European Union Committee: Report on 2013-14 (EUC Report)

Baroness Valentine Excerpts

Thursday 24th July 2014 Lords Chamber

[Baroness Valentine (CB)]

My Lords, before I begin, I declare that I am chief executive of London First, a not-for-profit business membership organisation.

I congratulate the noble Lord, Lord Boswell, on securing the debate. I am pleased to serve as a member of Lords EU Select Committee Sub-Committee B. We are tasked with investigating matters relating to the internal market, infrastructure and employment—three areas of critical importance to our future competitiveness. I want to reflect on those issues in relation to the EU, and particularly on the committee’s recent investigation into youth unemployment.

We are not here today to debate the UK’s membership of the EU. That question will undoubtedly continue to exercise the Chamber for many years to come. However, it is worth reflecting on the opportunities that membership provides. It provides access to the largest economic bloc in the world. The GDP of the EU is worth around $18 trillion compared with the US economy of $16 trillion, and is more than twice the size of China’s $8 trillion. Particularly in services, where the UK is exceptionally strong, there is a further upside to come from completion of the single market. It is estimated that the completion of the digital market alone would provide a 4% uplift to European GDP.

British citizens have the freedom to work in other European countries—from a student working as a barista in Barcelona to a financial analyst working in Frankfurt. Of course, this freedom of movement works in both directions. The quid pro quo is that citizens across the EU can work in the UK. While this adds to the pool of talent available to make our companies more competitive, it also provides a challenge to those with lower skills. But from a pan-European perspective, the fact that people can move around to look for jobs is healthy both economically and for the individuals concerned.

Our report identified large parts of Europe that face chronic and persistent levels of youth unemployment. In Greece, almost 60% of people aged 15-24 are unemployed; in Spain the figure is 54% and in Cyprus 40.4%. In the UK, youth unemployment is lower but, at around 22%, is still more than double the rate recorded in Germany and the Netherlands.

Behind those statistics lie human stories of wasted talent, unfulfilled potential and fear for the future. The impacts of such endemic unemployment cannot be underestimated. At worst, it can fuel social unrest and, at the least, young people across the continent risk missing out on the psychological and economic benefits of being in work, learning new skills and being independent. As George Orwell wrote, unemployment for humans is the equivalent of shackling a dog to a chain. I have as much sympathy for the unemployed in Athens as I do for those in London. The solution for the UK is not to put up barriers but to improve skills and education provision.

Are there ways that Europe can work more effectively to help us get young people into work? I believe there are. First, Europe can provide robust analysis of effective interventions across the Union. The UK should learn from best practice in other member states and not arrogantly dismiss ideas and methods that work elsewhere on the continent. One such example is the UK’s refusal to follow the majority of member states in introducing a youth guarantee, with funding provided by the European Social Fund. This would require the British Government to ensure that all young people find suitable work, training or further education opportunities within four months of being unemployed. At the very least, the Government should pilot the guarantee in areas most blighted by youth unemployment and measure its success.

Secondly, the UK should learn from the approach to training in the very best EU countries. I am told by those who follow sporting matters that the German football team has been the toast of Europe this summer, while England were found wanting. The German success reflects a wider facet of their culture; in particular, a serious, long-term approach to training. Indeed, its dual system of vocational education and training has been a major factor in Germany’s economic success and low levels of youth unemployment.

Vocational training is a term that still carries stigma in Britain. We tend to look down our noses at people who work with their hands. But other European countries —Germany and the Netherlands in particular—have reaped substantial rewards from building a partnership between business and government that links study and practical experience. Put simply, the UK needs to upskill its own learning skills.