Leaving the EU: State Aid, Public Ownership and Workers’ Rights

(Limited Text - Ministerial Extracts only)

Tuesday 11th December 2018 Westminster Hall

[The Minister for Universities, Science, Research and Innovation (Chris Skidmore)]

It is a pleasure to serve under your chairmanship, Mr Hollobone. I thank the hon. Member for Crewe and Nantwich (Laura Smith) for securing this important debate. There were passionate and learned contributions from the hon. Members for Glasgow East (David Linden) and for Barnsley East (Stephanie Peacock), from my hon. Friend the Member for Henley (John Howell) and the hon. Member for Glasgow South—

[Chris Stephens]

South West.

[Chris Skidmore]

Apologies—the hon. Member for Glasgow South West (Chris Stephens). I was deeply impressed by the hon. Gentleman’s ability to speak through his vocal impairment; he was cutting quite loudly through it by the end of his speech. We also heard from the hon. Member for Newcastle upon Tyne Central (Chi Onwurah) and, last but not least, the hon. Member for Stroud (Dr Drew), whom I thank for his generous congratulations on my fifth day in my new role.

[Chi Onwurah]

I regret that I did not take the opportunity to welcome the Minister to his new role and I wish him every success for the period he occupies it.

[Chris Skidmore]

I am deeply grateful for those kind words. I am getting stuck into the job by appearing at this debate, but I am here to represent the views of my Department as a replacement Minister. My hon. Friend the Member for Rochester and Strood (Kelly Tolhurst), the Minister for Small Business, Consumers and Corporate Responsibility, sends her profuse apologises that she has been unable to attend. She is representing the Department in the debate on the Accounts and Reports (Amendment) (EU Exit) Regulations 2018 in Committee corridor. I am here in her place to represent the Department’s views.

Let me start with what state aid rules are and why they exist, what is and is not state aid, and when it is allowed. Put simply, state aid is Government support or subsidy of an economic operator that gives it an advantage it could not get on the open market and distorts competition in the single market. The EU has tough rules governing the way subsidies can be given, to stop companies from getting an unfair advantage over their competitors and to ensure that countries with deep pockets do not subsidise their companies to the detriment of companies in other member states. However, where there are good policy justifications for state aid—where the benefit from giving aid outweighs the potential harm of a subsidy—the rules enable aid to be given.

Not all Government spending is aid. In fact, less than 1% of UK Government spending meets the technical definition of state aid. The state aid rules are about supporting fair and open competition, and the UK has long been a vocal proponent of them. The rules exist to stop countries from subsidising their industries unfairly, which would put businesses out of business and workers out of work.

A second misconception is that state aid rules prevent nationalisation. As long as the Government do not pay more than the market price for any assets acquired, the rules do not prevent that. However, the rules oblige the state to act as a normal market investor. That is good, because it prevents public authorities from unfairly distorting markets. State aid rules are neutral on public ownership and on the detail of spending decisions.

State aid rules are also fundamental to any free trade agreement. The political declaration on the framework for the future relationship between the EU and the UK recognises that. Free and fair trade is not possible if one party is able to subsidise without restraint. In a single customs territory that allowed the free trade of goods, as provided for in the draft withdrawal agreement, neither the EU nor the UK would be able to apply tariffs as measures against unfair subsidies by the other party. To ensure fair and open competition, it is absolutely necessary for the same state aid rules to apply consistently within the single customs territory, not to be frozen or disapplied for one bit of it.

I turn to workers’ rights, which have been the predominant topic of discussion. It is important to be clear that we are not making a choice between protecting state aid rules and protecting workers’ rights. As a responsible Government, we will work both to prevent unfair subsidies and to protect the rights of workers. The UK—we had several history lessons through some of the learned contributions to the debate—has a long-standing record of ensuring that workers’ rights are protected. Those include employment and equality rights, and protections for health and safety at work.

The decision to leave the European Union does not change that. This Government have made a firm commitment to protect workers’ rights and to maintain the protections covered in the Equality Acts.

[Chris Stephens]

Can the Minister tell us when the Government plan to publish their proposals in response to the Taylor review?

[Chris Skidmore]

In terms of the Government’s commitment and the commitments I am giving today, I reflect that the Prime Minister said recently in the House that

“we already go further than EU minimum standards, including on annual leave, paid maternity leave, flexible leave, paternity leave and pay, and parental leave, because we know that the first responsibility for protecting those rights sits with…Parliament. As we take back control of our laws, we will not only honour that responsibility, but go further still…by implementing the recommendations of the Taylor review. So we will not just protect workers’ rights: we will enhance them.”—[Official Report, 4 December 2018; Vol. 650, c. 760.]

The Government have been clear that they will take the recommendations of the Taylor review forward.

[Stephanie Peacock]

Further to the intervention by the hon. Member for Glasgow South West (Chris Stephens), the Minister has not given the House a date. If he is that committed to the response, can he tell us when it will be?

[Chris Skidmore]

I appreciate the hon. Members’ request for a specific date. I will have to fall back on a position of ensuring that my hon. Friend the Member for Rochester and Strood, the responsible Minister in this policy area, will write to both the hon. Lady and the hon. Member for Glasgow South West setting out clearly the next stages and the time frame for them.

Given our record in comparison to the EU standards in many areas, it is not surprising that Eurofound, the EU agency for work-related policy, ranks the UK as the second best country in the EU for workplace wellbeing, behind only Sweden, and the best country for workplace performance.

There has been some discussion about the EU withdrawal agreement. That will ensure that workers’ rights enjoyed under EU law will continue to be available in UK law after we have left the EU. That includes rights derived from EU law, such as the working time directive and the agency workers’ directive. Specifically within the withdrawal agreement, the UK is seeking a stringent and legally binding agreement with the EU not to roll back on employment standards. A joint committee would ensure that the UK was keeping to the agreement at a political level. There will be no roll-back of rights, including collective bargaining rights, when we leave the EU.

[John Howell]

I remind my hon. Friend of the European Social Charter, which we signed up to in 1961. Of the rights guaranteed by that charter, there are the

“the right to work, the right to organise”—

that is to be part of a trade union—

“the right to bargain collectively, the right to social security, the right to social and medical assistance, the right to the social, legal and economic protection of the family,”

and so on. Those are just some of the rights protected by this Council of Europe treaty that we signed up to in 1961 and it stands completely outside whatever is agreed in the withdrawal agreement.

[Chris Skidmore]

I thank my hon. Friend for putting that on the record. I listened to his speech on the Council of Europe and know he is a dedicated member of it. I pay tribute to his work, which often goes unheralded in this place. We know that there are many colleagues from across all parties who do a great deal of work on behalf of the United Kingdom at the Council of Europe, and it is right that that is recognised in this debate.

I hope the Government’s commitment, in both the withdrawal agreement and statements that we have made, will give certainty and continuity to employees and employers alike, creating stability in which the UK can grow and thrive. The political declaration on our future relationship makes it clear that we will build on this for the future deal with the EU. We want to ensure that the future economic partnership of the EU is underpinned by measures that ensure fair and open competition. Obviously, a rigorous approach to state aid is a critical component of that and provides a foundation for ensuring smooth trade and a partnership based on high market access. That is reflected in the political declaration, which establishes state aid as a crucial part of the level playing field commitments. The text makes clear that the precise nature of these commitments will depend on the scope and depth of the future relationship and the negotiations to take place.

There is no choice between taking the state aid rules or protecting workers’ rights; the Government recognise the fundamental importance of both.

[Stephanie Peacock]

The Minister talked about state aid and workers’ rights. Can he explain why the rules on state aid are both tougher and clearly more enforceable, in contrast to those on workers’ rights?

[Chris Skidmore]

I am not going to pre-judge what is taking place as we move towards a clear, definable free trade agreement with the European Union and the discussions that will happen after the political declaration. We have made that commitment, but actually we want to make sure that the United Kingdom has the ability to ensure that UK rights are clear, definable and stronger. They are already stronger than those in many European countries. We will continue to ensure that we have the reputation I mentioned: being the second best country in the EU for workplace wellbeing, behind only Sweden. It is important for our global reputation that we maintain that.

On the point about the EU workers council, if the EU withdrawal agreement is not approved we will still unilaterally protect workers’ rights in relation to European workers councils, as far as we can. However, to protect them fully, we require a deal with the EU, which sets the rules governing the establishment of a new European workers council. That is why I believe that the withdrawal agreement is so important to ensuring that we have no reduction in workers’ rights.

We will go further than the minimum labour market standards guaranteed in a withdrawal agreement. The Government will protect workers’ rights to ensure that they keep pace with changing labour markets. I hope the hon. Member for Crewe and Nantwich agrees that our approach on these vital issues will help secure the best possible deal for the UK as we leave the European Union.