Examination of Witnesses (Questions 119
- 139)
TUESDAY 8 MAY 2007
RT HON
GEOFFREY HOON,
MR ANTHONY
SMITH AND
MS SHAN
MORGAN
Q119 Chairman:
Thank you very much indeed, Minister, for being with us this afternoon,
we very much appreciate this. Before we go straight to questions,
I would like to welcome also Anthony Smith and Shan Morgan, who
I hope, Minister, will feel free to intervene at any point where
you would like them to do so.
Mr Hoon: All the time as far as I am concerned.
Q120 Chairman:
Fine; we will let you go and have a cup of tea while we ask them!
Mr Hoon: I am sure they would do a lot better
anyway!
Q121 Chairman:
Before we go straight to questions, let me just say that we have
launched this inquiry into the Annual Policy Strategy for 2008
because it complements the work we do and which we have done for
two or three years now on looking at the Annual Legislative and
Work Programme, and we thought it would be important to look at
the APS as well. We have already had a number of witness sessions.
We have seen a couple of our MEPs, Timothy Kirkhope and Gary Titley.
In Brussels last week we had a very useful discussion with Margot
Wallström and also with Klaus Welle, and this has given us
some good ideas about the usefulness of the APS, how it is constructed
and formulated. We found, surprisingly, that there were rather
different opinions as to its utility and it is interesting to
us that there seems to be a lack of a clear idea of what the real
objective of the Annual Policy Strategy is; some people were saying
that it was a useful qualitative health check on what the Commission
was thinking, others were saying that this was a forerunner, though
not a very detailed forerunner, of what was going to be included
in the Annual Legislative and Work Programme, but it was a little
bit fuzzy as to what the purpose of it all was. If we could begin
by asking you, Minister, what you feel the utility of the Annual
Policy Strategy is and does it really give you, the Government,
clear and coherent directions as to what the Commission is thinking
for 2008?
Mr Hoon: We welcomed the idea. I suspect the
Member States some years ago probably encouraged the Commission
to produce such a document. It is shorter than the draft legislative
programme, it should be something that is susceptible of being
discussed around the European Union, it is clearly—and I
do not say this unkindly—aspirational. If I make an abstract
constitutional comparison, it is more of a manifesto than a Queen's
Speech and to that extent there may be an element of it that we
are not 100 per cent sure will actually ever be delivered, but
it is a good snapshot of where the European Commission are in
terms of what they would like to say. As I say, I do not say aspirational
in a critical sense, but there are ambitions set out here for
the European Union in a relatively short document that we would
say is useful, not least because I suspect it was the Member States
originally who encouraged the European Commission to produce such
a document.
Q122 Chairman:
It emerged from the debate in the European Parliament that the
socialist Group was somewhat surprised by the omission of anything
dealing with social policy in the Annual Policy Strategy. What
are your views on that.
Mr Hoon: I suppose I have to declare an interest
as a former member of the Socialist Group in the European Parliament.
The problem with a social policy element or social protocol is
that it really does depend on what it consists of, and I do not
think the European Parliament Socialist Group has gone very far
in indicating what they in addition would like to see. I have
had fairly regular debates with former colleagues in the European
Parliament about this issue and my view very strongly is that
the best form of social policy for most people in the European
Union is called a job. The fact that we have full employment in
the United Kingdom in contrast to a number of other Member States
means that the social rights of citizens in the UK are rather
better protected than they would have been had they been unemployed.
That really is our priority, not only for the UK economy but for
the European economy, which is why we believe that the Commission
programme, which is much closer to a UK Government than ever before,
is in the right direction because it emphasises the importance
of maintaining the competitiveness of the European economy whilst
at the same time delivering fairness and social justice. We are
not saying the two things are mutually exclusive, we are simply
saying that it is our priority for both the UK and for the European
Union that they should remain competitive and should have the
opportunity of securing the maximum employment opportunities for
its citizens possible and that we should not take decisions that
are in any way damaging to that competitiveness.
Q123 Chairman:
There are a number of voices in the European Parliament and one
thinks particularly of ALDE, the Liberal Group, who were deploring
the fact that precious little if anything—I believe a couple
of lines—was devoted to the future of Europe. Our own view
has been that the timing was wrong, there would not have been
much point in saying much about the future of Europe until we
get past the June summit and maybe even past the Portuguese Presidency
and the IGC during that period. Would you confirm that you think
it was the right way to go not to address this issue in the APS?
Mr Hoon: It would look slightly odd for one
institution, particularly the European Commission, to be setting
out a particular solution to a problem that 27 countries will
have to grapple with. It would not be a surprise to say that there
is no agreement as yet amongst the 27 countries as to the right
way forward. It may be that the result of the French presidential
election clarifies one aspect of the multi-dimensional jigsaw
puzzle that we have to try and put together in June, but even
then it is not entirely clear that necessarily the successful
candidate's views that he has set out will find favour in 26 other
countries. It was perfectly sensible, indeed it would have looked
rather strange for the European Commission to articulate a way
forward. To say that there should be a way forward is fine, we
all have that ambition, but going any further than that would
have led them into difficulty.
Chairman: Lord Tomlinson was with us
in Brussels for the meetings there and would like to ask a question.
Lord Tomlinson.
Q124 Lord Tomlinson:
My Lord Chairman, I would just like to ask the Minister what he
thinks of the Commission's priorities for 2008 as set out in this
document, bearing in mind the fact that for the majority of the
priorities that they stipulate, if you look at the table on page
23 of the document there are no increased resources allocated
to that. How do these priorities compare with those of the Government,
because when I look at this table here: "competitiveness
for growth and employment"—no increase in the allocation
of resources; "cohesion for growth and employment"—no
increase in the allocation of resources. Do you find it an interesting
document that specifies priorities but does not attach cash to
them?
Mr Hoon: Having debated with Lord Tomlinson
questions about the budget in the past I know how strongly he
feels about these issues, but there is an agreement to a budget
review. We are very keen that the European Union should look at
its budgeted priorities and clearly the Commission has a task
of fitting its policy ambitions within the envelope of the budget
that will be available to it. There is every opportunity in the
course of the various negotiations that will take place for a
reordering, for example, of the budgetary priorities for the European
Union as a whole, something that I have heard Lord Tomlinson set
out at great length on many occasions, so I suspect we would not
necessarily disagree in terms of that reordering. In terms of
the actual policies contained here, a fair reading would say what
I said earlier, that the European Commission's plans and policies
are probably more consistent with those of the United Kingdom
Government than at any time in history and a reading of this document
certainly rightly echoes the Lisbon agenda, which we strongly
supported, it echoes what we set out at Hampton Court and it contains
an emphasis in a number of places on energy security, tackling
climate change, on questions of immigration and security against
crime and terrorism that are exactly the priorities of the Government
here in the United Kingdom. To that extent we are very pleased
with the way they have set it out and we are pleased with our
ambitions.
Q125 Lord Tomlinson:
Would it be helpful then in a strategy document if the Commission
might come up with a few ideas that they thought were less important
for the future so that you could have some common view on where
you might get a bit of extra resource for those issues where you
are agreed there is a high priority?
Mr Hoon: I am tempted to bite back with a question
because Lord Tomlinson has a much longer political career than
I have; I cannot recall a politician ever saying that something
was of a lesser priority, although there is an interesting phrase
towards the end of section 1, "Human resources", which
I still do not understand, which talks about "identifying
negative priorities". Perhaps that is what the Noble Lord
is referring to, but it is important and inevitable in the kind
of political world in which the Commission operates that they
need to set out a range of ambitions, aspirations—as I said
at the outset. The issue then—and it is a very important
issue, particularly for the budget review—is whether we
have a match between our policy aspirations and our budgetary
ability, which I took to be the purpose of the question. Actually,
I doubt whether there is much space between Lord Tomlinson and
the Government on this because we want to carry on the process
that has been underway for a number of years of ensuring that
the resources that are available to the European Union and how
they are spent matches the political priorities set out in this
document and set out by the British Government. That is a process;
it is wrong to suggest that there has not been a great deal of
change in the way that the budget is spent, because there has,
it simply has not gone as far as we think it should.
Chairman: That was a point very strongly
made by Klaus Welle and Margot Wallström and others when
we met them in Brussels, that these two aspects need to be married
together. Lord Blackwell.
Q126 Lord Blackwell:
I wanted to follow up and press Minister Hoon a bit, if I could,
on this question of whether there are some things in this programme
that the UK Government would rather were not there, in particular
I guess the things which strike me coming out of this are the
social reality stock-check. There are a whole list of things under
the heading of "Social solidarity"—a European
globalisation adjustment fund to fund workers made unemployed,
clarifying the application of Community law to social services,
EU-wide quality criteria for social services, initiatives to modernise
European labour law regarding flexicurity, initiatives aimed at
the reconciliation of family and professional life. Does the Government
believe these are things the European Union ought to have in its
strategy?
Mr Hoon: Yes, and if I can amplify the point
I made a moment ago in relation to a budget to Lord Tomlinson,
it seems to me that if there is anything at all missing here—and
it is a very comprehensive statement on a series of ambitions—it
is how you do it. It is not just a question of resources, it is
also a question of the political will to see through some of these
programmes. If I had any criticism at all of the Lisbon agenda
it is that it is an agenda and we have to maintain the political
pressure on delivery. If I were being critical—which I am
not but if I were—I would be concerned that both the Lisbon
agenda and Hampton Court were relatively easy to agree politically
in terms of the ambitions that the European Union has, but rather
like any delivery it takes years if not decades to see them in
action. I want to be more confident that there is the political
will in all Member States to see these laudable programmes delivered
on the ground in reality and in practice. Going back to Lord Tomlinson's
point, that means making sure that there are sufficient and adequate
resources to do so.
Q127 Lord Marlesford:
I would like, if I may, just to continue with Lord Tomlinson's
point because here is a document which is meant to present how
the EU is moving. You talked, Minister, about reordering budgetary
priorities, and this is meant to be a strategy; it shows a totally
static strategy. Even allowing for the fact that the table which
Lord Tomlinson referred to at page 23 is in very broad terms,
it has very broad headings, there seems to be absolutely no shift
in the resources between the heads and therefore nothing really
to indicate that anything is changing. The implication I would
draw, and you will tell me I am wrong, I hope, is that the on-going
programmes are almost impossible to shift and all they are doing
at the European level, as so often governments do at a national
level, is to trade off the new against the new rather than the
new against the old.
Mr Hoon: I am not going to repeat all the points
I made about the budget. There is an opportunity, and a significant
one, as part of the budget review to look at priorities in terms
of spending; it is a continuing process that has been under way
for very many years, so I do need to repeat that. Where I disagree
is that this is a good snapshot today, if I can take your words,
of how the EU is moving, because actually 10 years ago when this
process began I doubt that this document would have anything like
this in terms of the political priorities for the European Union,
so the emphasis on tackling climate change, on immigration flows,
on dealing with energy security, on security against crime and
terrorism is very much the agenda agreed at Lisbon and continued
at Hampton Court, it is very much the agenda that this Government
wants to see the European Union have, but it is an agenda and
I accept, being critical, that we have got to find ways of doing
everything, not only in terms of budgetary priorities but equally
the political will that is necessary to ensure that those policies
have some impact across the Union. That will take time but we
have to persuade other countries to invest the same degree of
effort that we are prepared to make, for example, on the Lisbon
agenda. I do not think we actually disagree, but I do not think
we are talking about the same thing. If I come back and give you
evidence about the budgetary review, which no doubt is a possibility
at some stage in the future, then we can have a clearer and perhaps
tougher discussion about resources. This document is not strictly
about resourcing.
Chairman: Thank you very much. If there
are no supplementary questions on that one then maybe we could
move on to just one or two specific proposals in the Policy Strategy.
I would like to ask Lady Thomas to ask a question about the European
Institute of Technology.
Q128 Baroness Thomas of Walliswood:
Firstly you will know that we have published an on-going report
on that and we were very concerned about the Institute and the
way it was apparently being set up in general. I do not think
we have had much information as to any changes which may have
been made in the proposal, although there may have been such changes.
My understanding is that it may go up for agreement at the June
25 meeting, but I do not know whether that is the confirmation
either. Whatever the current situation is, would you agree that
it is rather curious to plan for the financial implementation
of a project which has not even be approved?
Mr Hoon: I did say at the outset that this document
was aspirational and the European Commission are very ambitious
about the European Institute of Technology, it is something in
which the European Commission collectively have invested a great
deal of time and effort. You are right that the Member States
have yet to actually agree a specific proposal but it is fair
to say that there are continuing discussions about what the EIT
might look like.
Q129 Baroness Thomas of Walliswood:
That was clear but there was a slight possibility of scaling it
down a tiny bit, but the way that the funding was going to be
arrived at seemed to consist of taking little bits of odd budgetary
leftovers from various other budgetary heads and then enabling
the EIT to bid for contracts against other people from the social
fund and other similar kinds of funds, which did not seem a very
satisfactory way of setting up a new organisation. The best that
could happen is that if it did get lots of good contracts it would
simply be taking money away from other people who might have been
bidding for very similar sorts of contracts.
Mr Hoon: It does rather depend on what emerges.
We have had a very clear view that the EIT should link together
existing universities, existing research facilities, using the
benefits of modern technology to integrate a great deal of the
work that is done across the European Union. We would have no
difficulty with an outcome that was along those lines, but you
are right that there have been some discussions about the budget
and we have been pretty firm about the budget. Ministers at the
informal Competitiveness Council on 26 April said to the Commission
that they should submit a convincing and concrete funding proposal.
Q130 Baroness Thomas of Walliswood:
That would be an improvement.
Mr Hoon: That is a fairly succinct statement
of our position.
Q131 Lord Roper:
I wonder whether you would like to comment on your assessment
of the external relations proposals under Europe as a world partner
and in particular how far these can really be put forward by the
Commission given that a coherence in this field obviously depends
upon a good deal of interaction between the Commission and the
Council.
Mr Hoon: It depends on whether the Noble Lord
wants the long answer or the short answer. The short answer is
that we are essentially very comfortable with the various proposals;
the problem with the long answer is that I would have to go through
each of them in turn. It is a fair summary of where the EU is
at the present time in terms of the coherence and effectiveness
of these external policies and we do not have any specific disagreements,
but there is a great deal in it and it demonstrates actually the
success of our external policies and the coherence of the approach
that EU Member States have been able to develop in quite a range
of areas.
Q132 Lord Roper:
As far as Council and Commission relations are concerned, how
far is this document something on which you feel in agreement
with the high representative?
Mr Hoon: I do not know whether it has been specifically
agreed with Javier. Given the institutional tensions that exist
between the high representative and at least one member of the
Commission from time to time I had probably better not comment
on that. Do you want to say anything, Anthony?
Mr Smith: If Javier Solana was drawing up his
list it would probably look slightly different to this but a lot
of the things that are on the top of his mind are included in
here including something related to the Balkans and the Middle
East Peace Process, but not everything that he is doing. They
have tried to pick out things which are both a very high priority
like enlargement, the WTO negotiations, relations with key international
partners like Russia, the US and others and issues on which the
Commission played at least the leading role and sometimes has
a crucial lead in carrying out negotiations.
Mr Hoon: Iran is not in that list, for example,
which I am sure would be in Javier's list.
Q133 Chairman:
The Policy Strategy tells us that the European Neighbourhood Policy
will build on the annual evaluation of progress due at the end
of 2007; the impression we have had is that the European Neighbourhood
Policy has not had very much of an impact so far although today
I am very happy to read that there is going to be a much bigger
effort to increase co-operation in the Black Sea region which
is welcome news.
Mr Hoon: If I could give the Committee a practical
example of where it could have an impact, I was in the Ukraine
recently—actually there has been an outbreak of agreement
in the Ukraine in the last 24 hours but prior to that the only
thing upon which the president and the prime minister agreed was
that they had an ambition to join the European Union, and what
they were working towards, in discussion with the Commission,
was a neighbourhood programme that was not necessarily solely
concerned with leading towards the European Union but which, if
completed, could get them quite a long way down the track. I thought
that was quite a good way of looking at the neighbourhood policy;
not something that solely and automatically leads to membership
but something which, if the right reforms are made, could lead
in that direction and indeed would complete a great deal of the
work that any aspiring member state would have to complete in
order to enter into effective negotiations. The neighbourhood
policy is therefore quite important.
The Committee suspended from 16.50 pm to
16.58 pm for a division in the House
Chairman: Minister, we have got you for
another 16 minutes and, as they are saying in France at the moment
with the election of President Sarkozy, fasten your seatbelts,
here comes a question from Lady Symons.
Q134 Baroness Symons of Vernham Dean:
My Lord Chairman, thank you very much. Minister, the document
talks about working to ensure the successful completion and implementation
of the Doha development round, something, I suppose, much to be
desired by us all, but it couples with it proposals for the new
generation of free trade agreements with important emerging economies.
I seem to remember in the old days Pascal Lamy said, when he was
trade commissioner, that it was impossible to pursue both, that
by pursuing bilateral agreements it indicated a lack of confidence
in the Doha development round. Obviously, minds have changed a
bit over that but can you offer any explanation as to why, is
it just catch-up with the Americans who are pursuing these bilateral
agreements and does it not leave the poorer economies of Africa
struggling when concentrating on agreements with important emerging
economies, rather than those that are the ones that really need
help and on whom the Doha development round was concentrated?
Mr Hoon: I am sure they are not inconsistent
and my impression is that they are almost certainly talking about
different things. The purpose of Doha is clearly to build trade
questions into development issues, recognising that probably the
most important aspect for a developing country in order to sustain
its growth and prosperity is having access to the European market
and indeed to other markets. What we are trying to do in relation
to bilateral agreements with countries like India, Korea and so
on is to reflect the detailed trade arrangements with countries
that these days could hardly be described as developing countries,
so we are talking about two different things and therefore you
are probably right that there should be a parallel process. One
of the things that we have been looking at is to ensure that those
parallel processes are consistent one with another, and to that
extent I agree with you that it is important that there should
be that degree of consistency. Shan, do you want to add anything?
Ms Morgan: You have covered everything, Minister,
but simply to say that the approach is rather pragmatic to make
sure that we are moving forward and not being left behind by agreements
being made between other third countries.
Q135 Baroness Symons of Vernham Dean:
Have we got the resources to do both in Europe?
Mr Hoon: Yes. Essentially, the key to Doha as
far as the EU is concerned is the extent to which the agricultural
sector is opened up to trade, and that is part of a multilateral
negotiation—I will not go into the detail now and I should
not need to. Equally, I think that the bilateral agreements recognise
that countries like India are a completely different place now,
they are advancing, industrialised economies where trade questions
of a bilateral kind are increasingly important, so I just do not
see the two things as being either inconsistent or, frankly, arguably
about the same thing.
Chairman: Minister, the energy section
is one of the cross-cutting priorities in the APS. Lord Freeman,
you have a question on that.
Q136 Lord Freeman:
I anticipate, Mr Hoon, that Sub-Committee B will begin work on
an inquiry into the single market review which the Commission
has promised to look at the better workings of the internal market.
Could you comment on the priority and indeed support that HMG
will give to an integrated network for the distribution of gas
and electricity, and in the other half of your breath answering
the question could you just comment on what other areas in terms
of the single market review HMG would see a priority for—presumably
not consolidation of corporation tax which is alluded to, but
there are other suggestions made on page 7 of the Commission's
document which might commend themselves, particularly to small
and medium-sized enterprises.
Mr Hoon: The UK has rightly become the champion
of the single market in a number of different fields and we want
to see that completed. Financial services is an obvious area,
energy is another area. The Treasury has made some calculations
about the benefits to consumers of lower prices that will follow
from a genuine open and consistent market across all 27 Member
States. It has a further implication which perhaps is politically
more difficult, which is of course that different Member States
secure their energy from different places and one of the concerns
that the UK has had for some time is our potential dependence
on, if I can put it politely, troubled parts of the world; therefore,
we have sought to diversify our sources of energy in a way that
has not always been the case in other Member States. Therefore,
a coherent view of the energy market would allow for a degree
of solidarity, I suppose is the word, between different countries
in facing those who might be tempted to use energy as a political
lever in other kinds of discussions and negotiations. That is
not unknown in the recent past and I suspect it will be an increasing
feature of politics for the European Union in the future. In a
sense creating a single market both is a benefit to consumers
and is consistent with what we have done elsewhere, but I also
see it as having a strategic implication for the European Union
in allowing all 27 Member States to stand together as consumers
rather than be picked off one by one by countries who might be
tempted to use that leverage that large resources and reserves
of gas and oil might allow for them. I do not think the proposal
is quite designed yet to harmonise corporation tax, but because
we would be concerned that it might lead in that direction we
are resisting the idea of establishing a common tax base for corporation
tax. In fact, one does logically lead to the other and it would
be quite hard if there was a consistent test for the corporation
tax base to resist the idea that there should be a common corporation
tax.
Q137 Lord Freeman:
That is perhaps a negative that I cannot find in the explanatory
memorandum, not perhaps that that is the right place. Are there
any other suggestions by HMG for areas that the Commission should
look at in improving the single market?
Mr Hoon: I suspect that the problem is that
broadly speaking most of those areas have probably been previously
agreed. The issue now is the delivery and implementation; there
are a number of areas in financial services, for example, where
the market is not as open and as transparent as it should be.
Q138 Baroness Cohen of Pimlico:
The Commission is proposing to carry out a strategic review of
the EMU at the end of its first 10 years. My sub-committee, Sub-Committee
A, perhaps recklessly, is in the process of conducting a similar
review this year. When I say a similar review, it is hardly going
to end up advising people how to improve the Euro; the subject
matter that we are fundamentally considering is what are the things
that have been undoubtedly achieved—the answer roughly being
the sorts of things currency units do achieve—and where
are the strains showing. It is a different review. Will the Government
be involved in any way in the Commission's review?
Mr Hoon: I asked that question in preparing
myself for this Committee meeting and Shan has gone and found
the answer, so she can give it to you.
Ms Morgan: Our understanding is that the Commission
has decided to produce the 10 year review in 2008, that it is
not expected to ask for the views of any Member States in carrying
out that review, but that we will of course have the opportunity
to comment in the usual way through discussions at the ECOFIN
Council.
Chairman: Does that answer your question,
Lady Cohen?
Baroness Cohen of Pimlico: Yes.
Q139 Lord Roper:
Will that take part in the full ECOFIN Council rather than the
ECOFIN Council at the level of members of the EMU?
Ms Morgan: That is our understanding.
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