| Previous Section | Index | Home Page |
6.43 pm
The Chief Secretary to the Treasury (Mr. Paul Boateng): The debate that we have had today is one of fundamental importance, and hon. Members on both sides of the House have made a number of valuable and interesting contributions.
I thank my hon. Friends the Members for Dumbarton (Mr. McFall) and for Warwick and Leamington (Mr. Plaskitt) for their contributions. In particular, I thank them and all members of the Select Committee on the Treasury for their sixth report, to which we responded today and which we recognise as an important contribution to the debate that we are having about the euro. I have no doubt that we will return to it from time to time in the coming months.
The debate has not lacked passion. I was struck by the speech of my hon. Friend the Member for Hackney, South and Shoreditch (Mr. Sedgemore). He made the case for passion in our discussion of these issues. That passion was reflected on the other side of the debate by my hon. Friend the Member for Luton, North (Mr. Hopkins). We had passion, too—of a slightly different sort, but equally so—from the right hon. Member for Wokingham (Mr. Redwood), who, at a stroke, undid any good that the Leader of the Opposition might have been doing in Prague. When today is remembered, in so far as it is remembered at all, it will be for Wokingham, not for Prague, because Wokingham reflected the true nature of the Conservative party and the Conservative Opposition—they have an almost tangible animus against Europe. Indeed, it was almost tangible in the Chamber.
Mr. Redwood: Will the Minister give way?
I pay tribute to the thought and care that went into all hon. Members' contributions, whatever their perspective. I certainly sensed that in the speech by the hon. Member for Chichester (Mr. Tyrie). My hon. Friend the Member for Hackney, South and Shoreditch was good enough to give me a copy of the original speech that he made in 1990. I found the first iteration of his thoughts more acceptable—no wonder, because it consisted of a diatribe against Treasury Ministers and officials. Given the then role of the hon. Member for Chichester, I fancy that he would have been obliged to sit in the box and listen to that speech.
We want the debate to be reflected more widely in the country because of the great significance not only of the decision that we are considering, but of the radical programme of reforms that my right hon. Friend the Chancellor announced to the House on 9 June. Those included a new inflation target; reforms to housing and planning; reforms to achieve greater flexibility in markets for products, capital and labour; and a consultation on a new fiscal policy regime—reforms that are essential to Britain's economic success inside or outside the euro.
In today's debate, as in my right hon. Friend's assessment of the five tests, we made clear the strength of our commitment to and support for the principle of joining the euro and our determination to base a decision on EMU on Britain's long-term national interest. The assessments show that if durable convergence and flexibility can be achieved, the potential gains from joining to trade, business and living standards are, if anything, greater than previously anticipated. But the potential benefits cannot be captured unless we achieve settled convergence between the economies of the UK and the euro area and the UK economy has sufficient flexibility to respond to economic shocks.
It is therefore essential that the five tests be met, because they are the guarantee that joining the euro will not prejudice growth, business investment, jobs or our radical agenda to deliver better public services. That point was made clearly and helpfully by my hon. Friend the Member for Dagenham (Jon Cruddas). He stressed the central importance of convergence and structural reform of the policy framework to our approach to these issues.
Mr. Redwood: Given that the pensions tax has destroyed many pension funds and the telecoms tax has destroyed many telephone companies, does the Chief Secretary worry that extra housing taxes will destroy the housing market, and with it much consumption? Is that a price worth paying for the euro?
Mr. Boateng: The right hon. Gentleman reverts to a favourite theme. I do not know why he attacks the windfall levy and denies the importance of the corporate taxation reforms. The reforms have been well received by those who want to remove distortions in taxation. I believed that that was a concern of the right hon. Gentleman's.
The hon. Member for Hertford and Stortford (Mr. Prisk) suggested that we had a hidden agenda on taxing property. That is nonsense. Only the Conservatives, when they had stewardship of the economy, used stamp duty as a regulator in that way.
Mr. Prisk: Will the right hon. Gentleman give way?
Mr. Boateng: I shall finish my argument first.
No one who has listened to the debate could be in any doubt about the dividing lines on the issue. Some would rule out membership of the single currency on principle, even if joining were in the national economic interest. [Interruption.] Opposition Members cheer that. They reveal themselves through their own mouths. I fear that that approach was characterised by the speeches of the right hon. Member for Wokingham and the right hon. Member for Kensington and Chelsea (Mr. Portillo), from whom one would have hoped for better. His blithe dismissal of the five tests as irrelevant and a cover for a political decision did not do the arguments justice.
Let us consider the Liberal Democrats—at least I can now use the term in the plural. For almost the entire debate, the hon. Member for Yeovil (Mr. Laws), with whom we spent many happy hours in the Committee that considered the Finance Bill, was entirely alone. However, Liberal representation has doubled: two members of the party are present. They urge us to join the euro, regardless of the five tests. Such a course would prejudice our stability, risk repeating past failures of exchange rate management and could return us to the days of stop and go, at the expense of our ambitions for high investment, full employment and high and sustained growth.
We are considering not the "now or never" options that Conservative Members represent, but what takes forward our agenda of concrete, practical reforms that promote stability and dynamism and are right for Britain's future. As my hon. Friend the Member for Brent, North (Mr. Gardiner) said, it is not a question of
being pro or anti-Europe, but of being pro-Britain. The pro-Britain approach is also right for Europe, which can benefit from our reform agenda.Many hon. Members, especially my hon. Friends the Members for Dagenham and for Leicester, East (Keith Vaz), spoke about convergence. Hon. Members asked what could change in the year before the next Budget, when the Chancellor will revisit the matter. As my right hon. Friend made clear, the Government are not in the business of giving a running commentary on that. However, we have also made it clear that we believe that there is a realistic prospect of making significant progress in the next year. We will outline the implementation of several step changes in policy in the pre-Budget report.
Mr. Prisk: Will the Chief Secretary give way?
Mr. Boateng: In a moment. My hon. Friend the Member for Leicester, East requested such a timetable. The Chancellor outlined it in his statement to the House on 9 June.
Mr. Prisk: The Chief Secretary has referred to the need for reform and to the changes that will take place over the coming year, yet he has made light of the question that I and others have asked about whether he believes that property is lightly taxed. The matter is dealt with in the Treasury document to which I have referred, and the Chief Secretary is a Treasury Minister. Is it true or not?
Mr. Boateng: I refer the hon. Gentleman to section 6.102 and 89, which make it clear that there are no proposals for new taxes in the fiscal stabilisation paper. How many times do we have to say that there are no proposals here for new taxes? I have given the hon. Gentleman the answer to his question; he really needs to grasp it.
Important issues relating to the housing market must be addressed. Our agenda is not to attain market structures identical to those of other countries. Every country's market will have unique features, but history shows that the combination of house price inflation and volatility has been a problem for stability. We all know that, and we are determined to do more to entrench stability and to reduce the risk of inflation, irrespective of the decision on the euro. That is right for Britain, and for those who look to the housing market to meet their needs and aspirations. That is why we have asked Professor David Miles to examine the obstacles to the development of a bigger market in fixed-rate mortgages and to make recommendations on how the obstacles can be removed.
That review is taking place alongside major reforms to speed up the planning process to ensure that we give more certainty to developers and businesses, and that we meet the housing needs of the regions, backed up by £22 billion of investment over three years through the Deputy Prime Minister's sustainable communities plan. The Conservatives never put such investment into housing when they had stewardship of the economy. Outside EMU, our reforms will enhance the stability of the housing market and of the wider economy, and, if the UK were to join EMU, a more stable housing
market would increase the compatibility of UK and euro business cycles, facilitating sustainable convergence. That must be right, and we are doing the right thing. It is right for Britain, right for our future, and right for the needs and aspirations of our people.At the same time, we are taking the necessary steps to set the Bank of England a new inflation target based on the harmonised index of consumer prices, which is a measure of inflation that has much to commend it. The HICP provides a more accurate reflection of consumer behaviour than RPIX, and allows for consumers substituting cheaper goods for more expensive ones when relative prices change. This more accurately reflects people's spending behaviour, and is in line with international best practice. That ought to be welcomed by Conservative Members. It gives a more complete picture of spending patterns, as it takes account of spending by all consumers, including the richest earners, foreign visitors and all pensioners. It is the most comparable international measure used by our neighbours in Europe, and it enables people to make sound decisions on pricing and investment in the context of increasingly integrated global markets.
Our objective is to ensure that Britain, as a nation, benefits from those markets, from European reform and from the steps that we have taken to build on the framework of macro-economic stability that has characterised the Chancellor's stewardship of the economy. Conservative Members have made great play of the horrors that they say lie ahead in terms of closer working with Europe. In so doing, they reveal their blindness to the benefits of reform. The Government have consistently supported a prudent interpretation of the stability and growth pact. We have also consistently supported reforms designed to meet the objectives of the Lisbon agenda, for which my hon. Friend the Member for Leicester, East specifically called.
We are determined to safeguard the UK's stability and prosperity, and to ensure that they go hand in hand with a readiness to play our part in Europe's reforms and to build a modern, pro-European political consensus at home. That is why we, as a party, have the confidence to say that our future lies in Europe and that we should lead in Europe, and why the conclusions of the assessment and the package of reforms presented to the House on 9 June represent the right way forward as we work to build greater flexibility and higher productivity, growth and employment in Britain, and a more prosperous and successful Britain in Europe.
It being Seven o'clock, the motion for the Adjournment of the House lapsed, without Question put.
| Next Section
| Index | Home Page |