3 Europe 2020 Strategy: integrated guidelines
| (a)
(31573)
9231/10
SEC(10) 488
(b)
(31574)
9233/10
COM(10) 193
|
Draft 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
Draft Council Decision on guidelines for the employment policies of the Member States: Part II of the Europe 2020 integrated guidelines
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| Legal base | (a) Article 121 TFEU; —; QMV
(b) Article 148(2) TFEU; consultation; QMV
|
| Department | (a) HM Treasury
(b) Work and Pensions
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| Basis of consideration | Minister's letter of 11 October 2010
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| Previous Committee Report | HC 428-i (2010-11), chapter 9 (8 September 2010)
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| Discussion in Council | (a) ECOFIN 8 June 2010, European Council 17-18 June 2010, ECOFIN 13 July 2010
(b) Employment, Social Policy, Health and Consumer Affairs Council 7 June 2010, European Council 17-18 June 2010, further consideration by Employment, Social Policy, Health and Consumer Affairs Council on 21 October 2010
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| Committee's assessment | Legally and politically important
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| Committee's decision | For debate in European Committee B
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Background
3.1 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 dynamic knowledge-based economy in the
world". In 2005 the action plan was relaunched for the remainder
of the decade as the Lisbon Strategy for Jobs and Growth. As part
of the relaunch two-part "integrated guidelines" were
agreed. They contained broad guidelines for the economic policies
of the Member States and the then Community and guidelines for
the employment policies of the Member States. The guidelines were
to be taken into account by Member States in preparing and annually
updating their National Reform Programmes. Each Member State reported
annually on its reform programme and received non-binding recommendations,
proposed by the Commission and endorsed by the Council, for future
policies.
3.2 In March 2010 the Commission proposed a "Europe
2020 Strategy" for the coming decade, to follow on from the
Lisbon Strategy. It 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"
and proposed:
- policy priorities that focused
on smart, sustainable and inclusive growth;
- seven flagship initiatives to deliver on those
policy priorities;
- mobilising EU instruments and policies such as
the single market to pursue the strategy's objectives; and
- a governance structure that included five headline
targets that the EU should aim to achieve by 2020.
The strategy was to continue with integrated guidelines
and the associated reporting and monitoring process.[25]
The plan for a strategy was endorsed by the European Council in
March 2010.[26] The Lisbon
Treaty contains the legal base for the integrated guidelines —
Article 121 TFEU for broad economic policy guidelines and Article
148 TFEU for employment policy guidelines. The latter article
provides that the employment guidelines must be consistent with
the economic guidelines.
3.3 Alongside the Lisbon Strategy has been the Growth
and Stability Pact. The Pact, adopted in 1997, emphasised the
obligation of Member States to avoid excessive government deficits,
defined as the ratio of a planned or actual deficit to gross domestic
product (GDP) at market prices in excess of a "reference
value" of 3%. Each year the Economic and Financial Affairs
Council (ECOFIN) issues an Opinion on the updated stability or
convergence programme of each Member State. These Opinions, which
are not binding on Member States, are based on a recommendation
from the Commission. The economic content of the programmes is
assessed with reference to the Commission's current economic forecasts.
If a Member State's programme is found wanting, it may be invited
by ECOFIN, in a Recommendation, to make adjustments to its economic
policies, though such Recommendations are likewise not binding
on Member States. This whole procedure is essentially the Pact's
preventative arm. On the other hand, the Pact also endorsed a
dissuasive or corrective arm involving action in cases of an excessive
government deficit — the excessive deficit procedure provided
for in Article 126 TFEU (formerly Article 104 EC) and the relevant
Protocol. The March 2010 European Council, in endorsing the Europe
2020 Strategy said that "The timing of the reporting and
assessment of the National Reform Programmes and Stability and
Convergence Programmes should be better aligned, in order to enhance
the overall consistency of policy advice to Member States".[27]
3.4 These two documents presented, in April 2010
the Commission's proposals for the integrated guidelines for the
Europe 2020 Strategy. It suggested the guidelines should remain
largely stable until 2014 to ensure a focus on implementation.
The Commission proposed ten guidelines:
- Guideline 1: Ensuring the quality
and the sustainability of public finances;
- Guideline 2: Addressing macroeconomic imbalances;
- Guideline 3: Reducing imbalances in the euro
area;
- Guideline 4: Optimising support for research
and development and for innovation, strengthening the knowledge
triangle and unleashing the potential of the digital economy;
- Guideline 5: Improving resource efficiency and
reducing greenhouse gases emissions;
- Guideline 6: Improving the business and consumer
environment and modernising the industrial base;
- Guideline 7: Increasing labour market participation
and reducing structural unemployment;
- Guideline 8: Developing a skilled workforce responding
to labour market needs, promoting job quality and lifelong learning;
- Guideline 9: Improving the performance of education
and training systems at all levels and increasing participation
in tertiary education; and
- Guideline 10: Promoting social inclusion and
combating poverty.
Guidelines 1-6 are the proposed broad economic policy
guidelines, which come within the remit of the Economic and Finance
Affairs Council (ECOFIN), and Guidelines 7-10 the employment policy
guidelines, which come within the remit of the Employment and
Social Policy Council.
3.5 The details of the first six proposed guidelines
were set out in document (a), which presented a draft Recommendation
to Member States for adoption by the Council. The details of the
four proposed employment guidelines were set out in document (b),
which presented a draft Decision for adoption, after consultation
with the European Parliament, by the Council. The Decision would
require Member States to take account of the guidelines in their
employment policies.
3.6 When we considered these documents, in September
2010, we said that the potential impact of the integrated guidelines
for the Europe 2020 Strategy and for EU commentary on Government
policies was important, that we thought the Government should
be examined about that potential in a debate in European Committee
and that, therefore, we recommended such a debate on the two documents.
3.7 However, we also said that before that debate
took place we wanted to hear from the Government on two points,
related to the employment guidelines, document (b). We noted that
these guidelines, which Member States "shall take into account
in their employment policies" under Article 148(2) TFEU,
were being adopted on the basis of a legally binding Council Decision,
whereas the economic guidelines were adopted on the basis of a
non-legally binding Council Recommendation. We asked the Minister
to explain to us the thinking behind why the employment guidelines
were to be adopted by a Decision and not a Recommendation, and
whether this affected their legal status in the Member States.
On this note we saw that, under guideline 8, Member States were
told that "quality initial education and attractive vocational
training must be complemented with effective incentives
for lifelong learning, second-chance opportunities, ensuring every
adult the chance to move one step up in their qualification and
by targeted migration and integration policies". If these
were indeed guidelines, we thought this recommendation should
have been expressed in terms of "should" rather than
"must".
3.8 Secondly, we asked the Minister whether, in his
view, the Decision adopting the employment guidelines fell within
the definition of a "legislative act" under the TFEU.
If it did the subsidiarity early warning mechanism in Protocol
2 would apply, meaning that the House could submit a "reasoned
opinion" to the Commission if it thought that the proposal
did not comply with the principle of subsidiarity. We continued
that:
- as the excerpt from the guidelines
above showed, this was a policy field in which the Commission
was making detailed recommendations;
- but it was also one where competence was shared
with the Member States — so the principle of subsidiarity
was particularly important;
- we thought that the draft Decision was
a legislative act because the Council was to adopt the Decision
after the "participation" — in this case consultation
— with the European Parliament: so the procedure came within
the generic definition of a "special legislative procedure"
in Article 289(2) TFEU;
- however, doubt arose because the legal base did
not state in terms that it was a special legislative procedure;
- in correspondence with us, the previous Government
took the view that, where a legal base in the TFEU did not state
that it was an ordinary or special legislative procedure, the
act adopted was always non-legislative rather than legislative,
irrespective of the participation of the European Parliament;
and
- were that interpretation to be right, the House
could not have invoked the subsidiarity early warning mechanism
on this proposal.
The Minister's letter
3.9 The Minister of State for Employment, Department
for Work and Pensions (Chris Grayling) says in response to our
first point that:
- in contrast to Article 121
TFEU, the legal base for the Council Recommendation, Article 148
TFEU, the legal base for the Council Decision, does not specify
the form of the act that must be used to adopt the guidelines;
- it is therefore in theory an open choice but
the Government would argue that adopting the guidelines by Decision
has no policy implication;
- the Decision is only for adopting guidelines
which the Council is required to do but those guidelines are clearly
non-binding under the terms of the Treaty, which the Decision
text replicates;
- this is an oddity, and the Government does not
have access to any argument or explanation deployed in advance
of the Amsterdam Treaty in 1997, when the employment title first
appeared;
- the Government is very clear, however, that the
guidelines, nor the Europe 2020 process based on them, cannot
be used to commit the UK to any policy action;
- it is clear from Article 148(2) TFEU that the
guidelines are not intended to be legally binding;
- Member States are required to produce annual
reports and Article 148(3) TFEU is clear that these are on implementation
of national employment policy;
- any recommendations to Member States, therefore,
should have the same focus and be on the basis of 148(4) TFEU
only;
- Article 148 TFEU does not provide for any action
against a Member State that did not comply with the obligation
(in the Treaty, repeated in the Decision) to take account of the
guidelines;
- in the Government's view the purpose of the guidelines
is to provide a framework for what Member States should coordinate
on — the aim is not to drive national policy but to increase
collectively the EU level of employment;
- the process gives the Government scope to report
on what it thinks is most relevant and useful for the exchange
of good practice; and
- it will, moreover, have a role in agreeing to
the text of the Joint Employment Report and it is that which may
cover implementation of the guidelines which the Government's
believes amounts to setting the European Council's priorities
for the year ahead.
3.10 Finally, in response to our first point, the
Minister says that, in relation to our suggestion that in Guideline
8 the word 'should' would be better employed than 'must', the
Government tried to get this amended but without success. He continues
that, whilst the Government agrees that the use of an imperative
does appear to be in conflict with the role of the guidelines,
the word has no legal force and any interpretation of it to that
effect would be overridden by the overall non-binding status provided
for by the Treaty, particularly in Guideline 8 where it relates
to an area that is wholly national competence.
3.11 In response to our question about whether the
adoption of the guidelines could be interpreted as a legislative
act, the Minister says that:
- the Government's view is that
an act is non-legislative unless the legal base specifies that
it is adopted under the ordinary legislative procedure or the
special legislative procedure;
- therefore, the subsidiarity protocol does not
apply, although the Government is clear that the guidelines and
action based upon them must respect national competence, as Article
147 TFEU specifies; and
- the involvement of the European Parliament under
Article 148(2) TFEU is purely consultative and not legislative.
Conclusion
3.12 We are grateful to the Minister for his responses.
We note the firmness of his language in saying that the guidelines
for the employment policies of Member States are not binding on
the Member States, and that this is clear from Article 148(2)
of the Treaty on the Functioning of the European Union (TFEU),
the legal base. But the wording of that Article does not, in our
opinion, bear this out: it talks of an obligation rather than
a discretion: "guidelines which the Member States shall
take into account in their employment policies", rather than
"may". We also note that Article 2(3) TFEU says
that "Member States shall coordinate their economic
and employment policies within arrangements as determined
by this Treaty, which the Union will have competence to provide".
And in relation to the actual content of the current guidelines,
we note the UK was unsuccessful in negotiating the replacement
of "must" with "should" in Guideline 8. So
we conclude that the extent to which these guidelines bind the
UK is more ambiguous than the Minister's account would suggest.
3.13 The consequence of the distinction the Minister,
and seemingly the Treaty, draws between legislative and non-legislative
acts is that national parliaments are stopped from formally raising
subsidiarity concerns through the early warning mechanism in the
Subsidiarity Protocol on all non-legislative acts. This strikes
us as perverse in a field such as employment policy where the
impact of EU policies on the individual citizen can be considerable
and where there is, consequently, particular sensitivity about
safeguarding national sovereignty.
3.14 These are both points which, in addition
to the impact of the integrated guidelines for the Europe 2020
Strategy and for EU commentary on Government policies, Members
could explore in the debate in European Committee, which we recommend
should now take place. In relation to the employment guidelines
the Minister might usefully be asked to explain:
— the
negotiating history and implications of Articles 2(3) and 5 TFEU,
which give the EU competence to "ensure coordination of the
employment policies of the Member States", and in what respects
this "coordinating" competence, introduced by the Lisbon
Treaty, is distinct from shared competence and the doctrine of
pre-emption;
— what, if any, are the policy grounds
(above and beyond the Treaty definition of "draft legislative
act") for stopping Parliament from formally raising subsidiarity
concerns through the early warning mechanism on EU employment
guidelines which Member States must take into account in
their employment policies;
— or, in the likely absence of policy
grounds, whether the inappplicability of the subsidiarity early
warning mechanism is simply an example of the law of unintended
consequences at work; and
— how he thinks the distinction the
TFEU makes between legislative and non-legislative acts might
affect the development and application of the principle of subsidiarity.
For example, given that the Subsidiarity Protocol does not apply
to non-legislative acts, should subsidiarity only be a relevant
consideration in assessing EU legislation rather than guidelines
such as these.
25 See (31373) 7110/10: HC 5-xiv (2009-10), chapter
1 (17 March 2010) and Gen Co Debs, European Committee B,
22 March 2010, cols. 3-28. Back
26
See http://www.consilium.europa.eu/uedocs/cms_data/docs/pressdata/en/ec/113591.pdf.
Back
27
Ibid. Back
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