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Lord Ezra: My Lords, I too thank the Minister for repeating the Statement. I was a little surprised that we should have it because we had a similar Statement on 25th November and we have a full-scale debate tomorrow. Although the importance of the subject perhaps merits two bites of the cherry, three may be a little excessive. Like the noble Lord, Lord Peston, I shall therefore limit my remarks to just a few questions.

Like the noble Lord, I got the impression that the work done at the ECOFIN meeting yesterday was of a fairly limited nature. Only two of the four texts in connection with EMU preparation were considered and apparently no final agreements were reached on those two. Furthermore, somewhat to my surprise, it seems that the Dublin European Council meeting will apparently transact very little business because it was made clear that effective decisions will not be reached until the Amsterdam meeting in June of next year, a point to which the noble Lord, Lord Peston, referred. Perhaps the Minister will be able to explain exactly what is going to happen at the Dublin meeting and whether all is going to be decided at Amsterdam, which is mentioned as being the earliest date for such decisions, so this could probably go on for another six months until the next meeting.

In view of the rather fanciful press speculation, perhaps I may also ask the Minister--it is important that he confirms this--whether it remains the intention that the Government will continue to play a positive and active role in the negotiations. I feel that that is probably the intention, but as virtually every newspaper from the Financial Times to the tabloids has doubted that, I think it is relevant to ask the Minister on this occasion, and in advance of our full debate tomorrow, whether it remains the Government's firm intention to continue to play an active role in those deliberations. Following on from that, would it still be the Government's intention to pursue without ambiguity, whether in or out, a policy for "price stability", "sound public finances" and the avoidance of an "excessive deficit"--I quote from the Statement--and to promote such policy objectives within the EU as a whole? Those may appear to be somewhat redundant

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questions, but in view of this morning's press speculation I am sure that it would help the House to have clear answers to them.

Lord Mackay of Ardbrecknish: My Lords, I am grateful to both noble Lords for what they have said and I shall try to join them in brevity as we shall be having a debate on this tomorrow. Indeed, we seem to be having a number of debates on the issue in fairly short order.

I turn first to the questions asked by the noble Lord, Lord Peston. I expect that the employment report will be attached to the conclusions of the Dublin Summit, so the noble Lord will be able to see it then.

The noble Lord asked me whether things were going slowly. I am not sure whether my right honourable friend the Chancellor has a timetable for such matters, but these are difficult decisions. The definition of "excessive and temporary deficits" is difficult because on that definition will hinge whether or not the procedures fall on top of the heads of any state which breaches the deficit--that is, if it is in the euro. Such definitions are difficult and, as I indicated a week ago on Monday, there is a view--this is clearly seen in the papers--that the Germans would like firm statements on these matters and are keener on "automaticity" (if that is the right word) while other countries think that there should be a little flexibility in case a member state gets into a deficit for purely temporary reasons which should be taken into account. As I have said, these are difficult issues.

The Dublin Summit will have plenty to do. It will consider the progress made so far in this area. As the Finance Ministers will be meeting a week come Thursday (before the heads of government meet), it is possible that more progress may have been made and they may have to consider that.

I think that I have answered questions on ERM and the treaty previously, but when the proposition was made that before one could join the single currency one had to be in the ERM, it was an ERM with narrow bands. No one has interpreted the treaty now that ERM is based on broad bands. As with other factors, it will eventually be for heads of state to decide whether any country joins the single currency. I think that I explained that last week and we shall no doubt return to the matter tomorrow.

I turn now to the points raised by the noble Lord, Lord Ezra. I think that the two matters under consideration yesterday were very important. The legal status of the euro is a very important issue for the continuity of contracts for those states which decide to join the euro. There needs to be a smooth transition between contracts delineated in their currency and contracts which would thereafter have to be delineated in the euro. I am sure that the noble Lord knows that the City of London is very keen that such matters are clearly resolved before there is any more towards the euro. As I have said, the legal status of the euro is a very important issue.

I can assure the noble Lord, Lord Ezra, as I have on a number of occasions, that we shall continue to play a full and active part in all negotiations and discussions. As on a number of occasions, I fully agree with the noble Lord that price stability and avoiding excessive deficits are not only good with regard to a possible single currency but are sensible and should be pursued in any sensible economy.

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4.58 p.m.

Lord Harmar-Nicolls: My Lords, I am confused about the purpose of these various Statements. In my experience, Statements are given to keep Parliament informed of what the Executive are doing. This Statement--and one or two like it--does nothing of the sort. Indeed, the Statement itself said that no agreements were made. I can understand that because the final agreements will be made at the end and after Dublin. Although no agreements were made, the Statement went on to say that we had secured opt-out powers for this country. There has to be some sort of agreement by somebody if we are able to say that that has been re-established because there has been a lot of doubt. Furthermore, the Government say that no agreements have been made and yet progress has been achieved. Progress from where to where? In which direction was the progress? What does it mean?

I do not think that my noble friend or the Government should be easily satisfied with the comments made by those on the Labour and Liberal Democrat Benches. They will agree with whatever is done, provided that it is a move in one direction, which seems to me to lead to federalism or something like it. So their comments about wanting to know more about this can be disregarded. Their interpretation of "progress" is of progress in that direction. The Statement really should indicate in which direction we are progressing and how far we have got. I fully accept that the ultimate decision must be taken later.

Lord Mackay of Ardbrecknish: My Lords, the decisions about the legal basis of the euro and the stability pact are vitally important for the future of this country whether we are in or out. Their importance is obvious if we are in. They are equally important if we are out. The single market and the European Community will remain our single most important trading partner. It is essential to our economy that any single currency created by some member states is stable. That is why I have said on a number of occasions that the stability pact is very important. As I have explained to the noble Lord, Lord Ezra, the legal status of the euro is also important. If my noble friend doubts that, I invite him to ask those in the City of London whether these matters are of vital importance to them.

As regards Statements, when my ministerial colleagues return from Europe having discussed a variety of subjects they usually report to Parliament, in particular the House of Commons. This is done usually by Written Answer but sometimes by Statement. We believe that that is the right way to report these important issues to Parliament in order to keep Parliament informed so that it can express its views. I make no apology for this Statement. My right honourable friend the Chancellor has given Written Answers time without number on his return from ECOFIN meetings. On this occasion he has chosen to

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make an oral Statement because of the importance of these issues and the interest expressed in them in the other place and in your Lordships' House.

Lord Monkswell: My Lords, I, too, thank the Minister for repeating the Statement. I believe that all noble Lords recognise that whether this country is in or out of the common currency regime it is important that it succeeds. Nothing could be worse for Europe than for such a regime to be set up and within a short space of time to find it falling apart. I believe that that sentiment is shared all round the House and across Europe. We have heard from authoritative sources that the present method of setting it up is not viable. My noble friend Lord Desai said that a greater proportion of GDP should be available to the central budget than is currently the case. My noble friend Lord Healey has referred to social instability as a result of the implications of EMU. Perhaps I may ask the Minister whether any work is being done on the transfer of funds and the increase in the proportion of GDP available for budgetary purposes, in particular in terms of unemployment benefit or pension provision at European level, rather than that those matters should remain the sole responsibility of member states, the implication being that the European budget covers less than 2 per cent. of GDP.

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