The evidence
3. The Secretary of State gave us oral evidence on
9 March and the Minister on 11 March. We are very grateful to
them and their officials for the time and thought they put into
preparing for the evidence sessions and appearing before us.
4. Our meeting in February to consider the Commission's
report coincided with the dispute at the Lindsey oil refinery
following the decision to award a contract to an Italian company
(IREM) to carry out some of the work on the installation of a
new facility at the site. The conditions on which IREM's staff
were posted to the job were subject to the requirements of the
Posting of Workers Directive[3],
about which there is controversy as a result of the decisions
of the European Court of Justice in four recent cases. We decided,
therefore, that we should ask the Ministers about those matters
as well as the Commission's report.
5. The Secretary of State began his evidence as follows:
"If I may, perhaps I could just set out some
introductory remarks on the subject of the free movement of workers
and to provide some context about the very important and substantial
benefits that I believe the UK receives from the open EU market.
Statistics alone paint a clear picture. Half of the UK's exports
go to the 27 Member States of the EU making the European Union
our biggest market. 3 million to 3.5 million UK jobs are linked
to our trade with the European Union and roughly half of all UK
inward investment is from the European Union which is worth about
£315 billion a year. Over 320,000 British-owned firms are
operating in Western Europe. You will see that the importance
of the EU, its single market and its openness to trade and the
circulation of capital and workers is of immense economic importance
to Britain. In view of these benefits, it is my firm belief that
there is no advantage for the UK whatsoever doing anything to
deny ourselves full access to the European single market and therefore
any openness to protectionism, in the light of the current recession,
would be a very grave error in the government's view. This would
only lead to an erosion of the single market. It would lead to
a tit for tat inexorable closing of markets and opportunities
for trade for us in this country. It would lead very quickly
to a race to the bottom as people tried to hang on to what they
had and to exclude others which would very quickly create a downward
spiral. It is also, in our view, very important to keep our labour
market flexibility. This is the best way to ensure that people
can move between jobs and to other jobs as the economy adjusts
and recovers as it will. The UK has always been a firm supporter
of the free movement of workers in Europe which is why we fully
implemented the Posting of Workers Directive which has been in
force now for some years in the EU. We have also supported the
Commission's work with social partners and with enforcement authorities
to look at the operation of the Posting of Workers Directive and
we look forward to the results of that examination by the social
partners. We will continue to resist calls for additional burdensome
employment legislation, including from the EU. In particular
we will fight to retain the right of individuals to opt out of
the Working Time Directive's maximum 48 hour week. It is very
important if British workers are going to compete for supply chain
opportunities both in Britain and in Europe that we maximise their
skills and productivity capability and that is why John Denham
and I commissioned an independent review of the skills and productivity
in engineering construction in Britain which will identify specific
factors influencing success for UK-based companies bidding for
UK and foreign engineering construction contracts. It will shed
light on the current state of skills in this sector and it will
shape our strategy of investment in the future. I think this
is particularly important in the light of the unofficial disputes,
strikes and stoppages that have been present in this sector in
recent months and which of course it is very important for us
to seek to avoid in the future. With those introductory remarks,
I would be happy to take any questions from you and members of
the Committee."
6. We asked the Secretary of State a wide range of
questions. They included, for example, questions:
- about the number of workers
from the A-8, A-2 and other Member States who are working in the
UK (QQ 1, 2 and 14 to 16);
- whether new restrictions should be placed on
the movement of workers from the A-8 and A-2 because of the current
economic downturn (QQ 4 to 7 and 17 to 19);
- about the Posting of Workers Directive, the Committee
of Experts the Commission has set up to review the Directive and
the decisions of European Court of Justice which have caused controversy
(QQ24, 25 and 33 to 36); and
- whether collective agreements on terms and conditions
of employment should be made legally binding in the UK QQ 29 to
32).
7. We draw particular attention to the following
points in the Secretary of State's evidence:
- He could "categorically
rule out" the introduction of restrictive measures which
would prevent British nationals from working in the oil and gas
industry anywhere in the EU (Q 4).
- The Home Secretary has already indicated that
she is attracted to keeping the Worker Registration Scheme in
place for workers from the A-8 after April of this year (QQ 4
and 19).
- So far as he knew, there have been no discussions
with other Member States or trades unions in the UK about altering
the EC's existing rules on the free movement of workers in response
to the current economic downturn (Q 6).
- He does not share the concerns of some trades
unions about the decisions of the European Court of Justice in
the Laval un Parteri[4]
and Viking Line[5] cases
but, because they had caused such controversy, the Commission
was right to establish a Committee of Experts to examine any questions,
difficulties or specific issues which might arise concerning the
practical application of the Posting of Workers Directive or its
implementation and enforcement (QQ 24 and 33 to 35).
- The ACAS report on the dispute at the Lindsey
oil refinery had found that the employees of the Italian sub-contractor,
IREM, had the same terms and conditions as local workers under
the National Agreement for the Engineering Construction Industry
(QQ 28 and 29).[6]
- The Government currently has no proposal to amend
the Posting of Workers Directive to make collective agreements
enforceable in the UK (QQ 29 and 30).
8. Most of our questions to the Minister of State
for Borders and Immigration were about the number of workers from
the A-8 and A-2 who have come to the UK. Despite repeated questioning
and the Minister's efforts to explain the Government's figures,
we were left in doubt about the statistics and the reliability
of the estimates.
9. In response to our invitation to sum up his views
on the effects of the movement of workers from the A-8 and the
A-2, the Minister told us that the overall impact was beneficial.
He added that:
"One would have to look at regional and local
impacts. You could not in all cases say that there was value
added with certainty. I am not suggesting that there is evidence
to the contrary but I think one would have to look at the immigration
impact, social as well as economic. Overall, we support the analysis
that shows that it is beneficial. We believe that there is, other
things being equal, a diminishing return on that. We believe
that the current economic situation will present us with unknown
quantities of people and activity in the future, which is why
we are cautious and why we believe that the migration controls
that I was mentioning before, in answer to Mr Steen,[7]
are increasingly important. We were doing them anyway but we
think they are increasingly important. We are keen to put into
the debate the other side of the coin which I characterise as
the Auf Wiedersehen Pet point, which is that many of my constituents
work within other European Union Member States. All of these
policies can be reciprocal. I urge caution in looking at that.
This is a report about the 27, not about the one, that the European
Commission has presented us with. Overall, we support the analysis
that it has been beneficial. We proceed with the benefit of hindsight
for future potential accession."[8]
Conclusion
10. We now formally recommend the Commission's
Communication for debate in European Committee B. We believe that
the evidence Lord Mandelson and Mr Woolas gave us will be useful
to the debate and is likely to suggest subjects for further discussion
on that occasion.
1 The A-8 are Cyprus, the Czech Republic, Estonia,
Hungary, Latvia, Lithuania, Malta, Poland, Slovakia and Slovenia.
Bulgaria and Romania - the A-2 - acceded to the EU on I January
2007. Back
2
See HC 19-vi (2008-09), chapter 2 (4 February 2009). Back
3
Directive 96/71/EC. Back
4
Case C 341/05. Back
5
Case C 438/05. Back
6
ACAS report of an inquiry into the circumstances surrounding the
Lindsey oil refinery dispute, 16 February 2009. Back
7
QQ 58 to 60. Back
8
Q 55. Back
