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2. Mr. Mark Lazarowicz (Edinburgh, North and Leith): What steps she will be taking to promote Scotland's interests in the future of Europe debate. [41516]

The Secretary of State for Scotland (Mrs. Helen Liddell): The Government wish to encourage a wide-ranging debate on the future of Europe in advance of the intergovernmental conference in 2004. I will continue to contribute to that debate. Indeed, the Spanish presidency of the European Union is organising a major seminar on that issue next month in Segovia, where I shall speak.

Mr. Lazarowicz: I am glad that my right hon. Friend is taking part in that conference. As she is aware, one of the key issues facing Europe is enlargement. As she knows, enlargement will mean that more than 70 million

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people will join the eurozone. Does she agree that Scottish business and Scottish jobs are likely to suffer if more countries join the eurozone while the United Kingdom remains outside? Does she therefore agree that Scottish business and Scottish jobs need more than ever an early decision on British membership of the single currency?

Mrs. Liddell: Scottish business and Scottish jobs need to be certain that the economic conditions are right for Britain's membership of the single currency. We are the only Government ever to have said that we have no objection in principle to the single currency, but joining it must be within the context of meeting the five economic conditions set by my right hon. Friend the Chancellor. I acknowledge my hon. Friend's point about enlargement, which may mean something like £175 million per annum coming to Scotland; however, that money will come to Scotland only if Scottish companies are prepared.

Mr. Alex Salmond (Banff and Buchan): Can the Secretary of State identify for the House the precise benefits that will accrue to Scottish workers from the Prime Minister's new right-wing alliance with Silvio Berlusconi? Can she draw on her own experience to warn him of the dangers of becoming entangled with unscrupulous media tycoons?

Mrs. Liddell: I am intrigued that the hon. Gentleman does not think that the Prime Minister should have any contact with democratically elected Prime Ministers. Indeed, as well as working with the Italian Government—I take it that the hon. Gentleman is talking about that Government—the Government have worked with all the other 14 members of the European Union. Consequently, we now play a leading role in the European Union. As a direct result of the Government's policies on a flexible work force, increasing skills, and developing the knowledge economy, we have the lowest unemployment for more than a generation, more people in employment than for 40 years, the lowest interest rates and one of the most prosperous economies in Europe.

What a big difference from what the hon. Gentleman is suggesting—Britain as part of the European Free Trade Association or the European economic area. Under an independent Scotland, our partners would be Iceland, Liechtenstein and Switzerland.

Mr. Ian Davidson (Glasgow, Pollok): Does the Secretary of State accept that Scotland has a greater interest in European prosperity because we have a much greater proportion of trade with Europe than does the rest of the UK? Does she accept that if we consider joining the euro, we must ensure that we do so at the right rate? Joining at the present rate would lock in a degree of uncompetitiveness that would not serve us well in future. Does she accept that the devaluation that would be necessary if we changed the rates in the short term would cause inflation, which would be in no one's interest?

Mrs. Liddell: The Government's policy on exchange rates is that they will fluctuate and find their own balance in the medium term, which is as it should be. I repeat to my hon. Friend the point that I made to my hon. Friend the Member for Edinburgh, North and Leith (Mr. Lazarowicz); it is important that the five economic tests are met. A key issue is ensuring that we have a robust

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place in the European Union and are able to withstand external shocks; I believe that my hon. Friend the Member for Glasgow, Pollok (Mr. Davidson) was referring to that.

The Government's logical position of prepare and decide is a lot more sensible than the position expounded by Baroness Thatcher, who said that we should never enter the European Union and, indeed, blamed everything that has ever gone wrong in Europe on our partners in continental Europe; her angle was narrow-minded, regressive and backward-looking.

Mr. Greg Knight (East Yorkshire): Does the Secretary of State accept that there is a world of difference between promoting Scotland's interests and doing what she has been doing—trying to promote the interests of the Prime Minister? Is it not the case that the Prime Minister wants a united states of Europe, with a single constitution, a single currency, a single foreign policy, a single economic policy and a euro-army? Is not that why Ministers are not standing up for Scotland against the rising tide of euro-federalism? Would not Scotland's interests be better served by a free market, flexible union of member states, to enable Scotland to retain its national identity and its own currency?

Mrs. Liddell: Every time the right hon. Gentleman comes to the Dispatch Box, he displays his lack of knowledge about Scotland. Scotland benefits more than other parts of the European Union from our membership. A greater proportion of our exports goes to our European partners than goes to the United States of America, for example. We have benefited from the Government's policy of playing a leading role in Europe, rather than the previous Government's bonkers policy of trying to pretend that we could pull up the drawbridge on Europe. Businesses the length and breadth of Scotland are appalled by the attitude that the former leader of the Conservative party propounds in her most recent book. I urge him to come to the Dispatch Box and repudiate the views of Baroness Thatcher.

Mr. John McFall (Dumbarton): Can my right hon. Friend assure me that she will take no cognisance of the Conservative party, which wants to come out of Europe? That is the honest message that the Conservatives should be putting across. When she discusses the future of Europe in Spain next month, will she keep in mind the cities of Edinburgh and Glasgow, where the number of financial services jobs now exceeds 250,000? Apt financial regulation and EC directives are extremely important if the industry is to flourish in the future.

Mrs. Liddell: My hon. Friend makes an important point. The financial services sector in Edinburgh is a major engine for growth in the Scottish economy. Last Thursday, representatives of the financial community met my hon. Friend the Economic Secretary and me to discuss liberalisation and the completion of the single market in financial services. One of the great successes of the Barcelona summit was the movement towards completion of the single market in financial services. Already 25 measures have been approved; seven more are likely to be approved by the end of the year. Such measures are crucial to Scotland and represent a great opportunity for Scottish financial services. If we listen to the Conservative

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party, we hear euroscepticism that is damaging to Scotland's best interests. If we listen to the nationalists, their policy is to take us out of the European Union, because two former eurocrats said that perhaps, if they were awfully good, an independent Scotland might get into the EU. That is backward looking and regressive. We speak about the real issues; they speak about separation.

Strategic Rail Authority

4. Mr. Bill Wiggin (Leominster): What recent discussions she has had with the Scottish Executive on how the Strategic Rail Authority's strategic plan will affect Scotland. [41514]

The Minister of State, Scotland Office (Mr. George Foulkes): My right hon. Friend and I have regular discussions with Scottish Executive Ministers on a wide range of matters.

Mr. Wiggin: I am sure that the Minister is appalled, as I am, that Scottish rail passengers—[Hon. Members: "It says here."] It certainly does. I am sure that he is appalled that Scottish rail passengers are again being inconvenienced by strikes by the drivers. What action are he and his counterpart on the Scottish Executive taking to tell the unions that the strikes are out of order? If he does not take action, does he realise that the strikes will continue for two days a week until the end of the year? Can he tell me what part he played in the £34 million handout?

Mr. Foulkes: We are concerned at the way that the Scottish travelling public will be inconvenienced—and have been inconvenienced—by the strikes. Our first concern is for the Scottish passengers. Both the Scotland Office and the Scottish Executive believe that the operators and the trade union representatives should get back round the table as quickly as possible to resolve the dispute. I take the opportunity today to call on the management and the unions to resolve the matter through negotiation as soon as possible.

Dr. Gavin Strang (Edinburgh, East and Musselburgh): Last week, at a meeting with the leader of East Lothian council, the chief executive of Great North Eastern railway confirmed that the company still wants to build a new Edinburgh Parkway station at Musselburgh. Does he agree that such a station will encourage more people to travel to London by rail rather than by air, which itself would be a good thing, and provide a better service for commuters into Edinburgh, which would lead to more people travelling by rail to Edinburgh, which would also be a good thing? Will my hon. Friend give such a station his full support?

Mr. Foulkes: The SRA wants to encourage more people to use the railways and a 50 per cent. increase in passenger kilometres is envisaged. My right hon. Friend will know that the £400 million redevelopment of Waverley station is included, and he will welcome that. I shall certainly take on board his specific suggestion, discuss it with my colleagues in the Department for Transport, Local Government and the Regions and the Scottish Executive and write to him in due course.

Mrs. Jacqui Lait (Beckenham): As the unions have announced another 11 days of strikes against commuters

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in Scotland, will the Minister take any action or will he just talk about taking action? What plans does he have in his busy diary to champion the commuters and stop that disruption to the wealth-creating community in Scotland where growth is still below trend?

Mr. Foulkes: I thought that I answered that in reply to the hon. Member for Leominster (Mr. Wiggin). Unlike the hon. Lady, I am a regular user of trains—trains in Scotland and to and from Scotland—so I understand the concerns. I even travel to Tynecastle by train occasionally, and very fruitful it has been recently. What I said earlier is important. We do not want to interfere. Interfering Governments can create more problems. I suggested earlier that negotiations round the table between the unions and the management should take place as quickly as possible to resolve the matter and, once again, I repeat that that is what should happen.

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