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Lord Whitty: This has been a lengthy debate in two halves. For those who can remember, the first half was late on the night of 26th March when we had some broad sweep of history discussions about the whole nature of the European Union. Today has been more concerned, I admit, with the clauses on the table. However, the past hour or so, with its concentration on the social chapter, has once again been a bit of a pre-election time warp. I was hoping that we had got over some of the arguments. The social chapter and the employment chapter are neither the bogies that are suggested by the noble Lord, Lord Moynihan. Nor are they the solution to all our ills. We never claimed that they were.

As regards the broad sweep of history argument, we must be careful. I shall not respond in detail because we have heard much of the argument previously. This is still the Committee stage of the Bill and we should concentrate on the amendments and what is changed by

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the Bill and the treaty which it facilitates. So it will not be the intention of myself or my noble friends to engage repeatedly in debate about the fundamental principles of the Treaty of Rome and UK membership of the European Union. That was the tendency on the night of 26th March; it has occasionally been so today.

The basic framework under which we are operating, including the notion of qualified majority voting, is the same as it was in the Single European Act which was signed when the noble Lord, Lord Tebbit, was a member of the Cabinet and when the Maastricht Treaty was signed at which time the noble Lord, Lord Moynihan--although regrettably not a member of the Cabinet--was a member of the Government.

I therefore cannot accept, as the noble Lord, Lord Tebbit, said in his first intervention, an attack on our adherence to the social chapter on the grounds that it is impossible for us to reverse it. His government were responsible for signing a very large package or range of issues on which QMV would apply, which put us in exactly the same position under the Single European Act--quite rightly, in my view.

The social chapter, as the debate has indicated, is an area where there is a genuine difference of opinion between this side of the House and the other side, although one or two Members behind me seem to share the concern. But that is on grounds of principle and not on grounds of the content of the social chapter.

The difference between us is that we believe that the single market, to which I had thought all the mainstream parties were committed in this country, should have a social dimension. The Conservative Party apparently does not believe that it should have a social dimension. That is a genuine political difference, but not a major constitutional issue.

I had thought, with some relief, at the beginning of his speech, that the noble Lord, Lord Moynihan, recognised that this issue was explicitly settled by the general election. I understand that. In a few areas of the Labour Party manifesto, I understand, people are claiming ambiguity of meaning. But there can be no ambiguity of meaning whatever in,

    "Britain to sign the Social Chapter".

The noble Lord may regret losing the general election. He may feel that the British electorate were mistaken in making the decision that they did. But we have never supported the opt-out on the social chapter; the British electorate has never supported the opt-out on the social chapter; and we take pride in reversing the opt-out on the social chapter. It was a squalid little episode in our European history. The British government were behaving like a banana republic, going around assuring potential investors, who were not impressed, that British trade unions and British workers had fewer rights than anyone on the Continent. That is now over, and the British public in general support the change.

There was a slightly different attack on the social chapter in the first intervention of my noble friend Lord Stoddart. He produced an argument I have not heard for some time. It is, of course, true that at one point the British trade union movement and the British Labour Party were against any legal intervention in

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the area of workers' rights and collective bargaining. But that era came to an end, partly as a result of the experience of the 1970s. It is not the position of the Labour Party and has not been the position of the Labour Party for at least two decades. We now recognise on all sides that a clear legal framework for the way in which workers are treated is needed for prosperity as well as for security of workers.

As to whether we should be pursuing those social provisions at national or European level, clearly the vast majority of social policy issues will continue to be determined at national level. The social chapter is a much more limited part of the social provisions than has been claimed today. We have not taken on a whole mountain of prescriptive EU regulations intruding into every aspect of our working lives. We have not shackled ourselves to pointless restrictions which will strangle British competitiveness. As the noble Lord acknowledged, there are so far few provisions, and those which are in the pipeline or which may emerge will be subject to input not only from Britain but also from those countries which he rightly points out picked up the positive aspects of the experience of the British and American economies over recent years, as well as the much longer run of benefits of their own job creation programmes which took place in an earlier period, some of which still benefit them today.

The noble Lord points to the alleged ambitions of the Commission, and of Commissioner Flynn in particular, and a whole range of new regulations. That is scaremongering. Even if Mr. Flynn wished to pursue a whole range of new regulations, he does not act in a vacuum. The member states are increasingly influenced by an approach to labour market flexibility. I hesitate to use the term "the third way", but it is neither the corporatist demon that the noble Lord seeks to conjure up before us today, nor the utter free market concept of cutting workers' standards and wages, of which the previous government were very much in favour in both their domestic and European policies.

5 p.m.

Lord Tebbit: The noble Lord must have clear in his mind examples of where, under the previous government's policies, workers' wages were cut. Will he tell us about those wage cuts?

Lord Whitty: I intended to come to this in terms of the employment chapter, but the biggest wage cut of all occurred with the destruction of a large number of jobs in the manufacturing sector of British industry in the early 1980s.

Lord Tebbit: That will not do. I asked the noble Lord to give me examples of cuts in wages; that is, reductions in the amount of money men received from their employers.

Lord Whitty: I was first making the point that the biggest cut in the aggregate wages of British workers occurred because of the deliberate creation of unemployment by the previous government. They remarked on more than one occasion that unemployment was a price worth paying. However, if the noble Lord

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wishes for more specific examples, for which his department was partially responsible--I believe he was Secretary of State for Employment at the time--we had the abolition of the wages councils. In many of our service sectors, and subsequently in agriculture, that definitely in real terms cut the wages of several hundred thousand British workers. That was the objective. The noble Lord now denies the objective. But otherwise what was the point?

We do not believe that the labour market should be overregulated, nor do we believe that it should be unregulated. We believe that there are decent minimum standards, as do our European partners. We require more flexibility than some of our European partners recently demonstrated. But we believe also that to have a properly flexible labour force we need not only greater skills, mobility, flexibility, adaptability and employability, but also some degree of security and motivation among the workers. Simply cutting their protection and standards does not provide the background to make the substantial changes which the European economies will have to face in order to compete with increasingly globalised world markets.

Our balanced view on this matter--I regret that it is not shared by the Front Bench opposite--is that this combination of flexibility and basic minimum standards is necessary and that the commitment to co-operation at the job summit in Luxembourg last November and in the employment treaty provisions at Amsterdam will lead to a sharing of expertise; to some new European initiatives; and also to the creation of a skilled and adaptable workforce and labour markets which are responsive to economic change. Those are the British Government's words; they are not words which were there before the present Government took over and they are words which recognise the reality of the labour market situation rather than the mythology.

As to whether we will be overruled by QMV on these issues, our constructive approach to Europe gives us a real voice in the future development of EU policy in all these areas. Some noble Lords seem to approach QMV on the defeatist assumption that we will always be in a minority of one. Far from it. We can influence others and bring about our own majority. Indeed, the noble Lord, Lord Moynihan, referred to the empty chair allegation that we made--rightly--on the absence of British influence on the development of the social chapter during the period from Maastricht until the British general election. He mentioned in particular, in a different context, the new proposition coming through the social chapter pipeline on information and consultation for firms with under 50 employees.

It is true that the present British Government, like the past one, is not keen on that proposition. But it is true also that, had we started in the negotiations on that proposition at an earlier stage--in other words, if we had not had the social chapter opt-out--we would have been able to influence it in a somewhat different way. Of course, those negotiations are still open to us; they are not yet complete. The British Government's belated presence will improve the directive and make it more acceptable to us. We will continue to oppose it in its

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present form. But one of the reasons it is in its present form is that no British influence was brought to bear at an earlier stage. As has proved to be the case with the European Works Council, British firms will be indirectly affected by it, whether or not we are a party to the social chapter.

We believe that we have done the right thing in signing the social chapter. The provisions of the social chapter ought now to be accepted by a wide consensus of British industry and British society, and in reality we believe that they are. The debate on the social chapter is politically over as a result of the general election; it ought intellectually to be over in this House once and for all. I hope therefore that amendments which seek to delete our signing up to the social chapter will not appear at any later stage in the Bill. I hope that the noble Lord, in recognition of the convention in these matters, accepts my position--as he outlined--on the Salisbury Convention, not only by not pressing the vote himself but also by not voting for anybody else who may, by some chance, happen to press the Motion themselves.

I was slightly surprised at the vehemence of the Opposition in this debate towards the employment chapter, particularly those arguments we heard this afternoon. The comments we heard in the earlier stages of the debate, on 26th March, were even-handed and perhaps slightly confused. On the one hand, my noble friends Lord Bruce of Donington and Lord Shore--whose absence we greatly miss--made the point that these employment measures were not sufficient to make any real difference to economic policy. In reality, these employment measures will make some difference to the way in which the Council of Ministers approaches employment matters at the European level. They are not specific measures in themselves but they provide a way in which European Ministers can look at each other's employment policies and consider whether they should be generalised across Europe. However, the responsibility for the adoption of those policies rests with national governments.

I find the official Conservative position on the employment chapter quite extraordinary. On the one hand they say--the noble Lord, Lord Renton, echoed the earlier contribution of the noble Lord, Lord Moynihan--that the creation of employment is central to their concerns, but they reject the idea that part of any strategy on employment should be co-operation with our closest trading partners. My noble friend Lord Grenfell made that point clear. We all agreed that greater emphasis on employment was needed. All partners in Europe were convinced of this, although the degree to which we needed new employment measures was subject to some negotiation, and therefore not everyone got exactly what they wanted out of the new employment chapter, as is always the case in these inter-governmental conferences. But the provisions are not a centralised, Stalinist, European employment policy; they are a matter for common concern. Common concern means co-operation; it means learning from each other; and it means that some things are done better at European level than at national level.

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Our position, which has been adopted by Europe, is that we ought to be adopting the kind of guidelines that were agreed at the Luxembourg jobs summit last November. The employment chapter sets out a sensible procedure for member states to work together to identify how best to tackle unemployment. The value of EU-level co-operation is that it enables us to pool our expertise and to identify best practice. I am not clear why the Conservative Front Bench has departed from the position adopted by its predecessor. The previous administration accepted at the Essen summit that there was great benefit in agreeing procedures and guidelines on co-operation on European employment policy, on assessing each other's performance, on identifying areas where European co-operation could take place and on setting objectives for employment policy. In effect, the substantive part of the employment chapter puts into treaty form the agreement with which the previous government, with relatively little dissent on their Back Benches as compared with one or two other European issues during that period, were quite prepared to go along and indeed regarded as a major achievement.

I was asked some specific questions on the articles comprising the employment chapter. The noble Lord, Lord Moynihan, referred to Article 109p and asked whether there would be specific targets in this area. The answer is no, there will not be specific targets in this area in the sense that there are targets under the Maastricht criteria for the single currency, if that is what he meant. But there will nevertheless be some concerted effort to try to co-ordinate activities under that title.

He also asked what incentive measures may be. They are relatively tightly defined under Article 109r, which indicates that initiatives aimed at the exchange of information will be included as well as analysis promoting innovative approaches and evaluating experiences, in particular by recourse to pilot projects. For example, we are now working on a project to improve training opportunities for young entrepreneurs. Given that the chapter will not be in force until the ratification of the treaty, specific examples are slightly difficult to define. Nevertheless, they will fall in those kinds of areas. Declarations 23 and 24 attached to the treaty make it clear that any such incentive measures must be limited in time, must have limited financing and must have an objective need.

The noble Baroness, Lady Williams, asked whether they could include incentive measures in order to finance a project for exchange students or young people. They could indeed include such funding, although the funding under this chapter is limited. It is clear that all European-level funding of these activities, as distinct from national-level funding, is within existing budgets. The agreement at Luxembourg, with which Members of the Committee may not be entirely familiar, provides that some of the first measures under this chapter should be an agreement to a significant increase in EIB venture capital which would be lent to small and medium-sized enterprises in order to create employment. But that is not European budget money. It comes from the bank's reserves, not from member states or from the Community budget. The summit also agreed to redeploy 150 million ecus a year from the Community budget to

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provide for venture capital for small and medium-sized enterprises in order to fund projects. But this spending will be offset elsewhere in the budget, so there will be no overall increase.

I hope that, in a slightly rushed way, I have shown that the intentions of the employment chapter are nowhere near as Stalinist and centralising as the noble Lord attempted to conjure up and that they are directed at specific and practical ways in which we can learn from each other and provide some communal expertise and a limited degree of communal resources. They will not lead to vast, new regulations. The noble Lord, Lord Tebbit, asked why the limitation on harmonisation applies to only one article. The answer is that that is the only article in the employment chapter which is a legal basis for the Council to adopt detailed measures. So it would not be relevant to make that qualification to areas other than the article which provides for incentive measures.

The employment chapter will not create jobs overnight and will not bring down the number of unemployed--18 million--in a short time. But it will help to focus member states on the need to tackle unemployment by investing in people, by being competitive and by providing decent prospects for improving skills and mobility. It should also help all EU governments to identify which policies are most successful in doing that.

The debate has perhaps exaggerated the importance of both the social chapter provisions and the employment chapter provisions--not so much the debate in this House but the debate outside. However, it is a real distinction between us. We believe that social measures are an important part of the future of Europe and we believe that the European institutions can help in creating jobs. Apparently, the Opposition do not. We are prepared to rest on that defence but not to create a major constitutional issue out of it. I hope, therefore, that other colleagues in the Committee will not create a major constitutional issue out of it and I trust that, at this stage at least, the amendments can be withdrawn and that consideration can be taken at a later stage.

5.15 p.m.

Lord Bruce of Donington: Before the noble Lord sits down, will he be kind enough to deal with the argument which I presented at the initial stage of the debate, bearing in mind that I am fully in accord with his observations on the social chapter, and more particularly with those of my noble friend the Lord Privy Seal, who pointed out that its effects in any case are insignificant within the general flow of political and economic events? Will he deal with the point I ventured to make that, although the existing employment provisions incorporated in the Amsterdam Treaty are good enough in themselves and put unemployment firmly on the agenda, with marginal good effects where applied, nevertheless, other provisions of the Maastricht Treaty, and indeed of the Amsterdam Treaty, providing for economic conditions, monetary conditions and even fiscal policies to be determined centrally, have had an adverse effect on unemployment and have not contributed to unemployment going down?

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