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Internal Market in Services (EUC Report)

My Lords, on previous occasions in your Lordships’ House I have explained that, in my view, the real point of the European Union is not money and budgetary aspects, but the establishment of a system of rules put in place to integrate the economies of Europe in order to improve our collective standard of living, and to enable us to compete with the threats and opportunities of globalisation. This excellent report, which I warmly endorse, is a good example of how important that aspect is, and equally of how a failure to get it right could be so damaging to Britain and its citizens, the other member states and their citizens, and the European Union as a whole. Between 1999 and 2004 I was a member of the Legal Affairs and Internal Market Committee of the European Parliament. I am tempted to say that this was good fortune, because that is practice and good manners. However, having heard so many of the arguments put forward in the debate about the services directive, I sometimes wonder whether it was good fortune to have sat through it all. I say that because it was a depressing experience. Despite the fact that, in the words of the recently published OECD 2005 survey of the Euro area, in the section on integrating services markets,"““With its very wide scope, the services directive can be expected to bring about large employment and welfare gains””," the amount of criticism that was directed at this measure—which, on the face of it, can be almost entirely beneficial—was depressing. Of course elected representatives are there to articulate constituents’ points of view, but the procession of special pleading was imaginative, wide-ranging and ingenious, always advancing reasons why the impact of the directive should be watered down. Again, as the OECD document has pointed out:"““Despite its anticipated benefits, the services directive has met heavy opposition from different parties, in particular the labour unions. Its transversal approach implies eliminating rents in many sectors, including the regulated professions, thereby making it advantageous for a variety of powerful special interests to coalesce against the proposal””." The consequence of this in the European Parliament was touched on by the noble Lord, Lord Woolmer, in his opening remarks. From what my ex-colleagues there tell me, it is possible that a majority will emerge for a form of words that ought to make the directive at least moderately acceptable. I hope this will also run with the likely political agreement that is emerging in the Council, but I will be interested to hear from the Minister whether that is the case. It is hardly very perceptive to point out that our economies have to adapt or Europe will die. It is as obvious as saying to a farmer, which I am, that agricultural support has got to change. If one is faced with that, it is a painful process, but it has simply got to be done, and those involved have to take it on the chin. As has been pointed out, there has been a considerable amount of misinformation about the impact of this directive. Again I shall quote the OECD:"““In addition, misunderstanding about the interaction of the proposed services directive with the existing Posting of Workers Directive and scepticism regarding the possibility of enforcing this directive has fuelled excessive fears of social dumping, while others have argued that services, such as health care should be excluded. In public comments the country-of-origin principle has been misinterpreted and the directive has been linked with the issue of movement of persons from the new to the old EU member countries. Skilful use of this misunderstanding has enabled interest groups to create considerable resentment in public opinion against the proposed directive””." The world cannot remain as it is; nobody wants it to. We must deal with the changes as the world evolves. As I have already explained, there are concerns for employees, but we must also remember the concerns of the next generation of workers and employees. No amount of university expansion, training or sponsored schemes will avail anything if there is not a lively market for labour when people are ready to go into the labour market. The mythical Polish plumber, and his real predecessor in London, the Irish plumber, filled a need; that, after all, is why they came: there was a job that needed to be done. Flexible labour practices are a priority in the face of increased competition from outside and enlarged opportunities abroad. Competition is the hallmark of the market and competitiveness in delivery is the touchstone of success within it. As Anatole Kaletsky pointed out in yesterday’s Times, failure threatens over a period to dismantle our economies, reducing them, and with it our countries, to also-rans in the global marketplace. What will that do for jobs or services? Equally, it is no good fantasising about unilaterally jettisoning the European Union, because you cannot unilaterally withdraw from interdependence; it is too late for that now. The Union must be changed, but it will not evaporate at the same time. It is a false dichotomy to see an alternative between the European Union and market economics. There is no real choice; it must be both. That is the challenge, and the report points the way and shows what a political test the future holds for us. In truth, in my view, it will be incredibly hard work, but we must grind on doggedly and persistently, because there is no alternative worth having.