Relaunching the Single Market: EUC Report
Baroness O'Cathain
That the Grand Committee do consider the fifteenth report of the European Union Committee, Re-launching the Single Market.
Relevant document: Re-launching the Single Market (15th Report, HL Paper 129).
Baroness O'Cathain
My Lords, I am most grateful that we have been allocated time to debate this important subject, and particularly grateful that the debate comes only 56 working days after the publication of the Select Committee report on 4 April this year. This has to be something of a record. Unfortunately, due to pre-organised holidays, several members of Sub-Committee B are not available to take part in this debate. Holidays were arranged before we were informed that we would have a September sitting. However, it is most useful to have this debate and I hope that other people will read it in Hansard.
Before I begin to give the genesis of the inquiry, details of the process that the sub-committee adopted and the important issues raised, together with our conclusions, I want to give sincere thanks to all members of the committee who worked so diligently and engaged with the subject in such a manner as to make the inquiry a most enjoyable and interesting experience. We were particularly fortunate to have the services of John Turner, the Clerk, Michael Torrance, the policy analyst, and, for the initial scoping exercise, Laura Bonacorsi, our previous policy analyst. The committee as a whole is indebted to all three.
The House of Lords has a very long tradition of engagement with the single market. The late Lord Cockfield was instrumental in its creation during his time as a European Commissioner in the 1980s, and another Member of this House, my noble friend Lady Thatcher, was a mighty force in promoting it. Both believed that the single market was very important in the context of the whole European project and in the interests of the United Kingdom. It was regarded as important then, and it is even more important now when we are so focused on growth in the economy as one way of breaking out of the current doleful economic situation; and growth for the UK has always centred on our trade links and export effort.
When Sub-Committee B took the decision to undertake its inquiry in July 2010, the EU economy was in desperate need of a kick start. Nothing seems to have changed, unfortunately. That is why it is most appropriate that we draw attention to the absolute necessity to reignite enthusiasm in the single market, particularly as a counterbalance to the temptation of protectionism when the economic outlook is bleak.
The EU has produced a number of proposals with the aim of solving the serious economic problems. These include financial regulation, on which the EU Select Committee has already reported, and the Europe 2020 strategy, focusing on issues that were inhibiting growth and proposing measures to remove bottlenecks. The relaunch of the single market sits alongside these measures and is fundamental to future growth.
Our first witness was Professor Mario Monti, the former EU Commissioner. He explained to us that,
“the single market is not a flagship because it is neither a flag nor a ship, but”
the sea on which it floats and the wind in its sails. Professor Monti had produced a report at the behest of President Barroso detailing many ideas concerning the removal of bottlenecks that were hampering further development of the single market. A Commission consultation paper followed, entitled Towards a Single Market Act, and then finally the Single Market Act.
Our report is partly intended to inform the debate on which elements of Towards a Single Market Act should be included in the Single Market Act itself. The four main aspects that we examined were: first, the relationship between market liberalisation and social protection; secondly, the creation of a digital single market; thirdly, methods of enforcing single market rules; and fourthly, general ways in which the single market project could be relaunched. I wish to address each of these four points in turn.
Point one is the relationship between market liberalisation and social protection. Professor Monti acknowledged that the UK had been an enthusiastic advocate of the single market but was much less complimentary about other countries’ approach, which he described as,
“beset by fears about the erosion of the traditional social market economy.”
In order to overcome this reluctance he suggested that the Anglo-Saxon countries should accept greater social protection in exchange for the social market countries accepting greater liberalisation. We fundamentally disagreed with this analysis. We believe that each measure should be judged on its own merits and social measures should be the responsibility of member states. EU action should be necessary only where problems arose in liberalising measures. The posting of workers directive and the services directive fall into this category. The uncertainty surrounding the operation of the posting of workers directive and the subsequent rulings by the European Court of Justice exposed the difficulty between the right to trade in other EU member states and the right to take industrial action. This needs to be addressed and we welcomed the Commission’s intention to review the situation.
The services directive illustrates the tension between the Anglo-Saxon model and the social market model. I was glad to see that the noble Lord, Lord Hannay, had put his name down to speak in this debate. We had an interesting exchange of views on the services directive at the Select Committee. I do not know whether he will be adding anything to that subject today, but I suspect he will—I see he is nodding. I also recall that the noble Lord, Lord Liddle, had some interesting views on the services directive. I am delighted that he is speaking for the Opposition in this debate—he was a most valuable witness during the inquiry. How things change. I should mention that although the services directive was due to be implemented in December 2009, many member states have still not done so. On a more positive note, we welcomed the progress made so far, particularly in the establishment of points of single contact which assist businesses in trading abroad. However, we would like there to be speedier action to make sure that the directive is implemented properly.
Point two concerns the creation of a digital single market, which excites interest and significant progress is possible. The problem is that the regulatory conditions are not in place to enable more rapid progress to be made. The idea that 60 per cent of cross-border internet transactions in the European Union fail for one reason or another is both stupid and unacceptable. The Commission has this in its sights and I hope it will make progress speedily. Also, the objective of getting broadband to all EU citizens—thereby giving them the confidence to adopt the digital experience and benefit from the decided advantages it offers—is wholly admirable. We hope that that progress will accelerate rapidly. My noble friend Lady Wilcox, with her immense experience in consumer issues, will, I am sure, join us in welcoming the recent inclusion of digital goods within the scope of the consumer rights directive.
We did not consider mobile roaming charges but I was recently at an event in Warsaw to discuss the single market, and the issue of roaming charges was a hot topic. We in the UK and, indeed, in the EU Select Committee of your Lordships’ House can claim some credit in previously influencing the lowering of roaming charges, and I welcome the Commission’s recent proposals in this area and look forward to scrutinising them in the sub-committee in the autumn.
Point three concerns methods of enforcing single market rules. The single market must be policed more effectively. We do not believe that the Commission needs more power; it just needs to use its existing power more effectively. On the positive side, we are great supporters of SOLVIT, the online network permitting member states to solve the problems caused by the misapplication by public authorities of single market rules. We also support EU Pilot, which enables the Commission to raise problems with member states before starting informal infringement proceedings. In addition, the mutual evaluation process, used recently for the services directive, is another good thing.
Point four relates to the general ways in which the single market should be relaunched. I hope that I have convinced your Lordships that the single market is of benefit and that it has the potential to be of much greater benefit. When the arguments rage loud and long concerning whether or not we should leave the EU—which of course would be well nigh impossible now—we should counter the strident voices by pointing out that the single market is one area that we should all support, not least in our own interests. The single market can be of benefit to all citizens of the EU. It presents great opportunities for business and opportunities for jobs for the young at a time when such opportunities are so needed.
What is also needed is a concerted effort to convince EU citizens that, despite the tales of gloom and doom, we can use the single market as an engine of growth, not least in getting people back into the most important jobs of designing, producing, marketing and selling goods across the national borders of the EU member states. We must invest in projects that are relevant, properly managed and carefully audited. No more money can be wasted on projects that run over the original budget by a factor of three or more. I guess I should not say that “old Spanish practices” should be rooted out but that is the best way I know of insisting that every effort should be made to gear up our industry and businesses, particularly SMEs, to take on the ever-increasing competition from the BRICs. The old—very old—slogan of “united we stand, divided we fall” is how I see the single market.
The UK has been a champion of the single market right from the outset and I hope that this report will encourage many to champion it with renewed vigour. I beg to move.
Lord Bradshaw
I shall not detain your Lordships for long but I want to emphasise one point made by the noble Baroness, Lady O’Cathain, which is that infraction proceedings in the European Union should proceed at a much faster pace than they do at present.
We are members of the EU and, generally speaking, it is recognised that we are probably among the foremost in transposing EU legislation into our own law. However, there are many people who do not play by the rules. We heard yesterday of one country that was seeking to divert the money that the EU had paid it for one thing to another. This is the sort of thing that causes great impatience and of course provides a lot of opportunities for those who are against the EU to say that the proceedings are not properly or fairly conducted. I just expressed the view that, had we been more earnest within the EU in enforcing the rules relating to banking, the problems that have arisen in some countries would probably have been avoided.
Therefore, I want to make the point that infraction proceedings must be speeded up because they are most important in making sure that the EU is fair. We are well down the road with things such as advertising contracts in EU journals but, if other people are not playing by the same rules, you can be scrupulously fair on the one hand and sometimes face a chaotic situation on the other.
Therefore, my message to the Minister is very simple: I want to see something done to improve the infraction proceedings against those who choose not to implement EU law.
Lord Hannay of Chiswick
My Lords, it is all too easy, in this period of turbulence for the eurozone, to take one’s eye off the salience of the single market for the future prosperity and economic stability of all 27 members of the European Union. It is all too easy, too, to think that the single market was part of yesterday’s narrative, not today’s and tomorrow’s—all too easy but all too wrong, for two broad reasons.
The first reason is positive. A lot remains to be done before we have a true single market—a genuinely level playing field for our businesses, both manufacturers and services. Achieving that is not some academic or bureaucratic fancy. If noble Lords want an example, they should just look at the prescriptions that are being given to the weaker members of the eurozone—Greece, Portugal, Spain and Italy—by the IMF, the Commission and the European Central Bank. All involve programmes for getting rid of national barriers to investment and employment and removing national protections for vested interests; that is, for achieving a less imperfect single market. Moving the single market forward is therefore an integral part of making the EU capable of competing with the great emerging economies of China, India, Brazil and others.
The second reason that I suggest is the one put eloquently last week in a lecture at the London School of Economics by the president of the European Council, Herman Van Rompuy, when he said that it was the single market that had stood and continues to stand as the principal barrier against the follies of protectionism that so exacerbated the effects of the previous great economic and financial crisis in the 1930s.
This debate could not be more timely, as is the excellent report of the sub-committee, chaired by the noble Baroness, Lady O’Cathain, on which I congratulate both her and it. If the noble Baroness will forgive me one side remark, the only thing that I would suggest is never to refer to “old Spanish practices” in Brussels. I once went to a Bilderberg conference at which an Under-Secretary-General of the United Nations referred to “old Spanish practices” in front of Javier Solana, and the meeting had to be suspended for quite a long time.
What should the priorities be for the future development of the single market? Many of them are set out in the report that we are debating. First, I suggest that we need to recognise—this is the point that the noble Baroness, Lady O’Cathain, mentioned that I would get around to—that the services directive that was adopted a few years ago is a singularly imperfect and incomplete basis for a single market in what is now the largest part of all our economies. I argue that we need to go back to the drawing board as soon as this is politically feasible and start work on a second services directive to remedy at least some of, if not all, the deficiencies of the first. I hope that the Minister will give us some idea of the Government’s thinking on this point.
Secondly, I suggest that we also need to keep up the pressure for the liberalisation of energy supplies and markets, on which some progress has been made in recent years but where much remains to be done. Over the medium to long term, energy markets are tightening up and prices are set to rise as the global competition for resources increases. Europe surely needs to be making the most efficient use of those resources and to be working together collectively to maximise access to and diversification of supply, and I welcome the decision, which I believe was taken yesterday in Brussels, to give the European Union a remit to work on the diversification of supply.
Thirdly, we need a strong competition policy to underpin the single market and to roll back the increases in state aid that have been an inevitable but, in the long term, undesirable feature of the response to the current global economic and financial crisis.
If those are the priorities, we are certainly going to need allies in order to pursue them successfully—allies who go well beyond the enlistment of the majority of other member states, which is of course what you need if you are to get any piece of legislation through. We will need a strong Commission—and that was referred to by both previous speakers—ready to bring forward new liberalising proposals and ready to take a tough line on competition issues. We will need a Court of Justice whose rulings bring pressure to bear on laggard member states to implement properly the agreements reached in the Council—a point made by the noble Baroness, Lady O’Cathain, regarding the services directive still not being implemented in some member states. We will need a European Parliament ready to weigh in on the side of liberalisation when it exercises its powers of co-decision, but not to throw its weight behind protectionist amendments. Those three European institutions are not perhaps the flavours of the month in debates in this Parliament—particularly at the other end of the Corridor—but we need to realise that they are essential allies in any moves towards a more complete single market, and we need to treat them as such.
Another perhaps not very welcome point that we need to grasp is that you cannot hope to have a real single market on an à la carte basis, as some seem to think you can. An à la carte approach—picking the things you like and discarding the ones you do not—will lead to 27 different orderings of priorities and no single market at all. Therefore, when the rules of public purchasing lead to a contract going to a company in another member state, we will need to learn to resist the knee-jerk protectionist reaction. We really must not delude ourselves into thinking that a campaign to repatriate powers from the European Union is compatible with the proclaimed objective of achieving a more complete single market. It is not, and it would be a pity if we had to find that out by bitter experience rather than by applying a bit of common sense at the outset.
One final point: if the single market really is the bulwark against protectionism that Van Rompuy says it is—and I totally agree that that is the case—we need to be there to protect and to promote that bulwark in every forum available. That is why it was an error for the Government to have decided not to participate in the euro-plus pact, even when 24 out of 27 member states are in fact doing so—and a fair number of them are not in the eurozone. It is rather ironical, when our Government’s economic policies are totally consistent with those being followed and indeed applauded by eurozone Governments, that we should be absenting ourselves from a forum for discussion in which issues related to the single market will inevitably arise. I hope that over time the Government will have second thoughts about that decision and will realise that the euro-plus pact has nothing whatever to do with Britain’s decision on the euro itself, which is a separate matter that we all understand is not going to happen in the near future.
I welcome the fact that in his remarks after the G7 Finance Ministers’ meeting in Marseilles last weekend the right honourable gentleman the Chancellor of the Exchequer recognised the importance of this country being a continuing champion of the single market and of a firm competition policy. I hope he will ensure that he and his colleagues are there to do that on each and every occasion that it needs to be done.
Lord Liddle
My Lords, this has been a short debate but an excellent one. At least, the three speeches that we have heard so far have been excellent. I hope I shall not ruin the record. I have had three separate goes at this report. When I was first introduced to the House, the noble Baroness, Lady O’Cathain, kindly invited me to give evidence to the committee. I was then put on the Select Committee, on which I was delighted to serve. We discussed the report’s content, or some of its themes at any rate. Now it is my job to speak for the Opposition in this debate, so I have seen a lot of this report. I think it is excellent and applaud the committee for its work.
Sometimes we may think that the work of the European Union Select Committee does not get as much attention—the big attendances for debates in the House—as it perhaps should. However, from my experience I can certainly testify that outside the House—in the Civil Service and in Brussels—the reports are read with attention. This report will have a desirable impact in influential quarters.
Of course, the Labour Party supports the single market and wants to see it reinvigorated. The noble Baroness, Lady O’Cathain, was absolutely right; this is particularly relevant for the UK now, when we are in a very difficult economic situation. We all agree that we have to rebalance our economy and that we need more exports and investment. That needs a prosperous single market. There is no alternative to that. We cannot gloat at Europe’s difficulties. We must make the European Union, of which we are a part, an economic success if we are to succeed in our objectives for our own country. In this room we all agree on that.
The strengthening of the single market is also essential for our own interests. It gives our companies a huge home market from which they can tackle the challenges of globalisation. The noble Lord, Lord Hannay, was absolutely right that the single market is the cornerstone of the structural reform agenda that the member states, particularly in southern Europe—the Greeks, the Spaniards and the Italians—need to take forward if they are successfully to remain members of the euro. That is how they can improve their competitiveness and economic growth potential. The Spanish Government have certainly got that message, so I shall not join in making rude jokes about Spaniards. However, the Greeks and the Italians have some way to go.
I also agree very strongly with the noble Lord, Lord Bradshaw. If you are serious about the single market, you have to recognise that it is much more than a free trade area. It is an area of deep economic integration, which is underpinned by the supranational institutions, particularly the Commission and the Court of Justice. Britain needs, in its national interest, a strong Commission that will police the single market. It needs an effective Court of Justice that will come rapidly to decisions on the single market. Therefore, when some members of the Conservative Party attack the Commission and the Court of Justice, they undermine the very instruments that would lead to the success of their own ambitions for single market liberalisation.
Where are we on the single market? Formally we are making quite a lot of progress. The Monti report was excellent and set out an agenda for the future. The Commission is preparing a comprehensive single market Act, which is about to start on its way through the legislative procedures of the Union. However, my friends in Brussels tell me that the outlook for progress is not very good. In the Council there is essentially a deadlock between the northern liberals, of whom I suppose we count ourselves as part, and the southern protectionists.
If I have one disagreement with the noble Baroness’s committee’s report and its recommendations, it is that we as Brits should recognise more that you get somewhere in the EU only if you are prepared to contemplate a package deal. It is no good just saying, “I want this and I’m not going to give you what you want”. You have to be prepared to build alliances. That is why the Government should look favourably—if the Minister cannot respond to me now, perhaps she could do so in a letter to me later on the Government’s attitude—on the Mario Monti recommendations and the things that have been suggested, like amending the posted workers directive, that might produce a more balanced package that would ensure that the European Parliament was prepared to look again at toughening up the services directive. There are elements of the Single Market Act that could achieve what the noble Lord, Lord Hannay, wants, but they will not go through unless they are part of some package deal.
That brings me to other, wider questions of alliance-building, which are important. One group of countries who are potentially allies of the United Kingdom on single-market matters is the new member states of central and eastern Europe, particularly the Poles, who hold the presidency now. I was in Warsaw in June and I am afraid to say that the Polish Government are very upset with the British Government because of their attitude to the EU budget. I am a disciplinarian with regard to the EU budget—I am not in favour of huge increases in it—but when Britain puts forward its position of the EU budget, it must recognise that the plans for the future of Poland and other new member states in that region assume that they will have available for investment the money that they have been getting through the structural funds of the EU budget. If we go around making statements about the budget that give the impression that we think this vital infrastructure money that they are due to get will be cut off because of the British Government, that is seriously bad news for us in terms of our political influence. I urge the Government to bear this point in mind. I understand the point about budget discipline but this is important if we want to build allies.
Another point about alliance-building was made by the noble Lord, Lord Hannay. If you want to be influential in the EU, you have to be there in the room, engaged in the debate. Personally, I think it was a mistake for the British Government to steer clear of the euro-plus pact. I did not like a lot of what was in it—it is rather draconian in its approach to austerity, and I would be prepared to have a debate about that—but we should seek every opportunity to put forward our views about Europe’s future, including the need for the structural reforms to be promoted through single-market liberalisation. Therefore, I think that staying away from the euro-plus pact was a mistake. In itself, it probably does not matter that much but, if it is part of a trend, it could matter a great deal.
I am very interested in what the right honourable gentleman the Chancellor of the Exchequer has to say about the European Union. He is saying some rather interesting things. He is saying that he wants to see eurozone governance strengthened, but he recognises that this potentially puts us in a difficult position on matters to do with the single market, where in any future deals we would want to remain an equal partner with the eurozone.
That is a crucial issue for Britain. We cannot get ourselves into a position where the eurozone effectively determines its policy for the single market and then goes along to the Council saying, “This is what we’ve agreed. Under majority voting, that’s what you have to accept”. There is a real risk of that happening, and that risk is heightened if Britain adopts an approach to Europe which is unconstructive, which gloats over the eurozone’s difficulties and where people at home talk about what concessions they can screw out of the European Union as a result of its difficulties in order to loosen Britain’s relationship with Europe. That is not the way to win our objectives in Europe for a stronger, more effective single market, and I hope that we will hear from the Minister that that will never be the policy of the British Government.
The Parliamentary Under-Secretary of State, Department for Business, Innovation and Skills (Baroness Wilcox)
My Lords, this topic is of great importance to both the United Kingdom and the European Union in addressing the current economic situation. First, I commend the EU sub-committee under the chairmanship of my noble friend Lady O’Cathain for producing such an excellent report.
I shall start by responding quickly to a question from the noble Lord, Lord Liddle, who is quite frightening in his rise to glory through this House. He gave evidence as soon as he took his place here; he was then invited on to the Select Committee; and he is now standing opposite me speaking for Her Majesty’s Opposition. I worry about where he will be going next. However, I shall do my best. He asked whether the Government agree with the recommendations of the Mario Monti report. The answer is that we agree with many of Mr Monti’s points but, if the noble Lord does not mind, I shall write to him, with a copy to the chairman of the committee, with more detail on our thoughts about the individual recommendations, as we do not agree with them all.
The Government see the single market as one of the fundamental cornerstones in the drive for growth, as outlined by the Prime Minister in the pamphlet Let’s Choose Growth. In its report the committee raised a number of points that I should like to comment on further.
The Government agree that the social dimension of the single market should not be seen as a trade-off against market liberalisation. By removing barriers to trade, the single market opens new markets for businesses, provides consumers with greater choice, encourages innovation and, ultimately, creates jobs. It is the main driver of growth and prosperity across Europe and plays a key role in maintaining the European Union’s global competitiveness. Pressing for a deeper, more competitive and more effective single market is a key commitment of the UK Government’s Trade and Investment for Growth White Paper, which was published in February 2011.
Additionally, all EU proposals should be accompanied by impact assessments that analyse associated costs and benefits. We are working towards this aim with the Commission and other like-minded member states.
In response to the question of the noble Lord, Lord Bradshaw, infraction proceedings should proceed at a faster pace. We absolutely agree with him that infractions are too slow. Infraction proceedings under the services directive have only just started against Austria. The EU pilot cases are designed to speed up this process. I agree with him that fairness and enforcement are the watchwords here, and I thank him for that.
The services directive is central to the completion of the single market. Many providers in the UK look to Europe as a market for their services but they face restrictive regulatory practices in order to provide their services across borders. These barriers hinder service sector growth and job creation, and their proportionality needs to be rigorously assessed. Companies and individuals currently bear unnecessary costs, and consumers get less choice and lower-quality services at inflated prices. Further simplification of the administrative environment, ensuring transparent, proportionate regimes, is a crucial part of successful implementation and is vital to facilitate the growth of SMEs.
It is important where member states are shown to be lacking that any deficiency is addressed immediately by the member state or, ultimately, through the infraction process by the Commission. Ineffective implementation, transposition and enforcement will lead to potential gains not being realised.
The Government feel that the mutual evaluation process used at EU level for the first time was a valuable exercise and that member states, together with the European Commission, created a good evidence base for further improvements. The Commission and other member states feel the same way and the process will be used as an evaluation tool in other fora.
The noble Lord, Lord Hannay, asked about reopening the services directive. The United Kingdom would be open to a new services directive but there is unlikely to be sufficient support in other member states or from the Commission. We are keen to introduce a proportionality test into the current directive against which any barriers should be measured. We are also keen that the Commission should use these enforcement powers where there is blatant protectionism.
The mutual recognition of professional qualifications directive covers professionals who need to register with a regulatory body in order to practise or hold a title. The European Commission is currently reviewing this directive, with a view to proposing legislation by the end of the year. The main proposal is a professional card that can be presented to regulators. We are concerned that this could add an additional layer of bureaucracy and have asked the Commission to think through the proposal in more detail before taking action. We need to reduce regulated professions in areas where they are causing barriers. Consequently, we are pushing for member states to review their regulated professions and remove regulations that are unnecessary or disproportionate. Where necessary regulations remain, we would like more cross-EU collaboration to allow applications for recognition to be processed more smoothly.
We must also recognise the vital role that flexible labour markets play in a vibrant economy. It is important that we do not impose further EU labour regulations that undermine domestic regulatory systems and have a negative impact on labour market flexibility. The Government have taken note of the Commission’s proposals on the Single Market Act regarding the posting of workers directive. While we are happy to look at proposals to better implement the directive’s provisions, it is crucial that these proposals do not impose unreasonable burdens on business or the Exchequer.
The Government agree with the authors on the significance of a fully functioning digital single market. However, we come to a slightly different approach on assessing the recent policies of the European Commission.
We welcome that the Commission is not planning a full revision of the e-commerce directive because we are sceptical that reopening the directive would be productive. A preferred option would be to build on the fundamentals of the directive through advice and the promotion of best practice, using the existing directive to deliver more successful cross-border transactions.
My noble friend Lady O’Cathain referred to the new consumer rights directive and my background knowledge of it. Political agreement of the consumer rights directive has now been reached and the Council will formally adopt it very soon. We have supported the aims of this directive throughout because greater harmonisation of consumer rules across the European Union, particularly on distance selling, will improve the functioning of the single market. The directive also applies to digital content and will, among other things, require additional pre-contractual information such as system compatibility requirements and any technical protection mechanisms to be provided to consumers.
On intellectual property, both the European Commission and the Government have recently released strategies for future intellectual property policy. The Government’s was published in response to the Hargreaves review of intellectual property and growth. Both agree that a modern, integrated European intellectual property regime will make a major contribution to growth, job creation and economic competitiveness. Many of Hargreaves’s recommendations and European Commission proposals fall on common ground. Additionally, the Government agree with the Commission regarding other digital initiatives. These include policies that enhance the competitive deployment of high-speed broadband and the introduction of an alternative dispute resolution for online trading, which will help to overcome consumers’ difficulties in obtaining redress from businesses in other countries.
The Government believe that a common consolidated corporate tax base is unnecessary for the single market to function effectively. We will not agree to any proposals that would jeopardise the UK’s ability to shape its own tax policy or prevent the UK creating the most competitive corporate tax regime in the G20.
The noble Lords, Lord Liddle and Lord Hannay, spoke of the euro-plus pact. The noble Lord, Lord Hannay, mourned the fact that we did not join it, as did the noble Lord, Lord Liddle. It is true that we did not join the pact. However, we welcome the euro area’s determination to push forward structural reforms, which are very important for the future strength and stability of the single currency, which is firmly in the UK’s own economic interests. As we know, almost half of our exports go to the eurozone countries. The United Kingdom has its own special relationship with the European Union and the euro. We have a formal treaty opt-out from membership of the single currency. That is why we have decided not to participate formally in this pact.
The noble Lord, Lord Hannay, then referred to energy markets. My Secretary of State, Vince Cable, shares the noble Lord’s concerns regarding our energy markets. On the point that was made about competition policy, he is very interested in competition enforcers looking into the market via a market study. This is one of the enforcers’ competing priorities. They will have to make a decision on this shortly.
Looking forward, since the House of Lords inquiry took place, the agenda has not been static. On the digital single market, the Government initiated and hosted a meeting with 13 other like-minded member states in July. At that meeting, we agreed to put collective pressure on the European Commission, with clear targets and deliverables for how the Commission plans to implement the digital single market. A joint letter from the like-minded group to different EU commissioners will be sent out shortly. The next meeting of the group is scheduled for November. Following the Government’s response to the Hargreaves review we will, within the next few months, consult on the detail of how it will proceed, and will set out plans in a White Paper in spring 2012. Much of this will have consequences for the digital single market and wider European intellectual property.
We have also been working with the Polish and Danish Governments—the current and upcoming presidencies—to ensure that the single market and growth remain a priority. There are still a number of key issues to be resolved before we achieve full implementation of the services directive, but we remain optimistic that we will be able to achieve progress on this, on reducing burdens to business and on ensuring as far as possible the free movement of labour, goods, services and capital. These are the aims of the single market and are of great importance for both the United Kingdom and the growth agenda generally.
I have just realised that I have missed two questions. I think I have time in which to answer them; this will save you having to wait to receive a letter from me. One is from the noble Lord, Lord Hannay, and one is from the noble Lord, Lord Liddle. I apologise for having done that.
The noble Lord, Lord Hannay, asked a question on strong competition policy and rolling back state aid. The state aid regime is the cornerstone of the single market; it helps to ensure effective competition. The Commission rules create a level playing field for UK companies, while at the same time enabling member states to make targeted interventions aimed at correcting market failures. Whether you agree or not, that is the answer I give you today.
With regard to the query of the noble Lord, Lord Liddle, about how the United Kingdom should work with Europe, I agree with the noble Lord that the United Kingdom needs to work more collaboratively with our European partners and should take absolutely no joy from the eurozone’s current situation, given that the European Union is, as I have said before, the UK’s main trading partner. I once again thank the noble Baroness, Lady O’Cathain, for a most excellent report.
Baroness O'Cathain
Thank you very much. I thank all Members who participated in the debate. We may not have had the quantity but we have certainly had the quality, which has been very good.
I should like to proceed in the order of speakers. The noble Lord, Lord Bradshaw made a point about the infraction proceedings. We have not faced up to the fact but will have to consider that the backlog of work in the Court of Justice is considerable. This is one of those bottlenecks. I think we are always pussyfooting around anything to do with the judiciary—we cannot touch it because it is sacrosanct. However, there is something that the Government should do about trying to hasten the solution of these problems before the Court of Justice. The noble Lord is right about the infractions. As he knows, we wanted them addressed speedily and we will continue along that route.
I welcome very much the remarks of the noble Lord, Lord Hannay, about protectionism, which I mentioned. The big thing, when we have an economic disaster, as we have had over the past three years, is that people tend to go back into their huts and do not want to venture out. They do not think about going out and making an opportunity out of a disaster. This is a very valid point: we cannot afford to think about protectionism.
I was very sorry that the noble Lord, Lord Liddle, did not get a welcome from the Poles. They were all so kind to me when I was there a few days after the Summer Recess started. We are in dialogue with them and I am going again to Krakow in about a fortnight to take part in the chairmanship of a discussion about the single market. So I think they like our contribution and they are very genial. I will not make any comments about any other nations—I am sorry.
I should also like to thank my noble friend the Minister for her support and for her wise advice, bearing in mind her background. I would point out that professional qualifications are within the remit not of EU Sub-Committee B but of Sub-Committee G. I sat in with the chairman of Sub-Committee G at a meeting in Brussels after a meeting on the single market, so I know about the professional qualifications. This is a matter they should take up with Sub-Committee G.
Also, the point that I should like my noble friend to take back to the department is the absolute imperative to enthuse all the citizens of the European Union in this single market. There are a few quick wins we can get in doing that. One of the biggest would be—looking at the noble Lord, Lord Walpole—a total extension of broadband to every citizen in the European Union. We have had endless discussions about the black spots of the UK that still have not had broadband.
If we could go forward together and make sure that every European Union citizen was enthused about this we might get somewhere. Then the begrudgers would have very little to begrudge about and we should get somewhere. At the risk of boring everybody I repeat what I said, that I am very glad we have had this debate. I am sure that it will make good reading. I particularly want to thank again the Minister and the committee.
Lord Walpole
Before the chairman sits down, I want to say a brief word. One of the reasons why this committee has produced such a good report, and is going to produce another very good report fairly soon, is because our chairman looks after us so well and it is a very happy committee. We all get on with each other extremely well and that is reflected in the report. Of course it is our staff as well who help us to survive, and have written the next report already.