Examination of Witness (Questions 1-19)
Mr Jim Murphy MP
10 JUNE 2008
Q1 Chairman: Thank you very much, Minister,
for being with us. We have just had an interesting hour with the
Ambassador on the French Presidency priorities, so we are all
fired up and ready to go now on the Annual Policy Strategy, moving
forward from the second half of 2008 to what is going to happen
in 2009. Do you want to make an opening statement?
Mr Murphy: I am happy to go straight into the questions.
Q2 Chairman: Maybe you would like
to start by telling us what real value the Government puts on
the APS? I thought that the Explanatory Memorandum was interesting
but it said very little in terms of opinions and assessments of
the value of it. It was a very good recital of what is in it,
but at the end it was fairly brief on what you felt was the real
value of it and what individual aspects of it appealed to the
Government. Could you talk a little bit about what good you see
in this exercise?
Mr Murphy: Of course; I will happily do so.
What is important is to get a sense of really what purpose the
document serves. As your Lordships will be aware, it is not a
statement of legislative intent: it is a statement of intention.
In that sense we consider it to be useful but it is useful in
the context that it is a relatively internal document which gives
us a decent degree of guidance and a degree of predictability
about the energy that is going to be invested over the subsequent
twelve months, so on that basis it is an important predictor of
what is to follow, but that is all it is. It is not prescriptive:
it probably is not as detailed as others would wish; but it certainly
is more detailed than the multi annual strategic work plan, it
is a bit more granular than that. On that basis it is important
and useful but I do not think we should overstate its significance,
because in and of itself it does not create a single legislative
vehicle.
Q3 Chairman: There are seven priority
actions mentioned by the Commission, so you are right in saying
that this is not a legislative programme but a statement of intentions,
which are fairly well defined. I am just probing a little bit
to know what you see as the really high priorities from the Government's
point of view, amongst those identified by the Commission as their
priorities.
Mr Murphy: On the seven, climate change, not
least for the geopolitical reasons and the impending argument
about a global climate change, which is that if Europe either
reneges on its commitment on renewables and other aspects of the
climate change package or gives the impression of being luke warm
I think it will send a signal to other groups of nations across
the planet and would have a negative impact on other world capitals,
not least in Brazil, Russia, Washington and elsewhere. There is
a double pressure point to climate change, I think. Firstly, there
is the pressure point about trying to get a global success at
Kyoto but, secondly, and the French Ambassador may have spoken
about this as the important one the French would like to see during
their Presidency on climate change, the fact that after the French
the Czechs will have the opportunity to assume the Presidency,
and please, I know the Czech government would not take this as
an implicit criticism so your Lordships should not take it as
such either, but the jury is still out in Prague as to the need
for a concerted effort on climate change, so if I were to say
what the time pressure priority is it is important we make progress
on climate change for one internal Europe reason and one much
wider reason. Other than that, without going into detail, better
regulation, and, thirdly, it is a watching brief on justice and
home affairs. Now, I am not saying the others are not important,
but if your Lordships ask me for some sort of hierarchy that would
be my response this afternoon.
Q4 Baroness Cohen of Pimlico: My
question is not on climate change but on the general question
of tying the APS to budgets, because my sub-committee which looks
at budgets rather yearns to see some of the APS' proposals costed
or some kind of indication as to where the money will be coming
from to render any of these policies possible in any way at all,
or within any known timescale. Do you have any comments on the
Commission's general framework for human and financial resources?
There are very few. The Government's EM said that financial implications
are not applicable to the APS. Well, shouldn't they be? Would
we not be better off with a costed APS? How do you see it fitting
into the system?
Mr Murphy: It is essential that there is, first,
increasing attention paid to costings, of course. I am not certain
the APS is the right vehicle to do that but it is essential the
European Commission properly identifies a monetarised value of
its proposals. This is absolutely essential. There is an improvement
in the discipline of that but we are not where we should be. I
am far from convinced that the APS is a way of doing that on the
basis that the APS does not in itself contain the specific proposals,
so I am not sure a monetarised assessment of the potential cost
of general intention is the right way to go. The best way to capture
that is when it gets to the status of specific legislative proposals
and a monetarised value of a specific proposal, so in general,
of course, you are right, there needs to be progress along the
lines you have suggested, but I do not believe the APS is the
most cost effective way of doing it on the basis that it is a
relatively broad-ranging set of commitments rather than specifics.
Q5 Lord Tomlinson: Minister, one
of the first things I always look at in government explanatory
memoranda is the statement of financial implications, and I am
always fascinated to see how great and wide the ambitions are
and how usually the financial implications are stated as nil.
In your Explanatory Memorandum on this you say that financial
implications are not applicable to the APS but, as I look through
some of the ambitions of it, I see 619 million euro for the Lisbon
agenda, a specific 1,538,000,000 euro for cohesion for growth
and employment, 16% more for freedom, security and justice. What
kind of assurance can you give the Committee that the sort of
general framework that is put before us in an annual policy strategy
and the implication it has for human and financial resources for
2009 matches the financial commitments that have been made in
the framework, in the annual budget, in the financial perspectives?
How do they all match up? Or is the APS even a little bit less
than you implied at the beginning and a total waste of time because
it is financially incoherent?
Mr Murphy: Discuss! I do not believe it is irrelevant,
far from it, but neither do I believe we should overstate its
importance. That is the balance I am trying to strike in my comments
thus far this afternoon. It does set a framework for the preliminary
draft budget and I think that is the importance of the APS in
terms of European Commission financing and, therefore, it is a
guide towards the budget. Now, I have not had the opportunity,
I do not believe, to share with your lordships Committee thinking
on the budget, and I may be committing a different minister for
that purpose and if that is what I am doing I apologise, but there
may be an additional purpose in having a conversation about the
preliminary draft budget and the fiscal consequences of that,
because, returning to the point already raised, the APS really
does not claim to be, nor should it be seen as, a commitment of
financial investment, that is done through the preliminary draft
budget, and it does not commit the Commission to spending.
Q6 Lord Tomlinson: So, really, is
it anything more than a Christmas tree on which everybody hangs
their wish list for presents?
Mr Murphy: I think it prevents the European
Commission becoming a Christmas tree and enabling people to hang
their presents, because normally it would be a year-long aspiration
of work that is to be completed and for me what it does is it
prevents in February, March, April—right up to Christmas—people
decorating the Commission with a new wish list. So I think that
is one of the things it prevents. It gives a degree of predictability:
it is more granular in its detail than the multi annual work plan.
I would assume that, if an annual statement of this nature did
not exist, then the conversation we would be having today is "Why
isn't there one?" It is important for all organisations to
have a forward statement of their plan over the next 52 weeks,
and that is really what it is, but that is all we should see it
as.
Q7 Lord Kerr of Kinlochard: I agree
with you, Minister, about its usefulness, but I do not think the
Explanatory Memorandum can be said to be quite so useful. I agree
with Lord Tomlinson. The second half of the strategy document
is devoted to description of movements of money between different
headings; and comparisons between the new totals and their breakdown,
and the totals in the financial perspectives and their breakdown.
It is not clear to me how that relates to the budget: it is not
clear to me that the remaining headroom under the ceilings, which
is spelled out, is sufficient; and that does seem to me to be
a serious financial implication, which the Government might want
to think about. In all cases, as I read it, and I may have got
the numbers wrong, the available headroom is well under 1% of
the money under that sub ceiling in the financial perspective.
Now, I agree with you, this exercise probably does have the disciplinary
effect inside the Brussels institutions, but it seems to me we
ought for that very reason to take it seriously and see if we
agree with the shifts that they are describing and in some cases
proposing; the words "the Commission proposes" occur
from time to time. What is our view of their proposals; and do
we think the sum of the proposals comes sufficiently below the
ceilings or rather close? In my personal view it is rather close,
but I may be wrong.
Mr Murphy: On the specifics, on finance, without
wishing to add too much to what I have already referred to, in
the introduction to the APS it does talk about, if my recollection
is right, increased staffing of 250 to deal with the final component
of the enlargement regarding Bulgaria and Romania, and there are
no further staffing commitments other than those which would be
met by internal reprioritisation. I would not wish to disagree
with the noble Lord's general financial point, but it may be helpful
for your Lordships if, when it comes to the draft preliminary
budget, I return, which I am happy to do, to have this specific
conversation about the specific fiscal proposals.
Q8 Lord Kerr of Kinlochard: But some
of this is presumably money being spent this year, and when it
comes to the budget you are looking at the money for next year?
Mr Murphy: Yes. The way it would work is that
the APS for 2009 would help inform the CLWP, the Commission's
legislative work programme, which is published in final form in
December. It is I think published initially in October with conversations
and discussions in European capitals and parliaments in between
October and December, with, alongside that, the preliminary budget.
So it is a package of proposals for 2009. Individually each of
the documents serve a specific purpose but together the three
documents serve a combined aggregate function, which I think is
about right.
Q9 Baroness Howarth: Following up
this question but taking it into a slightly different area, one
of the budgetary problems at the end of last year was the funding
of the EIT and the question of finding money within the margins
in order that the European Institute of Technology could be set
up. Subsequently we asked a number of questions about whether
or not that would affect the KICs, the local projects, in relation
to developing small businesses and making sure that that work
went on locally. I was assured at the COSAC meeting that that
was so and that really the focus should be on local. Now, one
of the objectives of next year's programme is to involve local
citizens to make sure that Europe makes sense to local citizens,
and keeping things local does help with that. However, I have
recently had sight of another document which describes where the
funding for EIT is going to come from, and that includes a comment
that it will come from local projects. Now, which local projects?
That is another document we have for scrutiny, and the question
of which local projects is difficult. But you see the confusion
that arises if the project is not thought through in terms of
the funding from the beginning because it affects the policy and
whether the policy is to set up a huge institute, which we are
assured it is not, or whether the policy is to have an institute
that maintains and develops local and which feeds in, then, to
helping Europe to become much more understood by local communities.
Mr Murphy: Again, there are three or four different
aspects to the question, noble Lord Chairman. The purpose of the
European Institute, in my understanding, is to be a European hub
of innovation, it is not to create a research and development
monster and it is not to suck up capacity and expertise that already
exists in other European capitals, and not just in capitals but
in different regions and towns and cities throughout the European
Union. I have not had the option to read the document referred
to but I am happy to do so, if you wish me to, and to reflect
on it. In terms of the localism point, I share the assessment
which I have referred to in debates on the Lisbon Treaty in the
Commons about the problem with Europe in terms of the disconnect
with citizens, and I do not want to talk about Ireland and the
Lisbon Treaty, that is perhaps for another time. I do not believe
the disconnect with citizens is structural but largely about relevance,
and until you have proved beyond doubt its contemporary relevance
to the lives of citizens then euro scepticism will be alive and
kicking in the United Kingdom and elsewhere, so it is essential
that we have a sensible approach to localism, whether it is in
technology, in democratic control or whatever. So it is essential.
Q10 Baroness Howarth: You think it
becomes more meaningful when people become engaged in that way?
Mr Murphy: It is more meaningful, and it is
something that an enormous amount of energy is expended upon.
My approach in these evidence sessions is to try and be entirely
frank, and an awful lot of energy and some resource has been invested
in this challenge, and I think, on fair reflection at the moment,
with limited success. The opportunities for information technology
and internet activism around the European Union have met with
limited success, but that is no reason to stop trying, but as
we stop talking about structures and concentrate more on substance
in the next few months and years I think we stand a much better
chance.
Q11 Lord Roper: I want to follow
up something asked at the beginning, which concerns the process
by which we are able to influence the APS. What action does the
Government take to influence the Annual Policy Strategy, and are
you satisfied with the system the Commission has in place for
ensuring that the views of national governments and parliaments
are taken into account? Is there a proper dialogue, and is it
effective?
Mr Murphy: I think there is, but I have never
sought to say that things cannot continue to evolve and improve.
In terms of how to handle it across Whitehall and with devolved
administrations, Cabinet Office ensures the distribution of the
relevant material to Whitehall departments. I think within perhaps
two or three separate ring rounds of Whitehall departments there
is an opportunity for devolved administrations through the Joint
Ministerial Committee on Europe to play a role, but we should
continue to find additional ways to make that more effective.
I am content the system at the moment works pretty effectively,
but I am sure it could be improved upon.
Q12 Lord Roper: How is this fed into
the Commission system, and are you satisfied that they take any
notice of what anybody else says?
Mr Murphy: On the basis that the building blocks
of the annual policy programme of work are largely sourced from
the multi annual work plan which is largely sourced from Council
conclusions and commitments, if you look at the building blocks
that way you could argue that the work in itself at its inception
has taken account of the wishes of Member States and to a large
extent often can reflect the concerns of national parliaments,
but, once you get to the final point, governments through the
European Council and national parliaments have an opportunity
to make their observations and then those are all brought together,
and if amendments are needed to the annual work plan they can
take place. So there is a myriad of different pressure points
in the process, but the most effective pressure point is at the
beginning to make sure, where we can, that the annual programme
of work is rooted in the multi annual work plan, and that the
multi annual work plan is a reflection of the wishes of Member
States at the beginning.
Q13 Lord Roper: We as sub-committees
and in this Committee put in a certain amount of time to consider
this, and I suppose what we are really saying is what evidence
do we have that this is a useful way of spending our time.
Mr Murphy: On occasion we all would reflect
on that, and I think your Lordship's Committee and other Committees
reflected on the impact that the House of Lords and Committee
Reports in particular can have on the thinking in Brussels and
in other European capitals. The most celebrated example, of course,
is that of mobile phone telephony where undoubtedly the reflections
of your Lordships had an impact not just on thinking but on action.
That is the most celebrated example, and rightly so.
Q14 Lord Roper: We can see very clearly
the cases of individual proposals but I am really thinking about
the consideration of these very general documents, as to whether
reports on them are a useful way for us to spend our time in terms
of the way in which our reports are then used in the refinement
of such a strategy.
Mr Murphy: I think they undoubtedly are reflections
of your Lordship's Committee and other Committees of the House
of Lords, and there is a debate we are having in the House of
Commons on Thursday on this work in particular. The reflections
that your Lordship's Committee offers on the multi annual programme
of work and the Annual Policy Strategy are important, but also
the way in which Her Majesty's Government feeds into this process
is impacted upon by the observations of your Lordship's Committee
and the Committee of the House of Commons on our ambitions on
global Europe, so I would contend that again there is a myriad
of pressure points. It is not the Government's job to invite additional
pressure on the points but there are undoubtedly different ways
in which you can influence this work, partly by reports that are
read in other European capitals but in particular by continuing
to pressure Her Majesty's Government on these issues.
Q15 Chairman: Can I follow up a little
bit on what Lord Roper has been saying on this question to you?
In paragraph 37 of the Explanatory Memorandum you express your
disappointment that the APS is not more readable and more focused
with greater explanation of prioritisation of policy areas. If
they succeeded in doing something about that, and this is very
much what we were saying when we did our report on how the APS
was put together, if there was more prioritisation, would the
Government then in an Explanatory Memorandum be prepared to be
more forthcoming and tell us what they think of their priorities?
At the moment you have said there is not any prioritisation, and
it appears that seems to have let you off the hook of having to
say yourselves what you think of what priorities you can unearth
in this document?
Mr Murphy: I think this year forthcoming and
2009 is unusual in the same way that every five years there is
an unusual year. The APS and possibly the Explanatory Memorandum—and
I apologise to your Lordships if it turns out to be more impenetrable
than is normally the case: it is not our intention and I will
reflect on whether the Explanatory Memorandum cannot be improved
in future, of course—is a reflection of the dynamic of the
year we are about to approach. As the introduction to the document
itself states, most of the substantial legislative proposals have
already been tabled in 2008 and, therefore, we are in that period
of every five years where there is, to be frank, a degree of uncertainty
with the European elections and much else besides approaching
us. I will reflect on whether the EM can be improved for future
hearings and, of course, we should always try and make the Commission
and the European Union as accessible as is possible, and this
was a point made this morning. I hosted a seminar this morning
at the Oval cricket ground about the European Union on sport,
and this was a common frustration. For example, and I do not want
to take us down a side track and your Lordship would chastise
me for doing so, but take, for example, the nature of the word
"specificity" in the context of sport; it is another
one of those words that has its origins in the English language
but which does not have a clear English meaning, like "flexicurity",
so there are two words that are seemingly English in their origin
but have no precise definition. So it is a continual challenge
and I would be churlish to suggest there is an easy solution,
but as a general principle, my Lord, you are, of course, correct.
Q16 Chairman: For "specificity"
read "opt-out".
Mr Murphy: Well, that is one interpretation
but specificity does not allow for opt-out on a free movement
of labour, which obviously is an issue about UEFA who are saying
that Arsenal should only have five foreign players, so specificity
is not an opt-out because, while other European capitals misinterpret
it or reinterpret it as an opt-out, the United Kingdom government
will defend the fact that the free movement of labour applies
to all professions across the European Union including sport,
whether it is football or basketball or rugby.
Q17 Lord Sewel: Can I ask you really
for your degree of optimism on making progress on two topics that
appear in the APS? One is the health check and achieving a consensus
and then implementing it, and I suppose there what is interesting
is the extent to which France has really changed and the attitude
it will bring to the Presidency at the time when it will be leading
on the health check, and the second one is climate change and
energy. The next twelve months are going to be very important
and the lead-up to Copenhagen and developing a robust European
position. My Lord Jopling and I, not wearing EU hats but NATO
Parliamentary hats, recently were in Bulgaria and Romania looking
very much at energy climate change issues and, really and truly,
in those two countries, the response we got time and time again
was concentration on energy security, yes, and price and cost,
and when you tried to extend the argument into the link with the
environment and CO2 I am afraid you got pretty glazed looks. It
was: "Well, we are poor countries, we cannot really afford
that indulgence", which was a bit depressing. So I am wondering
the extent to which you can get a real European-wide position
in anticipation of Copenhagen when really there are separate discourses
going on, even within Europe.
Mr Murphy: On the specific question of agriculture
and whether France has changed, we will see! The Ambassador, of
course, will have offered his government's observations, but the
health check is important in terms of looking to simplify the
single payment scheme and other farming and agricultural reforms,
and it is also important, secondly, to have a conversation about
the longer term. But we are very firm that the health check should
not be used to set a longer term strategy on agricultural reform
which is limited in its ambition. It has to be a wholesale reform
of the Common Agricultural Policy, that is our starting point
and it is where we wish to get to. There can be in a health check
specific improvements but it is not a replacement for a wider
reform of the Common Agricultural Policy. To be fair to the French
I do not think that is what they see it as but I know there is
a temptation in some European capitals for that to happen. In
terms of climate security and energy, of all the issues that understandably
excite public comment in the United Kingdom I think energy security
is the one where the degree of strategic importance and public
comment is most out of kilter. We talk about energy security and
routes to market often through the prism of the posture of the
Government in Moscow and it becomes more accessible in that context,
but the viability and security of energy supply in a period where
we are climate change sensitive and where the supply pressures
exist in the dramatic way they do is one of the biggest strategic
challenges in every country in the European Union and beyond.
As for the solution, as your noble Lords are only too well aware,
we are not in the position that China or Russia would be in. They
have a single chequebook with a single pen. We do not. If we have
a chequebook at all there are 27 hands and 27 pens, and we are
not in the position where we can simply strike a deal in central
Asia or elsewhere. So there is so much to this issue. I was in
Azerbaijan last month meeting the President and we had conversations
about routes to market and the Baku pipeline, there are issues
about Ukraine and the proposals to sign a neighbourhood agreement
with Ukraine which would include the modernisation of their energy
transmission networks, so there is so much to this, and the third
part of the noble Lord's question then picks up the sentiment
in other European capitals and beyond. It is not just in the developing
nations that this conversation is pretty lively. If we look at
the conversation in Paris and elsewhere there is this phrase "carbon
leakage", another impenetrable phrase but on examination
we know what it means—it is the fact that put colloquially
why should we do the right thing when others will not? In doing
the right thing the issue is not carbon leakage; it is the transfer
of jobs as capital and investment opportunities move elsewhere
with a less rigorous climate change regime. Now, this is a part
of a continuing conversation but Her Majesty's Government is very
strongly of the view that the solution to this is not a carbon
tariff or a protectionist tariff of any sort, because it is pretty
dangerous if the international message is that the only way you
can do the right thing on climate change is by virtue of a new
round of tariffs, and it would lead very quickly to retaliatory
measures. So that is the debate not just in developing economies,
which of course it is in a different point of their economic evolution,
but it is also an important debate in Paris, and there is pressure
in Berlin with the niche car industry in terms of the climate
change package. That is why I started by saying what our priority
is, and I mentioned climate change in the first place, because
there are European pressures here which are pretty acute, and
there are time limits concerning not only Copenhagen but the impending
Czech Presidency as well, and that is why we need to make progress
during the French Presidency.
Q18 Lord Kerr of Kinlochard: I think
the Explanatory Memorandum is the sort of document the Foreign
Office—a wonderful Department, by the way—writes extremely
well; it is a descriptive document describing somebody else's
plans. But they are not somebody else's plans, they are our plans,
the Commission's money is our money, and the money bit at the
back does give you a hint as to priorities, and there are statements
in here that are very political. Do we agree that the current
financial turmoil calls for a co-ordinated EU response "including
a stronger presence of the Commission in international financial
institutions"? I am not sure that I do; and that is quite
a political statement by the Commission. So the policy implications
bit at the back of our Explanatory Memorandum seems to me to be
as inadequate as the financial implications bit, as Lord Tomlinson
pointed out, and that is because, I suspect, this document is
being treated as not very important. The sentence that I have
just read out from the document is one that would, I imagine,
cause people in the Treasury to sit up and take notice. The only
Treasury paragraph on this that I can see is the "financial
resources" three sentence discussion of what is half the
paper, and I guess that it was written—because it is beautifully
written—not in the Treasury but in the Foreign Office! So
it seems to me that we need to decide whether this is an interesting
description of Commission plans which we do not need to bother
about (in which case, if that is the Government's view, then maybe
we need not bother so much about scrutiny of the document), or,
whether it is an opportunity to influence thinking in the Commission,
to tell them that we do not think their implicit priorities as
demonstrated by the way they want to move money about are right,
or to tell them when we do not agree with a statement they make.
Maybe the Government does agree that we want to see a stronger
presence of the Commission in the international financial institutions,
in which case that in itself would be quite interesting.
Mr Murphy: I do not want to enter into open
speculation as to which government department wrote which sentence
of which paragraph, but the noble Lord, as always, has a degree
of accuracy in what he is reflecting upon. In terms of the role
of Europe in these international debates and international institutions,
the Prime Minister himself invited leaders of France, Germany,
Spain, Italy and the President of the Commission to Downing Street
to discuss these very issues, so there is a role for the Commission,
although the exact shape and nature of that role is open to conjecture
and continued discussion. The Explanatory Memorandum is the Government's
rather than any one government department's. I think the importance
of this document, which I tried to allude to earlier, is that
between now and October, when the Commission's legislative work
programme is published, the response to this document, I would
argue, impacts on the Commission's legislative work programme
potentially, and to be frank that is one of the important aspects
of evidence sessions such as this. So the document in and of itself
can be improved as Member States offer their reflections on it
and as the European Parliament offers its reflections on it, but
the period between now and October before the Commission publishes—and
we hope they stick to the timetable of October despite other pressures—is
a point of maximum influence as a consequence of these hearings.
Chairman: Could I make one comment on the general
framework of the Human and Financial Resources, which is Part
II of the APS? I must say I was very pleased to see there is now
a section "Changes in the Allocation of Financial Resources".
Lord Tomlinson may correct me if I am wrong but I seem to remember
that was a point we made very strongly with the Commission when
we met because it was something that was missing from the previous
one, so may we strike one for the European Union Select Committee
in that we seem to have got across to the Commission that they
should focus on changes to the allocation resources? Am I not
right?
Lord Tomlinson: Absolutely, Lord Chairman. Your
recollection, as ever, is totally immaculate!
Q19 Lord Wade of Chorlton: I would
like to explore a little bit the Government's views on European
regulation. We talk about "better regulation", et cetera,
and I have not the slightest idea what the word "better"
means in this context, but I would like to get a view of what
government feels about it. Do you think there is an issue relating
to continuing EU regulation? We know for a fact from evidence
we have had that there are some concerns in some quarters. How
do you feel you will react over the next twelve months to better
regulation suggested in the agenda?
Mr Murphy: Unlike "specificity" I
would argue a pretty clear understanding about what "better
regulation" means.
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