EU: Single Currency (Hansard, 5 April 1995)

§ The Minister of State, Department of Social Security (Lord Mackay of Ardbrecknish)
My Lords, under the UK opt-out to the Maastricht Treaty, the Government have kept open the option of whether or not to seek to join any future European single currency. That remains our policy. We shall judge, in the light of the circumstances of the time, whether participation would or would not be in the best interests of the United Kingdom.

§ Lord Barnett
My Lords, I am obliged to the Minister. Can I assume that he is not willing, or would not agree, to go beyond what the Prime Minister said on Monday night about the single currency, when, in fact, he said nothing and took a long time doing so? Can he also say whether or not a single currency would have the same effect as destroying a nation state? More importantly, would the Minister accept that, if the options are to be kept open, it would be necessary under Article 109j.1 of the Maastricht Treaty to be within the exchange rate mechanism from 1st July next year for two years? Is that the Government's intention?

§ Lord Mackay of Ardbrecknish
My Lords, the noble Lord is quite right in his assumption that I would not go beyond the statements already made by my right honourable friend the Prime Minister. So far as concerns the ERM, the Prime Minister made it very clear that Britain will not join the ERM in 1996 or 1997.

§ Lord Harmar-Nicholls
My Lords, does my noble friend agree that, whatever the ultimate result on this particular issue, from the nation's point of view it would he politically healthier for the overwhelming number in the Labour Party who disagree with the noble Lord, Lord Barnett, to place on the record how they feel, even at this stage?

§ Lord Mackay of Ardbrecknish
My Lords, my noble friend tempts me into the realms of speculation about what is or is not the Labour Party's policy with regard to either the ERM or a single currency. I believe that it is far too early for us to make a judgment about the situation in 1999. When we reach that point, we as a government intend to take any decision necessary, in the light of what is in the best interests of Britain, the British people and the British economy.

§ Lord Hailsham of Saint Marylebone
My Lords, would it surprise my noble friend to know that the earlier part of my life was spent under a single currency which had lasted for 100 years? It was called the gold standard. It ended only with the First World War. Nobody suggested that it interfered with our independence.

§ Lord Mackay of Ardbrecknish
My Lords, I shall not go back quite so far as that. But my point about the single currency is valid. If we decide some time in the future that the situation is such that we ought to consider joining it, quite clearly any government—certainly a Conservative Government—would take into account what was in the best interests of the British people and the British economy. That has to be the right way to treat this issue.

§ Lord Richard
My Lords, can we take it from what the Minister said—without going any further than the Prime Minister did, which I fully understand—that, if the conditions are right, the Government's policy is that they will join?

§ Lord Mackay of Ardbrecknish
My Lords, the situation is as I said. We will look at the conditions. As my right honourable friend the Prime Minister said on 3rd February, unless the economic conditions are right, a single currency would tear apart the European Union. It is not just consideration of the interests of the United Kingdom; it is also in the interests of the European Union itself that, when we are presented with the option of joining or not, we then decide whether or not that is in our interests.

§ Lord Richard
My Lords, if, in the opinion of the Government, the conditions are right, then the Government will join—is that right?

§ Lord Mackay of Ardbrecknish
My Lords, if the conditions are judged to be right—if it is in the interests of the British people—then the issue will have to be decided by the government of the day and indeed by Parliament, because it is a decision of very considerable importance.

§ Lord Boardman
My Lords, does my noble friend assume, from the Question put by the former Chief Secretary, and indeed others, that the Labour Party would now agree to a single currency if it should be in a position ever to exercise that authority?

§ Lord Mackay of Ardbrecknish
My Lords, that may well be the conclusion that one must draw from the exchanges this afternoon, and indeed from other remarks made outside the House and in another place. But I cannot believe that even the Labour Party would be so irresponsible as to decide now that they should join a single currency in 1999, 1997 or whenever, not knowing what the circumstances would be at that time. Not even the Labour Party could be that irresponsible.

§ Lord Stoddart of Swindon
My Lords, does the Minister agree that his noble and learned friend Lord 173 Hailsham is completely wrong in likening a single currency and economic monetary union to the gold standard? Does he further agree that far more than that is involved in a single currency and that loss of sovereignty could be involved? Will he tell the House whether the Government will agree to a referendum before we embark upon such a course?

§ Lord Mackay of Ardbrecknish
My Lords, I am always glad to welcome the authentic voice of the Labour Party to any European Union debates that we have on matters of that nature. The noble Lord is indeed right to say that a single currency raises serious economic, political and constitutional issues. On the issue of constitutional change, as my right honourable friend the Prime Minister has made clear on a number of occasions, a referendum cannot be ruled out. It would be for the Government at the time to decide whether, in the circumstances, it was sensible to recommend to Parliament that a referendum ought to be carried out.

§ Lord Peyton of Yeovil
My Lords, does my noble friend agree that if a German Minister were currently to be asked the kind of flat-footed question which was just addressed to him by the noble Lord the Leader of the Opposition, he would in no circumstances give a straight answer?

§ Lord Mackay of Ardbrecknish
My Lords, I am not entirely sure whether I should thank my noble friend for what was implied towards the end of that question. He makes a valid point. Ministers of other European countries also take largely the same view as we do and will do on the day on which a decision has to be made on behalf of their own countries; namely, they will take those decisions in the best interests of their own countrymen, whether they be French, German or in our case British.

§ Lord Barnett
My Lords, inadvertently, the Minister did not answer my supplementary question. I asked him, if the Government are to keep open their options about joining a single currency, whether, under Article 109 of the Maastricht Treaty, they would need to keep within the normal range of the ERM. I did not ask whether they would join it. I asked whether they would need to keep within that range. He simply replied that they do not intend to join it. Could he now perhaps try to answer my question?

§ Lord Mackay of Ardbrecknish
My Lords, I thought I had answered the question by saying that we do not intend to join it in 1997. However, the exchange rate criteria in the treaty was written at a time when the ERM operated under different rules. For example, there were narrow bands in the ERM which do not now exist. It is not clear now how the requirements would be measured. There is no legal or practical need for a formal interpretation of the treaty, nor for us to decide to join the ERM before 1997.