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Mr. Brown: I shall answer the substantive points one by one.

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It is remarkable that the shadow Chancellor of the Conservative party, which has been talking about this issue for 18 years, can come to the House, even after his session in Eastbourne last week, to draw conclusions, and not be able to tell us where the party stands on the issue of principle. Where does it stand not as to whether there are constitutional implications but as to whether there is a constitutional bar to membership? It cannot say whether the economic tests will be decisive, and the shadow Chancellor now tells us that he even opposes preparations for a single currency. [Hon. Members: "Answer his questions."] I have to ask him these questions.

I have to ask the Conservative party these questions. Does it support the principle of a single currency? We do. The Conservative party cannot say, because it is divided. Does it believe that there is a constitutional bar to membership of a single currency? Some say yes, some say no. They cannot agree.

Do Conservatives believe that economic tests should be decisive in this matter? The shadow Chancellor could not tell us, but Conservatives must tell us what they believe. Equally, do they believe that sustainable convergence, once achieved, is a means by which we could move forward to a single currency? On each of those issues of principle, it was striking that the shadow Chancellor was absolutely silent: he did not address them.

I come to the shadow Chancellor's specific questions. He asked about what he called stock market movements in relation to statements. I shall read to him the letter that was sent to him by the Governor of the Bank of England. It states:

When he was reading the letter from the SIB, the right hon. Gentleman might have told us exactly what was in it--that there has been no notification of the determination of an infringement whatever. The shadow Chancellor would do better to withdraw his allegations.

I come now to specific questions. It is not our intention to join the ERM. There are no additional powers related to taxation in relation to the single currency; and, of course, on taxation matters there is the British veto. The shadow Chancellor asked in what circumstances we would change our view. I said precisely in my statement that they were unforeseen circumstances, which means that they cannot be foreseen. On the question of convergence, I made it absolutely clear--as I think the shadow Chancellor will acknowledge--that I was not talking about convergence at one point in time as being the decisive test for a single currency. I was talking about a sustained and durable period of convergence--a settled period of convergence--which in our view would be necessary.

It comes back to this one question. We say that, if the economic benefits are clear and unambiguous, in the national interest, we should join, if the public are prepared to support it. The shadow Chancellor cannot say whether, even if the economic benefits to the country were compelling in terms of jobs, industry and commerce--even if it were proven to him that those economic benefits were compelling--he would be prepared to recommend joining. In other words, whether it be for reasons of

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division, dogma or anti-Europeanism on the part of the Conservative party, the national interest would come second to sorting out its internal problems.

The leader of the Conservative party reflects those problems. He said at one stage that it would not join the single currency on principle. Then he said that it would not join for 30 or 40 years. Then he said that it would not join for five years. Then he said that it would not join for the foreseeable circumstances. Now he says from Eastbourne that it will not join for two Parliaments. That is a recipe whereby there will be no Conservative Government for five years, for 10 years, for 40 years, for all the foreseeable circumstances.

Mr. Malcolm Bruce (Gordon): We Liberal Democrats can and do accept much of the tone, and some of the substance, of the Chancellor's statement. If the Chancellor and the Government are aiming to build a national consensus in favour of a single currency, they will have our unqualified support, but, if that is to be achieved, does he not accept that we need some clarity and some leadership, and that beneath the warm words in his statement there is still doubt and indecision?

Does the Chancellor not accept that he is effectively saying that Britain will not join monetary union in this Parliament? He has not bolted the door, but it does now appear to have been closed. Does he not remember saying in July that Britain should take its decisions on EMU for economic reasons and

But is not today's statement all about setting a political timetable?

Does the Chancellor no longer agree with the director-general of the Confederation of British Industry that there is "no economic case" for ruling out entry to the single currency in this Parliament? Does he really believe that business will invest valuable time and money in something as uncertain and distant as what he is offering today? Does he really expect business to make that commitment? Can he not accept that, despite the good intentions in the statement, the danger is that it risks replacing a strategy of "wait and see" with one of "wait, and wait, and wait"?

If that is true, will Britain's economic interests not be fundamentally damaged? The five economic tests that the Chancellor has set out are so elastic that they could stretch to the moon and back. Will he not explain how they are to be met in terms that people can understand, so that they can make a judgment as to when and how entry will be made?

Finally, will the Chancellor recognise that, if we leave ourselves out for this Parliament and, by implication, for much of the next Parliament, we rule ourselves out of giving a lead to shaping monetary union in terms of achieving convergence and being successful? Does not the national interest require us to be there?

Mr. Brown: I am grateful to the hon. Gentleman for his contribution to the debate. I will tell him where we are agreed. We are agreed on the principle. We are agreed that there is no constitutional bar to membership, that national economic interest must be the decisive test, and that we should prepare to join; but the question that I have

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to ask him is whether he believes that we should join irrespective of whether it can be demonstrated that there is sustainable convergence. It is a question whether we get it right or we get it quickly.

The hon. Gentleman suggests that it is important to get it quickly. I suggest to him that, for the British national interest, it is important to get it right. That is the only disagreement on this issue between him and me. The setting of an artificial economic or calendar timetable for Britain in this matter--when he knows perfectly well that, under the previous Government, preparations were not made, and that the business cycle is out of synch with that of our continental partners--is not in the best interests of Britain.

Where the hon. Gentleman should agree with us is that a national consensus can now be built on the need to take the preparations actively that are necessary, so that, if the country so wishes, it can join a single currency early in the next Parliament.

Mr. Giles Radice (North Durham): Is my right hon. Friend aware that he and the Government deserve great credit for committing themselves to the principle of a single currency and for putting forward a programme of preparation which will, I hope, enable us to join it? In short, in that respect, today's statement is an historic step forward for this country.

My right hon. Friend knows that I share the concerns of the CBI and the TUC that the Government are virtually ruling out joining a single currency in the lifetime of this Parliament. May I just add that, the longer we wait to join a successful single currency, the more we are at risk of being marginalised not only in Europe but in the world?

Mr. Brown: I am grateful to my hon. Friend, who is a long-standing supporter of the European cause and who has written widely on such matters. I am sure that it is true to say that he would have liked to join the single currency in January 1999, but he must accept that, while we agree on the principle and agree that there is no constitutional bar, the fact is that the proper preparations for Britain were never made under the previous Government. The structural and other reforms that are necessary to bring us to the point of decision have not been made.

It is not realistic to plan on the basis that we will join in this Parliament, and the reasons for that must be absolutely clear to people who have listened to the statement today: it is stability that matters; we must achieve sustainable convergence, and that cannot be achieved overnight; and we must make the proper preparations as a country. Once the country looks at the analysis by the Treasury on the whole question of economic tests, it will agree with what I have said today.

Mr. Kenneth Clarke (Rushcliffe): Does the Chancellor agree that the bizarre incompetence of his team a week ago has forced him to come to the House and concede, as I have long suspected, that he essentially agrees with me on the main point of this great issue?

Does the right hon. Gentleman accept that, if the other member states of the European Union go ahead with economic and monetary union, and if they create a sound monetary structure, it is inevitable, sooner or later, that it will be in this country's interests to join that economic

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and monetary union? If we mishandle the timing of that decision, we run the risk of a period when we will have second-rate economic prospects, when this country will be a second choice for inward investment, and when we will play a second-division role in the affairs of the European Union.

If what we are considering today is the handling and the timing of that decision and what is or is not foreseeable, does the right hon. Gentleman also accept that the timetable that he suddenly produced today to put flesh on the bones of Charlie Whelan's timetable of a week ago has nothing to do with a lack of preparation, because he inherited contingency work which he is now bringing to fruition in the Treasury where he took over? It also has nothing to do with when our economy is synchronised with those on the continent, which is extremely important but unforeseeable, but has everything to do with the obsession of the Prime Minister and the Chancellor with the management of the press, Rupert Murdoch's press in particular, and the fact that they are in a total panic about when and how they will face a referendum, if they ever get around to joining.

Does the right hon. Gentleman realise that that approach causes great damage to the very stability that he says he wants to see in our affairs; causes great damage to people's confidence in this country's economic prospects; and causes immense damage to any confidence in the decision-handling abilities of himself and his right hon. Friend?

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