HL Deb 16 December 1996 vol 576 cc1299-312

4.40 p.m.

The Lord Privy Seal (Viscount Cranborne)

My Lords, first, perhaps I may apologise to all those who were expecting the Statement a little earlier for the delay in making it. It is a delay for which I take full responsibility.

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 meeting of the European Council in Dublin on 13th and 14th December, which my right honourable friend attended with my right honourable friends the Foreign Secretary and the Chancellor of the Exchequer, and my honourable friend the Minister of State in the Foreign and Commonwealth Office. The conclusions of the Council have been placed in the Library.

The main issues on the agenda were the Intergovernmental Conference and economic monetary union. The Statement is as follows:

"The Council discussed the prospects for the Intergovernmental Conference at some length. Shortly beforehand, the Irish Presidency had tabled a general outline for a draft revision of the treaty. This has been deposited in the House. It summarises fairly the position reached in the negotiations and the views of different member states. The views of the United Kingdom are fully reflected.

"The Council conclusions reaffirm the target of completing the IGC at the Amsterdam European Council in June 1997 and welcomes the presidency document as a good basis for the work that lies ahead. This work was in no way prejudiced by the Council's conclusions in Dublin. We will continue to advocate our own proposals and press our own concerns.

"In discussion, I welcomed the progress made in a number of areas: subsidiarity; a greater role for national parliaments; making the common foreign and security policy more effective; improving the quality of European legislation; and introducing greater openness into the workings of the EU. I also spelled out the United Kingdom position on a number of key points. I see no point in a new employment chapter in the treaty. It will not create a single job. I do not accept that an enlarged European Union needs more qualified majority voting. On defence we welcome co-operation between the European Union and the Western European Union, not merger or subordination of decision making. I will not agree to justice and home affairs issues falling under Community competence. And it is unthinkable that the United Kingdom would relinquish its frontier controls.

"I also emphasised our requirement for progress on quota hopping in the common fisheries policy and on the Working Time Directive.

"The outcome of the IGC will do much to determine the future direction of the EU. Some advocate a more integrated, centralised Europe. I respect that view but I do not share it. It would not be right for Britain. I believe the European Union must be a partnership of nation states, with Community competence where it is needed, but only where it is needed. This is more than a free trade area, but very much less than an embryo European state.

"There is only one way these competing visions can be reconciled. And that is through the development of a more flexible Europe. This is one of the most important issues before the IGC. Those who want to integrate further in particular areas should not be frustrated unreasonably although, if they wish to use European Union institutions, they can only proceed through unanimity. Those who do not must not be forced into unwanted obligations which build up resentment.

"I first set out the need for flexibility at Leiden some years ago. This is now widely accepted. But we need to ensure that it is developed in a way that protects the vital interests of those who do not wish to integrate further in particular areas. There is much more work to be done here and very little time in which to do it if the Amsterdam deadline is to be met.

"Economic and monetary union was the subject of much interest, although the European Council did not itself discuss the issues at any length. The Council agreed a report by ECOFIN covering three issues on which my right honourable friend the Chancellor has reported to the House on a number of occasions in recent weeks: the stability pact, the legal status of the euro, and the new, voluntary, exchange rate mechanism. The conclusions—to which the ECOFIN report is annexed—make it clear that these issues remain subject to our parliamentary reserve.

"If the single currency goes ahead, it is a vital British interest, whether or not Britain is a member, that it succeeds. So I welcome the progress on the stability pact. The agreement reached strikes the right balance between the necessary discipline and the need for the Council of Ministers to retain control of the disciplinary process if individual countries get into difficulty.

"The House will welcome the clear statements in the ECOFIN report that the arrangements for economic surveillance to be agreed for countries not in the single currency cannot lead to sanctions of any kind.

"I have made no secret of my doubts about whether enough countries will be sufficiently convergent to allow a single currency to go ahead safely on the present timetable. I repeated these doubts in Dublin.

"It is important that the figures themselves are not fudged. But, whether or not particular countries meet particular targets on a particular day is less important than the extent of genuine economic readiness for such a far-reaching step. I am therefore pleased that the ECOFIN report makes clear the importance of not only achieving economic convergence on a particular day but being able to sustain it over the long term.

"I should also report that the President of the European Monetary Institute presented to the Council, and subsequently publicly, designs for the proposed single currency's banknotes. These designs are the responsibility of the Central Banks—as indeed, such designs are the responsibility of the Bank of England in this country now. Everyone will have their own views on these.

"The decision on whether to go ahead with a single currency will be the most far-reaching decision the European Union has ever taken. Although we expect to meet the required economic conditions, we have the right to decide whether or not we want to join, if it goes ahead. We will make our decision when we are clear about all the necessary issues including, crucially, our assessment of the prospect for real and sustained economic convergence.

"The Council also discussed employment. Unemployment in this country is lower than in the other major European Union economies, and is falling faster. I circulated at the Council a paper on United Kingdom policies and their results, and commended it to our partners.

"The Council adopted a declaration on unemployment. My agreement to it was subject to three conditions: first, that it confirmed that primary responsibility for employment policy rested with member states; secondly, that the European Union's approach remains based on the supply side policies agreed at Essen in 1994; and, thirdly, that the declaration in no way prejudiced the question of an employment chapter in the treaty. These conditions were agreed.

"The European Council also discussed justice and home affairs, where we welcome greater European co-operation, as long as it remains firmly on an intergovernmental basis. The Council confirmed the priority of the fight against drugs, and endorsed an Anglo-French initiative to combat transit and production of drugs in the central Asian republics. It called for ratification of the Europol Convention by the end of 1997—achieved only by the United Kingdom so far—and agreed that Europol should work in conjunction with national agencies to support the fight against international crime.

"The Council also created a high-level group to draw up an action plan against organised crime, welcomed joint actions against sexual exploitation of children and trafficking in human beings, and confirmed the need for intensified co-operation against terrorism.

"On BSE, I briefed my colleagues on the steps we have taken to eradicate BSE, notably progress under the 30-months slaughter scheme. I sought and received confirmation that future decisions on lifting the ban would be taken on the basis of science, as agreed at Florence. My right honourable friend the Minister of Agriculture will be making a statement a little later on the next steps.

"On foreign policy, the Council endorsed the London Conference document on Bosnia as an excellent basis for work next year. On the Middle East, the declaration issued reflected our concern about the current state of the peace process.

"The Council also expressed its strong interest in a smooth transition to the Hong Kong Special Administrative Region next year and its support for the existing representative democratic institutions of Hong Kong. This was a welcome endorsement of our approach.

"The European Union is approaching some historic decisions over the next 18 months, both on a single currency and its future direction. The result of the intergovernmental conference may well mark a crucial turning point in Europe's development.

"The President of the European Commission said last week that the moment of truth lies ahead. There is one sense at least in which he is right. The choices made will determine not only the success and stability of Europe as a whole, but Britain's relationship with it."

My Lords, that concludes the Statement.

4.51 p.m.

Lord McIntosh of Haringey

My Lords, on behalf of my noble friend Lord Richard, who, when I saw him on Saturday, was expecting to leave hospital today after a successful operation, I thank the Lord Privy Seal for repeating the Statement made in another place. Indeed, I thank him for delivering it with a good deal more panache and conviction than the Prime Minister himself, who tended to read his brief at a fast lick without showing much emotion. At least the Lord Privy Seal seemed to appreciate the quality of the text he had to repeat.

It will be well known that we support a very large number of the conclusions that the Government brought back from the European Council meeting in Dublin. In particular, I want to emphasise our support for the measures being proposed in the fight against terrorism, organised crime and the sexual exploitation of children, the measures on enlargement, and many of the foreign policy initiatives that were debated.

I have a good deal of sympathy for the Prime Minister and his colleagues as they return from this summit meeting. For reasons that will be obvious to all in the Conservative Party, they have to pretend that nothing has changed. Indeed, the Statement seeks to give that impression. The difficulty, if one looks not simply at the Statement but at the communiqué and the annexes that came from the presidency after the meeting, is that a great deal has changed. The communiqué uses the phrase, "further decisive progress towards European monetary union". I think it will be generally recognised that many of the obstacles that had been anticipated to European monetary union have been successfully resolved, largely by negotiation between France and Germany and very little as the result of any intervention or activity on the part of this Government. So it will be recognised that the Prime Minister has a difficult argument to put before Parliament, and above all before the different factions in his party.

There are so many issues in relation to which the Government had to pretend they were taking action and had to use phrases such as, spelled out the UK position", but it was not possible to say, as Ministers claimed in the two-day debate in another place before the summit, that the influence of Britain was fundamental in the activities of the Council and in the conclusions of the meeting.

Perhaps I may ask the Lord Privy Seal about the issue of flexibility and what is the Government's attitude. If, as one thinks, flexibility means that it is possible for some nations to go ahead against the opposition of others, and if that could mean, as it appears it could, permanent exclusion for those others from the inner core, what action have the Government effectively taken to resist that kind of flexibility? What have the Government said about the desirability of such a change, which, were it to take place, would clearly be immensely damaging to the interests of this country? The intergovernmental conference has been described by Ministers on many occasions as dangerous to the interests of this country and some of the proceedings also as dangerous.

The Irish draft treaty, accepted at Dublin this weekend, provides, as the communiqué says, a good basis for negotiation. Did the Government do anything other than spell out the UK position? Did the Government achieve any changes to the Irish draft treaty? Or is it the case that the dangerous revision of the Maastricht Treaty which is to be the result of the intergovernmental conference is proceeding without us and proceeding with very little input from this country?

On European monetary union, the Statement says nothing about the stability and growth pact, and still less (if less than nothing is possible) about the French proposal that there should be a stability and growth council, which should meet before ECOFIN meets again. What is the Government's response to that? The communiqué makes it clear that the major obstacles on the legal status of the euro have been overcome. What was the input of the Government to those negotiations?

On the second voluntary stage of the exchange rate mechanism, is it not the case that the Government have agreed that there should be deficit limits, penalties for default, rules for exceptional circumstances and means for enforcement of them? Have the Government not agreed that there should be penalties for default in case of breach of the convergence criteria? On a number of occasions the Government have made the point that ERM2 is voluntary and that the penalties do not apply to those who do not take part in it. However, the ECOFIN report states: Member states outside ERM2 and thus not having a central [exchange] rate will present policies so as to enable appropriate surveillance in the council, which can make, when necessary, non-binding recommendations. This surveillance will seek to ensure that their policies are oriented to stability and thus to avoid real exchange-rate mis-alignments and excessive nominal exchange-rate fluctuations". Have not the Government agreed to that? Have not the Government already agreed that exchange rates are, in the terms of the treaty, matters of common interest? Have not the Government agreed to a system of assessment and monitoring even for those who are outside ERM2?

The Lord Privy Seal said that real decisions are yet to be made. That is no doubt true. It is also no doubt true that all these matters are subject to parliamentary reserve and that there has to be some opportunity for further parliamentary debate. I hope that the Lord Privy Seal will agree that we will take part in that before a new negotiating team goes to the next summit in Amsterdam.

Is not the truth that the disagreements and divisions within the Conservative Party have fatally weakened the Government's negotiating position in Dublin in the coming months? Are not those divisions and disagreements made clear by the report in this morning's Daily Telegraph that 147 Conservative candidates propose to say in their election manifestos that they disagree with the Government's "wait and see" view on European policy?

I do not believe that I can conclude more appropriately than by quoting the words of the noble Lord, Lord Rees-Mogg, in The Times this morning. He said that, the British have no policy and no influence [in Europe]". Is that not the truth?

Lord Taverne

My Lords, perhaps I may start with some points of agreement. On the stability pact, I am sure that we on this side of the House agree with the Government in supporting the view that if a government have to take measures to counter serious recession, then any possible fine can only be imposed by a political decision.

We may also agree with the contention that much the most important guarantee of stability is real convergence. That is the best chance of success for monetary union. We should not wish to see a soft political decision to let in as many states as possible in a last minute dash to be a member of the first group. But if a judgment is made on convergence criteria, then it must be a bona, fide judgment. It must not be a case of looking for excuses to disapprove, in order to pacify Europhobes.

I turn to areas of less agreement: the attitude of the Government to the intergovernmental conference. The issues at stake are of great importance to this country. They include enlargement which we have always regarded as a crucial objective of our policy in Europe. They include a re-weighting of the votes in the Council. They include too an effective policy, which will be all the more effective if it is a common policy, on terrorism, asylum and immigration.

Is it not abundantly plain that the Government's present stance will frustrate our aims and harm our interests? It has been made clear by our partners that there can be no progress towards a re-weighting of the votes in Council unless there is also some extension of qualified majority voting. It has also been made plain by our partners that there cannot be enlargement unless there is some extension of qualified majority voting. That is a reasonable proposition if one is looking towards a Community which may be a community of 20 or more states.

If we are totally inflexible—as the Government have announced they intend to be on qualified majority voting (something which has greatly benefited us in the past in the single market)—if we are totally inflexible, we shall frustrate those aims. How can we protect our interests and extend our influence and control over our own affairs—which is essentially what sovereignty is about—if we are isolated and boast of our isolation and glory in it and if we go around threatening the veto and the boycott? Have the Government learnt nothing from the fiasco of our policy over BSE? We started with a policy of bluster but it ended in humiliation and surrender. It did not achieve any of our aims and left us with neither influence nor respect.

Finally, on flexibility—flexibility from an inner core—one can understand it if the Government insist on retaining a veto within the institutions of the Community or within the Maastricht Treaty on issues where we wish to remain part of the decision-making process—for example, in foreign policy and defence. But how can the Government justify also retaining a veto on those issues on which we may wish to exclude ourselves from being part of the decision-making process? Is that not yet another recipe for alienating every single one of our friends whom we shall need in times to come?

At its end, the Statement says that the next year or so will be crucial in the relationship between Britain and the rest of the European Union. The Government's policy is setting us on a very dangerous course and we are entering a very dangerous phase in our relationship.

Viscount Cranborne

My Lords, I am grateful to both noble Lords who have spoken from the Opposition Front Benches for the measure of agreement that they have been able to give. First, on behalf of the whole House, I ask the noble Lord, Lord McIntosh, to convey—and, for once, I put it in a spirit of non-party partisanship—to the noble Lord, Lord Richard, the good wishes of the whole House for his recovery and imminent return. It is no reflection on the noble Lord, Lord McIntosh, when I say that I greatly miss his noble friend.

I also say to the noble Lord, Lord McIntosh, that invidious comparisons between my method of delivery and that of my right honourable friend do not bode well for any future career which my right honourable friend might have. I hope that the noble Lord will not draw attention to his remarks in another place.

We must be clear about what underlies a great deal of the rhetoric we have heard from both noble Lords in the past few minutes. It is clear that this party and the two parties opposite differ about our assessment of what is in the interests of this country. We have a clear view of what delivers competitiveness, prosperity and therefore employment. I have to say to both noble Lords that although unemployment is still far too high in this country, the supply side reforms and the other reforms of the past 18 years have begun to make a significant contribution to unemployment, above all, which is rightly top of the list of priorities in the European Union. With the greatest respect to both noble Lords and our partners in Europe, we need no lessons from them about it.

It is in the spirit of that overall observation that I believe it would be right for me to emphasise to both noble Lords that we shall agree, wherever we can, with our European partners; but we shall negotiate as hard as we possibly can to protect our position where we feel that our vital interests are at stake. Neither I nor my colleagues on the Front Bench here or in another place are in the least apologetic if, sadly, we find ourselves in a minority of one on a number of issues. However, it is easy for noble Lords opposite to overestimate the areas where we are in that position. A fair number have been recognised clearly in the document produced by the Irish presidency. As the noble Lord, Lord McIntosh, said, it was a good basis for negotiation. I should point out to him that it is no surprise to anyone, least of all my right honourable friend, that the Dublin Summit was a way-station on the way to the final decision in Amsterdam. If I understood the implication of what the noble Lord said, he was asking whether I, as a future Leader of the House in the next Parliament, would be prepared to allow him, as Opposition Deputy Leader, a debate on the parliamentary reserve. Although no Parliament can bind its successor, I believe that I can give that undertaking without any fear of contradiction.

The noble Lord, Lord Taverne, talked about the questions of enlargement, about terrorism, about asylum and about immigration. It would be fair to say to the noble Lord that extending eastwards the security and prosperity that we take for granted is a fundamental task for Europe over the next decade. He and I agree about that, and I believe that he, with the greatest of respect to him, perhaps underestimates how hard this country has worked in taking a lead to create conditions for successful enlargement, particularly by pursuing the reform of both the CAP and the structural funds, for reasons that he will readily appreciate. Again, I do not want him to feel that we are in any way isolated, as he implied on that question—rather the reverse. And the same applies to terrorism. He will have noticed from the conclusions that there was agreement on terrorism, and that again is something that has been a gratifying intergovernmental area of agreement, where we can build a partnership.

As far as asylum and immigration are concerned, I must also say to the noble Lord that we are perfectly clear about our position and always have been. We are perfectly happy for other countries to look at other forms of immigration and asylum control. Our geographical position and our own traditions make it absolutely right for Her Majesty's Government to insist, as we do, that this must be always a question for Her Majesty's Government and the Parliament of the United Kingdom. We have not been moved off that and we have no intention of being moved off that.

The noble Lord talked about an extension of QMV and I should tell him about our position in Amsterdam. Again, our position is perfectly clear and has not changed after Dublin. We see no case for more QMV. We said in our White Paper that the Government would oppose further extension of QMV. We do see, on the other hand, a case for streamlining the Commission and the re-weighting of votes, and that is something that has been under discussion, as the noble Lord knows, for some time.

Both noble Lords talked about the stability pact. It is worth underlining what my right honourable friend said in his Statement. He made it perfectly clear in Dublin that the contents of the report by ECOFIN are subject to a UK parliamentary reserve. That is written on the first page of the report and indeed in the European Council conclusions. The reserve covers the issues of a stability pact, agreements on the details of the new ERM and indeed the legal framework. We will ensure that the process for completing parliamentary scrutiny is conducted shortly. I should add for the benefit of both noble Lords that, as my right honourable friend said in his Statement, we do not see that there is any future, so far as British interest is concerned, in seeing the launch of a single currency, whether we are members of it or not, turning into a disaster. That cannot be good for us and it cannot be good for our exports to Europe.

It is for that reason that my right honourable friend the Chancellor of the Exchequer has played a full part in the negotiations in ECOFIN which have led to the conclusions which the noble Lord, Lord McIntosh referred to as being contained in the annexe to the Presidency Conclusions paper. He will see in that—and he is quite right—that the convergence requirements for the "outs" (including ourselves, if we do not join) do not undermine the United Kingdom opt-out. It is still our right to opt in or out and it is not affected one jot by the discussion at Dublin. At Dublin no formal proposals were made on convergence arrangements for the "outs" and, when the proposals are made, we shall of course ensure that they respect United Kingdom interests.

Equally, it is clear that arrangements for the "outs" cannot have a binding effect upon freedom of action over their economic policies. There will be no sanctions on the "outs", just as my right honourable friend the Chancellor of the Exchequer made clear in the wake of ECOFIN.

Lord McIntosh of Haringey

My Lords, I wonder if the noble Viscount the Lord Privy Seal will allow me to clarify one matter. In his phrase in the last sentence before one he implied that the United Kingdom was one of the "outs" for the purpose of protecting our interests. I wonder whether he really meant that.

Viscount Cranborne

My Lords, as always, I must phrase my language with great care when I am confronted by the noble Lord. Of course he is right: our option is whether to go in or whether to go out. It is an option which we preserve and which we have managed to preserve during the course of the weekend in Dublin.

Also, I am sure that the noble Lord, Lord McIntosh, would agree that if the euro is to be launched successfully it is right for its legal status to be agreed. He would not expect me to dispute that. That is what he clearly implied. There are all sorts of financial documents and arrangements which will straddle the launch of the euro and it will be important that those documents cannot be undermined, so the legal status of the euro was an extremely sensible thing to be agreed at Dublin.

I should also emphasise to the noble Lord that the conclusions say that ERM2 is a purely voluntary affair. We have said that we would not join it, and that was certainly agreed at ECOFIN.

I am very conscious that my answer has been rather a long one, and I apologise to the House. However, many matters were raised. I wish to point out to the noble Lord, Lord McIntosh, in the most gentle terms, that there are a great many amusing jokes to be made about both our parties at the moment. It is worth his remembering that the leader of his own party in 1983 made all sorts of commitments in his election address. Just taking a couple of examples, he was committed to taking this country out of Europe and he was against the nuclear deterrent. It is only fair to spare the blushes of the noble Lord and not to go through that rather embarrassing document in greater detail today. However, I would remind the noble Lord that when he talks about British interests and indeed when the noble Lord, Lord Taverne, talks about British interests, we are told that the Labour Party, were they to win the next election, would find itself perfectly happy to give up the veto on regional policy, the veto on environmental policy, the position that we have adopted on the working time directive, and indeed the veto on the treaty on employment. All those matters would undermine the present success of this country in reducing the scourge of unemployment where we have made such advances in the last two or three years.

5.18 p.m.

Lord Boyd-Carpenter

My Lords, would my noble friend confirm what I believe he said more than once, but it is of such importance that it justifies confirmation, that nothing which was discussed at Dublin and none of the discussions which he quoted undermine in any respect the right of this country to retain its separate currency independently and separate from the European currency?

Viscount Cranborne

My Lords, I am very happy to give my noble friend the assurance he seeks. The opt-out was one negotiated by my right honourable friend the Prime Minister at Maastricht, and it is an opt-out which is still protected, even after Dublin.

Lord Stoddart of Swindon

My Lords, I have one short question to ask the noble Viscount, but before I do so I would remind him that it was his government that took this country, without the consent of the people, into the Treaty of Rome, into the Single European Act and, indeed, into the Maastricht Treaty without consulting anyone at all. Therefore, it behoves him ill to mention my right honourable friend Tony Blair, the Leader of the Opposition, particularly in the light of the stresses and strains which there are now in the Tory party among those decent members who accept that mistakes have been made by a Conservative government.

I should like to ask him just one question, because we want to get on with other business. On page 12 of the communiqué, in the area of justice and home affairs, in the last sentence of paragraph 1 there is a note which states: Europol should have operative powers"— I hope that the noble Viscount takes note of that— working in conjunction with the national authorities to this end". What does "operative powers" mean?

Viscount Cranborne

My Lords, I am always happy to see the noble Lord, Lord Stoddart, rise to his feet and imply so clearly that the Labour Party is united on matters of Europe. But there is a difference—I respect the noble Lord's capacity for textual analysis—between operational powers for Europol and operative powers. I hope that I can allay his fears. We would certainly not accept—it is our understanding that it was not in any way implied—that we would give powers of arrest or even of investigation to Europol. Our adherence and ratification of the Europol Convention implies that Europol's role is still and will continue to be to assist the national law enforcement agencies and certainly in no way to replace them.

Lord Pearson of Rannoch

My Lords, I am grateful to my noble friend for the Statement. In the interests of time, I shall not press him on how subsidiarity may work better or how there will be greater openness in the working of the EU, unless, of course, he would like to enlighten us on those points. My worry is concerned with a point raised by my noble friend Lord Boyd-Carpenter and what my noble friend said about the stability pact and so on for EMU. He said that they cannot lead to sanctions of any kind on non-member countries.

That may be so for the stability pact and convergence criteria for EMU themselves, but is that quite the whole picture? Are we not left in the background with the position in the treaty whereby under Article 3 of the Protocol our opt-out does not come into action until we say that we will not move to Stage 3? So my first question to my noble friend is: when we say that we will not move to Stage 3—assuming that we do say that—are not we still left with everything that we have agreed in the meantime?

My second question, which is related to the first, is even more difficult. Even after we have said that we will not move to Stage 3, are not we still left with many articles of the treaty, such as Articles 102, 103 and 109, which mean that action can still be brought against us in the Luxembourg court if we do not run our economy on communautaire lines? Articles 169, 170 and 171 can be used against us and, as I understand the treaty, unlimited fines can be imposed upon us in the Luxembourg court. I do not know how my noble friend will be able to reply to that kind of detail this afternoon. But my general question to him is: is our opt-out on EMU likely to turn out to be as unreliable as our opt-out on the social chapter?

Viscount Cranborne

My Lords, my noble friend is well known as a sceptic in every sense of the word. We are satisfied that the opt-out is safe and the ECOFIN conclusions have reinforced that view. I could trade—rather less effectively than my noble friend—the various articles and subsections of the treaty. But I believe it will be sufficient for me to say that I am sure that my noble friend will return to this question and I shall be extremely happy to help him monitor my assurance during the course of the coming months and years.

Lord Bruce of Donington

My Lords, I try to keep up with developments in Europe as much as is possible on the basis of published information. Can the noble Viscount indicate to me under whose authority the President of the Commission presumed to address himself to the entire Council and—I understand from the press—deliver an admonition to Her Majesty's Government? Is he in agreement with the principle in general—I make the inquiry in all good spirit—and are the Government in a position in which they accept quite willingly the right of the President of the Commission to lecture the United Kingdom?

Viscount Cranborne

My Lords, I understand that even Lord Palmerston was lectured when he was Foreign Secretary and Prime Minister of this country when it was reputedly at its most jingoistic. It is nothing new in our history for officials of one kind or another to lecture this country. The question is whether or not the lecture carries with it a stick. In this case we have managed to resist that stick—if it exists. As I said to my noble friend Lord Pearson of Rannoch, our opt-outs are ones which we are willing and happy to live with.

Lord Marlesford

My Lords, does my noble friend agree that two of the points made by my right honourable friend the Prime Minister are absolutely crucial for the British people to understand? First, the decision on whether to go ahead with the single currency will be the most far-reaching decision that the European Union has ever taken. Secondly, if the currency goes ahead, whether or not Britain is a member, it is a vital British interest that it succeeds.

In that context, does my noble friend agree that it is appropriate once again to congratulate my right honourable friend the Prime Minister on having secured the opt-out at Maastricht, ably assisted at that time by my right honourable friend Mr. Lamont? Is it now widely recognised that the Prime Minister on one of the ablest international negotiators on the scene today? For that reason alone and quite apart from any others, in this crucial matter it is very much in Britain's interest for the Prime Minister to negotiate on behalf of Britain throughout and at the Amsterdam Conference next year.

Let me make two other points. Would it be wise for the European Union, if it wished to press ahead with the euro, to do it in a more modest stage of merely making it legal tender in all countries and seeing whether or not people use it? That would be a real market test as to whether there is merit in it.

Finally, let me say how glad I was to hear in the Statement that the Council of the supreme body of Europe underwrote the democratic arrangements reached in Hong Kong. I hope very much that the Government of the People's Republic of China will pay due regard to that important consensus.

Viscount Cranborne

My Lords, as your Lordships would expect, I wholly endorse what my noble friend said about the negotiating skills of my right honourable friend the Prime Minister. I suspect that, if my right honourable friend had not secured the opt-out at Maastricht over EMU and indeed the social chapter, the debates in both Houses of Parliament would have taken on rather a different character. No doubt it is an enormous relief to all parties, quite apart from the people of this country, that they can rely on something as reliable as the opt-out when so much is still uncertain about the future of the euro. Certainly, the evidence that my right honourable friend is one of the finest international negotiators that we have on the European scene will, I am sure, be taken fully into account at the next general election, whenever it may come.

Of course, my noble friend is right and EMU is a far-reaching proposal. As I said, if it is to be launched—whether or not we are to be members of it—it is extremely important that it should not, to use an Americanism, "bomb". Nothing could be more unhelpful to the prosperity of western Europe, should that happen.

I am grateful too to my noble friend for drawing attention to yet another idea of my right honourable friend which he introduced when he was Chancellor of the Exchequer; he called it "parallel currencies". It was something which my noble friend's former magazine, The Economist, at one time took a good deal of credit for. I am glad that he has not forgotten the idea.

I am glad also that during the course of a series of exchanges which concentrated on domestic European matters above all, my right honourable friend found time to talk about the arrangements in relation to Hong Kong. That was a matter in which, contrary to what the noble Lord, Lord Taverne, implied, our European partners were only too happy to support us. We are extremely grateful to them for underlining the importance of a democratic settlement in the colony after it leaves British tutelage next year.