Relaunching the Single Market: EUC Report

Baroness O'Cathain Excerpts

Tuesday 13th September 2011 Grand Committee

Moved by

[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.

--- Later in debate ---

[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.