HL Deb 18 December 1995 vol 567 cc1418-32

3.48 p.m.

The Lord Privy Seal (Viscount Cranborne)

My Lords, with the leave of the House I shall now repeat a Statement made in another place by my right honourable friend the Prime Minister on the Madrid European Council. The Statement is as follows: "With permission, I shall make a Statement on the meeting of the European Council at Madrid which I attended with my right honourable friends the Foreign Secretary and the Chancellor of the Exchequer. I have placed the conclusions of the Council in the Library.

"I shall deal first with economic and monetary union and then with enlargement. The decisions which the European Union must take on these two issues over the next few years could be the most crucial steps for Europe since the European Community was founded. They will have a profound effect on the political and economic stability of our continent over the next generation.

"On economic and monetary union the Madrid Council decided on a name for a single European currency. "Euro" was not a name which attracted enthusiasm around the Council table. It will not ease the task of those seeking to market the idea of a single currency, but one or more of the member states had objections to each of the other names suggested.

"A more fundamental decision was to study the implications of seeking to introduce a single currency in 1999. As the House knows, I have for a long time argued that the introduction of a single currency by a small number of states would raise very serious questions about its economic consequences and about the way Europe functions.

"At the informal meeting at Mallorca in September there was general agreement that these questions needed to be examined carefully. At Madrid a study was formally commissioned.

"The Maastricht Treaty lays down strict criteria for entry to a single currency. It is now certain that on a proper interpretation of the criteria only a small number of member states will meet the criteria if a single currency is introduced in January 1999.

"Before taking such a step, the European Union needs to examine what it would mean in practice. It must consider its effect on the states outside the single currency area as well as those inside it. It must consider how decisions would be taken. It must ask whether the result would be divergence rather than convergence of European economies. It must consider the potential effects on employment and the demand for resource transfers.

"The risk of monetary instability is one of the questions to be examined. Some have argued for rigid linkages between those inside and those outside a single currency by reverting to an old-style exchange rate mechanism. This is a course which has already been tried and which failed. I have made clear to our partners that I would not recommend that sterling should return to such a system.

"Europe needs coherent answers to these and other questions and I am glad the Madrid Council decided to examine them. The opt-out I negotiated at Maastricht protects the United Kingdom from being forced into an unworkable system. But it is vital to our interests, and to the interests of Europe as a whole, that a single currency does not begin and then fail, thus causing economic turmoil across the continent.

"Let me turn now to enlargement. Ahead even of prosperity, the European Union exists to provide security and stability to the peoples of Europe. For that reason, I believe that enlargement is the most important task facing the European Union. Having demolished the Iron Curtain, we must never again have a dividing line running through the middle of Europe.

"Ten or more countries are hoping to negotiate entry to the European Union in the coming years. This is an historic opportunity to entrench stability through a union of democracies right across the continent—and one we must take. The Madrid Council gave further impetus to enlargement. The European Commission has been asked to produce opinions on all eastern and central European applicants as soon as possible after the end of the Inter-Governmental Conference. This is a necessary step towards full accession negotiations, which are likely to begin with at least the most advanced of the new applicants, as well as with Malta and Cyprus, in about two years' time.

"The Madrid Council considered reports from the Commission on the implications of enlargement for the European Union's policies. These are profound. To be affordable and to be consistent with the EU's obligations under the GATT, the common agricultural policy will have to be reformed when the Union enlarges. So will the structural cohesion funds. At my insistence, it was agreed that future meetings of the Council would examine the implications. The Madrid Council has therefore taken an important step towards combining policy reform with enlargement, both of which are essential to the European Union's future.

"Let me deal briefly with some of the other subjects discussed at Madrid. It was agreed that the Inter-Governmental Conference would start at Turin on 29th March. The conference will be conducted by meetings of foreign ministers, supported by a working party made up of a representative of each minister and of the President of the European Commission. No decisions were taken at Madrid on the substance of the IGC. Work on the agenda will be carried out under the Italian presidency by foreign ministers.

"The drive to promote subsidiarity was strongly in evidence again at Madrid and vigorously supported in informal discussion. The Commission has been instructed to examine the continued need for existing Community legislation and for proposals now on the table. It is now widely recognised that the United Kingdom was right to reverse the trend towards greater intrusiveness by the Commission.

"There was also support for our approach to job creation, flexible pay relating to performance, curtailing non-wage labour costs and the reform of social protection systems. Increasing emphasis is being given to small and medium enterprises and to the need to cut the burden of red tape and over-regulation. The campaign against fraud and for better financial management which I launched at the Essen Council a year ago gained further weight at Madrid.

"The House will welcome the higher priority being given to inter-governmental co-operation against drug-trafficking. At Madrid I presented, with President Chirac, an initiative to help Caribbean states crack down on the transhipment to Europe and elsewhere of huge quantities of drugs produced in Latin America. This initiative was agreed by the Council and is now part of the European Union's policy.

"On external affairs, the Council underlined the importance of successful implementation of the Bosnian peace agreement and gave support to Mr. Carl Bildt who will be leading the international civilian effort there. It also discussed the European Union's relations with Russia, Ukraine and Turkey, and welcomed the agreement at the recent European Union/United States summit to strengthen the European Union's relationship with the United States.

"This was a Council at which the key decisions for the future were identified rather than taken. The programme of work for the next five years, the Political Agenda for Europe, is set out in the Madrid Conclusions. It is a formidable programme. In this period Europe must review the treaty at the Inter-Governmental Conference; review the Union's policies, including the common agricultural policy and the structural funds; take decisions on a single currency; carry out enlargement negotiations; determine the Community's future financing; contribute to new European security arrangements; and develop its relations with neighbouring countries, especially Russia, Ukraine, Turkey and other Mediterranean countries.

"The decisions we take in this period will determine the shape of Europe well into the next century. They will vitally affect the United Kingdom's interests and our future security and prosperity. That is why at successive meetings of Heads of Government I have argued for cautious and careful consideration before decisions are finalised.

"The European Union must carefully weigh the practical consequences of all these issues. Its decisions must be securely grounded in reality. We need, above all, a Europe that works. In that respect, I believe that important steps were taken at Madrid, as they were at Mallorca. They would not have been taken if we had not been prepared to raise the difficult questions and to demand practical answers to real problems.

"In the interests of the United Kingdom, it is essential to continue taking a hard-headed approach at the centre of European policy-making, and I shall go on doing so."

My Lords, that concludes the Statement.

3.59 p.m.

Lord Richard

My Lords, I thank the Leader of the House for repeating a Statement made by his right honourable friend in another place. This is one of the more important European summits to take place in recent years. Quite frequently, Prime Ministers and heads of government go to these meetings and fly back with communiqués which are not over-precise. In this instance, it appears that certain very important decisions were made at the summit. It is very important for this country that that point is recognised and that we try to analyse them.

I make to the House a plea that I have made in respect of other Statements made by the Prime Minister when he has returned from other summits. I hope that your Lordships will read the communique and not rely merely upon the Statement. The communiqué is a somewhat lengthy but not too daunting a document, and it has been agreed to unanimously. I do not know what happens in the aeroplane on the way home from these summits. Recollections appear to be slightly disturbed and in the 24 or 48 hours that elapse between the end of the summit and the Statement by the Prime Minister certain things tend to be pushed to one side and a gloss is given to this or to that. Of course, none of it is directly misleading. Nevertheless, it is important that we look at the document and not just bathe ourselves in the rosy glow that all heads of government try to put upon what they have agreed to but perhaps do not particularly wish to own up to.

The fact is that at the Madrid Summit this country ended up isolated and alone on the essential points. It is very important that we accept that and see where the country should go to from here. Some parts of the communiqué and agreement are welcomed; for example, the issues of enlargement and subsidiarity. As far as enlargement is concerned, I ask the Leader of the House whether it is envisaged that negotiations with the applicant east European countries, who seem most ready for admission, will take place simultaneously with those conducted with Cyprus and Malta. Which countries do the Government see as being in the first batch of negotiations? As far as subsidiarity is concerned, I welcome what the Government and the communiqué have to say about that. However, I am bound to say that for the Government to go abroad trumpeting subsidiarity, in view of the treatment that they have meted out to local authorities in this country over the past five years, is a bit rich—but there we are! Perhaps we should not complain or be too surprised about the way in which this is presented. We also welcome what is said about Turkey, Caribbean drugs and the United States.

I turn to what are perhaps the two most important single issues: employment and European monetary union. Employment is dealt with in the Prime Minister's Statement in one small paragraph as if it is of no great account. I welcome what is said in the communiqué—that the European Council reaffirms that the fight against unemployment and for equal opportunities is the priority task for the Community and member states. I welcome, too, the list on page 11 of the communiqué. The communiqué urges member states to regard as priorities about a dozen spheres of action which are set out in the list. It would be nice to know at some stage the Government's thinking on these various items, not merely to have them all wrapped up as if the European Council agreed with the Government's approach to job creation and employment. I take but one example. Member states are urged to step up training programmes especially for the unemployed. The Prime Minister accepted it in Madrid. It is strange that he heads a government who have cut the training programme, especially for the unemployed. I suppose that we should not be too surprised at that slight difference between the communiqué and the Statement.

As regards European monetary union, the fact is that for all the Government's bluster before going to Madrid the European Council has agreed unanimously that the third stage should begin on 1st January 1999. It has reaffirmed all of the other criteria for its introduction. To all of this the Prime Minister has agreed. It is not as though he is in a minority of one. He has agreed to all of it happening. Could he have done otherwise? He probably could not, given the rough nature of domestic and international politics. But at least it stops all of the nonsense that we have heard for so long about our view gaining ground with our European partners. What happened to the prospective alliance with the French? They were to stand with us on European currency shoulder to shoulder against the Germans. What happened to the very successful foray to Rome last week when apparently the Italians were also to stand with us? The fact is that one thing Madrid has done is to strip away the illusion and destroy the fantasy. On the issue of the EMU, Britain finds itself isolated and alone in Europe. The only thing the Prime Minister came back with was the fig leaf of a study into the effects of the single currency.

Why are we in this position? I believe that, among other reasons, we are isolated and alone in Europe because nobody is quite sure what the Government mean. Is the Prime Minister in favour of a single currency and European monetary union but wants to get there rather more slowly and in a different way? I do riot know. Is he against the whole prospect and is desperately trying to hold out? I am afraid I have to say—because it is true—that our European policy is being dictated by the internal state of the governing party in the United Kingdom. This is a document and a policy that are designed to preserve as much unity as possible in the Conservative Party. In my view, it is not good for this country for us to stand isolated and alone in Europe against developments which, it is perfectly clear from the summit, wall take place.

Lord Jenkins of Hillhead

My Lords, I too, am grateful to the Leader of the House for having repeated the Statement and with such emphasis and animation. There was no question of his gabbling through it in his case. I agree with the noble Lord, Lord Richard, to the extent that this summit clearly marks a considerable strengthening of the probability of a European currency coming into operation by the appointed day. Ten days ago ex-Chancellor Schmidt of Germany told me that he thought the chances were fifty-fifty. Three days ago the British Chancellor of the Exchequer announced with a show of spirit, for a Minister of this Government, that he thought the chances were sixty-forty. The trend is strongly in that direction. Will it not now be sensible for the British Government to work on the assumption that it is more likely to happen than not, instead of trying to convince themselves that it will not and, therefore, constantly be operating on a false premise?

There are several reasons why we ought to be very nervous about continuing to sing the old and dangerous British lullaby which we have sung for the past 40 years. I can never forget, because it is engraved on my mind, the report of the British delegate to the Messina Conference in 1955. He said that they would not agree but that even if they did it would not happen, and if it happened it would not work. That is the position that we have consistently taken.

Would it not be better to learn a little from experience? To make a mistake once is fully excusable, as in the case of the European Coal and Steel Community. To make the same mistake twice, as in the case of Economic Community, is a pity. To make it a third time, as in the case of EMS, looks more like pig-headed than carelessness. To make it a fourth time, in exactly the same form as the single currency, points to positive perversity.

I would still not predict with certainty that a single currency will come into being. But I say with certainty that any wise British Government ought now to treat it as more likely than not, instead of going on trying to pretend that it is all a chimera. I also predict with certainty that if a single currency comes into being, which I believe is now more likely than not, we shall repeat the dreary and consistent pattern that we have previously followed. We shall probably not join in 1999. We shall probably join about two or three years later, dragging our feet in the meantime and doing it uninfluentially and with the minimum of good will. We saw the result of this at Madrid.

I am sorry to have to say this, but I have the strong impression, speaking with some experience of European councils, that the Prime Minister was brushed aside like a fly.

Lord Stoddart of Swindon

That is a disgrace if he was.

Lord Jenkins of Hillhead

Listen to him, let him have his say, let him have his inquiry. But let the rest of us get on with the business. I do not like to see a British Prime Minister so treated. But that is the reality and it will continue to be so, so long as our European policy is like a feather in the wind.

I make one last point. The second issue that the Prime Minister raised in his Statement was enlargement. It is of great importance. I am strongly in favour of enlargement. But it is a great mistake to see enlargement and a reform of the common agricultural policy as a matter quite separate from a single currency and general European construction.

I make another prediction. If, as is still possible, the single currency collapses, and if Europe is set back on its heels, then I think it very unlikely that enlargement will take place with any speed. Europe will be in a state of stasis; certain countries will go into a defeated, bunker-like mood; and one or more countries will veto enlargement. Enlargement is by far the best hope of reforming the common agricultural policy, if only because of the weight and expensiveness of Polish agriculture.

It is therefore a great pity to see these matters in isolation. How can Britain believe, being as isolated on the central issue as it was in Madrid, not merely that it can be at the heart of Europe—that sounds ridiculous these days—but that it can have any influence proportionate to that which a country of the United Kingdom's standing ought to exercise?

Viscount Cranborne

My Lords, I am most grateful to the noble Lord, Lord Jenkins of Hillhead, for his approval of the principle of enlargement, and that he subscribed to my right honourable friend's view of the importance of endeavouring to enlarge the Community. I am also grateful to him for stating in terms that enlargement is the best hope of reforming the CAP. That objective, as the noble Lord knows, is very much shared by Her Majesty's Government.

I was most interested, if not altogether surprised, to hear the mantra repeated by the noble Lord, Lord Richard, suggesting that we should (I paraphrase) not listen to the Statement but rather read the communiqué. I was particularly interested to hear the noble Lord issue what has now become his standard recommendation in the context of the importance of employment creation and how that was identified as a priority task by the heads of state and government who met in Madrid.

The noble Lord referred to page 11 of the presidency conclusions, which he has in front of him. I shall not weary the House by reading out all the employment action recommended on page 11 of those conclusions. However, virtually every single one, including training programmes, is entirely and fully in step and consistent with Her Majesty's Government's existing policies and negotiating objectives in Europe. Indeed, since Essen it has become perfectly clear that it is Europe that has finally realised—perhaps through looking at our own employment and unemployment figures—what policies are needed by developed economies (or indeed any economy) in order to achieve the sort of growth in employment and the decrease in unemployment which we are beginning to see in this country and which are in at least some favourable contrast to the employment figures obtaining in the economies of our European partners.

With the greatest respect to the noble Lord, Her Majesty's Government need no lectures from him on this matter. If he is implying that we are isolated on the policies needed for the priority task, as identified at Madrid, we can pronounce ourselves well satisfied at seeing our partners in Europe wholly with us on what creates employment. Perhaps we should underline that it is the Labour Party that is out of step. In the unlikely event that it ever finds itself in government, it will be interesting to see whether they will be isolated as the only government in Europe peddling socialist policies on employment creation rather than the ones that are prudent and work.

One has only to look at the other principal issues—subsidiarity, deregulation, competitiveness, the single market, enlargement (as I mentioned, as did the noble Lord, Lord Jenkins) and the fight against fraud—to see a litany of issues initially tabled by this country that we are delighted to see our European partners taking seriously after some years of persuasion on our part. A few years ago the United Kingdom alone would have been pushing those issues. Now they are common ground. The noble Lord is right to draw our attention to the presidency conclusions. From them it is clear that that is the case.

The noble Lords, Lord Jenkins and Lord Richard, both talked with some intimation of derision about the Government's position on economic and monetary union. I deduce from the noble Lord's remarks—I hope he will correct me if I am wrong—that were the Labour Party to come to government, they would immediately sign up to a single currency. From the noble Lord's present state of immobility, I imagine I am right in assuming that that is what a Labour Government would do.

It is worth emphasising, as the noble Lords, Lord Jenkins and Lord Richard, intimated, that it is perfectly possible that a number of countries will sign up to the third stage of EMU in 1999. What I am not entirely clear about—perhaps the noble Lord, Lord Jenkins, is a little clearer than I—is just how many countries will do so. It is perfectly clear that the Maastricht criteria will still apply. They will not be loosened in any way. There was no mention in the presidency conclusions of that being so. In that case, though we cannot be certain, it appears that the number of countries which will be in a position to join at the third stage in 1999 will not be even a majority of the members of the European Union.

I suggest that it is therefore only prudent for my right honourable friend to draw to the attention of his colleagues, the heads of state and government in the European Union, the questions that must be asked and addressed before 1999 comes along. What is the relationship between those countries that choose to join, and indeed are able to join because they satisfy the Maastricht criteria, and those which do not choose to join? Britain may well be one of them; after all, we secured an opt-out on this, unlike our European partners. But it is at least fair to ask what the relationship will be between the members of a single currency in 1999 and during the transitional phase between 1998 and 1st January 1999; how it will be possible to address the relationship; and, indeed, whether in fact the beginning of a hard-core single currency will not lead to the economies of Europe being driven apart rather than being brought closer together.

I suggest that it is entirely sensible for my right honourable friend to ask those tough questions and for this country to play a full part in the negotiations leading up to the final decisions being taken. They matter not only to those who join but also to those who do not join. Since it is this country which is concerned with the pragmatic questions, it seems only right that this country should ask them.

The noble Lord, Lord Jenkins, suggested that my right honourable friend the Prime Minister was brushed aside like a fly. That is some fly! It is a fly with a remarkable buzz, capable of making clear—and obtaining the agreement of his colleagues—that these matters have to be addressed and will be addressed urgently. Indeed, we shall begin to see some of the answers emerge at the next council in Florence towards the end of the Italian presidency. It is perhaps not Her Majesty's Government who are indulging in wishful thinking but rather the two Opposition parties, which hope against hope that Her Majesty's Government will be found not to be the effective negotiator and pragmatist in European matters that they are in fact turning out to be.

4.22 p.m.

Lord Beloff

My Lords, does my noble friend the Minister know of any other country of the European Union where, immediately following a summit meeting, the conclusions have been brought to the attention of the national parliament and discussed by it? Is not the fact that we are probably alone in doing that an additional reason for clinging to our parliamentary democracy and repudiating the idea of a European superstate which, the German Government have informed us, is the real and only reason for pressing for a single currency?

Viscount Cranborne

My Lords, perhaps fortunately I am not responsible to your Lordships' House for the proceedings and procedures of other parliamentary assemblies within the European Union. Therefore, I must ask your Lordships to draw your own conclusions from my noble friend's remarks. However, it is extremely fortunate, above all, that your Lordships are in a position to examine closely and with authoritative detail the directives that are sent our way from Brussels, and indeed that we are able to give these matters the degree of parliamentary scrutiny which perhaps, dare I say it, is a matter of some pride and self-congratulation for this place.

With regard to the general point made by my noble friend, I note with keen approval the frequent allusions of my right honourable friend Mr. Douglas Hurd, during his most distinguished tenure as Foreign Secretary, to his objective of building a Europe of nations.

Lord Barnett

My Lords, I should like to take up the point raised by the noble Lord, Lord Beloff, a moment ago. In discussing the agenda for the IGC, the Reflection Group unanimously made clear that it was not in favour of a superstate.

Reverting to the point made by the Prime Minister about economic and monetary union, can the Minister confirm that, however many states go in at the outset, under Maastricht if all those states—or even a minority of those states—meet the criteria, there will be a single currency? Perhaps he would confirm that for us.

Secondly, the Minister raised the issue of whether a Labour Government would automatically go into a single currency by 1999. I cannot speak for a future Labour Government. But will the Minister make quite clear that the Prime Minister has not ruled out—at least the Chancellor of the Exchequer has not ruled out—that they would possibly join a single currency (which I gather is now called a European currency for a number of reasons) and might well join a single currency by 1999, if we meet the criteria, as now seems extremely likely? Will he confirm that?

Perhaps the Minister will also answer another question. He may know that only the Members of your Lordships' House are discussing the important issue raised by the Prime Minister; namely, the issue of the ins and outs. That is to say, if there is to be a single currency, what will be the consequences for countries, like the United Kingdom, if they do or do not join? There would be consequences, as I am sure the Minister is aware. The all-party Select Committee which I have the honour to chair is looking at precisely that question which the Prime Minister raised. It is a vital question. Would the noble Lord the Leader of the House be willing to come and give evidence to that Select Committee, or would he persuade the Prime Minister to come and give evidence to it? I am sure that all the members of the committee would be delighted to hear from them.

Viscount Cranborne

My Lords, I am sure that if a number of members of the European Union qualify under the Maastricht criteria and decide to proceed with a single currency, it is possible that the single currency will happen. As the noble Lord knows—none better—unless that transition is accomplished with care, there could be some very serious consequences for both those who join and those who do not join, which could do a great disservice to the idea of an economically prosperous and stable Europe. We do not differ about that.

The noble Lord asked whether my right honourable friend has ruled out a single currency. I point out to him—again he knows far better than I do—that no parliament can bind its successor. That is axiomatic in our parliamentary proceedings. It is perfectly sensible for my right honourable friend and the Government as a whole to keep their options open. It would have been extremely foolish for any government to have said, "We shall opt out of the single currency no matter what happens", if only for the obvious negotiating reason that, contrary to what the noble Lord, Lord Richard, said, nobody would take us as seriously as they do in the councils of Europe. They would not do so if it were not clear that we are vitally interested and are taking a central part in the negotiations, particularly of the kind of matters that the noble Lord mentioned and what he called the ins and outs.

With regard to giving evidence to his committee, it would be very unwise for any Leader of your Lordships' House to dream of saying no to such an invitation, although I suspect that there may be people more technically qualified than I who are able to answer the questions of his committee with the assurance that he would expect of Members of the Government. Nevertheless, if the noble Lord invites me, certainly I shall not have the nerve to refuse. So far as concerns my right honourable friend the Prime Minister, I shall of course transmit his kind invitation in principle. No doubt my noble friend will answer any particular invitation with his usual empressement and courtesy.

Lord Shaw of Northstead

My Lords, it has been said that the Prime Minister was in a lonely position at Madrid. Is it not a fact that leaders who are giving a lead often find themselves in a lonely position? The crux must be whether in fact the lead that is being given will be followed by others in the months and years ahead. I am convinced that the value of what the Prime Minister has done at Madrid will be appreciated more and more.

Perhaps I may ask my noble friend a question relating to the IGC. I understand that it is to start on 29th March. Will it be of limited duration or a continuing conference? I have in mind that Italy's presidency will finalise in June. It is sometimes unfortunate that at the end of a presidency there is felt a need to produce a final statement when conditions are not always right for that final statement. It would be better, in my view, to allow the conference to be ongoing rather than seek to bring it to an end at a specific time.

Viscount Cranborne

My Lords, I am grateful to my noble friend for his remarks in relation to the qualities of leadership being shown by my right honourable friend the Prime Minister. I wholly concur with what he said. It is worth underlining the changed nature of the discussions being conducted in European forums, substantially as a result of the practical questions which my right honourable friends and ministerial colleagues ask. With regard to the duration of the IGC, it is fair to say that we can be pretty sure that it will last rather longer than the expected end of the Italian presidency. It will probably spill over into 1997.

Lord Bruce of Donington

My Lords, I am sorry that the noble Lord, Lord Jenkins, is not in his place. I feel sure that the whole House would not wish to endorse his remarks that if one is isolated, one is essentially wrong. There have been many times in our island's history when we have dissented from most of the countries of Europe and indeed other countries as well. Those with some experience of these matters in the 1930s will not be unaware that we have been known to be right. Therefore, to argue about this matter on the basis that we must be wrong because we are isolated is a lot of nonsense. It is unworthy of any intellectual appreciation with which one would normally credit the noble Lord, Lord Jenkins of Hillhead.

What seems to have escaped the noble Viscount opposite and, because of the pressures of time, has not yet been picked up by my noble friend on the Front Bench, is the fact that the whole of the proceedings in Madrid were dominated by the German Government. There can be no doubt about that. Anyone who saw the press reports knows perfectly well that it was Herr Kohl who laid down how the proceedings should go. He embarked upon a unique criticism of the President of the Commission and generally thought that the world—and in particular the United Kingdom—would have to do exactly what it was told or else. That is hardly the way in which international conferences ought to be conducted.

I am bound to draw to the attention of the noble Viscount and remind the House as a whole, though Members are probably aware of it, that on 22nd January 1963 the treaty of Elysé was entered into between Germany and France. It bound the two countries together to consult and determine their position before any matters were raised before the European Economic Community. The core of Europe is already there, enshrined in a treaty. It would be odd if we were able to enter it now. Surely it is possible to adopt a more rational attitude.

I was surprised that in the recent budget negotiations, whether or not qualified majority voting was applied, Her Majesty's Government voted£41 million to the Commission in order to popularise throughout Europe the whole question of the single currency. It is surprising also that£5 million of British taxpayers' money is to be devoted to propagating a cause by the Commission when the Government and the Opposition are not clear whether they want to enter it.

I hope that those matters can be clarified. They are of great importance. When one reads through the communiqué one finds—I am bound to say that I agree with my noble friend on the Front Bench, a unique occurrence—that the Government assented by supporting the document (there is no question of majority voting) that binds them hook, line and sinker. Unfortunately, in the absence of dissent from the noble Lord representing Labour interests, we have no indication that it would have dissented either.

Viscount Cranborne

My Lords, our debates in the wake of Statements of this kind would be the poorer were it not for the contributions of the noble Lord, Lord Bruce. However, I am not clear to what he thinks the Government have been bound "hook, line and sinker". If it is to economic and monetary union, I refer him to the opt-out, which we and the Danes are the only ones to enjoy.

I wholly follow the noble Lord's logic on the question of isolation. I always say to my children that just because everybody does it does not mean that it is right. I am pleased to find that, as I tried to say a few moments ago, our isolation on key matters is becoming much less of a factor as our partners come closer to us, particularly on the key matter of unemployment and what economic measures need to be taken in order to reduce it and, if possible, eliminate it.

With regard to the domination of the German Government, I wonder whether our Spanish friends would have agreed as they scurried round Europe trying to fix the agenda and give priority to those matters, particularly relationships with Latin America, which played such a large part in the arrangements. It would be a little discourteous for me to go along with the noble Lord. Domination by Germany is not part of our agenda; partnership is.

On the matter which the noble Lord thought so surprising, I confess that I find it surprising also.

Lord Stoddart of Swindon

My Lords, I too am sorry that the noble Lord, Lord Jenkins, is not in his place. He alleged that the British Prime Minister had been "brushed aside". I hope that the Leader of the House can give us an assurance that the British Government, which represents 60 million people, are never brushed aside; will not allow themselves to be brushed aside; and would say that this is not a partnership where the majority, whatever it may be, brushes one of the other partners aside. I want that assurance and I want it this afternoon.

Further, is the noble Viscount aware that we should not allow ourselves as a country to be driven by German political ambition into the madness of EMU and a single currency? In that connection, can he say what is meant on page 7 by, irrevocable fixing of conversion rates". What does that mean? We were able to opt-out of the ERM when it was claimed that it was destroying our economy. According to:his document, apparently we cannot ever opt-out of a single currency and the EMU even if it is plain for everyone to see that they are destroying our economy. Can the noble Viscount comment on that?

Finally, will the committee which is to look into the matter consider the taxation implications for the British people, particularly if expansion goes on towards the east? Those countries will need enormous subsidies if they are ever to be able to join the new European monetary union and a single currency. Those are some of the matters that need to be addressed not only by noble Lords and the Government opposite, but also by my own Front Bench. The sooner the whole country, including political parties, gets down to a realistic examination of this problem, the better it will be.

Viscount Cranborne

My Lords, I can certainly give the noble Lord the unequivocal assurance he needs that this country will certainly not be "brushed aside"—to use his phrase and that of the noble Lord, Lord Bruce. As I have tried to explain, that has been the tenor of the Government's approach. It is an assurance which his own noble friends are quite incapable of giving him I am sure that the country as a whole will note that.

As regards the single currency point, paragraph 4 on page 7 says: The scenario"— always a ghastly word to use— provides for transparency and acceptability, strengthens credibility and underlines the irreversibility of the process". I understand that that means that once the exchange rates have been fixed during the transitional period, that is irreversible; otherwise the exchanges themselves would be subject to some pretty powerful market forces of a kind which would destroy the process. That is my understanding of the word "irreversibility" which, I am advised, has a particular Euro-jargon meaning in matters of this kind.

As regards the taxation implications, I am beginning to wonder whether the noble Lord should cross the Floor and join us because that is precisely what has been worrying my right honourable friend. He wants to make absolutely sure that the desirable expansion of the European Community does not lead to a vast increase in the expense of the CAP or of the cohesion funds. That is going to be one of our principal bargaining objectives in the months and years to come. I fully expect that other partners will see the justice of that, particularly as so many of them are now net contributors like ourselves.