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The Minister of State, Department of Social Security (Lord Mackay of Ardbrecknish): My Lords, with the leave of the House I should now like to repeat a Statement being made in another place by my right honourable friend the Chancellor. The Statement is as follows:
"I am strongly in favour of full parliamentary debate and scrutiny of these important issues. That scrutiny must be properly completed before any decisions are taken which might have binding effect on this country. What the whole House must want is an informed debate at the right time rather than one based on inaccuracies and innuendo. That is why today I want to clear up the misconceptions and clarify the issues and procedures involved. My right honourable friend the Leader of the House will in due course make an announcement about the form and timing of the debate which must certainly come before the Dublin Summit. I repeat that no binding decisions will be taken in any forum until that debate has taken place.
"Last week, European Standing Committee B considered the latest relevant documents that should be subject to parliamentary scrutiny. It had all the up-to-date relevant legislative documents before it. These were commissioned at the Florence Summit in June, and cover the legal status of the Euro, the proposals for a new voluntary exchange rate mechanism of the european monetary system and the stability pact designed to provide a mechanism to help ensure that participants in Stage 3 of EMU do not run an excessive deficit.
"I have written to every Member of Parliament, setting out the facts about these texts. I have today arranged for further copies of this letter to be deposited in the Libraries of both Houses. I stand by that letter and I believe it to be accurate in every respect. I do not propose to read out the details of the letter but I would once again like to underline four key points about the draft EU legislation.
"First, the opt out from EMU that the Prime Minister negotiated at Maastricht remains entirely unaffected.
"Secondly, everything contained in the EU stability pact--including fines on 'ins'--derives from and was foreshadowed in the Maastricht Treaty.
"Thirdly, unless we join Stage 3 of the EMU, we will retain, as now, control of domestic economic policy. We would still have our existing commitment to endeavour to avoid an excessive deficit but there is no question of any fines or other sanctions being imposed on us for running an excessive deficit.
"I know that some colleagues have raised the possibility that Recital 13 of the draft regulation strengthening surveillance could be used to impose policy obligations or sanctions that can be binding on member states. This interpretation is incorrect. Article 103(5) can only be used to impose detailed rules as to procedure. Any recommendations that might be made under Article 103(4) are non-binding.
"Finally, the stability pact makes good economic sense for the UK and for Europe as a means of making sure that EMU is soundly based, whether we are in or out of a single currency. If we are in, we need to ensure that no other member of EMU falls into excessive deficit or debt crisis which might tend to drive up interest rates. If we are out, we need the Euro-zone to be stable as the British economy is more successful when the economies of our major customers are successful. That is why I am negotiating so toughly in ECOFIN in British interests to get the details right. That is why Parliament must scrutinise properly what I am doing.
"I have always accepted that these documents should be subject to the House's rules on scrutiny. Since the scrutiny procedure will not have been completed by the time the ECOFIN Council of Ministers meets on Monday, 2nd December, I shall maintain a scrutiny reserve at that meeting. There is nothing new or exceptional about that. Scrutiny reserves are often entered by Ministers at many meetings of the Council. I was quite clear in every discussion I had with honourable Members last week that I would maintain a scrutiny reserve in this case until the proper process was completed. That means that nothing of substance can be settled at next Monday's ECOFIN meeting.
"I would like now to turn to the documents referred to in yesterday's Sunday Times. The first of these is a briefing note prepared at the request of the EU Commissioners, Sir Leon Brittan and Neil Kinnock. It was designed to help them be aware of British views, at an early stage of the negotiations, before the Commission's thinking on the stability pact was finalised.
"The note was requested and sent to both of them in confidence. This is because European Commissioners are constitutionally independent, although I am quite sure that other Commissioners regularly receive briefings from other governments. Since someone--I believe the honourable Member for Dunfermline--has seen fit to break that confidence, and put the document in the public domain, I have today decided to release it. I am happy to do so, since it confirms that throughout the negotiations I have shown proper regard for the interests and procedures of Parliament, and a desire to achieve a sensible and acceptable outcome on the
"The paper states that 'the current proposals will not be acceptable to Parliament'. This was correct at the time. The whole point of the document was that it was sent before the Commission had tabled its proposals. The paper makes it quite clear that I was concerned about certain proposals that we feared the German and French Governments might be making to the Commission. It transpired that we were largely mistaken about the French position. In fact, the German position has in negotiation been much more reasonable than we then feared.
"When the Commission later tabled its proposal in the form of the papers European Standing Committee B had before it last week, it reflected British thinking to a much greater extent than before. In particular, it preserved the key principle of political judgment by Ministers being applied before any fines would be imposed on any member state that had joined EMU. The Commission proposal in itself will and can settle nothing. It provides a basis for further negotiation and eventual settlement at European Council, perhaps, but not certainly, in Dublin. I would welcome the views of this House about the position we should take in those negotiations.
"The second document is from the European Monetary Institute, which comprises all the central bank governors of the member states and is sometimes regarded as a precursor of the European Central Bank. It is not a Commission document, nor a council document, nor does it have any legal effect. It is advice on policy sent to the Council of Ministers in confidence. I was not able to communicate this document officially. However, in order to ensure that the House was well informed on its substance, I wrote to the honourable Member for Clydesdale, the Chairman of the Select Committee on EU legislation, on 31st October describing the main points. This paper has now been widely quoted in the press and I have decided to release it today. Honourable Members can see for themselves that my summary of 31st October was an accurate one.
"The document gives opinions and advice on how, in the opinion of central bank governors, a so-called Mark 2 ERM for member states outside an EMU might operate in practice and how the monetary stability of the whole Union might be safeguarded in future. It makes it quite clear that membership and even co-operation on exchange rate matters will remain voluntary. The conclusions of the Florence Council, repeated by the EMI, stated of any ERM, 'membership would be voluntary'. The EMI document also states, 'such closer co-operation would
"At Monday's meeting of ECOFIN, I do not expect and I never have expected any items of EMU legislation to come up for formal adoption. We will, however, seek in good faith to reach a broad measure of political agreement--as we were mandated to do by the Florence Summit. I will maintain the scrutiny reserve to any political agreement. And the results of discussion at ECOFIN will be available to inform the European debate in this House before the Dublin Summit. That meeting at Dublin is the earliest occasion at which any binding decision could be requested.
"Madam Speaker, there are two possible futures for this country. First, at some stage in the future we might move to the third stage of EMU and adopt a single currency. As this Government have always made clear, there could be advantages in such a move. But the associated legislation on the details of EMU must be sensible and effective and suit British interests. That is why it is so important to maintain our ability to participate and contribute to the negotiations now.
"They would represent part of the legislative base on which any future British government might enter EMU. They are part of the detail to be settled before we form our views on the way we should exercise our option. We must never repeat the mistake of abdicating from negotiation so that the structures are designed to meet only the interests of other member states.
"Secondly, we might always remain outside a single currency. Under those circumstances, we will ensure that we retain as now complete control of domestic economic policy and we are not made subject to any new binding legal obligations that go beyond non-binding recommendations of the kind we have already been subject to under the treaty and in practice for the past four years.
"Whether we are in or out, my concern is and will remain to respect the position and traditions of this Parliament and our independent nation state."
My Lords, that concludes the Statement.
Lord Eatwell: My Lords, I am grateful to the Minister for repeating the Statement made by his right honourable friend in another place. We on these Benches are particularly pleased that protests from all sides have made at least one small breach in the Prime Minister's attempts to suppress democratic debate on this vital matter.
As the Minister never wearies of telling us, the Government are keeping their options open and will decide to join if they believe that joining is in the best interests of Britain at the time, given the options available at the time when a decision must be made. However, the Minister cannot evade the fact that the British Government are this very day involved in the negotiations which are shaping exactly what EMU will look like.
At the ECOFIN meeting in Dublin next week, and at the Council meeting in December, the Government will be receiving advice on the future regulation of monetary union from a committee in which British officials are participating today. The Government are therefore taking part today in forming the options that Britain will face, whether or not we decide to join. The framework for the operation of monetary union is being decided now. The Chancellor of the Exchequer has said that Britain is bound by nothing, but that is simply not true. The boundaries of Britain's choices are being determined by negotiations taking place today.
The Statement that we have just heard recognises that the associated legislation on the details of EMU must be sensible and effective and suit British interests. That is why it is so important to maintain our ability to participate and to contribute to negotiations now, and why the House is entitled to know the Government's approach to those negotiations--negotiations which are vital to the economic future of this country, whether we are in or out.
The Financial Times reported this morning that:
On Thursday, the Minister told us that the Government were in favour of a stability pact. He was reluctant to tell us how the Government believe the stability pact should be enforced. Do the Government support the proposition that deficit countries should be fined? If so, at what levels of deficit do the Government believe fines should be levied? Is the political judgment referred to in the Statement to be reinforced by numerical limits on deficits or numerical limits on declines in GDP, which will define when fines should or should not be levied? If deficit countries are not to be fined, what is the Government's position as to what other disciplinary measures would be appropriate?
In considering the treatment of the countries which stay out of the monetary union, we must always remember that the Government have not yet decided whether Britain will be in or out. So far as the Government are concerned, we may as well be one of the "ins" concerned about the actions of the "outs" as one of the "outs" concerned about the actions of the "ins". Given the relationship between "outs" and "ins" referred to in the closing paragraphs of the Chancellor's Statement, does the Minister agree that there should be any rules at all limiting the monetary and fiscal policies of the "outs"? More precisely, if Britain is in, does the Minister believe that the "outs" should be free within the single market to use devaluation to acquire as much competitive advantage over the British economy as they wish? If he believes that there should be rules, what proposals are the British Government advancing for the
control of behaviour of the "outs"? If Britain is out, does not the statement that the stability pact makes good sense for the UK and for Europe as a means of making sure that EMU is soundly based contain the inference that we are intimately concerned with what the actual structure of the regulations for the "ins" will be?
It has been clear over the past few days that the Government are reluctant to allow Parliament to debate these decisions--decisions which are being formulated now. That does a grave disservice to the House and, most importantly, to the future of this country. It is vital that this House and another place should have an opportunity to examine proposals as they emerge to alert the Government to those proposals which might be damaging to British interests and to proffer the advice derived from the enormous experience of Members of this House. Will the Minister give an undertaking that the House will be given the opportunity to consider these matters regularly as they emerge over the next few weeks and months, and will the Conservative Party abandon its grotesque attempts to suppress democratic debate on this matter?
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