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Lord Pearson of Rannoch: With leave, we are in Committee at the moment. The Minister is free to answer any parts of the debate that he wishes. Nevertheless, I thought I detected a slight imputation that perhaps my remarks were not earthed in the amendment. Nevertheless, when the Minister comes to read Hansard tomorrow, if he allows me to take the amendment as read because it will be printed in Hansard, he will find that my remarks were targeted entirely on those aspects. The remarks were repeated by my noble friend Lord Mackay on the Front Bench. If the noble Lord answers nothing else, he should at least try to tell the Committee what will be the result of a single interest rate in an EMU of disparate and diverging economies.

Lord McIntosh of Haringey: That question does not arise in the amendment. As I have said, I shall do my best to answer points which noble Lords have made, however irrelevant they are to the amendment.

Amendment No. 27 would require a report on all EMU measures and decisions. The first category of the report would be the constitutional impact--that is, decisions over the participation of a member state in EMU. At least, that is what I take it to mean. Of course, the Act will not be enforced within the next seven days. But I remind the Committee that tomorrow and on Thursday the European Parliament will adopt an Opinion on the Commission and EMI reports on monetary union.

The Earl of Onslow: The impact of disparate interest rates all over Europe is certainly covered by:


Therefore, it is slap bang in the middle of the amendment.

Lord McIntosh of Haringey: If the noble Earl is dissatisfied with my answer when I have completed it, he will have an opportunity to say so at such length as he chooses. Such are the procedures of the House.

Tomorrow and on Thursday the European Parliament will express its opinion on the Commission and the European Monetary Institute reports. On Friday, ECOFIN will make a recommendation on which states can be taken to have fulfilled the criteria. On the morning of Saturday, the European Parliament will adopt an opinion on the ECOFIN recommendation which will have been made on Friday. On Saturday afternoon, the heads of states and the governments will confirm the member states who are to join European

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monetary union on 1st January 1999. Over the weekend, on Saturday and Sunday, ECOFIN will announce the bilateral conversion rates which will come into force.

Those decisions are not subject to amendments in this Bill, which will not have completed its passage through Parliament. So what constitutional matters referred to in the amendment will arise after next weekend? Of course, the important matter to which I am sure Members of the Committee who dealt with the amendment were referring was the question of UK participation. I remind the Committee that the Government have already made it absolutely clear that if they decide in favour of participation, they will not seek entry without the agreement of Parliament and of the people in a referendum. The European Communities (Amendment) Act 1993 requires an Act of Parliament before the UK can move to Stage III of EMU. So there can be no doubt that the object of:


    "(a) the constitutional impact",

in Amendment No. 27 will be achieved. It must be achieved by law and the Government have no intention whatever of skimping on reporting to Parliament or on the other measures which have been promised.

The second and third categories of decision referred to in the amendment are:


    "the monetary and financial impact, and ... the impact on economic and social progress".

I acknowledge what was said by the noble Earl, Lord Onslow: it covers anything. It is legitimate, within the scope of the procedures of the House, for noble Lords to speak about any subject, however remotely related to economic and monetary union, in the course of the debate on the basis of those words. That is what Members of the Committee have done. The noble Lord, Lord Pearson, made a most interesting analysis of optimum currency areas. He drew comparisons with the United States and asked me a number of specific questions about the future of economic conditions in the 11 member states which we expect to join after EMU has started. The noble Lords, Lord Pearson and Lord Mackay of Ardbrecknish, recognised the degree to which convergence has been achieved. The latter paid tribute to Italy no fewer than five times, I counted, in the course of his entertaining speech.

It is common ground that the fears which existed a year or two ago that there was no hope of convergence on the monetary criteria laid down at Maastricht have now been largely laid to rest. Of course, there will be accusations of fudge, accusations that many of the monetary measures which were laid down at Maastricht have been achieved on a point basis rather than on a sustainable basis. We shall see what results from that. We do not believe that achieving convergence on a point basis is satisfactory. Our whole approach to economic and monetary union has been the need for sustainable convergence over a period of time. That is why, in addition to the monetary criteria, the Chancellor laid down the economic criteria to which reference has already been made.

The Chancellor set out five tests which will indicate whether our joining economic and monetary union is in the national economic interest. Those tests are, first,

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achieving macro economic stability through sound fiscal and monetary policies; secondly, setting the right framework for low inflation through our reforms to the Bank of England and our commitments to monitor the inflation target in the light of the practices of the European Central Bank; thirdly, ensuring that our fiscal rules and deficit reduction plan continue to be consistent with the terms of the stability pact underlining our commitment to avoid an excessive deficit; fourthly, promoting greater flexibility in the UK economy and in Europe; fifthly, negotiating to secure the best interests of our financial sectors and to open up the single market in financial services.

The noble Lord, Lord Mackay, reading from the Treasury Select Committee report produced this afternoon, quoted an extract from my old and dear friend Christopher Johnson. As the noble Lord knows, he is a lifelong and devoted Euro enthusiast; some would even say--I do not believe he would mind--he is a Euro fanatic. Of course, for somebody who is a total Euro enthusiast some of the wording in the criteria is bound to be a little loose.

I must say to the Committee that I am no more bound by the quoted words of Christopher Johnson than by the quoted words of the Sunday Telegraph, anticipating a report which only came out this afternoon, or by the quoted sight--I saw them as well--of the three Channel 4 programmes on economic and monetary union showing a huddle around President Chirac and Chancellor Kohl. We do not make policies in this country on the basis of press reports of that kind. They were wonderful programmes. I pay tribute to them. They were enormously helpful, but we will not make policy on who huddles around whom at an international conference.

My noble friend Lord Stoddart at least made an attempt to relate the matters of which he spoke--on more than one occasion--to the amendment before us. The noble Lord, Lord Pearson, thinks that he has done so. If, when I read Hansard as he suggests, I find that he has done so and that his most interesting academic disposition on optimal currency areas relates to the amendment, I shall gladly send him a handwritten note to acknowledge that he was right.

The noble Lord, Lord Mackay, simply made fun. He knew perfectly well that his speech on 12th March was a Euro enthusiastic speech from which he had to recover at the last minute. The Leader of the Opposition was sitting beside him so he leapt free and expressed his scepticism about economic and monetary union in order to maintain his well-deserved place on the Opposition Front Bench. He got his own back this afternoon; he quoted at length from a report which he knows--because I have been here on the Front Bench--that I have not seen. He knows that I am not in any position to reply to his detailed criticisms.

My understanding from the chairman of the Select Committee is that it is a much more balanced report than Members of the Committee suggest. It pays some attention to the dangers of staying out of economic and monetary union as well as to the undoubted risks of

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going in and the undoubted requirements there will be for detailed consideration by the Government, by Parliament and by the people.

To return, as I must, to the amendment, I suggest to the Committee that the amendment would not serve any useful purpose which is not already served by the Government's intentions. I therefore invite the noble Lord, Lord Pearson, to withdraw it.

7.45 p.m.

Lord Pearson of Rannoch: I will not press the Minister on the point made by my noble friend that, if the Government reject this amendment, they are rejecting the Treasury Select Committee's report which asked for a similar amendment. That would be unfair until the Minister has had the opportunity to read the report in question. The Government can then come to their own conclusions.

I am not an economist, but even I understand the relationship between a single interest rate and an optimal currency area. A single interest rate is only safe in a currency area if the economies within it are not widely divergent. If we do not have that, then we will have massive transfers of resources within the area or unrest within the area.

In that sense, my remarks and the remarks of all Members of the Committee who spoke--to whom I am extremely grateful--were targeted on Amendment No. 27, particularly paragraphs (b) and (c). Even if the United Kingdom does not join EMU, as I sincerely hope it will not, the effect of the others joining will be great indeed on monetary and financial affairs, economic and social progress and on employment. I am a little surprised that the Minister cannot grasp that fact and accept the amendment. But, in view of the hour, I beg leave to withdraw the amendment.

Amendment, by leave, withdrawn.

[Amendments Nos. 28 to 43 not moved.]


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