9 Europe 2020 Strategy: integrated guidelines
| (a)
(31573)
9231/10
SEC(10) 488
(b)
(31574)
9233/10
COM(10) 193
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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
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| Documents originated | 27 April 2010
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| Deposited in Parliament | 25 May 2010
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| Department | (a) HM Treasury
(b) Work and Pensions
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| Basis of consideration | (a) EM of 9 June 2010 and Minister's letter of 20 July 2010
(b) EM of 8 June 2010
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| Previous Committee Report | None
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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 possibly in September 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, after receipt of further information
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Background
9.1 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.
9.2 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.[41]
The plan for a strategy was endorsed by the European Council in
March 2010.[42] 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.
9.3 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".[43]
The documents
9.4 These two documents present the Commission's
proposals for the integrated guidelines for the Europe 2020 Strategy.
It suggests the guidelines should remain largely stable until
2014 to ensure a focus on implementation. The Commission proposes
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.
9.5 The details of the first six proposed guidelines
are set out in document (a), which presents a draft Recommendation
to Member States for adoption by the Council. The proposed guidelines,
which are annexed to the draft Recommendation, include:
Guideline 1: Ensuring the quality and the sustainability
of public finances
- calls for Member States to
"implement budgetary consolidation strategies under the Stability
and Growth Pact and in particular recommendations addressed to
Member States under the excessive deficit procedure, and/or in
memoranda of understanding, in the case of balance-of-payments
support";
- calls for Member States, in designing and implementing
budgetary consolidation strategies to favour taxes that do not
harm growth and employment and, where taxes may have to rise,
for this to be done in conjunction with making tax systems more
growth friendly by shifting the tax burden from labour to other
tax bases and to prioritise growth-enhancing expenditure items
such as education, skills and employability, research and development
and innovation and investment in networks (high-speed internet
and transport interconnections);
- calls for Member States to strengthen national
budgetary frameworks, enhance the quality of public expenditure
and improve the sustainability of public finances, through a combination
of a fast pace of debt reduction, reform of age-related public
expenditure and raising effective retirement ages;
Guideline 2: Addressing macroeconomic imbalances
- an argument that "Member
States should avoid unsustainable macroeconomic imbalances, arising
notably from developments in current accounts, asset markets and
the balance sheets of the household and corporate sectors. Member
States with large current account imbalances rooted in a persistent
lack of competitiveness or prudential and taxation policies should
address the underlying causes by acting on fiscal policy, on wage
developments, on structural reforms relating to product and financial
services markets, on labour markets, in line with the employment
guidelines, or on any other relevant policy area";
Guideline 3: Reducing imbalances in the euro area
- a proposal that "Euro
area Member States should regard large and persistent divergences
in current account positions and other macroeconomic imbalances
as a matter of common concern and take action to reduce the imbalances
where necessary" and that "macroeconomic imbalances
should be regularly monitored within the Eurogroup, which should
propose remedial actions when needed";
Guideline 4: Optimising support for research and
development and for innovation, strengthening the knowledge triangle
and unleashing the potential of the digital economy
- calls for Member States to
review national (and regional) research and development and innovation
systems, so as to ensure adequate and effective public investment
and to orient them towards higher growth while addressing major
societal challenges (for example energy, resource efficiency,
climate change, social cohesion, ageing, health, and security);
- calls for Member States' research and development
and innovation policies to be set within an EU context in order
to enhance opportunities for pooling public and private resources
in areas with EU value added, exploiting synergies with EU funds
and, in line with proposed Guidelines 8 and 9, for Member States
to equip people with a broad range of skills needed for innovation
in all its forms and to ensure a sufficient supply of science,
mathematics, and engineering graduates;
- a link to the EU headline target, agreed at the
March 2010 European Council, and on the basis of which Member
States will set their national targets, that by 2020 3% of the
EU's GDP should be invested in research and development and to
the proposed new indicator — still being developed —
that would reflect research and development and innovation intensity;
Guideline 5: Improving resource efficiency and
reducing greenhouse gases emissions
- calls for Member States to
decouple economic growth from resource use, turning environmental
challenges into growth opportunities and making efficient use
of their natural resources;
- calls for Member States to reduce emissions through
making extensive use of market-based instruments, including taxation,
to support green growth and jobs;
- a link to the EU headline targets, agreed at
the March 2010 European Council, and on the basis of which Member
States will set their national targets, to reduce by 2020 greenhouse
gases emissions by at least 20% compared to 1990 levels or by
30%, if the conditions are right, to increase the share of renewable
energy sources in final energy consumption to 20% and to increase
energy efficiency by 20%;
Guideline 6: Improving the business and consumer
environment and modernising the industrial base
- calls for Member States to
put in place predictable framework conditions and ensure well-functioning,
open, and competitive goods and services markets, particularly
through fostering single market integration and effective implementation
and enforcement of single market and competition rules and developing
the necessary physical infrastructure; and
- calls for Member States to support small and
medium-sized enterprises, and a modern, diversified, competitive,
resource- and energy-efficient industrial base, partly by facilitating
any necessary restructuring in full compliance with EU competition
rules and other relevant rules.
9.6 The details of the four proposed employment guidelines
are set out in document (b), which presents 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. Illustrative
examples of what is suggested in the guidelines are:
- for Guideline 7: Increasing
labour market participation and reducing structural unemployment
—making full use of "flexicurity,"[44]
reviewing tax and social security systems to remove obstacles
to employment and disincentives to take paid work and ensuring
the provision of care for children and other dependents;
- for Guideline 8: Developing
a skilled workforce responding to labour market needs, promoting
job quality and lifelong learning — promoting education
and training to improve productivity and employability and to
equip people with the knowledge and skills needed to meet employers'
changing demands;
- Guideline 9: Improving the
performance of education and training systems at all levels and
increasing participation in tertiary education — taking
action to reduce the number of children who leave school prematurely,
to improve the accessibility and relevance of education and training
and to develop partnerships between training and work; and
- Guideline 10: Promoting social
inclusion and combating poverty — improving employment opportunities,
ensuring equal opportunities, removing unfair discrimination in
employment and making full use of the European Social Fund.
9.7 The draft Council Recommendation, document (a),
was agreed by ECOFIN on 8 June 2010. The draft Council Decision,
document (b), was agreed by the Employment, Social Policy, Health
and Consumer Affairs Council on 7 June 2010. Both documents were
considered by the European Council on 17-18 June 2010 with subsequent
further consideration by the appropriate functional Councils —
that is adoption of the draft Recommendation, on 13 July 2010,
and further consideration of the draft Decision after consultation
with the European Parliament, possibly in September 2010.
The Government's view
9.8 In his Explanatory Memorandum about the draft
Recommendation, document (a), the Commercial Secretary to the
Treasury (Lord Sassoon) first says that during the negotiations
the approach of the Government has been to seek to ensure that
surveillance of Member States' policies in line with these guidelines
does not expand or alter the competencies set out in the Treaties.
He continues that:
- the Government welcomes the
Commission's proposals as a useful starting point for the negotiations
on the broad economic policy guidelines, including their narrower
focus than under the current Lisbon Strategy (which had 24 guidelines);
and
- the economic and financial crisis has severely
impacted on Europe's growth prospects, and it is critical that
the EU and its Member States undertake the structural reforms
needed to promote growth in Europe.
9.9 The Minister tells us that during the negotiations
on the broad economic policy guidelines, the Government's approach
has been to seek to amend the broad economic policy guidelines,
so that they:
- highlight the action needed
to promote growth in Europe and its Member States;
- are consistent with the objectives as set out
by the Government in its Coalition Agreement;
- respect the principles of subsidiarity, including
with respect to education policy;
- fully respect the integrity of the Stability
and Growth Pact; and
- do not prejudice negotiations on the EU budget
review and future EU budgets.
He says that the Government has been pleased at the
direction that these negotiations have taken the broad economic
policy guidelines in, for example:
- tempering the language on the
composition of national expenditure and revenue to make it less
prescriptive (Guideline 1);
- removing language that could have prejudiced
negotiations on the EU budget review and future EU budgets (all
Guidelines);
- material on addressing macroeconomic imbalances
(Guidelines 2 and 3);
- adding references to EU level action to complement
Member State action to improve resource efficiency and reduce
greenhouse gases (Guideline 5); and
- the inclusion of positive material on the single
market and administrative burdens (Guideline 6).
9.10 The Minister reports that:
- at ECOFIN on 8 June 2010 the
broad economic policy guidelines were agreed under qualified majority
voting, with a UK abstention;
- the Government issued a Minute Statement at that
meeting, which read "The United Kingdom abstention on the
Broad Economic Policy Guidelines (BEPGs) reflects a parliamentary
scrutiny reservation on this item. The United Kingdom is also
reviewing the language and implications of the education elements
in the innovation guideline of the BEPGs and reserves the right
to return to the issue";
- the specific text on education (at the end of
the second paragraph of Guideline 4 on innovation) reads "In
line with guidelines 8 and 9, Member States should equip people
with a broad range of skills needed for innovation in all its
forms, including eco-innovation, and should seek to ensure a sufficient
supply of science, mathematics and technology graduates";
and
- the Government is considering the implications
of this language and whether it could give rise to detailed recommendations
on UK education policy.
9.11 In his letter the Minister says the broad economic
policy guidelines, document (a), were politically endorsed at
the European Council on 17 June 2010 and were formally adopted
by the ECOFIN Council on 13 July 2010.[45]
He says that the Government at this meeting signalled agreement
for the broad economic policy guidelines, overriding scrutiny
in this House, that he regrets that as we had not been appointed
we did not have the opportunity to complete scrutiny on this document,
but that it was important for the UK to play an active role on
this important issue at the EU level.
9.12 The Minister also tells us, in relation to the
Government's review of the language and implications of the education
elements in the earlier draft of the broad economic policy guidelines,
that the European Council was clear in politically endorsing them
that any recommendations following the guidelines "shall
be fully in line with relevant Treaty provisions and EU rules
and shall not alter Member States' competences, for example in
areas such as education."[46]
9.13 The Minister concludes that the Government welcomes
the adoption of the broad economic policy guidelines as an important
part of the Europe 2020 strategy and wider EU economic governance
framework, which can contribute towards EU economic recovery.
9.14 On the draft Council Decision, document (b),
the Minister of State for Employment, Department for Work and
Pensions (Chris Grayling) says that the employment policy guidelines
are not binding on the UK, but adds that if the Council were to
make any recommendations after considering the UK's annual employment
report, the Government would consider them. The Minister tells
us that the guidelines were agreed at the Employment, Social Policy,
Health and Consumer Affairs Council on 7 June 2010, but that the
Government abstained pending its consideration of the whole Europe
2020 Strategy package.
Conclusion
9.15 The potential impact of the integrated guidelines
for the Europe 2020 Strategy and for EU commentary on Government
policies is important. We think the Government should be examined
about that potential in a debate in European Committee B and so
recommend such a debate on the two documents.
9.16 However, before that debate takes place we
should like a comment from the Government on two points, related
to the employment guidelines, document (b). We note that these
guidelines, which Member States "shall take into account
in their employment policies" under Article 148(2) TFEU,
are adopted on the basis of a legally binding Council Decision,
whereas the economic guidelines are adopted on the basis of a
non-legally binding Council Recommendation. We would be grateful
if the Minister could explain to us the thinking behind why the
employment guidelines are adopted by a Decision and not a Recommendation,
and whether this affects their legal status in the Member States.
On this note we see that, under guideline 8, Member States are
told that "[q]uality 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
are indeed guidelines, we think this recommendation should have
been expressed in terms of "should" rather than "must".
9.17 Secondly, we also ask the Minister whether,
in his view, the Decision adopting the employment guidelines falls
within the definition of a "legislative act" under the
TFEU. If it does 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. As the excerpt
from the guidelines above shows, this is a policy field in which
the Commission is making detailed recommendations; but it is also
one where competence is shared with the Member States. So the
principle of subsidiarity is particularly important. We think
that the draft Decision is a legislative act because the
Council adopts the Decision after the "participation"
— in this case consultation— with the European Parliament:
so the procedure comes within the generic definition of a "special
legislative procedure" in Article 289(2) TFEU. However, doubt
arises because the legal base does not state in terms that it
is a special legislative procedure. In correspondence with us,
the previous Government took the view that, where a legal base
in the TFEU does not state that it is an ordinary or special legislative
procedure, the act adopted is always non-legislative rather than
legislative, irrespective of the participation of the European
Parliament. Were that interpretation to be right, the House could
not have invoked the subsidiarity early warning mechanism on this
proposal.
41 (31373) 7110/10: see HC 5-xiv (2009-10), chapter
1 (17 March 2010) and Stg Co Debs, European Committee B,
22 March 2010, cols. 3-28. Back
42
See http://www.consilium.europa.eu/uedocs/cms_data/docs/pressdata/en/ec/113591.pdf.
Back
43
Ibid. Back
44
Flexicurity means flexible employment contracts combined with
life-long learning, policies to encourage and support labour mobility,
help to find secure jobs and social security systems which cushions
people against unemployment caused by, for example, globalisation.
Back
45
See http://register.consilium.europa.eu/pdf/en/10/st11/st11646.en10.pdf.
Back
46
See http://www.consilium.europa.eu/uedocs/cms_data/docs/pressdata/en/ec/115346.pdf
paragraph 1.3. Back
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