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EU: Single Market (EUC Report)

rose to move, That this House takes note of the report of the European Union Committee on The Single Market: Wallflower or Dancing Partner?—Inquiry into the European Commission’s Review of the Single Market. (5th Report, HL Paper 36). The noble Lord said: My Lords, the European Commission began its review of the single market in May 2006 and the Commission reported in November last year. Sub-Committee B of the European Union Select Committee began its work at the beginning of last year and we took evidence throughout 2007. We reported to this House on 8 February. I am particularly pleased that the Government were able to respond very quickly by 4 March, and I thank the Department for Business, Enterprise and Regulatory Reform and Her Majesty’s Treasury for their speedy review, report and response. A word about our subtitle—we wished to ask ourselves: is the single market now an ignored, irrelevant side aspect of the European Union or very much capable of a useful and active contribution to European economic growth? I shall explain our conclusions in my contribution to the debate. I thank the Select Committee under the chairmanship of the noble Lord, Lord Grenfell, for wise counsel and support and for agreeing to the translation of the main part of the report into French and German for the benefit of MEPs, Ministers and the staff of the European Commission. This was despite some confusion among some of our European, particularly our French, colleagues—because one translation of our subtitle ended up as Small Plants in a Music Hall. I think they believed that this was a rather typical and mysterious example of a British sense of humour. But, seriously, the principle of translation of Select Committee reports of this House into foreign languages is important. I am grateful to the Select Committee and the noble Lord, Lord Grenfell, for their support in this matter, and I hope that that principle will be continued. I thank three successive Clerks to the sub-committee, Duncan Sagar, Judith Brooke and James Whittle. We are well served in this House by the very high standard of our parliamentary Clerks who work very long hours and whose English—indeed, grammar—is far superior to that of the members of the committees they serve. I thank also our special advisers, Dean Cook, Mark Griffiths and Dr Ian Walden. They fitted long hours into their busy professional jobs for modest reimbursement. The initial development of the Common Market, now the single market, was in large part due to the vision of Margaret Thatcher—now the noble Baroness, Lady Thatcher—as Prime Minister. It became a legal reality with the Rome treaty and the Single European Act 1986. I am sure that your Lordships will wish the noble Baroness good health and a speedy recovery to her place on the Benches on this side of the House. The single market is the free movement of goods, services, people and capital; and it has been a great success. I wish briefly to quote from Her Majesty's Government’s response to paragraph 149 of our Select Committee report. They state: "““The Government agrees that the Single Market is and continues to be of great benefit to consumers, businesses and citizens of the European Union. It has been an outstanding driver for growth and jobs, increasing EU GDP by 1.8%””—" per annum— "““and creating 2.75 million new jobs””." The committee agrees with the judgment of Her Majesty’s Government, and indeed the European Commission, that the single market has so far been a great success, but there is a great danger of that success faltering. The past benefits of the single market are not fully realised by the electorate, and one cannot detect a really enthusiastic vision for the further development of the single market by member states, the Commission or Parliament. We need to re-enthuse the population of the European Union about the prospects of the single market delivering even better results. The spring European Council is meeting this morning in Brussels on the second day of its two-day summit. I hope that the Prime Minister will take a lead in calling for the following measures, which the committee reported. First, we should call a halt to more regulation from Brussels unless it is absolutely necessary. There is broad agreement on both sides of the House on that point. Secondly, there should be an emphasis on proper implementation and enforcement of existing regulations. In the European acquis we have a great welter of regulations and directives, some of which have not been properly implemented and enforced in member states. Thirdly, the Commission should provide more advice and help to new members of the European Union in ensuring that the acquis is translated into their own domestic legislation. Fourthly, I do not think that there is any support for the appointment of any more European-wide regulators in Brussels. National regulation is the key—it is much more flexible—and I think that perhaps better co-ordination is required between nations. We do not want any further pan-European initiatives. Fifthly—I believe that the Prime Minister is particularly keen on this—there should be better help and assistance to small and medium-sized enterprises in exploiting the benefits of the single market. One can understand why very small firms do not necessarily think of trading in the European Union because of the complexities, difficulties and diseconomies of scale, but more should be done. Our committee believes that the single market of the future should be based on a much more liberalised European economy with free and undistorted competition and hence a more flexible and dynamic European economy with less bureaucracy. For the first time in my political life I judge that in your Lordships’ House and the other place, and now in Brussels, there is an acceptance of the need to build for the future on a more liberalised, flexible and competitive European economy. Her Majesty’s Government have responded very quickly. They have welcomed the committee’s report. I pay particular tribute to Commissioner McCreevy for his dynamic leadership of his portfolio and directorate. Our committee’s report marches very closely with his thoughts and views. I pay tribute to the internal market committee of the European Parliament, with which our committee has worked very closely. I now turn to the specific recommendations in our report. First, on energy, there is undoubtedly a battle going on in the summit in Brussels today over the view, led in part by the United Kingdom but also strongly supported by the commissioners, that we want an ownership ““unbundled”” system for our energy market for the future, whereby the generation of electricity and gas is separated from its transmission and sale. That model has worked extremely well in the United Kingdom, subject to ongoing and proper regulation resisted by a number of states. I hope that the commissioners and the Council will have the courage of their convictions and press ahead with wholesale reform of the energy market. Secondly, on financial services, we have had a welter of regulation at wholesale level. We now need reform at the retail level, so that customers of financial services institutions in this country can conduct their transactions much more freely across country boundaries. Further work needs to be done on that. Thirdly, on telecoms, we do not believe that there should be a European Union-wide regulator. Our regulator does an outstanding job and other national regulators should be encouraged to police their own systems. We believe that what is called the spectrum in telecommunications should be operated and exploited by the public sector and not be subject to regulation and control by Brussels. Fourthly, there is the topical subject of renewable energy. The Commission’s target, which I suspect will be adopted shortly by member states, is that by 2020, 20 per cent of our energy generation should come from renewable sources. The target for Britain is only 15 per cent, and at present we are on 2 or 3 per cent, so we have a mountain to climb. Some of your Lordships may have heard the report on the ““Today”” programme this morning from Cambridge Econometrics that it would be a major challenge for us to get even to 5 per cent by 2020. Therefore, the internal market has a crucial role. We need to lift regulations and encourage the European-wide trading of quotas in renewable energy targets. Sixthly, on small businesses, the competition council on 25 February gave support to the notion of a new small business Act. The details need to be flushed out by the Commission, but at its heart it will provide small businesses with exemptions from certain regulations. What has been done in Brussels with an organisation called SOLVIT, which provides information to small businesses trying to trade across national barriers, has been a success. The next step is not just information but advice, on which the British Government have been outstanding. In conclusion, the EU Select Committee—the main committee—published yesterday the impact assessment of the Lisbon treaty for the United Kingdom. It is a full document that is designed to inform your Lordships when we come to debate the treaty. I draw your Lordships’ attention to the fact that the Lisbon treaty will have very little impact on the workings of the internal market other than the extension of qualified majority voting. There is a significant change in the Lisbon treaty from the old draft constitutional treaty. It is the absence in the main part of the treaty of the term ““free and undistorted competition”” as being a target, an aspiration and a principle of the operation of the internal market. We are all disappointed about its relegation to a protocol. We have been assured by the lawyers that it makes no difference at all, except the jury is out. We shall have to wait to see the judicial interpretation of the placement of that aspiration in the protocol. A liberalised, competitive and lightly regulated single market is the best way to serve citizens of Europe. I commend the report to the House. I beg to move. Moved, That this House takes note of the report of the European Union Committee on The Single Market: Wallflower or Dancing Partner?—Inquiry into the European Commission’s Review of the Single Market. (5th Report, HL Paper 36).—(Lord Freeman.)