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Lord Roper: My Lords, we on these Benches are broadly in favour of the proposals. However, I should like to reiterate one point that has been raised. In publishing this information, will there be reference to the number of days on which individual peers attended?
Earl Ferrers: My Lords, I wonder whether the Chairman of Committees could deal with one or two points. First, what exactly is the purpose of this? Who is going to make use of the divulged information other than the press who go round ferreting in order perhaps to make trouble? Secondly, will noble Lords at the top of the list as the greatest attenders and drawing the greatest expenses emerge as good people and good followers of the second Chamber in so far as they have attended regularly, or will they go down as baddies who have attended as often as they can in order to collect their expenses?
The Chairman of Committees: If I may, my Lords, I shall answer the last question from the noble Earl, Lord Ferrers, first. We are obliged by the Freedom of Information Act to publish this information whether it be for the benefit of the press or the public. I do not intend, nor is it my role, to comment on the merits or otherwise of the Freedom of Information Act. If the noble Earl does not like the Freedom of Information Act, he should not have allowed it to be passed. As to whether those who attend most days are goodies or baddies, I must leave that to others to judge. It is certainly not a matter for me.
I turn to the more substantial points. The noble Lord, Lord Tordoff—to whom I am grateful, I think, for his work in starting this process—asked how the expenditure of Select Committee and parliamentary delegation travel would be eventually published. That has not yet been decided, but we have quite a long time further to refine the details.
I think that that also answers the noble Lord, Lord Geddes. As the report says,
- "The Committee will report further to the House as appropriate",
- "The Committee will report further to the House as appropriate".
In reply to the noble Lord, Lord Skelmersdale, travel will indeed be itemised separately, as all the headings are going to be. It is suggested that an indication should be given of the location of each Member's main residence. The suggestion was made because those living in the outer Hebrides, for example, might claim 10 times as much in travel expenses as those, for example, living in Surrey. We hope that the press will not leap on that difference and say that it is outrageous, but genuinely understand the reason for some travel expenses being that much more. It will not be compulsory to publish the location of one's main residence, and I appreciate that some noble Lords feel quite strongly about that. The location would, however, be given only by county, or perhaps by region, and certainly not in further detail than that.
The noble Lord, Lord Roper, asked whether the number of days that noble Lords attended would be included in the figures. As those figures are already published, there is absolutely no reason why they should not be included in the table produced.
Lord Geddes: My Lords, the noble Lord quite rightly referred me to the last, short sentence of Paragraph 8. I became confused by the words "as appropriate". It could be interpreted either as "the committee will report if it feels that it is appropriate", or as "the committee will, willy-nilly, report on whatever happens to be appropriate". Perhaps the noble Lord could enlighten us on that.
The Chairman of Committees: My Lords, I think that it is fairly obviously the second one—if there are matters on which it is appropriate to report, they will be reported. The scheme will not come into force for 18 months. We can use that time to refine the details.
Lord Berkeley: My Lords, the Chairman of Committees said that the different categories of expense, including travel, will be itemised. Will that include the means of travel, whether that be air, car, bicycle or bus?
The Chairman of Committees: No, my Lords.
On Question, Motion agreed to.
European Labour Markets
3.30 p.m.
Baroness Harris of Richmond rose to call attention to the flexibility of European labour markets in the light of the report of the European Union Select Committee Working in Europe: Access for all (Session 2001–02, 15th Report, HL 88); and to move for Papers.
The noble Baroness said: My Lords, I commend to the House the report by the Select Committee on the European Union on European labour markets. It is rather unfortunate that it has taken such a long time to bring the debate before your Lordships' House—11 months, to be exact. Nevertheless, it remains an
important and relevant report. It is wide-ranging, and touches on the work of a number of Government departments, principally the Departments for Education and Skills and for Work and Pensions, but also the Departments of Trade and Industry and of Health, the Treasury and the Inland Revenue.I am grateful to Professor Roger Vickerman, our specialist adviser, who drew on his considerable expertise to guide us through the many different aspects of policies that are affected by the desire to increase the flexibility of labour markets. I should also like to thank most sincerely Dr. Richard McLean, our Clerk, who has moved on to other areas of work in the EU committee structure, and Dr. Valsamis Mitsilegas, our legal adviser, who is thankfully still with us. They gave us invaluable assistance.
The wording of today's Motion has deliberately been chosen so as to allow a wide debate that covers the economic impact of flexible labour markets as well as the educational and social issues, on which the report primarily focuses.
As Members will be aware, the Treasury's second test for UK entry to the euro is,
- "whether there is enough flexibility to cope with economic change"—
We were not attempting to mirror this wide test on the flexibility of the economy, or to pre-empt the important work of the Treasury. Rather, our inquiry focused specifically on the flexibility of European labour markets and was based on a Commission communication on New European Labour Markets, Open to All, with Access for All, which was submitted to the Stockholm European Council in March 2001.
The committee concluded that it is important to work towards removing inefficiencies within labour markets, thereby making them more flexible, so that they are able to respond quickly to these changing times, when we have so many changes in technologies and demand.
There are various ways in which labour markets can be flexible, such as being flexible about wages or working patterns. The committee therefore questioned what the best way was of achieving flexibility in labour markets. The inquiry focused in particular on two forms of flexibility: occupational or skill mobility, enabling workers to be flexible about what work they do; and geographical mobility, enabling workers to be flexible about where they work.
On the first of these, the Committee wholly supported the Commission's objective of improving skills and thereby attaining higher occupational mobility. Indeed, the committee called on the Government to come up with additional policies in order to achieve an increase in the skill level of workers. I will return to these shortly.
On geographical mobility, which was the second form of flexibility examined during the inquiry, the committee concluded that,
- "a degree of geographical mobility is desirable for European labour markets to work efficiently and thus for the economy to be prosperous".
The principle that, as a single market, the European Union should comprise an area without internal frontiers, is long-established. One of the Community's key objectives is the abolition of obstacles to freedom of movement for workers and services between member states. Furthermore, free movement within the Union is a right of EU citizens, added by the Maastricht Treaty and reiterated recently in the European Charter of Fundamental Rights. While a number of steps have been taken to secure the free movement of workers, it is clear that barriers inhibiting their mobility still remain. The committee therefore considered that securing the right of freedom of movement through the removal of barriers is essential.
The committee analysed several different barriers to movement that still exist in Europe and made recommendations as to how these might be eliminated, and I shall return to these in a minute. However, the committee received no evidence of the number of people who currently want to move, but are frustrated from doing so. The committee therefore questioned the need for policies whose objective is to increase the aggregate level of geographical mobility in Europe. The aim should be to provide a framework within which those who wish to move can do so easily and not to increase geographical mobility for its own sake.
There is a complete lack of evidence on the factors influencing people not to move. The extent to which geographical mobility is artificially restricted by barriers is not known. It is not clear whether the low levels of mobility observed are an expression of individuals' general reluctance to move or of their inability to do so because of barriers. The committee was extremely concerned that policy is being drafted despite the absence of significant statistical information in this area. We strongly believe that the Commission and member states should invest in research in order to be able to judge effectively to what extent geographical mobility is an important factor in the development of flexible European labour markets.
The Government response frequently acknowledges the limited amount of research on migration patterns within the EU and on the reasons why individuals decide not to move. In a letter to the noble Lord, Lord Brabazon, the then Chairman of the Select Committee, on 16th May 2002, Margaret Hodge said that the Government had noted the committee's concerns in this area and were,
- "considering raising the issue about research with the Commission",
I therefore ask the Minister what representations the Government have made to the Commission on this issue. Are they putting pressure on the Commission to initiate such research? Until we know the reasons why few people move between member states for work, governments cannot sensibly draft policies.
We examined several of the potential barriers to people's geographic mobility. We looked at the economic and administrative barriers, such as the difficulties people face trying to understand different systems of housing, taxation, pensions and social security. It is important to increase understanding of these issues so that people understand their rights. The committee recommends that basic information on such rights should be freely available to all as part of a publicly-provided service, and hopes that the Commission further develops its website in this way.
We found clear evidence that the lack of mutual recognition of qualifications is a barrier to individuals and employers. The committee welcomes the Commission's intention to propose a simplified, more uniform, transparent and flexible regime of recognition for vocational qualifications in the regulated professions. However, as the committee is concerned that the benefits of mobility to the individual should be available to all groups in society, initiatives should be encouraged concerning the mutual recognition of qualifications in non-regulated professional and other vocational skills, in order to ensure the removal of barriers for all. The committee is also in favour of the Commission developing an over-arching transparent framework for the assessment and recognition of non-formal and informal learning. Could the Minister please update us on the work of the European forum on the transparency of vocational qualifications?
The committee agrees with the Commission that a lack of language skills represents a significant barrier for those considering geographical mobility. The UK record here is appalling and shameful. Yet still the Government are not doing enough to rectify the problem of our poor ability to speak foreign languages. The Government's announcement just before Christmas on the teaching of foreign languages in schools is very disappointing. The teaching of the first foreign language to all pupils should start from age eight at the latest. An entitlement to some teaching, perhaps to be administered by someone with no teaching qualification, is not enough. Furthermore, we consider that it should remain a statutory requirement for all pupils to continue studying a foreign language until the age of 16.
I turn now to occupational or skill mobility. The globalisation of markets, industrial change and the unprecedented rate of technological innovation are producing rapid changes in the types of skills that are considered valuable and relevant in the labour markets. As a consequence, an increasing number of people may have to adapt to a change of job or career, involving different skills, during their working life. It is vital that people are equipped with the skills to adapt to these changes.
A workforce that has high levels of skill mobility can adapt to labour market shocks more easily and respond to increasing unemployment in one sector by moving to another. Conversely, a low level of occupational mobility constrains the ability to fill job vacancies. Moreover, the CBI ranked skills among "the most important areas" for creating open, flexible labour markets.
I welcome the establishment of the Learning and Skills Council and the national Skills for Life strategy. These are encouraging developments. However, they are also much needed developments and are still at an early stage. The CBI maintained that, while the Government had improved the situations in schools, they had done little to address the needs of the older workforce. The CBI warned that the size of this problem should not be underestimated. Based on the findings of the working group chaired by the noble Lord, Lord Moser, the CBI said that in the UK 20 per cent of the workforce are functionally innumerate or illiterate. This is an appalling figure and is by far the highest in Europe. We cannot just address the UK's skills problems overnight. They are very difficult issues that will require a lot of time and probably a lot of money. The upskilling of the workforce must be an urgent priority for the UK. In order to increase occupational mobility and fill the identified skill gaps, the teaching of basic skills has to be coupled with the provision of lifelong learning. The committee supports the targeting of lifelong learning and training initiatives at third country nationals, women and older workers.
Yet, as the Government acknowledge in their written response to our report:
- "little progress has been made across the EU to turn lifelong learning into a daily reality for most adults".
I very much look forward to hearing the rest of the debate and I commend the report to your Lordships. My Lords, I beg to move for Papers.
3.45 p.m.
Baroness Gibson of Market Rasen: My Lords, I welcome the debate, which the committee's members have long awaited. I place on record my congratulations and thanks to the chair of the committee, the noble Baroness, Lady Harris of Richmond, for her patient, kind, but firm guidance of what was, on occasions, her wayward group of Peers.
The report concentrates on the major barriers to labour force mobility within the European Union. We started from the agreed premise of the importance of the issue for workers in the UK and the need to equip them with the skills necessary to compete in the European labour market. Whether we like it or not—
and personally I do—we are part of the European Union and therefore we have to consider the position of our workforce within the Union. As has been said and as the TUC pointed out in its evidence to the committee, the right to move and work within the European Union is a fundamental right of EU citizens.We cannot mention today all the findings of the report, so ably highlighted by the noble Baroness, Lady Harris. I want to concentrate on what for me are the key issues. First, I want to consider how to establish skills across various workplaces. The need for increasing numeracy and literacy skills became ever more obvious as we gathered evidence for the report.
Over recent decades the labour market has changed substantially. More women have entered that market, the flexibility of working patterns has increased and information technology has changed working lives beyond all recognition in many areas. Workforces and their skills training have to improve.
We are talking about encouraging employees to gain basic and fundamental skills, but also about employers assisting in the task. That involves all citizens, regardless of age. Consideration must be given to expanding skills training to the newer entrants to the labour market, such as women, and to third country nationals, and to the retention and reskilling where necessary of older workers whose knowledge gained during their working lives is invaluable to a country's wellbeing. Basic skills are vital for increasing choices for workers, but alongside these we have to consider providing and improving academic skills and vocational skills as well as recognising the skills picked up through life which can be such an asset in a workplace.
I am mindful here of the undervaluing of women's skills which have arisen from bringing up and playing a pivotal role in a family. These include the organisational skills developed in ensuring that the family get to the workplace and/or to the school, on time; the financial skills gained by juggling the family budget, which is often still left to the female partner or the single parent; and the skills of dealing with people, gained by stopping siblings arguing and creating harmony in the family. These are all instances of what I am talking about.
Closely associated with these foundation skills is the question of language skills. As we continued our work in the sub-committee, it became ever more evident that language was undoubtedly a barrier to the movement of workers within the European Union. As the TUC said in its evidence, while English is widely taught and spoken as an additional language throughout the world, the language skills of the indigenous British workforce remain poor. This reduces significantly the scope for such workers to seek employment in non-English-speaking countries. I am afraid that in some quarters the myth remains that if we, the English, shout loud enough, we can make ourselves understood. I shall give a little anecdote. Some years ago, I went on a trip to Spain. On the first morning in the hotel, I came across two of our party bellowing at
one of the waitresses, "Where is the local market?". On receiving no response, one turned to the other and said, "Ridiculous. She doesn't appear to understand English.".Matters have improved somewhat, but there is still a large language gap. That became increasingly clear as witnesses gave evidence. The committee feels very strongly that the Government should concentrate urgently on remedying that situation. The fear arose in our discussions, based on elements of the educational Green Paper, that the Government might be travelling in the opposite direction to that we had hoped. I ask the Minister to bring us up to date with the Government's thinking.
We recognise that some employers provide language training, for which they should be praised. Rather than a hit-and-miss approach, however, we feel that it should be part of the scheme for lifelong learning. We also feel very strongly that it should not be up to employees to use their own free time for such learning. Competent basic language skills would also help employers.
The question of mutual recognition of qualifications arose frequently in our deliberations. It was obvious from the evidence we received that the lack of such recognition proves a barrier to both individual workers and employers. The CBI, in its evidence, recognised that the question had been under consideration for a long time without a solution, but it believes, as does the TUC, that it must be overcome if workers are to be able to move within the EU effectively.
The CBI points out that employers remain unfamiliar with foreign qualifications. It would like to see a system that is able to,
- "read across each EU country",
Obviously, as a former trade union official, the question of workers' rights was high in my mind during our considerations. As has been pointed out, they differ from country to country. If there is to be true mobility and access to employment, far more consideration of that problem is needed. The TUC pointed out in its evidence the difficulties that workers face in understanding employment contracts when moving to another country and finding on arrival that the terms and conditions are not what they expected. The workers involved frequently lack both the knowledge and language skills to enforce their basic rights.
Workers' rights cover many areas, such as pensions, health service provision and better information on taxation. Especially needed are full details of taxation liability. The subject exercises the minds of both sides of industry. The CBI confirmed,
- "that the current social security and pensions regulations also proved to be a burden for firms, especially smaller firms".
Various proposals were made during the taking of evidence as to how some solutions could be reached. I ask the Minister what the Government's reaction would be to a social security card system. It might simplify procedures without changing existing rights and obligations.
My final subject is the obvious difficulty we face in gathering our evidence on mobility of the workforce, which is vitally important to us. That difficulty is a lack—I would go so far as to say a drastic lack—of information available, as highlighted by the noble Baroness, Lady Harris, who outlined proposals on the matter. The sub-committee became increasingly concerned about lack of information. I await with interest the Minister's response to those proposals. We believe that they could help to encourage more mobility and therefore flexibility for both EU employers and employees.
There is much more in the report than the issues I have raised. It deals with housing, children's education and providing assistance to the partners of those planning to move so that they can find employment too. However, the issues to which I have drawn attention—skills and qualifications, the mutual recognition of those skills, the importance of language and its teaching, the co-ordination of workers' rights, and the increase of information about mobility—are linked. I look forward to my noble friend's response.
3.55 p.m.
Lord Brittan of Spennithorne: My Lords, I welcome the debate, because of the importance of the subject and the excellence of the work done by the noble Baroness, Lady Harris, and her committee. I have an extra reason for welcoming the opportunity to participate in this debate, which is that, when I was the Member of Parliament for Richmond, she was a distinguished constituent of mine.
The report points out the low levels of mobility in the European Union, and also that there is no evidence as to the extent to which that is caused by barriers to mobility as opposed to other factors. None the less, it is clearly desirable that whatever barriers there are should be removed. Therefore, I very much welcome what is said in the report about mutual recognition of qualifications, the lack of language skills, the importance of improving people's knowledge of their rights and, with regard to occupational mobility, what is said about lifelong learning.
Perhaps the most important statement in the report is about putting geographical mobility of labour into its proper context. Paragraph 26 states:
- "When looking at ways to improve the efficiency of labour markets, it is widely recognised that geographical mobility should not be considered in isolation. The Commission's Communication points out that occupational (or skill) mobility should be considered as equally important . . . The CBI went further and in a report identified six forms of flexibility, of which geographical mobility was one. The others were: flexibility in working patterns [hours flexibility]; wage flexibility [pay]; skills flexibility; numerical flexibility [such as limited by employment protection legislation]; functional flexibility or internal flexibility [how much people are moving within jobs or within the organisation]".
- "They found that 'the overall level of flexibility' of labour markets, rather than any single dimension, was important".
In paragraph 186, the committee said:
- "The Committee appreciates that it is important to work towards removing inefficiencies within labour markets, so that they are able to respond quickly to changes in demand. Yet increasing geographical mobility is only one means of improving the flexibility of labour markets, and improving flexibility by other means . . . can reduce the need for geographical mobility".
One can say that there have been three phases in the results of the introduction of the euro. The first phase was the preparation for the introduction, with the need for those who wished to participate in the euro to conform to the Maastricht criteria, which were essentially criteria about introducing sound finance where it had not previously existed. That meant changing countries such as Portugal, Spain, Italy and Greece from having high inflation and high budget deficits into following sound financial policies. That was a remarkable and beneficial transformation over a wide part of the European Union.
The second phase in the introduction of the euro occurred when the euro was actually introduced; I refer not simply to the movement to notes and coins but to the period before then, when the euro was introduced as a virtual currency. We then saw corporate restructuring because, as a result of the removal of the exchange rate risk, we saw a great bout of mergers and acquisitions in the European Union and the massive explosion of the corporate bond market—the growth of corporate bonds across the EU. There was also reorganisation within companies of distribution arrangements because it was no longer necessary to have distribution arrangements in penny packets because of the risk of exchange rate changes. All of that is beneficial, although the full benefit takes a long time to come forward, as we found in relation to the changes in the early 1980s in this country.
The third phase in terms of the results and consequences of the introduction of the euro is only just starting. It involves economic restructuring and in particular moves towards labour market flexibility, which is the subject of this debate. The relationship between the introduction of the euro and the gradual start of much-needed economic restructuring, including labour market flexibility involves the introduction of the euro and removes and prevents the possibility of soft—
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