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Lord McIntosh of Haringey: My Lords, we have not divested ourselves of control over interest rates. We have said that the short-term decisions on interest rates shall be the responsibility of the Bank of England, which
will in turn act in accordance with criteria having particular reference to inflation which will be set by government. That is not abandoning responsibility in any sense of the word.
Lord Bruce of Donington: My Lords, many of us will be most grateful to the Government for having made such a clear Statement this afternoon. One thing is absolutely clear; namely, that we have at least four years during which informed debate can take place, not only in this House and in another place but also throughout the country. Can my noble friend say whether the Government will use their best endeavours, not least by example, to prevent the arguments that will be forthcoming from becoming sloganised instead of being examined critically on the basis of the facts as they become available?
Further, can my noble friend say whether the Government are prepared to accept responsibility for making as many facts as possible, not slogans, available to the whole country--and, indeed, to this House and another place--so that we shall be able to arrive at rational decisions while respecting the views of others, but nonetheless be able to speak on the basis of our own convictions based upon the facts which are produced to us for our consideration?
In that connection, can my noble friend say, finally, whether the Government will do as their predecessors did in 1984 and make available to this House and another place a cost-benefit analysis of our developing relations, not only with Europe but also with the rest of the world? Speaking personally for a moment, I should say that the Government have my utmost goodwill. I hope that we shall not have sonorous platitudes from them that pass for statesmanship, but that we shall have statements of real intention and of real honesty.
Lord McIntosh of Haringey: My Lords, I am deeply grateful to my noble friend for his constructive contribution to the debate. Indeed, I would be the last person to say that there should be any inhibition in this House or anywhere else on informed debate. My noble friend was right to draw the attention of the House to the need to avoid sloganising. My noble friend asked whether we would publish a cost-benefit analysis of the issues that face us in preparing for membership of the European monetary union. The Treasury document referred to in the Statement, which my noble friend will not yet have had a chance to read, is very much a precursor to the kind of cost benefit analysis that he requests. It would not be a good idea for us to be publishing such cost-benefit analyses at regular, predetermined intervals. However, as information becomes available which is relevant to the debate, we shall of course make it available to the public and to Parliament.
While talking about informed debate, I must emphasise the fact that we are not simply embarking upon a period of four years, or whatever, of debate; we are embarking upon a period of preparation. Unless we use the time available to us for preparation for entry into EMU, the question which we put to Parliament and to the people in a referendum will be meaningless. There
is no point in putting forward a question to which the answer is, "Yes, we would like to do it, but we are not ready". It must be a period of active preparation rather than a period of theoretical debate, however well informed.
Lord Howell of Guildford: My Lords, the noble Lord said earlier that it was in Britain's national interest not only that we should enter successfully when we do--indeed, that is obvious--but also that it is in our national interest that the single currency system as a whole should work in the longer term. Can the noble Lord tell us what we are to do to contribute to that task, whether from a position of "out" or "pre-in" or "in" the system, given the fact that the whole system will remain extremely fragile for many years; that there is not much convergence throughout the whole of Europe let alone between Britain and the continental economies; that there is very little labour mobility; and that we remain extremely vulnerable to the major kind of shocks that nearly destroyed the old ERM and which could destroy us again, as threatened by Asia?
Lord McIntosh of Haringey: My Lords, I am grateful to the noble Lord for his question. The Statement refers to our responsibilities in the first six months of the presidency next year and then subsequently for ensuring that EMU does work, even during the period when we are not members. Although we take part in the work of the European Monetary Institute at present, that will cease when its responsibilities are transferred to the European Central Bank. However, ECOFIN will carry on and we will still be a part of it. Discussions and decisions on the single market will continue and we shall remain part of that process. It will still be the case that trade barriers within Europe will have to be dismantled and we shall play a part in the decision making as regards that dismantling. In all of those areas we shall still play an active part, as we shall in the Council of Ministers, on decisions on trade between the member states of the European Union and the operation of the single currency. It is difficult to be more precise at the moment about the way it will work until we see how the UK presidency proceeds. However, I can give the noble Lord an assurance that we shall seek to be closely involved in these decisions and to make sure that nothing happens that will rule out our subsequent entry when the time is right.
Lord Taverne: My Lords, is there not a basic contradiction and inconsistency in the Government's position because despite the encouraging words, fundamentally there has been no commitment? Can the Government really expect industry to spend tens of millions of pounds--and in some cases hundreds of millions of pounds--on preparation for an event which according to the Government may never take place?
Lord McIntosh of Haringey: My Lords, I do not know what a commitment is if it is not the commitment that has been declared this afternoon. We have declared for the principle of monetary union. We have declared that there is no constitutional bar and that the unambiguous economic benefit to this country is the
overriding criterion. But we have also said--as we have always said--that this is a decision of such importance that it has to be a decision for the British people. If we were to abandon the triple lock and if we were to abandon the principle of a Cabinet recommendation to Parliament, and then a recommendation through a referendum before legislation is introduced, we would abandon the pledge we have already made. We cannot go further than we have done in ensuring that this is a democratic decision while at the same time ensuring that it is realistic in economic terms.
Lord Desai: My Lords, I wish to ask my noble friend about the criteria for convergence as our inflation rates have converged and our unemployment rate is better than that of Europe. Are we now to consider only interest rates; that is, is it when interest rates converge that we shall think we are in sync? Are they short-term interest rates or long-term interest rates? Do we wait for a complete cyclical agreement to rejoin after a full cycle has been gone through, in sync, or do we do so before that happens?
Lord McIntosh of Haringey: My Lords, cyclical convergence as we have described it is wider than inflation rates or indeed inflation rates plus interest rates. I do not think our inflation rates have converged. It is certainly not true to say that our short-term interest rates have converged with those of most other European countries. My noble friend is of course quite right that one of the major benefits of a single currency will be the reduction of longer-term interest rates. We saw some benefit in that direction immediately after a government took over who were prepared from the beginning to re-examine the question of European monetary union. As to my noble friend's specific question about how convergent economic cycles have to be, the answer is that they can never be completely convergent. The judgment we are making now is that the lack of convergence between our economy and that of other European countries is so great that the economic benefit, which is our fundamental criterion for membership, simply does not exist at the moment. In answer to my noble friend's final question, it would not have to be seen through a whole cycle in order to be proved. Indeed the whole thrust of the Government's economic policy is to avoid the kind of cyclical boom and bust which has been the characteristic of our economy for so many years.
Lord Campbell of Alloway: My Lords, can the noble Lord confirm quite categorically that the commitment of this Government is that the debate will ensue on the basis of full factual information, as proposed by the noble Lord, Lord Bruce of Donington, as to when and if it is right to go in, and that we will not go in unless it is considered, on objective analysis, that it is--as put quite simply by my noble friend--in the interests of Britain?
Lord McIntosh of Haringey: My Lords, unless there is some trap which I do not expect from the noble Lord, Lord Campbell of Alloway, I think I can agree with him. However, I shall have to read his words carefully. I do
not know whether the noble Lord has ever appeared on those television programmes where one is asked the same question 10 times in the hope that on one occasion one will be out of sync, and that answer will be taken up as it is in conflict with the others. However, in principle, the noble Lord is right.
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