HC Deb 10 May 2001 vol 368 cc254-6
7. Mr. Owen Paterson (North Shropshire)

When he expects that his five economic tests for British participation in EMU will be fulfilled. [159881]

The Chancellor of the Exchequer (Mr. Gordon Brown)

The Government's position on the five economic tests for the euro was set out in a 1997 statement to the House. The Government have said that the assessment will be made early in the next Parliament, so that British business is prepared for the introduction of euro notes and coins in 2002 in the euro area. I am today in consultation with business, publishing additional case studies showing how British businesses across a range of sectors have prepared for the introduction of the euro, thus helping British business to compete effectively in the single market, whether we are in or out of the euro.

Mr. Paterson

Last week, the Chancellor got into the most terrible huff when the European Commission criticised his conduct of the economy. We all know from the Gould memo and from indiscretions on television that the Prime Minister wants to bundle us into the euro, against the wishes of the British people. As that will reduce the role of the Chancellor of the Exchequer of the United Kingdom to that of office boy for the European Commission, will he now go through each of the five tests and give his interpretation of where we stand today?

Mr. Brown

The Government's position is as set out on previous occasions. While we see the benefits in principle of the single currency, we shall subject it to five economic tests, which will be rigorously made early in the next Parliament. If we were to recommend that we join the single currency, we would report to Parliament, and then the people of this country would have the final say.

The difference between our two parties is that we are prepared to say that we support the single currency in principle, but will subject it to tests. The Conservative party cannot tell us whether it supports it in principle or is against it in principle. Indeed, some of those in the Conservative party support it in principle and some are against in principle. During the election campaign, they will have to make up their mind.

Mr. Denzil Davies (Llanelli)

When my right hon. Friend comes to consider the five economic tests, particularly the question of whether the British economy is converging with that of the euro area, will he take into account the effect of enlargement on the economy of the euro area, and specifically the possible effect of enlargement on the value of the single currency?

Mr. Brown

All matters that are relevant will be taken into account in making the assessment, and we shall consider the effects on investment, employment and financial services. We shall consider whether we have the flexibility and we shall consider whether there is sustainable convergence. Those are the economic tests for Britain.

What the country will not support is a Conservative party that appears to want to rule out a single currency on grounds of dogma and is not prepared to examine what is in the national economic interest. I believe that, at the end of the day, people will want this decision to be taken on the basis of the national economic interest. By refusing even to support preparations by business, the Conservative party is not only the anti-European party in this country but the anti-business party.

Mr. Christopher Gill (Ludlow)

In advocating the single currency, will the Chancellor make sure to remind the British people that every time that we have been on fixed exchange rates, unemployment has increased astronomically? Will he also tell the British public that the choice of rate at which we would join the single currency is not left to this country to decide, because under article 109 of the treaty it has to be decided in conjunction with other countries? In other words, we cannot pick a rate to suit this country and the economy of this country.

Mr. Brown

The hon. Gentleman's problem is that while he appears to be subjecting the single currency to the tests of employment and everything else, he has ruled out the single currency as a matter of dogma. His position is not to support it if the economic tests are met but to oppose it under all circumstances.

The Conservative party will have to make up its mind. The shadow Chancellor told Welsh Conservatives on one occasion that his policy was to keep our options open on EMU. He also said that a single currency would mean giving up the government of the UK. The Conservative party must make up its mind in this campaign. Is it against a single currency in principle, and therefore for ever, or against it only for one Parliament?

Mr. Dennis Skinner (Bolsover)

Is my right hon. Friend aware that one reason why he is in a position to tell the Commission and anybody else, including the International Monetary Fund, to get stuffed is that we now have the most successful economy in all my 31 years as a Member of Parliament? When the election is fought, one thing will be cettain: we shall not need any lectures from people who were experts in building deficits. This Government have managed not only to wipe out the debt left by the Tories, but to create a successful economy, which will provide more money for the health service, more money for schools and more money for the welfare state. I look forward in the next four or five years to more redistribution of wealth from the rich, who are represented by the Tories, to the many, who are represented on the Labour Benches.

Mr. Brown

I am grateful to my hon. Friend and thank him for his campaigning, particularly on behalf of pensioners.

Any Conservative party claims to economic competence have been undermined not only by what it did in government, but, today, by a manifesto that is unaffordable and not properly costed. When it comes to the campaign, the deputy Director General of the CBI has said that the Tory party's more eurosceptic view is not one that most CBI members would feel comfortable with, and that it is not in our commercial interest to have a eurosceptic Government. He also said that the CBI was once considered the corporate arm of the Tory party, but that most businesses. would take their hat off to this Government for getting Britain's message across better. In other words, the Conservative party is not just the anti-euro party but, indeed, the anti-business party.

Mr. Howard Flight (Arundel and South Downs)

Given the Chancellor's objections to and embarrassment at receiving orders from Brussels to cut his overspending plans, why does he continue with the silly pretence that a Labour Government's decision to join the euro would be based on objective economic criteria? The country well knows that the issue is a fundamental constitutional one, not least whether Britain should retain the ability to manage its own economy.

Mr. Brown

That really sums it up. I asked whether the Conservatives are against the single currency on principle or owing to the national economic interest. The hon. Gentleman has now proved that he is against the European Union altogether. It is hardly surprising that he had to apologise for calling for a renegotiation of our membership of the European Union. At this election, as I have seen from the Conservative party's manifesto issued this morning, it is against not only a single currency and helping business prepare for its introduction, but the treaty of Nice and single majority voting—and the hon. Gentleman is against the EU altogether. It is no wonder that businesses oppose the Conservative party.