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Mr. Brown: The former Chancellor says that he agrees with me; his problem is that he does not agree with the leader of his party. In fact, very few in his parliamentary party agree with him. I said earlier that I was the first Chancellor in a Government to say that we supported the principle of monetary union, but that is not strictly true: the right hon. and learned Gentleman said that he supported it, but the problem was that he was speaking in a personal capacity. It was not the then Government's official policy--and now we find that even the Prime Minister of that Government did not agree with the official policy at the time.
We are agreed on the principle. The right hon. and learned Gentleman says that preparations have been properly in hand--perhaps he did not tell the then Prime Minister about what he was planning in the Treasury at the time--but I can tell him that we are not prepared to enter a single currency, and that preparations have not been made here as they have been made in other European countries. If he reflects on it for a minute, he will recognise that that is the case.
We have to be satisfied that we have met the five economic tests that I set out. If we do so, it will be appropriate to put the question to the country, but if we cannot, it would be irresponsible for a Government to recommend entry, and I will not do so. We will make a decision only when we know that we can meet the substantial economic tests that we have set out: that will be the true test of national economic interest.
Mr. Tony Benn (Chesterfield):
Is my right hon. Friend aware that his statement will be remembered not for its economic analysis but because he has told us that the Government believe that the electors have no right to determine our economic policy through the ballot box,
With 18.5 million unemployed in the European Union, few people will accept that the move into a deflationary system will be beneficial. I agree with my right hon. Friend that the issue is probably the most important to face this generation, so will he give a categorical assurance on behalf of the Government that, when the debate takes place, all members of his party and everyone else will be able to speak their mind on every aspect of European policy without any gags being imposed to prevent them from expressing an honest opinion?
Mr. Brown:
I do not think that the right hon. Gentleman has been prevented from speaking his mind for some time. On unemployment, it is precisely because of that problem that we have a welfare-to-work programme; we are dealing with that issue. On the consent of the British people, I think that he would recognise that our decision to hold a referendum if a recommendation is made by Government and approved by Parliament means that the people will have the final say. That is absolutely as it should be.
Sir Michael Spicer (West Worcestershire):
If one gives up all control of interest rates, exchange rates, money supply, national reserves and--through the stability pact--fiscal policy, has not one ceased to be an independent nation state?
Mr. Brown:
The hon. Gentleman has got it wrong. There is no question of our giving up our ability to make decisions on tax and spending. That is what we do, and will continue to do, through our Budgets. This afternoon we have seen the two sections of the Conservative party: the one, led by the former Chancellor, is for going in almost immediately, and the other is for never going in at all.
The shadow Chancellor and the leader of the Conservative party tried to bridge the gap by saying that entry would take 10 years. On what basis? If it is wrong in principle, why do they not rule it out for 100 years? If it is not wrong in principle but depends on the economic situation, why do they not apply the economic tests exactly as we do? The Conservative party must grow up.
Mr. Tam Dalyell (Linlithgow):
If one wants to catch a train, is it not prudent to get on that train at the point of departure rather than trying to catch up with it when it is well on its journey? Is it not, and I say this very sadly, an historic mistake not to go in on 1 January 1999? What did John Monks, speaking on behalf of the General Council of the TUC, tell my right hon. Friend?
Mr. Brown:
I am grateful to my hon. Friend, who has been a long-standing supporter of European integration, but I have to tell him that his proposal for 1 January 1999 is not a realistic prospect. Interest rates in Britain are 7 per cent., while on the continent they are 3 per cent. There is no convergence of the economic cycle that could make entry in 1999 possible. We have to make a decision based on the economic tests that we are applying.
On that basis, it is not a realistic prospect, in our view, to decide to join then, nor is it a realistic prospect to decide to join during the course of this Parliament, barring something unforeseen. I believe that, when he considers those issues--and particularly the Treasury assessment--on all the economic tests, my hon. Friend will agree that 1999 is unrealistic. I think that he will find John Monks and the TUC supportive of the facts that we favour the principle and that we will make proper preparations so that a decision by the country to join can be made at an appropriate time.
Mr. Douglas Hogg (Sleaford and North Hykeham):
Does the Chancellor agree that, following the report in the Financial Times at the end of September, a false market in shares was created? Does he agree that the principal cause of that was the remarks of an unnamed Minister to the effect that early entry to the single currency was to be anticipated? Given that a false market had been created and could have been dispelled, why did not the Chancellor make his position clear much earlier--or had he not made his mind up?
Mr. Brown:
I must refer the right hon. and learned Gentleman to the letters from the Bank of England and the Securities and Investments Board on his points about the shares market. On making definitive statements, with the detailed assessment, I have done it, as people would have expected me to do, in very great detail, and I have done it in a statement to this House.
Mr. Stuart Bell (Middlesbrough):
Does the Chancellor agree that the country will welcome what my hon. Friend the Member for North Durham (Mr. Radice) described as an historic decision? It is historic because the principle of entering into a single currency is confirmed and the option of not entering is foreclosed. Does he agree that the City will be pleased to hear that the Government will adhere to the stability pact? The emphasis on preparation and convergence will be important.
Does my right hon. Friend agree that preparation will mean that the time lag between the decision to enter the single currency and actual entry after getting the approval of the people in a referendum will be reduced, so that we can play the part that the Prime Minister has described at the heart of the Europe, influencing European affairs?
Mr. Brown:
I am glad that my hon. Friend realises the importance of preparation--something that has been lost on the Conservatives. It is very important that the standing committee that we have set up with the Governor of the Bank of England, the president of the CBI and the Association of British Chambers of Commerce gets to work to look at these issues in great detail and to make recommendations to us. We would be failing in our duty if we did not set up that committee and make preparations now.
My hon. Friend mentioned the importance of the City of London and financial services. It is one of the tests that we are applying on entry to monetary union that jobs in the City and in financial services, which are a rising part of employment in our economy, can be enhanced by a decision to enter.
On the general question of jobs, I believe that our test on jobs is the most important one for the British people. We are pressing right across Europe, through our plans for the
special employment summit and other things, for Europe to direct its attention to solving the problems of unemployment.
Mr. Dafydd Wigley (Caernarfon):
Does the Chancellor accept that we in Plaid Cymru see considerable benefit from being in the single currency for industry, agriculture and home owners, always provided that there is a real mechanism to deal with regional discrepancy? There is as great a need to deal with that, both in the UK and in other parts of Europe, as there is to deal with convergence between states in Europe. In his statement, the Chancellor did not refer to dealing with regional disparity. Will he now address it, and accept that we would very much like to have been in the single currency in 1999, as the Irish Republic will be?
Mr. Brown:
I am grateful to the hon. Gentleman for his general support of the statement of principle and the practical measures that we are taking for preparation. Unemployment and regional policy are right at the heart of the debate about EMU. If he looks at the Treasury's economic assessment, he will find that the worries about flexibility relate to the ability of regions and parts of the European economy to withstand any shocks that may arise owing to changes in their economic circumstances. It is precisely for those reasons that we must be satisfied that there is an ability to adjust to change within the European economies so that regions cannot and do not lose out at a time of great economic change.
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