Post-Council EU Competitiveness Council

Lord Willetts Excerpts

Thursday 18th October 2012 Written Statements

[The Minister for Universities and Science (Mr David Willetts)]

The EU Competitiveness Council took place in Luxembourg on 10 and 11 October 2012. I represented the UK on research issues on 10 October, and also for some items on 11 October on internal market and industry. Shan Morgan, Deputy Permanent Representative to the European Union, also represented the UK for a number of items on 11 October. A summary of those discussions follows.

The research session of the Competitiveness Council started with agreement being reached on a partial general approach (PGA) on the main elements (budget was excluded) of the European Institute of Innovation and Technology (EIT) amending regulation. The main focus of subsequent discussion was on the Horizon 2020 rules for participation regulation (“the Rules”), which sets out the rules under which participants in Horizon 2020 must operate and the arrangements through which they receive funding.

Following an initial roundtable, which confirmed member state positions on reimbursement (those that wanted only flat rates and those that wanted a full economic cost option for indirect costs) and remuneration of researcher salaries (where the EU12 were seeking to achieve greater harmonisation of salaries across Europe, either by means of coefficients or by relaxing the current guidelines on bonuses), the presidency broke for lunch with Ministers to begin negotiations towards a compromise deal. A further roundtable after lunch confirmed the offer of increasing the indirect cost flat rate to 25% (from the presidency’s text 23%) and placing a cap of €8,000 per researcher per year on bonuses that could be reimbursed. With the presidency on the point of conceding defeat on agreement of a partial general approach on the rules, the UK intervened to drop its request for a full economic cost option having secured sufficient concessions on flat rates. This was followed by Germany and Finland taking a similar position on the promise from the European Commission that it would produce guidance on high value infrastructure costs that could be counted as direct costs, which would be reimbursed at 100%. On this basis the presidency concluded that agreement had been reached.

Following the conclusion of negotiations on the rules for participation, delegations received a short presentation on the Commission’s proposals for the European research area and open access to scientific data. Member states were broadly supportive, although some member states would like to see a more ambitious approach to improving gender equality amongst European researchers.

This was followed by Commission presentations and brief interventions from member states on Commission policy initiatives in relation to implementing the European research area and open access to scientific data.

Finally, Ministers had a short discussion over lunch on the future of the European strategy forum on research infrastructures (ESFRI).

The main internal market and industry issues discussed on 11 October were: the European consumer agenda; European industrial policy, including Council conclusions on key enabling technologies and the European innovation partnership on raw materials; and; a debate on the state of play of Single Market Act I.

A Council resolution was agreed on the European consumer agenda, welcoming the Commission’s May 2012 communication which set out actions to boost consumer confidence and growth. There was no discussion on this item.

The European industrial policy item covered three communications from the Commission on industrial policy, sustainable construction and cultural and creative sectors for creative growth respectively. This was a round-table discussion, on which most member states intervened. I intervened to welcome the communications, but also to stress the challenges facing European industry. I emphasised that regulation was often holding us back, and that regulation needed to keep pace with progress and innovation, for example in biosciences and space related industry. I also drew the Council’s attention to the fact that other jurisdictions appear to have been more successful than the EU in creating and growing new and innovative companies. Finally, I also restated UK opposition to the proposed instrument on reciprocity in public procurement.

Most member states also supported the communications. There will be Council conclusions on European industrial policy for agreement at the December Competitiveness Council.

The second part of the European industrial policy item concerned Council conclusions on key enabling technologies and the European innovation partnership on raw materials. Heading into Council, there was one outstanding issue on the conclusions concerning matching aid and the ongoing state aid review, where new text had been proposed by the French delegation. A compromise text was agreed by the Council pertaining to the need for an “inclusive debate” on state aid, without specifically mentioning matching aid. Many member states supported the French proposals, but equally, a number of countries highlighted that they had agreed with the original text. There will now be a debate on state aid at the December Competitiveness Council.

Over lunch, there was a discussion on the role and functioning of the Competitiveness Council. The UK was represented by Shan Morgan over lunch, though I had raised the suggestion earlier in the morning that the Council could invite relevant speakers to address the Chamber. There was some support for an annual report on progress on the growth agenda, and an interest in linking in more closely to the European semester and European Council preparations in general.

The final substantive agenda item after lunch was a debate on the state of play of Single Market Act I. The UK intervened to thank presidencies past and present for their work on progressing the Single Market Act, but also stressed the importance of ensuring existing single market rules are properly applied, and the need to follow through on the proposals contained in the Commission’s June communications on the services directive and single market governance. The UK also took the opportunity at this point to welcome the publication of Single Market Act II, in particular the objective of more efficient and integrated networks.

Most other member states intervened to emphasise that priority must be given to those measures in the Single Market Act that will do most to boost growth, with the Dutch and Czech delegations, amongst others, highlighting the need for reducing red tape and better impact assessment of proposed measures. France and Italy alone mentioned the social dimension of the Single Market Act, with the French delegation specifically raising reciprocity.

Draft conclusions will be prepared for the December Competitiveness Council.

Four AOB points were covered. The first concerned the recent roundtable on the future of the European steel industry. Discussion was not expected, but several member states, including the UK, intervened to welcome the focus on the issues facing the steel industry and to highlight their wish to be involved in any follow up work from the roundtable. The second AOB point concerned results from the 12th European tourism forum and the third was a presentation by the German delegation on state aid for films—the UK intervened on neither issue. Finally, the Commission presented the SMA II package. There was no discussion on this item, most delegates had covered their intervention as part of the Single Market Act I discussions.