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House of Lords

Thursday, 12th June 1997.

The House met at three of the clock (Prayers having been read earlier at the Judicial Sitting by the Lord Bishop of Lincoln.): The LORD CHANCELLOR on the Woolsack.

Lord Evans of Parkside

John Evans, Esquire, having been created Baron Evans of Parkside, of St. Helens in the County of Merseyside, for life--Was, in his robes, introduced between the Baroness Gould of Potternewton and the Lord Whitty, and made the solemn Affirmation.

Lord Lofthouse of Pontefract

Sir Geoffrey Lofthouse, Knight, having been created Baron Lofthouse of Pontefract, of Pontefract in the County of West Yorkshire, for life--Was, in his robes, introduced between the Lord Gregson and the Lord Mason of Barnsley.

The Lord Chancellor: Leave of Absence

The Lord Chancellor (Lord Irvine of Lairg): My Lords, before the commencement of business, I take the opportunity to inform the House that I am to attend the University of Glasgow to receive an honorary Doctorate of Laws on Wednesday, 18th June 1997. Accordingly, I trust that the House will grant me leave of absence.

Noble Lords: Hear, hear!

EU Anti-Fraud Proposals

3.21 p.m.

Lord Campbell of Croy asked Her Majesty's Government:

    Whether they will support the European Union's proposed FISCALIS programme, which is due to start in 1998 and which is intended to reduce fraud in VAT and in excise duties by improving co-operation between member states.

Lord Haskel: My Lords, may I congratulate the noble Lord on his alertness at picking up so early the FISCALIS proposals because they have not yet been considered in detail at European Community level. So in a way the Question is a little premature. However, while endorsing the FISCALIS programme in principle, the Government's full support must be subject to further consideration of the costs and resources involved. The Government are determined to work with the European Commission in developing co-operation with EC authorities as a means of combating fraud within the Community.

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Lord Campbell of Croy: My Lords, I thank the noble Lord for his Answer. I agree that this is an early stage, but it cannot be too soon to start considering the scheme which has been put forward. Does the noble Lord agree that while the European Commission can provide help and co-ordination, the curbing of fraud must mainly depend on the willingness of authorities in member countries to increase their vigilance and clamp down on transgressions? Can the British Government stimulate other governments in the Community to catch and prosecute their nationals who indulge in fraudulent practices? I confidently expect to receive support for what I say from the noble Lord, Lord Bruce of Donington, whom I am glad to see in his place. The noble Lord has made a study of this subject over several years.

Lord Haskel: My Lords, the proposed arrangements under the FISCALIS programme, particularly the improvement of IT systems, are based very much on work which has been done in the United Kingdom. So the noble Lord can be assured that work will be carried out within the United Kingdom on this very important project. The whole programme is designed with co-operation between European Community countries in mind. I am sure therefore that the benefit of experience in the UK will be made available to the other European countries.

Lord Bruce of Donington: My Lords, is the noble Lord aware that one of the difficulties that must be facing Her Majesty's Government in this regard is the failure of the Commission's proposals to make adequate distinction between fraud and irregularity and its failure generally to take account of irregularity which, according to British law, in many cases is already fraudulent? Will the Government give consideration to the view already widely held, not only in the United Kingdom, that the nature and form of Commission legislation in many spheres is in itself an open invitation to fraud?

Lord Haskel: My Lords, I am not sure that I can respond to the second part of the noble Lord's question. As to the first part, most of the tax at risk is excise duty. There is no evidence of significant fraud as a result of intra-EC VAT systems. VAT losses attributable to the single market are estimated at about £150 million. As regards excise goods, Customs and Excise estimates that revenue--that is, excise duty and VAT--evaded through abuse of personal importation rules for alcohol and tobacco is about £770 million a year. That is large-scale commercial fraud. There are possibly other significant but unquantifiable losses.

Lord Mackay of Ardbrecknish: My Lords, do the Government agree that not only is there fraud on VAT and excise duty across the Community, but, as the noble Lord, Lord Bruce of Donington, has told us on a number of occasions, there is fairly massive fraud in the European budget itself, especially in the common agricultural policy? Can the Minister assure the House

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that the Government will be every bit as determined as the last Government to pursue fraud in the Commission, at European level and also at member state level?

Lord Haskel: My Lords, I can certainly assure the noble Lord that this Government will be as diligent as the previous one, and far more diligent, I hope, in pursuing fraud.

EU Social Chapter

3.26 p.m.

Lord Pearson of Rannoch asked Her Majesty's Government:

    How they propose to sign the EU social chapter and then avoid EU legislation arising therefrom which they may consider damaging to British interests, given the chapter's provision for qualified majority voting.

The Minister of State, Department of Trade and Industry (Lord Clinton-Davis): My Lords, by accepting the social chapter we will ensure that the United Kingdom can take part in negotiations and influence the outcome. We will argue strongly for competitiveness. Under the last Government's so-called "opt-out", legislation such as the European Works Council Directive, which affects many British companies, could be adopted without any United Kingdom involvement.

Lord Pearson of Rannoch: My Lords, I am grateful to the noble Lord for that reply, which I find a little optimistic in view of the fact that the draft social chapter legislation at present includes provision to impose works councils on companies with as few as 50 employees, with legal rights within those companies, affecting perhaps 11.5 million people in this country, and also gives to part-time workers all the rights which are at present enjoyed by full-time workers. Does not the noble Lord agree that the new Government could pass into British legislation any Act it wished in this field without having possibly to assume legislation from Brussels which it does not like? In short, is not signing the social chapter rather like going for a walk in a tropical country in the rainy season and forgoing the offer of an umbrella?

Lord Clinton-Davis: My Lords, I find the analogy rather bizarre, but then I would expect that from the noble Lord. The fact of the matter is that, as regards the Works Council Directive, a large number of companies in this country have voluntarily undertaken the obligations which are enshrined in the social chapter in this regard. But we had no influence on that whatsoever because of the opt-out. Indeed, there can be no influence if one seeks to entertain the idea of an opt-out. For the sake of its business and its own interests, we believe that it is important that Britain should participate in the debates. We were precluded from doing that because of the strange notions of the party opposite.

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Lord Stoddart of Swindon: My Lords, can my noble friend confirm that at present there is discussion between Mr. Flynn and the European Parliament about the possibility of a further 87 items being brought in under the social chapter? If so, can the Minister refer back to the Question and say whether it would be possible for Britain to choose not to implement items which will not do this country's economy any good and with which the Government disagree?

Lord Clinton-Davis: My Lords, my noble friend inadvertently draws attention to the need for us to be present at those discussions. I do not know precisely what discussions Commissioner Padraig Flynn is having with the European Parliament, but we need to have a voice in the discussions and the sooner we can achieve that the better. I do not accept all my noble friend's conclusions on this. The reality is that in the discussions we shall maximise flexibility and competitiveness while at the same time ensuring that the social justice which is enjoyed by others comes to people in this country also.

Lord Stoddart of Swindon: My Lords, can my noble friend say whether qualified majority voting will overrule British objections?

Lord Clinton-Davis: My Lords, qualified majority voting could theoretically--

Noble Lords: Ah!

Lord Clinton-Davis: --overcome objections from any member state, not only from Britain. Why does my noble friend consider that we are incapable of influencing a decision so that it is in favour of Britain? That was not possible under the government of the party opposite because of the extraordinary stance that they took. We have a much better chance of being able to ensure that the need to maintain the competitiveness of the Community economy, which is stated explicitly in the social chapter, is indeed maintained if we have a proper voice.

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