§ 9. Dr. Julian Lewis (New Forest, East)What the implications are for businesses of replacing the pound by the single European currency. [159069]
§ The Secretary of State for Trade and Industry (Mr. Stephen Byers)Provided the five economic tests laid down by the Chancellor are met, and the Government, Parliament and the British people agree to join, we believe that there would be benefits for British business in membership of the single European currency, particularly in respect of trade, transparency of costs and currency stability.
§ Dr. LewisI congratulate the Secretary of State on reading out his mantra so fluently. If there are those benefits, how can he explain the discrepancy that, whereas British public opinion is against joining the single currency and scrapping the pound to the tune of two thirds of the entire population, British businesses are against joining the single currency and scrapping the pound to the tune of three quarters of British businesses? What do British businesses know that make them so much more opposed to new Labour's policy of scrapping the pound than even the vast majority of the electorate at large?
§ Mr. ByersI do not know the source for the hon. Gentleman's view that three quarters of British businesses are opposed, but certainly the CBI and British Chambers of Commerce—[Laughter.] It is an interesting change in the political landscape when a mention of the CBI has Tory Members groaning. What a change we have seen! The reality is that the CBI knows that the Government's policy on the single currency is the right one—for the simple reason that we are putting the national interest first, not the interest of party. The issue divides the Conservative party from top to bottom—that is the reality. The Conservatives have therefore cobbled together a 975 policy that really does not stand up to the tests. The Government's policy is clear. Our view is: why not simply let the British people decide?
§ Ms Sally Keeble (Northampton, North)Is my right hon. Friend aware of the particular pressures of our being outside the single currency for foreign companies making investment decisions in the UK? He is aware that the US-owned company British Timkin has closed in Northampton, with the loss of 950 jobs. People in Northampton appreciated the prompt response of the Government in setting up a taskforce. I wonder if my right hon. Friend could—[Interruption.] Opposition Members may laugh, but people in Northampton appreciated that response, which was in marked contrast to anything done about job losses by the Conservative Government.
Will my right hon. Friend give two assurances? First, while trying to attract inward investment, will there be a focus on bringing high quality engineering and manufacturing jobs to Northampton to replace those that were lost? Secondly, will my right hon. Friend say what the Government intend—
§ Mr. SpeakerOrder. I think that the Minister has enough to go on with.
§ Mr. ByersMy hon. Friend is right to say that there are major international companies, such as British Timkin, that have taken decisions in relation to the weakness of the euro vis-à-vis the strength of sterling, and that, clearly, was one of the reasons behind the decision that British Timkin took. The Government will not walk away from the difficulties created by that decision, but will work with local people, local Members of Parliament and local businesses to see Northampton through those difficulties.
My hon. Friend is also right to say that there are major inward investors who have made it very clear that, if the Government had ruled out joining the single European currency for a fixed period, inward investment decisions would not have been made in favour of the United Kingdom. The head of Nissan, Carlo Ghosn, said very clearly when he announced the investment in Sunderland that it would not have been made if we had had a policy of refusing to join the single European currency during the next Parliament—and Conservative Members and those on their Front Bench need to answer those questions. What about the effects on inward investment?
§ Mr. Alan Duncan (Rutland and Melton)If we were to join the euro, we would have not just a single currency, but a single interest rate, so the only variables left to take the strain of economic management would be taxation, transfer payments, wages and prices. Big companies could spread their activities across national boundaries, but smaller, United Kingdom-based companies would not be able to do so. For them, there would be the pain of the exchange rate mechanism all over again, with the European Union controlling taxes and grants and with domestic wages and prices taking all the pain. Will the Secretary of State explain exactly how he thinks that UK companies could, in any way, escape from that pressure?
§ Mr. ByersInterestingly, there was no mention of the effects that the Conservative policy would have on inward investment. On the particulars of the question asked, the hon. Gentleman mentions the difficulties that arose from 976 ERM—a creation of the then Conservative Government, especially the terms under which the United Kingdom entered it. The reason why the five economic tests laid down by the Chancellor are so important is that they will ensure that if joining the single European currency is an issue, it will be done on terms that are in the interests of British businesses, both large and small. The point is that we are not adopting a policy of ruling out joining just for political convenience; we are putting the national interest first and letting the British people decide.