HC Deb 18 January 1979 vol 960 cc1927-9
2. Mr. Spearing

asked the Chancellor of the Exchequer if he will make a statement concerning the operations to date of the European monetary system.

The Chancellor of the Exchequer (Mr. Denis Healey)

The EMS has not yet started to operate.

Mr. Spearing

Do not the complicated delays over the system show how prudent it was for Her Majesty's Government to remain outside the system, and how foolish it was of the Opposition to advocate our entry? Does my right hon. Friend agree that if the system went ahead on the conditions that the French are now asking—namely, the phasing out of MCAs—it would mean an increase of farm gate prices in the United Kingdom of at least 30 per cent. to 40 per cent.? As the Opposition have already advocated the phasing out of the green currencies, they would be causing immense inflation that would be against the interests of housewives and consumers as a whole and the entire nation.

Mr. Healey

Beyond saying "Yes, Sir", which I say with the greatest pleasure, I add that it is true that developments since the summit conference was held in December have shown that the views of the Shadow Foreign Secretary, as he expressed them on 19th December, were as fatuous as they were anti-British. It is true that if certain proposals for the phasing out of MCAs were accepted and the common price was allowed to rise, that could have a damaging effect on the cost of living in Britain and on British food prices. I have no doubt that my hon. Friends will be referring to that in debate whenever they have the opportunity. My right hon. Friend the Secretary of State for Foreign and Commonwealth Affairs has already made it clear in Brussels that there can be no question of the British Government agreeing to a resolution of the current dispute over MCAs leading to an increase in food prices for Britain.

Mr. Hordern

Has the right hon. Gentleman given any assurances to the EEC Finance Ministers that he will keep sterling within the present band of the basket of European currencies?

Mr. Healey

No. I made it clear when I spoke to the House on this matter before Christmas that the Prime Minister and I have given assurances to our Common Market colleagues that we intend to maintain the present stability of sterling, which has been stable within a narrower band than is permitted even inside the EMS, against not a basket of European currencies but a basket composed of the currencies of the countries with which we trade.

Mr. Gould

To what extent are we now pursuing policies that are virtually indistinguishable from those that we should have to pursue if we were members of the EMS? Given the overwhelming case made against our joining the EMS, is not the case against those parallel policies equally damaging?

Mr. Healey

To quote the poet Marvell on love: But ours so truly parellel Though infinite can never meet. The fact that we are pursuing the stability of sterling does not mean that we are pursuing policies that could lead to Britain joining the exchange rate regime of the EMS. The important difference is that the parity grid system of the EMS would commit countries with currencies not divergent from the general trend to lose reserves to make the deutschemark more competitive. That does not seem to be in Britain's interests. That is a general view.

Mr. Marten

Am I right in assuming that the British Government can block these proposals by the French?

Mr. Healey

There are no specific proposals by the French. The French Government have certain objectives on MCAs which have been resisted by a number of other Community countries. We have made clear that there can be no question of our agreeing to the increase of the common price as a result of that, and we have the power to prevent it.