we should like to have from the Government the reports from the various Councils to the European Council, together with, as appropriate, supplementary Explanatory Memoranda. Meanwhile the document remains under scrutiny.

33 (29288) 16752/07: see HC 16-ix (2007-08), chapter 18 (23 January 2008) and HC 16-xix (2007-08), chapter 11 (23 April 2008). Back

34 See http://www.consilium.europa.eu/ueDocs/cms_Data/docs/pressData/en/ec/99410.pdf. Back

35 (29818) 11517/08 +ADDs 1-3: see HC 16-xxviii (2007-08), chapter 8 (22 July 2008). Back

36 (29791) 11262/08 + ADDS 1-2: see HC 16-xxix (2007-08), chapter 8 (10 September 2008). Back

37 (28373) 6312/07: see HC 41-xiv (206-07), chapter 11 (14 March 2007). Back

38 http://www.fi.se/Templates/Page____10336.aspx Back

39 (29403) 5866/08 HC 16-xiii (2007-08), chapter 8 (27 February 2008). Back

40 (29874) 12026/08 + ADDs 1-2: HC 16-xxx (2007-08), chapter 4 (8 October 2008). Back

41 (27107) 15380/05 + ADDs 1-2 (27108) 15381/05 + ADDS 1-2: see HC 34-xvii (2005-06), chapter 5 (1 February 2006), HC 34-xxxi (2005-06), chapter 7 (14 June 2006), HC 41-x (2006-07), chapter 6 (21 February 2007), HC 41-xv (2006-07), chapter 8 (21 March 2007) and HC 41-xxv (2006-07), chapter 14 (13 June 2007). Back

42 See http://www.consilium.europa.eu/ueDocs/cms_Data/docs/pressData/en/ec/89013.pdf. Back

43 (27356) 7301/06: see HC 34-xxv (2005-06), chapter 5 (19 April 2006) and HC 34-xlii (2005-06), chapter 14 (7 November 2006); and (30321) 5005/09 + ADDs 1-2, on which we expect to report shortly. Back

44 (29056) 14490/07 + ADDS 1-2: see HC 16-viii (2007-08), chapter 4 (16 January 2008) and Stg. Co. Deb., European Committee, 17 March 2008, cols. 3-14. Back