Parliament & Politics: EU red tape costs jobs, says Hague

TONY BLAIR was adamant that the Government's economic forecasts were in line with those of the Bank of England yesterday and also dismissed accusations that an EU directive on working hours was "strangling" business with red tape.

The Prime Minister rejected claims by William Hague, the Tory party leader, that the working time directive would add to inflation, saying the Bank had said it would only have a "marginal effect".

The exchanges during question time followed the publication of the Bank's report which downgraded estimates for economic growth to figures similar to those provided by the Chancellor, Gordon Brown. It also showed that unemployment figures had risen by 3,000 between July and September.

Mr Blair said the fact employees were for the first time going to get four weeks minimum holiday entitlement was "a good thing, not a bad thing".

He added: "Actually, what the Bank of England says is that although there may be some marginal effect as a result of the working time directive, we are going to meet the central objectives for inflation. "The (Bank's) growth forecasts are in line with the growth forecasts we have been putting forward and you have been objecting to."

But the Tory leader argued that if the Prime Minister agreed the working time directive would increase inflation, he must know it would also add to unemployment. "Isn't it the worst possible time to add extra regulation and bureaucracy to the burden that businesses now have to bear?" he asked.

Mr Blair replied that the European Union introduced the working time directive under the Conservatives, "and it would have had to have been implemented by any Government, no matter who was in power". In any case, its impact would be insufficient to warrant changing the main inflation projection for two years ahead.

The Prime Minister added that measures such as the New Deal and the Working Families Tax credit were designed to increase the supply of labour and could lower the natural rate of unemployment."

Mr Hague insisted the Bank's report said the directive would cause an "upward skew" in inflation, stressing: "If the best argument you have got for the working time directive is to pretend that the Conservative Party was in favour of it then you are pretty short of arguments on this subject."

He told Mr Blair that today's unemployment figures were "yet another sign" of a downturn caused by Downing Street. "Businesses are facing a flood of new regulations and bureaucracy. When are ministers going to understand that red tape strangles businesses and jobs?"

Both the claimant count and ILO unemployment, which includes people not eligible for benefit, have risen following a series of high profile job losses. ILO unemployment increased by 3,000 between July and September to 1,804,000. The claimant count increased by 6,800 in October to 1,319,400.