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Mr. Hogg: Is not another indication of the lack of importance that the Chief Secretary attaches to the

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constitutional issues his refusal to commit the Government to publishing a White Paper on the constitutional implications of the single currency as a prelude to holding the referendum?

Mr. Heathcoat-Amory: My right hon. and learned Friend is absolutely right. Conservative Members understand that it is not good enough simply to talk about economic tests, because joining a single European currency and giving up sterling is not just a question of changing the face on the bank notes; it is about a transfer of powers. That is a constitutional matter. We are owed an explanation and a promise that, before we go any further, a White Paper at the very least will be published and presented to the House.

A useful feature of the creation and launch of the euro on 1 January this year is that it has been accompanied by some candid remarks from other EU politicians about precisely these constitutional implications. It is clear that the launch of the new currency signals a new drive towards political and economic integration.

Mrs. Angela Browning (Tiverton and Honiton): The Chief Secretary said in his closing remarks that a serious debate is going on in Europe about this, but does my right hon. Friend agree that much of that debate is about constitutional matters, and yet not only was the constitution argument not mentioned tonight, or simply dismissed, but the Government have actively tried to suppress debate on it?

Mr. Heathcoat-Amory: My hon. Friend is absolutely right. The Government do not know whether to deny that or ignore it, but it is taking place. We in Britain sometimes pride ourselves on the quality of our debate on those matters, but we are wrong. In many respects, a more honest debate is taking place on the continent, where it is freely admitted that there are those constitutional implications. They know that, at root, it is a political project.

Mr. Bercow: Further to what our hon. Friend the Member for Tiverton and Honiton (Mrs. Browning) has just said, does my right hon. Friend recall, in talking about the constitutional issues, that the former Spanish Prime Minister, Felipe Gonzalez, writing in May of this year, quite explicitly said:

He went on to support it, saying:

    "We need this united Europe. We must never forget that the euro is an instrument for this project."

Would it not be a useful addition to the reading list of the Chief Secretary to have a collection of the former Spanish Prime Minister's speeches in his red box?

Mr. Heathcoat-Amory: My hon. Friend is right. There is an essential deceit at the core of the Government's position on the euro in that it denies that this is at root a political project.

Mr. Plaskitt: Will the right hon. Gentleman give way?

Mr. Heathcoat-Amory: Will the hon. Gentleman excuse me? I want to make progress and I am aware that other hon. Members want to contribute in due course.

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When the German Finance Minister, Mr. Lafontaine, announced last year moves towards tax harmonisation, he was dismissed by the Government as someone who was simply making a private contribution to the debate, even though, as we know, a British Treasury Minister is chairing the EU committee which is charged with eradicating what is called unfair tax competition. I would say in passing that that committee's proceedings are secret. We know that British taxes are under scrutiny by an EU committee chaired by a Treasury Minister, but the House is not allowed to know about it.

We know from leaks that more than 80 tax measures are under consideration, and some of them are British, but the House, which was founded on the supposition that we alone control taxation, is not allowed to know which taxes are under consideration.

Mr. Plaskitt rose-

Mr. Bill Rammell (Harlow) rose--

Mr. Heathcoat-Amory: I shall give way to the hon. Member for Harlow (Mr. Rammell), and then perhaps to the hon. Member for Warwick and Leamington (Mr. Plaskitt).

Mr. Rammell: The right hon. Gentleman is clearly exercised about the committee. How, in principle, is that different from the former Chancellor of the Exchequer, Norman Lamont, negotiating and agreeing the standardisation of VAT rates, as he did in 1991?

Mr. Heathcoat-Amory: Everything that Lord Lamont did was public. The position that he was taking was well known. We had debates in the House about it. That is the difference. We had an opportunity to comment and to vote. In the committee on unfair tax competition, a secret agenda is being drawn up to reverse tax measures passed by the House, some of them in this Government's first Budget. For example, it is rumoured that concessions to the British film industry are now under consideration. They were passed by the House less than 18 months ago, but they now fall foul of the rule against unfair tax competition.

It is not only tax harmonisation that is being considered in Europe. The German Foreign Minister is saying that the European Union should now proceed by majority voting in all areas except important treaty changes. I suppose that the Government will now dismiss him as a deranged individual speaking solely in a private capacity, but he and others are speaking the truth. I do not dismiss German and French Ministers as people who are simply speculating about their private desires and priorities; they are speaking on behalf of their Government and, in the case of the German Minister, after a recent general election, so they are right to highlight the eventual destination of the euro project. It is only the Government who are fooling themselves and trying to fool the public that that is not the case.

Mr. Plaskitt: If, as the right hon. Gentleman makes out, those considerations are all constitutional impediments to sterling's entry to the euro zone, how does he imagine they will dissolve in 10 years?

Mr. Heathcoat-Amory: They probably will not dissolve. It is likely that, when tax harmonisation becomes

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a reality rather than just an aim, that will be a further objection for Parliament and the British people to consider before they make up their mind. The Government's object is to smuggle matters through before they become clear and their implications are fully understood.

Mr. Lembit Öpik (Montgomeryshire): Will the right hon. Gentleman give way?

Mr. Heathcoat-Amory: I hope that the hon. Gentleman will forgive me for not giving way. I promised that I would make progress and I want to cover one more area of policy.

My essential point is that the Government face big issues on taxation in Europe, budgetary reform, the future voting system in Europe and monetary and economic integration, and there is a wide and growing gap between other member states' ambitions and what this country wants and what the Government say that they want. That is where self-delusion sets in. They honestly believe that they can head off all those powerful forces even though those forces are specifically promoted by France, Germany and almost all the other European Union member states.

Rather than confronting the issues, the Government are simply ignoring them because they do not want to be isolated. They are terrified of losing what they call influence, but the best influence that we have in the European Union comes, not from going along with what the EU proposes, but from our example. By avoiding the job-destroying regulations in the European Union and by not harmonising our taxes upwards to European Union rates, over the past few years this country has created jobs as fast as EU countries have been destroying them. That is the golden economic legacy that the Chief Secretary referred to in his speech, and we are proud of it.

The hon. Member for Gordon referred to the exchange rate. When will the Government come clean about their policy on the exchange rate? They smuggled out a document shortly before Christmas about the convergence programme, but they owe an explanation to the House. I have read the document, and it does not broach the issue of the treaty requirement for us to join an exchange rate mechanism as a prior condition to joining the euro. The treaty requirement is not that Britain should have joined the original exchange rate mechanism--that collapsed in 1993. The obligation remains. The decision cannot wait until after a referendum because that is when the Government would want to join the euro. They must start the process now.

Questions to the Government remain. Will the Chancellor decide that we should shadow the euro, and if so, when? The document contains only the usual waffle about exchange rate stability being a product of domestic and macro-economic stability. We all know that, but it does not answer the question of what the Government will do about the fact that they are committed in principle to joining the euro but there is a precondition that they must shadow or join a exchange rate mechanism with the euro.

We want to know--the Minister of State, Foreign and Commonwealth Office, the right hon. Member for Gateshead, East and Washington, West (Ms Quin), who will reply to the debate, will be able to tell us--whether

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the Treasury representative on the Monetary Policy Committee is now being told to make that precondition a consideration in setting interest rates. In other words, will interest rates increasingly be set to suit, not domestic economic requirements, but external requirements? That information should not be published or hinted at in a document placed in the Library; it ought to be explained to the House. The matter goes to the heart of how we control the domestic economy.

As the Government are committed in principle to the huge and irrevocable step to give up our domestic currency and join the euro, why are they so shy about hinting at or explaining the need to shadow the euro or join an exchange rate mechanism? That step could be reversed. Why are they so timid about taking the first steps when they are already committed to the final destination?

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