Examination of Witnesses (Questions 40
- 48)
MONDAY 18 JUNE 2007
Dr Mark Thatcher
Q40 Lord Dykes: Returning
to Lord Whitty's interesting question and your comments about
the rigidities and the fact that a very small number of people
do shop around, forgive me because your research may have only
covered the UK and obviously with the piece of water in between
and the dominance of the English language there may be more rigidities
and even less incentive to do the shopping around here. Do you
detect that on the trans-border areas of the continental Member
States there is much more of that crossing of borders and doing
shopping and getting the advantage of a single price, of course
expressed in euros of which we are not a member.
Dr Thatcher: My research has been comparative
and I think comparison is important. I have looked at four countries
in Europe. I think you are right on the shopping aspects, as in
terms of goods, but much more important, as you know, in Europe
is services and on that there has been much less cross-border
shopping. The obvious areas would be things like insurance and
actually there is very little cross-border shopping in this.
Q41 Lord Dykes: Even though
the insurance companies themselves have merged into large trans-national
entities like AXA?
Dr Thatcher: You have to distinguish between
the suppliers becoming cross-border companies, and that is where
most activity has taken place, and individual customers buying
from abroad. You can buy a service in your country from a company
which happens to be a cross-border company, but that does not
I think count as the kind of cross-border purchases which were
being referred to earlier.
Q42 Lord Dykes: Would there
not be an incentive, say 10 km into Holland over the German border,
for the AXA agent to say, "My colleagues over the way would
be able to offer something at X rather than X-plus-3"?
Dr Thatcher: There may be but there just has
not been that kind of mass cross-border purchasing.
Q43 Baroness Eccles of Moulton:
I was very intrigued, Dr Thatcher, by what you said about the
way the rest of Europe views the extent to which we have benefited
although we beef on about the Commission. I wondered whether you
would agree with the view that a lot of people in the UK take,
and that is that when EU Directives are transposed into our law
by governments, by civil servants, that somehow there is a bit
of gold-plating to it and therefore the Directives arrive within
our legislation rather heavier than they might do in other countries,
that somehow we leap-frog over the Whitehall effect and blame
it all on the Commission? If perhaps the plating was a little
lighter then we would view the Commission in a slightly more favourable
light?
Dr Thatcher: There is an issue of gold-plating
but I think there is also a cultural element here about trying
to blame the Commission for all kinds of things which it is not
responsible for. So there is an issue of gold-plating but I think
there is a more important issue about how legislation is implemented
in practice. That is not really about gold-plating, it is about
the way it is interpreted. These are very broad Directives and
if one thinks of, to give you an example in telecoms, Telecom
Italia was recently the target of a possible takeover bid from
AT&T, a Mexican company. The Italian Government then announced
it was going to investigate whether or not Telecom Italia should
be broken up into a network company and a service company, taking
Britain as an example. The result was that AT&T withdrew and
Telefonica came in. That is not about gold-plating, that is really
about how you use your powers within a European framework in a
particular way. To give another example, if a country administratively
says, "It will take us several months before we will give
you your certificate", that has an effect on your capacity
to enter. Or if it says, "We are going to have a particular
structure of charges for interconnection to a network", or
if it says, "Actually we have very limited airport capacity",
these are all things which are about how you actually interpret
European law and I think they are by far the most important and
the most difficult to get at in terms of the single market but
I think they are the ones which companies come up against most
of all. So if British policy-makers are concerned about the single
market, they should focus on that end and perhaps see the Commission
more as an ally rather than an enemy. That is politically, I am
aware, a sensitive thing to say.
Q44 Baroness Eccles of Moulton:
That would need a big cultural shift.
Dr Thatcher: Yes.
Chairman: Three brief questions and brief
answers because we are running out of time.
Q45 Lord St John of Bletso:
Perhaps this is somewhat wide of the remit but it goes down to
management. We are seeing a quantum shift in leadership in France
which could have a profound impact for inward investment into
the region from abroad. We have been grappling with the Galileo
project which by all accounts has been poorly managed, poorly
delivered, out of time, and who knows where it is going to go
from here. Bearing in mind there is a quantum shift in leadership,
what impact do you believe this is going to have in the effectiveness
of the single market?
Dr Thatcher: It is very difficult to tell because
of course the Right in yesterday's elections did not win a vast
majority. Also, Mr Sarkozy has said that he is in favour of protecting
French firms. You can never tell in French politics the difference
between rhetoric and reality, who knows what will happen in practice,
but it is more fundamental than that. A lot of what you are talking
about are tight and informal networks between companies, administrators
and politicians in France through the grands corps and
through informal networks they have built up by having served
in ministerial cabinets. It is not clear, however committed
a French President might be, that he can break those kind of informal
linkages, and those linkages are very different in Britain. We
do not have those kind of tight linkages between the Civil Service,
business and politics, on the contrary those three have tended
to be separated one from the other.
Q46 Lord Dykes: A little ex
cathedra to say the least and forgive me for this, but can
one really complete a genuine single market without having a single
currency?
Dr Thatcher: A single currency may help but
I am not sure it is a necessary or sufficient condition. I think
historically single currencies have tended to follow single markets
and have then helped integration but with new technology there
is no reason in every sector that you need to have the same currency.
In some sectors there is a great deliverability—one thinks
of the financial sectors—regardless of currency because
currencies are easy to translate one into the other and because
big companies can hedge against currency changes. A single currency
helps price transparency but I am not sure it is sufficient in
itself. One can think of many examples where particular parts
of a country remain cut off from other parts of the country because
of barriers. Perhaps more important are standards. I would suspect
they are a much greater barrier to a single market together with
these administrative traditions and ways of implementing.
Q47 Lord Lee of Trafford:
This is a supplementary to Lady Eccles' question. How hostile
is the popular European press to the European Commission and all
that comes out of Europe as compared with the near-universal hostility
that, in my judgment, substantially influences popular opinion
in this country?
Dr Thatcher: Traditionally, Europe has been
seen as a good thing in a country like Italy or France. That has
changed recently because there has been a feeling that Europe
does not look after the social side of things, that it is just
about profit-making and business and that it threatens very cherished
welfare and employment protection legislation. That is a very
rough answer but I think there is a lot less hostility. I would
also say that the political elite and educated opinion is very
strongly pro-European in continental Europe; in Britain opinion
is much more divided.
Q48 Chairman: Thank you very
much indeed for coming. I speak on behalf of all my colleagues,
you have expanded and extended our thinking about how we should
approach this by talking about the institutions. There may be
some questions which our clerk is going to write to you about
and suggest you might be good enough to give us some further thoughts
on.
Dr Thatcher: Of course.
Chairman: Thank you very much indeed.
| 
