EU Directive on Services

– in the House of Lords at 11:08 am on 21st July 2005.

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Photo of Lord Harrison Lord Harrison Labour 11:08 am, 21st July 2005

asked Her Majesty's Government:

What plans they have to make progress with the European Union Directive on Services during the United Kingdom presidency of the European Union.

Photo of Lord Triesman Lord Triesman Parliamentary Under-Secretary, Foreign & Commonwealth Office, Parliamentary Under-Secretary (Foreign and Commonwealth Office)

My Lords, we shall try to resolve outstanding concerns on the directive on services during our presidency. Free movement of services is and always has been one of the fundamental freedoms set out in the EU treaties. We shall continue the technical work begun by the Luxembourg presidency on this directive in preparation for further discussions after the European Parliament's first reading in the autumn.

Photo of Lord Harrison Lord Harrison Labour

My Lords, despite the Prime Minister's genuine concerns, alluded to in a speech on 24 March, with regard to the impact of the services directive on the NHS, does my noble friend agree that implementation of the services directive will be the greatest impetus to the Lisbon agenda, will generate 600,000 new jobs and will boost EU GDP by €37 billion? Does he agree that that will represent the very best form of a European social model and help to bring the people closer to the European Union, as outlined by Trade Commissioner Peter Mandelson today?

Photo of Lord Triesman Lord Triesman Parliamentary Under-Secretary, Foreign & Commonwealth Office, Parliamentary Under-Secretary (Foreign and Commonwealth Office)

My Lords, I agree with my noble friend. The negotiations on the scope of the directive as regards who will be covered by it and who will not are not yet resolved; they are ongoing. That should comfort those who may be fearful regarding particular services. However, the overall benefits are accurately stated: benefits to all states; value added of about 1.1 per cent to some €33 billion; and productivity gains without question. In addition, real wages in the EU would rise by nearly half a per cent while the return on capital would increase by 1.1 per cent. Were we able to achieve those kinds of liberalisation, the quality of the economies of Europe, not all of which are in great shape, would unquestionably improve.

Photo of Lord Dykes Lord Dykes Spokesperson in the Lords (Europe), Foreign & Commonwealth Affairs

My Lords, does the Minister agree that the directive is long overdue? It has already been discussed substantially, so we hope that the negotiations will not take too long. Does he not further agree that it is perfectly possible to maintain high standards of qualifications for people who have spent many years getting their qualifications in vocations, professions and trades without them becoming artificial restraints on trade or restrictive practices? That should reassure some of our colleagues on the Continent who are more nervous about this directive than we are.

Photo of Lord Triesman Lord Triesman Parliamentary Under-Secretary, Foreign & Commonwealth Office, Parliamentary Under-Secretary (Foreign and Commonwealth Office)

My Lords, I agree with that point. The ability of people with a known qualification to transport their skills is obviously useful. It gives reassurance. People have a sense of knowing what they are getting when they engage with someone for a service. It is absolutely true that there is no reason for people to be unduly apprehensive about any of that. In making the commitment to try to drive this matter forward during our presidency, which lasts only six months, noble Lords can see that there is urgency there.

Photo of Lord Hannay of Chiswick Lord Hannay of Chiswick Crossbench

My Lords, does not the Minister agree that the corollary to what he said about this being a basic freedom is that whatever exemptions are made at this stage cannot under any circumstances be permanent? Would he like to comment on the proposition that, rather than allow a general watering down of the provisions of the directive, it might be better to accept slightly larger sectoral exemptions in the first place?

Photo of Lord Triesman Lord Triesman Parliamentary Under-Secretary, Foreign & Commonwealth Office, Parliamentary Under-Secretary (Foreign and Commonwealth Office)

My Lords, I am quite tempted by that proposition but the reality is that the negotiation will no doubt have to balance that against other factors. There are apprehensions in some of the European states about the likely impact of the measure, and there are concerns that there should be no social dumping and no moving down towards the bottom. I do not believe that those are really the dangers and for that reason I am not as apprehensive about the measure. However, the negotiations and the role of the European Parliament in determining the outcomes of them will be essential.

Photo of Lord Biffen Lord Biffen Conservative

My Lords, will the Minister confirm that there is a great deal of apprehension on the part of the French concerning this directive? Will he state whether an opt-out would be a perfectly legitimate compromise to help to overcome those anxieties?

Photo of Lord Triesman Lord Triesman Parliamentary Under-Secretary, Foreign & Commonwealth Office, Parliamentary Under-Secretary (Foreign and Commonwealth Office)

My Lords, I hope that we shall reach an agreement which will not involve an opt-out. The characterisation in some of the French media regarding a liberalised economy over which there are no restraints competing with the European social model has been greatly overstated. I do not think that the March European Council misunderstood the issues; it said that the internal market for services has to be fully operational while preserving the European social model. That specifically tried to address those French concerns. It is our belief that the negotiations will be successful in that respect.

Photo of Lord Lea of Crondall Lord Lea of Crondall Labour

My Lords, is my noble friend aware that progress on the services directive will be supported more strongly—I support it very strongly—if there is progress at the same time on the temporary agency workers directive?

Photo of Lord Triesman Lord Triesman Parliamentary Under-Secretary, Foreign & Commonwealth Office, Parliamentary Under-Secretary (Foreign and Commonwealth Office)

My Lords, I have heard that point put and I know that it is put understandably and reasonably by representatives of the ETUC and the domestic trade union movements. If too many directives are all interlinked, the prospects of getting any reasonable progress in any reasonable period of time will be very limited. Of course, no one wants to see some form of movement to the bottom, which I believe underpins the question that has been asked.

Photo of Lord Howell of Guildford Lord Howell of Guildford Spokespersons In the Lords, Foreign Affairs, Deputy Leader, House of Lords, Shadow Minister (Foreign and Commonwealth Affairs), Shadow Deputy Leader of the House of Lords

My Lords, the aims of this directive are obviously admirable, but are not the Government right to proceed rather cautiously in their consultation? Does the Minister agree that this is a most colossal directive covering, it is estimated, more than 60 per cent of all employed people throughout the entire European Union? It is, in fact, a mega directive and therefore needs to be handled very carefully. Does the Minister agree that it would be a great pity if it ended up producing more regulation and not less, and attached itself by conditions to all kinds of other regulations and created greater difficulties for business and not the kind of competition that we all want to see?

Photo of Lord Triesman Lord Triesman Parliamentary Under-Secretary, Foreign & Commonwealth Office, Parliamentary Under-Secretary (Foreign and Commonwealth Office)

My Lords, it is an absolutely massive potential change, which is why it is possible to make the claim for it that, if successful, it will have as dramatic an impact as my noble friend Lord Harrison and I indicated on levels of employment, competitiveness, potential profitability and value added. Those are big prizes and it is worth going for them. However, if we put too many impediments in the way, none of those prizes will be realised and people may well say within a year or so, "What was the impact of the Lisbon agreements?". That would be a shocking and wasteful outcome.