Examination of Witnesses (Questions 20-39)
15 JANUARY 2008Mr
Jim Murphy, Ms Shan Morgan and Mr Adam Bye
Q20 Lord Harrison: Minister, you have
reiterated this evening the Government's support for the Lisbon
Strategy by saying that we should stay true to the Lisbon Agenda
and you assert that it is now accepted orthodoxy within the European
Union the importance of the Lisbon Strategy, and the Presidency
Conclusions say very clearly, "The Lisbon Strategy is delivering".
I wish it were so. Do you believe it to be so and do you have
hard evidence that that is the case? Because I have my doubts
and I wonder whether indeed we should be requesting the European
Union to undertake a thorough overhaul of the Integrated Guidelines
to put back on track what I think is absolutely a key measure
to the Single Market that you and Lord Powell talked about earlier—absolutely
crucial to the United Kingdom's view of the development of the
European Union.
Mr Murphy: Your Lordship is absolutely right,
the Lisbon Strategy is absolutely key to the completion of the
Single Market. In terms of the assessment of the Lisbon Strategy,
has it achieved everything? No, of course it has not; its current
approach to this still has three years to run. Has it made substantial
progress? We believe it has. I would like to remind you briefly
of what our assessment of that would be. Firstly it is, as I say,
my contention that it is now accepted orthodoxy—economic
and political orthodoxy—and it has led to a change in governments'
approach across the European Union. Additionally, it has been
the template for new Member States as they reform their economies,
the substantial reform that new Member States have gone through.
The template against which they were judged and in turn sought
to reach was the detail of the Lisbon Strategy. Also—and
the importance of this, I think, has been underplayed—new
Commission proposals are judged against the Lisbon Strategy criteria,
and even when there have been other pressures, other tendencies
and temporarily other priorities the Commission proposals are
now judged against that. So the Integrated Guidelines and the
priorities of the Lisbon Strategy currently in place are the right
ones. Of course, as we come to the end of the process we do have
to look and see what has been more successful and what has been
least successful; but based on jobs growth in particular I think
it has been and continues to be a substantial success.
Q21 Lord Harrison: I accept what you
say about it being a template, especially to those countries that
have recently come in, but is there hard evidence? Are we able
to demonstrate that the increase in the number of jobs, the creation
of wealth is attributable to the fact that the Lisbon Strategy
now exists and it did not before?
Mr Murphy: The issue in all of these is cause
and effect and trying to link both, and what degree of economic
growth would there have been in any case and what degree of jobs
growth would there be in any case? One of the ways to assess it
is what would the priorities of the Lisbon Strategy include? The
priorities included older workers and women workers and the greatest
area of growth has been amongst older workers, those over 50,
I think, and women workers. But again we get into a debate as
to what degree of that growth would have happened in any case?
The liberalisation of markets, the template for new Member States
and the pro-market Commission default posture has added to this
growth—that is beyond dispute, the general economic posture—and
that has led to continued economic growth, growth in jobs which
you can attribute directly back to the Lisbon Strategy.
Q22 Lord Harrison: My understanding was
that President Barroso was reluctant to include that element of
the Lisbon Strategy and indeed wanted to subtract that element
which wanted to encourage older workers, women workers to come
in and improve their education and training. There was a period
some two or three years ago where it was thought to be preferable
to focus on what was considered to be hard measures to enact the
Lisbon Strategy. Are you saying that President Barroso has now
changed?
Mr Murphy: I did not say that he had changed
or was correct or wrong; what I said is that the Strategy itself
has identified priority areas and the greatest growth has been
in those priority areas.
Q23 Lord Jopling: Minister, are the conclusions
of the meeting somewhat contradictory in that they say, on the
one hand, that Integrated Guidelines do not need a fundamental
overhaul, and in the next sentence but one they talk about the
need for appropriate action in areas—and I will not read
it, you will be aware of it—and there is a great shopping
list of fundamental things. Do you not think that it is slightly
contradictory to have said those two seemingly opposite suggestions?
Mr Murphy: I do not believe there is, in that
a decade on there are inevitably new or refined priorities. Pretty
fairly your Lordship mentions a rather long list and there is
a rather long list—I am looking at the list in paragraph
39 in front of me now and it is a substantial list, which is why
earlier I was asked to identify where the UK sees the priorities
within here. An example of the as yet unrealised ambition of the
Lisbon Strategy, which ties into the first aim about acknowledging
innovation and also feeds into the ambition of SMEs, is the cost
of patenting in the European Union; I think in more than half
a dozen countries in the European Union it costs three to five
times more than it would in Japan and the US. Part of that is
about translation costs but that is a substantial and sensible
reform which would encourage innovation that we would like to
see happen. So a series of these types of reforms, which are essential
not only to meet the challenge of Japan and America but also to
meet the challenge of India, I think that is the context. It has
been said before but nevertheless it is still the case that the
Lisbon Strategy as envisaged was largely but not exclusively about
meeting the economic challenge of the US. As we visit it ten years
later—and I spoke earlier about this—the nature of
the economic global dynamics has changed and the refreshed Lisbon
Strategy has to meet the specific challenges, particularly of
China and India—and also countries such as Vietnam.
Chairman: Let us move ahead to foreign affairs. We
have a number of issues here, Minister, and perhaps I should give
you notice of the fact that we would also like to raise one particular
aspect of the EU's relations with Iran. Let us start with the
very knotty problem of Kosovo. Lord Maclennan.
Q24 Lord Maclennan of Rogart: Minister,
the report of the Contact Group on the exhaustion of the negotiating
process between the parties was made available and publicised
just before the Council meeting. I am interested to know whether
the Council had a meeting of minds about the future status of
Kosovo—the, if you like, final status—and if perhaps
there were differences how is it that the Council was able to
reach a position on the sending of a mission under the ESDP arrangements
to seek to sustain the stability of Kosovo?
Mr Murphy: Your Lordship is right in implying
that this is a long and difficult journey that the international
community has been on but, more importantly, the people of Kosovo
and people of Serbia in recent times have been on. In paragraph
69 of the Conclusions the EU did reach a substantial conclusion
including that the declaration and our position on Kosovo did
not set any precedent, which of course in itself is significant.
It would be wrong to say that there has been through the process
100% consensus and unanimity, but we have got to a point now where
there is overwhelming support for a Kosovo final status, based
on the Ahtisaari Proposals, and that even the most sceptical,
which, without being disparaging, would be Cyprus, have said that
they will not stand in the way of an ESDP mission, and that is
significant.
Q25 Lord Maclennan of Rogart: Was that
statement about the pending status of Kosovo not constituting
a sui generis case a paving remark to enable agreement
to be reached on the ESDP mission? What does it actually mean?
You can say every case is sui generis but precedents are
established.
Mr Murphy: In paragraph 68 of the Conclusions—and
it may be helpful to your Lordships if I briefly read it—"The
European Council agreed with the UN Secretary-General that the
status quo in Kosovo is unsustainable and, thus, stressed the
need to move forward toward a Kosovo settlement, which is essential
for regional stability. Such a settlement should ensure a democratic,
multi-ethnic Kosovo committed to the rule of law, and to the protection
of minorities and of culture and religious heritage." In
that context really we have reached a point where the UN process
is exhausted or near exhausted. As your Lordships are aware, there
was no meeting of minds through the Troika Process and we are
now left in a position in the European Union as to how to respond
to the expected Declaration of Independence, which I think is
impending, from the Team of Unity in Kosovo. But whilst in the
past the European Union has had some difficulty—of course,
well documented disagreements about some of this in the past—the
fact now is that the European Council has put itself in a position
that it is willing to play a leading role and deploy an ESDP mission
with the support of every Member State.
Q26 Lord Maclennan of Rogart: With respect,
Minister, I understand that; that is stated in the Presidential
Conclusions. But it is not actually clear about what agreement,
if any, was reached about the final status of Kosovo and Government's
view about that—not just about security and things but about
what might be possible for the European Union to achieve.
Mr Murphy: The UK Government's position, as
I think your Lordships are aware, is to recognise an independent
Kosovo, an independent Kosovo that is processed and is supervised,
and we would expect the substantial majority of EU Member States
to unilaterally take that decision as well. Would it immediately
be all 27? I do not think it would be is a frank assessment for
your Lordships—I do not believe it would be all 27 on day
one. But I think very quickly we would be in the mid-20s of recognition
of Kosovo's final status, based on the Ahtisaari Plans. I think
that is where we will end up very quickly after Declaration of
Independence.
Chairman: Shall we move on to the related issue of
Serbia.
Q27 Lord Wright of Richmond: Minister,
the Presidency Conclusions reiterate their confidence that progress
on Serbia's road towards the EU, including candidate status, can
be accelerated. Is the British Government's position totally at
one with that? And what is your attitude to the Serbian Foreign
Minister's call for a Stabilisation and Association Agreement
this month?
Mr Murphy: The Agreement, as your Lordships
are aware, has been initialled; it has not been signed. A straightforward
way of explaining this would be to see that the next move is Serbia's,
both in terms of its response to the Declaration of Independence
of Kosovo and its full cooperation with a criminal tribunal. There
are four outstanding suspects that we still expect to see apprehended
and to face justice. We have this conversation of course at European
Councils and European gatherings of Ministers—is it conditional
upon all four being captured and facing justice? A fair assessment
would be no, it is based on 100% effort by the Serbian authorities,
and our assessment up until now, even though belatedly there has
been a €1 million public reward, up until relatively recently
there has not been 100% effort. I spoke to Carla Del Ponte before
she left post and she was hopeful that there would be concrete
progress, but at the moment that just does not seem to be the
case. I have noted the comments by the Foreign Minister, who I
think is a pretty reasonable man—incidentally, I met him
and talked with him. It is not our intention to play inside the
domestic politics of Serbia in terms of their election process.
I will conclude this where I started it, that really the next
move is Serbia's. If they demonstrate 100% effort then we would
be inclined to sign and progress the Agreement, which would put
them on the path to EU membership, which we strongly support—Serbia
should have an EU perspective in the same way that Kosovo should.
Q28 Lord Wright of Richmond: At the meeting
itself was there much disagreement about both the assessment of
the situation and the approach we should take towards Serbia?
Mr Murphy: In different international forums
there have been nuanced positions about what is the correct choreography
of different stages of this process. I think there is unanimity
as to where the progress reaches and the conclusion is that two
independent countries at some point will join the European Union,
and how we get there is really about what is the most effective
way of sequencing the different stages. Traditionally we, the
Dutch and some others have been pretty strong on the conditionality
about full cooperation and 100% effort; others, of course, whilst
still wanting to see real progress, finesse that to sequence it
in a different way, and the Slovenian Presidency wish to see real
progress on this over the future months.
Q29 Lord Tomlinson: I see that the Council
encouraged Serbia to head for candidate status. Did anybody talk
in terms of time spans and decision-making?
Mr Murphy: In terms of independence for Kosovo
there is an envisaged timeline, but in terms of candidate and
membership status of the European Union there is no established
timeline. That would be the case for each of the countries currently
seeking membership of the European Union, be it Croatia, Turkey,
Kosovo or, in time, Serbia. It is tied to conditions rather than
dates.
Q30 Lord Tomlinson: Here, as part of
the deal over Kosovo, the Council appeared to be encouraging Cyprus.
Did that encouragement have any tangible form or was it just a
form of words?
Mr Murphy: We are encouraging Serbia. We have
made it clear bilaterally to the Serbian Government; I have made
it clear myself and the Foreign Secretary here has also made it
clear that really Serbia has a strategic decision to make about
her future. We have all rehearsed, I think, the assessment and
the analysis as to what that decision entails, as to whether Serbia
sees itself as a member of the EU and open market, an integrated
part of the European Union or someone who sees their relationship
with the European Union as altogether less constructive. There
seems to be within the Serbian domestic opinion, as is often the
case, a division of opinion based on occasion along generational
lines, with many younger people seeing Serbia's future as part
of the European Union with freedom of movement, freedom of travel,
freedom of study, and others perhaps are looking to Serbia's past
as the prism through which they see Serbia's future.
Q31 Baroness Symons of Vernham Dean:
Minister, can we turn to the issue of Burma? It is some while
now since we saw those shocking pictures about the suppression
of a democratic resurgence in Burma. The Conclusions talk about
the EU "standing ready to review, amend or further reinforce
restrictive measures". I do not think that the words "standing
ready to review" sound compelling in terms of encouragement
to the authorities in Burma; and when we turn to paragraph 81
we are told that "The EU is determined to assist the people
of Burma further on their path to democracy, security and prosperity."
How? How are we going to do that rather than just "standing
ready to review", which does not sound the most compelling
of positions?
Mr Murphy: I think at the General Affairs Council,
towards the end of last year when we discussed Burma in some detail
and the nature of the sanctions regime, a series of measures were
taken then; but the view then, as the view is clear in paragraph
79 of the Conclusions, was that if Burma does not make the progress
that we would all like to see, as the monks and so many others
demonstrated for us, that collectively the European Union is willing
to take other sanctioning measures. Previously we have declared
that we will rule nothing out; we made that very clear after the
General Affairs Council towards the end of last year. I think
the Conclusions also talk about the importance of regional powers
and the Prime Minister will be going to India and China later
this week and this is something that he will be raising bilaterally
with both India and China.
Q32 Baroness Symons of Vernham Dean:
So it is definitely on that agenda?
Mr Murphy: Yes, absolutely. The danger, of course,
is that the world's media, for understandable reasons, moves on
to Kenya or Pakistan from Burma and potentially in the world's
mind it could be forgotten; but in the diplomatic sense it is
not and it will not be, and that is why the Prime Minister will
raise it both with India and with China.
Q33 Baroness Symons of Vernham Dean:
That is an interesting piece of information about what his intentions
are; thank you. Minister, can I ask you something about what the
Conclusions say on Iran, particularly because over the last few
days—and I happened to be in the regions—it does seem
that since the Bush speeches in the Arabic part of the Middle
East there has been a hardening of attitudes again. We saw a very
distinctive role for the European Union when the Foreign Secretaries
of Britain, France and Germany went to talk to the Iranians, but
now it seems that there is a very real fear that the Americans
are winding up to some real action over Iran; but equally, I would
say, in the region quite a fear that nobody does anything at all
about this. What distinctive role do you see for the European
Union in relation to the stand-off with Iran?
Mr Murphy: Its specific and distinctive role
would be that if Iran does not comply with its international obligations,
that are again well rehearsed in public, that regardless of the
UN process the European Union is willing to enact further sanctions,
and that would be a distinct EU perspective on an international
situation in respect of Iran and, as I say, outside of a UN process.
Q34 Lord Wade of Chorlton: What am I
to understand as to what impact the European decision along those
lines might have on Iran? Is it a financial one or how would you
see any actions that Europe could take having an impact on Iran
that might change its mind?
Mr Murphy: The shape of any potential future
sanctions has not been decided, but certainly there would be a
very strong economic perspective to it in terms of we can take
further economic sanctions. That would be a large component of
anything further that was considered in the EU.
Chairman: Let us come on to better regulation.
Q35 Lord Plumb: Minister, it is good
to see that there is a better regulation agenda and this surely
would be welcomed by many who might believe that there is going
to be some improvement in the regulations over a period of time,
and I note that at European Union level they are setting targets
of improvement by 25%. Of course in some ways this relates to
the first question that Lord Wade raised about the use of currency
because a lot of the regulations of course involve investment
in various areas. If this is going to be done under the national
reform programme to what extent are we following up on this? They
are asking us by 2008 to also set targets. If there is a target
at European level of 25% how do we stand and what plans do we
have to improve those regulations?
Mr Murphy: My experience of this is when I had
the joy of being the Better Regulation Minister in the Cabinet
Office a couple of years ago.
Q36 Lord Plumb: You are to blame for
it, are you!
Mr Murphy: As part of the UK Presidency we hosted
an EU conference in Edinburgh on just how we can get the Commission
to this 25% target. I and the Foreign Secretary have both said
this recently. I know it sounds counter-intuitive for some but
the Commission are our allies on this; there is a real determination
in the Commission to deliver on this. In terms of domestically,
the week before Christmas and in the rush to Christmas—and
understandably this was missed by most—19 UK Government
departments published their Better Regulation Plans, which would
see us actually exceeding the domestic target that we signed up
to. It is 26%, which is a net 3.5 billion a year up to 2010. So
that is by 19 departments and regulators. The important thing
now is for the respective Select Committees in respect of both
Houses to continue to challenge government departments as to whether
we are on track for achieving a 26% reduction. But it would be
substantial and it would change the culture of government, both
on private sector but, importantly, the public sector because
we hear—not just anecdotally but we know from studies—that
a number of frontline public sector workers get frustrated with
the degree of paperwork. So this is an approach, private and public
sector and the voluntary sector.
Q37 Lord Plumb: Could you give us an
example of an improved regulation?
Mr Murphy: Preparing for this afternoon I said
to officials, "Can you get me some examples because someone
is likely to ask?" We have cut red tape in 288 different
ways. I do not have all 288 and your Lordships would not thank
me for bringing all 288 to your Lordships' attention—
Q38 Lord Plumb: Just one actually.
Mr Murphy: Just one here is entitled Facilitation
of Electronic Communications, and while in itself it does not
sound dramatic the cumulative impact of a number of these ...
It shows that one in 0.2 million companies can now send information
to shareholders by email rather than hard copy. This is expected
to reduce by £100,000 to £400,000 per mailing per company.
So that is a sensible measure. The others would be AGM obligations
have been changed for private companies; between half a million
and three-quarters of a million private companies no longer need
to hold an AGM. Again, in itself it does not transform the business
climate but cumulatively those sorts of measures are substantial,
and there are 288—and perhaps not all are as significant
as that—and that in itself signifies early progress and
that a momentum is being developed. The challenge here now is
for government departments to be held to account on their delivery
plans. I think government departments are pretty clear about that.
Q39 Lord Harrison: I am seduced, Minister,
into taking you on to a theological debate since you are a former
Better Regulation Minister, but is there not a contradiction with
the mechanical view of artificially cutting 25% of the regulations
away and the concept of better regulation, which emphasises the
quality of regulation? We all need red tape if red tape does the
proper job in explaining what is required for the laws and regulation
of any market, but the judgment is to actually arrive at the best
rules and regulations where everyone is clear about what it is
that they are attempting to do and to transact business within
that market. Coming along and saying, "25% should be shed",
you could actually take away some very important reserves that
are enshrined in the regulation which preserves certain interests
in the function of that market. For instance, that one example
you gave of the reduction of the number of AGMs, they might be
a burden in one sense but it may be that the AGM is very important
in terms of holding to account the directors of any company. Perhaps
this is the wrong place, but I wonder whether you, after your
period of being a Better Regulation Minister, wondered, as I always
do, as to whether having a 25% ambition is actually the wrong
way to tackle the matter?
Mr Murphy: I hope your Lordship does not mind
me not succumbing to his invitation to be seduced, theologically
or otherwise—I have already been seduced theologically in
another direction anyway, but that is for another conversation
another time! It is a fair point. It is the type of conversation
that Government continually has as to what are the right principles
underpinning better regulation because it is better regulation
rather than less regulation. The better regulation is about having
a risk based approach to regulation. I think those sorts of measures
are identified if they are carried out in conjunction with business
and close cooperation with business; I think those are emblematic
of a risk-based approach because clearly in the electronic communications
and in the need for holding AGMs for certain companies that is
a risk-based approach to regulation, and that is what we should
have. The difficulty there is—without prolonging this into
a conversation exclusively about better regulation—that
it is important that you are able to measure these things. So
we can either measure it by general feel and anecdote; we can
measure it by economic growth, which is a multi-faceted dynamic
in terms of the outcomes, or you can measure it both in terms
of specific measures and a general weight of the regulatory burden.
It is important that we are able to measure it year on year, and
that is why we count the number of regulations and the general
weight of the regulatory burden.
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