Select Committee on European Union Minutes of Evidence

Examination of Witnesses (Questions 1-19)




  1. Good morning, Minister. Thank you very much indeed for coming and talking to us. We know that you have a very busy schedule. We are particularly grateful to you for responding and we thank you for the written evidence, which was set to a very tight deadline. We have a very short deadline for this quick inquiry that we are doing, but it is a fairly crucial one and we are grateful to the Government for giving us the evidence. We are looking at the social aspects of the Convention on the Future of Europe. It is a short inquiry, designed to contribute to the debate in the Convention on what is a very difficult and controversial area. We are planning also, while we have you here, Minister, to talk about those parts within the Convention related to our other, rather longer inquiry on proposals to establish a European border guard. I wonder if you would like to make an opening statement?

  (Peter Hain) Thank you very much for inviting me. I look forward to the grilling. I circulated to you yesterday two brief statements, one of which was an article in the Financial Times, which I think would obviate the need for an opening statement, except to say this. First of all, my two officials here are John Fletcher from the Foreign and Commonwealth Office, European Union Department, Internal, and Tim Goodship from the Department for Trade and Industry. We are joined-up government here! Our objective in social policy is neither to achieve an American free market model nor an old-fashioned protectionist model; but in a European Union of 25, with some 18 million unemployed and 77 million people of working age who are economically inactive, the objective of full employment and creating more employment opportunities, as well as maintaining high social standards, has to be paramount. So we see social policy in that context.

  2. I wonder if I could start the ball rolling with one or two questions? You say in your response to us that you believe that the existing competences of the Union are adequate. Could I ask you if you believe, specifically in the social policy field, that they are adequate to meet the needs of the Union in the future, looking particularly at the goals set at the Lisbon Council in 2000?

  A. Yes, we do. In fact, the working group on the Convention of which I was a member agreed with that conclusion, that the existing competences are adequate. We have a situation with competences which support national action as a general rule, and then competences which are shared between the Community and Member States. For example, shared competences would be on employment relations law or on discrimination. I think that the alternative, where you just have more and more harmonisation which does not take into account the diversity of different social systems could actually undermine the Lisbon objectives of creating many more jobs and of modernising and reforming the European economy. Social policy has to be pursued with, obviously, a priority of decent social standards otherwise, Europe does not stand for anything—but at the same time with making sure that we get the Lisbon agenda in place to reform the European economy, to create more jobs.

  3. Do you feel that the concept of the European social model is a helpful one? If so, what does it amount to?

  A. There are different academic definitions of it, which I will not trouble you with myself; but I do think that it is helpful. In fact, I supported it within the context of the working group. It derives from the language used by the presidency conclusions of the Barcelona European Council last year, which referred to a European social model. If I could quote from it, it stated that it should be based on, ". . . good economic performance, competitiveness, a high level of social protection and education and social dialogue". I think that we can see in the European social model genuine social values that are distinctively European. So, yes, I do think that it is a helpful model in that context.

Lord King of West Bromwich

  4. May I first of all declare my interest in various things? I am a member of the Sandwell local authority, an alternate member on the Committee of the Regions and vice-president of the Local Government Association. I do not want to get on the wrong side of the standards committee! My question is how much diversity between the Member States' social models can be expected under the new constitution?

  A. I think that this is crucial, because we are talking about very diverse states in the existing 15 members, and even more so with 25 from next year. As the working group agreed, therefore, the shared values and objectives could be achieved using the diverse traditions of the Member States. I think that is the best way to ensure a Europe of social justice, if we all develop adaptable and flexible rules and arrangements. Obviously there is no use—this is an important point—in proposing a European social model with protectionist measures which exclude the unemployed from the labour market, all 18 million of them, not even taking into account the 77 million of working age who are economically inactive, creating a bias in favour of those already in jobs. You could almost say that there has been a dominant tradition in Europe—understandably and, as a former trade union official myself, I fully subscribe to it—of a trade union objective of protecting those within jobs and making sure that they have decent standards—that goes without saying. But when that is at the expense of those who do not have jobs getting into employment through business creation and more flexibility, I think that has been a problem. On the other hand, we do not support the neo-liberal free market model, which is characterised by very poor social standards, by weak communities and by high levels of poverty. It is within that objective that we expect, and will certainly be working flat out to secure, the new Constitution's call for diversity in Member States' social models and systems of industrial relations. For example, co-determination is an essential part of the German business model but not of most other Member States, where voluntary collective agreements or other forms of employee participation are the norm. Then you have a situation where firefighters can strike in Britain but they cannot strike in Germany under the Constitution. This diversity is a strength of Europe and we ought to support it rather than undermine it, but proceed in a way which reflects those diverse traditions.

Lord Dubs

  5. Your statements that you have let us have are very robust in terms of positive policies to create jobs and to have high levels of employment. Do you think that there is agreement across European countries about what is meant by full employment? Related to that, do you see any possible tensions between policies needed to reduce unemployment—high levels of employment in the European Union—and some of the economic policies that might be followed either by Brussels or by individual Member States?

  A. This is a key issue. I remember, in my undergraduate days as an economics student, all sorts of economists differing on what full employment really meant, except that I do not think anybody suggested that it literally means 100 per cent employment, which is a rarely achievable goal. I see our aim as being job opportunities for all and full employment is the best signal of that intention. It also signals that economic policy should aim for full employment alongside our own objectives. With that in mind, therefore, I support full employment being in a Treaty and I think that it is better than a high level of employment, which is currently a Treaty objective. However, it has to do it in a way which I think is behind the second part of your question, which complements our agenda which is for skills and opportunities for people to obtain and progress in employment, and our own record as a Government on that is pretty good.

  6. Is it possible that there could be real tensions between policies needed to increase the number of jobs in the European Union and economic policies which may be followed to achieve other objectives, those economic policies then being in conflict with high levels of employment?

  A. Do you mean by Member States?

  7. Yes. We are not in the euro. If we are in the euro, we talk about the European Central Bank. There are two elements to it. One is pre our joining the euro, and the other, if we join the euro—so both.

  A. Obviously, different Member States—and, I would argue, for most of the previous Government's 18 years—pursued policies not geared to full employment. The issue that then arises is, could this be challenged? Could those Member States' policies be challenged? That, I guess, is behind your question. It is theoretically possible that, say, the European Court of Justice could be evoked to challenge Member States if they are judged to have failed to achieve a Treaty objective such as this one. In practice, however, if you look at what has happened since the Treaties were agreed—they were revised in Maastricht to include the promotion of a high level of employment, which we are currently proposing to replace by full employment (I think that it is Article 2 of the Treaty)—there has been no challenge in this context, even though no doubt somebody could argue that some Member States' policies do go against that objective. As long as full employment remains an overarching objective, I do not think that it would make Member States vulnerable to any action at a European level to change their domestic policies against their wishes.

Baroness Greengross

  8. Minister, can I first declare an interest? I am a vice-chair of the Britain in Europe Campaign.

  A. I am a very strong supporter of Britain in Europe.

  9. I know you are. I want to ask you about the part in the working group's report which looks as if there might be an extension of the rules relating to services of general interest to public services in the social sphere. The Government objects to that, and I would like to know what the Government's reasons are for these objections.

  A. It was actually a source of quite a lot of argument in the working group, with myself and a number of others taking a view which was probably different, I guess—if it had ever been put to the test—to the majority. We obviously attach a lot of importance to high-quality public services, and I would be very happy with a Treaty objective along those lines. We agree that the contribution of those services to the European social model should be recognised. The way the redraft of the rules was suggested, however, would entail a pretty substantial expansion of European Union competence in fields such as social security and education, even though the working group has recommended against significant extension of competence elsewhere in this report. We were therefore concerned about the definition of services of general interest and seeking effectively, almost by the back door, an extension of European competence into areas which we would not want and, at least in principle, the working group did not seek to do it. The redrafted rules could also, for example, give the European Union control over setting public service conditions, which we believe should remain at a national Member State level. The public services are an intimate part of the relationship between national governments and their citizens, and so individual Member States should have the right to define their own services of general economic interest and the way in which they are delivered, rather than a change in the competence. I think that the existing Treaty base for Community action in services of general interest is sufficient; it does not really need amending. "If it ain't broke, don't fix it" is the principle there.

Lord Corbett of Castle Vale

  10. In your written evidence, Minister, you say that what is unhelpfully described as "the open method of co-ordination" is a helpful development. What do you see as the advantages and disadvantages of making specific provision in the Constitution for it?

  A. First of all, yes, I do think that the open method of co-ordination is a very useful development. It was highlighted by the European Council of Lisbon in 2000 and has been progressively introduced in the fields of employment and social affairs. It allows common European Union values and objectives to be achieved through the diverse systems of Member States rather than imposing, through legislation, effectively a Brussels' diktat from the centre, or giving the European Union competences it should not have. I would like to see the Treaty refer to the open method of co-ordination, as long as it gives flexibility for how it is applied. I think that account should be taken in any Treaty reference of the different variations of the open method. As to the specific advantages and disadvantages which you have asked about, the advantages are that it would emphasise the importance of the open method in helping Member States to achieve common objectives through diverse means. It would also improve the transparency of the open method, as the working group reported knowledge as being a deficiency so far. The disadvantage is that there is a risk—an outside risk, we judge—that the Treaty reference could lead to inflexible application of the open method. However, I think it is unlikely because there is a broad consensus in the Convention working group not to specify detailed procedures or areas or areas of application in the Treaty. To summarise, there is almost a reflex action very often at a European level to go for legislation as the best way of achieving an objective. We are saying that, especially in the context of economic and social policy that could and should apply elsewhere, it is better to have a common policy to co-ordinate that policy in an open way and to give it a Treaty base than always to reach for legislation, which then implies a rather rigid straitjacket to the whole thing.

  11. From what you have said, I think that there is no attempt by Member States to try to lay down one single open method of co-ordination. Did you end up saying that you would want this referred to in the Treaty?

  A. Yes.

  12. Laid down as an objective, as it were?

  A. I am very relaxed—I am not opposed to giving the open method a Treaty base, as long as it is done in a way that gives flexibility to its application. That is the important thing, depending on which field it is applied in. I think that paragraph 37 of the Lisbon Council conclusions could provide useful language for a Treaty reference. It recommended specifically, "a fully decentralised approach", which should be applied in line with the principle of subsidiarity to which the Union operates. I think that is the way that we would like to see it proceed. Provided it is on that basis, yes, I think a Treaty base for it would be a good thing.

  13. Against that background, could I ask you how can actions taken under this method be made accountable and subject to scrutiny by national parliaments? Can you also meet the point put to us in a letter from the Local Government International Bureau, saying that it is extremely important that there is consultation during the formulation of the policy—right the way through the process and not just a single part of it?

  A. This is an important point. I do not think the open method is sufficiently transparent at the present time. I would certainly welcome any advice that your Committee had on that and would want to look at it very carefully. We would be happy to explore options for improved scrutiny if there is a general concern, which you may share, that it is not sufficiently accountable. We have become involved in open method processes through the reviews of key EU documents related to employment and social inclusion spheres, such as the explanatory memorandum procedure. That is therefore giving some scrutiny. National action plans produced under the open method are sent to our Parliament, including to the House of Lords. There is also a range of key actors, including the devolved administrations and social partners, involved in the process of drawing up national action plans. I am not sure where local government comes into this, except perhaps through the Committee of the Regions. I proposed a strengthened role for the Committee of the Regions and, elsewhere in the discussions on the Convention, we have also proposed much greater national parliament scrutiny over proposals from the European Commission for new legislation and new policies: specifically to see whether they infringe the principles of subsidiarity and proportionality. This may also stray into that field.


  14. One of the points made by the Local Government International Bureau was that any obstacles to efficient implementation can be identified at an early stage by those responsible at the point of delivery, and that is extremely important. Also, that the authorities should be involved in the evaluation process. It is the formulation, therefore—getting in upstream and then evaluating.

  A. I think that there is a lot of logic to that. The thinking of the old days, where the Commission just initiated a proposal and that was that, has now been superseded, including in the Commission itself, in that it actually makes for much better legislation—if that is what is involved—to have an element of pre-scrutiny and consultation to get it exactly right.

Lord Wright of Richmond

  15. I wonder if I could ask you a supplementary on this? As someone who has come rather new to this concept of OMC, can you explain to me how it differs in essence from the procedure which the European Council has used for years to reach its conclusions?

  A. There is an overlap, but I think that it has established a more formal basis and a recognised alternative to just reaching for legislation. That is what it is about, in a nutshell—providing for concerted co-ordination under the eye of, and driven by, the European Council. So that, for example, in the case of the Lisbon agenda for economic performance, which is crucial to Europe's competitiveness in the future. The Spring Council—and I think that there will be one next week in Brussels—will review the progress of the Lisbon agenda. There is therefore that degree of co-ordination, which is a new thing. In the past, the Council tended to pass the policy or agree a conclusion and there was no proper monitoring, except insofar as the Commission picked it up for implementation.

Lord King of West Bromwich

  16. I understand that the Government is not opposed to some extension of Union competence in the area of public health. Where would you draw the line on that?

  A. I think that there may well be some extension. There may be a case for some extension of Union competence in the field of public health protection—as long as we protect national Member States' responsibility over their own health systems, given the diversity of national circumstances and what I think would be judged to be our own patch, if you like, at Member State level. For example, bioterrorism or communicable disease control—cross-border public health issues—are very clearly in this category. The Convention working group drew similar conclusions. There may also be benefits of rationalising existing Community powers to deliver health objectives more effectively, such as on tobacco control. We do believe, however, that further discussion of specifics is necessary to nail down the detail, before we can decide on an extension of Community competence in the health field and, if so, where to draw the line. These are quite complex and tricky areas. The High Level Process of Reflection on Patient Mobility and Healthcare Development in Europe provides a valuable forum for further discussion of these kinds of complexities. The informal group, as I think you know, is made up of health ministers and representatives of key stakeholders. It therefore offers an opportunity to consider issues of competence and possibilities for co-operation to clarify these issues.

Lord Dubs

  17. You mentioned tobacco control. Is there not a difficulty, in that it is a legitimate public health objective to reduce smoking? We give effect to that in Britain by a number of means, including putting a high level of duty on cigarettes. Most of our European partners do not see it that way. They do not believe a high duty on tobacco, or as high as we impose, is the way to deal with it: hence smuggling or imports of cigarettes on a large scale. Is there not a problem there, unless duties on cigarettes are in line with public health objectives, as we have them here?

  A. I think that you are then getting into harmonisation of tax policy, which is not an area I would invite you to stray into—and certainly would not invite you to invite me to do that!

Chairman: I think that we will take that advice very seriously.

Lord Dubs

  18. I understand the difficulty. On the other hand, our present policies about tobacco are being significantly and seriously undermined by the vast amount of tobacco that is brought in. We lose a lot of money and it undermines our health policy, because we see in the streets of London people illegally selling cigarettes that have been brought in this way. So there is a difficulty there. Maybe they should adopt our policies rather than harmonise.

  A. Maybe they should, but I think that this is not really a public health competence issue; it is an issue for wider European Union policy. I think that could be discussed in the high level process to which I referred, if this is an issue that people are concerned about. There is a logic to your point, but I do not think that it should be dealt with in the context of a Treaty, in a constitutional revision, but through other routes.

Baroness Greengross

  19. This is connected with that last question. What about prevention? Would you think that there is a case for widening this to vaccination and immunisation policies? You could say that it is cross-border.

  A. I would have to think about that and perhaps in your own deliberations you could consider it. Obviously, we want to ensure that standards of vaccination are high and so on, but it is not something, to be frank, to which I have given detailed consideration. If you wanted to explore it and if you wanted me to write to you about it, however, I would be happy to do that.

Chairman: That would be extremely helpful, Minister, if you are able to do that.

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