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Baroness Jay of Paddington: My Lords, I suspect that my noble friend and I will always have a disagreement in principle; I hope that we both accept that we take our positions from honourable backgrounds. I am sure my noble friend will appreciate that a great deal of the Statement and a great deal of the background document, which, with his usual assiduousness, he has probably already read, relate to the technical, practical and--as I said in answer to the noble Lords, Lord Strathclyde and Lord Rodgers--what I would call effective and sensible business strategy rather than any kind of propaganda. As the Statement makes clear, it is intended to try and move towards a situation where the real choice is legitimately on the table. That involves some practical preparation, but not necessarily the influencing of opinion; rather the influencing of business strategy.

Baroness Ludford: My Lords, does the noble Baroness accept that the position taken by these Benches is motivated by the economic interests of this country and not by ideological, crazy passion? As shown in conference last week, both the TUC and companies such as Vauxhall think it important for direct investment reasons that this country joins the euro. Is the Minister also aware that 80 per cent. of people in this country believe that we will eventually join the euro? They can perceive the economic advantages of lower interest rates, prices and so on. Does this not suggest a greater need for public information at this stage? People are looking for the kind of leadership, through information, that the Government could provide. As my noble friend Lord Rodgers said, while this is a welcome step, it does not go far enough in providing the kind of leadership that opinion polls show people are crying out for.

Baroness Jay of Paddington: My Lords, I am grateful to the noble Baroness for her comments. Once again, if I may say so with respect, she slightly misses the point of the Statement which is to address the practical preparations for the business case which could be made for consideration, at another stage, of economic convergence.

I take her point about the role that business has played so far. It is important that the Governor of the Bank of England, the heads of the Financial Services Authority and the British Bankers Association, the presidents of the CBI and the British Chambers of Commerce, and the general secretary of the TUC have been involved in producing this document. They will be involved in the very important and more detailed work which will need to be undertaken in order to answer some of the questions about timing and the analysis of convergence issues which have rightly been raised.

Lord Howe of Aberavon: My Lords, will the noble Baroness the Leader of the House accept that this statement of intention to join a successful single

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currency, however tentatively presented, will be welcomed by very many men and women who care deeply about the future well-being and prosperity of this country? To that end, can she assure the House that that intention will henceforward be fulfilled--not by accident or osmosis but by making it an important objective of government policy?

Baroness Jay of Paddington: My Lords, I am extremely grateful for what the noble and learned Lord, Lord Howe, says about the background principles of this policy. I hope it was clear from the Statement that the Government are--as was originally proposed by my right honourable friend the Chancellor of the Exchequer in his Statement of October 1997--advancing the principle that if the euro is successful, and if the economic conditions of the euro are suitable for this country and promote better jobs, better industrial progress and so on for Great Britain, that is the policy the Government will pursue. We do not intend to pursue it to the economic disadvantage of the country, but we certainly intend to pursue it within the criteria I have described.

Viscount Cranborne: My Lords, as the noble Baroness has made considerable play about the number of SMEs which maintain euro accounts, I wonder whether she can tell the House how many SMEs trade in US dollars and maintain US dollar accounts? Can she also tell the House whether she has noticed that there is an almost unanimous view being expressed by officials in Brussels, and by elected government Ministers in euroland, that EMU is only the first step towards a united states of Europe? If the Government do not agree with that proposition, how, once they have got us in, will they prevent our being dragged into such a confederation?

Baroness Jay of Paddington: My Lords, on the point about the number of SMEs trading in dollars, I am advised by my noble friend Lord Simon of Highbury--who has taken a very important lead in this project on behalf of the Government and whom we thank very much for his activities in liaising between the Government and the business community--that the number of SMEs dealing in dollar trading accounts is probably much less than the number of SMEs now doing business with Europe. It is important to recognise that 45 per cent. of SMEs describe themselves as having important trading relations with Europe. That is 700,000 small businesses which, on any basis, should not be ignored.

On the point about "dragging", as the noble Viscount said slightly pejoratively, this country along in the general European direction, we will of course remain members of the European Union whatever happens as regards our joining or otherwise the single currency. It is the European Union which may pursue the political agenda; we will, as always, protect British interests in that forum.

The Earl of Onslow: My Lords, will the noble Baroness please go to the lap of the noble Lord her

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father and ask him to remind her of the horrors of the 1967 devaluation? Will she even ask for the advice of the noble Lord, Lord Lamont, who also went through the horrors of coming out of fixed exchange rates? Will she furthermore pray to the ghosts of Sir Stafford Cripps and Philip Snowden, both of whose political careers were very nearly destroyed by coming out of fixed exchange rates? Can we not learn that fixed exchange rates have done this country no good whatever and that we should therefore keep out of them and plough our own furrow in a way we are quite capable of doing? To say that we are not is to underestimate our own abilities.

Baroness Jay of Paddington: My Lords, I am, as always, grateful to the noble Earl for his trenchant comments and for his trenchant advice. Although he invites me to go and sit on the lap of my father, I would say that he is being, as usual, extraordinarily flattering because, as an extremely grown-up person in 1967, I have clear memories of the Labour Government's problems in that period. As I said to my noble friend Lord Shore, I think we would have a disagreement in principle about the relevant economic and political decisions that we need to make. Those are ones which, as the noble Lord, Lord Strathclyde, said, are issues of national policy and national strategy which we should have an opportunity to debate. I do not think that they are necessarily relevant to the much more technical discussion about preparation which we are discussing this afternoon.

Lord Grenfell: My Lords, does my noble friend agree that it is very necessary indeed to maintain the expectation of Britain eventually going into the euro? That in itself will help with convergence. The financial markets and potential investors will behave towards this country in the light of the expectation of our going in and the expectation of our going in will produce positive results in the markets. Does she further agree that it is important to get an absolute undertaking from Brussels that we will not be required to enter into ERM2? In Brussels it is still insisted that we shall have to. If we do not wish to do so, and if that is to become a block to our going into the euro, it is important that we should have the matter settled once and for all.

Baroness Jay of Paddington: My Lords, my noble friend makes some interesting comments about what one might call the virtuous circle of expectation and real economic development. I have heard it suggested--this is perhaps relevant to the comment of the noble Earl, Lord Onslow, in his intervention--that the only prospect of there being tremendous jitters in the currency markets on the basis of the programme we have outlined is if there were to be, somewhat extraordinarily in the present circumstances, the prospect of a Conservative government being elected at a general election, which is rather a change from what happened in the 1960s and the 1970s. Those who experienced that will be very clear about it.

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On the point about ERM, I can say to my noble friend that there is no intention of doing that. As far as I am aware, no member state has raised that question in Brussels recently.

Lord Howell of Guildford: My Lords, I know that many senior business people and many distinguished political leaders whose judgment I respect believe that our membership of the euro in due course, if not immediately, is inevitable. But there is a possibility that the convergence schedule will not go as planned. Indeed, if one looks at Europe at the moment, although it is early days, one could say that divergence is more the keynote, with the German economy actually shrinking and wide divergences in economic performance growing even within euroland, let alone between ourselves and euroland. In that situation it is a practical possibility, for which we need to prepare, that we might find ourselves outside euroland, which will continue, and operating a local currency, sterling, not just for a few years but for a considerable length of time. Perhaps I may repeat the question of my noble friend Lord Strathclyde. Is it not a matter of preparing for the practical arrangements that might arise if we found ourselves in that position? Would it be too much to ask that, in the name of balance in this matter, which I know the Government are very anxious to maintain, a working party and a White Paper should be produced to define the ways in which we can benefit and prosper in that situation, which is possible?

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