House of Commons - Documents considered by the Committee on 3 February 2010

Documents considered by the Committee on 3 February 2010 - European Scrutiny Committee Contents

5 The Lisbon Strategy

(31244)

5034/10

COM(09) 678

Commission Communication: 2^nd Implementation Report for the Community Lisbon Programme 2008-2010

Legal base —

Document originated 15 December 2009

Deposited in Parliament 11 January 2010

Department HM Treasury

Basis of consideration EM of 26 January 2010

Previous Committee Report None

To be discussed in Council Not known

Committee's assessment Politically important

Committee's decision Cleared

Background

5.1 The Lisbon Strategy is the economic reform strategy for the Community. It was launched in 2000, re-launched 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 re-launch 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.[17]

5.2 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.[18] Discussion of a successor policy to the Lisbon Strategy is presently underway.[19]

5.3 The Commission's first progress report on the Community Lisbon Programme was presented in December 2008.[20]

The document

5.4 This Communication is the second assessment of implementation of the Community Lisbon Programme, for the period up to November 2009. In the document the Commission asserts that, overall, further substantial progress has been made and a number of key milestones have already been achieved, but that there are a number of issues that still need to be addressed as the highest priority. The Commission summarises progress against the ten key objectives and suggests the most important milestones in the second year of the Community Lisbon Programme cycle to be:

adoption of the renewed Social Agenda that addresses the need to enhance employment opportunities and ensuring solidarity (relevant to the first objective of the programme);[21]
achieving the first step towards a common migration policy with adoption of the Directive on entry of highly skilled workers, the Blue Card Directive (relevant to the second objective);[22]
endorsement of the Small Business Act and the Commission's action plan by the Council and the European Parliament in December 2008 and substantial progress on implementation by both the Commission and Member States (relevant to the third objective);[23]
further progress by the Commission in implementing its better regulation agenda, notably in the area of the reduction of unnecessary administrative burdens (relevant to the fourth objective);[24]
the Commission's proposals aimed at reforming and strengthening the EU financial supervision system (relevant to the fifth objective);[25]
entry into force in August 2009 of a legal framework for the creation and operation of research infrastructures of EU interest, adopted in June 2009 (relevant to the sixth objective);[26]
adoption of the climate and energy package including a revised Emissions Trading Scheme Directive, a Decision setting targets for Member States for emissions reductions in sectors outside the trading scheme and a Directive on the promotion of renewable energy (relevant to the eighth objective );[27] and
adoption of the Third Package on the Internal Energy Market, which was to supplement existing rules so as to ensure that the internal market operate smoothly for all consumers and to enable the EU to achieve a more secure, competitive, and sustainable energy supply, and substantial progress in implementation of the Community Lisbon Programme aspects of the European Economic Recovery Plan (also relevant to the eighth objective).[28]

5.5 The Commission also draws attention to a considerable number of policy actions which it believes remain to be further developed or finalised and suggests, in particular, five areas more progress should be made:

movement on the stalled draft Pension Portability Directive, which it says is essential to facilitate cross-border working (relevant to the first objective);[29]
integrating the retail mortgage market and other retail financial markets across the EU (relevant to the fifth objective);
resolution, following encouraging progress, with political agreement in the Competitiveness Council on the EU Patent and the European and EU Patent Courts, of the outstanding issues such as translation arrangements of the patent, in order to bring about an affordable single EU-wide patent (relevant to the seventh objective);[30]
overcoming the regulatory and tax obstacles to cross-border venture capital investments that the Commission says seriously limit the availability of finances for innovation (also relevant to the seventh objective); and
adoption of a number of the legislative proposals introduced as part of the Small Business Act (relevant to the third objective).

The Government's views

5.6 The Economic Secretary to the Treasury (Ian Pearson) says that the Government welcomes the progress that has been made in implementing the Community Lisbon Programme. Before turning to the five matters the Commission suggests as particularly needing progress, the Minister comments on it highlighting introduction of the Blue Card Directive as an example of an important milestone in the second year of the Community Lisbon Programme. He points out that:

the UK has not opted-in to the Directive and therefore any movement rights between Member States obtained by a third country national through it would not apply to the UK;
the chief factor in the Government's decision not to opt in to the Directive was its effect on the UK's policy for labour migration — it would require the UK to grant residence and employment rights to certain "highly qualified" third country nationals living in other Member States, in preference to those arriving from outside the EU; and
this would conflict with the UK's points based system, which is designed to match labour migration with the needs of the UK labour market.

5.7 On the proposed areas on which the Commission argues that more progress should be made the Minister says that:

the draft Pension Portability Directive is intended to facilitate the free movement of workers, with aims of setting minimum standards for access to supplementary pension rights, ensuring that pension rights left in pension schemes are treated fairly and retain their value over time and allowing scheme members access to the information necessary to make an informed decision about changing employment;
in this sense it builds on the Supplementary Pensions Directive, 98/49/EC) and was proposed on 30th October 2005 by the UK Presidency;
successive Employment and Social Affairs Councils, in May 2007 and December 2007, failed, however, to reach an agreement;
it was removed from the agenda for the Employment and Social Affairs Council in June 2008, when it became clear that no agreement could be reached, and no new proposals have been brought forward since;
the Government expects, however, portability to form part of a wider piece of work on pensions which the Commission is expected to produce this year;
it is not clear from the Commission Communication what further progress the Commission argues needs to be made on integrating the retail mortgage market and other retail financial markets across the EU — there is no specific mention in the document;
the Government supports, overall, the drive for a strong, competitive, and integrated single market, including in financial services;
the proposed supervisory package will fundamentally improve the quality of supervision, ensure more effective rulemaking and enforcement, and better identify risks in the financial system;
the Government supports creation of the new European Supervisory Authorities and giving them a strong rulemaking role, a role in enforcing rules, a role in peer review to ensure high standards and the ability to settle disagreements between supervisors — such moves will improve the quality of supervision in the EU and are supported by the City and in particular cross-border institutions operating from London;
the Capital Requirements Directive will ensure a more robust system, with banks holding more and better quality capital, but the Government will seek to ensure that, where applicable, the Directive stays faithful to decisions made by the Basel Committee and that it is fully informed by cost benefit analysis;
Solvency II will strengthen the Single Market in insurance, encourage best practice in risk management across the sector and introduce strong and risk sensitive capital requirements, however the Government has some concerns with regard to potential implementation measures and is working to resolve them;
the Government supports improved EU crisis management arrangements, including ensuring that all Member States have access to a minimum set of resolution tools — recovery and resolution plans should play a key role in this area;[31]
the Competitiveness Council agreement on EU patent regulation is a significant step forward in the long-running issue of patent reform — a EU patent would offer significant cost savings and greater choice for business when protecting their ideas;
an effective EU patent system is crucial if innovative companies are to succeed in bringing new products to market quickly, generating jobs, growth and competitiveness in the single market;
inability to agree on the languages of the EU patent has been a longstanding barrier to overall agreement — the Government expects the Commission to bring out a language proposal before the May 2010 Competitiveness Council and supports a cost-effective language solution that minimises expensive translations;
negotiations on a European Patent Court are frozen pending the decision of the European Court of Justice on the compatibility of the agreement with the Treaties — the Government would support the opinion being issued during 2010 and, if so, these important negotiations would continue later in 2010;
the Government is supportive of efforts to improve cross-border venture capital investment and is taking steps to expand the international coverage of its tax incentives for investment in small companies, supporting investments across the EU;
at present, however, it remains unclear what tax obstacles the Commission has identified — the Government therefore awaits the report from the Venture Capital Group;[32]
if there are significant tax obstacles the Government will work with its EU partners to endeavour to find ways of removing these in ways that do not risk the sustainability of Member States' tax bases;
there are no policy implications arising from the Communication in relation to the Small Business Act — the Government supports the Act, including the emphasis in the Commission's action plan on access to finance, the regulatory environment and access to markets;
the Government was highly influential in the Small Business Act negotiation, securing an agreement that aligns closely with its policy and priorities;
the Commission has published a report on Small Business Act implementation;[33] and
in this Communication the Commission focuses on legislative proposals related to the Small Business Act, highlighting that some are yet to be adopted — the European Private Company Statute,[34] an amendment to the Late Payments Directive[35] and a Directive on VAT invoicing.[36]

Conclusion

5.8 Whilst clearing this document we draw it to the attention of the House as it will be relevant to development of the Lisbon Strategy's successor policy.

17 (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

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

19 (31210) 16016/09: see HC 5-vi (2009-10), chapter 7 (13 January 2010) and HC 5-vii (2009-10), chapter 12 (20 January 2010). Back

20 (30305) 17358/08: see HC 19-v (2008-09), chapter 10 (28 January 2009) and HC 19-xi (2008-09), chapter 17 (18 March 2009). Back

21 (29818) 11517/08 + ADDs 1-3: see HC 16-xxviii (2007-08), chapter 8 (22 July 2008). Back

22 (30052) 13748/08: see HC 16-xxxv (2007-08), chapter 16 (12 November 2008). Back

23 (29791) 11262/08 + ADDs 1-2: see HC 16-xxix (2007-08), chapter 8 (10 September 2008). Back

24 (31052) 15019/09: see HC 19-xxxi (2008-09), chapter 8 (11 November 2009). Back

25 (30950)-(30957) 13645/09, 13648/09, 13652/09-13654-09, 13656/09-13658/09: see HC 19-xxviii (2008-09), chapter 6 (21 October 2009), HC 19-xxx (2008-09), chapter 2 (4 November 2009) and HC 5-i (2009-2010), chapter 2 (19 November 2009) and HC Deb, 1 December 2009, cols. 989-1026. Back

26 (29896) 12259/08 + ADDs 1-2: see HC 16-xxxiii (2007-08), chapter 3 (29 October 2008), HC 19-ii (2008-09), chapter 5 (17 December 2008) and HC 19-xxi (2008-09), chapter 4 (24 June 2009). Back

27 (29405) 5421/08 + ADDs 1-2 (29401) 5849/08 + ADD 1 (29402) 5862/08 + ADDs 1-3: see HC 16-xiii (2007-08), chapters 1, 3 and 4 (27 February 2008), Stg Co Debs, European Committee, 22 April 2008, cols 3-32 and HC Deb, 3 June 2008, cols 687-712. Back

28 (28932) 13043/07 (28933) 13045/07 (28937) 13212/07 (28938) 13219/07 (28934) 13046/07 (28935) 13048/07 (28936) 13049/07: see HC 16-iv (2007-08), chapters 1 and 2 (28 November 2007) and Stg Co Debs, European Standing Committee, 5 February 2008, cols. 3-12 and (30213) 16097/08: see HC 19-i (2008-09), chapter 4 (10 December 2008) and HC Deb, 20 January 2009, cols 626-53. Back