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Lord Mackay of Ardbrecknish: My Lords, I believe that I answered the original Question put by the noble Lord when I said that, although the Government recognised the value of a stable exchange rate, they did not have a target for sterling. Before the noble Lord becomes too concerned about the recent increase in the value of sterling--I understand that since the trough in mid-summer it has appreciated by about 8.5 per cent.--he should remember that this takes sterling back to around the level it was towards the end of 1994.

Lord Peston: My Lords, I do not believe that the noble Lord really expressed a view. I certainly did not predict that sterling would strengthen to the extent that it did. I believe that it is right for me to declare a prejudice. I prefer a strong to a weak sterling. There is nothing more disastrous than the continuous decline in the value of sterling which this country has experienced during the lifetime of this Government. I could not resist that one! I also promise not to guide us back to EMU by asking about the fixed value of sterling if we follow that route.

If the rise in sterling is the result of speculative forces, does the Minister agree that that will yet again be deleterious to British industry on a scale far in excess of anything else that might affect Britain's ability to compete abroad? Further, does the Minister agree that a 10 per cent. appreciation, much as I may like it in a way, cannot possibly be of help to industry in the short term?

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Lord Mackay of Ardbrecknish: My Lords, I do not have to make predictions either as I am not a professor of economics. But I do not believe that the increase in the value of sterling has been caused by speculation. There are other factors at work. As I said in my main answer, these movements are difficult to predict, as the noble Lord has agreed. The Government, together with the Governor of the Bank of England, simply have to take a view every month of the effects of a number of factors. As far as concerns exports, for many months they have been strong. Only this morning there was an announcement of an export order worth £1 billion from Australia.

Lord Brabazon of Tara: My Lords, does my noble friend recall that two of the countries with the strongest exchange rates over the past 50 years or so, Germany and Japan, have also had the two most successful economies?

Lord Mackay of Ardbrecknish: My Lords, my noble friend makes a telling point. Although exchange rates are not the only factor in the success of an economy, it is true that both Germany and Japan, with strong currencies, have been very successful. That confirms the point made by the noble Lord, Lord Peston, that one should not be tempted by the siren song of those who believe that it becomes easier to live if one devalues one's currency.

Lord Ezra: My Lords, does the Minister agree that the Chancellor of the Exchequer is now in a bit of a trap? He is harkening to the advice of the Governor of the Bank of England that interest rates should be increased in order to limit inflation, but, on the other hand, the more he increases interest rates the more sterling will rise and the more difficult it will become for our exporters?

Lord Mackay of Ardbrecknish: My Lords, I believe that the last person who can be accused of being in a trap is my right honourable friend the Chancellor of the Exchequer. There are a number of different factors in the economy. At their monthly meeting the Governor of the Bank of England and the Chancellor have to take into account all those factors. If one looks for the success of the economy, one has only to consider the way in which unemployment has declined year on year for many years in comparison with our European friends and how the number of people in employment has increased. I believe that if the noble Lord looks at those figures he will be a little more optimistic.

Lord Pearson of Rannoch: My Lords, can my noble friend say why he is so convinced that sterling is not suffering some of the problems of the Swiss franc, into which billions of deutschmarks are being poured because knowledgeable people in Germany and elsewhere have formed the firm opinion that the Euro, if it ever comes into existence, will be a weak currency? If sterling is to stay out of that weak currency, may it not attract similar speculation? If so, does that not underline the immense difficulty of the whole project of European monetary union?

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Lord Mackay of Ardbrecknish: My Lords, my noble friend tempts me into discussing European monetary union, which does not greatly surprise me. I thought that I was about to have the exchange that my noble friend Lady Chalker has just had. As I said to the noble Lord, Lord Peston, I do not believe that we are seeing much in the way of speculation. Although I will check later, I do not believe that there is evidence that, like the Swiss, we are getting great inflows of deutschmarks because the Germans are afraid of EMU.

Millennium Site, Greenwich

2.47 p.m.

The Earl of Kinnoull asked Her Majesty's Government:

    What progress is being made on the proposals for the millennium development at Greenwich; and whether British Gas, the owners of the polluted site, are co-operating in accordance with the principles of best environmental practice.

The Parliamentary Under-Secretary of State, Department of National Heritage (Lord Inglewood): My Lords, British Gas is decontaminating the site in line with its responsibilities under the Environment Act 1995. The Environment Agency and the London Borough of Greenwich have approved the remediation strategy and are monitoring the ongoing works. An outline planning application was submitted by W.S. Atkins to the borough council on 31st October 1996 for the construction of the dome and allied buildings.

The Earl of Kinnoull: My Lords, I thank my noble friend for his encouraging reply, particularly the progress of British Gas in cleaning up its heavily polluted sites. In view of the massive funding required from public and private sources amounting to something like £400 million, what is the long-term future for the millennium project beyond the exhibition of two years? Can my noble friend confirm that British Gas has offered the land for long-term benefit as part of its contribution? Finally, does my noble friend agree that among the considerable gains to the Greenwich area, one may be the return of commercial traffic to the river Thames, which was lost about a century ago?

Lord Inglewood: My Lords, the planning application which was submitted on the 31st October on behalf of the operating company was for temporary exhibition use. The purpose is to build durable low-cost structures on the site which have a long-term use. Over the next few years the operating company will liaise with British Gas, English Partnerships and the London Borough of Greenwich about the long-term use of the whole site. It is important to be clear that the proposed use of the site for the exhibition is temporary. The site will then have been decontaminated and have had infrastructure put into it to enable it to have a use beyond the lifetime of

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the exhibition. Obviously, this depends upon the aspirations of the landowner and the London Borough of Greenwich.

Lord Dean of Beswick: My Lords, in his supplementary question, the noble Lord who put the Question on the Order Paper mentioned the required sum of £400 million. I understand from press reports that there has been a governmental promise through Mr. Heseltine that half of that sum will come from lottery funds. Will the Minister ask the Secretary of State for the Department of the Environment, who is handling this matter, whether he will be as generous towards Manchester, whose heart has been blown out by the IRA, and which, so far, has received only peanuts?

Lord Inglewood: My Lords, I shall certainly pass on the noble Lord's comments to my right honourable friend. As your Lordships know, the Government are most concerned about Manchester. Last week some announcements were made to help bring forward the proposals to redevelop the city centre where it was blown up.

Lord Donoughue: My Lords, if one might go a little wider than pollution, does the Minister agree that this has about it the smell of an impending muddle? Here we have a project running late, with a fixed and very public completion date. That seems to me to be a recipe for putting the contractors in control and for cost overrun. I have a basic question that I should like to ask the Minister. With about half a billion pounds to be spent on cleansing the site and a mainly temporary enjoyment of the site, is there nothing in the areas concerning children, the sick, the elderly, or anything else upon which £500 million could be spent which would be of more permanent benefit to the British public?

Lord Inglewood: My Lords, the figure that the noble Lord has given is one that I cannot accept. I want to be absolutely clear for the benefit of your Lordships that we are talking here about a 300-acre site within a 15 minute Tube journey from the centre of London. It was a gasworks, and is seriously contaminated. The proposals have two separate parts to them: this 300-acre site will be decontaminated, infrastructure will be installed, and it will be available to be used in the future. In the short term there is a proposal to put the millennium exhibition on the site. That involves the construction of a dome and other buildings together with a large area of car parking. It is proposed that that will be in place until the end of 2000. Thereafter, the detailed future of the site is unclear; but, as I have already explained, that is a matter for the landowners and the London Borough of Greenwich. The noble Lord expresses some scepticism about the ability to bring this project to fruition within the inevitably constrained time scale. I have every confidence that it will be a case of just-in-time delivery.

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