Euro

HC Deb 04 March 1999 vol 326 cc1193-7

1. Mr. John Bercow (Buckingham)

If he will make a statement on preparations for possible British entry to the euro zone. [72413]

The Chancellor of the Exchequer (Mr. Gordon Brown)

As the Prime Minister said on 23 February, the Government believe it important to make practical preparations now if we wish to have the option of considering joining the euro in the next Parliament. The preparations have been supported by a standing committee, which has included the Confederation of British Industry, chambers of commerce, the British Bankers Association, the Bank of England, the Financial Services Industry Association, the Consumers Association, the Trades Union Congress and others. One hundred business organisations have been involved. I can announce that banks, retailers and small businesses will be among those involved in working parties, conducting a business examination of critical issues. Any decision, of course, would involve a referendum of the people of this country.

All political parties in the House have been invited to join a parliamentary committee to consider the work of the standing committee. One of the parties asked—the Conservative party—has refused to join.

Mr. Bercow

I am grateful for that reply. Given that Lord Simon could give no clear idea to the Treasury Committee on Tuesday of how much money the Government will have to spend to prepare for the euro, over and above the £29 million already incurred, why does the right hon. Gentleman not just admit that, in seeking to drag Britain into the European single currency, which the former Spanish Prime Minister, Felipe Gonzalez, has described as the greatest abandonment of sovereignty since the foundation of the European Community", he does so with a cost that he will not calculate, for a benefit that he cannot quantify, at a risk to the British people that he dare not admit?

Mr. Brown

I thought that, when the hon. Gentleman started, he was making a bid to fill the Conservatives' empty chair in the committee. The £29 million which he is talking about is money related to the start of the euro in Europe, for which the Bank of England and others have had to make preparations. It is normal, when legislation is published, to publish the moneys that would have to be allocated to social security, the Inland Revenue and Customs and Excise, and that will be done in the normal way. The usual value-for-money test will be met, and Parliament will have a chance to vote on the legislation. We have done everything that is proper.

The question that the Conservative party must answer is this: if we are to decide on computer systems, for example, for social security, Inland Revenue and Customs and Excise for 10, 20 or 30 years ahead, is it not sensible to build in a facility to include the euro? If the Conservatives abandon or seek to abandon meaningful preparation, they are denying the British people the choice. We have a Conservative party that refuses to consider joining the euro, refuses to consider preparations, and now even refuses to discuss considering preparations. Its motto is: be unprepared.

Mr. Mike Gapes (Ilford, South)

Does my right hon. Friend agree that the Conservative party's behaviour on this issue is in marked contrast to this Government's and to the interests of British business and people? There will be serious implications for business, regardless of whether this country joins the euro, so we must be properly prepared to deal with that—unlike Conservative Members, who just take their bat away and say, "We're not playing."

Mr. Brown

I agree with my hon. Friend. Two months ago, the Conservative party in the House of Commons lost the support of hereditary peers. Now it has lost the support of business, the CBI, the British Bankers Association and chambers of commerce, which all believe that it is sensible to consider practical preparation. The Conservative party is becoming a marginal force in British politics.

Dr. Vincent Cable (Twickenham)

Is the Chancellor aware that the Back-Bench committee to which he refers duly met this morning in a businesslike manner? Can he think of any rational reason why the official Opposition should choose to boycott a committee on which all other United Kingdom parties are represented, including several that are hostile to economic and monetary union?

Hon. Members

Order.

Madam Speaker

Order. This is a reasonable question; it is a parliamentary matter.

Dr. Cable

Can the Chancellor explain why the official Opposition may not wish to participate in public scrutiny of expenditure on the changeover plan, which they will otherwise complain is improperly or secretly spent?

Mr. Brown

We hope that every political party in the House would see the national economic interests in this matter, and would participate in the committee. I am very pleased that all other political parties have decided to be part of the group and have sent a nominated representative.

Mr. Desmond Swayne (New Forest, West)

Quislings!

Mr. Brown

I think that that was unparliamentary language—but not from me. It is pleasing that other political parties have chosen to take part. On this matter, the Conservative party has set itself against the whole of British industry and commerce, which, whatever their views, want to make practical preparations so that we are in a position to make a choice. The Conservative party is trying to deny the British people a realistic and fair choice.

Mr. Robert Sheldon (Ashton-under-Lyne)

Of course my right hon. Friend is absolutely right to undertake these preparations, but the negotiations will obviously be very difficult and complex. Will he confirm that it is his intention to achieve a competitive level for the pound? I ask him for no more details than that because of the difficulties of these negotiations; but will he confirm that, in the interests of manufacturing industry, he will try to achieve that competitive level of the pound?

Mr. Brown

Our policy is for exchange rate stability, and that is the policy that matters as far as the euro is concerned. As for British industry, I think my right hon. Friend, who has taken a strong interest in manufacturing industry for a long time, will agree that manufacturers throughout the country are worried about the fact that a political party in the House wants to stand aside from the preparations that are necessary in the national interest.

I read this morning that the shadow Chancellor is to lead national demonstrations to the House of Commons, including anti-Europeans, Europeans and Euro-sceptics. I believe that people will find it ironic that the man who signed the Maastricht treaty is now leading demonstrations against that treaty.

Mr. Alan Clark (Kensington and Chelsea)

The Chancellor just mentioned exchange rate stability, but, as he knows, the value of the euro has steadily deteriorated since its launch. He may or may not agree with his distinguished predecessor, Lord Healey, that at this rate it will be out of sight completely in five years. But what message does he have for savers, for those on fixed incomes and for those with building society accounts, who already, over the past two months, have seen a deterioration that amounts almost to one year's complete income?

Mr. Brown

What worries savers most is the idea of a return to the boom-bust policies of the Conservative Government. The country will not forget that inflation went as high as 21 per cent. in the 1980s. Inflation is now about 2½ per cent. That is our target, and we shall stick to it. This party—and this Government—is the low-inflation party in this country.

Mr. Bill Rammell (Harlow)

Does the Chancellor share my puzzlement that the statement that we just heard is the first call in the Chamber that I can remember for higher interest rates? Does he agree that the Prime Minister's statement on the national changeover plan has been warmly welcomed throughout the country? Did he notice the MORI opinion poll in The Times last week, showing for the first time a majority of people in favour of, not opposed to, British entry to the single currency; and does that not emphasise the reasons why we are hearing the shrill voices from the Conservatives today—the shrill voices of desperation, as they realise that public opinion is leaving them behind?

Mr. Brown

I believe that, whatever people in this country feel about the euro, they feel that a Government should make practical preparations to give the people a realistic choice; and they will find it very strange indeed that the Conservative party has so marginalised itself that it will not even participate in the discussions about preparations. The Conservatives are now the rump of a sect of a faction of a once-national party.

Mr. Francis Maude (Horsham)

What estimate have the Government made of the conversion costs either to business or to the taxpayer of Britain joining the euro? Why was no such estimate included in the national changeover plan published last week? Why, in the time scale for membership set out in that plan, was there no mention of when the most important event of all would take place—the act of monetary union, the irrevocable locking of exchange rates?

Mr. Brown

If the right hon. Member would send his representatives along to the committee, they would consider those very issues. The point of the outline changeover plan is that it is a consultative exercise; it is for business and Government to share their insights and ideas about the necessary arrangements that would have to be made for a changeover. However, the Conservative party wants to deprive the country of the realistic option of making a choice.

Mr. Maude

That just will not do. The Government appear to be so sure that membership of the single currency will be in Britain's interests that they are ready to commit large sums—tens of millions of pounds, the Prime Minister said—of taxpayers' money now, and to ask business to do the same, on the arrogant assumption that the British people will want to join it. How can they possibly be so sure when they have not even bothered to estimate the costs, let alone the benefits?

Is not the Chancellor's untypical coyness on the timing of the exchange rate locking explained by the fact that, if it was to be early in the time scale, he would have to tell the Bank of England to shadow the euro before the general election, contrary to what the Prime Minister said last week; and, if it was to be later, there is no possible reason for anyone to spend money on it now? Does not his reticence on the subject give the game away? The plan is about edging Britain ever closer to membership, in an attempt to close off the option of Britain prospering outside.

Mr. Brown

The whole point of the national changeover plan is to have a discussion of the implications for business and others of the option to join the euro. The whole point of the Conservative opposition to that is to deny us a realistic choice in the next Parliament.

With regard to preparations, business—to which the right hon. Gentleman's question supposedly relates—is joining us in examining those issues. On dates, we have made it absolutely clear that the issue is whether we meet the economic tests. We have not set a date. We have set tests that must be met, and we shall evaluate them in the next Parliament.

The problem for the Conservative party is that there are two realistic positions—to be in favour of the euro in principle or to be against in principle. The right hon. Gentleman and those on the Back Benches are against. The Leader of the Opposition says that he would rule out joining for 10 years. The shadow Chancellor is now ruling out preparations for 10 years. The party is split asunder by the issue of Europe.

Mr. Harry Barnes (North-East Derbyshire)

The House understands the practical preparations that are to take place in terms of economic measures, and the provisions for a referendum. What measures are to be taken on a European scale in respect of the democracy of the European Union, in order to make it a fit body to run the euro?

Mr. Brown

We have made our proposals for economic and political reform in Europe, and we shall continue to pursue them. We have made proposals on jobs, capital markets and competition policy. We have made proposals about other issues relating to the operation of the European Parliament, and we shall continue to push the agenda that is right for Britain in Europe.