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Economic and Monetary Union
9. Dr. Vincent Cable (Twickenham): If he will make a statement on progress towards the introduction of EMU. [38250]
The Economic Secretary to the Treasury (Mrs. Helen Liddell): Preparations for the launch of stage three of economic and monetary union have continued throughout the UK presidency of the EU. In the presidency, the Government are committed to ensuring that the single currency is launched smoothly and on time, taking into account the views of other member states.
The key decisions on which member states will join the single currency will be taken over the first weekend in May on the basis of the Commission and European Monetary Institute reports.
Dr. Cable:
Does the Economic Secretary acknowledge that, as EMU is now proceeding with 11 members, there is some risk of the remaining four being excluded from key economic management decisions in Europe? As the Government have declined to accept our advice on proceeding with early entry and an early referendum, will the hon. Lady set out the sort of conversations the Government had with Greece, Denmark and Sweden to ensure that they are not marginalised on economic policy making?
Mrs. Liddell:
We failed to take the hon. Gentleman's advice because, on this as on other matters, it is consistently wrong. The hon. Gentleman asks about the applicant countries for the euro zone. The decision on that will be made next week in full consultation with all member states over the May bank holiday weekend. During our presidency we shall do our utmost to ensure that the decision is taken in an orderly and smooth manner.
Mr. Charles Clarke (Norwich, South):
Does my hon. Friend accept that the real meaning of the reports by the European Commission, the European Monetary Institute and the Bundesbank, is that economic and monetary union will go ahead from 1 January 1999 with 11 members? Does she agree that it is about time all parties in the House, including both Conservative parties, faced that fact and accepted it and addressed the real implications for this country of that change?
Does she further agree that one of the implications may be that, from 1 January 1999, the euro will circulate more widely in the United Kingdom than people, including those in the Treasury, currently expect? I cite the example that was given by my hon. Friend the Member for Rotherham (Mr. MacShane) about today's Vauxhall pay negotiations. Does she accept that it is necessary for the Treasury to address more urgently the possible implications of the euro spreading in this country faster than most people expect?
Mrs. Liddell:
My hon. Friend is unnecessarily generous to Opposition Members. I thought that there were singularly more than two--[Interruption.] I am sorry, not singularly. I thought that there were multiples of views on Europe on the Conservative Benches.
My hon. Friend makes a very important point about the progress that has been made towards convergence. For example, average EU inflation fell from about 4 per cent.
in 1993 to an estimated 2 per cent. last year. The point that my hon. Friend makes about companies' preparations in this country for the use of the euro after 1 January 1999 contrasts with the myopic attitude of the Conservative party, which refuses to accept reality and, because of the attitude that it adopted when it formed the Government, held back companies' preparations.
As part of the Government's preparations, the Treasury has established with the Department of Trade and Industry an EMU preparation unit. Several road shows are being held throughout the country. A considerable amount of material is now being made available to businesses--especially small and medium enterprises--and the provision of such material will continue and escalate once the decisions are taken next weekend.
Sir Peter Tapsell (Louth and Horncastle):
As it is generally agreed that the success of EMU will crucially depend on the quality of whoever is appointed as president of the European central bank, is it not disquieting that, despite the clear provisions of the Maastricht treaty that the central bank, when established, shall not be subject to national pressures of any kind, both Germany and France obviously regard it as essential to their national interests that their nominees should be appointed governor of that bank?
Is the Economic Secretary aware of the widely reported horse-trading going on between Germany and France, to the effect that whoever is appointed, whether the French or German nominee, will agree to step down after four years--despite the fact that the Maastricht treaty lays down that it should be an eight-year term--to make way for the nominee of the other great power? Is that not an augury of the way in which Europe will be run in future; Germany and France will stitch everything up behind the scenes and then impose their wishes on the smaller countries?
Mrs. Liddell:
I am tempted simply to say no, but I shall make the point that there is no German nominee for the presidency of the European central bank. As my right hon. Friend the Chancellor of the Exchequer said, the president of the central bank must be in place by July. We shall do our utmost to ensure that the decisions are taken in an orderly manner in due course, and we hope that those decisions will be taken soon.
10. Mr. Gareth R. Thomas (Harrow, West):
What discussions he has had with representatives of the Association of British Credit Unions Ltd. [38251]
19. Dr. Norman A. Godman (Greenock and Inverclyde):
What plans he has to modify the regulations governing the financial transactions between credit unions and their members. [38262]
The Economic Secretary to the Treasury (Mrs. Helen Liddell):
Credit unions play an important role in encouraging savings and providing low-cost credit. I have met the Association of British Credit Unions to discuss its ideas for strengthening the credit union movement and plan to see the association again soon. We are examining ways to promote the further growth of
Mr. Thomas:
I am grateful for that reply. Does my hon. Friend agree that credit unions provide an especially valuable service to people on a low income who live in areas from which the high street banks have withdrawn? Will she assure the House that the Treasury is committed to furthering the growth of credit unions and will actively consider proposals from the Association of British Credit Unions to allow, for example, credit unions to borrow capital from external bodies other than banks and to offer a broader range of financial services to their members?
Mrs. Liddell:
My hon. Friend makes a valid point. We are examining the proposals that he mentions. Credit unions play a significant role in helping the low paid. We are developing that approach as we seek to eliminate the social exclusion caused by the previous Government that has resulted in many people not having access to conventional financial services. Access to financial services can be a route out of poverty. I commend the work done by many hundreds of people throughout the United Kingdom in operating credit unions.
11. Dr. Phyllis Starkey (Milton Keynes, South-West):
If he will make a statement on the Mauritius mandate. [38252]
17. Mr. Tony McNulty (Harrow, East):
What recent representations he has received on his policy to reduce the debt burden of the poorest countries. [38260]
The Economic Secretary to the Treasury (Mrs. Helen Liddell):
The Government have made considerable progress in securing international agreement to the Mauritius mandate and will continue to press for its speedy and determined implementation. Since his Mauritius mandate statement to Commonwealth Finance Ministers last September, my right hon. Friend the Chancellor has held a number of meetings with religious leaders and non-governmental organisation heads to discuss the issue of debt relief and keep them informed of progress.
Dr. Starkey:
May I pass on to my hon. Friend the considerable support that I have received from my constituents for the effective action that the Government are taking to reduce the debt burden on poorer countries? Given the importance of reducing debt to allow the poorest countries to develop more effectively, and because of the wider effect on the world economy, what steps are the G7 countries taking to monitor progress in achieving those targets by 2000?
Mrs. Liddell:
I congratulate my hon. Friend on that question. [Interruption.] Opposition Members sneer, but the Treasury has received many thousands of letters supporting the Government's position on the Mauritius mandate. The G7 countries issued a statement on 21 February encouraging all debtor countries to begin the process of securing debt relief by the year 2000, and they continue to monitor that progress. In addition,
Mr. McNulty:
Does my hon. Friend agree that there is little point in seeking to alleviate debt unless we tackle the systemic and structural difficulties in those economies to allow them to develop through sustainable growth? Can she confirm that the measures taken to alleviate debt will set out a way in which those countries can achieve sustainable growth?
Mrs. Liddell:
I commend my hon. Friend for that question. It is important that we encourage Governments to develop sound economic policies so that in future they do not return to their present condition. That is why the programme is biased towards countries that clearly exhibit a determination to adopt sound economic policies. We will encourage them in that and give the support that is necessary, both in our role as the UK Government and through our role in G7 and other international organisations.
Dr. Jenny Tonge (Richmond Park):
Will the Minister confirm that the money necessary to relieve the debt of the poorest countries is taken from the overseas aid budget? Can she say when the Government expect to make progress on increasing to 0.7 per cent. of gross national product aid to the poorest countries of the world, as promised?
Mrs. Liddell:
I do not confirm the hon. Lady's point about the overseas development budget, but we have given extra assistance to the African development bank. In relation to specific countries--for example, Mozambique--where there is a particular problem because of the scale of the debt, my right hon. Friend the Chancellor has brokered a significant deal. As a result, maximum assistance is being given to Mozambique to ensure that it can meet its debt obligations and find an exit from its debt, in line with the other countries involved.
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