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Mr. Lamont : I will give way later.

Labour Members are suffering from what Christopher Fildes has called bovine spongiform Euromania, or mad bull disease. It is a disease that lodges in holes in the cerebellum and causes erosion of the powers of reasoning. Sufferers come to believe that membership of the ERM has

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magical powers and will solve all problems. They also suffer from irrational fear and outbreaks of terror about something called the golden scenario. It is a golden scenario in which the Tories engineer a short boom, falling interest rates, a quick election--and my hon. Friend the Member for Crawley (Mr. Soames) is returned in time to go back to Ascot. Rational people know that the ERM has more limited powers, that it is a discipline, but that it is a powerful one which involves hard and difficult choices having to be made.

Labour Members are sore because they believed that the Government never would join the ERM. They were content to go on urging us to join, even though they did not know what the ERM was and what its implications were. They thought that it did not matter when they did not bother to explain it to the public. They were content to urge the Government to join, so long as it was their distinctive policy. Seventy-two hours before the Chancellor announced his decision to join the ERM, the Leader of the Opposition was telling his party in Blackpool that if he were ever in a position to take decisions, one of the first would be to take sterling into the ERM. When it happened, what did we find? Did the right hon. Gentleman lead the cheers? Did he join the welcome? Did we hear the faintest echo, even a whisper of support, from him? No. It was left to one of the luckless Labour media advisers to provide the definitive reaction, preserved for posterity in the pink pages of the Financial Times. I shall give the quote in full because it bears repeating. The spokesman said : "This has really screwed up our coverage in the media tomorrow. The conference organisers had laid on a particularly spectacular finale with the Red Flag, Jerusalem and auld lang syne to follow a rousing, rallying cry by Dr. Jack Cunningham, the campaign co-ordinator. All that now goes by the board. They have outsmarted us."

How can we explain the modest reception for the sudden implementation of what we were told was the central plank of the economic strategy of the Labour party? The answer is all too simple : for the Labour party, ERM was not a policy but an excuse. For it, joining the ERM was not a policy for reinforcing the anti-inflation process, but a fig leaf to conceal the absence of its policies. For it, the ERM was not the exchange rate mechanism but a slogan designed to cover up the bankruptcy of its own ideas. Read their lips--for members of the Labour party, ERM spells "everything's a real muddle."

Mr. Leighton : In an answer the Chief Secretary said that the hard ecu was evolutionary--evolutionary towards what?

Mr. Lamont : I have dealt with that question and I see that my right hon. Friend the Member for Chingford (Mr. Tebbit) is well satisfied with my answer.

Mr. John Smith : Will the right hon. Gentleman tell us about the arrangements for accountability for the European monetary fund? Does Sir Michael Butler-- [Interruption.] I hear the right hon. Gentleman asking the Chancellor for the answer, and I ask the right hon. Gentleman to give us his own answer. How will the European monetary fund operate and how will it account to the House?

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Mr. Lamont : We have made it clear on several occasions that we do not believe in an independent central bank at a European or a national level. The monetary authority would be subject to political control, which would have to be negotiated, but it would not be, in the sense that the right hon. and learned Gentleman describes it, an independent central bank.

The right hon. and learned Gentleman asks me a lot of questions, but he did not give away one detail about his policy on the matter. I should like to ask the right hon. and learned Gentleman why on earth, if he is not in favour of a single currency, he is in favour of a central bank in the first place, which is what he was putting forward.

The right hon. and learned Member for Monklands, East, of all people, has least cause to complain or criticise the Government in their attitude to the ERM. In his famous Walden interview, when he was asked about his economic policy in the current climate, he replied that he would do two things : join the ERM and cut interest rates by 1 per cent. However, his reception and reaction have been strangely muted and his rapture strictly modified, yet he has a profound and lasting influence on my right hon. Friend the Member for Chingford.

The right hon. and learned Member for Monklands, East and all Labour Members who have spoken in the debate have shown that they do not understand what the ERM is about. They do not understand that it is a discipline to lower inflationary expectations, and to give us the benefits of the policies of low inflation countries and that the whole point of the ERM is for inflation to converge towards the level of low inflation countries.

The terms referred to by my right hon. Friend the Member for Chingford add up to the following : first, devalue the currency, then lock into the new inflationary exchange rate and follow that by subverting the monetary discipline that lies at the heart of the ERM. By doing that, the Labour party would remove the very features of the ERM that make it an anchor against inflation. The truth is that the Labour party does not want an anchor against inflation today any more than it did in the past.

Labour has no credible monetary policy. It has no credible policy on the ERM. We believe that an important step has been taken : one which enhances the credibility of our monetary policy, will help us to defeat inflation and will bring lasting benefit to the people of the country. I commend the motion to my right hon. and hon. Friends. Question put, That the amendment be made :--

The House divided : Ayes 188, Noes 323.

Division No. 331] [10 pm

AYES

Abbott, Ms Diane

Allen, Graham

Archer, Rt Hon Peter

Armstrong, Hilary

Ashley, Rt Hon Jack

Banks, Tony (Newham NW)

Barnes, Harry (Derbyshire NE)

Barron, Kevin

Battle, John

Beckett, Margaret

Beggs, Roy

Bell, Stuart

Bennett, A. F. (D'nt'n & R'dish)

Bermingham, Gerald

Bidwell, Sydney

Blair, Tony

Blunkett, David

Boateng, Paul

Boyes, Roland

Bradley, Keith

Bray, Dr Jeremy

Brown, Gordon (D'mline E)

Brown, Nicholas (Newcastle E)

Buckley, George J.

Caborn, Richard

Callaghan, Jim

Campbell, Ron (Blyth Valley)

Campbell-Savours, D. N.

Clark, Dr David (S Shields)

Clarke, Tom (Monklands W)

Clwyd, Mrs Ann

Cohen, Harry

Coleman, Donald

Cook, Robin (Livingston)

Corbett, Robin

Cousins, Jim

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Column 285

Crowther, Stan

Cummings, John

Cunliffe, Lawrence

Cunningham, Dr John

Dalyell, Tam

Darling, Alistair

Davies, Rt Hon Denzil (Llanelli)

Davies, Ron (Caerphilly)

Davis, Terry (B'ham Hodge H'l)

Dewar, Donald

Dixon, Don

Dobson, Frank

Doran, Frank

Douglas, Dick

Dunnachie, Jimmy

Eastham, Ken

Evans, John (St Helens N)

Ewing, Harry (Falkirk E)

Faulds, Andrew

Fisher, Mark

Flannery, Martin

Flynn, Paul

Foot, Rt Hon Michael

Foster, Derek

Fraser, John

Fyfe, Maria

Galbraith, Sam

Garrett, John (Norwich South)

George, Bruce

Gilbert, Rt Hon Dr John

Godman, Dr Norman A.

Gould, Bryan

Graham, Thomas

Grant, Bernie (Tottenham)

Griffiths, Nigel (Edinburgh S)

Griffiths, Win (Bridgend)

Hardy, Peter

Harman, Ms Harriet

Hattersley, Rt Hon Roy

Heal, Mrs Sylvia

Healey, Rt Hon Denis

Henderson, Doug

Hinchliffe, David

Hoey, Ms Kate (Vauxhall)

Hogg, N. (C'nauld & Kilsyth)

Home Robertson, John

Hood, Jimmy

Howell, Rt Hon D. (S'heath)

Howells, Dr. Kim (Pontypridd)

Hoyle, Doug

Hughes, John (Coventry NE)

Hughes, Robert (Aberdeen N)

Illsley, Eric

Ingram, Adam

Janner, Greville

Jones, Barry (Alyn & Deeside)

Kaufman, Rt Hon Gerald

Kinnock, Rt Hon Neil

Lambie, David

Lamond, James

Leadbitter, Ted

Leighton, Ron

Lestor, Joan (Eccles)

Lewis, Terry

Litherland, Robert

Lloyd, Tony (Stretford)

Lofthouse, Geoffrey

McAllion, John

McAvoy, Thomas

McCartney, Ian

McFall, John

McKelvey, William

McLeish, Henry

McNamara, Kevin

McWilliam, John

Mahon, Mrs Alice

Marek, Dr John

Marshall, David (Shettleston)

Marshall, Jim (Leicester S)

Martin, Michael J. (Springburn)

Maxton, John

Meacher, Michael

Michael, Alun

Michie, Bill (Sheffield Heeley)

Moonie, Dr Lewis

Morgan, Rhodri

Morley, Elliot

Morris, Rt Hon J. (Aberavon)

Murphy, Paul

Oakes, Rt Hon Gordon

O'Brien, William

O'Hara, Edward

O'Neill, Martin

Orme, Rt Hon Stanley

Parry, Robert

Patchett, Terry

Pendry, Tom

Pike, Peter L.

Powell, Ray (Ogmore)

Prescott, John

Primarolo, Dawn

Quin, Ms Joyce

Radice, Giles

Randall, Stuart

Rees, Rt Hon Merlyn

Richardson, Jo

Robertson, George

Robinson, Geoffrey

Rogers, Allan

Rooker, Jeff

Ross, Ernie (Dundee W)

Ross, William (Londonderry E)

Rowlands, Ted

Ruddock, Joan

Salmond, Alex

Sedgemore, Brian

Sheerman, Barry

Sheldon, Rt Hon Robert

Short, Clare

Sillars, Jim

Smith, Andrew (Oxford E)

Smith, C. (Isl'ton & F'bury)

Smith, Rt Hon J. (Monk'ds E)

Smith, J. P. (Vale of Glam)

Smyth, Rev Martin (Belfast S)

Snape, Peter

Soley, Clive

Steinberg, Gerry

Stott, Roger

Strang, Gavin

Straw, Jack

Taylor, Mrs Ann (Dewsbury)

Thompson, Jack (Wansbeck)

Trimble, David

Turner, Dennis

Vaz, Keith

Walker, A. Cecil (Belfast N)

Walley, Joan

Wardell, Gareth (Gower)

Wareing, Robert N.

Watson, Mike (Glasgow, C)

Welsh, Andrew (Angus E)

Welsh, Michael (Doncaster N)

Wigley, Dafydd

Williams, Rt Hon Alan

Williams, Alan W. (Carm'then)

Wilson, Brian

Winnick, David

Wise, Mrs Audrey

Worthington, Tony

Wray, Jimmy

Young, David (Bolton SE)

Tellers for the Ayes :

Mrs. Llin Golding and

Mr. Allen McKay.

NOES

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