Select Committee on Treasury Minutes of Evidence

Examination of witnesses (Questions 1-19)




  1. Welcome. It is always a pleasure to welcome you to the Treasury Select Committee. I understand that it is your birthday today, so it is an even greater pleasure. Many happy returns.

  (Dawn Primarolo) I could not think of a better way to spend my birthday—it says here in my notes.

  2. Is there anything either of you would like to say to begin with?
  (Dawn Primarolo) No, I do not think there is, Chairman, except to introduce the people sitting at the table with myself and the Economic Secretary. Peter Curwen, on my left, is Head of the European and International Tax team. Next to the Economic Secretary is Ivan Rogers, who is the Director of Europe, that is Her Majesty's Treasury. At the far end is Richard Brown, Head of Agriculture and Environmental Policy, Her Majesty's Treasury.

  3. Thank you very much indeed.
  (Dawn Primarolo) I do not know who these are behind us but I thought they were your fan club.

  4. Maybe they are yours.
  (Dawn Primarolo) I do not have one.

  5. This may even be my farewell question: I would just like to ask you what difference has it made to Ecofin having the Euroclub, or the Eurogroup as it is called, Euro-X or Euro-12, whatever it is now called? I think it is called Eurogroup. Has it made any impact?
  (Dawn Primarolo) If I could say, Chairman, on the question of tax and the discussions around the major tax agenda, of course Ecofin has continued to be the forum, matters settled by unanimity.

  6. So it has made no difference?
  (Dawn Primarolo) There is no change in that respect. I am not actually aware, unless the Economic Secretary wants to add any points, of necessarily an impact but certainly not on the tax side, no.

  7. Economic Secretary?
  (Miss Johnson) There have been suggestions that have come out for a better informal organisation of the Eurogroup and hence better visibility, including better communication between the Eurogroup and the ECB and, indeed, the markets. We welcome those developments and I think that those are positive as far as we are concerned. As the Paymaster General has said, the fact remains that Ecofin is the prime forum in all of this and has a central role in economic policy co-ordination and that remains as it has always remained.

  8. The fact that the Chair of the Eurogroup is somebody different from the Chair of Ecofin, has that made a difference?
  (Miss Johnson) I think it provides another alternative set of energies going into leadership in Europe and that is only constructive given the developments that the Eurogroup have been making along the lines that I have already mentioned. I think greater visibility and better co-ordination are real positives.

  9. When you arrive out there on the continent of Europe for your meeting at Ecofin, the fact that Eurogroup may have met in the morning does not make any difference?
  (Miss Johnson) No. If you are, as you would be, at the lunch there is much discussion of what has happened at Eurogroup as part of the luncheon discussion as well. We are very much included in that and, in my experience, it makes very little difference. There certainly is not a feeling of being outside of things, if that is what you are suggesting.

  Chairman: I was possibly.

Mr Davey

  10. Can I just check that no British official or Minister attends the Eurogroup meetings, is that correct?
  (Miss Johnson) That is correct.

  11. Do we receive the minutes of the Eurogroup meetings?
  (Miss Johnson) No, we do not.

  12. So we do not attend either in an official capacity or a ministerial capacity and we do not receive the minutes. Anything we find out about what goes on in those meetings comes from informal briefings over lunch, is that correct?
  (Miss Johnson) Yes, but those informal briefings are fairly full and do include some discussion around anything that is of interest to the whole group and, indeed, often there is obviously an overlap between the subjects that are being discussed.

  13. Let me just press you on that. Say, for example, the members of the Eurogroup had read or seen in the press that the British Minister going to Ecofin was going to take a particular position and they decided that they did not support that position and discussed it at that group, presumably they would not give you formal notice of that at the lunch. That could happen if we do not have membership of that committee and do not see the minutes.
  (Miss Johnson) All the decisions are actually taken amongst the 15 and, as I said in my opening response to the Chairman's question, obviously Ecofin remains the sole decision making body on EU economic policy and that is as it has always been.

  14. You do not think it possible for the Eurogroup members to stitch Britain up then?
  (Miss Johnson) We remain vigilant and we would resist anything that we felt had that character to it. We are talking about recent Ecofins, and indeed the Chairman started off by saying "when you are over on the continent, as it were, actually at a meeting how does it feel", and I can only tell you how it feels from personal experience and it feels that we are still very much taking a leading role, we are influencing things from the centre, but Ecofin is still very much at the heart of decision making, as is its proper constitutional place in the framework. It does not feel as if there is any kind of problem of the kind that you are trying to allude to.

  15. Let us be very clear on this for the record. There are some decisions taken by Ecofin which are not subject to unanimity rules and the 12 members of the Eurogroup would have the voting power amongst those 12 to vote out Britain's opposition on an issue that did not require unanimity. That is correct, is it not?
  (Miss Johnson) The fact is that decisions are taken in the forum of the 15 unless they are explicitly—

  16. That is not the question. I have asked you to confirm the legal position.
  (Miss Johnson) You are saying if it is something related to majority voting then obviously a majority can carry the day. That is a fact in any context.

  17. Thank you for confirming that.
  (Miss Johnson) That is just a matter of fact, that is nothing to do with the Eurogroup.

  18. I want to you to confirm that the 12 members of the Eurogroup would actually form such a majority. Can you confirm that for the record?
  (Miss Johnson) I think you can see that 12 members are actually a majority of the group.

  Mr Davey: Thank you very much, that is all I wanted to find out.

Sir Teddy Taylor

  19. Chairman, while I am sure we will all have been greatly heartened by the Minister's summary of the situation of Britain being outside the Eurogroup and not suffering anything, there is one particular issue on which I would greatly appreciate her advice. That is on the apparent censure which was given by Ecofin at the meeting of 12 February in which they said that the Treasury's budget projections were "not in line" with the Stability and Growth Pact. The figures show, I think, we are the only country that is looking forward to a deficit, I think it is one per cent, in the year 2003-04. While I appreciate, Chairman, the Government may take the view that Ecofin are being a bit pessimistic and perhaps even cautious, what I would genuinely like to know is what is the status of it? The reason I am asking is that in the actual summary of the decision taken in June 1997 it said the British Government commit themselves to taking the corrective budgetary action they deem necessary to meet the objectives of their stability or convergence programmes. I am wondering what is the status of this warning? They have said to us "you are going to be spending too much", can we just ignore it or is there some kind of standing and does Britain have any legal obligations to change things?
  (Miss Johnson) The Stability and Growth Pact actually provides non-binding guidance on the orientation of Member States' economic policies. All I can do is emphasise the fact that those are non-binding.

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