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Lisbon: Special European Council

3.43 p.m.

The Lord Privy Seal (Baroness Jay of Paddington): My Lords, with the leave of the House, I should like to repeat a Statement which is being made in another place by my right honourable friend the Prime Minister. The Statement is as follows:

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    social exclusion, with member states setting targets in specific areas--unemployment, youth unemployment, overall employment, child poverty and so on; we agreed to halve by 2010 the number of 18 to 24 year-olds excluded from the labour market because of low educational qualifications; we finally opened up the issue of the long-term sustainability of member states' pension systems and the need to reform them across the EU; we agreed to establish a new Europe-wide database on jobs and learning opportunities; we agreed to put life-long learning at the centre of job creation, and to monitor each member state's progress against a series of agreed aims; we agreed to improve equal opportunities, increase the provision of childcare and promote greater flexibility in the management of working time. Each year, the European Council will meet to examine progress and agree further action specifically on economic reform.

    "The Lisbon European Council represents a turning point in Europe's approach to economic and social policy. With a sound macro-economic framework in place and the euro safely introduced, the concrete actions agreed at the Council should help to deliver an increase in the EU employment rate over the next 10 years, from an average of 61 per cent today to something close to 70 per cent. I have no doubt that this is achievable. In the last three years, we have created over 800,000 new jobs in Britain; in Spain there have been over a million new jobs; and in France, too, employment has risen by over 800,000 in the last two years, in part reflecting new measures to cut the cost of labour.

    "Above all, the European Council agreed that once again in Europe we can seriously contemplate a return to full employment. That post-war goal, achieved 30 or 40 years ago, but then abandoned, is back on the agenda and quite right too. Each citizen unemployed is a resource wasted.

    "But we have the courage to recognise that the aspiration cannot be met unless we are prepared to make the fundamental reforms necessary to equip our countries for the modern age, a new 21st century economy. It is in the combining of traditional aims and values with modern means and reforms that the true significance of Lisbon lies.

    "We had a full discussion of the situation in the Balkans, including the continuing problems in Kosovo and Montenegro. We agreed that the countries of the region need to be brought more into the European mainstream, and committed ourselves to enhance economic assistance, including through early trade liberalisation. The Lisbon Council recognised the immense progress made since the Kosovo conflict began a year ago, but agreed that a more coherent approach by the international community was needed. We asked the Council Secretary General and the European Commission to come forward with early recommendations on how to strengthen the impact of the European contribution and enhance co-ordination of the overall international effort. We believe this will

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    enable Javier Solana and Chris Patten to promote a more coherent international strategy for Kosovo and the region.

    "Finally, we discussed relations with Russia on the eve of the presidential elections, agreeing on the need for a full partnership between the European Union and Russia, and emphasising our concerns again about the situation in Chechnya.

    "I spoke to President Putin this morning to congratulate him on his emphatic election victory. He was very conscious of the weight of responsibility on his shoulders, both to restore order and democracy in Chechnya and to rebuild the Russian economy.

    "Lisbon was a highly successful summit. By getting our way in Europe, we are standing up for Britain's economic interests. Making Europe more dynamic benefits Britain. More competition in Europe means new markets for British business. More enterprise in Europe means more jobs in Britain. More e-commerce means more opportunities for British companies. More jobs, cheaper goods and easier access to the Internet are good for Britain.

    "Once again, constructive engagement has been shown to be the right policy for Britain and for Europe".

My Lords, that concludes the Statement.

3.52 p.m.

Lord Strathclyde: My Lords, I thank the noble Baroness the Leader of the House for repeating the Statement. Will the noble Baroness will join me in welcoming the presence in Lisbon, with such strong popular backing, of Prime Minister Aznar of Spain? Does she agree that his influence on future discussions is likely to be far more constructive than the rather outdated attitudes of M. Jospin?

We welcome the fact that at last some EU leaders seem to accept the need to reduce regulation and increase competitiveness. We welcome the fact that the EU has realised that it is not internationally competitive and that the crucial services sector is underdeveloped. But we do have to ask why it has taken so long. We have been saying this for decades. And has anyone told the EU Commission, which still seems to be working with undiminished zeal on measures for harmonisation and regulation?

There are many fine words in the Lisbon communique. In fact, I have rarely read such a torrent of aspirations--the small print of which amounted to the Prime Minister and his colleagues confessing, "We've over-regulated, overspent and overtaxed". But words are not enough. The commitment to deregulate must be matched in action. Small business people in Britain and throughout Europe are crying out at the cost of the regulation and nannying interference that they now face in running their businesses. In the spirit of the Lisbon summit, can the noble Baroness undertake to review all those regulations imposed on small businesses in the United Kingdom since the signing of the Social Chapter by the Prime Minister?

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We welcome the commitment in principle in Lisbon to deregulate in the fields of telecommunications and utilities. But how does that sit with the Government's plans to introduce more regulation on these industries in the current parliamentary Session? Will the Lisbon discussions affect that legislation in any way? And, when will all this happen? Were target dates set for the liberalisation of markets in gas, electricity, water, postal services and transport? If so, what were those target dates? Will the Utilities Bill currently before Parliament be dropped?

Why did the Prime Minister commit himself to the so-called "pending tax package"--tax harmonisation by another name?

On research, where again there are worthy aspirations, most of them are best met not by states, but by the private sector. What is meant by giving the Commission powers to "build a European Research Area", including mechanisms for monitoring research and using tax policies to promote research? I wonder whether this represents an extension of Community taxation competence. It sounds as though it does.

We read in paragraph 21 of the conclusions that the Ministers want to,

    "eliminate barriers to investment in pension funds".

How does that sit with the Chancellor of the Exchequer's smash-and-grab raid on pensions investments with his massive increase in taxation of dividends?

We welcome the commitment to lower taxes on low-paid workers. But does not the American model point to the urgent need to lower taxes in the European economies overall? Therefore, will the Government set a lower tax target for the UK? Does not this commitment at Lisbon suggest that the huge increase in the tax burden since May 1997--now of course admitted by the Chancellor of the Exchequer--is taking Britain in precisely the opposite direction to what is needed?

We welcome another Lisbon aspiration, which is to facilitate cross-border investment. We need and support such a free market. But when will the Government wake up to the fact that unless sensible action is taken this could represent a threat as well as an opportunity to our most vital national interests in the City of London? Will they reconsider their decision in the Budget not to reduce or eliminate stamp duty on transactions in shares, given the fact that UK rates are now becoming increasingly uncompetitive in Europe? We do not want to wake up to a world in which business drains away from the London market because of the determination of the Chancellor to cling to stamp duty.

As usual, a number of initiatives were suggested at Lisbon. Perhaps the noble Baroness will indicate to us how she believes they will be paid for. Will any addition be requested to current EU funds?

Perhaps I may turn briefly to foreign affairs. We welcome what is said about securing the stability of south-eastern Europe. But when do the Government expect navigation on the Danube to be opened, as called for in paragraph 51? What part will the

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UK Government play in this? Do the Government envisage any further burdens falling on our magnificent servicemen and women in the Balkans?

Finally, the most absurd part of the summit was the body language of the Prime Minister when sitting next to the Chancellor of Austria. For how long do he and his EU partners intend to go on with the futile boycott of the democratically elected government of Austria? Will he still be boycotting Austria while congratulating Mr Putin, who has presided over a catalogue of human rights abuses in Chechnya, or feting President Jiang Zemin, who has done the same in Tibet? Was not the "musical chairs" in Lisbon another example of the frankly rather adolescent Blair doctrine on human rights: hector the weak, but lick the boots of the strong? Is this now the policy of the British Government?

What is needed in Europe following Lisbon is not what we were presented with--a further addition to the mountain of Euro-rhetoric--but a radical shift of direction, to lower tax, less regulation and more open competition. There can be no sense of a sea change in European economic thinking until we see less interference from Europe in the nooks and crannies of business and our private lives.

3.59 p.m.

Lord Rodgers of Quarry Bank: My Lords, I thank the noble Baroness the Leader of the House for repeating the Prime Minister's Statement. Despite some discussion of Kosovo and of Russia, the Lisbon summit has been given the convenient title of "the Internet summit". That is what I shall address my remarks to.

As the House will recall, the whole question of the preliminary paper for the Lisbon summit was discussed by the Select Committee on the European Union, which reported to the House in its sixth report. If I were to summarise the tone of that report, I would say that it was a healthy scepticism about what the summit might achieve. It referred to the uncertainty of the underlying rationale of the special council and to the danger that it would be long on objectives but short on the means to achieve them. That was very much the mood when, on the initiative of my noble friend Lord Wallace of Saltaire in tabling an Unstarred Question on 15th March, the House debated the Lisbon summit. In reply to that debate the noble Lord, Lord Sainsbury, said:

    "This summit is ultimately about making Europe the best place in the world to do business".--[Official Report, 15/3/2000; col. 1674.]

That was a very good summary and we should attempt to judge the achievements of Lisbon against that criterion. I prefer to use the word "criterion" because I am still not quite sure what a "benchmark" is. Indeed, the verb "to benchmark" finds no place in the Larger Oxford English Dictionary, but I take it to mean "to measure against objectives". In a sense, that will be the test of Lisbon: whether, given the aspirations of Lisbon--that is what they mainly were--we will be able to measure achievement

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positively against what was discussed and agreed last weekend. As a result of Lisbon, will Europe be the best place in the world to do business?

Put like that, on the basis of the communique itself, the answer is plainly "no". I do not think that the Prime Minister or the Leader of the House would claim that Lisbon has solved the problem of how to make Europe the best place in the world for business. The most it has done is to take some steps in that direction. The achievement will depend on a persistent will on the part of the Union itself and its member countries over a long period. Very many decisions will be required--most of them not by governments and most of them not yet taken--if we are to achieve the aspirations of Lisbon.

On my part, I have divided thoughts: welcoming what was achieved but perhaps suspending judgment on whether history will show that it was mainly rhetoric or there was real substance behind it. Certainly, in historical terms, it is too soon to sustain the Prime Minister's main claim that it is a turning point. It may be. It could be a turning point for the better, but we cannot even say that for the moment.

The emphasis in the Statement is on modernisation and liberalisation. Those are the fashionable "buzz words" but they are not the whole language of politics.

I have two principal mainstream reservations about the Statement. First, I cannot share the passionate belief in markets solving all problems. Liberalisation is not all good. For example, would it get rid of poverty; and what would be the cost in dislocation and personal security? That is what we have to set against the advantages of liberalisation, although they can be recognised. Secondly, I found no reference in the communique to the danger that Europe may become a rich island in a poor world. If it is successful, if the aspirations of Lisbon are fulfilled, we shall be very rich indeed. We shall be growing at 3 per cent per annum. We shall be a competitor to the United States. But where does that leave the rest of the world? Will the rich be getting richer and will the poor be getting poorer? If that were to be the case, it would be right to have reservations on whether Lisbon has been a turning point or at least a turning point in the right direction.

Although we broadly welcome the Lisbon communique and congratulate the Prime Minister both on writing the Lisbon agenda and the communique in Downing Street--that is precisely what I think happened--I hope that there will be no attempt to lecture other European Union countries on the way we would want them to run their own economies. Even for those of us who are strong Europeans, that is further than any European Union communique should go. Perhaps it would be a good time to say again that if Britain is to play its full part I hope that the strong, clear leadership that was the theme of the Prime Minister's own statement about his achievement will soon lead to Britain's participation in the single European currency.

The noble Baroness will be very glad to know that I have only one question on the Statement. Although there was no reference to it in the communique, will she

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say whether there was any discussion of the single currency--if not in the Council itself then in the margins--and whether the Government have moved any further forward to taking a more positive view on this issue, which is central to the part that Britain will play in the Union in the years ahead?

4.6 p.m.

Baroness Jay of Paddington: My Lords, I am grateful to both noble Lords who have, I think it would be fair to say, broadly welcomed the Statement. I am glad that both noble Lords acknowledged that the Statement was the result of the positive leadership role played by the United Kingdom Government on the agenda. I remind the noble Lord, Lord Rodgers, of the scope of the agenda which, I am sure the Government would acknowledge, did not include all of the global picture which he rightly identified as being of relevance to the Union. But, as the title or "theme", if one wants to so describe it, of the particular meeting was employment, economic reform and social cohesion within the Union, perhaps that broader global context, although it would be relevant to discuss it in another forum, was not the main subject of the agenda for today.

The noble Lord, Lord Rodgers, also said that many of the decisions and items for discussion within the context of the Statement and the agenda at Lisbon were not those to be taken necessarily by government but were in a sense more relevant to the private market place. But he is right in saying that the underlying theme of the summit, at least from the UK Government's perspective, was to ensure that the European Union is the best place to do business. That was particularly relevant to the e-commerce agenda and all of those issues that flow from that.

Both noble Lords were somewhat sceptical about the precise points that had been agreed by the summit and any form of action that had been set out on a specific timetable. It is right to say that in the conclusions and in the Statement there is indeed a new emphasis both on deadlines and specific objectives. For example, it has been agreed that a fully integrated and liberalised telecommunications market should take place before 2001. The charter for small firms, which is particularly relevant to the new economy, is to be agreed by June of this year. A financial services action is to be implemented by the year 2005. There is to be procurement on-line by 2003. There is to be a Community-wide patents agreement by 2001 and teachers are to be skilled in the Internet and multi-media resources by 2002. Those are all specific objectives with specific timetables which do not stand up to the criticism that the Statement or the conclusions of the summit were related only to rhetorical ambition rather than a specific programme.

The noble Lord, Lord Strathclyde, asked whether what had been agreed would make any difference to the Government's position on tax in the European Union. I am sure the noble Lord is aware that Her Majesty's Government have long made it clear that we will not sign up to EU tax measures which bring any form of tax regulation under the QMV arrangements

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or any that are harmful to the City. Those positions were protected at Lisbon and the conclusions demonstrate that.

The noble Lord, Lord Strathclyde, mentioned Austria and asked whether what was said was simply symbolic. As the noble Lord will be aware, the UK Government and their European partners have said clearly that the Austrian Government must be judged by their record in government. It is still too soon to draw any conclusions. We shall continue to monitor developments and implement the measures agreed, and see what comes out of that in the long run.

Overall, it is true that the constructive leadership given by both the United Kingdom and Spain--the noble Lord, Lord Strathclyde, rightly drew attention to the role that the Spanish Government had played--and by the Portuguese presidency, together with the very good preparation achieved by a large number of bilateral contacts and statements by various European partners before Lisbon, have produced this very practical outcome. I challenge both Lords that this is a sea change. As a result of Lisbon we have seen not only the specific set of goals and programmes for change that I have listed, but also the important achievement of a different approach to the liberalisation of certain important matters. I have already mentioned the telecommunications and utilities issue. Maintaining common issues of social justice has also been important in the bilateral discussions. Noble Lords will not be surprised to hear me refer to my portfolio as Minister for Women. I am particularly pleased, for example, that the conclusions contain references to an improvement in equality of opportunity and improvements in the numbers of jobs for women within the European Union; they contain also a specific reference to childcare.

4.10 p.m.

Lord Tomlinson: My Lords, I should like to ask my noble friend two questions. First, perhaps I may rebut slightly the scepticism expressed by the noble Lord, Lord Rodgers, in regard to the Select Committee report. My noble friend will be aware that the report was produced only on the basis of the presidency paper, and that subsequent to the presidency paper there were seven further Commission papers, three Council papers and four others which substantially improved input to the European summit and made it more focused and much clearer, especially in regard to macro-economic objectives.

One point that is lacking in both the Statement and in the presidency conclusions is any interface between the decisions at Lisbon and the future enlargement of the European Union. If this Lisbon Statement is to produce real actions--as I believe it should and can--does it not somewhat alter the goal-posts of the acquis communautaire for those countries seeking to join the European Union? Is it not therefore necessary for the Government to address at some future stage, with ministerial colleagues from the rest of the European Union, the question of what support there will be for the applicant countries aspiring to join the European Union, in order that many of the high objectives

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agreed at Lisbon can be partly implemented in those countries so that they are not further behind us when enlargement takes place?

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