§ 2. Mr. Mark Lazarowicz (Edinburgh, North and Leith)
What steps she will be taking to promote Scotland's interests in the future of Europe debate. 
§ The Secretary of State for Scotland (Mrs. Helen Liddell)
The Government wish to encourage a wide-ranging debate on the future of Europe in advance of the intergovernmental conference in 2004. I will continue to contribute to that debate. Indeed, the Spanish presidency of the European Union is organising a major seminar on that issue next month in Segovia, where I shall speak.
§ Mr. Lazarowicz
I am glad that my right hon. Friend is taking part in that conference. As she is aware, one of the key issues facing Europe is enlargement. As she knows, enlargement will mean that more than 70 million 153 people will join the eurozone. Does she agree that Scottish business and Scottish jobs are likely to suffer if more countries join the eurozone while the United Kingdom remains outside? Does she therefore agree that Scottish business and Scottish jobs need more than ever an early decision on British membership of the single currency?
§ Mrs. Liddell
Scottish business and Scottish jobs need to be certain that the economic conditions are right for Britain's membership of the single currency. We are the only Government ever to have said that we have no objection in principle to the single currency, but joining it must be within the context of meeting the five economic conditions set by my right hon. Friend the Chancellor. I acknowledge my hon. Friend's point about enlargement, which may mean something like £175 million per annum coming to Scotland; however, that money will come to Scotland only if Scottish companies are prepared.
§ Mr. Alex Salmond (Banff and Buchan)
Can the Secretary of State identify for the House the precise benefits that will accrue to Scottish workers from the Prime Minister's new right-wing alliance with Silvio Berlusconi? Can she draw on her own experience to warn him of the dangers of becoming entangled with unscrupulous media tycoons?
§ Mrs. Liddell
I am intrigued that the hon. Gentleman does not think that the Prime Minister should have any contact with democratically elected Prime Ministers. Indeed, as well as working with the Italian Government—I take it that the hon. Gentleman is talking about that Government—the Government have worked with all the other 14 members of the European Union. Consequently, we now play a leading role in the European Union. As a direct result of the Government's policies on a flexible work force, increasing skills, and developing the knowledge economy, we have the lowest unemployment for more than a generation, more people in employment than for 40 years, the lowest interest rates and one of the most prosperous economies in Europe.
What a big difference from what the hon. Gentleman is suggesting—Britain as part of the European Free Trade Association or the European economic area. Under an independent Scotland, our partners would be Iceland, Liechtenstein and Switzerland.
§ Mr. Ian Davidson (Glasgow, Pollok)
Does the Secretary of State accept that Scotland has a greater interest in European prosperity because we have a much greater proportion of trade with Europe than does the rest of the UK? Does she accept that if we consider joining the euro, we must ensure that we do so at the right rate? Joining at the present rate would lock in a degree of uncompetitiveness that would not serve us well in future. Does she accept that the devaluation that would be necessary if we changed the rates in the short term would cause inflation, which would be in no one's interest?
§ Mrs. Liddell
The Government's policy on exchange rates is that they will fluctuate and find their own balance in the medium term, which is as it should be. I repeat to my hon. Friend the point that I made to my hon. Friend the Member for Edinburgh, North and Leith (Mr. Lazarowicz); it is important that the five economic tests are met. A key issue is ensuring that we have a robust 154 place in the European Union and are able to withstand external shocks; I believe that my hon. Friend the Member for Glasgow, Pollok (Mr. Davidson) was referring to that.
The Government's logical position of prepare and decide is a lot more sensible than the position expounded by Baroness Thatcher, who said that we should never enter the European Union and, indeed, blamed everything that has ever gone wrong in Europe on our partners in continental Europe; her angle was narrow-minded, regressive and backward-looking.
§ Mr. Greg Knight (East Yorkshire)
Does the Secretary of State accept that there is a world of difference between promoting Scotland's interests and doing what she has been doing—trying to promote the interests of the Prime Minister? Is it not the case that the Prime Minister wants a united states of Europe, with a single constitution, a single currency, a single foreign policy, a single economic policy and a euro-army? Is not that why Ministers are not standing up for Scotland against the rising tide of euro-federalism? Would not Scotland's interests be better served by a free market, flexible union of member states, to enable Scotland to retain its national identity and its own currency?
§ Mrs. Liddell
Every time the right hon. Gentleman comes to the Dispatch Box, he displays his lack of knowledge about Scotland. Scotland benefits more than other parts of the European Union from our membership. A greater proportion of our exports goes to our European partners than goes to the United States of America, for example. We have benefited from the Government's policy of playing a leading role in Europe, rather than the previous Government's bonkers policy of trying to pretend that we could pull up the drawbridge on Europe. Businesses the length and breadth of Scotland are appalled by the attitude that the former leader of the Conservative party propounds in her most recent book. I urge him to come to the Dispatch Box and repudiate the views of Baroness Thatcher.
§ Mr. John McFall (Dumbarton)
Can my right hon. Friend assure me that she will take no cognisance of the Conservative party, which wants to come out of Europe? That is the honest message that the Conservatives should be putting across. When she discusses the future of Europe in Spain next month, will she keep in mind the cities of Edinburgh and Glasgow, where the number of financial services jobs now exceeds 250,000? Apt financial regulation and EC directives are extremely important if the industry is to flourish in the future.
§ Mrs. Liddell
My hon. Friend makes an important point. The financial services sector in Edinburgh is a major engine for growth in the Scottish economy. Last Thursday, representatives of the financial community met my hon. Friend the Economic Secretary and me to discuss liberalisation and the completion of the single market in financial services. One of the great successes of the Barcelona summit was the movement towards completion of the single market in financial services. Already 25 measures have been approved; seven more are likely to be approved by the end of the year. Such measures are crucial to Scotland and represent a great opportunity for Scottish financial services. If we listen to the Conservative 155 party, we hear euroscepticism that is damaging to Scotland's best interests. If we listen to the nationalists, their policy is to take us out of the European Union, because two former eurocrats said that perhaps, if they were awfully good, an independent Scotland might get into the EU. That is backward looking and regressive. We speak about the real issues; they speak about separation.