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Lord Saatchi: My Lords, yes, I shall and, later, perhaps I may pass over the extract from this document. However, these are the Government's own figures relating to the take-up of all the different types of income-related benefit. In fact, they rather flatter the take-up figures. The figure for family credit is used rather than that for working families' tax credit, which replaced it. Most people believe that the take-up of the working families' tax credit is lower than that of the family credit. Therefore, it is a flattering picture.

Lord McIntosh of Haringey: My Lords, they are wrong. The argument is very simple: 800,000 people took up family credit; 1.2 million people take up the working families' tax credit.

Lord Saatchi: My Lords, that is fine. If the Minister would have a look at the relevant table and the figure of £2 billion to £4 billion and say what happened to it and whether that amount will be saved and given to those who are entitled to it or kept, that would be helpful.

Perhaps we could find more helpful territory for the Government by moving on to the second paragraph of the gracious Speech, which concerns the phrases "economic stability", "low inflation" and "sound public finance". Perhaps if we look at the economy from a broader perspective, we shall find more grounds for confidence. Of course, the Government's real claim to fame is strong public finances. The main proof of that is, as the noble Baroness said, the heroic repayment of £34 billion of government debt. A similar figure also appears in the Treasury press release. I believe that the noble Baroness referred to an amount of £34 billion over the past two years. We all consider that to be a first-class result.

However, after four years of what I hope I have just demonstrated was fairly miserly spending and the famously record taxing that the Government have carried out, is it not extraordinary that Britain is not, after all, being led to a massive US-style government surplus which we might use to repay debt, spend on public services or whatever else we may choose? Not at all. Believe it or not, the cupboard is bare. The Government are leading us into a massive deficit.

How will the Government fill that deficit? If they could, they would find some more invisible tax rises, but that game appears to be up. Therefore, they will fill it in the old-fashioned way--they will borrow it. The Government's spending will be paid for by borrowing. These are the amounts that the Government say they will borrow over the next four years: in year one, £1 billion; in year two, £10 billion; then £11 billion and £12 billion. Spookily enough, those figures add up to £34 billion over four years. Therefore, the Government are repaying debt of £34 billion, receiving the applause, and then promptly borrowing it again. I repeat: £34 billion over four years. The Government's own figures show that by the end of this Parliament they will be borrowing £12 billion a year.

However, that is simply the good news. The bad news comes from Europe, where, until recently, the ECB had been telling us that Europe and the euro-zone were immune from the US downturn. That now

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appears not to be the case and that is why people are becoming worried about the ECB. I want to ask what the Government have in mind for improving the effectiveness and, in particular, the transparency of the ECB.

The Bank of England, for example, publishes promptly the minutes and voting record from its rate-setting meetings. The Bank of England Act requires it to do so. The US federal reserve system's Open Market Committee publishes the minutes of each meeting within a few days of the next regularly scheduled meeting--that is, approximately four to six weeks after each meeting. However, with regard to the ECB, perhaps I may read your Lordships the following exchange. I should be grateful if the Government could tell us what steps they will take to improve the situation as one day soon the ECB may be looking after all our finances. I shall read a note from my researcher to her opposite number in Europe:

    "Hi, Samantha. I hope you're OK. I have a really quick query. How long after the ECB meet to discuss euro-zone interest rates are the minutes of the meeting published? Many thanks, Alex".

The reply reads:

    "Hi, Alex. Sorry I didn't get the chance to get back to you yesterday. Hope all is well. The ECB does not publish any minutes of meetings at all as they are "confidential". All you can get is a two-paragraph statement on the rates that appears on their internet Hopeless, isn't it?"

Therefore, given that so much of what will happen with regard to our public finances will be affected by Europe and by the activities of the ECB, will the Minister be able to say in his reply what plans exist to improve the effectiveness and transparency of that body?

I have also tried to demonstrate that there is a tangled web in the Government's economic policy. I shall close by saying that if we really want a bigger slice of the cake for schools and hospitals, the only way in which to achieve that is by making the cake bigger. As I believe the gracious Speech showed, this Government, like all Labour governments before them, do not know how to do that.

I have tried to give an alternative view of the Queen's Speech and I very much look forward to hearing other noble Lords' comments this afternoon.

Lord Barnett: My Lords, I listened with very great interest to the noble Lord's attack on the low level of increase in public expenditure on social services. Is he suggesting that the Government should spend more?

Lord Saatchi: My Lords, I am commenting only on the high hopes that people had of this Government when they were elected four years ago and the fact that the electorate have given the Government a second chance. I am sure that the Front Bench opposite knows very well that there will be no third chance.

3.47 p.m.

Earl Russell: My Lords, I begin by congratulating the Government on not changing places. I also warmly welcome back the Minister to her place. It is a great pleasure to me; it is very good news indeed for social

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security; and I hope that it is an equal pleasure for the Minister. She gives me vigorous exercise in debate. She does innumerable kindnesses, the latest as recently as last Friday, for which I am extremely grateful. I shall not say that she is always competent because no one on earth is that, but she comes as near to it as any Minister with whom it has been my pleasure to argue. I am very glad to see her here.

I also congratulate the noble and learned Lord, Lord Goldsmith, on keeping the office of Attorney-General in this House. The noble and learned Lord, Lord Williams of Mostyn, is a very hard act to follow. The Manchester Evening News has hurled at the Attorney-General perhaps the biggest hot potato that has greeted any new Minister at the beginning of his term of office. It may interest him that the very earliest known English laws are laws to restrict the right of private vengeance. It is the very purpose of the state to restrict private vengeance. That the state may have got it wrong is in a free country a view which must always be tenable. But the view that the right of vengeance should be taken out of the hands of the state is an assault on the very existence of the state itself. Therefore, the noble and learned Lord is in a very hot seat indeed and I have great confidence in him in it.

I also thank the Minister very much for her invitation to a meeting to discuss the reorganisation of the department. As that meeting is in the future and not in the past, my comments on the reorganisation are tentative. The case in favour is clear. For a long time it has been evident to us in our debates that having the welfare to work scheme and the New Deal as benefits in the same ministry makes a good deal of sense. On the other hand, some of the spin in that regard caused a certain amount of misgiving. The department responsible for social security is one of the most competent departments in Whitehall. It has a very good departmental culture and a long-standing concern with the alleviation of poverty.

As far back as I know, there has always been somebody who is concerned with the alleviation of poverty, whether that responsibility is in the hands of the state or the Church. In the development of the employment agency side of the new department, I hope that that tradition will not be lost sight of. It has always been an illusion that one could reduce poverty substantially by instilling in people a greater will to work. On every previous occasion on which that view has been held it has proved to be an illusion, and it could be so again.

I want to say a little about public services. I declare an interest--mercifully, I do so in this Session for the last time--as a serving university teacher. At Question Time today, the noble Lord, Lord Walton of Detchant, drew our attention to a major problem in the public services and the fact that increasingly people are developing a reluctance to work. Before the Government talk too much about reform, they should think about why such reluctance is becoming so strong. Most people who go into the public services do so out of a sense of vocation; they certainly do not do so for the money. That sense of vocation and Treasury public service agreements sit rather uneasily together,

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especially when those agreements--which are back, somewhat to my regret, at the Treasury--are driven by the pursuit of efficiency, which is always concerned with getting people to do more rather than with how well the job is being done.

I remember extremely vividly a conversation with an intensive care nurse--probably the best nurse I have ever seen in action. After the patient had drifted off into a healing sleep, the nurse, observing that no one else was at that moment awake, paused a moment and said, "I am about to go back to speak to the sixth form at my old school and I am going to tell them, 'Whatever you do, never go into nursing. There is more expected of you than you can possibly do. You are set up to fail and you can therefore choose only between demotivation and burn-out'". Every public servant to whom I have repeated that story and members of my profession recognised it instantly. In fact, as I see it, for the past 25 years all government pressure has been to make me do my job worse and worse each year. I have got very tired of that, and I am not alone in my view. Governments, after all, should recognise that their expertise in such matters is limited.

Mr Richard Caborn has given rise to a certain amount of merriment by not being able to answer questions in a sports quiz. I want to attack not Mr Caborn, but his critics, who did not recognise the difference between a Minister of Sport and a sportsman. It is like expecting the commander of a battleship to understand fiddly details about how to get better value for money from the ship's engines; that is not his department. I remember the late Baroness Macleod of Borve saying that when her husband was Minister of Health, he would never have had a doctor in the ministry; different jobs were involved. When governments talk about, for example, improvements in education, they are outside their element; they are not competent to recognise an improvement in education. Unless governments are prepared to let those who work in the public services have their own values, they might find that they have to pay market rates to attract such people, which would be very expensive.

We have had a lot of argument recently about the role of the public or private sectors in the delivery of public services. We on these Benches do not make an ideological issue in that regard. We have never gone in for the attitude that involves saying, "Four legs good, two legs bad". That attitude comes from the 20th century's politics of class conflict, against which we set our face at the beginning of that century; we are very glad that we did so. For us, that is more of a matter of horses for courses. The public and private sectors both have excellences. The question is: which excellence belongs to this particular job? The answer involves identifying the function that is required.

The great discipline of the private sector is competition. When there is no competition, the excellence of the private sector cannot be brought to bear. That applies especially when there is a single monopoly purchaser, against whom there can be no competition. Also, it is the nature of the market to

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have losers as well as winners; if it does not, it is not a market. One sees that in the supply of school places. After he had been at the ministry responsible for education for a few years, Lord Joseph realised that it was impossible to combine a market in school places with a universal supply of places. In that context, I was extremely pleased to read in The Times today that the Government are contemplating legislation to repeal the Greenwich judgment. If that report is correct, I warmly welcome such legislation.

We need to think about what we want to do. That has not been done nearly enough. When it happens, we might have a slightly more worthwhile debate. The bulk of what we have to deal with concerns the Minister's brief; namely, all of the various issues involving welfare reform. I say in passing that I agree with my noble friend Lady Williams of Crosby in her regret that the Government have adopted the slightly pejorative American use of the word "welfare" and do not continue to talk, as we always have, of social security. It is clear that all that we do in this context happens in a global market and that the playing field in that market is not level. Capital can move at a few seconds' notice across the world. Labour, even if there were no restrictions on its movement, is much less easily uprooted. That creates a big advantage to capital and tends to downgrade the price of labour. Too far in that direction and we could see a serious drop in the general level of world demand, which would not be good for the world's economy. When we discuss the cost of social security, we should bear in mind those questions along with narrower questions.

The relationship between the state and the market is a seesaw, and a seesaw should never become immobile. The Government have reached a seriously mistaken diagnosis of what they think is wrong with the social security system. The White Paper, Towards Full Employment, published earlier this year, states:

    "Rather than being a solution to these problems, the welfare system had become part of the problem itself".

The Government have asserted that many times but it has not yet been proved or even seriously argued for. If the Minister can put me right in that regard I shall be grateful. The Government think--this illusion is centuries old--that the problem is having to make people want to work. It is not usually a problem to make people want to work; after all, work is to many people their only social life as well as their only means of earning money. When people do not want to work, that is usually a matter of physical or mental illness or it involves the thinking behind the old proverb that,

    "hope deferred maketh the heart sick".

There are of course many categories of people--they are determined by geography, race, gender or disability--for whom work is difficult. The Minister and I know all about that. We have had exchanges on such matters many times. I shall not detain her now. But a great many of the people who do not get work have some disadvantage.

I raise in passing the question whether in some areas, like the ward next door to mine, there is a covert postcode discrimination by employers so that it is

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much more difficult to obtain work if one comes from those areas. If we could address that--I do not immediately see how--it would be nice.

Beyond that, a lot of the Government's policies on welfare reform have sprung out of the mind of Mr Michael Portillo and the Jobseekers Act. The key innovation in that legislation was not the "actively seeking work" requirement. That is not particularly controversial. What was crucial in that Act was the assumption that the state and its organs are the supreme judges of the work people should seek--for which jobs they should apply and which jobs they should not leave--and that the state's judgment takes priority over that of the people concerned.

Of course, the state is at a major disadvantage in relation to information. So there is at least a rebuttable presumption that the state might get some of these things wrong. If it has got them wrong and disqualification from benefit is inflicted as a result, that is a particularly severe penalty.

There is one case which particularly tickled me. It happened under the previous government but it could easily have happened under this Government. A man in Cardiff, a lifelong supporter of the Labour Party, was offered a job pulling pints at the Cardiff Conservative Club. He refused it and was told that he was voluntarily unemployed and could have no benefit. I believe that that discomposes me a great deal more than it discomposes new Labour Ministers. I do not think that that should have happened. There is, after all, such a thing as an individual conscience. If you deny that, you will not get a conscientious workforce and the losses out of that may be more than are realised.

Another sphere where private judgment matters, because it has the information, is as regards parents. I heard what the Minister said about interviews for partners. It could be argued that that is the down-side of equality. The argument has substance. But the requirement of interviews and, even more, if they are to come in, the existence of targets can create a rebuttable presumption and the existence of targets backed by the power to disentitle benefits may be a very severe pressure indeed.

The Minister may remember the noble Lord, Lord Evans of Parkside, speaking in our debates on single parents in 1997. He described the occasion when he was six, when his father said goodbye after breakfast, went down the pit and never came back. He said that for a year afterwards, he and his younger sister would never let their mother out of their sight. He said it would have been absolutely useless to encourage her to seek work.

Where there is an inflexible bureaucratic rule, it is impossible to respond to a case like that and a government who cannot respond to such a case are not living in the real world. The Government should think about their targets for getting single parents into work because they involve a really serious intrusion into the sphere of private judgment. They should watch, too, how many of the people disentitled to benefit are removed from the claimant count. I accept the point

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made by the noble Baroness, Lady Blackstone, in her Written Answer to me of 8th May last that not all of them are removed from the claimant count. But when the Prime Minister, in the House of Commons on the 20th of this month, boasted of the reduction in the claimant count, he should have been able to say how much of that reduction was achieved simply by taking people off the count by disentitlement. "She left my employment", as Goldfinger put it. It is worrying.

There have been, since 1997, 701,000 people sanctioned under the Jobseekers Act. That is an awful lot of people. We do not know anything about what happened to them and we should do.

As regards housing benefit, the Minister knows my views. I ask her to stick to the commitment of the 1986 Act that income support is not meant to cover rent. Before she speaks, as the Government do, about work incentives, I ask her to look again at the DETR and the DSS research on housing benefit. I know she knows it well. I should like to think that anything that the Government do will be compatible with that research. If it is not, it will take up a good deal of time in this Chamber.

Finally, we should not lose sight of the purpose of benefits. The purpose of benefits is not to cure poverty. That they have not done so is no reproach to the Government. The purpose of benefits is to alleviate poverty until something better can be done. That is a very necessary purpose.

I have a pupil at the moment who has just finished his exams. He is still in those intervening days between the end of the exams and the beginning of the right to social security, which is quite a long time on an empty stomach. He has absolutely nothing to live on. He spent his last penny ringing me up and ran out of money before he could tell me where he was and before I was able to do anything about it.

We talk about rights and responsibilities. They are interlocked. They are not necessarily contingent. If you do not believe in the death penalty, you do not believe that the right to life is contingent on good behaviour. I do not, in fact. But if we want people to exercise their responsibilities rather better--and I must confess that I do--then how we exercise our responsibilities to them is a matter to which we should not be indifferent. If we tell people, "We do not care whether you have anything to eat. You are nothing to do with us. Go away. We have forgotten about you", that is an abdication of responsibility which invites retaliation. I do not think it is wise.

4.7 p.m.

Lord Roll of Ipsden: My Lords, those who have spoken today have again done what it is usual to do in a new Parliament; that is, to combine the traditional initial reaction to the gracious Speech with some reflections on the record of the outgoing administration.

I remember only too well the last government coming into office in 1997. As Labour returned to power after 18 years in the wilderness and with an enormous and unprecedented majority, it was

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understandable that its followers greeted this as a new dawn. I had some very welcoming words to say about the new government, both about what they have already put in train and what they were intending to do fairly quickly. However, I said that it might be as well to wait to say,

    "Bliss was it in that dawn to be alive",

before we actually joined in that jubilation.

What has happened since? I will not and I could not possibly follow the noble Baroness, Lady Hollis, in that avalanche and catalogue of all the good things that the Government have done, particularly in the field of social justice and ameliorating the condition of the less advantaged members of our society. I readily accept that much has been done for the family, for the young and for children through taxes and through other means. Of course, the gap between the rich and the poor continues and, indeed, has grown rather wider. That is a topic to which we may return on another occasion.

However, I should say that in so far as the gap has increased through improvements at the top end, I am made slightly uneasy by what appears to be the Prime Minister's somewhat undiscriminating approval of what he regards as the rewards of merit. Often the connection between "reward" and "merit" is not evident.

However, I join wholeheartedly in praising what has been achieved so far in relation to the broad economic and financial management of our society and our economy. Naturally, I welcome the independence of the Bank of England in respect of monetary policy. Three years earlier I had the pleasure of chairing an independent panel that made almost exactly the same recommendations as those that the Chancellor has implemented and which are now embodied in the Bank of England Act.

Much against the views of many followers of the Government, I agree with the decision to keep the tax and spending pattern of the previous administration for another two years. I believe that that was essential to prevent the avalanche of plagues that would almost certainly have appeared, given the fact that the Labour Party had been out of office for 18 years.

More generally, the financial management has been good. I agree with the noble Baroness that the reduction of the national debt and the consequent reduction and easing of the burden of interest payments are to be welcomed as pillars of our economic and financial stability and, provided they are used, they have created more room for manoeuvre for funding improvements in social services. We shall see whether that actually happens.

Inflation has been kept down; unemployment has been greatly reduced; employment has been increased; and a respectable growth rate has been maintained. The fact that those things have been achieved--to some extent with the aid of propitious external circumstances--cannot be denied, and immediately a question is raised about the future. The uncertainties of the American economy present a big question mark

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and there are disturbing signs on the Continent, particularly in Germany. With our relatively flourishing economy today, how long we shall be able to withstand what happens abroad remains to be seen.

Looking ahead to the future, in choosing the improvement and enlargement of public services as the centre of their programme, the Government have probably judged the public mood correctly. Perhaps the increasing success of the Liberal Democrats in elections, given their avowed readiness and eagerness to tax more in order to gain more funds for public services, also appears to be a sign that the public mood is moving in a somewhat unusual direction.

I do not believe that anybody could possibly disagree with the desire to improve public services. We hear a lot about having world-class, first-class public services, and who would deny them? As the Americans used to say a long time ago, that would be like denying the virtues of motherhood and sliced bread. But how are we to achieve such services?

Today, appropriately, the Institute for Public Policy Research has published a highly interesting report which throws considerable doubt on what has become something of a slogan "public-private partnership/private finance initiative". No doubt there will be continuing controversy on this point, but it is worth considering. I agree with the Government that such a matter should be approached without dogma. Today ideology is out of fashion and, paraphrasing Sir William Harcourt, we can say that we are all pragmatists now.

Nevertheless, if we are to look at this matter in a hard-nosed way, we should look upon it as a business proposition. Unfortunately, some of the examples of what has happened so far, particularly in private finance initiatives, are not encouraging. Under a PFI a first-class new school has been built, but why it appears to be impossible to build such a school under a different system of finance is a complete mystery to me. Surely the essential difference between the two lies in the eventual cost to the public purse.

I simply cannot understand why the difference in the rewards earned by a private consortium, which provides the initial capital outlay, and the public purse, which usually over a period of 30 years commits itself to repaying that, should be significantly different. After all, that represents a commitment by the state, so there should not be a significant difference in the cost of securing the finance, even if it comes from a private consortium. Yet there have been many examples that show that even the modest savings envisaged to the public purse, compared with the size of the total outlay, are often illusory and compared with the rewards earned by the private consortium are certainly inadequate. That requires careful consideration.

The zeal with which some Ministers--for example, the Deputy Prime Minister--advocate this new policy is reminiscent of the zeal with which the long-forgotten Clause 4 used to be defended. Zeal is not required, but careful, convincing argument.

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However, there is another aspect. Having spent 34 years in the City, I do not believe that anyone could accuse me of a prejudice against private enterprise. I am conscious of what it has done, what it is doing and what it can do and of the fact that a great part of the material advances of mankind are due to the inventiveness, the ingenuity and the readiness to take risks of private entrepreneurs.

It is quite unacceptable for people to say that one cannot acquire adequate management from the public sector alone. Not only is that a denigration and a slur on the body of devoted, loyal and generally extremely efficient public servants--of which I know something after 25 years in the public service--but it is also entirely unjustified in actual experience. The public service has shown a readiness to adapt itself to new tasks--even in terms of remuneration--that cannot be ignored.

In parenthesis, a C, a K and certainly a G are highly desirable and justifiably prized rewards, but your Lordships may well remember the celebrated statement in "Gentlemen Prefer Blondes" that a kiss on the hand makes you feel very good but a diamond and sapphire bracelet lasts for ever. Even a devoted civil servant cannot maintain the kind of status that conventionally he has to maintain without adequate remuneration.

When still in Whitehall I shocked my fellow permanent secretaries by arguing that there was no reason why we should all receive the same pay. Some of us were in direct competition with people outside who had much higher remuneration. Needless to say, at the time nothing happened, but the public service has adapted itself even in that regard.

Finally, I return to my King Charles's head, Europe. When the previous Labour Government took office I was pleased that they made some positive noises, certainly compared with the two preceding governments who were in power for 18 years. However, what followed was a period of considerable inactivity, the result of which has been that opponents of our entry to the euro-zone have had it all their own way. Now, judging by the opinion polls, a large majority appears to be against our entry. Perhaps significantly, a modest majority appears to believe that we shall enter anyway at some future date.

I believe that the situation is extremely difficult for the Government. Ministers seem wisely to have retreated below the parapet which the Chancellor so skilfully erected for them in his five economic tests. The political wisdom of that was shown by the result of one sortie: some statements made in the euphoria of the election victory about an eventual referendum within two years of the present Parliament created the impression among the media and the markets that early entry was very much on the cards. As a result, the pound plummeted. That had to be. The invention of the term "euro realism" and the statement that the issue is being approached by the Government with consideration and caution--incidentally, I thought that the Government applied that to everything they did--naturally brought the pound back up again.

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For the moment, the situation is in limbo and I do not know what will happen. For my part, perhaps I may give an example which is applied to more important human transactions; namely, the triumph of hope over experience. But I shall wait patiently and I still happen to think that, in spite of everything, the eventual emergence of the single European currency is inevitable.

4.21 p.m.

Lord Lea of Crondall: My Lords, I am particularly happy to follow the noble Lord, Lord Roll of Ipsden, because I share a great deal of his analysis and shall pick up his final point. In the light of the Chancellor's Mansion House speech, which coincided with the Queen's Speech here last Wednesday, this is an opportune moment to consider economic strategy not only for the next year or 18 months but for the next four or five years or longer. I emphasise that duality because, unfortunately, there are times when the short term, on which I accept that the record has been exemplary, as stated by the Minister, and the strategic may be in conflict. Despite new Labour's stated aim to be strategic, it is, on the main strategic issue facing the country--that is, the euro--currently allowing a succession of short-term arguments and economic indicators to dominate its decisions to the exclusion of the strategic.

The European project is now far wider than anything we have grappled with previously. The fact that we could leave the exchange rate mechanism--or be shown the door, if you prefer--shows how false that analogy is. It is precisely because we have to get the entry rate right and secure a smooth landing that the Governor of the Bank of England cannot be allowed to judge the issue as though this year's inflation figure, which is the lowest in Europe, is the only issue.

Therefore, when we now hear the argument that we cannot debate the issue because it might affect the exchange rate, the answer must be, "Of course it will affect the exchange rate. Entry will not happen at the present exchange rate". If we do not want to affect the exchange rate, we had better join the noble Baroness, Lady Thatcher, and say, "Never!".

We are talking about Britain's industrial position in Europe and in the world. There may be some in the City whose book is best served by us being an offshore island with no political say in the affairs of the Continent. "Down with the continental system", is a cry which has echoed throughout the centuries and has come from the same groups of people. We will of course be in Europe and a keen player in the world economy. For those who are committed in a positive way to the project--and after all the Government agree the principle--we must speak out on the means of getting from A to Z or in four years' time we shall be where we are today or further back in our programme of modernising Britain.

If we describe the policy in short as "prepare and decide", a phrase which has recurred in ministerial speeches since the Chancellor's benchmark speech in November 1997, there are unfortunately a whole

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plethora of ambiguities. For example, how are the issues being prepared--I use the word "prepared" advisedly--so that the people on the doorstep in middle England can understand them sufficiently to vote in a referendum? Can I be the only one here who has been reading with wonder in every newspaper every day since the election that we must close the gap between Parliament and the people? Yet are we not to apply that to the euro?

We all know that one does not win general elections solely on what one says in the last few weeks. Is there any good reason to believe that referendums are all that different? Are we really supposing that a few senior Ministers can do this on their own in a matter of weeks without the normal infrastructure of mass involvement, of democratic explanation within the political parties, on the doorsteps and in civil society generally? Surely the needs of democracy point directly in the opposite direction. If we do not speak now, when do we speak? Is it going to be when we decide not to have a referendum because we have not lifted a finger in good time to persuade the public of the reasons for saying, "Yes"?

Therefore, although it was a plausible enough soundbite in Sweden last week, it really will not do for Peter Hain to go around Europe stirring up apathy with his slogan "Cool it!". What else have we been doing for the past four years but cooling it? Our brains are getting so cool they can hardly function. We will soon be in a deep coma. And why allow our gladiator to have nets thrown over him by the gladiator on the other side? At the very minimum, what are the Government proposing to do to counter some of the more recurrent arguments against the euro in general and UK participation in particular?

Perhaps I may remind your Lordships that Sub-Committee A dealt with the main arguments a year ago in its report, How is the euro working?. As regards the fashionable objection that one interest rate cannot fit all parts of Europe, we pointed to the fallacy of that objection; namely that the difference between different degrees of capacity, utilisation and inflationary pressures, the issue on which the argument principally turns, is, for example, far greater between London and Cardiff than between London and Brussels--and we do not have different interest rates in London and Cardiff, do we? What is of great concern in South Wales is the issue of international investment and inward investment. And why should companies take two exchange rate risks in coming to Britain when they have to take only one risk on the Continent?

There is then the contention that the European Central Bank is undemocratic. Sub-committee A pointed out that the difference in procedure from the Bank of England on the publication of voting patterns is not too surprising given the multi-national nature of the ECB board and the fact that its decisions are unanimous. But in any event, is it really persuasive to stand on the touch-line saying that we know how to play the game so much better than the equally successful economies which are actually playing it?

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Furthermore, our friends on the Continent are beginning to ask why the Treasury, far from explaining the many positive features of the euro system, seems to say something about the subject only when it wants to say something negative? It cannot go on that like that. We now know that there will be a rather short time between the national economic assessment and the referendum, so it cannot be left until then to explain the case to the British people. If, as some eurosceptics would have us do, we wait until then there will not be a referendum because the essential political test, which everyone knows is the winnability of the referendum, will be impossible to meet. Surely, no member of the Government wishes to achieve that outcome by a policy of benign neglect.

Those of us who have invested a good deal of political capital in this project will not let the matter rest there. I respond to the challenge myself. What are the positive arguments? First, single market, yes; single money, yes. We challenge the logic of those who say that there should be a single market but not a single currency. The ultimate in market transparency is certainty in exchange, and the single currency achieves that for the greater part of our trade.

Secondly, to different degrees we are all uneasy about globalisation, but what is the answer to it? Surely, the answer is to have an economic area which is strong enough to set standards for workers and consumers as well as producers and is as large as that of the United States, if the UK is in.

Thirdly, it is in the employment and social area that Europe begins to connect with the people. I spent the election on doorsteps in Falmouth and Camborne. Obviously, the issues which came up were dominated by jobs, hospitals and schools, but when I talked to people at greater length I found that they were delighted with the four weeks' holiday paid up front. They had never had it but they do now, thanks to Europe; they were delighted to hear about pro rata rights for part-time workers; they had never had it but they do now, thanks to Europe; and they had never had maternity pay but they do now, thanks to Europe. The list is a long one. Apart from the TUC, no one ever told them that Europe had anything to do with it. Some new Labour politicians are often blind to their own long-term self-interest by failing to give any credit to Europe.

It is to our advantage that we introduce these reforms on a trans-European basis. There is, after all, a logical reason--namely, the facts of international competitiveness--why we need to deal with such matters as minimum labour standards on a joint European basis. Trade unions in the major industrial sectors which are in daily touch with the workplace say that this is a hot issue which is becoming hotter. Therefore, we cannot "cool it". The arguments need to be addressed now, which is a job for Mr Hain.

My question to the Front Bench is: what is wrong with the arguments which support the Government's avowed principles being presented now? How will we get out of the double bind of always waiting for something else to happen before we make the

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arguments, in the meantime allowing those arguments to go by default? If we wait until the notes and coin are introduced in January, will we then highlight something that has gone wrong with one or other aspect--no doubt the hijacking in Palermo of a security vehicle full of bank notes?

Those who now say "cool it" confuse two things: on the one hand, the contention that we anticipate the national economic assessment; on the other, the failure to address some of the principled arguments heard in the media every day of the week. The first half of this is at best to play semantics, but the second is more worrying. Do Ministers fear that they are not equipped to mount the arguments? I start by helping them out of one hole. Let us remove the ridiculous notion that it must be clear and unambiguous before we can enter. That is not what we do on other issues, is it? Moreover, was it clear and unambiguous when the founding fathers of the EU started the operation in 1950? Was it clear and unambiguous to us in the United Kingdom when we joined in 1973? Was it clear and unambiguous when Jacques Delors masterminded the Treaty of Maastricht and the timetable for economic and monetary union in 1990? In any case, how will we be judged by history if we simply wait and see which side is winning and then join it years later? Is that statesmanship? Is it not a recipe for being a second-class partner in the meantime? We shall not win unless we go out there and make the case. If we fail to do that the real winner of the election will prove to be Mr William Hague.

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