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13 Jan 1999 : Column 369

UK Role in Europe

Mr. Deputy Speaker (Mr. Michael Lord): I must tell the House that Madam Speaker has selected the amendment in the name of the Prime Minister.

7.14 pm

Mr. Malcolm Bruce (Gordon): I beg to move,

I begin by welcoming the Chief Secretary to the Treasury to his new role and--although she is not here--by congratulating the new Paymaster General on her, perhaps unexpected, promotion.

Mr. Menzies Campbell (North-East Fife): The Paymistress General.

Mr. Bruce: I think she is still called the Paymaster General. I hope that they will engage with us in the debate, even though this is the Chief Secretary's first outing. Nevertheless, it is a pity that, over the past month, the internal warfare of the Government has been a distraction from key policy issues facing the country--not least, during the middle of the mayhem, the introduction of the euro among 11 members on continental Europe: a matter of crucial importance to the future of this country.

In relation to the euro in particular, the lack of clarity on policy--not merely the chaos in the top echelons of Government--has been responsible for what I can only describe as a very low profile for the Chancellor and his team during that crucial episode. The Chancellor's own contribution to the relaunch of new Labour this week was a speech on Monday--I read the entire text--which failed even to mention the euro. In the first weeks of this new year, the Chancellor of the Exchequer did not even mention the euro--even though the speech was billed by the Chancellor himself as a look at

I am sorry that the Chancellor will not seize the opportunity that we have given him today, since the launch of the euro, to shed some light from his perspective on the Government's position on the matter. That is in no way to denigrate the Chief Secretary's contribution to the debate. I wonder whether the Chancellor is still being distracted by the internal divisions within the Government. The funny thing about the Chancellor's

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speech is that, although there was no room to mention the euro, he did find space on page 5 to emphasise that action was needed urgently to tackle what he called the

    "culture of adversarial industrial relations in the workplace."

I just wonder whether that was a reference to his own workplace.

On the same page of his speech, the Chancellor said that he wanted to bring to an end the era of "absentee government". That seems particularly resonant when we are talking about the Government's handling of the euro. It seems to me, and to my party, that "absentee government" is precisely what the country is being offered in relation to this hugely important issue--absentee government when it comes to policy conviction or serious preparations, and even at the launch of the euro itself, when the Chancellor just decided to stay away. He is absent again today, ducking the first opportunity to tell us what the Government are doing about this central issue. So much for the Prime Minister's claim that the Government are returning to dealing with substance.

It is sad and extraordinary that, in the days that marked the beginning of this project, Britain's Chancellor was lying low at home in Scotland--where, incidentally, according to today's edition of The Scotsman, enthusiasm for the euro is a lot greater than in the rest of the UK; opinion is evenly divided. Interestingly enough, while the Chancellor was keeping quiet in Scotland, the shadow Chancellor was apparently touring the Pacific on business for an American investment bank. We had absentee government from the Chancellor and absentee opposition from the Conservative party. That is what Britain is getting on the issue of the euro.

My party regrets that the Government have not taken a clearer position and made greater efforts to convince the public of the potential benefits. We unashamedly regret the fact that not enough is being done to prepare Britain for the option of joining. The Chief Secretary will no doubt respond to that, but the Government's position, according to the Chancellor, is that they are determined to "prepare and then decide"--to put in place the necessary preparations while making absolutely no commitment on the final decision.

Would not a sensible Government decide first, and commit itself to, when, rather than if? Surely the logical decision would be to decide and then prepare, rather than the other way round. It is simply impossible for the Government to prepare seriously for the euro while remaining committed to a policy of indecision.

The Chancellor's approach means that what is being done by the Government tend to be only the small things that are not central to convergence or to preparation, with the rather big things being left undone. In the past few days, I have had a number of discussions with large and small businesses in Scotland and in England, and the definite response that I received was that people are looking for clarity and a clear lead from the Government on business decisions. How can anyone expect the private sector--hard-headed business men and business women--to invest serious amounts of cash in preparations that could turn out to be simply a waste of time? As a representative of one organisation said to me, if the Government are not prepared to tell us what they intend to do, why do they expect us to put our money where their mouth is not?

Jacqui Smith (Redditch): In the interests of clarity, will the hon. Gentleman confirm that the Liberal

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Democrats believe that, regardless of the British economic interest, regardless of convergence criteria and regardless of where we are in the economic cycle, we should rush into the euro now?

Mr. Bruce: No. I am sorry that I gave way.

I should tell the Chief Secretary that "prepare and decide" is a political strategy to get through the next general election; it is not a sensible economic strategy designed to promote the national economic interest. My only comment on the intervention of the hon. Member for Redditch (Jacqui Smith) is that the Government must make clear their position if they are to provide leadership in the national economic interest.

We have rehearsed many times in the House the arguments for and against the euro in principle. That is not the subject on which I shall focus now. We know where most of us--although perhaps not the Government--stand on the issue. I ask the Government to do four specific things to advance preparations for the euro.

I hope that, on his first outing, the Chief Secretary will engage with us on these four points and give us four specific answers. His two new Labour predecessors proved to be careful and competent batsmen who could be relied on--that was their characteristic--to stay safely at the wicket and play a straight bat. I hope that we can use our debate to advance understanding of Government policy and to make some constructive suggestions, and I urge the Government to respond. If the debate has been worth while, it will leave us better informed about Government policy and what the Government propose to do to plan and prepare.

My first question relates to the Government's target for inflation. If we are to join the European single currency, we will eventually need to move to monitoring or targeting in terms of the harmonised index of consumer prices, as used in the euro zone. That raises important questions about the composition of different inflation indices, which may reflect different spending patterns in different member states, and how a new target will be defined.

According to one or two reports that appeared over the new year period, the Government seem to be briefing some newspapers on the matter already. I was asked to contribute to a discussion on it on "The World at One" around new year. Are the Government committed to introducing a target for the harmonised measure of inflation during this Parliament? What issues are the Government examining in that connection? When will we have an announcement on the matter, given the important effect that it would have on monetary policy, inflation expectations and the Bank of England's inflation target?

My second point relates to the stability and level of the pound. The Government are well aware that our membership of the euro could be blocked, at least for a time, if existing members cannot be shown a sustained period of stability in our exchange rate in the run-up to membership, or if they believe that the pound is fundamentally misaligned. The Government are sometimes a little complacent in assuming that that issue does not need to be addressed.

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I draw the attention of the House to an article in The Independent today, which I suspect did not arrive there by sheer chance. It claims that the Treasury has submitted an unpublished report on the matter to the European Commission. When is the report to be made available to the House? [Interruption.] I hear that it is in the Library, but it is described in The Independent as "an unpublished report".

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