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Lord Tebbit: I am surprised that my noble friend seems not to know the answer to that question. It is that such domestic legislation could be repealed following a change of mind by the British electorate. Any measure introduced as European legislation under the provisions of this treaty could not be so repealed. My noble friend made the point that we in this place would never vote down a matter that was in the election manifesto of an elected government. Unfortunately, our masters in Brussels do not have such qualms.

Lord Moynihan: My noble friend intervened as I begged the question and before I came to give an answer. I had intended to give two answers. My noble friend has given what would have been my second answer far more eloquently than I could ever have done.

My first answer to the question that I posed is that social legislation must, and should, be tailored to fit the interests of this country as decided by this Parliament for the people of this country. It is just not possible for any student of Europe, particularly given the examples that I have mentioned, to believe that the ill-fitting, one-size-for-all measures on social policy for general use from Finland to France can possibly be in the best interests of this nation.

Thirdly, the argument was put to us that the "empty chair at the negotiating table" philosophy has been used to argue that, despite our opt-out--which meant that we played no part in shaping social chapter policies and had no influence over them--Britain was still affected by legislation under the social chapter and companies were frequently forced to apply it. Even in this House, the Lord Privy Seal himself has told us that there is no halfway house between opting in and staying out, and that we must be at the table arguing our case or we shall be outvoted on measures with which we disagree. That is a critically important point.

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Will the Minister explain why the same logic does not apply to our other opt-outs--to the title on asylum, immigration and visa policy and to our sovereignty over our border controls, to the provisions for flexibility, and even to our opt-out from economic and monetary union? Will the Minister explain where the difference lies and how, elsewhere in the Union, we shall be able to maintain a halfway house between opting in to those measures which may suit us while exercising our right not to opt in to other potentially damaging measures, if that is not possible in the case of measures enacted under the social chapter?

It is therefore relevant for us to consider whether there is a third way, or whether it is merely a damaging dead end. The truth is that, despite the Prime Minister's much vaunted "third way", despite his apparent conversion to flexible job markets and his praise for entrepreneurship--even though it is clear that the Foreign Secretary does not share his enthusiasm--his early action in signing up to the social chapter and agreeing to the employment chapter sends quite a different message: that we are returning to the old, discredited agenda that social legislation is somehow the way to provide more security in employment for people in the modern world.

From these Benches we support the Government if their objective is indeed ending the old ways of state intervention, corporatism and over-burdensome regulation. But it is hard to see how that fits with signing the social chapter, compulsory union recognition, adopting the employment chapter and introducing the minimum wage, many of which are more likely to destroy jobs than create them.

It is particularly ironic that this should happen just as we were winning the argument for the enterprise model of Britain--just as the years of Conservative government were delivering Britain an economic performance that has made it the envy of Europe; just as our partners in Europe were waking up to the fact that the only route to job security and wealth creation is through the success of enterprise, and the success of building an open, outward-looking, customer-driven economy throughout Europe.

4.45 p.m.

Baroness Williams of Crosby: I thank the noble Lord for giving way. Does he not find some inconsistency between his extolling of American records in achieving high employment and his remark about the minimum wage, to which the United States has been attached for many years?

Lord Moynihan: I find none at all. For that reason I assure the noble Baroness, who focused very carefully on the words that I chose, that I should be more than happy to enter into a debate about the effect of a minimum wage. I should, however, be in danger of straying outside the remit of this particular clause. I genuinely believe that the minimum wage, particularly set at the wrong level, can be deeply damaging to the flexibility of the labour market. It is an argument on which I should happily deliver in greater detail.

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The point I was making when the noble Baroness intervened was that the European social model-- I quoted four or five specific aspects of that model, many of which would now be employed as a result of the social chapter--has done much to destroy jobs in Europe. When we see that absence in the United States, when we see the climate that we have built in this country, I find it worrying and disturbing, and wholly wrong politically, that we should be going down the path of establishing a stronger social model, which will now be imposed on the United Kingdom as a result of the absence of our opt-out, rather than working in quite the opposite direction to make the economy more competitive, less burdened by bureaucracy and particularly by the social measures that I indicated would possibly have to be adopted--that is the importance of the point made by the noble Lord, Lord Tebbit--by this country whether we liked them or not. I believe that anybody looking at our economy recognises that millions of Europeans also accept that. Perhaps I may quote again to the noble Baroness the many examples cited by strong pro-Europeans, with whom she would have a great deal of sympathy. Jacques Delors forecast after Maastricht that our opt-out from the social chapter would make Britain, "a paradise for Japanese investment".

I have already quoted Hans Olaf Henkel who, I believe, is very wise in this context and highlighted his recognition of the benefits of the right economic framework in the United Kingdom as opposed to the damage that can be done by a European social model, the likes of which we are witnessing in so many European countries and which has brought so much unemployment to those countries. Maybe the Government give greater weight to the opinions of their European partners than those I have just quoted.

However, I add in this context a couple of newspaper reports to support the point I hope to make, although I doubt whether I shall convince the noble Baroness, Lady Williams, on this occasion. Perhaps I may quote the German newspaper Handelsblatt which reported:

    "With greater labour flexibility, trade union power was reduced, meaning that Britain has suffered far fewer strikes than during the 1960s. According to OECD economists, Britain is setting the pace in micro-economic reforms".

It went on to say:

    "One might even say that Britain was a model".

If the Germans do not convince, then perhaps the French might. Le Monde asked:

    "How does one interpret the incredible change in unemployment in Great Britain? If unemployment is dropping in Britain it is because they have done everything to deserve it. For several years, considerable efforts have been made to improve the workings of the labour market, thereby boosting job and new company creations".

Perhaps the last word might go to the Dutch. Jan Timmer, president of Philips, said:

    "The most competitive country in Europe today is the United Kingdom. It has a great sense of realism, a great sense of competitive spirit--the factories we have in the UK are the most changed factories in the world. For manufacturing, Britain [for Philips] is the most competitive country in Europe today".

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I have made those arguments in detail because we on this side of the House feel passionately that the proposal to adopt the social chapter, to face the effects of QMV in the way that I have outlined, will be deeply damaging to our economic prospects at exactly the time when we should not be staying where we are but going in the opposite direction for further liberalisation. The policies of the previous government were focused intently on this approach. They gave British business a critical competitive advantage for British business to win orders, create jobs and build prosperity.

The cumulative effect of the present Government's policy, the signing up to the social chapter and the new employment chapter represents a slow but definite erosion in the opposite direction--the salami slicing of that critical margin of competitiveness, starting with small and medium sized firms across the country. To sign the social chapter is to lower our legal defences and to invite into our law, into our market place and into our culture, rules and regulations that are strangers to our spirit of free trade. To sign the social chapter and to agree to the employment chapter is to sign away British competitiveness and to stifle and smother our entrepreneurial shoots of success.

Some confusion exists over the Government's assessment of the importance of the social and employment chapters to British workers and businesses. Can the Minister confirm once and for all whether the social chapter and the employment chapter are vital measures for British workers which will create jobs and lead to better working conditions or whether they are modest measures which are more symbol than substance? It seems to me that both would lead to disaster, although by different roads; the former, by hitting prosperity through burdensome regulations, the latter by fuelling unrealistic, potentially damaging expectations. That is why I have tabled Amendments Nos. 18 and 19 opposing those measures. That is why I tabled the new clause--it appears as Amendment No. 43--calling for a report to Parliament on the legislation and employment implications arising from the social chapter. I hope that the Government will adopt the proposals.

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