Euro: Economic Tests for UK Entry (Hansard, 11 October 2000)

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

§ Lord Taverne
My Lords, I hope the Government will treat this as a constructive suggestion and not entrench themselves further in the usual positions. The Government have announced that the five conditions 327 are extremely important. Does it not follow that if the Government want an informed and reasonable debate on the whole question it would be of great assistance to have from time to time a public assessment of progress in meeting the five tests? Furthermore, do the Government agree that it would be quite wrong for a judgment on whether conditions were favourable for entry into the euro—which the Government say in principle they desire—to be kept within the Treasury? Does that not reinforce the case for regular public assessment of the state of convergence between the UK economy and the euro-zone economies?

§ Lord McIntosh of Haringey
My Lords, the noble Lord has chosen in his Question to concentrate on one particular conclusion in a very constructive and helpful report from Christopher Huhne and his colleagues. It is made nonetheless constructive by the fact that the noble Lord, Lord Taverne, was a member of the group that produced it. In saying that the report was constructive and helpful, we do not have to agree with every part of it. We have never taken the view—we do not take the view now—that continually to dip into the pot to decide whether or not the tests apply at this time would be at all helpful.

§ Lord Hoyle
My Lords, will my noble friend confirm that the five tests must be met before any recommendation to join is made? Will he also confirm that the final decision will be made by the British people in the form of a referendum?

§ Lord McIntosh of Haringey
My Lords, I can certainly confirm both points raised by my noble friend. I have confirmed them in the words of the Chancellor in 1997 and the Prime Minister in 1999. I can confirm them again in the words of the Prime Minister at Warsaw last week. He said: It is an economic union. Joining prematurely simply on political grounds, without the economic conditions being right, would be a mistake. Hence our position—in principle, in favour; in practice, the economic test must be met.

§ Lord Lamont of Lerwick
My Lords, will the Minister not put the noble Lord, Lord Taverne, out of his misery and tell him that the five tests are completely meaningless and entirely a matter of judgment; and that the real test that matters is of course the sixth test? That is published not just six-monthly, but monthly in the opinion poll Attitudes Towards the Euro; and alas that ain't becoming convergent.

§ Lord McIntosh of Haringey
My Lords, I rather thought that the noble Lord, Lord Lamont, in referring to the sixth test was referring to the same six tests to which the noble Lord, Lord Taverne, was referring. The Liberal Democrats think that the sixth test is actually the exchange rate. The economic tests are the right tests for the Government to make up their own mind and to make a recommendation to 328 Parliament and to the United Kingdom. It is up to us to persuade the people of the United Kingdom of the correctness of the conclusion that we reach.

§ Lord Barnett
My Lords, will my noble friend ignore the customary remark from the noble Lord, Lord Lamont, which tends to be both irrelevant to the major issue and irrational? But will he accept that most of the economic tests have already been met or are likely to be met, other than the main one; namely, the problem of convergence of currency rates? Have the Government considered negotiating the question of whether or not it would be possible on joining—which I hope we shall—to negotiate a lower rate for the UK?

§ Lord McIntosh of Haringey
My Lords, I would never have the temerity to ignore what the noble Lord, Lord Lamont, says, even if I occasionally, but not always, disagree with him. As to whether the exchange rate is the sixth test, the exchange rate is in great part the result of the conclusion of the five economic tests. Exchange rates are not determined by fiat, by diktat or by passing laws in this country.

§ Lord Saatchi
My Lords, I hesitate to draw attention to even the smallest defect in the Minister's performance, but I am sure that he will agree that one of the alleged perils of joining the euro that is not dealt with in the five tests is the impact of tax harmonisation. In that context, perhaps I may remind him of what he said: The fact is that taxes are falling". The noble Lord, Lord Kingsland, asked whether the noble Lord could justify that figure. In reply he said: Yes, my Lords. I shall do so in a considered letter which I shall send to all noble Lords who have taken part in the debate. I shall also place the letter in the Library of the House".—[Official Report, 28/7/00; col. 758.] That was two and a half months ago. When will such a letter be put in the post?

§ Lord McIntosh of Haringey
My Lords, I am grateful for that reminder. I was offered a draft of such a letter this morning. I rejected it as being totally inadequate. I shall ensure that a proper answer is given to the noble Lord, Lord Kingsland, and other noble Lords who took part in the debate.

§ Lord Shore of Stepney
My Lords, my noble friend has already tried to give an answer to the noble Lord, Lord Lamont, and, frankly, he has not been very convincing. How does my noble friend explain the fact that virtually every political leader in Europe, the Governor of the Bank of England only last month and the President of the European Central Bank have all expressed the view that the single currency is primarily about political union? How can the Government and my noble friend go on with this absurd pretence that it is simply a matter of economic calculation?

§ Lord McIntosh of Haringey
My Lords, we have always said that political and constitutional issues are involved in this decision. Clearly, whenever 329 sovereignty is pooled, constitutional issues are involved. But we have taken the view, and still take the view, that in the interests of this country the economic criteria must be paramount and that the other issues are subordinate to that and can be resolved. We have not deviated from that view.