Select Committee on European Union Fortieth Report



Letter from Rt Hon Geoff Hoon MP, Minister for Europe, Foreign and Commonwealth Office to the Chairman

  Following my Evidence Session before the Committee on 13 July, I promised to respond in writing on the following questions.


The Conclusions (paragraph 16) note that the Council "took stock of progress in several of the areas discussed at Hampton Court and at the last Spring European Council, aimed at promoting the European way of life in the face of globalisation and demographic trends." How important are the challenges of globalisation and demography to the future prosperity of Europe and what approach is being taken to face up to them? What progress has been made and is Europe's response too sluggish?

  At the Hampton Court summit, EU leaders collectively agreed that globalisation presented Europe with its biggest challenge of the first half of this century. The Hampton Court agenda is a major part of Europe's response to that challenge. There has been, and continues to be, good progress made on the priority areas for action agreed at Hampton Court. On innovation, research and universities, the EU has agreed to establish a European Research Council, an independent body which will be run by scientists, aiming to channel additional funding to the best research teams in Europe. More resources will also be available for R&D; the December EU budget deal committed to increase EU funding for research by around 75% in real terms by 2013. These agreements will be delivered through the EU budget's Framework Programme 7, which we hope to see agreed by January 2007. The Commission have also been tasked to produce further ideas on the proposed "European Institute for Technology".

  On energy, the Spring European Council reaffirmed 2007 as the target date for the liberalisation of EU energy markets. The Commission has identified "serious distortions in the market" and so is carrying out an inquiry into competition within the EU energy sector which will report early in 2007. The Commission are currently preparing an external energy strategy to use the EU's leverage with third countries to enhance energy security of supply; this will be discussed at the Lahti summit on 20 October, where President Putin will join EU Heads. The Commission will publish later this year its detailed analysis and ideas on how best to respond to the demographic challenge.


Paragraph 21 of the Conclusions underlines the importance of the Single Market and the Commission's review thereof "to be followed by concrete proposals for completing the internal market and ensuring its effective functioning". What are the priority areas HMG would wish to see covered as part of the Commission's review of the single market?

  The removal of barriers to trade and competition through the Single Market has had a huge impact in driving prosperity and job creation in the EU: it has boosted EU GDP by €875 billion over 10 years, generating 2.5 million jobs. We agree with the five themes that the Commission has identified as priorities for their review, and the Government set out its initial thinking on the review at the end of June in our response to the Commission consultation (currently being laid before Parliament). We feel that further work to removing remaining barriers should concentrate on energy, financial and other services, domestic rail services, and mobility of labour. We would also like the Commission to consider a number of other areas to improve the effectiveness of the Single Market, in particular:

    —    how implementation and enforcement of the Single Market rules can be improved so that people can exercise their Single market rights effectively;

    —    embedding the better regulation agenda in Single Market proposals;

    —    enhanced dialogue with countries outside the EU on removing trade barriers, with the full involvement of Member States; and

    —    enhancing the conditions for innovation and competition to flourish. Key policy areas that can support innovation are delivering on better regulation, improving access to venture capital and proper protection of intellectual property rights.

  We will be developing our detailed ideas on all of these objectives as the review progresses.


The Council calls for discussions to take forward the Policy Plan on Legal Migration. This proposes giving rights to legal migrants not yet entitled to long-term resident status. How is the Government going to participate in the Policy Plan on Legal Migration, given that it has so far refused to extend the protection of the Long-Term Residents Directive to those who are already entitled to that status?

  We have consistently not opted into legal migration measures such as the Long Term Residents Directive because we wish to retain our frontier controls and maintain domestic control over who is admitted to the UK, as provided for by our protocol on Title IV of the Amsterdam Treaty.

  We will assess any legislative measures on the admission of labour migrants when we see the detail. Key to our position will be that any such measures are flexible enough to take account of our labour market needs and the points-based system we are developing for routes to work, train or study in the UK. Meanwhile, we welcome the recognition that decisions on the number of economic migrants admitted are the responsibility of Member States.

  We are not convinced on the need for a common framework of rights for third country nationals, taking the view that these are matters for Member States. We welcome the emphasis on effective integration on legal migrants. Exchanging information on good practice should be facilitated.

  UK policy is to opt in to Title IV measures where we can, provided they are consistent with our policy of retaining frontier controls. In remaining outside of these Directives it is not the Government's intention that the UK should be seriously out of line with our European partners, and we will continue to monitor the UK's position in relation to that of other Member States.


Paragraph 22 of the Conclusions refers to an Energy policy for Europe and a set of actions. What are the priority areas HMG would wish to see covered as part of the development of energy policy?

  There are three priority areas for action. Firstly, although EU energy structures are increasingly integrated, electricity and gas supplies have not been liberalised. The EU lacks flexibility to move surplus capacity to areas where it is urgently needed. And the EU consumer is paying too much for gas and electricity.

  Secondly, we need a more coherent EU external energy policy. The EU is increasingly dependent on imported energy, especially gas. The UK Government has for some time advocated a co-ordinated policy to assure energy security through diversity of supply. We now seem to be winning that argument, but there is much more to do. We give our full support to the action plan on external energy relations produced last month by the European Commission and High Representative Javier Solana.

  Lastly, we need to ensure that our energy policy is compatible with, and reinforces, our climate change objectives. As our recent Energy Review has made clear, this Government attaches huge importance to tackling climate change nationally and internationally. Energy policy and climate security policy are inextricably linked. The promotion of energy efficiency and the development of renewable energies, to name but two examples, are common to both and are important priorities.


We have recently had some exchanges with your colleague Meg Munn over the Management Board of the European Gender Institute. The Government supported a unanimous vote for a 25-member board, even though the Commission, European Parliament and the Select Committee had argued for a smaller one. We note that the agencies like CEDEFOP have three seats for the Commission, making 78 in all. Now that we have 25 Member States, soon to be 27, is it not time to challenge the convention that every member State has an automatic right to a seat on the board of every EU agency? Does the Government have a policy on this?

  There is no one Member, one seat convention. The Government's policy has been that each case should be decided on its merits. The Government has consistently maintained that the number of seats on the boards of EU agencies and their composition should be decided on a case by case basis.


We note the commitment in the Preliminary Agenda for Finland's Presidency (dated 24 May) to "mainstream, human rights policy, incorporating it into all EU policy areas" and to increase its coherence. Is securing agreement on the Fundamental Rights Agency proposal a priority for the Government? Will the UK be prepared to block the adoption of this proposal if other Member States agree on a Third Pillar remit?

  We welcome the Commission proposal to establish a European Fundamental Rights Agency (FRA). There are, at present, no EU bodies to assist Community institutions on fundamental rights issues. The FRA will fill this gap. In order to add real value, the Agency should be a fact-finding and opinion-giving body, assisting Community Institutions on fundamental rights issues. It should avoid duplicating the work already done by the Council of Europe and other human rights institutions.

  Negotiations on the FRA are still ongoing in Brussels at working group level. The Finnish Presidency hopes to reach agreement on the Agency by October 2006, so that it can start work in January 2007.

  It is unlikely, at this stage, that the question of the UK blocking the adoption of the proposal on account of the Third Pillar remit will arise. A number of Member States share our view that there is no adequate legal base in the current treaties that allows the Council to extend the Agency's remit to Third Pillar matters (police and judicial co-operation). We will continue our efforts to remove the Third Pillar remit from the proposal.


The Conclusions of the European Council (paragraph 21) reaffirm that the European Institute for Technology "will be an important step to fill the existing gap between higher education, research and innovation". How did the European Council come to support the European Institute of Technology in the absence of the specific proposals the Commission is (in the same paragraph) asked to bring forward? And how does this conclusion square with HMGs own stated opposition to the EIT in principle?

  The Government is strongly of the view that there is a need to encourage greater business and industrial investment in research and development and closer collaboration between universities and business in exploiting research and knowledge transfer. The Government has therefore welcomed the Commission's two communications as important contributions to the debate and has noted that a well-designed and well-focused EIT could be a useful tool in meeting the challenges in this area. The Government has not opposed the EIT in principle but has raised questions about the model that the Commission has presented so far. The Government welcomes the fact that the Commission's latest Communication (which was presented to the European Council in June) has rightly acknowledged the complexity of the issues concerned and has recognised that it will need to continue consulting widely with Member States and stakeholders. It reaffirmed that the EIT will be an important step to fill the existing gap between higher education, research and innovation. The Government will continue to work with other Member States with a view to influencing the shape of the Commission's formal proposal which is expected in the autumn. The proposal will be accompanied by a full impact assessment. This will be the first opportunity for a discussion of the concept in a formal Council forum.


Recent press reports have indicated that the Chancellor is raising questions over whether the UK should be required to contribute to the reductions in GNI and VAT resources to the Budget agreed by the December council meeting under the UK Presidency.

    (i)  What is the definitive Government position on whether the UK should be required to help finance these reductions in the contributions granted to other Member States?

    (ii)  Can you give us figures which will enable us to compare the expected contributions from the UK, France and Italy to the EU over the period of the next Financial Perspective?

  (i)  Discussions on the Own Resources Directive are on track. We are looking at the draft text carefully to make sure it property reflects on the December deal. We are confident that an agreement will be reached in good time to come into force in January 2009.

  The December deal specifically states that "The UK abatement shall remain". The only areas where the abatement is "disapplied" is in expenditure on economic development in the new Member States. The UK has always been a strong supporter of enlargement and accepts the additional financial burden that this places on the more wealthy Member States.

  (ii)  UK contributions will be published in the budget in the usual way. The Government does not generally publish forecasts of other Member States' contributions, which are a matter for the Member States in question. But we (and the Commission) expect that, expressed as a proportion of Gross National Income, the total net contributions over the period 2007-13 of the UK, France and Italy will be closely similar. In contrast, on the same basis over the period 1984-2004, the UK has paid on average nearly two and a half times as much as France and three and a half times as much as Italy.

20 July 2006


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