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Lord Taverne: My Lords, perhaps I may start with some points of agreement. On the stability pact, I am sure that we on this side of the House agree with the Government in supporting the view that if a government have to take measures to counter serious recession, then any possible fine can only be imposed by a political decision.

We may also agree with the contention that much the most important guarantee of stability is real convergence. That is the best chance of success for monetary union. We should not wish to see a soft political decision to let in as many states as possible in a last minute dash to be a member of the first group. But if a judgment is made on convergence criteria, then it must be a bona fide judgment. It must not be a case of looking for excuses to disapprove, in order to pacify Europhobes.

I turn to areas of less agreement: the attitude of the Government to the intergovernmental conference. The issues at stake are of great importance to this country. They include enlargement which we have always regarded as a crucial objective of our policy in Europe. They include a re-weighting of the votes in the Council. They include too an effective policy, which will be all the more effective if it is a common policy, on terrorism, asylum and immigration.

Is it not abundantly plain that the Government's present stance will frustrate our aims and harm our interests? It has been made clear by our partners that there can be no progress towards a re-weighting of the votes in Council unless there is also some extension of qualified majority voting. It has also been made plain by our partners that there cannot be enlargement unless there is some extension of qualified majority voting. That is a reasonable proposition if one is looking towards a Community which may be a community of 20 or more states.

If we are totally inflexible--as the Government have announced they intend to be on qualified majority voting (something which has greatly benefited us in the past in the single market)--if we are totally inflexible, we shall frustrate those aims. How can we protect our interests and extend our influence and control over our own

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affairs--which is essentially what sovereignty is about--if we are isolated and boast of our isolation and glory in it and if we go around threatening the veto and the boycott? Have the Government learnt nothing from the fiasco of our policy over BSE? We started with a policy of bluster but it ended in humiliation and surrender. It did not achieve any of our aims and left us with neither influence nor respect.

Finally, on flexibility--flexibility from an inner core--one can understand it if the Government insist on retaining a veto within the institutions of the Community or within the Maastricht Treaty on issues where we wish to remain part of the decision-making process--for example, in foreign policy and defence. But how can the Government justify also retaining a veto on those issues on which we may wish to exclude ourselves from being part of the decision-making process? Is that not yet another recipe for alienating every single one of our friends whom we shall need in times to come?

At its end, the Statement says that the next year or so will be crucial in the relationship between Britain and the rest of the European Union. The Government's policy is setting us on a very dangerous course and we are entering a very dangerous phase in our relationship.

Viscount Cranborne: My Lords, I am grateful to both noble Lords who have spoken from the Opposition Front Benches for the measure of agreement that they have been able to give. First, on behalf of the whole House, I ask the noble Lord, Lord McIntosh, to convey--and, for once, I put it in a spirit of non-party partisanship--to the noble Lord, Lord Richard, the good wishes of the whole House for his recovery and imminent return. It is no reflection on the noble Lord, Lord McIntosh, when I say that I greatly miss his noble friend.

I also say to the noble Lord, Lord McIntosh, that invidious comparisons between my method of delivery and that of my right honourable friend do not bode well for any future career which my right honourable friend might have. I hope that the noble Lord will not draw attention to his remarks in another place.

We must be clear about what underlies a great deal of the rhetoric we have heard from both noble Lords in the past few minutes. It is clear that this party and the two parties opposite differ about our assessment of what is in the interests of this country. We have a clear view of what delivers competitiveness, prosperity and therefore employment. I have to say to both noble Lords that although unemployment is still far too high in this country, the supply side reforms and the other reforms of the past 18 years have begun to make a significant contribution to unemployment, above all, which is rightly top of the list of priorities in the European Union. With the greatest respect to both noble Lords and our partners in Europe, we need no lessons from them about it.

It is in the spirit of that overall observation that I believe it would be right for me to emphasise to both noble Lords that we shall agree, wherever we can, with our European partners; but we shall negotiate as hard as we possibly can to protect our position where we feel

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that our vital interests are at stake. Neither I nor my colleagues on the Front Bench here or in another place are in the least apologetic if, sadly, we find ourselves in a minority of one on a number of issues. However, it is easy for noble Lords opposite to overestimate the areas where we are in that position. A fair number have been recognised clearly in the document produced by the Irish presidency. As the noble Lord, Lord McIntosh, said, it was a good basis for negotiation. I should point out to him that it is no surprise to anyone, least of all my right honourable friend, that the Dublin Summit was a way-station on the way to the final decision in Amsterdam. If I understood the implication of what the noble Lord said, he was asking whether I, as a future Leader of the House in the next Parliament, would be prepared to allow him, as Opposition Deputy Leader, a debate on the parliamentary reserve. Although no Parliament can bind its successor, I believe that I can give that undertaking without any fear of contradiction.

The noble Lord, Lord Taverne, talked about the questions of enlargement, about terrorism, about asylum and about immigration. It would be fair to say to the noble Lord that extending eastwards the security and prosperity that we take for granted is a fundamental task for Europe over the next decade. He and I agree about that, and I believe that he, with the greatest of respect to him, perhaps underestimates how hard this country has worked in taking a lead to create conditions for successful enlargement, particularly by pursuing the reform of both the CAP and the structural funds, for reasons that he will readily appreciate. Again, I do not want him to feel that we are in any way isolated, as he implied on that question--rather the reverse. And the same applies to terrorism. He will have noticed from the conclusions that there was agreement on terrorism, and that again is something that has been a gratifying intergovernmental area of agreement, where we can build a partnership.

As far as asylum and immigration are concerned, I must also say to the noble Lord that we are perfectly clear about our position and always have been. We are perfectly happy for other countries to look at other forms of immigration and asylum control. Our geographical position and our own traditions make it absolutely right for Her Majesty's Government to insist, as we do, that this must be always a question for Her Majesty's Government and the Parliament of the United Kingdom. We have not been moved off that and we have no intention of being moved off that.

The noble Lord talked about an extension of QMV and I should tell him about our position in Amsterdam. Again, our position is perfectly clear and has not changed after Dublin. We see no case for more QMV. We said in our White Paper that the Government would oppose further extension of QMV. We do see, on the other hand, a case for streamlining the Commission and the re-weighting of votes, and that is something that has been under discussion, as the noble Lord knows, for some time.

Both noble Lords talked about the stability pact. It is worth underlining what my right honourable friend said in his Statement. He made it perfectly clear in Dublin

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that the contents of the report by ECOFIN are subject to a UK parliamentary reserve. That is written on the first page of the report and indeed in the European Council conclusions. The reserve covers the issues of a stability pact, agreements on the details of the new ERM and indeed the legal framework. We will ensure that the process for completing parliamentary scrutiny is conducted shortly. I should add for the benefit of both noble Lords that, as my right honourable friend said in his Statement, we do not see that there is any future, so far as British interest is concerned, in seeing the launch of a single currency, whether we are members of it or not, turning into a disaster. That cannot be good for us and it cannot be good for our exports to Europe.

It is for that reason that my right honourable friend the Chancellor of the Exchequer has played a full part in the negotiations in ECOFIN which have led to the conclusions which the noble Lord, Lord McIntosh referred to as being contained in the annexe to the Presidency Conclusions paper. He will see in that--and he is quite right--that the convergence requirements for the "outs" (including ourselves, if we do not join) do not undermine the United Kingdom opt-out. It is still our right to opt in or out and it is not affected one jot by the discussion at Dublin. At Dublin no formal proposals were made on convergence arrangements for the "outs" and, when the proposals are made, we shall of course ensure that they respect United Kingdom interests.

Equally, it is clear that arrangements for the "outs" cannot have a binding effect upon freedom of action over their economic policies. There will be no sanctions on the "outs", just as my right honourable friend the Chancellor of the Exchequer made clear in the wake of ECOFIN.

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