European Currency Proposals (Hansard, 19 December 1990)

§ The Parliamentary Under-Secretary of State, Department of Social Security (Lord Henley)
My Lords, at the intergovernmental conference on economic and monetary union the Government will be putting forward proposals for the establishment of a European monetary fund which will manage a new common currency, the hard ecu. Under those proposals, the hard ecu could ultimately evolve towards a single currency if it were the wish of governments and peoples that it should be used in preference to their own national currencies; but it is neither necessary nor desirable to take such a decision now.

§ Lord Holme of Cheltenham
My Lords, I thank the Minister for his Answer. Does he accept that behind the Government's welcome change of style in European matters, there is still an unresolved question of substance? Do the Government believe that the ultimate step-by-step unimposed adoption of a single currency for Europe is a desirable objective or do they believe that it is undesirable? Do the Minister and the Government accept that until the policy objective is clearly resolved, the uncertainty will be damaging for the City and for British industry?

§ Lord Henley
My Lords, no, I do not accept that. The Government have made their position clear. If it were the wish of peoples and governments that a hard ecu should evolve into a single currency, that should be allowed to happen. As my right honourable friend has made clear, it should be market-driven.

§ The Earl of Lauderdale
My Lords, is not such an airy-fairy scheme premature until all members of the Common Market obey the rules?

§ Lord Henley
My Lords, I would not describe the scheme put forward by my right honourable friend the Prime Minister when he was Chancellor of the Exchequer as airy-fairy. It is a valid scheme that we are putting forward to the EC for discussion at the intergovernmental conference.

§ Lord Barnett
My Lords, I agree with the reply given by the Minister to the noble Lord, Lord Holme. Will he clarify it a little further and make absolutely clear that in practice he is saying that he agrees with the objective of a single currency provided that it evolves from market forces?

§ Lord Henley
My Lords, I can only repeat what my right honourable friend the Prime Minister said. He made it plain that under the United Kingdom's proposals the hard ecu could ultimately evolve into a single currency if it were the wish of peoples and governments that it should be so used.

§ Lord Ezra
My Lords, in his Answer to my noble friend Lord Holme, the Minister said, "if it were the wish of governments and peoples." We can understand how governments come into this through the intergovernmental conference. But how are peoples to come into it?

§ Lord Henley
My Lords, that is obvious: by people using it.

§ Lord Harmar-Nicholls
My Lords, is my noble friend aware that if what he said is as interpreted by the noble Lord, Lord Barnett, there would be a real risk of a different Conservative Party from the one that exists today?

§ Lord Henley
My Lords, I am not sure that I follow my noble friend's reasoning. All that I was trying to make clear was that we shall allow the hard ecu to evolve into a single currency if the market so dictates.

Lord Bruce of Donington
My Lords, will the Minister confirm that in giving consideration to the problem and, in particular, the latest effusion on the subject from the European Commission called One Market, One Money, which is some 355 pages long, he will also cause consideration to be given to the fine report published in 1977 by Sir Donald MacDougall on behalf of the Commission which showed that a considerable shift of resources would be required across the whole Community to achieve convergence? That report was successfully withheld by the European Commission from the European Parliament's consideration at the time.

§ Lord Henley
My Lords, I cannot comment upon the MacDougall Report which, as the noble Lord said, dates from some 12 years ago. I am sure that the other report to which the noble Lord referred which, I must confess, at 350 pages, or whatever it was, I have not read, will be taken into consideration.

§ Lord Campbell of Alloway
My Lords, may I ask my noble friend for clarification? Does it come to this: that the hard ecu can either be a means to an end or an end in itself, depending upon the will of the member states?

§ Lord Henley
My Lords, my noble friend is correct. The hard ecu could evolve into a single currency if it were so desired.

§ Baroness Robson of Kiddington
My Lords, the Minister replied to my noble friend Lord Ezra, who asked when people come into it. Does he agree that it is not possible for people to come in until the hard ecu becomes legal tender usable by ordinary individuals?

§ Lord Henley
My Lords, I am afraid that the noble Baroness is mistaken. There is no need for the hard ecu to be legal tender. People use a currency when they make contracts, but they do not have to use legal tender. Legal tender applies only to those contracts which have already been made.

§ Lord Stoddart of Swindon
My Lords, does the Minister agree that it is somewhat premature for people to be trying to push us into a single currency, bearing in mind that we have only just entered the ERM with what many people would consider to be unfortunate consequences for the Government? Are they not now caught in a position where, although they desperately wish to reduce interest rates, they cannot do so because they are constrained within the ERM? Is that not hurting industry and causing the recession to be deeper and longer than it need be?

§ Lord Henley
My Lords, that is another Question. If our proposals for the hard ecu are accepted it will be entirely up to the noble Lord to use it as he wishes.

§ Lord Peston
My Lords, the hard ecu scheme is so preposterous that it is flattering for it to be referred to as "airy-fairy".

§ The Earl of Lauderdale
My Lords, I referred not to the hard ecu but to the proposed single currency as airy-fairy.

§ Lord Peston
My Lords, has the noble Lord ever heard the expression "when the time is ripe"? Is the answer that we shall hear during the next few months while the Government are still in power that we shall have a single currency when the time is ripe? Is that the answer that the noble Lord is trying to give?

§ Lord Henley
My Lords, the Government will be in power for considerably longer than a few months. I have answered the noble Lord's question. He knows that perfectly well; it is that we have made proposals for a hard ecu which could ultimately evolve into a single currency.

§ Lord Williams of Elvel
My Lords, can the noble Lord focus his mind on the terms of the Question? Under what circumstances would the Government bring such proposals before Parliament? Does the noble Lord recall that the decision to join the exchange rate mechanism was not brought before Parliament and was not discussed by it? Is there any requirement for discussion of a single currency by Parliament? If so, what is it?

§ Lord Henley
My Lords, my understanding is that if there is agreement by all 12 nations it would need parliamentary approval.

The Earl of Halsbury
My Lords, can the noble Lord assure me that whatever the Vickers diamond pyramid hardness scale applied to the ecu, what circulates as coinage in this country will be known as the pound sterling?

§ Lord Henley
My Lords, I cannot answer that question. The hard ecu could evolve into a single currency if that were the wish of the people and the governments.