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Noble Lords: Oh!

On Question, Bill read a second time, and committed to a Grand Committee.

European Union (Accessions) Bill

2.46 pm

The Parliamentary Under-Secretary of State, Foreign and Commonwealth Office (Lord Triesman): My Lords, I beg to move that this Bill be now read a second time.

This momentous Bill is very brief. It will do two things. First, Clause 1 will implement Bulgaria and Romania's accession treaty in United Kingdom law. In other words, it will facilitate their accession to the European Union. Secondly, Clause 2 will allow the Government to set the terms on which Bulgarian and Romanian workers will be granted access to the United Kingdom's labour market for a maximum seven-year transitional period.

I shall begin with Clause 1, and Bulgaria and Romania's accession to the EU. European Union enlargement has become a critical part of the process that has transformed Europe from being the,

described by Winston Churchill to a strong union of nation states, secure in their borders, sharing the same democratic and humane values, and enjoying peace, prosperity and stability. Enlargement has helped democratic governments of developing countries that have been dominated by fascism and communism, thereby enabling millions of people to have a voice in how they are ruled. It has reinforced the rule of law and respect for human rights, and has given us new partners in tackling the challenges of cross-border crime and terrorism.
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Enlargement has also provided new consumers for United Kingdom goods and services, and new markets for our firms. High street names such as Next, Mothercare, Marks & Spencer and Tesco are just examples of the companies now operating through the 10 new member states. Tesco has 33 stores in Slovakia and over 40 in Hungary. Hundreds more British firms are benefiting from the enlarged EU—Vodafone, HSBC, BP, Shell and GlaxoSmithKline, to name just a few. It is therefore not surprising that enlargement has become an issue on which this House has been united, and I am delighted to be able to say that cross-party consensus remains just as strong as was clearly evident in 2003, when there was universal support for the EU accessions Bill for the 10 countries of eastern and central Europe. As the noble Lord, Lord Howell, said on Second Reading on that occasion,

This Bill is intended to do the same for two more eastern European countries that have emerged from similar trials and experiences. Bulgaria and Romania are also vigorous, independent states that have made similarly impressive advances in the space of a few years. Bulgaria's economy has consistently grown at double the EU average during the last five years; unemployment has been halved in that same period. Romania has performed strongly as well; inflation is down from over 100 per cent in the late 1990s to around 8 per cent today. It has also successfully attracted more direct foreign investment than any other state in south-east Europe.

The prospect of EU membership has also spurred both countries to make real progress in political and economic reform. The European Council acknowledged that progress in December 2004 when it formally closed accession negotiations with both countries, agreeing that they should be ready for membership in January 2007. Four months later, in April 2005, the 25 member states of the EU signed a joint accession treaty with both countries which envisages their accession on 1 January 2007. However, unlike in previous accessions, the timing is not guaranteed. Both countries need to continue to make progress in their EU-related reforms. If they do not and either Bulgaria or Romania is deemed to be "manifestly unprepared" for membership, EU member states can decide to delay that country's entry by a year. That new approach is designed to ensure that countries joining the EU sustain their reforms right up to accession and indeed beyond. That is in the EU's interests, and in those of the countries which want to join.

The European Commission is responsible for monitoring both countries' preparations. On 25 October it produced detailed and rigorous reports on their performance against EU commitments. In presenting these reports, Commissioner for Enlargement Olli Rehn said:

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The reports highlight a range of areas in which Bulgaria and Romania need to make urgent progress to be ready for accession in 2007. That includes addressing the problem of corruption which, in both countries, remains a corrosive agent, undermining public and business confidence. Part of the problem lies with their justice systems, which need further reform. Bulgaria must also tackle head-on the problem of organised crime. The daylight assassination of a high-ranking financier in October demonstrated starkly the scale of the challenge in that area.

However, there were also a range of more specific technical concerns. For example, both countries need to do more to bring their agricultural and food safety standards up to those of the EU member states. They need to improve their capacity to absorb EU funding streams, to enhance their protection of intellectual property rights and—particularly in Romania's case—to do more to tackle environmental pollution. In the coming months, the Commission will continue monitoring the progress of both countries, targeting in particular areas of serious concern identified in the reports. It will then produce further reports next April or May.

If the Commission has then judged there to be a serious risk of either or both of Bulgaria and Romania being "manifestly unprepared", as the words were, for membership in January 2007, the European Council can then decide to delay their entry. In addition, the Commission can impose more targeted safeguards and measures to tackle problems in specific areas. Those were considered for previous enlargements but, happily, in the event did not prove necessary.

We are content that the EU has the right mechanisms in place to protect our interests, and remain confident that both countries can be ready to join the EU on schedule in January 2007. Yet they cannot afford to be complacent. They need to take vigorous actions now to address the concerns identified by the Commission. Of course, we will continue to provide bilateral and other assistance targeted in the areas which matter most. We already have three advisers working in Romania on corruption issues, and embassy liaison officers in both countries working with their counterparts on drugs and people trafficking. We are funding various projects in both countries focusing on human rights, judicial training and institutional capacity building.

I am sure that your Lordships will be interested to know exactly how much Bulgarian and Romanian membership will cost, since their accession coincides with the discussions which have taken place over the next financial perspective of the EU, from 2007 to 2013. Those costs have been the matter of recent negotiation. That said, most EU expenditure on Bulgaria and Romania has been previously agreed for 2007–10, assuming that accession takes place in January 2007. Spending will total approximately €15 billion over the three years and will not be altered by our recent proposals for the financial perspective or the agreements made on it. Of that total, roughly €5.5 billion will be devoted to agriculture-related
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spending and approximately €8 billion to structural funds. I stress that those figures are from recent negotiations and had, up until then, been indicative.

Of course there is a significant amount of money in the package, by any standards. But, as your Lordships will be more than aware, most of the accession costs are being borne by the new member states themselves—the objective being, over time, to ensure that net recipients start to contribute to the EU budget. Spain and Ireland are good examples of that and, indeed, Slovenia and Cyprus are performing strongly in that regard among the newcomers.

I turn briefly to Clause 2. Under the terms of the accession treaty, the UK has the ability to decide what level of access it offers Bulgarian and Romanian workers, up to a maximum period of seven years after accession, before Community rules on the free movement of workers come in. Clause 2 gives the Government a wide degree of flexibility in deciding these terms.

With accession still over a year away—and possibly two—it is too early to decide now what the level of access should be, and right to keep our options open. We may want to continue the current work permit scheme. Conversely, we may decide to offer more lightly regulated access along similar lines to that given to the workers of the eight central and eastern European countries who joined in the 2004 enlargement.

As we have seen, that policy has proved a real success. Over 293,000 nationals from the A8 registered with the worker registration scheme between May 2004 and September 2005. Most workers registering are young and have taken on jobs throughout the country. Less than one in five is based in London. They are employed in a broad range of industries from administration to healthcare and farming, industries where there are serious gaps in our own labour market. They are contributing to the UK's economic growth and to our tax revenues without being a burden on the state.

Of course, we must recognise that the situation could change. That is why we intend to take a decision on the level of access we grant to Bulgarian and Romanian workers nearer the time of their accession. In reaching any decision we will want to consider the requirements of the labour market and other member states' decisions. The Home Office, the Cabinet Office, the Department for Work and Pensions and the Office of the Deputy Prime Minister will all be involved in that process and I should stress that any future regulations will be subject to parliamentary approval through the affirmative procedure.

In conclusion, the United Kingdom's strong support for enlargement is well recognised throughout the world, across Europe and not least by Bulgaria and Romania themselves. Many of your Lordships on both sides of this House have played an extremely important part in bringing us to that point. We should be in no doubt that this enlargement is a real success for United Kingdom policy. It is a success both for this Government and for the country as a whole. I am
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certain that all of us here today will want, in the clearest possible terms, to welcome Bulgaria and Romania to the club. I commend this Bill to the House.

Moved, That the Bill be now read a second time.—(Lord Triesman.)

2.59 pm

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