European Single Currency (Hansard, 27 June 2000)

§ Lord McIntosh of Haringey
My Lords, the Chancellor of the Exchequer has said that we shall make another assessment of the five economic tests early in the next Parliament.

§ Lord Blaker
My Lords, I am grateful for that reply but does not the noble Lord agree that the economic tests are so amorphous, and the answers to them necessarily so subjective, that they are unlikely ever to provide the clear and unambiguous evidence of economic benefits for which the Prime Minister has called? Is not the real purpose of the economic tests to promote the idea that the economic problems are more important than the political questions and to provide a screen behind which the Government will be able to judge according to the state of the opinion polls when it is suitable to hold a referendum?

§ Lord McIntosh of Haringey
My Lords, I do not agree that the tests are amorphous and I do not agree that this is primarily a political decision rather than an economic one. As the Chancellor has always made clear, the economic tests apply to a successful single currency and to the circumstances under which the Government accept that there will be a pooling of sovereignty if we go into a single currency. But the tests of sustainable convergence, of flexibility, of investment, of financial services industry and of employment are by no means amorphous. They are capable of analysis and they have been subject to analysis, most recently by the International Monetary Fund.

§ Lord Shore of Stepney
My Lords, I am sorry that I cannot support my noble friend in what he has said. Seriously, there is only a flimsy intellectual case for joining on economic terms. It is a major political and constitutional issue. For the Government to go on ducking the issue and pretending that this is not the case is simply an exercise in dishonesty which gains us no respect on the Continent, where every other political leader accepts that the major purpose is to foster political union, is it not?

§ Lord McIntosh of Haringey
My Lords, I am not aware that my noble friend asked a question in any of that. I am sorry that he felt it necessary to use such language in an intervention.

§ Lord Taverne
My Lords, can the Government explain how they will avoid the euro becoming an issue at the next election? In particular, how can die Chancellor of the Exchequer argue, as he clearly 763 intends to, that the Government should be re-elected because of his brilliant management of the economy and in the same breath state that he cannot possibly say that the state of the economy will be in a suitable condition for us to join the euro within a year or so of the next election? Is the Chancellor so blind that he cannot see that he is giving Mr Hague a superb opportunity to make him look foolish?

§ Lord McIntosh of Haringey
My Lords, I think that the noble Lord, Lord Taverne, has departed from the Liberal Democrat script in the final few words of his intervention. Certainly the Government intend to adduce the argument in the next election that the Chancellor has done a brilliant job of restoring the economy to health. We will do that because it is true. However, to say that we are trying to secure that there will be no reference to the single currency in the next election is quite unrealistic.

§ Lord Waddington
My Lords, surely the noble Lord must agree that a glance at the second test, which asks, "If problems emerge, is there sufficient flexibility to deal with them?", shows that these are not tests at all but matters of judgment, leaving the Prime Minister free to recommend abolition of the pound whenever he thinks that he can get away with it.

§ Lord McIntosh of Haringey
My Lords, the second test actually asks whether there is sufficient flexibility to cope with economic change. I see no difficulty in that.

§ Lord Peston
My Lords, I hope that I may break the rules and speak in favour of the European Community. I refer to the questioning that seems to take place all the time. It is a long time since I knew any economics, but the notion that any economic test could be exercised without judgment is rather farfetched. Does not my noble friend agree that the tests lay down some sensible criteria but that it is up to someone—in this case, the Chancellor—to interpret them and put forward a view? Does not my noble friend also agree that that view will be subject to the test of many other people expressing their views, and therefore there is no problem?

§ Lord McIntosh of Haringey
My Lords, my noble friend is absolutely right. This Government have always said that, early in the next Parliament, on the basis of those tests, the Treasury will make an assessment; the Government will make a decision on the basis of that assessment; they will put that decision to the House of Commons and then to the people of this country in a referendum.

§ Earl Russell
My Lords, before the Minister accuses my noble friend Lord Taverne of departing from the Liberal Democrat script, will he tell the House whether he heard my noble friend in so much as a syllable suggest that Mr Hague might take the opportunity he was being given?

§ Lord McIntosh of Haringey
My Lords, that is an ingenious let out for the noble Lord, Lord Taverne.
764 The departure from the Liberal Democrat script comprised the suggestion that there might be some polemic gift to Mr Hague, but it certainly does not follow that he would be capable of taking it.

§ Lord Saatchi
My Lords, can the Minister give your Lordships' House the name of a single economist who will say that the five tests are objective? Is it not true that the tests are just a matter of opinion and that, as the Minister just said, the opinion will be the opinion of the Treasury and that, if asked to do so by Government Ministers, the Treasury would express the opinion that the earth was flat?

§ Lord McIntosh of Haringey
My Lords, the noble Lord, Lord Saatchi, has a gift for answering his own questions. Many economists take the view that these are objective tests. They are not precise tests. The noble Lord, Lord Peston, is a good example of a distinguished economist and there are many other distinguished economists on these Benches who take a comparable view. However, it is because we realise that ultimately we have to have a political as well as an economic judgment that we have continued to propose the process of assessment, decision and taking the view, first, of Parliament and the people of this country.