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Mr. Gordon Brown (Dunfermline, East): The muted cheers when the Chancellor mentioned the case for a single currency and the jeers from the Conservative Benches when he mentioned the case against a single currency showed exactly why the Conservatives never wanted a debate. The Chancellor's problem is that every time he tells us what is on the Finance Ministers' agenda for next Monday--the euro, the stability pact, the budget and exchange rates and exchange rate co-operation--he demonstrates precisely why all parties represented on the Select Committee on European Legislation and hon. Members of all parties in the House were absolutely right to unite to demand a full debate on those matters before the meeting. They are still right to do so. The purpose of the Government's statement today is that the House should hear the views of the Chancellor, but surely the whole purpose of a debate is that the Chancellor should hear the views of the House.

The test of the Chancellor's main assertion today--that nothing of substance will be decided on 2 December--is not in the repetition of that assertion, but in the precision of the specific answers that he gives. How does he square his claim that nothing of substance can be decided with the fact that in his letter on 31 October to the Chairman

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of the Select Committee on European Legislation, he said that political agreement is likely on 2 December, and with the fact that the documents that he gave to the Select Committee state that the Government will participate in political decisions on them at the ECOFIN Council on 2 December? Why did the Leader of the House say that scrutiny would have to be completed by the end of November, because that would be in time for the House's views to be taken into account in any decisions at the 2 December meeting? Surely the main point of the Chancellor's letter of Friday is that, with or without a security reserve--[Interruption.] Conservative Members should listen. The Chancellor's letter of Friday said that on 2 December we might reach a broad measure of political agreement.

The Chancellor has confirmed that papers on exchange rates will be discussed at the meeting next Monday. Will he confirm that--in addition to what he says about the proposals in those papers--there is now a proposal in the European Monetary Institute document that the exchange rates of all the outs will be monitored and assessed, and a further proposal that, where convergence is achieved, countries can be expected to enter ERM mark 2? If, as the Chancellor admitted in his letter of Friday, a broad measure of political agreement might be reached on those issues next Monday, surely that is a matter on which we should hear the Government's position, on which the opinions of Members of this House should be heard and on which we should see the paper that is now before the European Ministers?

If, as the Chancellor confirmed today, the meeting next Monday will discuss both stability plans for the ins and convergence plans for the outs, and as stability plans are, as everybody knows, important even to the countries that remain out; if there is a set of proposals for every one of those inside currency union that the deficit should never be higher than 3 per cent., that it should never be more than 1 per cent. over the cycle and that it should never be considered exceptional unless there is a specified reduction in national income in any one year; and if, as the Chancellor says in his letter, a broad measure of political agreement is likely on 2 December--including on the subject of fines for the ins--surely we should know as a matter of fact what is finally being proposed and whether the Chancellor considers the rules to be too rigid or inflexible. Surely the House should be allowed to give its views on the matter, too.

The Chancellor says that the convergence plan does not include fines--which is right--but also says that it is a requirement only for information and for nothing more, but surely he must explain the proposals that are before his meeting next Monday. As I understand them--I hope that he will confirm this--Britain would be compelled to submit a convergence plan, which the Treasury accepts may yet have to include forecasts on interest rates and unemployment. Britain would then be assessed and judged on the credibility of its economic position and on whether it was meeting the criteria. Britain might then be urged to take corrective action, and given a specified time to do so. The Chancellor must surely explain the fear expressed by the Treasury that those plans go way beyond the provision of information and involve what it calls pre-commitments to respond to changes in the deficit.

The Chancellor says that no agreements have yet been made. Perhaps he will explain why the informal meeting of Finance Ministers in September agreed that there was

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a broad level of consensus that convergence programmes should be made obligatory and that their contents should be developed along the same lines as for stability programmes. The Chancellor should explain why one thing is being said in Brussels and another back here in Britain.

Try as the Chancellor might to downplay 2 September and to say that nothing of substance is being decided, he cannot do so. Is it not the case that there is only one reason for denying us the debate that the House and the country want--internal Tory party management? On that and on the other issues, the national interest should come first.

Mr. Clarke: On the final point, I can assure the right hon. Gentleman that the policy that I am pursuing is the declared policy of the Government. As I tried to explain, I am pursuing it in a way that I am perfectly happy to debate. It is important to us all and I am happy to make it clear.

On the decisions that will be taken next Monday at ECOFIN, I anticipate that the most likely outcome will be a report to go ahead to the summit in Dublin on where we are in the discussions on all those things. It is possible that we shall seek to reach political agreement on that and other things. I made it clear a few moments ago that, until we have finished the scrutiny procedure here, I shall put in a parliamentary reserve--something that frequently happens in the Council.

The right hon. Gentleman referred to the way in which I described the matter to the Scrutiny Committee in my letter of 21 October, when I said:

"the Government will be participating in the formal completion of the process at ECOFIN on 2 December and the European Council on 13 and 14 December."

After the conclusions at Florence, no member state is assuming that ECOFIN will determine the final shape of those things or legislate--there are to be no legislative proposals. ECOFIN is meant to be trying to reach political agreement to go on to Dublin, and I shall enter a parliamentary reserve to that.

Mr. Dennis Skinner (Bolsover): Hoodwinked.

Mr. Clarke: No. Let me quote again from the letter to the Chairman of the Scrutiny Committee. I said that the letter,

"by providing you with advanced warning, will help to ensure that your Committee is fully able to feed in its views on these proposals in time for the Government to participate in political decisions on them at the ECOFIN Council meeting on 2 December and the European Council on 13 and 14 December".

I went on to say:

"I attach great importance to the role of Parliament in scrutinising European business".

That is why I sent the letter and why we still have plenty of time before any of the matters are resolved in the meetings.

Let me say what might prevent political agreement from being reached at ECOFIN and in Dublin. Important matters, particularly in the stability pact, would affect us if we were to go into economic and monetary union at any time. It is important that the fines should not be so excessive as to make the economic crisis worse, that the process should not be automatic and that it should be

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subject to political decisions by the Council of Ministers at every stage. It is important that the timetable should not be so rapid as to ratchet up a problem to a crisis in one member state. The fines and penalties in the treaty were intended to act as a deterrent but, like all the best deterrents, they would be a deterrent that would never be imposed because they would put pressure on a member state to get back within the excessive deficit.

That is the position that is being taken, and the process will not be concluded next Monday--it was always highly unlikely that it would be concluded next Monday and I am not even sure that it will be concluded at Dublin. I shall put in a parliamentary reserve on those matters until the House is satisfied and its scrutiny process finished. [Interruption.] I have always been clear about that. I have never had the slightest intention of going to any Council of Ministers without the parliamentary scrutiny process being completed.

The right hon. Gentleman also referred to the European Monetary Institute document. That document has no legal effect, and the right hon. Gentleman does not do a service to sensible debate by misquoting or by distorting quotations. It is an inescapable fact that he ought to accept that the EMI is proceeding on the only sensible and true basis: that a country joins ERM mark 2 only if its Parliament decides to. The Prime Minister and I have repeatedly made it clear that we have no intention of proceeding to ERM mark 2.

It is not true that convergence plans can lead to the conclusions that the right hon. Gentleman said they could lead to; they can lead only to non-binding recommendations. It is true that we are contemplating the idea of it being compulsory to submit such plans, but this country has been submitting them for three or four years, they have been approved every year in Parliament, and we have never had back a recommendation that did not endorse our policy; so there is no great threat posed there.

Other member states that might get themselves into fiscal problems have had a habit in the past of submitting inadequate plans and submitting them late, so there are some attractions, if one wants stability in the single market, to getting the conversion programmes sorted out. However, I agree with the right hon. Gentleman about matters such as forecasts of interest and exchange rates, and I do not think that they will survive.

Finally, the right hon. Member for Dunfermline, East talked about the need for a debate. I have made it absolutely clear that we will have a debate. [Hon. Members: "When?"] I welcome a debate; I enjoy the debate. The right hon. Gentleman says that he is looking forward to an interesting debate between me and my Back Benchers; I think that he will have some fun with some of his, if we ever get to a debate, not least because I am not the slightest bit aware of his position on any of those matters at any stage.

My right hon. Friend the Leader of the House will in due course announce the terms of the debate--perhaps a longer debate--that we hope to have; it will certainly be held before the Dublin summit, on a motion for the Adjournment.

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