A House of Lords report has backed the controversial European Union services directive. The construction industry had lobbied against the directive on the grounds that it threatened working conditions.

The Lords’ committee on the European single market has issued a report backing the proposal, commonly known as the Bolkestein directive, which will allow companies to work anywhere in the EU while retaining the working rules of their country of origin.

Lord Woolmer of Leeds, who chaired the committee, said: “Trade in services across the EU remains bogged down by restrictions, which limit choice for consumers and businesses and hold back innovation and growth in output and employment.

“In our view, the thrust of the directive should be supported.”

The move will anger European construction confederations and unions, who fear that health and safety standards will fall and the minimum wage could be ignored.

However, Woolmer defended the group’s decision. He said: “Many arguments raised against the draft directive appear to be either based upon misunderstanding or seek to obstruct effective operation of the free movement of services in the EU. In our view, the directive doesn’t pose a threat to the health and safety of employees or consumers.”

In its own report on the directive this week, the T&G called for the country of origin principle to be removed from the directive, or failing that, for health and safety and other aspects of employment law to be excluded.