Examination of witnesses (Questions 600
- 608)
TUESDAY 25 JULY 2000
THE RT
HON GORDON
BROWN, MR
GUS O'DONNELL,
MR JOHN
GIEVE, MR
ADAM SHARPLES
and MR ED
BALLS
600. And you know it. Therefore, there is a
relationship between single currency and monetary policy being
given over to some organisation and fiscal policy going the same
way, there has to be.
(Mr Brown) Of course the Stability Pact recognises
there is an issue involved in co-ordinating monetary and fiscal
policy but that is completely different—
601. There will be central taxation.
(Mr Brown) Hold on. No, that is completely different.
I have not said that.
Chairman
602. No, he did not say that.
(Mr Brown) You seem to want to draw your own conclusions.
Tax issues are decided in the European Union only by unanimity.
Tax issues are decided not by Euro-x, they are decided by ECOFIN
and by unanimity of the Member States. There is no way that tax
harmonisation can be imposed upon us. This is a matter that requires
unanimity.
Sir Michael Spicer
603. You know in the Maastricht Treaty it will
always be done through qualified majority.
(Mr Brown) No, I am sorry, tax issues are decided
by unanimity. The reason why there was a debate on the withholding
tax was that we had refused to support the withholding tax. We
said that if necessary we would veto this issue. In fact, we persuaded
our colleagues—and it is an example of how constructive
engagement works—that exchange of information on a European,
indeed wider than Europe, basis is a better way forward than harmonising
tax rates. You may wish to persist in trying to tell the British
public that a single currency inevitably means that you pay the
same tax rates as every country in Europe but that is a completely
false picture. It does not even exist in the United States of
America where they have a single currency but they do not have
harmonised tax rates.
Mr Cousins
604. Chancellor, it is clear that during the
period of the French Presidency, the French Government, both the
President of France and the Government of France are going to
seek to lock the euro zone countries into closer co-ordinated
action. That seems to me to be uncontestable. Do you think that
is going to make giving a clearer answer to the five economic
tests easier or more difficult?
(Mr Brown) I think, first of all, that the 1997 Luxembourg
Agreement about the role of the Euro-x Committee and the role
of ECOFIN will continue to be the basis on which we move forward.
Whenever matters of common interest are concerned, they will be
discussed by Ministers of all Member States. That is the agreement
that has been made and that is the agreement which is being followed.
It is hardly surprising that people who are part of a single currency
will want to discuss issues related to the membership of that
single currency. We have never sought to try and avoid that happening.
We have an agreement that has held and it is an agreement which
is, I think, the right thing, that where there are matters of
common interest affecting all the Member States these are discussed
in ECOFIN or what is called the extended Euro-11 by Ministers
of all Member States.
605. Chancellor, the present French Minister
of Finance has made it clear, and the clarity of his remarks must
be on behalf of the French Government as a whole, that he does
intend a broader range of issues like, for example, financial
markets regulation and integration to be decided, debated, a steer
to be set by the Euro Group. Now do you think that puts at risk
the agreement that you have just quoted?
(Mr Brown) No, I do not think it does. There is a
difference between discussing within the Euro Group those matters
which are of interest to the management of the euro by these Member
States and discussing, as happens within the European Finance
Ministers—all 15 of us—those matters which are relevant
to the whole of Europe. For example, there is a group which has
been set up to review the financial services that is called the
Wise Men Group, on which Britain is represented by a very senior
and distinguished former head of international affairs at the
Treasury. That will report not to the Euro-x, that will report
to the ECOFIN and it will report then to the Council of Ministers.
It is quite wrong to suggest that these matters, for example,
of financial sector importance are being excluded from the remit
of the ECOFIN; they are being discussed through ECOFIN and by
a Wise Men Group that we are playing a part in running.
606. Are you monitoring the activities of the
Euro Group closely?
(Mr Brown) It is common convention that is agreed
that at the meetings of ECOFIN there is a full report given to
us with what debate is necessary afterwards on what happens at
the Euro-x meetings. There is no secret to the ministers who are
not part of the Euro Group, who are part of ECOFIN, about what
is happening in the Euro Group, it is reported to us, there is
a debate on it and it is well understood that the work of the
Euro-x is also prepared by the European Monetary Committee, the
European Finance Committee, on which Britain sits. There is a
great deal of dialogue and there is a great deal of common understanding
and all the issues that need to be discussed by ECOFIN are discussed
by ECOFIN.
607. So you find yourself like a Select Committee
Member, you can ask questions?
(Mr Brown) No, not at all. We participate in all the
discussions that are relevant to Britain. I quite understand that
the members of the euro have got issues relating to the management
of the euro that they will want to discuss as the 11, now the
12, but we do not believe that we have been excluded in any way
from the reports about what is happening or an ability to debate
all the matters of common interest that affect us as Members of
the European Union. I think what we achieved at Luxembourg was
the best way forward, that matters of common interest come to
the 15.
Chairman
608. Thank you very much, Chancellor, for the
way you have answered the questions and for the length of the
period over which you have answered questions.
(Mr Brown) Thank you.
Chairman: Thank you.
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