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House of Lords

Wednesday, 4th December 2002.

The House met at half-past two of the clock: The LORD CHANCELLOR on the Woolsack.

Prayers—Read by the Lord Bishop of Portsmouth.

Euro: Price Convergence

Baroness Wilcox asked Her Majesty's Government:

    What has been the impact of the introduction of the euro on price convergence in the euro-zone.

Lord McIntosh of Haringey: My Lords, the Government said that they will complete an assessment of the five economic tests within two years of the start of this Parliament. The preliminary analysis supporting the five tests assessment—that is, technical work needed to enable the assessment to be completed within two years—is well under way. The 6th September paper for the Treasury Select Committee on the Treasury's approach to the preliminary and technical work made clear that that work, which will be published alongside the assessment of the five tests, will include a supporting study on price differentials. Further details can be found in the 6th September paper, a copy of which is in the Library of the House.

Baroness Wilcox: My Lords, I thank the Minister for answering my Question. Can he give the House some concrete examples of where prices have already come together?

Lord McIntosh of Haringey: My Lords, a very detailed report was produced and published in July this year. It describes the whole process of adoption of the euro. It is called EPR6—6th Report on Euro Preparation. I recommend it to the noble Baroness, Lady Wilcox. As to the effect on prices, I believe that the best evidence comes not from the Government but from Eurostat, which, in its most recent report on 18th November, estimated that the effect of the changeover on inflation was between 0.0 and 0.2 per cent.

Lord Taverne: My Lords, the evidence relating to the impact of the euro seems to be somewhat ambivalent. Small prices—that is, for items such as cups of coffee—have risen since the introduction of the euro but big prices—for major goods such as cars and so on—are likely to go down. Is it not important that we are part of a system in which price transparency has led to a great deal more competition, and are the Government not keen to promote competition?

Lord McIntosh of Haringey: Yes, my Lords. The argument for the euro has always been one of transparency of prices leading to keener competition. The euro having been in place for only 11 months, I

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believe it is a little early to be as definite as the noble Lord, Lord Taverne, appears to be about the detail. However, certainly the aggregate effect has not been one of inflation, as reported in a number of Euro-sceptic British newspapers. I am as confident as the noble Lord that, in due course, there will be better evidence of the beneficial effects of transparency.

Lord Saatchi: My Lords, was not one of the benefits of the euro said to be that the greater transparency offered would lead to more common standard prices across Europe? The reason I ask is that if, around the euro-zone, one took a taxi to the airport where one bought a book and had a cup of coffee, the taxi fare per kilometre would cost 3 euros in Brussels and 1 euro in Stockholm; a top-10 paperback would cost 7 euros in Madrid and 23 euros in Paris; and the Nescafe would set one back 8 euros in Frankfurt and 4 euros in Rome.

Lord McIntosh of Haringey: My Lords, as always, I congratulate the noble Lord, Lord Saatchi, on the detail and quality of his research, and I should be grateful if that could be passed on to his researcher. Of course, price standardisation does not occur immediately and will not occur to the extent that prices affected by, for example, different levels of VAT will come together. In general, the point made by the noble Lord, Lord Taverne, is right. Transparency will in due course—not immediately and certainly not within 11 months—lead to a better deal for the consumer.

Lord Barnett: My Lords, I thank my noble friend for his original, very detailed Answer to the Question. I thought that it covered the points very well. Perhaps I may also be allowed to congratulate the researcher of the noble Lord, Lord Saatchi. I do not know what on earth he was doing with that research, but perhaps my noble friend can help us. Whether it showed inflation in the euro-zone to be higher or lower, the Euro-sceptics would still attack it. That applies to the view of the research expressed by the noble Lord, Lord Saatchi. Does my noble friend accept—from what he says, I believe that he does—that, since its inception, the euro-zone has gone very well indeed?

Lord McIntosh of Haringey: My Lords, that is what the 6th Report on Euro Preparation, which we published on 17th July, says. It states that, despite all the predictions of doom and gloom before and immediately after the introduction of the euro, the changeover went extremely well. A period of two months was allowed for the changeover. However, from my experience, and as reported in EPR6, the changeover took place within two or three days. It is possible to make such changes without great disruption.

Baroness Carnegy of Lour: My Lords, the noble Lord's Answer to my noble friend who asked the Question concerned inflation. Is he saying to the House that, thus far, there is no sign of price convergence?

Lord McIntosh of Haringey: Yes, my Lords. I am saying that the element of inflation which has taken

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place and which, according to Eurostat—the European statistical office in Luxembourg—can reasonably and legitimately be attributed to the changeover to the euro is minimal. It is in the range 0.0 to 0.2 per cent. There are two different issues. One is convergence of prices across European countries and the other is the general level of prices. I believe that it is fair to distinguish between the two, although both are clearly important.

Lord Richard: My Lords, is my noble friend aware that I read the same table as, I believe, did the noble Lord, Lord Saatchi, in either the Telegraph or the Daily Mail showing comparative costs of taxi rides? Is my noble friend further aware that the most expensive taxi ride in the European Union is in this country, which, if my memory serves me correctly, is outside the euro-zone?

Lord McIntosh of Haringey: My Lords, it is worse after midnight.

Drug Treatment Centres

2.43 p.m.

Baroness Masham of Ilton asked Her Majesty's Government:

    How many residential drug treatment centres there are in England for people aged under 17.

Baroness Andrews: My Lords, there are currently two residential drug treatment centres in England exclusively providing services to people aged under 17. They provide intensive and specialised services for young people with complex needs, but the majority of young people who need drug treatment are supported by a range of other appropriate services.

Baroness Masham of Ilton: My Lords, I thank the Minister for her reply. Is she aware that more and more people aged 15 and 16 are entering young offender institutions? It is much more difficult for them when they come out and are sucked back into the drug culture. Will she closely consider the matter and try to get some of the new money promised for young people? I am sure that everyone who has had teenage children will know that that is a difficult age group.

Baroness Andrews: Absolutely, my Lords. The Question is extremely timely. Young people leaving young offender institutions when they are over 18 have access to adult residential services—there are about 300 bed spaces. But if they are in juvenile accommodation because they are younger than that, it is felt that when they come out, unless they have exceptional needs, they are better supported in the community, where their parents can be supportive and they can receive intensive treatment.

The drugs update Statement made yesterday made it clear that young people are at the heart of our strategy and that the additional money to be made

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available during the next three years will go towards new services and treatment. The noble Baroness will want to know that some of that money will be spent on better after-care services.

Lord Williamson of Horton: My Lords, although I appreciate the points made by the Minister, will she tell us directly whether the number of drug rehabilitation centres is sufficient?

Baroness Andrews: My Lords, as I have said, it depends on the situation of young people—their needs, their family situation and whether they are vulnerable with complex needs. In some cases, especially those involving long-term drug addicts, residential accommodation is clearly appropriate. The question of whether provision is sufficient is always extremely difficult to answer. We do not have sufficient drug treatments. Part of the emphasis of the updated strategy published yesterday is to ensure that during the next three years double the current number of people enter treatment. Among the new provision will be residential accommodation.

Baroness Walmsley: My Lords, given that treatment in the community is so much cheaper because education is already provided, and in view of the increasing number and falling age of young people taking drugs—a report published this week states that 10 per cent of 11 year-olds are taking drugs—what additional resources do the Government intend to devote to alcohol education in schools and, in particular, to support and help for parents of children at risk, to help them to help those young people?

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