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Lord Jenkins of Hillhead: My Lords, I too, am grateful to the Leader of the House for having repeated the Statement and with such emphasis and animation. There was no question of his gabbling through it in his case. I agree with the noble Lord, Lord Richard, to the extent that this summit clearly marks a considerable strengthening of the probability of a European currency coming into operation by the appointed day. Ten days ago ex-Chancellor Schmidt of Germany told me that he thought the chances were fifty-fifty. Three days ago the British Chancellor of the Exchequer announced with a show of spirit, for a Minister of this Government, that he thought the chances were sixty-forty. The trend is strongly in that direction. Will it not now be sensible for the British Government to work on the assumption that it is more likely to happen than not, instead of trying to convince themselves that it will not and, therefore, constantly be operating on a false premise?

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There are several reasons why we ought to be very nervous about continuing to sing the old and dangerous British lullaby which we have sung for the past 40 years. I can never forget, because it is engraved on my mind, the report of the British delegate to the Messina Conference in 1955. He said that they would not agree but that even if they did it would not happen, and if it happened it would not work. That is the position that we have consistently taken.

Would it not be better to learn a little from experience? To make a mistake once is fully excusable, as in the case of the European Coal and Steel Community. To make the same mistake twice, as in the case of Economic Community, is a pity. To make it a third time, as in the case of EMS, looks more like pig-headed than carelessness. To make it a fourth time, in exactly the same form as the single currency, points to positive perversity.

I would still not predict with certainty that a single currency will come into being. But I say with certainty that any wise British Government ought now to treat it as more likely than not, instead of going on trying to pretend that it is all a chimera. I also predict with certainty that if a single currency comes into being, which I believe is now more likely than not, we shall repeat the dreary and consistent pattern that we have previously followed. We shall probably not join in 1999. We shall probably join about two or three years later, dragging our feet in the meantime and doing it uninfluentially and with the minimum of good will. We saw the result of this at Madrid.

I am sorry to have to say this, but I have the strong impression, speaking with some experience of European councils, that the Prime Minister was brushed aside like a fly.

Lord Stoddart of Swindon: That is a disgrace if he was.

Lord Jenkins of Hillhead: Listen to him, let him have his say, let him have his inquiry. But let the rest of us get on with the business. I do not like to see a British Prime Minister so treated. But that is the reality and it will continue to be so, so long as our European policy is like a feather in the wind.

I make one last point. The second issue that the Prime Minister raised in his Statement was enlargement. It is of great importance. I am strongly in favour of enlargement. But it is a great mistake to see enlargement and a reform of the common agricultural policy as a matter quite separate from a single currency and general European construction.

I make another prediction. If, as is still possible, the single currency collapses, and if Europe is set back on its heels, then I think it very unlikely that enlargement will take place with any speed. Europe will be in a state of stasis; certain countries will go into a defeated, bunker-like mood; and one or more countries will veto enlargement. Enlargement is by far the best hope of reforming the common agricultural policy, if only because of the weight and expensiveness of Polish agriculture.

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It is therefore a great pity to see these matters in isolation. How can Britain believe, being as isolated on the central issue as it was in Madrid, not merely that it can be at the heart of Europe--that sounds ridiculous these days--but that it can have any influence proportionate to that which a country of the United Kingdom's standing ought to exercise?

Viscount Cranborne: My Lords, I am most grateful to the noble Lord, Lord Jenkins of Hillhead, for his approval of the principle of enlargement, and that he subscribed to my right honourable friend's view of the importance of endeavouring to enlarge the Community. I am also grateful to him for stating in terms that enlargement is the best hope of reforming the CAP. That objective, as the noble Lord knows, is very much shared by Her Majesty's Government.

I was most interested, if not altogether surprised, to hear the mantra repeated by the noble Lord, Lord Richard, suggesting that we should (I paraphrase) not listen to the Statement but rather read the communique. I was particularly interested to hear the noble Lord issue what has now become his standard recommendation in the context of the importance of employment creation and how that was identified as a priority task by the heads of state and government who met in Madrid.

The noble Lord referred to page 11 of the presidency conclusions, which he has in front of him. I shall not weary the House by reading out all the employment action recommended on page 11 of those conclusions. However, virtually every single one, including training programmes, is entirely and fully in step and consistent with Her Majesty's Government's existing policies and negotiating objectives in Europe. Indeed, since Essen it has become perfectly clear that it is Europe that has finally realised--perhaps through looking at our own employment and unemployment figures--what policies are needed by developed economies (or indeed any economy) in order to achieve the sort of growth in employment and the decrease in unemployment which we are beginning to see in this country and which are in at least some favourable contrast to the employment figures obtaining in the economies of our European partners.

With the greatest respect to the noble Lord, Her Majesty's Government need no lectures from him on this matter. If he is implying that we are isolated on the policies needed for the priority task, as identified at Madrid, we can pronounce ourselves well satisfied at seeing our partners in Europe wholly with us on what creates employment. Perhaps we should underline that it is the Labour Party that is out of step. In the unlikely event that it ever finds itself in government, it will be interesting to see whether they will be isolated as the only government in Europe peddling socialist policies on employment creation rather than the ones that are prudent and work.

One has only to look at the other principal issues--subsidiarity, deregulation, competitiveness, the single market, enlargement (as I mentioned, as did the noble Lord, Lord Jenkins) and the fight against fraud--to see a litany of issues initially tabled by this country that we

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are delighted to see our European partners taking seriously after some years of persuasion on our part. A few years ago the United Kingdom alone would have been pushing those issues. Now they are common ground. The noble Lord is right to draw our attention to the presidency conclusions. From them it is clear that that is the case.

The noble Lords, Lord Jenkins and Lord Richard, both talked with some intimation of derision about the Government's position on economic and monetary union. I deduce from the noble Lord's remarks--I hope he will correct me if I am wrong--that were the Labour Party to come to government, they would immediately sign up to a single currency. From the noble Lord's present state of immobility, I imagine I am right in assuming that that is what a Labour Government would do.

It is worth emphasising, as the noble Lords, Lord Jenkins and Lord Richard, intimated, that it is perfectly possible that a number of countries will sign up to the third stage of EMU in 1999. What I am not entirely clear about--perhaps the noble Lord, Lord Jenkins, is a little clearer than I--is just how many countries will do so. It is perfectly clear that the Maastricht criteria will still apply. They will not be loosened in any way. There was no mention in the presidency conclusions of that being so. In that case, though we cannot be certain, it appears that the number of countries which will be in a position to join at the third stage in 1999 will not be even a majority of the members of the European Union.

I suggest that it is therefore only prudent for my right honourable friend to draw to the attention of his colleagues, the heads of state and government in the European Union, the questions that must be asked and addressed before 1999 comes along. What is the relationship between those countries that choose to join, and indeed are able to join because they satisfy the Maastricht criteria, and those which do not choose to join? Britain may well be one of them; after all, we secured an opt-out on this, unlike our European partners. But it is at least fair to ask what the relationship will be between the members of a single currency in 1999 and during the transitional phase between 1998 and 1st January 1999; how it will be possible to address the relationship; and, indeed, whether in fact the beginning of a hard-core single currency will not lead to the economies of Europe being driven apart rather than being brought closer together.

I suggest that it is entirely sensible for my right honourable friend to ask those tough questions and for this country to play a full part in the negotiations leading up to the final decisions being taken. They matter not only to those who join but also to those who do not join. Since it is this country which is concerned with the pragmatic questions, it seems only right that this country should ask them.

The noble Lord, Lord Jenkins, suggested that my right honourable friend the Prime Minister was brushed aside like a fly. That is some fly! It is a fly with a remarkable buzz, capable of making clear--and obtaining the agreement of his colleagues--that these matters have to be addressed and will be addressed urgently. Indeed, we

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shall begin to see some of the answers emerge at the next council in Florence towards the end of the Italian presidency. It is perhaps not Her Majesty's Government who are indulging in wishful thinking but rather the two Opposition parties, which hope against hope that Her Majesty's Government will be found not to be the effective negotiator and pragmatist in European matters that they are in fact turning out to be.

4.22 p.m.

Lord Beloff: My Lords, does my noble friend the Minister know of any other country of the European Union where, immediately following a summit meeting, the conclusions have been brought to the attention of the national parliament and discussed by it? Is not the fact that we are probably alone in doing that an additional reason for clinging to our parliamentary democracy and repudiating the idea of a European superstate which, the German Government have informed us, is the real and only reason for pressing for a single currency?

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