Single European Currency (Hansard, 2 March 1995)

§ 8. Mr. Gordon Prentice
To ask the Chancellor of the Exchequer what discussions he has with EU leaders about the introduction of a single currency and its link with political union.

§ 12. Mr. Welsh
To ask the Chancellor of the Exchequer what recent representations he has received advocating a single European currency; and if he will make a statement.

§ 14. Mr. Heppell
To ask the Chancellor of the Exchequer what discussions he has held with the Economic and Finance Council about a single European currency.

§ Mr. Kenneth Clarke
I hold regular discussions with my European colleagues about a wide range of issues, including those relating to a single currency.

§ Mr. Prentice
What are the constitutional impediments, if any, of Britain joining a single currency? Is the issue really a matter of practice rather than principle, as asserted by the Prime Minister yesterday?

§ Mr. Clarke
The Prime Minister, other members of the Government and I set out yesterday the way in which the country should exercise the judgment that we have allowed it to make by the negotiations at Maastricht. We discussed this comprehensively yesterday and the Prime Minister came to the sensible conclusion—indeed, the obvious, commonsense conclusion—that we should take advantage of that option by taking a hard-headed judgment of British interest when the time comes, if it ever comes, for us to make up our mind.

§ Mr. Welsh
Did the Prime Minister agree to or in any way alter the words of the Chancellor's speech on 9 February, in which he said that monetary union would not necessarily be a huge step on the road to federal union in Europe? If the Prime Minister agreed with him then, why will he not back the Chancellor's words now? Is there a massive policy gulf between them or, indeed, between them and the previous Chancellor, who disagrees with them both?

§ Mr. Clarke
The Prime Minister answered that question yesterday in a way with which I totally agree. The Prime Minister said: With one important qualification: I believe that it is possible to move forward to monetary union without necessarily moving forward to political union … the qualification depends on the nature and style of monetary union".—[Official Report, 1 March 1995; Vol. 255, c. 1067.] He went on to deal with that. It is absurd nit-picking textual analysis to try to separate members of the Government from that. That position leads, as I have just said, to the plain and obvious commonsense conclusion that we will make our minds up on the best judgment of British interests in 1999, or thereafter, whenever this proposition comes before us. To most people in the country, that, I think, is the sensible way in which to approach this important issue, compared with the rather lightweight way, with uncertain support behind, which the Opposition parties have demonstrated.

§ Mr. Heppell
Is the Chancellor aware that yesterday the Prime Minister significantly decided not to endorse the Chancellor's view on a European currency that it 1173 would not be a serious constitutional issue? In view of the Prime Minister's lack of support, does the Chancellor feel that his position is unassailable?

§ Mr. Clarke
I can only assume that the hon. Gentleman was not here yesterday. If he had been, he would have enjoyed an extremely interesting debate which, in my opinion, was won hands down by my right hon. Friend the Prime Minister. I can also assume that the hon. Gentleman did not listen to my first two answers to questions on this subject. It is quite obvious from his misquotation that he has not read the speech that I gave a few days ago. I suggest that he studies what is coming from those on the Government Benches explaining the difficult choice that the country may face and how we propose to tackle it. He will then be better informed on all aspects of the subject.

§ Dr. Hampson
Did my right hon. and learned Friend notice a piece in The Observer a few months ago which argued that commitment to a single currency and the associated restrictions on public spending and inability to devalue were inherently in conflict with the Labour party's commitments on economic policies? The author of that piece was the right hon. Member for Bethnal Green and Stepney (Mr. Shore), who claimed that 67 other Opposition Members supported him. Is it surprising that the title of the piece was "Labour all at sea over Europe"?

§ Mr. Clarke
I failed to see that article, but I am familiar with the views of the right hon. Member for Bethnal Green and Stepney (Mr. Shore), who is in his place again today. The right hon. Gentleman was a member of Labour Governments who seemed to their opponents to use devaluation as an instrument of policy from time to time which, as a deliberate instrument of policy, I do not think that we should.
My hon. Friend the Member for Leeds, North-West (Dr. Hampson) is quite right. At least 60 Opposition Members do not agree with a word of the comments made by the Leader of the Opposition yesterday. The Leader of the Opposition yesterday put forward an incredible position in comparison to my right hon. Friend the Prime Minister, who made it quite clear that he was going to concentrate on the national interest if and when the decision had to be made.

§ Dame Jill Knight
Is it not the case that there is now clear evidence that other members of the European family, notably Germany and Ireland, have stated that they recognise the dangers, not only of rushing prematurely into the EMU, but of saying at this stage in the proceedings that they intend to go into the EMU or indeed stay out of it?

§ Mr. Clarke
My hon. Friend is right. Although the debate may be lively in this country, it is becoming more intelligent and more informed and it is somewhat in advance of that taking place in some other countries on the continent. I have heard the German State Secretary and the Irish Finance Minister say that they see no prospect of economic and monetary union before 1999. I have seen reports of the Portuguese Finance Minister saying that he would expect the Portuguese to exercise an option, despite the fact that they failed to negotiate such an option for themselves in the Maastricht treaty.
1174 The Prime Minister, the Governor of the Bank of England and I have begun to set out the argument at greater length in this country. All of us, including myself, have set out clear circumstances in which we would be opposed to going into economic and monetary union because there are circumstances in which it might not be to our advantage. We in Britain are in one of the best positions in Europe. We have sensibly reserved for ourselves the opportunity to make a contribution to designing the thing and then to make our own decision in due course about where our national interest lies.

§ Mr. Forman
Is my right hon. and learned Friend aware that all Conservative Members, except possibly one right hon. Member, felt that we were completely convinced by the clarification provided by my right hon. Friend the Prime Minister on this question yesterday? Is it not a fact that, since the Maastricht treaty, the European Union has become much more of a hybrid organisation with more intergovernmental characteristics? Does my right hon. and learned Friend agree that we should not fall for the argument from some of our continental partners that we are going to be the victims of institutional determinism?

§ Mr. Clarke
I agree with my hon. Friend and I do not think that we are going to be the victims of institutional determinism. I also agree with him that neither of us, nor the Conservative party, wishes that. My hon. Friend is quite right. Ever since Maastricht, with the second and third pillars moving forward on an intergovernmental basis, there have been changes from the old blueprint days inside the European Union. Yesterday, the Prime Minister clarified the position not by giving silly simple answers to very glib questions, but by setting out the serious economic and political considerations on which we have to concentrate and then reserving to the Government of this country the right to make up their mind in due course on a hard-headed judgment of the national interest.

§ Mr. Gordon Brown
Although the search to find Mr. Leeson is now over, the search is clearly still on to discover the Government's European policy. On the single currency and the referendum, yesterday the Prime Minister said that a referendum may be necessary and desirable. Does the Chancellor now regret saying, as he did, that a referendum was totally a non-issue and that those who thought that constituents desired it were slightly up the creek? Does the Chancellor agree with the Prime Minister that a referendum may be necessary and may be desirable?

§ Mr. Clarke
Well, there were better jokes yesterday from the Leader of the Opposition and from the hon. Member for Livingston (Mr. Cook). The search is now on for some Labour party policy on the subject which might hold together people as disparate as the hon. Member for Workington (Mr. Campbell-Savours) with the right hon. Member for Bethnal Green and Stepney, and the hon. Member for Workington with the hon. Member for Bolsover (Mr. Skinner), pointing out some rather serious divisions behind the hon. Member for Dunfermline, East (Mr. Brown).
Our position is clear: that when the time comes to make a decision, the Prime Minister left open the question of a referendum. If and when we do reach the stage at which a single currency is on the agenda and ready for national decision, that is obviously again something that we have 1175 left open for the British Parliament at the time to consider when it decides how to address the question of the national interest.

§ Mr. Haselhurst
Does my right hon. and learned Friend think that the increased usage of the ecu as a common currency would help to clarify some of the practicalities and dispel some of the myths attaching to a possible future single currency?

§ Mr. Clarke
I do, but I think that it is going to be rather difficult to move there from the Maastricht position. The British Government, with hindsight, were proved right in pursuing those ideas, as indeed we did in the run-up to Maastricht. If it came back as a real possibility, I agree with my hon. Friend that it might well be a very sensible way to proceed, but all these matters now might or might not emerge in the debate over the next four, five or however many years in which we are going to play an active and constructive role.