The Chair: I understand that Keith Hill, as a member of the European Scrutiny Committee, wishes to make a brief explanatory statement about the decision to refer the relevant document to the Committee.

Keith Hill (Streatham) (Lab): I do indeed, Mr. Howarth. May I say how delighted—

Mr. David Heathcoat-Amory (Wells) (Con): On a point of order, Mr. Howarth. I am sure that a statement made by the right hon. Member for Streatham will be very well done, but I have been asked to make the statement. Both of us having been asked to do it leads to confusion that the Committee can do without.

The Chair: I am grateful to the right hon. Gentleman for that point of order, but my information is that the right hon. Member for Streatham had been asked to make a statement. Any confusion should be taken up with the Clerk to the European Scrutiny Committee or through the usual channels. It is not a matter for me who speaks on behalf of that Committee.

Mr. Heathcoat-Amory: Further to that point of order, Mr. Howarth. I am sure that you are right to call the right hon. Member for Streatham. I have no objection to that. He is a splendid member of the European Scrutiny Committee, but it is wrong that you have been clearly misinformed, given that I was asked explicitly to make a statement. Although the blame might lie elsewhere, the matter is for the House Committee system.

The Chair: If the Committee feels strongly enough about it, it can determine the issue. Does the right hon. Member for Wells wish to press the matter?

Mr. Heathcoat-Amory indicated dissent.

The Chair: In that case I call Mr. Keith Hill.

Keith Hill: Let me begin again by saying how truly delighted I am to be serving under your distinguished chairmanship, Mr. Howarth, in what I confidently expect to be my final appearance in this Committee. I very much regret the confusion to which the right hon. Member for Wells alluded, but I am pretty sure that that will not deter him from contributing to our proceedings in due course.

It might be helpful to the Committee if I take a couple of minutes to explain the background to the documents and why the European Scrutiny Committee recommended them for the debate. In 2000, an action plan known as the Lisbon agenda or Lisbon strategy was launched to

In 2005, the action plan was relaunched for the remainder of the decade as the Lisbon strategy for jobs and growth. In November 2009, the Commission published a working document seeking the views of citizens, organisations and public authorities on a future Europe 2020 strategy as a successor to the current Lisbon strategy for growth and jobs.

The first paper before us is a Commission staff working document, which gives an initial indication of the main trends to have emerged from the Commission’s consultation. The second paper, another Commission staff working document, gives an account of lessons to be learnt from an evaluation of the Lisbon strategy. Both documents were relevant to the preparation of the third document, a Commission communication, which presents formal proposals for the Europe 2020 strategy and which should be the main focus of our debate. The Commission suggests three policy areas: smart, sustainable and inclusive growth; five headline targets and seven flagship initiatives; and a governance structure for the programme. It asks the European Council to adopt, at its meeting on 25 and 26 March 2010, a range of decisions to carry forward the Commission’s ideas.

It is widely held that the Lisbon strategy could at best be described as only a partial success. It has certainly come nowhere near making the EU the most competitive and dynamic knowledge-based economy in the world by the end of the year. It is debatable why the Lisbon strategy has been a disappointment, but among the reasons considered by my Committee are simple over-ambition, the gap between aspiration and practical possibilities, and the impracticability of applying EU targets to 27 member states with widely differing economic and social circumstances. The Commission is quite clear that it intends the Europe 2020 strategy to be a framework for much of EU policy for the next decade, which itself is sufficient reason for the debate. However, the considerations of my Committee about the Lisbon strategy, which I mentioned, additionally emphasised the need for the debate.

What the House needs to know from my hon. Friend the Minister is, first, shall we end up with a practical, realistic statement of intent, or a collection of targets that, if achievable at all, represent commitments to programmes as yet neither properly defined nor elaborated? Secondly, will the Government ensure that what emerges is not so prescriptive as to hobble member states to targets or benchmarks that are inappropriate for individual circumstances? Thirdly, will the Government ensure that the governance proposals do not encroach on or limit national competencies and, in particular, do the Government find the content and tone of the conclusions that the Commission have asked the European Council to adopt later this week acceptable?

The Chair: I call the Minister to make an explanatory opening statement.

The Economic Secretary to the Treasury (Ian Pearson): Thank you, Mr. Howarth, and it is a pleasure to serve under your chairmanship this afternoon. I welcome the European Committee’s decision to refer the matters for debate, because they are vital to the future of the United Kingdom as well as to the future of Europe.

At the moment, across Europe and globally, we are seeing a shift away from the immediate concerns of the global financial crisis and the economic downturn and a start of thinking about where jobs and growth in the medium term will come from. Clearly, more work needs to be done on the former still, through the G20, Europe and other forums, but in the focus on jobs and growth for the future, it is important to recognise that Europe faces some specific challenges.

The EU economy grew by 0.3 per cent. in quarter 3 last year and 0.1 per cent. in quarter 4. Seventeen out of the 27 countries in the EU are now out of recession, including the United Kingdom, but the recovery is still fragile. Estimates suggest that investment declined by 11 per cent. in 2009, and unemployment across the eurozone is something in the region of 10 per cent.—pretty much historic high figures. There is still a lot of uncertainty about the future growth of the European economy. Some estimates suggest that the EU will recover only to growth of 1.6 per cent. by 2013, which is important not just for Europe and Europe’s future but also for the United Kingdom, as half of our trade is in the European Union. The challenge, as my right hon. Friend the Member for Streatham correctly summarised, is to ensure that Europe achieves sustainable, strong and balanced growth for the future.

On the UK’s response to the emerging debate about the successor to the Lisbon strategy, I note and agree largely with what my right hon. Friend said. The UK submitted a major document, called “EU Compact for Jobs and Growth”. We have also worked with the Commission on its plans for the 2020 strategy. In summary, we need to see action at the EU and the national levels, and we broadly welcome the Commission’s proposals. I hope, when answering questions, to expand more on the UK’s policy discussions. As has been mentioned, such matters will be discussed later this week at the European Council. I hope for a broad level of agreement, then further work on the details of the policies and support for them at the June European Council.

My right hon. Friend rightly mentioned a number of challenges about how we get the balance right. Will the meeting be just a talking shop? Will a set of measures be agreed as a common framework? Will it make a difference? The question about making a difference is crucial—given our experiences of Lisbon, there has at the European level been some push to come up with hard-wired solutions, but we in the UK do not believe that a top-down approach of EU-wide targets, which are then agreed individually at member state level, is the right one. In our compact for jobs and growth we talk about a bottom-up approach, giving a higher profile to decisions and holding an annual economic summit to give an increased profile and prominence to the targets that we hope will be agreed for Europe’s approach. Those are important issues and I look forward to hon. Members’ contributions during the course of the debate this afternoon.

The Chair: It might be of assistance to the Committee if I remind members that we have until 5 o’clock for questions to the Minister and that they should be brief. It is open to any hon. Member who wishes to pursue a point to ask supplementary questions at the discretion of the Chair.

Mr. David Gauke (South-West Hertfordshire) (Con): It is a great pleasure to serve under your chairmanship, Mr. Howarth. I thank the right hon. Member for Streatham for his introductory, if not valedictory, words and I thank the Minister for his comments as well.

Before looking at the contents of these documents, may I ask the Minister for his assessment on whether the Lisbon strategy for growth, referred to by the right hon. Member for Streatham, has succeeded in making the EU the most competitive and dynamic knowledge-based economy in the world this year? If he agrees with the general consensus that it has not, will he explain why it has not worked?

Ian Pearson: I agree with the general view, held by many commentators who have looked at the Lisbon strategy and its implementation, that it has been, at best, only partially successful. The policy focused broadly in the right direction, but was not followed through sufficiently, either at European or at member state level. That is one of the great failings of Lisbon.

The question then arises as to the reasons for that, to which the hon. Gentleman suggested I respond. Lisbon—and what is being proposed here—is more of a framework in which decisions can be taken, with actions then implemented by individual member states. It is important to recognise that at a conceptual level we can look at different elements. We can look at the overall framework and, within that, the component that individual members states are responsible for: the EU budget; EU regulation; other EU institutions, most notably the European Investment Bank; and external action—Europe’s relations with the outside world, particularly on the trade agenda that is crucial for jobs and growth. It is important that we focus on all those particular areas.

I do not believe that a hard-wired solution—legally binding national targets that every member state has to implement—is likely to be acceptable in the EU. That is certainly not the UK’s view on how the successor to Lisbon should be approached. Our views on governance are very clear and outlined in the “EU Compact for Jobs and Growth”. I could go into them, but am conscious that I have already given quite a long answer and perhaps I will have another opportunity.

Mr. Gauke: I am grateful for that answer. Is the Minister saying that some of the flaws that he considers were in the Lisbon strategy for growth are replicated in the proposal from the European Commission?

Ian Pearson: It is important to recognise that we have 27 sovereign member states and that we are discussing an economic strategy for Europe that covers not just the EU budget, but actions that are rightly the responsibility of individual member states. It is not right that member states should be compelled to take specific courses of action through a strategy document, and we do not propose that. We have carefully thought through the perceived weaknesses of the governance arrangements for implementing the Lisbon agenda, which is why we have proposed a series of measures, including setting sensible targets, public benchmarking, and discussions with stakeholders about member states agreeing to the target rates that they want to see set on a bottom-up basis. There is a lot of validity in the whole process having a greater profile through an annual economic summit at Heads of State level, and such architecture will provide a way to ensure that there is a greater commonality of views, and greater focus on the targets and on ensuring that they are delivered.

Kelvin Hopkins (Luton, North) (Lab): My hon. Friend has been speaking in moderate tones about recent developments, but since the European Scrutiny Committee referred the documents, there have been some dramatic developments in Europe, particularly in the attitudes of France and Germany to the Greek difficulty. Has he considered the serious threat to European growth posed by the difference in view between France and Germany over Greece?