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Lord Torphichen: My Lords, did the noble Lord say that Norway would be one of the first entrants into the system?

Lord Roll of Ipsden: My Lords, I thought I heard the noble Lord, Lord Jenkins of Hillhead mention Oslo. Perhaps I misheard him.

6.6 p.m.

Lord Haskel: My Lords, the decision on EMU will be the most important decision affecting British industry to be taken by a British government during the next year. It is a matter about which everybody working in industry needs to be well informed. I would like to congratulate my noble friend Lord Barnett and his committee on preparing such a balanced and readable report.

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Sadly, at present there is only a limited appreciation of what monetary union would actually mean for United Kingdom industry. That is because the debate about Britain's future in Europe has become distorted by the divisions in the Conservative Party and the xenophobia and petty nationalism generated by the beef crisis.

Other noble Lords have spoken of the sad climate in our relations with the European Union. I am sure that many noble Lords are fed up with apologising to business people in the European Union--people with whom we are bound in the single market, and with whom we are attempting to build up a business relationship--for the unnecessarily hostile tone sometimes adopted by the Government. As far as concerns business, that attitude is totally counter-productive. I hope that when he comes to reply, the Minister will not produce the tired, old response that Labour is also divided. The difference is that Labour's Front Bench is united and the Government are split down the middle, and this damages the national interest.

However, business must deal with things as they are and not as they would like them to be. In his memorandum dated 15th July the Chancellor said that the Government are committed to being involved in the preparations for monetary union. So business must assume that monetary union will go ahead sooner or later. Therefore, it is important to consider what are the advantages and disadvantages to business of being an "in" or an "out" and what are the costs and savings.

The noble Lord, Lord Jenkins of Hillhead, has spoken about money transaction costs. Those savings are minor compared with ending the uncertainties of exchange rate variability. Exchange rate speculation is both destabilising and costly, and its removal would make a significant contribution to our competitiveness. Monetary union would allow easy comparability of prices within the area, and thereby clearly demonstrate where we excel.

A further advantage of being an "in" would be that monetary union should reduce the extreme swings we have in this country in the economic cycle, and save us from the added instability that that produces. Industry would welcome the greater price stability that being an "in" might bring. If industry expects price stability, growth and investment will follow. Hopefully, EMU would force governments to follow sensible fiscal policies in the long term so that the volatility of the past would be diminished. The experience of Black Wednesday is etched on everybody's mind and nobody wants to go through that again.

Of what is industry afraid? First and foremost must be the effect on our relationship with the single market. EMU should never for one moment undermine the single market. An enormous amount of money, time and energy has been expended in building up relationships with customers, suppliers and partners in the single market. Nothing must be done to jeopardise that investment. Indeed, monetary union is a logical continuation of that work.

A further point is that hovering half in and half out will be interpreted as a lack of commitment to the single market and a desire to retain the use of competitive

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devaluation as a possible compensation for failure in other areas of business. This is an improper and ill-advised short-term trading position. It must be avoided if we are not to damage our position in the single market. I have no doubt that firms, investors and wage earners will behave differently outside the EMU than inside the EMU, if they believe that devaluation is an option. As the report points out, markets would assume that the UK had a bias toward devaluation and as a consequence the markets would punish us with higher interest rates.

Secondly, I believe that industry is concerned about the exchange rate of the Euro and the US dollar. Britain does more trade with the USA than any other European Union country. So that is a legitimate concern for us. That is why it is particularly important, whether we are in or out, for the Government to encourage work now on the method of calculating exchange rates so that business can begin to get an indication of the likely level of exchange between the Euro and the dollar, so as not to delay plans related to business in America.

Next, there is the matter of the timing and practicalities of monetary convergence. Industry is concerned that deflationary measures are not forced upon us to achieve convergence by a set date. Our performance must be judged over the whole economic cycle and a sensible EMU of ins and outs, as described in the report, will certainly facilitate that.

Then there are the practical economics of monetary convergence. I should like to emphasise that convergence is not only a matter of monetary policy. It is also a matter of employment and the real economy. What is important from industry's point of view is that hand in hand with monetary convergence must go the investment, training and technical progress and management of our companies essential to hold down unit costs. That is to ensure that monetary convergence does not take priority over the real economy, thereby holding back our competitiveness and adding to unemployment. I call for a rounded judgment, not merely getting the monetary numbers right.

Industry is also concerned about losing influence in the single market if we are out. As the single market inside EMU becomes more integrated, there will inevitably be the need for closer co-ordination on matters such as market regulation, social security and tax policy. We must be involved with that.

A further concern is that under the Maastricht Treaty, non-participants in the single currency will be excluded from voting on decisions regarding the administration of the single currency. As the Select Committee's report wisely points out, instead of arguing among ourselves, there are things that we need to be doing. It is of no use to industry for the Government to excuse inaction by saying that monetary union is too distant a prospect for them to have a policy and it may never happen anyway. All that that does is create a policy vacuum which will be filled by consultants second-guessing the Government.

How much better it would be to have a clear and consistent policy which would give industry some stability on which to base its plans for the future,

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knowing that the United Kingdom will play its part in the preparation for monetary union. The European Monetary Institute has prepared a timetable for transition for the banking sector. Industry too needs to be working on a timetable of transition and the DTI should already be laying down guidelines for that as it laid down guidelines for industry's entry into the single market. I hope that the Minister will reassure us on that point.

Because of those arguments, British industry must assume that monetary union will go ahead, whether Britain is an "in" or an "out". Isolation is not an option. Britain can no longer afford to stand and offer advice from the sidelines. We must be at the heart of developments. The strength of the Select Committee's report is that it demonstrates that that is entirely feasible, even if we wait and see.

Of course there are difficulties still to be resolved. But I hope that the Minister will tell us that the arguments about principle are settled. I agree with other noble Lords that the Euro will come, and in preparing for its arrival I recommend the Select Committee's report as essential reading for everybody in industry.

6.15 p.m.

Lord Sheppard of Didgemere: My Lords, at this moment it is very little consolation to me that privately many noble Lords have told me just how nervous they were when they stood up to make their maiden speech in this great and impressive place. Before you, my Lords, you do not have a sturdy shepherd--and maybe in view of today's announcement this is an unfortunate statement--but a sheep ready to run.

I speak against a background of international trade, in which I have been involved for the whole of my life, in the motor industry and more recently in food and drink. Right from the beginning, which goes back a long time to my days when I began with Ford of Dagenham, I learnt a lesson which has stayed with me right up until today (and I hope beyond). It is that if you are going to succeed in business you must spend your time looking outwards and not inwards. To that end, it has been a great pleasure and joy to me as a businessman over recent years to see the removal of protections across the world and the introduction of free trade.

Access to the large domestic market in which we now trade--namely, Europe--has made a tremendous difference. It has given us economies not only of production but also of research and marketing. In strategic discussions, people often ask about the area that one is going for in business. They ask, "Are you going for Europe, for America or for the rapidly growing markets of Asia?" My answer is always the same: yes. In fact, one does not have to choose. Our markets, our customers and our competitors are all increasingly international. They are not restricted by country; in fact, they are not restricted by continent. They are worldwide.

So the first point that I should like to make today is that any discussion that we have on monetary union must take place--as it has so far in this debate--against

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that background. We must assess the impact of economic and monetary union by looking at what it will do to the competitiveness of UK industry (looking narrowly at it) and of all European industry. Can Europe compete in the world and does the single currency help it? That is the fundamental question that will decide the living standards of Europeans for at least the next 100 years and probably for the next millennium.

Some months ago I saw a cartoon in The Times which depicted an emu with the caption "EMU--a bird that cannot fly". I shall not attempt to give an answer or even a view on that at this point. As a businessman one has to keep all one's options open. But in some cases one has concerns which are even more fundamental. Certainly as a businessman I know that if the monetary union debate in Europe means that Europe will be looking inward and arguing, as it has been doing recently and maybe as it will do for some time, the Asians will get so far ahead of us that the debate will be irrelevant.

I speak narrowly as a businessman. I should prefer to see the debate in Europe about how Europe can win worldwide; how European union can expand free trade across the whole of Europe and not just part of it; and how we can forge constructive links with other trading blocs across the world. Let us start building that bridge, which has already been started to some extent, between NAFTA for example, and the European Union. If we are to reduce what I think we would all agree is the unacceptably high level of unemployment across Europe, we must get out and win jobs; we must create jobs. Nobody is going to give them to us. We are only going to do that by being competitive and entrepreneurial and eliminating unnecessary bureaucracy.

The second point I would like to make is one that we sometimes seem to miss--that British business is doing quite well in Europe. We sometimes speak as if we are a failing operation. But we are doing quite well. Of course we can and must do much better. But let us at least approach this issue (which the report of course did) from the basis that we have much to gain and learn from Europe. Our competitors and colleagues in Europe--our fellow Europeans--also have a lot to learn from us, so it is not a one-way mission. It is not Europe imposing on Britain and how Britain responds; we are right in it. I am not certain about being at the centre; I prefer to see us at the front.

I would like to give examples of what I mean. Our successes on inward investment have already been referred to. A lot of countries would love to send regular delegations to Britain to find out how we are achieving that. The major success that British industry has achieved throughout the world as an investor, a trader and an adviser is envied by many European companies.

My role as chairman of London First has involved me in work with inward investment to London on issues such as transport. It has also involved my going around the city in which I was born because people have asked me about places I had not been to for decades. I have been to St. Paul's a bit more recently, but I have not actually looked round it. It was on one of my London

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First visits that I went to St. Paul's, and suddenly I stopped and saw something which is relevant to our debate today. Of course one knows the phrase, "For whom the bell tolls", but I had forgotten that it came from a poem by the great Dean of St. Paul's, John Donne. That poem, as your Lordships know, begins,

    "No man is an Island, entire of it self".
I firmly believe that the UK is not an island "entire of it self". Unless Britain seizes the opportunity and takes its place in leading Europe towards enterprise and towards world free trade, we shall end up chanting another part of that poem: Ask not:

    "for whom the bell tolls; it tolls for thee".
I very much welcome the Select Committee's report. It is, as others have said, a report which makes a major contribution, a balanced contribution--it gets past the slogans--to the debate on how Britain should play a vital part in building a better and more prosperous Europe.

Monetary union, as we know well, is a complex subject. There is not a simple yes or no answer. The timing of Britain's decision is critical, as we heard. We must not drag our feet. On the other hand, do not let us make the mistake which has bankrupted many businesses. We should not rush to answer a question which has not yet been properly defined.

I thank your Lordships for listening to my remarks and for the support I have had since I have been a Member of this great place. I look forward very much to this not being my last participation.

6.23 p.m.

Lord Bruce of Donington: My Lords, it falls to me to congratulate the noble Lord, Lord Sheppard, on his maiden speech to which I listened with very great interest indeed. In fact, in sharp contrast to many of the participants in the debate so far, the noble Lord has been cheerful which, in discussing a serious subject like this, is a very good attribute.

The noble Lord comes to this House almost super-qualified in practically every respect. Not only has he intruded into my own field of accountancy, being on the management side; he has also made a good fist in qualifying from the taxation side. He is, I observe, a Fellow of the Chartered Institute of Secretaries. In fact there is hardly a field professionally in which he has not played an active part. He had a distinguished career at the London School of Economics. Not only was he a student there; now he is a governor and on the advisory board concerned with raising funds for it. He has had a distinguished career in practically every kind of enterprise in the United Kingdom.

I for one congratulate him on his speech. I could go on listing his qualifications. I could for example mention his interest in the Prince's Trust and a whole series of other ventures connected with youth, and still I would not have exhausted his qualifications. I am sure that I speak for all your Lordships when I say quite truthfully that we should be listening to the noble Lord not only on this subject, into which I believe he has a shrewd insight, but also on many others about which he would be able so pleasantly to inform your Lordships.

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I interrupt my tribute to the noble Lord's speech by saying, "Let us be cheerful", for never in the field of economics, indeed in foreign affairs and in all matters connected with the intercourse between nations, their nationals, their language, have I heard so much gloom. Could it be that this shows a certain lack of confidence? I listened to my noble friend Lord Haskel who gave us a very good and faithful account of his views. However, from this standpoint he tended to say that all controversy was somehow wrong, that there is no room for dissent. There is, of course, the graveyard, where there is complete unanimity, but in this House I rejoice that there is argument concerning these very important matters on which we have touched this afternoon.

As my noble friend Lord Barnett has already indicated, I have provided an occasional note of dissent in the activities of Sub-Committee A. It is of course not right that I should in any way reveal the tenor of our deliberations, which are not public, as distinct from the evidence, that is. However, I do not think I should be reproached for saying that I had some 69 amendments to the first draft report and received support for what amounted to some typographical errors, but nothing much more than that. However, in the interests of having the report out before next Christmas I decided not to pursue in any depth the amendments which I argued before the committee.

We have had a very interesting discussion this afternoon. One thing that rather struck me was the support given to those who believed that the mere fact that we were in, compelled us to agree with everybody else. What did not emerge was that, of all the countries in the European Community, we are probably the most law abiding of the lot. I do not think that is in any doubt. I am not prepared to grovel or apologise for my country choosing to adopt a practice which has been endemic in Europe, at any rate since 1963; that is to say, when things get too awkward or we cannot establish a point of view of our own, we take extra constitutional action; we decide on non-co-operation. Anybody would think, from what has been said by some of the speakers this afternoon, that in being unco-operative in order to achieve a specific objective, we have somehow offended against all high Heaven. Examination of the record reveals that most other countries--notably France--whenever it suits have not co-operated. I am certainly not going to grovel in apology by withdrawing my support--shared by my noble friend the Leader of my party in another place--in vindicating the right and the duty of the Government, in certain circumstances, to withhold co-operation.

It has been proved that this country has obeyed the law. It has sought to make certain changes. Why not? Or it has sought to argue certain matters out with other members of the Community. The way that some noble Lords have spoken this afternoon it is almost as though it is a sin to disagree with one's colleagues in Europe. Not a bit of it. Surely for the vitality of the Community and, indeed, for our own vitality, it is necessary that we argue matters out from time to time. I shall not apologise for my country having the temerity, under certain circumstances, to disagree with something that the rest have said. Surely we have not sunk to that level.

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Are we so lacking in conviction that we have lost the right or indeed the inclination to be able to disagree? Fie on it! For my part, I have always adopted the standpoint that if one believes in something, one should articulate it--unless one is ashamed of it, in which case one should shut up. But if one believes in something, one should articulate it and, if necessary, stand one's ground and argue about it. That does not apply only to one's personal life; it applies also to the lives of countries. I hope therefore that that notion can be laid to rest.

It was argued at one point that if we did not go into the European Monetary Union, somehow people would gang up against us. At one time it was thought that even officially we may be out of order. However, on detailed investigation it was found that the actions so far taken by the British Government could not possibly attract any legal retaliation. We have acted quite properly from the beginning and there is nothing wrong in that.

But then the argument began to develop as to whether, though they could not get at Britain legally, somehow the other member states would get round it and make life uncomfortable for us. I am a bit old-fashioned in the sense that I work on the balance of advantages. Bearing in mind that Europe has a trade surplus, both visible and invisible, with this country, it occurred to me that it probably would not want to cut off its nose to spite its face. That seemed a reasonable supposition. Moreover, since the taxpayer directly contributes money into the Community on an average of around £2.5 billion a year and rising, it might have some regard to that as well.

I must admit that I was mistaken. Eventually, mainly due to the eloquence of my noble friend Lord Barnett I became convinced that what he said was undoubtedly true: that there was going to be a lot of unofficial action taken against the United Kingdom because we declined to do something that the other members wanted us to do. I said to myself, "Well, these are rum partners with whom to be in the Community if the first time that we disagree with them on some vital subject or other, they start black-balling us or whispering about us".

On balance, after a while, my noble friend Lord Barnett was so persuasive and some of his colleagues likewise that I came to the conclusion that they were probably right. Then I asked the question: "How comes it that we have partners who would try illegally to do something that they could not legally do against us?" It is a little curious. They do not sound like very good partners to me. It is rather like joining a club and somebody says when one arrives, "I black-balled you. Now we have admitted you, but you had better watch your step because we have got it in for you in one way or another". That cannot be a good club to which to belong. I must assume therefore that it pays us to continue to belong to it, in spite of the fact that most of our trade--visible and invisible--is in countries other than in Europe, and those figures can be proved statistically.

Why should we suddenly bow the knee to everybody? Why should we feel it incumbent on us to explain ourselves to everybody? Why should we be compelled

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on to the defensive in anything that we do, as long as we do what we do in good faith and in what we believe to be the interests of our country? At any rate, that is what my country means to me.

Let us turn to the future. Is it wise, in circumstances when our partners are so devious or assumed to be so devious in these matters, that we continue to rely on any kind of assurances that they give us in regard to our joining the single currency? After all, they may disagree with our attitude in that regard. Why is it, in those circumstances, that we are apparently prepared as a country to part with some of the vital factors of control necessary to exercise any decisive influence on the development of our own economy?

Apparently we are going to agree to our deficit being limited to 3 per cent. GDP and to our total indebtedness being 60 per cent. We are going to agree, within certain limits, as to how much GDP we can have and how low or how high it can get. We are going to give powers to the new European central bank that we ourselves now hold, together with the control of this country's currency reserves. We are going to give control in regard to what types of transaction we will undertake. We are going to give over control of our entire monetary policy. All that remains to us as a country, under those circumstances, is the right to raise taxation up to certain levels and the right to spend within those limits; we shall retain a fiscal freedom.

That does not seem to me to make sense. I am very happy to say that my own party has entered a caveat already, although it is not sufficiently watertight. It has said that, as regards the power of the European central bank, it wants a degree of democratic control. That is stated in the party's policy, but unfortunately the treaty does not permit it. It says that the European central bank should not be interfered with in any way by anybody; it should maintain its absolute independence and no government or body of persons should have any right to tell it what to do. It does not say so only in Article 107; the treaty repeats it in Protocols 5 and 6 for emphasis. I hope that soon my own party will be able to publish its proposed amendments for the IGC in order that this matter may be dealt with properly.

Is it really the case that we in this country, notably our economists, cannot find any way to begin to put forward economic policies to deal with the current development of the mixed economy in the United Kingdom? Is it asking too much for them to be able to do so? There are advantages, of course, because if things go wrong the government in office can then say, "It is nothing to do with us. The European central bank made all the mistakes and we are innocent. We had nothing to do with it". I call that an abdication of responsibility.

The function of the United Kingdom government is to govern and to conduct the country's affairs in a way that makes for the well-being of the majority, if not all, of its citizens. That is their task. They cannot abdicate that responsibility and, least of all, to a country called "Europe" which in some respects

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comprises partners who are quite willing, if the opportunity is there, to do you down if they do not get their way.

6.43 p.m.

Lord Ashburton: My Lords, it is a great pleasure for me to follow the noble Lord, Lord Bruce of Donington, in congratulating the noble Lord, Lord Sheppard of Didgemere, on his maiden speech. I never had any doubt when he joined this House that we should enjoy his contributions and find them not only substantial but amusing.

I speak as another member of the sub-committee of the European Communities Committee which produced the report. Our chairman, the noble Lord, Lord Barnett, introduced the debate and ably chaired the committee. I add my thanks to those already expressed to the noble Lord by the noble Lord, Lord Roll. I was not a member of the committee for the whole period of its existence, but I did hear the majority of the evidence given to it and I participated in the production of the report.

It was an extremely interesting process. I am happy to have been part of it and to have signed the report. I am also happy to say that, since its publication, a number of people whom I have met and who are very knowledgeable of the subject and who are professionally interested in what happens over EMU, have said that they thought it a good report.

The sub-committee's terms of reference were precise and tightly worded. They explicitly excluded the question of whether or not the United Kingdom should join EMU, assuming that it is set up on the timetable now envisaged. Inevitably, the views on membership of EMU of those who gave evidence--and the views of the members of the committee--were, as noble Lords are beginning to hear, diverse and often strongly held. I was extremely interested to note that the opinions were often subjective and proceeded from exactly the same premises to precisely opposite conclusions. Indeed, my own discussions in the business world reveal wide differences of opinion to a surprising extent.

However, later I should like to touch on the possibility of discriminatory acts which might be levied against us, as it were, particularly if we choose not to join EMU at this stage. In doing so, like others, I shall stray a little from the content of the report and say where I stand on the issue of membership.

While there is no time limit to this debate, I would like to proceed in a backwards order by setting out my conclusions and then describing briefly how I arrived at one or two of them. My conclusions are as follows: first, the single market is the most precious achievement of the EU and damage to it would be a severe blow. Damage to our membership of it would be a severe blow indeed to the interests of this country. Secondly, a common currency is not essential for the single market. There are examples of markets elsewhere in the world which demonstrate that. Thirdly, a common currency would nevertheless bring some advantages, mainly in transaction costs, but they are nothing like as large and important as those flowing from the single market. Fourthly, a partial EMU can perfectly well go ahead

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without us participating. Fifthly, our wholehearted participation in the processes leading up to the establishment of EMU and the European central bank, is useful to our partners and essential to our own interests. Sixthly, Germany and France have a political agenda that we do not wholly share. It looks to me as though they are prepared to embark on a large act of faith in pursuit of this agenda. Seventhly, in no circumstances should the UK rule out joining EMU at some stage. Eighthly, we can and should delay any final decision for as long as the present timetable allows while participating to the full in the preparatory process. Ninthly, it should not be difficult for us to join EMU at a later date provided that we have helped to design it.

As to the future of ERM, I understand--and I hope I am right in this--that agreement has largely been achieved on a broad band ERM giving bands of plus or minus 15 per cent. If that is so, I can see no great problems to our being members of it, nor indeed any great advantages in its existence. We have a hard decision to make and there are many strongly held differences of opinion within all sectors of society including business. I believe that the electorate at large is woefully unprepared for that decision.

I reach these conclusions because I want this country to be fully involved in Europe. "At the heart of" still seems to be a good phrase. I do not believe that for us there is any other game in town. I have never heard a convincing or coherent description of what, or where, another such game might be. There are plenty of irritations in being members of the EU and there are worse than irritations which get up our noses. But in the end it is up to us to help Europe from the inside to get things right. Surely, none of us ever felt that full membership of the European Community was not going to involve some acceptance of changes.

I believe that our membership of the world, as it now is, and the fact that we are part of the global interdependent economic system, enormously curtails our freedom of action in economic and other spheres. Sovereignty does not lie entirely with us; it cannot do so. It is not simply membership of the European Union which curtails sovereignty. It is no good our expecting to be able to cherry-pick the most convenient and comfortable aspects of the system for ourselves. It is more than arguable that in the past we would have done well to choose some of the better parts of other nations' systems.

The Franco-German relationship has always been at the heart of the European Community. At its beginning the concept was a political one and it had political ends. It proposed economic means to achieve those ends. It was about the binding together of Germany and France and their neighbours so that conflict would henceforth be impossible. We must always remember that if we are to understand some of the motivations. I have come to the conclusion that the political steam that drives Germany and France to embark on this process--which as far as I am aware has never been attempted before--must be accepted as an extension of the process of Franco-German assimilation.

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I know that what is proposed is fraught with risks. At times there will be terrible political difficulties when governments in any participating country come under pressure from strong local interests to bring about changes in the policy which do not suit participants in EMU as a whole. It will be remarkably difficult to maintain the degree of economic convergence that will be necessary to preserve EMU. I know that the enlargement of the European Union will complicate matters enormously. Germany and France will not make a final decision for a while yet, but I understand what drives them, even if I regard the process on which they are embarking to be one of high risk. I must accept that against all odds they will probably go ahead.

Where does this leave us? In all the circumstances, it will be more likely than not that we will stand aside at this stage. If we do so I hope that we shall wish those who go ahead well, recognising that if their great enterprise succeeds as they hope we may well want to join later. To this end, we must regard the preservation of the single market as our paramount interest. There is no question but that discrimination against those who do not participate in EMU is illegal. The sub-committee had ample confirmatory evidence of that. But there will be temptations aplenty for the "ins" to be swayed by commercial arguments to take action put forward by their own citizens. We all recognise that in the real world discrimination is not easy to police. For example, delays can be just as damaging as refusals and are much more difficult to prove.

We shall have to run our economic affairs in a way that does not provoke retaliation in any way. It seems to me that as a member of all the European institutions other than EMU it would be only sensible, and in our best interests, to do so. We must avoid at all costs the kind of bitterness and misunderstanding that some of our actions have provoked in the past. We must remain at the heart of Europe and keep our options open in respect of EMU. This does not mean that I dissent from the remarks of the noble Lord, Lord Bruce of Donington, as regards willingness to speak up where our interests are crucially threatened. We do not have to be mealy-mouthed about it; we can be grown-up.

As so often happens in life, the decision that one faces is not simply between the right decision and the wrong decision but between the wrong decision and one that is less wrong. I shall not make up my mind finally until nearer the time. But, as of today, for all of the reasons that have been given, I believe that to stay out is right, while I accept willingly and publicly that in due course joining will probably be the right choice for this country. If someone can think of a new name for the Euro, that would be a bonus.

6.55 p.m.

Lord Cockfield: My Lords, my noble and learned friend Lord Howe of Aberavon, who responded so eloquently to the wide-ranging and interesting speech of the noble Lord, Lord Barnett, in introducing the report of the sub-committee, has asked me to apologise to the House for his inability to stay for the remainder of the

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debate, particularly for the closing speeches, because of a long-standing engagement. Perhaps typically, I was rash enough to ask him what the engagement was. I can assure noble Lords that it was an absolutely genuine reason why he could not stay.

As I suspected--and indeed feared--the report of the Select Committee has become a peg on which to hang a wide-ranging debate on every aspect of the United Kingdom's relationship with the European Union, even to raise matters relating to the policy of the Labour Party. (I had hoped that on this occasion as on others we might have been spared that.) I have some reservations about the report, not because I disagree with it--I believe that what it says is absolutely splendid--but because I do not believe that it has tackled the job that essentially it was asked to do.

I believe that from the outset the sub-committee got off on the wrong foot. In paragraph 30 the sub-committee reports:

    "The Committee's terms of reference involve making three working assumptions: about whether EMU will go ahead, when, and which Member States will join".
With respect to the sub-committee, its terms of reference did not ask it to investigate those matters at all or to come to any conclusions upon them. On the contrary, its terms of reference told it specifically what assumptions it had to make. It was told to conduct its inquiry on the basis that EMU would go ahead, and it was to assume that a significant number of member states would not be able or willing to join at the outset. This is not mere logic-chopping. Neither this Select Committee nor any other can forecast the future. That is a matter for prophets and soothsayers--or, at a pinch, the editor of Old Moore's Almanack. All that the Select Committee could do was to make assumptions, and its terms of reference clearly told it what assumptions it had to make.

It may well be asked why I should object to the Select Committee wandering down these pleasant leafy lanes, particularly as at the end of the day it came to very much the same conclusions as I myself would have done. My answer to this question--although it is a very unfortunate answer it is nevertheless an important one--is that the report runs to 45 pages and, for the most part, the first 37 and a half pages deal with matters which the Select Committee was not specifically asked to address and on which it had to make certain assumptions. It is only when one looks at the last half dozen or so pages, beginning with the heading "Implications of a partial EMU", that the Select Committee seriously gets down to the job it was asked to do. As a result, while what the Select Committee says is fine--for the most part, I agree with it--inevitably it is sketchy, incomplete, insufficiently argued and sometimes open to question.

I was fascinated by the fact that in his speech the noble Lord, Lord Barnett, asked the Minister to reply to about 20 specific points. I should have thought that it was the job of the Select Committee to have considered those points and suggested answers to them. But no doubt, as the Select Committee has not guided us on

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those matters--I shall deal with this in some detail in a moment--we shall fall back on the good offices of the Minister, who I am sure will not let us down.

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