Select Committee on Treasury Sixth Report


The challenge

111. As already stated, we agree with the Chancellor that the question of whether to join the Euro is one of the most significant issues faced by Parliament and the nation. If the Government and Parliament decide in favour of moving forward towards membership, then it is the people—in the form of the electorate—who will be faced with the final choice. But how will the public respond to being asked to make such a choice? Will people be sufficiently interested to participate in the debate and the referendum process? Or does recent evidence of voter disengagement mean that there will be only a low turnout? Alternatively, even if sufficiently interested, how confident will individual voters be in making a choice of such importance? Will they feel they understand enough about the issues to make the choice? And will they feel able to balance the political and the economic issues?

112. These questions are important. It should be the objective of the Government—and of other organisations and institutions involved, including the political parties and Parliament itself—to promote as full and as well informed a debate as possible ahead of any referendum. We should be seeking to maximise the level of participation in a referendum and to maximise the extent to which voters feel they have been given the information necessary to cast their vote, based on their knowledge of the issues involved.

113. In order to examine this issue, we included in our programme of oral evidence a range of journalists and commentators, together with witnesses from the BBC and from the Electoral Commission. We also had the benefit, as outlined earlier, of electronic submissions from members of the public,[204] which— although self­selecting—helped to supplement our own experience from constituents and others as to the issues which were of principal concern to the public.

Public interest and increasing public understanding

114. The baseline for current views on whether the UK should join the Euro appears to be that—of those already fairly decided in their view—there is a majority against joining over those in favour. However there is a large proportion who are either undecided or who profess themselves capable of being persuaded either way. These results appear to be fairly consistent across different polls using different ways of putting the question.[205]

115. We note evidence given to us by MORI: "But from the outset, the British public has been opposed to British membership of the European single currency. Tracking the level of support and opposition to Britain's over the past five years shows that while early on there was about a near 20 point gap between opponents and supporters, that gap has widened to a steady two to one opposition."[206] That trend has been consolidated since the introduction of the euro at the start of 2002.

116. Witnesses were reasonably bullish about likely levels of interest and participation in a referendum. Although the low turnout (59%) at the 2001 General Election was widely acknowledged to be a matter of concern and to indicate at least in part some disaffection with the political process, it was felt that the circumstances of a referendum on the Euro would be different[207]. For example, Mr Kaletsky, of The Times, told us "I think when the referendum comes there will be far more interest and the public will be pretty fully engaged, or more engaged and involved than they have been in any of the other European countries."[208] It was noted, however, that political circles, opinion formers and the media had an important role to play. Dr Coyle, of Enlightenment Economics, suggested "It does depend on the rhetoric¼ If everyone who is talking about it says that this is the most important decision our nation has ever taken, then the public is more likely to pay attention."[209] Mr Kavanagh, of The Sun, took the view that in the lead up to a referendum "there will be no shortage of coverage for and against the argument".[210]

117. The Electoral Commission noted that recent opinion polls suggested that people's propensity to vote in a euro referendum was similar to that for a general election[211]. Mr Sam Younger, the Chairman of the Commission, indicated that if the trials of initiatives to increase electoral turnout generally went favourably then they could in principle be applicable for a euro referendum, though in respect of all­postal voting he said that "My own gut feeling would be that it would be a step too far to go into that for a major UK­wide vote at the moment"[212]. The Commission also noted "that there would appear to be significant gaps in public knowledge and understanding" of the issue",[213] adding that its existing research and experience suggested that "¼information provision is a key factor influencing electors' decisions about whether to 'turn out'. Information provision (and especially the absence of information) appears to be especially important to non­voters."[214] Existing legislation does not give the Electoral Commission a power to promote participation in a referendum; specific provision is however being included for this in the enabling legislation for the referendums for English regional assemblies and the Commission stated that it "would expect the Government to make similar provision in any future referendum legislation".[215] We recommend that, were there to be a referendum on the euro, provision for the Electoral Commission to encourage voter participation, and—as we discuss below—to provide objective information, should be included in the enabling legislation.


118. Other witnesses made a range of comments on the extent of knowledge and understanding of voters about the issues involved. In some ways, it was thought that the UK electorate was reasonably well placed. Mr McRae, of The Independent, told us that "I am not too worried about the level of debate and the level of understanding in this country about the issues¼ if you look at the overall level of economic competence we are remarkably high."[216] Mr Kavanagh thought that "at the end of a referendum campaign [people's] knowledge about the issues will have grown enormously"[217]. For the BBC, Mr Damazer suggested that surveys "indicate that the level of understanding of the British public about the mechanics and simple issues surrounding the euro is not as high as we would like it to be", but that "during the course of any referendum campaign, that level of understanding would dramatically increase"[218]. At the same time, it was suggested that there was a wide desire for greater knowledge. Mr Riddell, of The Times, told us "¼the most striking thing of all the focus groups and polling evidence I have seen is the degree of 'We want to know more about the issue'. That is absolutely clear cut."[219]

119. Mr Sparrow, of ICM Research, was more cautious however. He suggested that:

"¼you only have to scratch the surface to realise that people's actual understanding of what it means to change our currency is very shallow indeed.. I think that is a real problem with engaging the public, a broad mass of people, in this issue about the euro; it is simply too difficult a subject for them to understand." [220]

He also thought that "It would be wrong¼ to take at face value the demand by most voters to be informed and imagine they are likely to engage in a real debate in advance of a real campaign" because in many cases such a response will have been made to excuse current ignorance[221]. It must also be recognised, as we have stated throughout this Report, that people's response in a referendum will be as much a response to the politics as to the economics of the debate and that this is likely to be the case however well informed they are about the economic issues.

120. Nonetheless, while we fully accept that a real readiness to learn more about the issues will be far from universal, we conclude overall that there is a need and a desire among the public for a balanced source of information on the economic issues involved in a decision on whether to join the euro, ahead of any referendum. We recommend that the Government and the Electoral Commission give specific attention to examining ways of providing such information.

121. How is this to be achieved? Obviously, the lead role in the debate will be taken by the political parties and the other protagonists for each side. The Electoral Commission will have the duty of registering as 'permitted participants' (these are any bodies, including political parties, intending to spend over £10,000) and for selecting 'designated organisations' (these are existing or specially established organisations, one for each side of the debate, who will be eligible for assistance such as free mailings and referendum broadcasts, and higher spending limits, under the provisions of Part VII of the Political Parties, Elections and Referendums Act 2000). Their campaigns will be widely reported through the media as for any other issue, and the press will be pushing their own views at the same time. Professor Worcester argued that "an important factor in any referendum campaign will be press coverage of the issue",[222] because such coverage was the more significant the lower the salience of an issue in the public mind[223]. Asked whether The Sun's coverage would be "educative or campaigning", Mr Kavanagh replied "I hope it will be both", though he was unsure "how much one newspaper can affect the settled view of the public".[224]

122. But while these campaigns will serve to increase public awareness of the importance of the issue at stake (and thus promote turnout), the public may find them unconvincing as a means of promoting understanding of the issues, since these sources are not those from which they seek reliable, balanced information. Professor Worcester noted that:

"There is little systematic and objective information in any structured way available to policy makers and the citizenry. Nor is there any real forum for people's views to be aired, and little open debate not led by either the protagonists or the antagonists, no objective and trusted 'middleman' leading the debate."[225]

Mr Sparrow was sceptical, however, as to whether it would be possible to find independent figures who could significantly influence the public's understanding of the issues, suggesting that "¼there will be a very limited number of facts, impressions and attitudes that will, in the end, determine it. It comes out of that political debate with the two sides willing to argue either case passionately on both sides¼".[226]

123. Among those cited as sources in which the public would place more trust­perhaps because they are seen, in the words of Mr Whittam­Smith, as "not particularly typecast as having one view or another"—were broadcasters, business leaders and economists[227]. It is possible that distrust of Government announcements might be ameliorated by the knowledge that their arguments for joining had been buttressed by a serious in­depth analysis (ie the 5 tests and the supporting studies); however, witnesses thought this was unlikely, partly because the tests did not really mean much to the wider public in the first place[228]. Dr Coyle suggested that the contribution of economists (and economic issues) to the debate might in practice be weakened by the fact that opinion amongst economists on the issue was so divided.[229]

124. An extra premium is thus placed on the role played by the broadcast media in promoting objective debate in an informative way. The Deputy Head of News for the BBC, Mr Mark Damazer, suggested that, while it was not the BBC's role to increase turnout as such, their hope was that their coverage would encourage people to exercise their civic responsibility and would increase knowledge of the issues[230]. He recognised the potential importance of the BBC's role, accepting that "were there to be a referendum, it would be one of the supreme challenges for public service broadcasting, indeed for any broadcaster" and that it would:

       "take a great deal of imagination, air time and resource during the course of the referendum campaign to ensure that all the BBC's many audiences are as well informed as they would hope to be from the BBC about the issues that are at stake."[231]

He observed that "we have to place and schedule these programmes across all our various networks in a way that gives the audience a chance to find them"[232]. Economists and leading figures from business, to whose explanations and expertise people may be more responsive than to those of politicians and political commentators, might have a particular role to play[233]. The BBC already had webpages dedicated to the euro debate[234]. An overriding issue for the BBC was that their coverage should be impartial.[235]

125. We consider that the role of the broadcast media in promoting informed and educative debate on the issues relating to the euro will be of particular importance during a referendum campaign. We have every confidence that broadcasters will recognise the significance of their treatment of the issue and will live up to their responsibilities. The BBC and other websites could play an invaluable role.[236]

126. We considered whether there were further specific measures which might be taken to promote knowledge and understanding. There may be a case for taking more direct steps to promote the distribution of information, perhaps through the preparation, and distribution to each household, of a public information document setting out some basic information on the key issues on which the public wanted to know more. Dr Coyle told us that she "would like to see a leaflet sent to each household listing a wide range of sources of information".[237]

127. One possibility for preparing such a leaflet might be the Electoral Commission itself. The Chairman of the Commission, Mr Younger, told us that while there was "a role for an organisation such as ours¼ I think I need to be very careful about what it is we do. What we would hope to do in the context of a referendum on the euro is be able to leave the substance of the arguments ¼ to those designated organisations and others, to those who are particularly engaged in the issue."[238] However, the Commission explained that, in connection with the English regional assembly referendums, legislative provision was being made for allowing the Commission to provide voter information itself in the event that no designated organisations had been selected. Although the situation we envisage—where any such information would be in addition to information provided by campaigning bodies—would be different, it does suggest that the principle of a neutral body supplying information might be workable[239]. Another possibility might be a document based on this Report[240].

128. We are under no illusions about the difficulty of finding a means by which an information document could be prepared which would command universal (or near­universal) consent as to content which would not at the same time be so bland as to be almost worthless. It might not be necessary to satisfy absolutely everyone that the document is sufficiently neutral to justify its distribution at public expense, but it would ideally have to satisfy both designated groups and the main political parties, and the process must be safe against legal challenge. Specific provision for such an exercise would have to be made in the legislation establishing the referendum.

129. We accordingly recommend that, as part of their response to the recommendation in paragraph 120 above, the Government and the Electoral Commission, in consultation with the British political parties represented at Westminster and in the European Parliament, should examine ways in which a public information leaflet could be prepared and distributed to each household ahead of a referendum. The leaflet should include summary information on the key issues. It should also include website addresses for a range of other documentation and organisations. We note that, as the legislation currently stands, the issuing of any such document by a public body in the last 28 days of a campaign would be unlawful,[241] and that accordingly the enabling legislation for the referendum would have to remove this obstacle.

130. In making this recommendation, we are under no illusion either that it will necessarily have a dramatic effect. We recognise that­as Mr Sparrow suggested to us[242] ­many people would not read any document, however simply it set the issues out. Nevertheless, if it reached and was found useful by only a relatively small proportion of those genuinely seeking extra information, it would have had some value. Professor Worcester noted evidence from polls that there was a group of very nearly 20% of the electorate who were both open to persuasion by either side on the issue of euro membership and who read no newspaper regularly[243].

Issues of concern to the public

131. What is it that the public might want or need to know more about? It would clearly be naïve to imagine that there is a great demand for the kind of detailed economic analysis of the kind we have received in the written and oral evidence in this inquiry. Nor would there be great purpose in attempting to supply such analyses. But there are certain core issues which feature again and again in the wider submissions we have received[244].

132. For those broadly in favour of the euro, the principal concerns were:

Political: the need for the UK to show more commitment to the whole EU process if it was not to lose influence


  • the ability to influence the development of the eurozone institutions and policies
  • the advantages for business of reduced foreign exchange risks/costs, and hence
  • the prospect of greater foreign investment and better prospects for jobs, in particular manufacturing jobs

133. For those broadly against joining the euro, the principal concerns were:

Political: fears that entry involved a significant diminution in political autonomy and was another step towards a single European state


  • the imposition of inappropriate monetary and economic policy on the UK: concerns about the 'one­size­fits­all' interest rate and lack of convergence
  • the extent to which the current problems facing Germany are attributable to the euro
  • the abandonment of the current successful UK model for monetary/economic governance in favour of less successful and less accountable ones.

134. Most (though not all) responses expressed concerns only from their own side of the argument. Some issues did however receive frequent mentions from both camps (as well as from the uncommitted):

  • the extent to which the decision is as much (or even more) a political decision as an economic one
  • the importance of the level at which sterling would enter the euro: opinion on all sides of the debate noted the significance of getting the entry rate right, with almost all seeking a lowering of the current sterling rate[245]
  • a need for more, or more balanced, information to be made available to help voters to decide: in making this point, a number of responses suggested that currently the debate was in effect a dialogue of the deaf conducted in superficial terms.

Issues which were mentioned but not with great frequency included whether joining was in some sense inevitable,[246] and issues to do with changeover (such as possible inflationary effects). There was relatively little awareness in the responses about what has been called (as discussed earlier in this Report) the 'counterfactual' issue in the event of not joining­i.e. the need to consider, in assessing the UK's economic prospects, not the economy's position compared to the eurozone now but what the situation would be after a few years once it had been decided that the UK was not to join.

135. These concerns tally very closely with those suggested by our witnesses as being those in which the public were likely to be most interested. These included: suspicion that continental Europeans are in some way taking over[247] or that joining the Euro means entering a United Europe, essentially a single state;[248] not joining the Euro means being left out of something it is worth being in;[249] the long­term interaction between politics and economics and the losing of control over interest rates and monetary policy;[250] economic policy—who is going to decide our taxes?;[251] jobs;[252] foreign investment;[253] how well the eurozone is performing relative to the UK[254]and the current problem being faced by some eurozone economies, particularly Germany;[255] benefits for business, especially multinationals;[256] use of the changeover as an excuse or opportunity for price rises.[257]

136. As the earlier discussion in this report has shown, these are indeed important issues. On some of them, it may be that some of the fears­on either side of the debate­can be shown to be largely misplaced. On others, there is clearly room for differing views. It is worth noting that these concerns straddle the political and economic angles to the issue.[258]

137. The public information leaflet we have proposed will need to include information addressing the issues listed in paragraphs 132-134 above, if it is to be effective in responding to voters' concerns for information.

204   See footnote 7 above; about 90 e-mails were received Back

205   Ev 325 and 345 Back

206   Ev 323 Back

207   The fact that the vote would come at the end of a high profile campaign could also mean that- unlike in an opinion poll - the exact wording of the question may make relatively little difference to the outcome. Professor Worcester argued that "At the end of a three- or four- week campaign people know what is at issue, and the people who cast their vote have thought something about it. It is not sprung on them." (Ev 322; Q1228) Nonetheless, the Electoral Commission, who are required by statute to consider the wording of referendum questions, told us it regarded "the intelligibility of a referendum question as critical to engaging voters"; it has issued a number of guidelines designed to ensure that the wording of the question (on any referendum) is as clear and as neutral as possible. (Ev 361 para 17 and Annex B). We note the Commission's evidence that it is important that the question be short and clear; if there is a need to place other information before the voter on the face of the voting paper then this should be in a preamble to the question (though in such a case extreme care would have to be taken that the preambular material was impartial) (Q 1313 ff.). Back

208   Q 3 Back

209   Q 108 Back

210   Q 1254 Back

211   Ev 360 (para 11); see also Q 1330 Back

212   Qq 1331, 1334 ff. Back

213   Ev 360 (para 11) Back

214   Ev 360 (para 12) Back

215   Ev 360 (paras 9-10) Back

216   Q 3; see also Mr Kalestky (Q 3) Back

217   Q 1278 Back

218   Q 1349; see also Qq 1359-1360 Back

219   Q 107; we note also that the motion on the euro passed by the TUC on 15 September 2002 called for factual information on a range of issues relating to the euro and eurozone be put before each Congress prior to any referendum. Back

220   Q 1228 Back

221   Ev 344; Q1228 Back

222   See Ev 359-361 and Q 1343 ff; the issue of spending limits for the various organisations and campaigns has itself been an issue of controversy, but is not a matter for this Report Back

223   Ev 329 Back

224   Qq 1255, 1276 Back

225   Ev 320 Back

226   Qq 1240-1241 and 1248; see also Q 1242 [Mr Kellner] Back

227   See for example Q 6 [Mr Whittam-Smith], Q 107 [Mr Riddell] Back

228   Q 1251 and Ev 344 [Nick Sparrow, ICM] Back

229   Q 55 Back

230   Qq 1353-1356 Back

231   Q 1349 Back

232   Q 1387; one witness suggested that including references to the issues in non-factual programmes, such as soaps and game shows might increase awareness (Q 1252), though another thought that this would "simply turn people right off" (Q 1282). Back

233   Q 1388 Back

234   Q 1389 ff. Back

235   Q 1361 ff. Back

236   Mr Riddell drew particular attention to the potential value of the internet in informing the euro debate (Q 108). Back

237   Ev 17 Back

238   Q 1340 Back

239   Ev 362 Annex A Back

240   Mr Andreas Whittam-Smith, former Editor of The Independent, noted that "Parliament itself might be the body which would publish something that would be something people would trust as being a fair analysis of the two sides of the argument" Q 2 Back

241   Political Parties, Elections and Referendums Act 2000 section 125. Back

242   Q 1249 Back

243   Ev 330; BBC research also pointed to a significant group who neither voted nor watched BBC political programmes (Q 1350) Back

244   Overall, the e-mail responses received broke down roughly 35% in favour of the euro, 45% against and 20% not clearly decided. Back

245   Though it should be noted that many of these responses were submitted at a time when the pound stood at a higher rate than the current rate (see Chart p 5, page 42 above, for change in rate over recent months); we note also the observation by Mr Sparrow that the general public's response to seeing the pound rise against foreign currencies is that "means something good" Q 1244 Back

246   Mr Sparrow suggested that if there were a deep sense of "inevitability" about the euro then this might have been expected to show through in opinion poll results and there was no evidence that it was doing so (Q 1238) Back

247   Q 1235 Back

248   Ev 343 Back

249   Ev 343 Back

250   Qq 1247, 1264 and Ev 344 Back

251   Q 4 Back

252   Qq 55, 1237 Back

253   Q 105 Back

254   Q 4 [Mr McCrae] Back

255   Qq 4, Q 1243 Back

256   Ev 344 Back

257   Ev 343 Back

258   We note that in one of their surveys on opinion on the Euro, MORI asked half its sample about "Britains economic interests" and half simply about "Britain's interests" and found no statistical difference between the responses (Q 1227) Back

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