Europe 2020 Integrated Guidelines

The Committee consisted of the following Members:

Chair: Miss Anne McIntosh 

† Baldwin, Harriett (West Worcestershire) (Con) 

† Brown, Lyn (West Ham) (Lab) 

† Connarty, Michael (Linlithgow and East Falkirk) (Lab) 

† Cryer, John (Leyton and Wanstead) (Lab) 

† Duddridge, James (Lord Commissioner of Her Majesty's Treasury)  

† Greening, Justine (Economic Secretary to the Treasury)  

† Harrington, Richard (Watford) (Con) 

† Heaton-Harris, Chris (Daventry) (Con) 

† McCarthy, Kerry (Bristol East) (Lab) 

† Syms, Mr Robert (Poole) (Con) 

† Timms, Stephen (East Ham) (Lab) 

† Williams, Stephen (Bristol West) (LD) 

Wilson, Sammy (East Antrim) (DUP) 

Adrian Jenner, Alison Groves, Committee Clerks

† attended the Committee

The following also attended ( Standing Order No. 119(6) ) :

Begg, Dame Anne (Aberdeen South) (Lab) 

Cash, Mr William (Stone) (Con) 

Grayling, Chris (Minister of State, Department for Work and Pensions)  

McVey, Esther (Wirral West) (Con) 

European Committee B 

Monday 10 January 2011  

[Miss Anne McIntosh in the Chair] 

Europe 2020 Integrated Guidelines 

4.30 pm 

The Chair:  I understand that the European Scrutiny Committee would like one of its members make a brief explanatory statement about the decision to refer the relevant documents to the Committee. 

Michael Connarty (Linlithgow and East Falkirk) (Lab):  I believe that that duty has been designated to me. 

The Chair:  You have five minutes. 

Michael Connarty:  Thank you, Miss McIntosh. I think that this is the first time that I have had the pleasure of serving under your chairmanship. I am pleased to do so and wish you a happy but not too successful—given that there is to be a by-election in a couple of days—2011. 

As a member of the European Scrutiny Committee, I wish to indicate why the ESC wishes the documents to be debated. In 2000, an action plan known as the Lisbon agenda or Lisbon strategy, was launched to 

“make Europe, by 2010, the most competitive and the most knowledge-based economy in the world.” 

In 2005, the action plan was relaunched for the remainder of the decade as the Lisbon strategy for growth and jobs. As part of the relaunch, two-part integrated guidelines were agreed, and they combined with the reporting and monitoring process. They included broad guidelines for the economic polices of the member states and the then Community, and guidelines for the employment policies of member states. I think that it is up to those who followed the process to decide whether the first strategy or, in fact, the relaunched strategy was successful. 

In March 2010, the European Council endorsed a Commission proposal for a Europe 2020 strategy for the coming decade, to follow on from the Lisbon strategy. The Commission document set out the challenges facing the EU over the coming decade and the need for 

“a strategy to turn the EU into a smart, sustainable and inclusive economy delivering high levels of employment, productivity and social cohesion”. 

The strategy was to continue with integrated guidelines and the associated reporting and monitoring process. 

The two documents under discussion are the Commission’s proposals for the integrated guidelines for the Europe 2020 strategy. It is suggested that the guidelines should remain largely stable until 2014 to ensure a focus on implementation. The Commission proposes 10 guidelines—six for economic polices and four for employment policies. 

The ESC thought that the documents should be debated for two reasons. First, hon. Members should be able to explore the potential impact of the integrated guidelines for the Europe 2020 strategy and for EU

commentary—the associated reporting and monitoring mechanisms—on the Government policies of all 27 member states. The second reason relates to two legal points in relation to the employment guidelines. First, are those guidelines, which, according to the Lisbon treaty, member states “shall take into account” in the various aspects of their employment policies, legally binding? Secondly, the Council’s decision is categorised as a non-legislative act, thus preventing national Parliaments from raising any subsidiary issue formally. That greatly exercised the previous ESC, because many aspects of policy now being made have no right to the orange and yellow card procedure to hold up anything that seems to be interfering with national jurisdiction. 

The ESC suggests that members of the Committee ought to hear about—and I hope the Minister will elucidate on them—the negotiating history and implications of articles 2(3) and 2(5) of the treaty on the function of the European Union. They give the EU competence, as the guidelines state, to 

“ensure coordination of the employment policies of the Member States”. 

They go on to ask: 

“In what respects this ‘coordinating’ competence, introduced by the Lisbon Treaty, is distinct from the shared competence and the doctrine of pre-emption” 

which previously existed. 

The Committee should also hear about policy grounds, above and beyond the treaty definition of a draft legislative Act, for stopping Parliament from formally raising subsidiarity concerns through the early warning mechanism on EU employment guidelines that member states may take into account in their employment policies. The failure to pay national insurance or to pay local rates of pay— 

The Chair:  Order. I ask the hon. Gentleman to resume his seat and I call on the Economic Secretary, who is the first Minister to speak, to make an opening statement of no more than five minutes. 

4.36 pm 

The Economic Secretary to the Treasury (Justine Greening):  It is a pleasure to serve under your chairmanship, Miss McIntosh. I welcome the comments and the suggestion by the European Scrutiny Committee to refer this matter for debate, as it is important. The hon. Gentleman has set out clearly some of the concerns the ESC, which plays a vital role in scrutinising European Union legislation as it passes through our United Kingdom Parliament, and the broader role that he has just demonstrated. I therefore welcome the chance to debate, with the Committee, the integrated guidelines, including the broad economic policy guidelines. I know that my right hon. Friend, the Minister of State, Department for Work and Pensions (Chris Grayling) will discuss in more detail some of the issues raised regarding employment. 

On economic guidelines, we all know that Europe desperately needs economic growth for a number of reasons. First, the EU needs growth to ensure a lasting recovery from the crisis. The Commission estimated that the crisis will knock 4% off the EU’s potential output. That will not be easily regained as the crisis also dampens trend growth, which is forecast to recover to just 1.7% by 2014. The recovery in the EU is fragile and,

as the Commission said, “rather uneven” across member states. For example, the Commission forecasts gross domestic product growth in 2012 of 4.2% in Poland, 2.5% in the UK, 2% in Germany, 1.8% in France, 1.1% in Italy and 0.8% in Portugal. That is clearly a range of different growth figures across the European Union. While the EU grapples with its economic recovery, growth in emerging markets looks set to remain buoyant. The International Monetary Fund forecasts average annual GDP between 2010 to 2015 of 9.7% in China, and 8.4% in India. The EU also needs growth to take advantage of the opportunities that growing markets present for European exports and to respond to the challenge of competing in an increasingly dynamic global economy. 

Finally, Europe needs growth to help ensure fiscal sustainability and overcome concerns about deficits and debts in the Euro area, and to adjust to demographic changes that over the long term will stretch the resources of pension systems and weigh on public finances. The Commission estimated that by 2060, age-related public expenditure will rise by almost 5% of GDP, on average, across the EU. 

Recognising the scale of the challenge facing Europe is the first vital step. The next step is to act to address that challenge. We know that the 2000-2010 Lisbon strategy, which was designed to promote economic growth, did not achieve its aim. It did not promote national ownership of the difficult reforms needed and it did not ensure adequate focus on the necessary EU-level measures. That is why EU heads agreed, in June, a new Europe 2020 strategy that seeks to make better progress than the Lisbon strategy and, as had been said, to promote smart, sustainable and inclusive growth. The Government support those objectives, but we have also made it clear that it is not EU strategies that ultimately deliver growth. Growth requires implementation of the right policy and, as the Chancellor wrote in the Financial Times last week, 

“European economies also need both European Union and domestic measures to open up product markets, liberalise labour markets, support enterprise and to reform welfare.” 

Some of that action is needed at the EU level on the single market, on trade, on smarter regulation, and the UK will be a driving force behind progress in such areas. 

However, much of the action required is needed at the national level. The EU cannot force reform on national Governments in areas of national competence, but it can facilitate peer review of best practice and encourage Governments to stick to their reform plans. The broad economic policy guidelines help that process by providing a framework for economic reform while recognising national competence, so it is important that the guidelines required under the treaties are as proportionate and effective as possible. 

The Government welcome the new set of guidelines, which are more concise than the 2008-10 guidelines. They give more weight to the need to address the macro-economic imbalances that have hindered recovery from the crisis and, as well as the two new guidelines on imbalances, the overall set of guidelines concentrates on the quality and sustainability of public finances—a critical issue for Europe—research and development innovation, resource efficiency and the business and

consumer environment. Getting policy right in such areas will be critical as the EU and its member states promote economic growth. 

The Government also welcome improvements that have been made in negotiations on the Commission’s original draft, including new language underneath the smart regulation and the importance for budget efficiency in EU level public spending. The broad framework in the guidelines is very much in line with the Government’s plan set out in the Budget and, indeed, the spending review and latterly the growth review to promote strong, sustainable and balanced growth in the UK. I hope that my initial comments have been helpful, but I look forward to discussing those broad, economic policy guidelines further with the Committee today. 

The Chair:  Of the 10 minutes allocated, only four minutes remain for Mr. Grayling. 

The Minister of State, Department for Work and Pensions (Chris Grayling):  My colleague and I are doing a double-header because the matter is sprad across the two Departments. Without wanting to pre-empt hon. Members’ questions, I wish to touch briefly on the process that we have gone through in the past few months and explain where the guidelines fit into the overall legal framework. 

The guidelines are part of the process set out in article 148 of the treaty commonly known as the European employment strategy, which was established in 1997 by the Amsterdam treaty. Its function is actually older than the guidelines themselves. Co-ordination between member states of employment policies has existed since the European Community was established. It is worth noting that EU Employment Ministers agreed to enact the formal procedure before the treaty came into force, because at the time they wanted urgently to tackle high levels of unemployment. Indeed, that is a driving force behind some of the discussions between different member states. 

The co-ordination process demonstrates in practice that the guidelines are not tramlines. The term “shall take into account” in the treaty is met readily by member states because the guidelines already reflect common policy practice. I characterise the issue for member states as one of whether they are all pulling their weight. That matters, because decisions taken in other member states can have a big impact on us in areas such as benefit tourism while, if other member states are not delivering an environment in which large numbers of people are moving off welfare into work, that can have a significant knock-on effect throughout Europe. 

In my work in Brussels, I have been keen to encourage other member states to follow the same path as us on the welfare-to-work route because there is a great opportunity for British businesses in a single European welfare-to-work market where other countries are opening up programmes similar to the Work programme, in which British organisations have the opportunity to establish a footprint in other parts of Europe and make a difference to long-term unemployment there. 

Finally, I wish to update the Committee on my extension on the employment guidelines decision in the summer. The Treasury submitted to the Commission a draft UK national reform programme, but it did not cover the

scope of the employment guidelines. To fully meet the terms of article 148, we reported separately to the Employment Committee solely for its examination on 23 and 24 November. It concentrated on the promotion of our welfare reforms, which have wider EU relevance. However, we decided to abstain earlier in the year because we wanted to make sure that there was proper time for parliamentary scrutiny here, in keeping with all the things that the European Scrutiny Committee holds dear. To kick off our deliberations, I will happily take further questions on such issues. I look forward to the rest of the debate. 

The Chair:  We now have until 5.30 pm for questions. Any hon. Member may ask questions, whether or not they are members of the Committee. 

Kerry McCarthy (Bristol East) (Lab):  May I start by asking about education? There seemed to be a concern throughout the negotiations about subsidiarity, particularly as it affected UK education policy. The UK abstained in ECOFIN on 8 June 2010 when the broad economic policy guidelines were agreed. That was partly because of the need for parliamentary scrutiny, and also because the UK was reviewing the language and implications of the education elements in the innovation guideline—guideline 4—and reserved the right to return to the issue. Can one of the Ministers—the Economic Secretary, I guess, as this relates to an ECOFIN meeting—explain the concern about education? 

Chris Grayling:  I will take that. 

I had a number of concerns about the wording of the guidelines. An important question I have asked on many occasions over the months is whether these things are guidelines—I have genuinely gone back to ask whether we are sure that they do not have legal force. I was not entirely comfortable with some of the language on education, as well as on one or two other areas. We and our officials—I pay tribute to the work of our team in Brussels—have secured some changes to the wording over the months. 

However, we need to be watchful. Members on both sides of the House believe strongly in the principles of subsidiarity. We believe in working with our European partners when it is right to do so. We do not want to see further competencies transferred to Brussels, and Brussels taking a role in areas such as education that are very much the responsibility of national Governments. From our point of view, it is about working together and partnership. A framework that encourages that is fine, but something that opens the door to greater legislation and regulation is not fine. That, I guess, is where we really stand. 

Kerry McCarthy:  The specific text on education in guideline 4 recommends that member states 

“should ensure a sufficient supply of science, mathematics and engineering graduates”, 

and the document says that the Government are considering the implications of such language and how it might give rise to detailed recommendations on UK education policy. Is that need to ensure a sufficient supply of graduates in STEM subjects—science, technology,

engineering and maths—the particular area of concern? Will the Minister explain why that was seen to be a particular concern? 

Chris Grayling:  It was not that one issue in particular. We have to be careful about the wording, because no one in another Department or I wants to create Trojan horses. Some of the stuff in the guidelines is plain common sense. The Economic Secretary and I are not in Departments that deal with schools or with higher and further education, but it is a common desire across the Government that we develop technological skills that are suited to the needs of the country and the future. Any decent Government would seek to achieve that, so our concern was not specifically about that subject area. 

When negotiating the guidelines, we sought to ensure that they reflected the fact that such matters are for national Governments and that the guidelines play the role that they should play—co-ordination and creating an environment in which member states work together, compare notes and share experiences, as we are doing all the time. Ministers in the previous Government did so, too—they had regular meetings and discussions with their counterparts to share best practice. However, there was no particular hidden motivation behind that particular section. 

Kerry McCarthy:  Given the 80% cuts in higher education funding, were the Government concerned that they would be pulled up on failing to meet the requirement if it was included in the guidelines? Was that why the proposal has been kicked into the long grass and they are not prepared to sign up to it at the moment? 

Chris Grayling:  Not at all. 

Dame Anne Begg (Aberdeen South) (Lab):  What is the coalition Government’s view of flexicurity? Is their take on flexible security in employment different from the previous Government’s? 

Chris Grayling:  The answer, I think, is that flexicurity can mean a lot of things to a lot of people. We want a labour market that is appropriately flexible to enable our businesses to meet the needs of a pretty competitive world and to provide reasonable security of high-quality employment in this country. At the same time, we want to ensure that we protect—as we should—the rights of people who live and work in this country. There is always a balance and there are always competitive pressures, as the hon. Lady will be aware from her party’s time in government. Flexicurity is about achieving the best possible balance, but it is one of those words that mean any number of things to any number of people. 

Stephen Timms (East Ham) (Lab):  Will the Minister clarify what stage the employment guidelines have now reached in the European procedure? His memorandum in June pointed out that they could not then be adopted because the procedure was still continuing, as he wrote: 

“the European Parliament is being consulted and is expected to present its report in September.” 

Will he bring us up to date on what has happened since then? What is the status of the guidelines now? 

Chris Grayling:  The Europe 2020 guidelines were approved at the European summit in the summer and have been through the process. As far as we are concerned, they are now in place and we are moving forward. The Commission is in discussion with us on some matters relating to the employment target. We are showing it the plans that we have set out for my Department, the Treasury and other Departments, and what we are seeking to achieve. The guidelines are in place, and it is now a question of moving ahead with them. 

Stephen Timms:  Is it correct that the guidelines have now been adopted? Is that their formal status? 

Chris Grayling:  The Europe 2020 guidelines were adopted at the full Heads of State European Council in the summer. As far as I am aware, that is the state of play. 

Stephen Timms:  Paragraph 21 of the Minister’s June memorandum stated: 

“These can not be adopted by the European Council as the European Parliament is being consulted and is expected to present its report in September.” 

Chris Grayling:  That certainly happened. As far as I am concerned, the guidelines are in place. 

Stephen Timms:  I just wanted clarification that the guidelines had been adopted. 

The Minister mentioned the employment target to which the document refers. There are four employment guidelines and three EU-wide targets, and the document says that member states will draw up each of their targets on the basis of the EU targets. Will the Government produce a UK target for those three targets and, if so, what process do they intend to adopt for each? 

Chris Grayling:  We are discussing that with the European Commission. As the right hon. Gentleman will know, we have set our face against single national targets. Indeed, no previous Government set themselves a single employment target. A broad range of objectives were set out in the departmental reports that were published a few months ago. We are discussing how to fit those into the context of the overall European Union goals to achieve improvements to employment levels throughout the Union. 

Stephen Timms:  Let me ask the Minister about each of the three targets. On the employment target, I understand his answer to mean that we will end up with not a specific number, but something more rounded. Will he tell us how the employment target, as eventually developed, might look? 

Chris Grayling:  It is very much about the mix of our policies to deliver what the overall European employment target seeks to achieve, which is the participation of groups in the labour market that are further from that market and are some of the harder-to-help groups. For example, at the heart of our approach is the Work programme, which is designed to speed up the process of getting people off long-term welfare dependency and into work. We are putting in place work through the

migration of incapacity benefit to employment and support allowance to tackle the issue of long-term incapacity benefit dependency. We intend to show the Commission the different elements of the jigsaw puzzle that we are putting in place to deliver improved levels of employability in the UK. It is absolutely not our intention simply to have a single number against which to work. That has not been the case for any previous Government, and it will not be the case for this Government. 

Stephen Timms:  I understand that there will not be a single number, but I am not clear about whether there will be a range of numbers. Will there be numbers in the employment target, or is the Minister saying that it will be a description of policies? 

Chris Grayling:  We are looking more at a description of policies. As the right hon. Gentleman and his party know from years of experience, it is not about the individual numbers—actually, they become something of a distraction—but about having a coherent mix of policies that take us in a direction in which we all want to go. 

Stephen Timms:  May I similarly ask the Minister about the two other targets set out in the employment guidelines? The next one is about participation in higher education, for which, of course, the previous Government had a target. What is the Government’s intention here? 

Justine Greening:  We have been clear that we did not feel that the previous target for participation in higher education was appropriate. It was not a random target, but education is an individual thing, so the number of people going to university should reflect people’s personal aspirations. The assumption that 50% of people will go to university and that that is the right thing for the national economy is far too much of a broad-brush approach. It is not our Government’s policy to look at higher education in that way. The right hon. Gentleman will of course be familiar with some of our proposals on funding for higher education, which was a critical issue that we were left with. The previous Government recognised that by setting up the Browne review in the first place, which reported in the early months of this Government. 

Stephen Timms:  I appreciate that the Ministers in the room are not directly responsible for this, but I wonder whether we can hear a little bit more about what the Government are proposing to do in response to the second target in guideline 9, which states: 

“The EU headline target, on the basis of which member states will set their national targets, is to reduce the drop-out rate to 10%, whilst increasing the share of the population aged 30 to 34 having completed tertiary or equivalent education to at least 40% in 2020.” 

What kind of response do Ministers expect to make to that particular element? 

Justine Greening:  Overall, we now have the integrated guidelines. In response to that, there is the national reform programme. Each member state will produce such a programme. We have already proposed a draft version, and it will be finalised in April. Set against the

process for member states to respond to the guidelines is the pan-EU annual growth survey, which will come out later this month. That will be discussed by EU heads in March, I think, and conclusions will be drawn from that. 

There is therefore a pan-European aspect of the process. With an assessment and the guidelines in place, there is a framework in which we have set out what constitutes smart running of the EU on the economy and employment. We then look at the state of play and the possible gaps, and we can then understand the role of individual member states within that. 

It is fair to point out, particularly for the hon. Member for Linlithgow and East Falkirk, who spoke on behalf of the European Scrutiny Committee, that those national reform programmes are proposed by member states. They are not things to which the European Union can force a change if it feels that they are inadequate, but statements that member states can make to be clear, within the EU, about their piece of the jigsaw to deliver the EU 2020 growth strategy. 

The right hon. Gentleman’s question on higher education and employment more broadly is clearly going to be part and parcel of that, because the draft national reform programme that we submitted back in November examined a number of bottlenecks to growth. He will be aware that the original guidelines, which are now being superseded by the new integrated guidelines—fortunately, there are now fewer of them—reflected the EU’s point to the United Kingdom that we needed to improve skill levels. That point was quite right. It was something that the previous Government were concerned to see happen, and it is also something that this Government want to see. I think it involves looking at not just higher education, but apprenticeships and a whole range of areas that are not just for today’s teenagers and 20-somethings, such as looking at early years and the next generations coming through education. 

I sense that we might be straying from the integrated guidelines that we are here to discuss, and I am probably straying outside my remit as a Treasury Minister. However, I hope that the way in which I have set out the broad process is helpful and that it satisfies the shadow Minister. 

The Chair:  For the record, you are completely within the guidelines. 

Stephen Timms:  I am grateful for that reassurance. 

May I ask about the third target—again, on the basis of which member states will set their national targets—to reduce by 25% the number of Europeans living below the national poverty line and lift more than 20 million people out of poverty? Of course, we have a UK target on child poverty, which was supported by both sides of the House before the election. How do the Government intend to respond to that particular recommendation? 

Chris Grayling:  The right hon. Gentleman knows that our child poverty target has support on both sides of the House. The introduction of the universal credit will be a significant step towards achieving that target, and we intend that it will represent our contribution

towards the Europe-wide goal. If we can achieve that target, we will have taken a significant step to help the EU towards its 2020 target. 

Stephen Timms:  The target to which I am referring is a slightly different one—to reduce by 25% the number of Europeans living below the national poverty line—so it is about not only children, but the population as a whole. Do the Government intend to adopt some numbers in that area, as we did with child poverty? 

Chris Grayling:  The right hon. Gentleman has to bear in mind that if we lift children out of poverty, by definition we lift their parents or carers out of poverty, because the two are integrally linked. Our analysis shows that meeting the 2020 target will be sufficient to allow us to make our contribution towards the overall European goal. That will also allow us to achieve what is set out in the European goal: lifting a substantial proportion of our population out of poverty. 

Stephen Timms:  I think that the Minister is telling the Committee that the existing child poverty target will be the response to that particular issue. 

Chris Grayling  indicated assent.  

Stephen Timms:  In that case, we will get a specific number, or indeed the number that is already enshrined in legislation. 

Given the understandable reluctance of Ministers to go along with the lines of at least the first two of the three targets, why did not the Government oppose the proposals? I think that the Minister implied, at least for those first two areas, that the Government are not comfortable about setting UK targets. Why was that position not argued in the Council debate, and why have Europe-wide targets been adopted in such a way without any apparent UK objections? 

Chris Grayling:  In my remarks in the Council back in the summer, I made precisely that point, because I said that we as a Government were moving away from top-down national targets. The key point is that the guidelines are not mandatory. We would not have accepted a mandatory target from Brussels, backed up by legislation, that required us to achieve particular targets in this area. However, we are a constructive member of the European Union and we recognise the real need across Europe to achieve the objective that is set out in the guidelines. We stand to benefit economically and socially if countries across Europe can achieve the aspirations set out in the guidelines. If we can play our role through the open method of co-ordination and through the bilateral discussions we have with other nations, as well as through co-ordinating work via the European Council, if we can play a part in helping other member states to achieve those goals, and if we can learn from some of the things that those member states are doing to improve our chances of moving more people off welfare and into work, and of lifting families and children out of poverty, the process is worth while. However, if there had been a legislative imposition—a target that Brussels required us by law to meet—that would have been a different situation. 

Harriett Baldwin (West Worcestershire) (Con):  I want clarification on the employment section of the guidelines. Does it change in any way the guidance on state aid for employment programmes? When the Work and Pensions Committee examined the future jobs fund, we found that people were not clear about the impact of state aid on job creation in the private sector. Do the guidelines change the advice that the Government might give in the future about state aid? 

Chris Grayling:  I fear not. My hon. Friend is right to refer to the future jobs fund. It is odd that we cannot create the kind of intervention programme that that represented in the middle of a recession without the intervention of state aid rules. Any private sector organisation wanting to participate in the future jobs fund would have had to set up a special-purpose vehicle. There is no doubt that that made it extremely unlikely that the programme could have generated sustainable long-term private sector employment, as many people would have wished. Nothing in the guidelines makes a difference to that, unfortunately. 

Dame Anne Begg:  May I return to flexicurity, because it was an important principle in the Lisbon agenda on employment provisions, and it continues to be so in the 2020 vision? Obviously, employers like the flexible bit of flexicurity and workers like the security part. I ask my question in the light of the fact that the Prime Minister was meeting some business leaders today. I have not yet heard news of what came out of that meeting, but this morning’s news suggested that they might be discussing more the flexibility side, from the employers’ point of view, and taking away some workers’ rights, such as by making the rights that they would gain after a year’s employment instead apply after two years. Obviously that would have an impact on the security side of the equation for workers. 

I asked whether the coalition Government’s position on flexicurity was different from that of the previous Government because, considering this morning’s news, it sounds as though they are moving towards the flexible side of the equation and away from security? What assurances can the Minister give British workers that their hard-fought and hard-won rights, which the previous Labour Government put in place, will not be eroded in the name of flexicurity? 

Chris Grayling:  I see where the hon. Lady is coming from. As I said earlier, flexicurity can mean a variety of different things. As she rightly says, some people like the flexi bit more than the security bit, and the job of the Government is to achieve a sensible balance between the two. We all want a world in which workers receive as much protection as possible but, equally, we must recognise that if we do not offer a flexible and deregulated environment for business, the businesses might not be there to create jobs in which people may have security in the first place. 

This Administration’s view is that we need sensible deregulation for business to ensure that Britain is an attractive place in which to invest and to build a business, and somewhere in which people are creating long-term, sustainable jobs for the future. That will mean that there is some degree of deregulation in employment policy, such as in health and safety policy, which is part of my

responsibility. Of course, that does not mean that I want to go back to a world in which workers are in severe danger in the workplace. This is about saying, “Have we got the balance right?” 

Our view is that, for motivations and reasons that I entirely understand, the previous Labour Government got it wrong. They over-regulated and made things over-complex, and we want simplification that will enable business to succeed, flourish and employ people. 

Dame Anne Begg:  Despite all that, however, is it not the case that Britain still has far less regulation than its European counterparts? British workers were crying out for such protection. Will the Minister put himself in their position, because they think that a lot of those important rights could be undermined by what he has said today? 

Chris Grayling:  The simple question is: are we going to have jobs for the future? Is this going to be a place where companies want to come and invest? We must recognise that the more burdens, costs and complexity we place on the shoulders of people who are taking investment decisions, the less likely they are to invest. This will undoubtedly be a matter of debate between the Government and the Opposition over the next few years. My party and our coalition partners share the view that we have to create an environment in which business can grow, develop and create jobs. That means striking a sensible balance that protects workers and creates an attractive investment environment, and we will try to achieve that. 

Dame Anne Begg:  I have one question on a slightly different topic; perhaps other hon. Members want to pursue flexicurity a bit more. May I ask about Britain’s access to the European social fund in future? We know that in previous years the European social fund was often used to get marginalised and disadvantaged workers into work. Of course, with expansion, the amount of money available to the UK through the ESF became less. In future years, will Britain have access to the ESF? Will it play an important part in achieving the target employment rate of 75%? If that is to be achieved, extra expenditure will be required in the areas where unemployment is highest and where the work force are most disadvantaged. 

The Chair:  Order. That is tangential, so the Minister might not want to answer too fully. 

Justine Greening:  Just let me say that one of the changes that we made to the guidelines before they were issued was to remove over-prescriptive statements about the EU budget. The hon. Lady is quite right to say that we should not pre-empt in the guidelines such discussions about where value for money from spending the EU budget can best be found. Over the coming weeks and months, we will debate how the EU’s vast budget can best be invested to ensure that we have structural growth in the member states that need it, to ensure that we tackle problems such as unemployment across Europe and that we create growth, which is what the document is, at its heart, all about. As we set out not only the 2012 EU budget—we have only just sorted out the 2011 EU

budget—but the next budget for what is called the financial perspective, which covers the next seven years, we will debate all those questions about where the EU’s money can best be spent for people in the EU. 

Interestingly, one of the guidelines refers to member states setting a good example regarding public pay. In many member states, as in the United Kingdom, we are taking difficult decisions on public sector pay, to preserve public sector jobs and tackle our debt. It is a real disappointment to us that officials in places such as the European Commission are seeing pay rises of 3.7% over the coming year. Such rises are entirely inappropriate. The document is good in setting out the guidelines within which member states should operate, but the European Commission must live by the guidelines and take similar notice of the need for strict and strong financial control over the coming months. 

Several hon. Members  rose —  

The Chair:  Order. I remind the Committee that we have less than 20 minutes left for questions, so questions and answers must be short. 

Michael Connarty:  Thank you, Miss McIntosh, for that admonition before I have asked a single question. I intend to ask a few very simple questions, and follow them up. 

Would it be fair to say that the debate about the 2020 guidelines is a result of the failure of the previous Lisbon strategy, and even the amended strategy in 2005, and that the strategy failed because countries did not take the guidelines seriously? Spain, for example, instead of having a highly skilled young population, ended up building millions of houses. People left school at 16 with no skills, so the unemployment rate among the young people of Spain is now 40%. Many other such examples can be given. 

Is it not the case with these proposals that, although there is a reduction in the number of guidelines and targets, the EU is determined to ensure that they stick and that countries follow the guidelines? How do the Government think that that approach will be different from the previous one? In response to the European Scrutiny Committee’s question, which I included in my opening statement, about whether the guidelines were legally binding, I think that the Minister’s reply was no. 

Justine Greening:  Perhaps I can answer that. The hon. Gentleman is correct that these guidelines are not legally binding on member states. Clearly, the United Kingdom is keen to ensure that we bring forward the measures that we have to tackle our financial deficit. As he knows, the first of the guidelines is about creating strong public finances. He is quite right to ask what will happen if member states do not follow the guidelines. 

Clearly, there is a separate but related discussion happening right now—particularly within the eurozone—following the output of the work of the Van Rompuy taskforce. It is considering the extent to which sanctions should be in place for countries within the eurozone. Of course, the United Kingdom is not part of that group. For those countries within the eurozone—the hon.

Gentleman mentioned Spain, which is, of course, part of the eurozone—it is considering the extent to which there should be sanctions for countries that are not tackling the economic imbalances within their economies. 

It has been made explicit that any such sanctions, if they are put in place, will not apply to the United Kingdom. It is not clear what process we would have leading up to those sanctions for eurozone countries. The crisis that we have found ourselves in shows that we need to ensure that the eurozone is successful. That is in the interests not only of the eurozone countries, but of countries such as the UK that have healthy export markets with the eurozone countries. The hon. Gentleman is right to point that out, but the United Kingdom would be outside those sanction processes. 

John Cryer (Leyton and Wanstead) (Lab):  It is always a pleasure to have the opportunity to contribute. The Minister mentioned certain regulations, which he thought were a bar to the growth of business. Will he give some examples of what regulations he had in mind? 

Chris Grayling:  I am not going to start this afternoon getting into a debate about individual areas of business regulation—that is not within the remit of this debate. I simply say that we believe that we have to achieve a sensible balance between employment protection—the kind of legislation that was passed by the previous Government—and the need to ensure that we have a dynamic, deregulated, attractive, entrepreneurial environment in which business will invest. If we do not do that, there will be no jobs to protect. It is about achieving the right balance. The previous Government did not achieve the right balance; we will seek to do so. 

John Cryer:  Before the Minister embarks on any review of existing regulations, he might want to bear in mind, on health and safety legislation, that two construction workers are killed each week in this country. I would be careful on that issue. 

On a point of information, flexicurity, if I remember rightly, was introduced in a green paper produced by the European Commission five or six years ago. The thrust of that paper was flexibility, not security. The thrust was that there was too much protection for male full-time employees. That protection should therefore be removed, because it somehow discriminates against female workers and ethnic minority workers. The thrust was that, because some sections of the work force have a rubbish deal, the rest should be treated in the same manner. When I read that green paper, I thought that this must have been dreamed up by some demented android in the bowels of the European Commission, presumably taking a break from torturing small animals. 

The Chair:  Order. May we have a question? 

John Cryer:  The question is: will the Minister go back and look at that green paper and ensure that the Government have nothing to do with any plans of that nature? 

Chris Grayling:  If the hon. Gentleman looks at the origin of flexicurity, he will see that it goes back to Danish Government policy in the mid-1990s. He has

just underlined my point that flexicurity can mean a large number of things to a large number of people. As far as I am concerned, it means achieving the right balance between having proper social policies, having proper social protection and maintaining a good environment for business to operate in. That is what we will seek to achieve. 

Chris Heaton-Harris (Daventry) (Con):  I do not wish to put words into the Minister’s mouth, but the Labour Government lobbied hard to try to stop the temporary workers directive, which affects many jobs across the continent. When trying to help employment in the future, that is one area where there would be cross-party agreement. 

Chris Grayling:  My hon. Friend is absolutely right. I hope that we will be able to work closely with MEPs from all parties, now that the European Parliament has a stronger role to play, following the Lisbon treaty. It is particularly important that we as different parties in the House are willing to encourage our MEPs to work together for the UK national interest. 

Michael Connarty:  It was interesting that the Economic Secretary acted as a Treasury Minister and discussed the stability and growth pact, instead of discussing the controls and implications of how to make these guidelines stick. The European Scrutiny Committee was obviously concerned that, if these guidelines are treated as the beginning of a European Commission attempt to force the countries that are not in the stability and growth pact into carrying out the 2020 strategy, it could endanger some of the powers that lie within this Parliament. There is talk of a “co-ordinating competence”. That is a new term; it used to be “shared competence” and “absolute competence”. 

Does it not concern Ministers that the European Commission’s approach is to try to bring in guidelines and to bring in sanctions thereafter? What assurances can they give this Parliament that, if any sanctions are brought in or any changes are made to the powers and controls, some kind of allowance will be made for this Parliament to speak up and have a say? As we have been told, non-legislative acts do not give us any powers at all and remove many of these areas from scrutiny. 

Justine Greening:  First, the guidelines are required under the Lisbon treaty, which the previous Government signed up to. I do not believe that it is the beginning of a process, and we are determined to make sure that it will not be. When the question arose about whether this meant an additional competence in the area of education, the Government refused to support it until we had had the chance to have proper and direct parliamentary scrutiny. I can assure the hon. Gentleman that the guidelines are there to help to provide a framework for EU countries and their policies. We can all see from the economic crisis that we have had, including within the EU, why EU economies need to improve their performance and grow. It is in everybody’s interests to do that. That is the aim of the guidelines. The key thing for us, as he points out, is that they are not legally binding at the member state level. The United Kingdom determines its own economic policy. We happen to agree with many of the points that are in the guidelines because, as my

right hon. Friend the Minister of State, Department for Work and Pensions said, many of them are common sense. 

Kerry McCarthy:  May I ask a couple questions about taxation and the impact of the guidelines on UK policy? Guideline 1 calls on member states to 

“favour taxes that do not harm growth and employment”. 

Does the Minister believe that the recent tax changes introduced by the Government would meet that criterion, particularly the VAT rise that came in last week, given that the Institute for Fiscal Studies has said that it is still a jobs tax and the Chartered Institute of Personnel and Development has estimated that it would have an impact on 250,000 jobs? Guideline 5 calls on member states to reduce emissions and 

“make extensive use of market-based instruments, including taxation, to support green growth and jobs”. 

Guideline 1 specifically mentions taxing environmentally harmful activities instead of taxing things that would harm growth or employment. Do the Government have any plans to go further down the path suggested in guideline 5? 

Justine Greening:  The first thing to point out is that we see tax as a national competence. As a Government, we have resisted and will resist any attempt by the EU to gain greater power over tax setting. Tax setting is the prerogative of the United Kingdom Government, not the European Union. We have been very clear about that and when the issue of so-called EU own resources arose during the EU budget setting procedure we, along with many other member states, said that we found that proposal unacceptable. Effectively, it would have been a discussion about an EU tax. 

The point on taxing employment is correct in the sense that the alternative would have been to raise national insurance on employers, which would have absolutely been a jobs tax. Clearly, the other aspect of the first guideline is about public finances. Unfortunately, the United Kingdom’s public finances, which we inherited as an incoming Government, were in such an awful state that we have had to take serious measures, not least the emergency Budget and the spending review, to put our public finances and our economy back on the road to recovery. We believe that our decisions on VAT are part of getting our public finances back into shape. The alternative would have been a more damaging tax on employment. 

Guideline 5 addresses the environment, and we are keen to see green growth. That is one of the reasons why we want to develop things such as the green investment bank, which, alongside tackling our emission levels, will seek to ensure that we can create jobs in that sector, too. So I do not think that the two are contradictory; I think they go hand in hand. 

Kerry McCarthy:  The CIPD estimates that the VAT rise will have an impact on 250,000 jobs, compared with the effect of a national insurance rise, which would have an impact on only 75,000 jobs. 

In her response, the Minister is basically saying that taxation is a national competence, which I accept. The Work and Pensions Minister said earlier that the guidelines are not legally binding. So is there any point in having

the guidelines refer to taxation? They call on member states to favour taxes that do not harm growth or employment, and they call on member states to make use of taxation to support green growth and jobs. Is the Economic Secretary to the Treasury not really saying that it is completely meaningless to have such references in the guidelines? 

Justine Greening:  I do not think it is meaningless. As we have already discussed, the guidelines are there to do exactly what they are meant to do, which is to provide some kind of guidance on what constitutes a sensible economic and employment strategy across the EU. 

In terms of statistics on jobs, the real statistics that the hon. Lady ought to look at are the ones that were pulled together not to get a headline, but to assess whether the Government’s economic policy will meet our fiscal mandate of tackling the structural deficit that we were left to deal with by her party. We set up the Office for Budget Responsibility precisely to provide for the first time some independent scrutiny of the Government’s economic policy. That OBR report, which was produced after both the emergency Budget and the spending review, shows that the policies—including the policy on VAT, which was part of the overall assessment—are getting our public finances back into order in the way that we want and will see employment rise year on year and unemployment fall year on year. Those are the statistics at which she ought to be looking. 

Kerry McCarthy:  I also have a question on guideline 4, which details 

“a link to the EU headline target, agreed at the March 2010 European Council…that by 2020 3% of the EU’s GDP should be invested in research and development”. 

That headline target will set the basis on which member states set their national targets. Could the Minister tell the Committee whether the UK will look to adopt a similar target of 3% of GDP? What is the time scale for our being informed of that national target? 

Justine Greening:  The short answer is that, no, we will not be setting a national target. As the hon. Lady is aware, we are keen to see R and D flourish in the United Kingdom. We plan to encourage that by supporting the many companies, including pharmaceutical companies, that carry out world-beating R and D here in the United Kingdom. 

Lastly, the hon. Lady is aware that we have also announced that we will go ahead with the patent box idea, which, again, will strengthen the ability of companies to feel that it is more worth while to do R and D in the United Kingdom compared with other countries. We will not, however, be setting a national target. 

Stephen Timms:  Are there other countries that will not set such targets, either? Or in each of these cases will there be just a list of every other country’s target with a blank space for the UK? 

Justine Greening:  Clearly, that is a matter for them. We, as a Government, have decided that targets are not a replacement for a strategy. Far too often over the past

decade Government put in place targets that were ultimately and unfortunately a substitute for strategy, which is why so many of the targets were not met. We need a strategy to stimulate and support R and D, which is the one that I have just set out. It is not a single policy; they are several policies, aimed at supporting companies and encouraging R and D in the United Kingdom. We think that that is far more valuable than agreeing a figure, and then not having a proposal for how we get there. 

The Chair:  That brings us to the end of the time allotted to questions, so I call the Minister to move the motion. 

Motion made, and Question proposed,  

That the Committee takes note of European Union Documents No. 9231/10, Recommendation for a Council Recommendation on broad guidelines for the economic policies of the Member States and of the Union - Part I of the Europe 2020 Integrated Guidelines, and No. 9233/10, Proposal for a Council Decision on guidelines for the employment policies of the Member States - Part II of the Europe 2020 Integrated Guidelines; and supports the Government's engagement with the overall Europe 2020 Strategy which seeks to encourage the structural reforms ceded to promote growth in Europe.—(Justine Greening.)

5.30 pm 

Stephen Timms:  As I did not make this point earlier, may I say that I am delighted to serve under your chairmanship for the first time, Miss McIntosh? 

I want to make some specific remarks about the employment guidelines and reflect on the Government’s policy—there were exchanges in the Chamber this afternoon on that subject, too. The key problem with that policy is that it will not work if there is no work, to coin a phrase. At the moment, large numbers of people are applying for each job vacancy and there is the prospect of substantial job losses in not only the public sector, but the private sector too—as PricewaterhouseCoopers reminded us last year—because of the Government’s spending announcements. Of course, a particular strength of the future jobs fund was, or is, that it creates jobs that otherwise would not be there. I have had the chance, as has the Minister no doubt, to look at some of those who have taken advantage of the fund. I went to some Salvation Army placements, and there are lots of local authorities that have had placements supported through the fund. The guidelines are absolutely right to draw attention—specifically in guideline 7—to the importance of the labour market integration of young people. It is a timely reminder when youth unemployment is rising so sharply and worryingly. 

The Secretary of State for Work and Pensions—and I give credit to him for this—was one of the first in his party to understand the importance of tackling youth unemployment. I was encouraged to see his article in The Daily Telegraph today, which commented on youth unemployment and the fact that it was rising. He wrote: 

“The programmes we inherited will remain in place until we replace them later this year.” 

I hoped that that meant new referrals to the future jobs fund would continue until the Work programme begins in June—at the moment, new referrals of young people are due to finish at the end of March. 

I asked the Minister of State, Department for Work and Pensions, the right hon. Member for Epsom and Ewell, about that in the Chamber earlier. As I understood

it, his answer implied that there could be some additional referrals beyond the end of March, if the Government judge that that is appropriate at the time. I wonder whether in winding up this debate, the Minister could confirm that, as the Secretary of State has indicated, the future jobs fund and new referrals of young people to it will continue until the Work programme begins in June. Otherwise, the cost in rising youth unemployment over a period of two or three months, when the future jobs fund or the Work programme will not be in place, will be worrying. 

The target for the future jobs fund was that 150,000 six-month posts would be created by March this year. The Work and Pensions Committee, chaired by my hon. Friend the Member for Aberdeen South, published a report just before Christmas about the fund. It drew attention in particular to that gap between the end of March and the beginning of June. It also provided some interesting and—I thought—encouraging data about the relatively, and perhaps unexpectedly, high proportion of people who had been through the future jobs fund, and who were in employment after their six-month placement had ended, which implies that it has been a significant benefit. We will see what the evaluation concludes in due course, but it implies that the benefit to sustainable employment has been worthwhile. I am pleased that the guidelines pick up on the important point about integrating young people into the labour market. 

Two other issues relating to young people are raised in the employment guidelines. First, at the end of guideline 9, it states that 

“Member States should take all necessary steps to prevent early school leaving.” 

That is right, because, at a time when youth unemployment is rising, it is helpful to encourage people to stay in education. I put it to the Minister that it is therefore a particularly damaging time to be abolishing the education maintenance allowance, which will clearly discourage some from remaining in education who would otherwise do so. 

Secondly, my hon. Friend the Member for Bristol East pressed the Minister earlier on the Government’s policy on higher education funding, and, towards the end of the rubric, guideline 9 states: 

“Higher education should become more open to non-traditional learners and participation in tertiary or equivalent education should be increased.” 

However, trebling the cost of participating in tertiary or equivalent education from 2012 is bound to decrease the number of people enrolling in it. 

On both of those issues, the Government are going in the opposite direction to that recommended in the guidelines. 

The Government are getting themselves into some difficulty by acquiescing with proposals such as these in Europe. In terms of the employment guidelines, three targets are to be set Europe-wide 

“on the basis of which Member States will set their national targets”, 

but the Government then say that they will not set national targets. My hon. Friend the Member for Bristol East led the Minister to advise that the same will happen with the R and D target. 

It seems to me that if the Government’s position is that the targets are damaging, unhelpful or undesirable, they need to make that case in Europe and argue against them, rather than simply to abstain, as the Minister told us has happened on this occasion. If, in due course, we are going to see tables of targets published—the EU-wide target and then each country’s target—are we going to see a blank space where the UK target should be? 

Of course, the Government are perfectly entitled to believe that national targets and, presumably, EU-wide targets are undesirable, but, if so, they need to argue that case in Brussels, and they need to persuade the other member states. For the Government to acquiesce, as has happened in this case, with a guideline that suggests that national targets will be produced underneath the EU-wide targets, and then to say that they will not actually bother doing so, seems to put them in a pretty indefensible and isolated position. The Government need either to go along with the recommendations that they acquiesces with or to argue against them and persuade the other member states, or the commission that proposed them, that they are mistaken. 

In all these cases, I think that a target would be helpful. A target for participation in higher education, which the previous Government set, is valuable. Indeed, a target for poverty reduction has been agreed across the House. I would not argue against an employment rate target either, because that could be helpful. My hon. Friend the Member for Bristol East has pressed the Minister about an R and D intensity target, and there is something to be said for that as well. However, I think that the Government either need to provide those targets or to persuade others in Europe that the targets are not needed or are unhelpful. I think that just to be in this kind of no man’s land is a pretty unfortunate position to end up in. 

Finally, I want to ask a couple of other questions about some of the detailed points in these guidelines. In the Chamber earlier, the Minister of State, Department for Work and Pensions, the right hon. Member for Epsom and Ewell, touched on this issue and I wonder whether he could say a little more about it to the Committee this afternoon; how are the Government planning to use the European social fund to increase labour market participation, as called for in guideline 7? Also, what steps are the Government taking to promote the work-life balance, which again is referred to in guideline 7? I appreciate that green jobs are not the direct responsibility of either of the Ministers present, but I wonder whether either of them can tell us what the Government are doing to promote green jobs, which again is recommended policy towards the end of guideline 7? 

Do the Government agree with the recommendation in guideline 8—I certainly agree with it and I suspect the Government may well do too, but I wonder whether the Minister can confirm that they do—that they should intervene rapidly when young people become unemployed, and that the longer that a younger person in particular is unemployed, the more damaging it is and that the quicker that intervention takes place, the better? 

Regarding guideline 10, I wonder whether the Minister agrees with the view in this document that the health service has a very important role in enabling participation in the workplace? I am thinking about the work of Dame Carol Black, who worked for the previous

Government and who I know is continuing to work for the current Government. I think that she has done particularly good work in helping to encourage changes in the health service so that it facilitates a faster return to employment for people than would otherwise be the case. I was pleased to see that point picked up in these guidelines and I wonder whether the Minister could endorse it too. 

5.42 pm 

Michael Connarty:  It is important for the Government to come clean, if you like, and say a little more specifically about what points in the guidelines they support and what points they do not. Do they have reservations about some of the guidelines? I think that some of the questions from our own Front Benchers have been very probing; hopefully, they have not been ignored by the Government and will be answered. It is important for us to know where our Government are going in their discussions, because in the motion they are asking us to support them and not just to note that they are engaged in the discussions. I am not quite sure yet what we are being asked to support. 

It is quite clear that the Lisbon strategy in its first inception did not work. It did not work because I do not think that anybody took it seriously; no doubt the people in the committee meetings to discuss it took it seriously, but nobody in the Governments’ economic departments seemed to take it seriously. They all ran on their own agendas. 2005 was an attempt to focus a bit more, to exert a little more pressure to get a bit of consensus and hopefully to get Government Ministers of various countries to buy in, but it did not seem to make too much of a difference. I think that our Government—the previous Labour Government—did buy in quite a lot to what the original Lisbon strategy was about. They invested quite heavily in research and development, they developed policies that focused on skills and the number of apprentices that they tried to put back into the economy, and so on. Those policies were very much in line with the Lisbon strategy. So what will this Government say about these guidelines? Hopefully the probing questions from our Front-Benchers will lead to answers. 

There are other issues to consider. For instance, I think that today we had a very good example, with the decision of the courts in France to uphold the French Government’s decision that Ryanair could not run its Marseilles airport operation and pretend that its employees were Irish employees and pay them Irish rates of pay and apply Irish conditions. In fact they had to pay them French rates of pay, with French conditions. That is something that people want to know about. What are the Government going to defend on their behalf? 

There is a lot of talk about too much regulation. As I recall from most of the commentators from the Conservative Benches, in fact Europe was the source of most of the regulation, rather than being a way of getting rid of it; so are we supporting a strategy where it is quite clear that the Commission wants the same regulations and pressures—I am not saying that is a bad or good thing—on all the countries to try to come up to some kind of mark? That means that whether they put down targets in the sense that we in the previous

Government put down lots of targets, or whether they have aspirations, they are attempting, if you like, to herd and encourage the 27 countries of Europe to become what the 2020 strategy says: smart, sustainable and so on. 

Where are the Government in this? Why should I support the Government today in this debate? Which direction are they going in? Will it be to say, “What we want to do is have more of what happened in the Viking case,” for example? In that case it was decided through legislation that the matter was a single market matter, in the sole competence of the Commission, and that Viking Line in Sweden could discriminate and pay less in wages to people working for it than all the other people in the same region of Sweden who were working in the same employment area. I think there was another case in Denmark, causing a great deal of controversy. 

I want to know whether our Government are saying that it is to be just a free-for-all, and whether the flexibility mentioned by my hon. Friend the Member for Aberdeen South is all about the lowest common denominator, as long as it creates employment—if the Employment Minister is taking the matter on as his task; or whether it is a question of lower costs of public services, or a lessening of public services, reducing public sector expenditure in the economy, because the belief is that throughout Europe we need a small public sector and some sort of flourishing raw capitalist model. That is not something that attracts me. I want to know from the Government what they are taking from the 10 guidelines. Which are the key guidelines—the ones that we should support them on? 

The second point consistently comes up from the Committee, as you know, Miss McIntosh—you were previously a member of the European Scrutiny Committee—and it is about the diminishing of the power of this Parliament. In the last Parliament we flagged up in the Committee that non-legislative acts were a way for the European Commission to make legislation by the back door, through guidelines and agreements that are not legislation. Therefore they were excluded entirely from the subsidiarity mechanism. 

The Government have responded in a way that the Committee approve of, in having this debate. They could have said, “This is a non-legislative act; this will not be a matter where it will ever be possible to put controls on what comes out of the EU, and therefore we do not need to put it to the Committee.” I am glad that the Government, as with the previous Government, accept that European scrutiny is a very important matter, and that they have allowed the debate. 

We need to know when the Government will say “Enough is enough” to the Commission. When the guidelines are being put forward, and there is a proposal for an agreement that would be some kind of sanction, will the Government bring it back to Parliament? Will Parliament have the right to say, “This a breach of our powers within our own country, and we will not have it?” We want to know what the Government are giving away in their deal with the other 26 nations and the Commission. 

5.49 pm 

Chris Grayling:  To provide some context, if the shadow Minister will forgive me, I shall begin with the questions raised by the hon. Member for Linlithgow and East

Falkirk, because what he was touching on was the broad principle behind the debate. He is right: he raises some significant and important points. What is the purpose of the exercise and the guidelines? Where do they take us? He should be reassured: that is something that has exercised my colleagues and me in our first few months in office. We do not want to create a Trojan horse for a new area of Europe-wide legislation with competence transferred to Brussels. Indeed, tomorrow, the House will debate the mechanisms that we are seeking to put in place to prevent further powers and competencies from being transferred to the European Union. 

The guidelines are a vehicle for informal collaboration through the mechanisms of the European Council; they do not represent the creation of a new set of European laws. This is all about the vision we have in Europe. Although some would clearly like to leave the European Union, those who believe in being part of it, in being partners with other European nations and in working together when it is in our mutual interest to do so must support the informal mechanisms that are there, as part of the European mix, to enable that collaboration, and the guidelines are one vehicle to enable that open co-ordination and collaboration between nations. If we turn round and say, “We don’t want that either,” what do we want? I do not want to see rafts of new European legislation, but it makes sense for us to work together; that is in our mutual interest in a small world. 

Looking at this issue from the perspective of the Department for Work and Pensions, I see the potential issues around benefit tourism and people moving around Europe seeking employment in places where there is none. It is self-evidently in our interest to share our experience to try to ensure that living standards, employment levels and job opportunities are spread right across the continent. Indeed, for those of us who have always believed in expansion, the thing that the European Union has done well in the past is serve as a stimulator of growth for new member states with pretty low living standards and levels of development, helping them to raise their living standards closer to those in the more prosperous parts of Europe. That must be a good thing for all of us. 

Supporting the informal things that create a structure for dialogue therefore makes sense, but supporting a raft of new legislation in areas that are rightly matters of national competence, and which are set out as such in the various treaties, would be absolutely wrong. The hon. Member for Linlithgow and East Falkirk mentioned sanctions. If the European Union came back with proposed sanctions on these issues, the DWP would certainly take a pretty dim view of that, because this is supposed to be about our underpinning partnership, not legislation. Frankly, I would much rather deal with non-legislative acts than with legislative ones; we have had much too much of the latter over the years. 

There is an awful lot of common sense in the guidelines. There are things that have been a natural part of the actions of Governments from both sides of the House, and that will continue to be the case. We want more research and development. We want green technologies to emerge. We want people who are long way from workplaces to have greater opportunities to get into work. We want people to be lifted out of poverty. At the same time, however, we want to create the kind of

environment that will enable international organisations seeking to invest and to build new markets, and, indeed, our own potential entrepreneurs, to come forward and to see the United Kingdom as a great place to invest in. In that, I am pretty partisan about this country’s interests. I want to see growth elsewhere in Europe, because that it is in our interest, but I particularly want to see businesses grow and develop in the United Kingdom. 

The shadow Minister raised a number of concerns about the policies that the Government are pursuing, but he must remember the context in which we are working. The level of unemployment that we inherited was 400,000 higher than the last time the Conservative party was in government, in 1997. He talked about young people, and 600,000 young people aged between 18 and 24 have never worked since leaving education. That has not happened just in the past six months, but over many years. One of the previous Government’s great failings was that, through good years and bad, we consistently had something like 5 million people on out-of-work benefits. Even when we had rapid employment growth and people coming from overseas to find jobs, that number never really changed. That was a huge failing. 

Let me touch on the shadow Minister’s points about the future jobs fund, which I suspect will be a continuing matter of debate between us. The truth is that the future jobs fund is an extremely expensive programme. It costs twice as much as the new deal for young people, which the previous Government put in place. There is no clear evidence as yet that it has outperformed the new deal for young people. He is right to say that after seven months, the first figures show that about 50% of those young people who went on to the future jobs fund have returned to benefits, and about 50% have not, but among the remaining 50% some were on programmes that were not six months long, but were extended for a few months by local authority funding. It is not yet clear how far below that 50% the final total will settle, but I know that those jobs were not created where they should have been created—in private enterprise with long-term career prospects. The whole purpose of our decision to establish tens of thousands of new apprenticeships with a big, one-off increase of 50,000 apprenticeships this year, and a steady increase of 75,000 more over the next few years is because we believe that that route is more likely to give young people a long-term career opportunity and a chance to build the skills they need. 

Stephen Timms:  Am I correct to infer from an answer that the Minister gave in the Chamber that the possibility of referrals after the end of March is being kept alive, given that there is youth unemployment at the moment? 

Chris Grayling:  Let me touch on the transition issue. We are trying to get the transition right. As the right hon. Gentleman knows from experience, finessing two generations of an employment programme is an interesting task which must be done carefully. We have extended all the existing programmes, so all referrals on all the existing programmes will continue until 31 March. We have not yet introduced detailed proposals—we will do so in the next few weeks—for managing the three-month period between 31 March and the full introduction of the Work programme. I hope and expect that in some

areas it will begin earlier than June, because if a provider is in place and will become the Work programme provider, it will be down to how we negotiate the migration of people from one programme to the next. I cannot give the right hon. Gentleman a clear answer about that transition, but I will do so shortly, and he will undoubtedly return to the matter. We are working carefully through the ramifications, and examining the costs and where there may be gaps. 

The right hon. Gentleman rightly referred to guideline 8 and the point of intervention with young people. At the moment, under the young person’s guarantee, all young people are referred on a mandatory basis to the various programmes under the umbrella guarantee after 10 months. Under the Work programme, young people will be referred generally after nine months, but those in the hardest-to-help groups with particular challenges in their lives will be referred after just three months. We believe that that will be a significant step up in the support that they receive, and acknowledges the point that he rightly raises in the guidelines: when young people face substantial challenges in their upbringing—for example, coming out of care or coming from a broken home—there should be additional support for them at a much earlier stage than was previously the case. I believe that that will take us well beyond the position provided by the future jobs fund and support for the young person’s guarantee. 

I shall touch on one or two other matters that the right hon. Gentleman raised. He talked about the education issue, and about EMA and higher education funding. He did not, of course, discuss what we believe is the root problem—the failings in our schools system. The figures produced last weekend by my right hon. Friend the Secretary of State for Education showing that just 15% of young people in this country achieve grade A to C in GCSEs in core subjects are a damning indictment of the previous Government’s failed education policies. That is a shocking statistic, and I am confident that my right hon. Friend’s report will start to address it. 

On the target issue, it will not surprise the right hon. Gentleman, after all we have said in recent years about targets, that we intend, as do other member states, to take our own approach to addressing the Europe-wide target. The document refers to national decision-making processes, and we came in midway through. That is subject to qualified majority voting as a result of decisions by previous Administrations, but we have made it clear that we will do what we believe is right for the UK, and we will work in the UK’s interests and with our European partners in the interests of this country. That is what other member states will do, and it is what we will seek to do. 

The right hon. Gentleman touched on two or three other areas. We are working through the details of the European social fund, and its rules require it to be used for groups that are struggling in the employment arena into the workplace. We want the Work programme to be the good, strong core of the back-to-work support that we provide in this country, and we want the European social fund to deliver added value, to get to some of the places that the programme does not reach. We will

provide details of our approach in the next few weeks, and I will happily share them with him at the right time and debate them then. 

On work-life balance, I believe that there is cross-parliamentary agreement about the desirability of achieving flexible working. As an employer in Parliament—and particularly before I became an MP—I have always found that if people are given flexible working, one gets more rather than less out of them. It is absolutely correct for this Administration to pursue the right for employees to ask for flexible working. 

As the right hon. Gentleman knows from the spending review in the autumn—we will certainly be returning to this in the months ahead—green jobs are a priority for the Government. I know that that priority is shared by Members on both sides of the House, and I hope that we can move forward successfully. More should have been done in the past. It has always been a frustration to me that, 20 years ago, this country was a leader in the field of wind energy but that we lost that leadership. We must not make the same mistake again with the green technologies that are being developed today. 

I pay tribute to Dame Carol Black. The previous Administration were right to seek her input, and my colleague Lord Freud continues to work with her. Again, that agenda is shared across the House. It is encouraging that there is a great deal of agreement on this subject, and I pay tribute, and give thanks, to the Opposition spokespeople for that. We may have differences on the detail, but, over the years, there has been a great deal of agreement about some of the principles towards which we are working. I very much hope that we can have a collaborative and constructive debate about maximising opportunities for young people, people who are out of the jobs market, people who are long-term welfare dependants and, indeed, all those workers who are sometimes forgotten in some of the political debate. 

The guidelines, however, are not about the collaborative discussions in the House but about those that take place across Europe: the partnerships that UK Ministers forge with their counterparts in other European countries, the discussions that we have formally at EPSCO—the Employment, Social Policy, Health and Consumer Affairs Council—meetings, and informally around those meetings, and the bilateral discussions between this and other Governments. 

I look forward to visiting Denmark later this week to understand more clearly how it is approaching labour market activation. There is a great deal to be learned—none of us has a monopoly on wisdom. I see the guidelines as a vehicle for us, the Commission and the European machinery not to dictate—we will not have that—but to facilitate a sensible discussion across Europe about how we deal with common challenges and issues. 

My message to the European Scrutiny Committee—I know that one or two colleagues of the hon. Member for Linlithgow and East Falkirk on that Committee have strong feelings about this—is that this is about collaboration and partnership, not legislation and handing over competencies. Those who have been working with me in government for the past few months know that I have absolutely no intention of sitting idly by while the European Union makes our life even more difficult in areas where it has no competence. Indeed, I hope that the Committee has sensed that from some of the communiqués that it has received from me on social

security matters. I assure hon. Members that collaboration, friendship and partnership are the order of the day; legislation definitely is not. 

On that note, I hope that this Committee will endorse the principles of the guidelines and support this Administration in moving ahead with the collaborative discussions that I hope will help us to achieve the goals that we all want to achieve. 

Question put and agreed to.  

Resolved,  

That the Committee takes note of European Union Documents No. 9231/10, Recommendation for a Council Recommendation on broad guidelines for the economic policies of the Member States and of the Union - Part I of the Europe 2020 Integrated Guidelines, and No. 9233/10, Proposal for a Council Decision on guidelines for the employment policies of the Member States - Part II of the Europe 2020 Integrated Guidelines; and supports the Government’s engagement with the overall Europe 2020 Strategy which seeks to encourage the structural reforms needed to promote growth in Europe. 

6.4 pm 

Committee rose.