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6.48 pm

The Economic Secretary to the Treasury (Mrs. Helen Liddell): This has been an interesting debate. It started with a degree of manic passion across the House, which quickly became manic depression when the right hon. Member for Hitchin and Harpenden (Mr. Lilley) rose to speak. We had a lesson in leadership from the Liberal Democrats, which was amusing in itself. The hon. Member for West Worcestershire (Sir M. Spicer) then read out his speech to the Treasury Committee, which gives a new meaning to the phrase "vanity publishing". We should be grateful that at least he did not try to mimic the voices of those present at the time.

We are on the eve of a significant moment for Europe. This weekend, the Prime Minister and the Chancellor will chair key meetings to decide which countries should join the single currency on 1 January 1999. This year--one year on from the general election--a Labour Chancellor of the Exchequer and a Labour Prime Minister are respected and admired, as distinct from their Conservative predecessors, by our partners in Europe. We all remember the shame that this country experienced because of the Conservative Government's performance.

Let me reiterate that the UK Government believe that a successful single currency would be in the interests of Europe and of Great Britain.

Mr. Jenkin: Will the hon. Lady give way?

Mrs. Liddell: I have no intention of giving way. The right hon. Member for Wells (Mr. Heathcoat-Amory) did not give way to my hon. Friends, and a number of points were made in the debate which I wish to answer.

The Government believe that a successful single currency will lock in monetary and fiscal stability, and provide a competitive boost to European business. The rest of Europe now knows that the UK Government share the objective of a successful single currency. We are the first United Kingdom Government to declare themselves in favour of the principle of a single currency. We look to the future because we do not have to keep looking over our shoulders to see what is happening on the divided Benches behind us.

May I take up some of the points made in the course of this debate? The hon. Member for Gordon (Mr. Bruce) eventually made a rather petulant speech. I must point out to him that we shall not join in the first wave because our economy has neither the necessary convergence with the rest of Europe nor the necessary flexibility for it to be in our economic interest to do so. We want the single currency to succeed. For the British Government to enter a single currency when we believe that it would not be in our interests would damage the single currency. We shall take decisions based on the best interests of the UK economy.

The official Opposition have already made it perfectly clear that, even if it were in Britain's national economic interest, they would not join a single currency. Would that be for five, 10 or 60 years? Their ideological or theological differences matter more to Conservative Members than Britain's national economic interests.

We heard a considerable amount about Italy, although we did not hear quite as much about what Opposition Members think about Britain's position in relation to a single currency. I want to look specifically at the position of Italy. The treaty is clearly not hard and fast.

30 Apr 1998 : Column 513

Conservative Members should be well aware of that, as it was they who signed it. The treaty makes it clear that the debt level, which is part of the excessive deficit position, is open to interpretation, and it has been rightly interpreted in the past. When the Conservatives were in government in 1994, ECOFIN, which included the right hon. and learned Member for Rushcliffe (Mr. Clarke), decided that Ireland did not have an excessive deficit when its debt stood at 96 per cent. In 1996, the Council reached the same conclusion about Denmark when its deficit stood at 72 per cent., so some consistency from Conservative Members would have been appreciated.

I reiterate the point in relation to Italy: the deficit over the past four years has been much smaller, at only three points, as my right hon. Friend the Chancellor pointed out. The Italian Government's draft budget was announced earlier this month and is currently being debated before the Italian Parliament. It makes it clear that the Italians are aiming to bring the debt ratio down by 3 per cent. a year over the next four years. Those figures must be put into context. Italy has been running a primary surplus since the early 1990s and its overall deficit is forecast to remain on a declining trend, below 3 per cent., with a current account surplus.

I wish to make an extremely important point: we must make clear the significance of sustaining debt reduction for all EU member states, but especially those with high debts. That fits in very much with UK domestic policy, which is why my right hon. Friend the Chancellor has made it clear that we are working with other member states towards a declaration that re-commits European countries to continued fiscal discipline through the stability and growth pacts.

As well as the criteria that we shall discuss this weekend, it is of critical importance to the success of the single currency that there is structural reform. EMU will require economic reform, and this Labour Government have led the debate in Europe on that. Attention to the supply side will determine the employment and productive capacity of Europe's economies. It is only by undertaking reform that we can ensure that EMU works and is in our national interest.

The hon. Member for West Worcestershire asked about the exchange rate mechanism. My right hon. Friend the Chancellor has made it clear that we have no intention of rejoining the exchange rate mechanism.

Sir Michael Spicer: You have to.

Mrs. Liddell: It is perfectly clear from the European Monetary Institute reports published in relation to EMU that we do not have to. Finland and Italy are two cases in point. The exchange rate conditions can be interpreted flexibly. I must point out to the hon. Gentleman, because I know of his interest in these matters, that ERM will become a different beast after the establishment of a single currency zone. I repeat what my right hon. Friend the Chancellor has said time and again: we do not intend to rejoin the ERM.

Mr. Lilley: Will the hon. Lady confirm that she disagrees with the Treasury Committee report, which says:


30 Apr 1998 : Column 514

    If Sweden is excluded on that ground--otherwise it would have been forced by law to join--why would we be allowed to join, as we did not voluntarily join the ERM?

Mrs. Liddell: I regret having given way to the right hon. Gentleman. I did so because of his position in the House. He should read the EMI report, because he has quoted selectively. The decision on Sweden relates to the position of its central bank.

May I return to the substantive points that hon. Members made in the debate? My hon. Friend the Member for Linlithgow (Mr. Dalyell) asked about the cost of not joining a single currency. That question goes to the heart of this debate. The cost of not joining is being out of sync with the rest of Europe, and cutting ourselves off from the global opportunities that will be available to us, from the removal of transaction costs and from an opportunity to work in concert with our European partners. That is why the Government have said that if it is in Britain's economic interests to join a single currency, we see no barrier to our doing so.

However, it would not be right to join in the lifetime of this Parliament, to a large extent because of the position that we inherited from the previous Government. Conservative Members try hard to pretend that the events of last year did not happen, but one of the most illuminating factors that the Government experienced on 2, 3 and 4 May was to see the fudges of the previous Government and the extent to which they were prepared to play politics rather than take into account the nation's interests.

The British Government have an opportunity tomorrow, as we have had over the past year, to enable member states to maximise their potential for the benefit of every European citizen. We have won the respect of the other member states, which is particularly important given the shameful behaviour of the previous Government. I am proud that tomorrow and on Saturday I shall see these momentous decisions being taken. I am also proud to be part of a Government who are enabling this country to prepare for entry into EMU and who will decide when it is in Britain's national economic interest to join.

I urge the House to support the motion and to wish the Chancellor and the Prime Minister well at the summit over the weekend.

Question put, That the amendment be made:--

The House divided: Ayes 138, Noes 287.

Division No. 265
[7 pm


AYES


Ainsworth, Peter (E Surrey)
Amess, David
Arbuthnot, James
Atkinson, David (Bour'mth E)
Atkinson, Peter (Hexham)
Baldry, Tony
Bercow, John
Blunt, Crispin
Body, Sir Richard
Boswell, Tim
Bottomley, Peter (Worthing W)
Bottomley, Rt Hon Mrs Virginia
Brady, Graham
Brazier, Julian
Brooke, Rt Hon Peter
Browning, Mrs Angela
Bruce, Ian (S Dorset)
Burns, Simon
Butterfill, John
Cash, William
Chapman, Sir Sydney
(Chipping Barnet)
Clappison, James
Clark, Rt Hon Alan (Kensington)
Clarke, Rt Hon Kenneth
(Rushcliffe)
Clifton-Brown, Geoffrey
Collins, Tim
Colvin, Michael
Cormack, Sir Patrick
Cran, James
Curry, Rt Hon David
Davies, Quentin (Grantham)
Davis, Rt Hon David (Haltemprice)
Day, Stephen
Dorrell, Rt Hon Stephen
Duncan, Alan
Duncan Smith, Iain
Emery, Rt Hon Sir Peter
Evans, Nigel
Faber, David
Fabricant, Michael
Fallon, Michael
Flight, Howard
Forth, Rt Hon Eric
Fowler, Rt Hon Sir Norman
Fox, Dr Liam
Fraser, Christopher
Gale, Roger
Garnier, Edward
Gibb, Nick
Gill, Christopher
Gillan, Mrs Cheryl
Goodlad, Rt Hon Sir Alastair
Gorman, Mrs Teresa
Green, Damian
Greenway, John
Grieve, Dominic
Hamilton, Rt Hon Sir Archie
Hammond, Philip
Hawkins, Nick
Hayes, John
Heald, Oliver
Heathcoat-Amory, Rt Hon David
Horam, John
Howard, Rt Hon Michael
Howarth, Gerald (Aldershot)
Hunter, Andrew
Jackson, Robert (Wantage)
Jenkin, Bernard
Johnson Smith,
Rt Hon Sir Geoffrey
Key, Robert
King, Rt Hon Tom (Bridgwater)
Kirkbride, Miss Julie
Laing, Mrs Eleanor
Lait, Mrs Jacqui
Lansley, Andrew
Leigh, Edward
Letwin, Oliver
Lewis, Dr Julian (New Forest E)
Lilley, Rt Hon Peter
Lloyd, Rt Hon Sir Peter (Fareham)
Loughton, Tim
Luff, Peter
Lyell, Rt Hon Sir Nicholas
McIntosh, Miss Anne
MacKay, Andrew
Maclean, Rt Hon David
McLoughlin, Patrick
Madel, Sir David
Malins, Humfrey
Mates, Michael
Maude, Rt Hon Francis
Mawhinney, Rt Hon Sir Brian
May, Mrs Theresa
Moss, Malcolm
Norman, Archie
Ottaway, Richard
Page, Richard
Paice, James
Pickles, Eric
Prior, David
Randall, John
Redwood, Rt Hon John
Robathan, Andrew
Robertson, Laurence (Tewk'b'ry)
Roe, Mrs Marion (Broxbourne)
Ruffley, David
St Aubyn, Nick
Sayeed, Jonathan
Shephard, Rt Hon Mrs Gillian
Shepherd, Richard
Simpson, Keith (Mid-Norfolk)
Soames, Nicholas
Spelman, Mrs Caroline
Spicer, Sir Michael
Spring, Richard
Stanley, Rt Hon Sir John
Steen, Anthony
Streeter, Gary
Swayne, Desmond
Syms, Robert
Tapsell, Sir Peter
Taylor, Ian (Esher & Walton)
Taylor, Sir Teddy
Townend, John
Tredinnick, David
Trend, Michael
Tyrie, Andrew
Viggers, Peter
Walter, Robert
Wardle, Charles
Waterson, Nigel
Widdecombe, Rt Hon Miss Ann
Wilkinson, John
Wilshire, David
Winterton, Mrs Ann (Congleton)
Winterton, Nicholas (Macclesfield)
Woodward, Shaun
Yeo, Tim

Tellers for the Ayes:


Mr. John M. Taylor and
Mr. John Whittingdale.


NOES


Adams, Mrs Irene (Paisley N)
Ainger, Nick
Ainsworth, Robert (Cov'try NE)
Allan, Richard
Allen, Graham
Anderson, Donald (Swansea E)
Anderson, Janet (Rossendale)
Armstrong, Ms Hilary
Ashton, Joe
Atkins, Charlotte
Banks, Tony
Barnes, Harry
Battle, John
Bell, Stuart (Middlesbrough)
Bennett, Andrew F
Benton, Joe
Bermingham, Gerald
Betts, Clive
Blackman, Liz
Blizzard, Bob
Boateng, Paul
Borrow, David
Bradley, Keith (Withington)
Bradley, Peter (The Wrekin)
Bradshaw, Ben
Brake, Tom
Brand, Dr Peter
Breed, Colin
Brinton, Mrs Helen
Brown, Rt Hon Gordon
(Dunfermline E)
Brown, Rt Hon Nick (Newcastle E)
Browne, Desmond
Bruce, Malcolm (Gordon)
Burden, Richard
Burgon, Colin
Burstow, Paul
Butler, Mrs Christine
Cable, Dr Vincent
Campbell, Alan (Tynemouth)
Campbell, Mrs Anne (C'bridge)
Campbell, Menzies (NE Fife)
Campbell, Ronnie (Blyth V)
Campbell-Savours, Dale
Canavan, Dennis
Cann, Jamie
Casale, Roger
Caton, Martin
Chapman, Ben (Wirral S)
Chaytor, David
Chidgey, David
Church, Ms Judith
Clark, Paul (Gillingham)
Clarke, Charles (Norwich S)
Clarke, Tony (Northampton S)
Clelland, David
Clwyd, Ann
Coaker, Vernon
Coffey, Ms Ann
Coleman, Iain
Cook, Frank (Stockton N)
Cooper, Yvette
Corbett, Robin
Cotter, Brian
Cousins, Jim
Cox, Tom
Cranston, Ross
Crausby, David
Cryer, Mrs Ann (Keighley)
Cummings, John
Cunliffe, Lawrence
Cunningham, Jim (Cov'try S)
Dalyell, Tam
Darling, Rt Hon Alistair
Davey, Edward (Kingston)
Davidson, Ian
Davies, Rt Hon Denzil (Llanelli)
Davies, Geraint (Croydon C)
Dean, Mrs Janet
Denham, John
Dobbin, Jim
Dobson, Rt Hon Frank
Doran, Frank
Drew, David
Drown, Ms Julia
Eagle, Angela (Wallasey)
Eagle, Maria (L'pool Garston)
Ellman, Mrs Louise
Etherington, Bill
Fatchett, Derek
Fearn, Ronnie
Field, Rt Hon Frank
Fitzpatrick, Jim
Flynn, Paul
Follett, Barbara
Foster, Rt Hon Derek
Foster, Michael Jabez (Hastings)
Foster, Michael J (Worcester)
Fyfe, Maria
Galloway, George
Gardiner, Barry
Gerrard, Neil
Gibson, Dr Ian
Godman, Dr Norman A
Godsiff, Roger
Golding, Mrs Llin
Gorrie, Donald
Griffiths, Jane (Reading E)
Griffiths, Nigel (Edinburgh S)
Hall, Patrick (Bedford)
Hancock, Mike
Harris, Dr Evan
Heal, Mrs Sylvia
Heath, David (Somerton & Frome)
Henderson, Doug (Newcastle N)
Henderson, Ivan (Harwich)
Hepburn, Stephen
Heppell, John
Hesford, Stephen
Hinchliffe, David
Hoey, Kate
Home Robertson, John
Hoon, Geoffrey
Hopkins, Kelvin
Howarth, Alan (Newport E)
Howarth, George (Knowsley N)
Howells, Dr Kim
Hughes, Simon (Southwark N)
Humble, Mrs Joan
Hurst, Alan
Hutton, John
Iddon, Dr Brian
Jackson, Ms Glenda (Hampstead)
Jackson, Helen (Hillsborough)
Jamieson, David
Jenkins, Brian
Johnson, Alan (Hull W & Hessle)
Johnson, Miss Melanie
(Welwyn Hatfield)
Jones, Ieuan Wyn (Ynys Mon)
Jones, Ms Jenny
(Wolverh'ton SW)
Jones, Martyn (Clwyd S)
Jones, Nigel (Cheltenham)
Keeble, Ms Sally
Keetch, Paul
Kelly, Ms Ruth
Kennedy, Charles (Ross Skye)
Kennedy, Jane (Wavertree)
Kidney, David
Kilfoyle, Peter
King, Andy (Rugby & Kenilworth)
Kingham, Ms Tess
Kirkwood, Archy
Kumar, Dr Ashok
Ladyman, Dr Stephen
Lawrence, Ms Jackie
Laxton, Bob
Lepper, David
Leslie, Christopher
Levitt, Tom
Lewis, Ivan (Bury S)
Liddell, Mrs Helen
Livingstone, Ken
Livsey, Richard
Lloyd, Tony (Manchester C)
Lock, David
Love, Andrew
McAllion, John
McAvoy, Thomas
McCabe, Steve
McCafferty, Ms Chris
McCartney, Ian (Makerfield)
McDonnell, John
McIsaac, Shona
Mackinlay, Andrew
McNamara, Kevin
McNulty, Tony
McWalter, Tony
McWilliam, John
Mallaber, Judy
Mandelson, Peter
Marsden, Gordon (Blackpool S)
Marshall, David (Shettleston)
Marshall, Jim (Leicester S)
Marshall-Andrews, Robert
Maxton, John
Michael, Alun
Michie, Bill (Shef'ld Heeley)
Mitchell, Austin
Moffatt, Laura
Moonie, Dr Lewis
Moore, Michael
Moran, Ms Margaret
Morgan, Rhodri (Cardiff W)
Morley, Elliot
Morris, Rt Hon John (Aberavon)
Mudie, George
Mullin, Chris
Murphy, Denis (Wansbeck)
Oaten, Mark
O'Brien, Bill (Normanton)
O'Brien, Mike (N Warks)
O'Hara, Eddie
Olner, Bill
Organ, Mrs Diana
Palmer, Dr Nick
Perham, Ms Linda
Pickthall, Colin
Pike, Peter L
Plaskitt, James
Pollard, Kerry
Pope, Greg
Pound, Stephen
Powell, Sir Raymond
Prentice, Gordon (Pendle)
Primarolo, Dawn
Prosser, Gwyn
Purchase, Ken
Quinn, Lawrie
Radice, Giles
Rammell, Bill
Reed, Andrew (Loughborough)
Rendel, David
Robinson, Geoffrey (Cov'try NW)
Roche, Mrs Barbara
Rooker, Jeff
Ross, Ernie (Dundee W)
Rowlands, Ted
Roy, Frank
Ruane, Chris
Ruddock, Ms Joan
Russell, Bob (Colchester)
Sanders, Adrian
Sawford, Phil
Sedgemore, Brian
Shaw, Jonathan
Sheldon, Rt Hon Robert
Short, Rt Hon Clare
Simpson, Alan (Nottingham S)
Singh, Marsha
Skinner, Dennis
Smith, Rt Hon Andrew (Oxford E)
Smith, Angela (Basildon)
Smith, Miss Geraldine
(Morecambe & Lunesdale)
Smith, John (Glamorgan)
Smith, Llew (Blaenau Gwent)
Smith, Sir Robert (W Ab'd'ns)
Spellar, John
Squire, Ms Rachel
Starkey, Dr Phyllis
Steinberg, Gerry
Stevenson, George
Stewart, David (Inverness E)
Stewart, Ian (Eccles)
Stinchcombe, Paul
Stoate, Dr Howard
Stott, Roger
Strang, Rt Hon Dr Gavin
Stringer, Graham
Stuart, Ms Gisela
Stunell, Andrew
Taylor, Rt Hon Mrs Ann
(Dewsbury)
Taylor, Ms Dari (Stockton S)
Taylor, Matthew (Truro)
Temple-Morris, Peter
Thomas, Gareth R (Harrow W)
Timms, Stephen
Tipping, Paddy
Tonge, Dr Jenny
Touhig, Don
Truswell, Paul
Turner, Dennis (Wolverh'ton SE)
Turner, Dr Desmond (Kemptown)
Twigg, Derek (Halton)
Tyler, Paul
Vis, Dr Rudi
Wallace, James
Watts, David
Webb, Steve
White, Brian
Wicks, Malcolm
Williams, Rt Hon Alan
(Swansea W)
Williams, Alan W (E Carmarthen)
Willis, Phil
Winnick, David
Wise, Audrey
Wood, Mike
Wray, James
Wright, Anthony D (Gt Yarmouth)

Tellers for the Noes:


Ms Bridget Prentice and
Mr. Jim Dowd.

Question accordingly negatived.

30 Apr 1998 : Column 517

Main Question put:--

The House divided: Ayes 196, Noes 35.


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