HL Deb 26 November 1996 vol 576 cc113-6

2.45 p.m.

Lord Pearson of Rannoch asked Her Majesty's Government:

Whether they believe that Germany, France and the other signatories to the Treaty of Rome will be able to meet the convergence criteria for monetary union and whether, if not, they will only withhold their veto of the whole project in return for a substantial repatriation of powers to the United Kingdom.

The Minister of State, Department of Social Security (Lord Mackay of Ardbrecknish

My Lords, decisions on which member states meet the conditions for adopting the single currency will be made by heads of government in 1998. Until then considerable uncertainties remain. There will be no opportunity for any single member state to veto the whole project even if it wished to. A separate decision, under qualified majority voting, will be taken for each member state on whether or not it meets the conditions to participate.

Lord Pearson of Rannoch

My Lords, I am grateful to my noble friend for that reply. Does he agree that however capable of dishonest manipulation the convergence criteria for monetary union may be, the criterion contained in Article 109j(4) of the treaty is couched in terms which not even the Luxembourg Court could misinterpret? This states that the third stage of monetary union must start at the latest on 1st January 1999. Does my noble friend agree that if the other countries need to delay beyond that date, it would require a change in the treaty's wording and thus give us the opportunity of the veto, which is the object of this Question?

Lord Mackay of Ardbrecknish

My Lords, I suggest to my noble friend that he might like to put down a specific Question about that particular part of the Maastricht Treaty. I am afraid that I do not have the treaty with me and I cannot give him an answer right now. If, for any reason, it was decided to delay the introduction of the single currency for those wishing and able to join it, I do not think there would be anything in the treaty to prevent that delay.

Lord Bruce of Donington

My Lords, does the Minister agree that the Council of Ministers and individual member states may be in some difficulty about determining the true degree of convergence in view of the fact that the convergence criteria will be based upon statistics provided by the Commission itself? Under the treaty it has the exclusive responsibility of providing the figures, and the Commission directorate responsible has so far shown a degree of flexibility in determining what the convergence criteria may be. One expects that, artistically, because its head is a Frenchman.

Lord Mackay of Ardbrecknish

My Lords, the convergence criteria are clearly set down. The statistics are collected from the member states. We all send various measures of statistics to the Commission. Obviously, it has the duty to make sure that all the statistics are collected and presented on the same basis. As an accountant the noble Lord will know that that is often quite a difficult and skilful operation but that it is absolutely essential if one is to compare like with like.

Lord Tebbit

My Lords, is my noble friend aware that I am greatly encouraged to learn that he does not have with him a copy of the Maastricht Treaty? That suggests perhaps that the Treasury's copy is being read by the Chancellor before the ECOFIN meeting. Can my noble friend tell me, in the event that it is clear that the criteria are not being observed, whether that would be just a matter for a little bit of QMV and that these things can be slurred over and not call for any action by Her Majesty's Government?

Lord Mackay of Ardbrecknish

My Lords, the criteria are clearly laid out, as indeed are a number of other aspects of factors that will be looked at when it is decided whether a country can join EMU. It is perfectly clear. I may not have a copy of the treaty, but I do have with me some of the pages relevant to questions I am asked. I can assure my noble friend that the convergence criteria are clearly laid out: fiscal deficit, debt percentage GDP, inflation and so on. All those things are clearly laid out. Of course, it is not just a matter of meeting them on the day; it is whether or not one is moving towards them and, more importantly, as yesterday's discussions made clear, whether one will stick with them after a member state joins, which is why the stability pact is so important.

Lord Stoddart of Swindon

My Lords, irrespective of EMU, would it be to the benefit of the United Kingdom if a substantial part—if not all—of the powers ceded to Brussels were repatriated to the United Kingdom? Does the Minister agree that the crooked deals which apparently have been made to allow certain countries such as France to meet the criteria, although they do not do so, will not be helpful at all to the EU or indeed this country? Finally, does he agree that the people in the real world who will decide whether or not these projects go ahead are the lorry drivers of France and other workers who will be extremely disadvantaged by the criteria agreed at Maastricht for EMU?

Lord Mackay of Ardbrecknish

My Lords, the question goes a little wider than even I usually manage to predict. Whatever countries may be doing now, the decision on whether or not they meet the convergence criteria will not be made, as I said in my original Answer to my noble friend, until 1998. Countries are taking steps to try to meet the convergence criteria right now, partly because many of them want to meet them and also because the criteria themselves are a sensible guideline to running a successful economy.

Lord Brabazon of Tara

My Lords, can my noble friend clarify a point that arose during the Statement yesterday regarding our own opt-out of Article 104c?

Lord Mackay of Ardbrecknish

My Lords, I am grateful to my noble friend for asking that question. There was some uncertainty yesterday after the noble Lord, Lord Bruce of Donington, intervened during my repeating of the Chancellor's Statement. It is perfectly clear, as I indicated yesterday, in paragraph 5 of Protocol Number 11, that Article 104c(1), (9) and (11) of the treaty, shall not apply to the United Kingdom". That is perfectly clear and is at variance with some of the suggestions made by the noble Lord, Lord Bruce of Donington, yesterday.

Lord Eatwell

My Lords, is it the Government's view that the convergence criteria should be enforced under all economic circumstances? If not, under what economic circumstances would a breach of the criteria be desirable?

Lord Mackay of Ardbrecknish

My Lords, as I mentioned, the decision will not need to be made until 1998, but my right honourable friends the Chancellor and the Prime Minister have made clear on a number of occasions that it is important that the criteria are observed. If an EMU has to come about, it is important that it is soundly and firmly based. To have that sound base we believe that all the countries joining ought to meet the convergence criteria.

Lord Willoughby de Broke

My Lords, can my noble friend confirm that one of the criteria written into the Maastricht Treaty for entrance into the EMU is membership of an exchange rate mechanism? This country has not been a member of the exchange rate mechanism for the required two years. Is it the case therefore that we cannot be members of an economic monetary union?

Lord Mackay of Ardbrecknish

My Lords, I have answered this question on a number of occasions before. The position has not changed. The original position, which envisaged being a member of the ERM before one joined the EMU, was based on narrow bands. The narrow bands no longer exist, and it is unclear what weight will be put on the need to be a member of the ERM. This Government and this party made it perfectly clear that we have no intention of rejoining the ERM.