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Lord Jenkins of Hillhead: My Lords, we naturally welcome the constructive, pro-European framework into which the Statement is set. That is a vast advance on the unrealistic scepticism, mingled with sour ill-will, with which the previous government approached the subject. At the same time, there is a major tactical misjudgment as to how to approach this most vital, and, on the experience of successive governments, dangerous subject.

The Government would have kept better command of events and more fortified their position had they decided to go for an earlier decision. I accept that there are technical reasons associated with the different phases of the UK and Continental economies as to why entry in 1999 is difficult, although I believe that statesmanship is often most marked when it rises above technical reasons. However, even if entry is to be delayed, an earlier referendum--they are committed to a referendum--would have been desirable.

I am confident that with a firm lead from the Government, and the economic and political line-up which would have followed, a referendum at a fairly early date could have led to a successful conclusion in favour of entry into a single currency. I speak on the issue with a recollection as president of the Keep Britain in Europe campaign at the time of the 1975 referendum. Six months before that referendum we were in a far more adverse position. I am amazed to see, on the latest figures, that 37 per cent. still pronounce themselves positively in favour of going in. That is in the face of a complete dearth of any propaganda from the previous government or, to be honest, from almost anyone else. Therefore, I believe that 37 per cent., as a starting point, is a remarkably favourable base. As noble Lords will recollect, the 1975 referendum, starting from a more unfavourable point in the autumn of 1974, resulted in a two-to-one majority on quite a high turnout.

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I believe that the period of "wait and see" is bound to be somewhat deleterious to our influence in Europe, although not necessarily permanently or disastrously so. Waiting to see if an action is successful before one decides whether to join is not traditionally the most noble or glorious course. Very few Victoria Crosses have been won that way. Nevertheless, I welcome, first, the new constructive tone; secondly, the fact that the constitutional and/or sovereignty arguments have been so decisively set aside; thirdly, the fact that action is to be taken to explain and advocate the reasons for going in; and fourthly, as I understand it, the fact that the detailed preparations will welcome, more or less, the use of the euro as a parallel currency in this country. I say in passing that I am extremely glad that the responsibilities of the noble Lord, Lord Simon, have been extended to include that aspect of the matter. From these Benches, we greatly welcome that and believe that the noble Lord has very much to contribute. Fifthly, I applaud the positive desire to get us into "sync", the current phrase, at the earliest possible moment.

The Statement is far from eradicating the chronic British national disease of always being late which has afflicted successive governments since 1950. But at least we now avoid complaining about what others are doing or indulging in complacent and mis-placed scepticism and an attachment to the shadow of sovereignty while allowing its substance to be gobbled up by the global economy which has played a major part in reducing the Conservative Party to the state in which it finds itself today. The European issue has been a great destroyer of governments and Prime Ministers. I hope that that lesson has at least been partially learned.

Lord McIntosh of Haringey: My Lords, for different reasons, I am grateful to both noble Lords for their response to this important Statement. The noble Lord, Lord Mackay of Ardbrecknish, used the first three minutes of the time available to him complaining that I took 20 minutes to discuss the issues but refusing to consider the issues at all. He was concerned only with the surface politics of the past three weeks. I am sorry to say that he does not appear to have read or listened to what was said from this Dispatch Box on that occasion. I do not wish to spend much time on the matter but surely it would be right for the Official Opposition to pay attention to what the Chancellor said rather than to major, as the noble Lord did, on the press speculation which surrounded those statements.

For our part, the position has been entirely clear and has not changed. In other words, we said at the very beginning that we saw formidable obstacles to joining in January 1999. We set the Treasury the task of examining the economic criteria--I stress that the economic criteria are far more important in the long run than the largely fiscal criteria laid down at Maastricht--saying that when that review had been completed we would come back to Parliament and state our position. That is exactly what we have done.

The noble Lord, Lord Mackay, finds agreement with us in that we both think that the criterion for membership or otherwise should be what is good for Britain. But that is an extremely minimal degree of

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agreement, is it not? It is the absolute lowest common denominator of agreement. Of course, we all think that it should be good for Britain but what we think is good for Britain and why we think it is good for Britain is subject to a great deal of disagreement. On this side of the House we have set out our stand in this Statement. We have ruled out those options which are not tenable and have set our path for the future with all the clarity and responsibility which have been called for.

In more than 10 minutes, the noble Lord, Lord Mackay, did not make a single reference to his own party's policy reaction to the Statement: he was concerned largely with trivia rather than with the major thrust of the Statement or government policy. The noble Lord asked me whether the triple lock will continue; whether it is still the combination of the view of the Cabinet, Parliament and the people in a referendum. I believe that the Statement makes clear--and I can understand that in a long Statement, the noble Lord may have missed it--that that commitment to a triple lock continues as long as is necessary and if necessary into the next Parliament.

The noble Lord asked about the definition of a settled period of sustainable convergence. That is a very serious and important question, and he was right to raise the matter. We do not know in terms of numbers of months what is the definition of sustainable convergence. We cannot say in terms of a number of days what is a settled period. But the forward markets give us some idea of what it is likely to be. It is because we wish a settled period of sustainable convergence to be the primary criterion for us that we have been obliged to say that we do not see that we shall be entering or making the decision to enter within this Parliament.

As to the question which the noble Lord raised about the rules for the time between a decision to enter and the final adoption of a single currency, the rules for later entrants will be the same as the rules for original entrants.

The noble Lord chided us on first criticising and then using the Maastricht opt-out. I believe that he has a point there. It is true that the result that came back from the Maastricht Treaty negotiations has proved valuable. I think that that was recognised in both Houses of Parliament when those matters were debated.

The noble Lord asked about the meaning of the caveat of "wholly unexpected and unforeseen circumstances." I have made it clear that although we are determined to be proactive in making sure that our preparations are powerful and effective, no government--this Government or any other--can be certain under all circumstances that we can predict what the economic circumstances will be in the future. But if the noble Lord is claiming seriously that the Conservative government made real preparations for entry into the European Union, all I can say is that he certainly fooled me. Much more important, he certainly fooled the leaders of business in this country because there has been no significant element of conviction by the business community, as has been made clear by the CBI and many others, that the Conservative government at that time, even under Mr. Kenneth Clarke, expected

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seriously that we should enter European monetary union and therefore expected British business to make realistic preparations. If that had been so we might have had something proposed by the last government along the lines of the standing committee which is now to be established and we might have had someone of the calibre of my noble friend Lord Simon of Highbury taking responsibility for such matters in the Treasury. However, we did not. In all of this there was no proper response to the issue of policy which I believe this country expects to be debated within the next few years. On future occasions, I hope that the noble Lord will feel it possible to join in the debate rather more seriously than he did today.

I turn now to the remarks made by the noble Lord, Lord Jenkins. Of course I am grateful to him for what he said. I know that he recognises how serious we are and how important is the change in policy which has been announced. The noble Lord confirmed the importance of the Statement in that this is the first government to declare for the principle of monetary union, to declare that there is no overriding constitutional bar and to declare that it must be "clear and unambiguous" economic benefit which determines the final choice which will be made by the people of this country.

I was slightly surprised by the noble Lord's suggestion that it would be desirable to go for an early referendum, even if we were not proposing to act upon it until a later date. The noble Lord described our position as being a tactical misjudgment. However, if a referendum is to be a genuine consultation of the British people, I suggest to the noble Lord that it must be taken at a time when both the Cabinet and Parliament have satisfied themselves that these serious economic tests have been achieved, so that it is possible to put the position to the British people with a sufficient degree of confidence.

The noble Lord described the change from the position of "wait and see" of the previous government. I agree with him. I rather like the suggestion in today's press reports that we have moved from a position of "wait and see" to one of "prepare and join". It is for the judgment of the British people to determine whether or not that is the case. I very much hope that it will be.

4.52 p.m.

Lord Boardman: My Lords, when repeating the Statement, the noble Lord referred to the importance of stability and coherence. He will no doubt agree that, to achieve those two objectives, control over internal interest rates will be needed. Therefore, having divested themselves of control over interest rates, does the noble Lord believe that the Government will reverse their policy in that respect? Alternatively, are they prepared to leave the settlement of such matters to those whom they do not control?

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