The ERM (Hansard, 3 July 1995)

§ Lord Henley
My Lords, on many occasions Her Majesty's Government have clearly stated that we do not anticipate the United Kingdom joining the exchange rate mechanism in the lifetime of this Parliament.

§ Lord Barnett
My Lords, as the noble Lord will be aware, I am very keen to help the Prime Minister in this respect because I very much agree with his policy of keeping options open on joining the single currency. But if he is keeping options open on that, should he not also be keeping options open on the exchange rate mechanism?

§ Lord Henley
My Lords, since at the ECOFIN meeting last week it was agreed that there will be no move to a single currency in 1997, I do not think that it is quite necessary to take the line that the noble Lord is pursuing. As regards the first part of his question, in which he offered to support my right honourable friend the Prime Minister, I shall of course convey that back to my right honourable friend. I am sure that he will be most delighted to receive support from such a welcome source.

§ Lord Renfrew of Kaimsthorn
My Lords, may I commend the consistency with which my noble friend has responded to this Question and others on very similar topics in recent months and years and may I also commend the consistency of my right honourable friend the Prime Minister? May I go so far as to ask whether my noble friend will agree that in the light of these repeated assurances there is a risk that the Question from the noble Lord opposite was otiose to the point of superfluity?

§ Lord Henley
My Lords, I do not intend to answer the last part of my noble friend's question. As regards consistency, I can assure him that I and all colleagues in Her Majesty's Government have answered this Question and similar Questions with the utmost consistency ever since they were first asked by the noble Lord and other noble Lords in all parts of the House.

§ Lord Merlyn-Rees
My Lords, the noble Lord has given us government policy as of just after three o'clock today. Can he assure the House that it will be exactly the same policy after half-past five tomorrow?

§ Lord Henley
My Lords, I can give the noble Lord absolutely that assurance. After half-past five or half-past six tomorrow my right honourable friend the Prime Minister will still be Prime Minster. He will be Prime Minister in two weeks' time, he will be Prime Minister in two years' time, and for many years thereafter.

§ Lord Tebbit
My Lords, may I remind my noble friend—

Noble Lords
No!

§ Lord Tebbit
—in a form interrogative by asking whether he remembers that Her Majesty's Government's policy was absolutely clear—that we remained in the ERM—until the glorious 30th September 1990? Would he not agree that we should look for changes which may come under pressure? Would he not further agree that the noble Lord, Lord Barnett, was right to raise this matter, for if we are to have the option of entering the single currency on 1st January 1999, which has not been excluded by the Government, we should have to join the narrow band of the ERM by 1st January 1997, which is really not very far away to allow for a change of policy?

§ Lord Henley
My Lords, my noble friend is absolutely correct that we should look for changes. That is why my right honourable friend the Prime Minister and the entire Government have made it quite clear that we shall keep our options open. That is the deal that my right honourable friend the Prime Minister negotiated at 940 Maastricht; and at that time possibly my noble friend supported the deal that my right honourable friend the Prime Minister negotiated.

§ Lord Peston
My Lords, the noble Lord does not seem to understand his noble friend's question. That is why the Question is not otiose but is vitally important. Is he aware that the option under Maastricht is a nullity unless we are members of the exchange rate mechanism? That is what we signed in the Maastricht Treaty. The question being put to the noble Lord, which I, too, would like him to answer, is this: if we are not going to join the exchange rate mechanism before 1997, why is his party tearing itself apart on the single currency? The issue will not arise for them. They will not be able to exercise the option because the option will not be there. That is the whole point of the Question. Why does not the noble Lord answer it?

§ Lord Henley
My Lords, I suspect that it is the noble Lord who is in ignorance on these matters. He is right to imply that membership of the ERM is one of the convergence criteria. He then goes on to suggest that the refusal to join implies a ruling out of EMU. That simply is not the case. The exchange rate criterion in the treaty was written at a time when the ERM operated under very different rules from the way it operates at the moment. It is not now clear how the requirement will be measured, but there is no legal or practical need for a formal interpretation of the treaty on the subject now, especially since, as I made quite clear, the 1997 start for the EMU is ruled out. For that reason it is quite clear that we can keep our options open on the ERM until well after the election and we can keep our options on EMU open for considerably longer. We can make up our mind at the time as is appropriate.

§ Lord Desai
My Lords, will the noble Lord allow me to help him by saying what he really means in answer to the question of the noble Lord, Lord Tebbit? Does he agree that what he means is that perhaps Parliament would be dissolved before January 1997 to allow us both options of keeping with the currency, perhaps under either government?

§ Lord Henley
My Lords, as and when Parliament is dissolved is a matter for my right honourable friend the Prime Minister, Mr. John Major, who will be Prime Minister in 1997 and, as I said earlier, will be Prime Minister for considerably longer after that.

§ Lord Barnett
My Lords, the noble Lord seemed to be saying that, as there is no question of joining the single currency by 1997, there is no need to say what the Government are going to do on the exchange rate mechanism. Why in that case, as my noble friend on the Front Bench said, are the Government troubling themselves with the whole question of a single currency? If they are leaving the options on a single currency open until the end of the century or beyond, why do they not also leave the options open on rejoining the exchange rate mechanism, or, as Article 109j says, at least stay within the fluctuation margins of it?

§ Lord Henley
My Lords, I do not think that I can take the noble Lord much further. It is quite obvious that there is no need to make our decisions on either for 941 the foreseeable future. My right honourable friend the Prime Minister said that he did not foresee any chance of joining the ERM in the lifetime of this Parliament.