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Lord Shore of Stepney: My Lords, my noble friend totally misjudges the seriousness of the tax harmonisation initiative. For the sake of giving credence to his optimistic assertion, will the Minister tell us how he distinguishes between unfair tax competition and fair and desirable tax competition? We are already pledged to go along with fair tax competition and we shall agree with our European partners on a whole range of matters involved in that proposition.

Lord McIntosh of Haringey: My Lords, as far as our powers are concerned, the words of Humpty Dumpty will suffice:

If we think it is unfair we shall veto it and it will not happen. It is as simple as that. The failsafe position is on my side of the argument and not on my noble friend's side.

The noble Lord, Lord Ezra, referred to the difference between RPIX and the HICP as a way of measuring inflation. He will have noticed that we are now quoting

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both measures in official statistics. I do not know which one will finally win out. However, we recognise, as we do with labour market statistics, that it is important to have international comparisons.

I turn to the issue of British entry to the euro. I have done a count and not a single speaker spoke in support of the Government's point of view. It was now or never as far as the debate was concerned. I can deal with "never" quite quickly. The noble Earl, Lord Caithness, and the noble Lords, Lord Skidelsky, Lord Lamont, Lord Shore, Lord Beaumont, and especially the noble Lord, Lord Harris of High Cross, spoke on this point. I found the argument of the noble Lord, Lord Harris of High Cross, about market economists rather strange. He said that there were no market economists in favour of the euro. There are lots of economists in favour of the euro and most people involved in markets are in favour of the euro. The noble Lord's category of market economists is a rather strange category in the middle, which does not seem to fit in with anything else.

I counted those who want us to join now, those who want us to announce now that we are joining, and those who want us to announce a date for joining--the noble Lords, Lord Taverne, Lord Grenfell, Lord Barnett, Lord Roll of Ipsden, Lord Haskel, Lord Ezra, Lord Currie of Marylebone and even the noble Lord, Lord Cockfield, Lord Tanlaw, and Lord Newby, and the noble Baronesses, Lady Williams of Crosby and Lady Ludford.

Lord Cockfield: My Lords, I did not say that we should enter now. I was telling the Government what the problem would be if we enter. I asked how they would propose solving it.

Lord McIntosh of Haringey: My Lords, I believe that that is in the category of those who want to enter now, those who want us to declare now that we will enter and those who want us to set a date. I believe that the noble Lord, to a considerable extent, did come into the latter part of that category. I do not think I have misrepresented him.

Lord Skidelsky: My Lords, I am sorry, but even at the risk of prolonging the Minister's speech, can I ask the noble Lord why he thinks that anything I said suggests that we should never enter the euro?

Lord McIntosh of Haringey: My Lords, I am glad that the noble Lord, Lord Skidelsky, has intervened. He said that we should exclude entry before the end of the next Parliament, which I understand to be one of the positions of the Conservative Party.

However, I have to contrast the point of view of the noble Lord, Lord Skidelsky, which is cautious, with that of others. The noble Lord, Lord Higgins, was in fact more cautious. Indeed, he was wonderfully cautious and virtually avoided expressing an opinion at all until the 12th minute of his 12-minute speech. Nevertheless, I have to remind him that Mr. Hague, Mr. Redwood, Mr. Howard and many others are on record as saying that they are opposed to British entry into the single

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currency on principle. Moreover, in an interview in the Observer on 27th November last year, Mr. Francis Maude went so far as to say that, whether or not the euro is successful is not in itself an argument which will affect the decision of whether or not to join. There may be criticism of the Government's point of view--and no doubt there will be--but there are certainly criticisms to be made of the Opposition's point of view, which have been very clearly revealed in the speeches made in this Chamber tonight.

This Government have set out very clearly their position on UK entry. We have said that, in principle, a successful single currency should bring benefits to Britain and to Europe. I put it to your Lordships that that is very different from the position of the previous government and even more different from the position of the Conservative Opposition now. If the single currency is successful and the economic benefits to the UK from joining are clear and unambiguous, then Britain should be part of it. There is no overriding constitutional bar to British membership.

The Government's central economic objective for Britain is to achieve high and stable levels of growth and employment. Britain's economic interests in the single currency need to be judged against that objective. That is the basis for our five economic tests. The tests define whether a clear and unambiguous case can be made for British entry. The noble Lord, Lord Higgins, queried one of them and asked whether we were requiring that the economic cycle should coincide. I should tell him that economic cycles are never going to coincide in that sense exactly. The judgment that we have to make is whether the balance of advantage falls one way or the other. At present, our cycle is clearly so far out of kilter with those of other European economies that the risk is not worth taking. Our position is that we will recommend joining when it is in the national economic interest to do so--something we think possible early in the next Parliament.

Those who want us to declare intent now and those who want us to set a timetable are, in my view, taking a position which is illogical. They are taking the position that the date is more significant than the achievement of economic targets. I put it to your Lordships that, under those circumstances, the present task for government and for business is to continue making the necessary preparations so that we can exercise genuine choice on entry in due course. We have always said that our policy is to prepare and then decide; that is, of course, to make a recommendation on the basis that, as we have always promised, the decision is for the British Parliament and for the British people. That is the only way in which a realistic choice can be presented to the British people, and the Government are on course to do just that.

8.23 p.m.

Lord Taverne: My Lords, the noble Lord, Lord McIntosh, expressed some regret that there would perhaps be no publicity given to tonight's debate. I should not be in the least surprised if that were the case. Economic debates in this House are not reported in the press. Indeed, if it is any consolation, economic debates in the other place are not reported in the press;

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nor are the proceedings of Parliament. Of course, there are occasional parliamentary sketches, which enable commentators to exercise their rather caustic wit. However, the idea that what we say in this Chamber is recorded in newspaper reports is an illusion.

Nevertheless, I have found this to be one of the most interesting of the Euro debates. I say that not just because on this occasion those who are in favour of European monetary union greatly outnumber those who are against it, but because there was perhaps rather less repetition than there sometimes is in such debates. Quite apart from the powerful arguments advanced on both sides, the debate was most interesting because a number of noble Lords spoke from their own experience in a way that was particularly valuable.

Perhaps I may first sound a personal note. I was delighted to be reminded by the noble Lord, Lord Harris of High Cross, of a trip that we both made to Exeter and the debate that we had in the Exeter Union on George Brown's National Plan. I was then a newly appointed Treasury Minister and found myself defending the plan. I do not think that the majority with which I won the debate was quite as enormous as the noble Lord said, but I do remember saying afterwards that I thought he had the better of the argument. That does not mean to say that I became an instant convert to every part of the Friedmanite doctrine and philosophy on economic affairs. I do not share that view as a whole, but I believe that the institute that the noble Lord set up has played a most valuable role and has obviously had enormous influence. It also did a great deal of good in spreading the message for deregulation and in favour of capital markets. However, I do not quite see what that has to do with the European Union.

I say that because, on the whole, the European Union enshrines the principles of competition and capital markets and did not go for the kind of blue-print laid down by the commissariat du plan, which was temporarily fashionable in the early 1960s and on which George Brown's National Plan was based. I believe that the noble Lord, Lord Shore, played a considerable part in the latter.

I turn now to the debate as a whole. I was hoping to hear a little more from those who are hostile to our entry into monetary union about the alternatives that they have to offer. As I said before, the position of the noble Lord, Lord Shore, is absolutely clear: he wants nothing whatever to do with the institutions of the EU. As I understood those noble Lords, what they were saying in effect was broadly, "We don't have to do anything because it will not work". I shall turn later to what the noble Lord, Lord Skidelsky, said. The noble Lord, Lord Lamont, concluded by saying that EMU could not work for political reasons. He made a very eloquent, delightful but controversial maiden speech, which I very much enjoyed.

The noble Earl, Lord Caithness, spread a message of great gloom. The only sort of inkling of an alternative was the mention of Switzerland. I do not think that the UK could ever find itself quite in the position of Switzerland. Apart from anything else, and with no

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disrespect to the Swiss, I feel that, for historical reasons, we have a rather different and greater role to play in the world than has Switzerland.

The noble Lord, Lord Higgins, said that of course it was possible to be pro-European and against, or sceptical about, monetary union. Theoretically that may be possible, but it really depends on expecting the European Union to break down. If one is simply relying on delay, there are dangers--I shall address them in a moment--as has been pointed out by other speakers. The noble Lord, Lord Skidelsky, said, "Let us wait and see what the relations are, for example, between the euro and the dollar; and, in eight years' time, we might then reach a decision". But why eight years' time? Why not six or 10 years' time? The euro is not going to be fixed in relation to the dollar and one will never be sure what the next five years will bring in that respect. Indeed, that is just an argument for postponing the decision for ever.

It seems to me that the official Opposition have not grasped the very real dangers of delay. The only speeches to which I wish to refer are those in which noble Lords spoke from their own experience. Many powerful arguments were advanced in a number of very eloquent speeches. However, I do not think that the Government should disregard the comments made by the noble Lord, Lord Cobbold, and the noble Lord, Lord Roll, about the impact on the City. They sounded a very severe warning that there would be a great danger to the standing of the City and its role as the financial centre of Europe if the decision was long delayed.

I believe that the Government should pay the greatest attention to what was said about the impact on industry by the noble Lord, Lord Currie, who has very special experience through the London Business School. His message was absolutely clear: business is already falling behind and, if we delay much longer, it will fall further behind. Those concerned must know where they are going. The same message was strongly conveyed by the noble Lord, Lord Haskel--

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