---

Lord Renton: We are discussing an important issue. Surely, in every modern democracy the three principal aims of economic policy must be, first, the creation of employment; secondly, the improvement of social services; and, thirdly, the raising of the standard of living. But the creation of employment must come first because without it we cannot achieve the other two. Economic policy involves many aims, but they are merely a means to an end. Monetary policy, interest

27 Apr 1998 : Column 22

rates, the balance of payments and increasing production, for instance, merely support the aims, but the creation of employment must come first.

In that respect, I was pleased that the noble Baroness, Lady Williams, praised the speech of my noble friend Lord Moynihan. He gave a powerful analysis of the need to put the creation of employment first. I am pleased to say that the Conservative Party, which I have supported for many years, performed extremely well, especially in its last five years in government. Great achievements were also made in the early years of the Thatcher governments. It is a pity that during the general election campaign, almost a year ago, the people did not appreciate what had been achieved.

It is right that during our debate on the part to be played in Europe we should concentrate first and foremost upon the creation of employment and how our membership of the European Union, under a new treaty and further strategies, can lead to that principal aim. I hope that the government spokesman will give a full and careful answer to the points made by my noble friend Lord Moynihan.

Lord Grenfell: I, too, am sorry that my noble friend Lord Shore is indisposed. He adds enormous wisdom to our debates, even when we do not agree with the points he is making. Today, I have a difference of view with the noble Lord, Lord Moynihan. It is curious that those who have attacked the provisions in the new title are pessimistic about the possibility of best practice in this country being transferred to other members of the Community. They attack the title as though it were designed to create unemployment. One has only to read the title to see that it is replete with objectives, all aimed at putting employment at the top of the list and creating maximum employment possibilities.

Secondly, the title deals with developing a co-ordinated strategy. When a community of nations suffers from the problem of perhaps one country being successful in its employment and others not, it is not unreasonable that there should be a transfer of ideas. People should come together to discuss what in the practice of one country brings about a better record of employment which could be adopted by another country. That is all that the title proposes. It tries to find the best and most practical means of discovering what is best practice and encouraging its adoption by those countries which do not possess it.

The flexibility of the labour market is a typical example. Of course other countries have a great deal to learn, but I cannot understand the attitude of those people who assume that we should have nothing to do with this title, as if we have nothing to say to our Community partners. That is not the case. What on earth is wrong with drawing up guidelines for member states to take into account employment policies? Does not this country have the confidence to impart its best practice to others? Is it afraid to discuss with other members of the European Union how we have arrived at a successful employment policy with less than 5 per cent. unemployed? That is what Title VI is all about. It shares

27 Apr 1998 : Column 23

the experience that we have accumulated in order to ensure that the European Union as a whole can improve its employment record and learn something from us.

I wish that those who attack Title VI on the ground that it is an intervention and interference would look at it from the other side and see that it is not an intervention and interference in our business, but an invitation to us to pass on our best practices to those who need them most.

4 p.m.

Lord Tebbit: I believe that the noble Lord, Lord Grenfell, misunderstands the way in which the transfer of best practice operates. The British motor industry, which had fallen into the worst practice in the world, did not manage to regain its competitiveness by going to governments and asking, "Please, can you tell us what the Germans and the Japanese are doing which is right?", and then waiting for governments to meet under the cover of a great treaty, with enormous numbers of people going backwards and forwards to huge offices erected in Brussels. It did not happen like that. It happened as a matter of commerce; as a matter of business. Sadly, in the end, because we were slow at picking these things up, Japanese companies arrived in Britain and demonstrated to us just what best practice meant.

I must assure the noble Lord that I was in the Department of Trade and Industry when the Nissan Motor Company came to Great Britain. It was not universally welcomed by Members on all sides of the House, but it came. It did not have to bring best practice from Japan via the government in Tokyo, coming across to me in the Department of Trade and Industry and asking me to go out and tell people in the industry what it should be doing to make motor cars. This is an absolute mare's nest. The only best practice we would receive from this method would be the best practice of bureaucrats in creating jobs for themselves and destroying jobs for other people.

I took an interest in what was said by the noble Baroness, Lady Williams. She said that this is no more than occurs all the time in the OECD. That is fine. But why do we need this provision? We could throw away part of this treaty and achieve the result by going through the OECD. If the provision does no more than the OECD does, why do we have to re-invent the OECD and put it into the Treaty of Rome in order to achieve the aim? It is a most extraordinary argument. Of course I know why it is, as I am sure do most noble Lords if they think about it. If we include in the Treaty of Rome words in particular of the kind which the noble Baroness, Lady Thatcher, used to believe were guff, they acquire a life of their own. Matters of common concern move on and become matters of common policy. Sooner or later they become matters of single policy. That is a progress and that is why we cannot leave the matter with the OECD. It is why we cannot leave it to businessmen, through the normal flow of practice and competitive pressures, to take best practice from one country to another.

27 Apr 1998 : Column 24

In particular, I noticed the comfort which the noble Baroness gave. At the bottom of page 30 of the treaty are those words from which the noble Baroness told us we should take great comfort. The treaty states:

"Those measures shall not include harmonisation of the laws and regulations of the Member States".

But that applies to paragraph 109r. It does not apply to paragraphs 109p or 109q or any of the other paragraphs. It applies only to the part which matters least and it does not apply to the parts which matter most.

I am not a stranger to all this kind of thing. When I was Secretary of State for Employment, we were making some of the changes which, I believe, before the election the then Leader of the Opposition, now Prime Minister, used to refer to as "best practice" in industrial relations law. I might add that that is best practice against which he voted on every possible occasion when those changes were being introduced. But let us set that on one side. We should welcome sinners when they come to repentance.

However, when I was introducing those measures, which now stand out clearly as best practice in Europe, I was being badgered constantly by my colleagues in the Council of Ministers with ideas of precisely the sort that we are now seeing introduced through the social chapter. "Why don't we do this?" they asked. As we all know, the power of initiation does not rest with Ministers but with commissioners and, at that time, they had the powerful backing of a most distinguished commissioner. Since he is not on the Government Front Bench at the moment, I shall not mention his name. But he kept bringing forward those ideas and bringing them forward in the Council. At that time, we needed unanimity and so I merely made it plain that there was not the slightest prospect of unanimity and those ideas were taken away again.

Always I said to my colleagues, "Look, if you sincerely believe that those measures will assist your economies, will help to reduce unemployment, will give new energy to your commerce and industry, why don't you introduce them? I wouldn't stop you. I wish you good fortune". "Oh no", they would say, "We couldn't do that because unless you were required to introduce them as well, you would have a competitive advantage". That seemed to me a most extraordinary argument.

Of course, it has been refined now. The French call it le social dumping. The French believe that it is better to be an unemployed French worker than an employed British worker because the British worker is the victim of le social dumping. On the whole, I believe that it is better to be employed in Britain than unemployed in France.

Of course, we would see the pressures to harmonise our laws. After all, it is absolutely disgraceful, is it not, that we see a company like P&O Ferries prospering, carrying goods back and forth across the Channel, while the French opposition is in considerable trouble? Naturally, the view of the French unions is the view which would have been the view of a British union 20 years ago; that is, "We'll go on strike. There is nothing like a good strike for improving the competitiveness of one's business". But of course, at

27 Apr 1998 : Column 25

present, before they can stop their customers going to P&O, they have to blockade the ports. That causes disorder and social tensions--quite disgraceful affairs. British and German lorry drivers can avoid the disruption of their businesses by using P&O ferries. That causes grave concern for France.

What is the answer? To a Frenchman, it is perfectly obvious: you bring the British into line; you give us the benefit of your employment laws. That is the purpose of this provision.

The noble Lord, Lord Bruce, speaking this afternoon, said what I am sure the noble Lord, Lord Shore, had he been here, would have said too. I must say that I shall miss hearing the vivid imagery of the noble Lord, Lord Shore, on this matter. It was said that we should have a common purpose of creating employment. That is quite right. But here is the rub. At the moment, we seem to have found that happy trick of increasing employment and reducing unemployment in this country. We are doing it quite well.

What is it that is stopping our competitors on the Continent from following our best practice in that regard? Why do they not adopt the British system? Are they waiting for a treaty which would compel all of them to agree that our system is better and that they should adopt it, or are they waiting for an opportunity to make sure that we fall into line with them so that we are not competitive?

If the European Union were the world perhaps that trick might work for a while, but it is not. I talked recently to the managers of one of our largest, most successful manufacturing companies. They have made the decision that, for the first time, they will establish a manufacturing plant outside the United Kingdom. They are a shrewd bunch, very successful. Are they rushing to Germany, Spain, Greece or Finland? Not on your life. Nor are they going to the Far East to enjoy the fruits of purposeful capitalism a la Will Hutton in Malaysia. No, they are going to the United States. They are going there because not only is land cheaper, not only is the cost of the construction of a factory cheaper, not only are the planning procedures simpler, not only is the bureaucracy less but the wage overhead ratio is better too. There is less interference from union officials more concerned with making a living for themselves than making a living for their members.

If we were to have a treaty under which we were to bind ourselves to exchanging information on best practice, and perhaps even one day to bind ourselves to accept the practices of others, we might do better to have a treaty with the United States than with France or Germany.

I am afraid that, in this treaty, we have got it all wrong. I now come to some common ground with the noble Lord, Lord Bruce. Paragraph 2 of Article 109p states:

"The objective of a high level of employment shall be taken into consideration in the formulation and implementation of Community policies and activities".

Could there be a more important part of a government's policy in that regard than the management of the currency? Who, in this brave new world of the European

27 Apr 1998 : Column 26

Community, will be in charge of the management of the currency? It will not be this place, not the Bundestag and not the National Assembly; it will be a quango of bankers. The treaty specifically provides that they should not take any notice whatever of outsiders such as, for example, parliaments--even the European Parliament if it should call for policies designed to achieve higher employment.

I am one of those who think that, on the whole, the bankers are more likely to get it right than the politicians, but it seems to me to be a fundamentally undemocratic practice and one which makes an absolute nonsense of Article 109p. I think that we would be better off if the whole of this section were torn out of the treaty now before it does any more harm.

---