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Lord McIntosh of Haringey: My Lords, we have never denied that there are particular difficulties for manufacturing industry. We are glad to debate that at any time. The estimate of growth for last year is pretty well complete. Our expectation of growth in 2002 is that it will be faster than in any other G7 country. That is not simply a Treasury estimate; it is a view held by the IMF, the OECD and the National Institute of Economic and Social Research. It is a fairly widely held view.

Lord Tebbit: My Lords, as the Minister will be aware, an important part of that growth is provided by exports of our manufacturing industry in particular. In that context he will also be aware of the importance of the exchange rate. One of the objectives of Her Majesty's Government is to have a stable and competitive exchange rate. Is it currently stable and competitive?

Lord McIntosh of Haringey: My Lords, it is indeed the Government's objective to have a stable and competitive pound over the medium term. That does not mean that we have an exchange rate target at any particular period in time; we do not have a particular exchange rate target now. A stable and competitive pound can be achieved only through sound public finances and through low and stable inflation.

Lord Northbrook: My Lords, how important does the Minister regard the EU's stability and growth pact in sustaining economic growth as compared with the golden rule?

Lord McIntosh of Haringey: My Lords, our own criteria contribute, and have contributed, successfully over the past five years to the stability of the economy and to the public finances in this country. The stability and growth pact is an additional criterion to which we pay considerable attention.

Lord Saatchi: My Lords, Members on the Government Front Bench like to wear their hearts on their sleeves in relation to the National Health Service. They routinely condemn our Benches for heartless cruelty. How, then, did they feel on discovering that, in the five years since they came to power, they have invested less in health and in education than any government in any five-year period since the Second World War?

Lord McIntosh of Haringey: My Lords, I am more inclined, as I have said previously, to be a "speak your weight" machine rather than to wear my heart on my sleeve. I do not recognise the noble Lord's figures as being accurate. I should be glad to hear them in more detail, but in any case they do not appear to be relevant to the Question on the Order Paper.

Lord Marlesford: My Lords, returning to my noble friend's supplementary question, is the Minister

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confident that the Chancellor recognises that the world slow-down—not to say recession—would be a great deal worse had it not been for the 10 dollar a barrel fall in the price of oil over the past year, which was a major fiscal stimulus to the world? Does he recognise that to increase taxation now would undo that good and that the Government have plenty of scope to borrow, as far as it may be necessary, and that at present it is cheap to do so?

Lord McIntosh of Haringey: My Lords, I have no particular insight into the Chancellor's mind, nor do I know what facts he retains in it, particularly in the period running up to the Budget. That confirms my view that I should not express opinions about taxation levels in the run-up to the Budget.

Gibraltar

2.58 p.m.

Lord Waddington asked Her Majesty's Government:

Whether they still intend to offer Spain joint sovereignty over Gibraltar.

The Parliamentary Under-Secretary of State, Foreign and Commonwealth Office (Baroness Amos): My Lords, the Government resumed talks with Spain in July 2001 in accordance with the terms of the Brussels communiqué issued in November 1984. At the most recent round of talks under the Brussels process, which took place in London yesterday, my right honourable friend the Foreign Secretary and the Spanish Foreign Minister reaffirmed their common aim of concluding a comprehensive agreement before the summer, covering all outstanding issues, including co-operation and sovereignty. A copy of the joint communiqué issued after that meeting has been placed in the Libraries of both Houses.

Lord Waddington: My Lords, I am grateful to the noble Baroness for that reply. Have the British Government sought an undertaking from the Government of Spain that, in the event of the people of Gibraltar rejecting in a referendum any joint proposals put forward by Britain and Spain, Spain will respect that decision of the people of Gibraltar and will, in the words of Mr Hain, treat Gibraltarians as they are entitled to be treated and not resort to harassment and interference with their rights of free movement?

Baroness Amos: My Lords, the noble Lord, Lord Waddington, will know that we have pressed the Government of Gibraltar to be involved in the current discussions. Noble Lords will know that we have proposed that a framework agreement should come out of those talks which will then be followed by a referendum. If the people of Gibraltar vote "yes", it will be implemented; if they vote "no", it will not.

Lord Maclennan of Rogart: My Lords, does the Minister agree that the Brussels process which began under the previous Conservative administration

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included reference to all difficulties between the countries, including sovereignty? Would it not be timely now to have the full participation of the Gibraltar Government in these talks? There would then be no question of the Gibraltar government appearing to be an obstacle to the co-operation which is required at this stage in order to achieve an acceptable agreement which may ensure the prosperous future of Gibraltar in Europe, including a more clear and distinct status for those who live there.

Baroness Amos: My Lords, I can confirm that the Brussels process began in 1984 under the government of the noble Baroness, Lady Thatcher, and that sovereignty was one of the issues discussed in that process. We would very much welcome the full participation of the Government of Gibraltar in this process. We have sought their participation at every stage. I agree with the noble Lord that we all seek a prosperous future for Gibraltar within the European Union.

Lord Hardy of Wath: My Lords, I trust that the new arrangement will lead to a happier approach from Spain, but will my noble friend confirm that the present democratic character of the governance of Gibraltar will continue while the people of Gibraltar want it? Should not their wishes count for rather more than the arrangements made in the Treaty of Utrecht which was signed almost 300 years ago in a pre-democratic Europe?

Baroness Amos: My Lords, we are very concerned to ensure that the views of the people of Gibraltar are taken into account in this process, but the Treaty of Utrecht remains important. We shall continue to look at the issues under discussion through the Brussels process in the context of the Treaty of Utrecht.

Lord Howe of Aberavon: My Lords, does the Minister recall the very wise observation of Gibraltar's Chief Minister, Mr Peter Caruana, that you cannot expect Spain to join in discussions of this topic without being,

"free . . . to raise the matter that is of most interest to them, and that is sovereignty".

In the light of the wisdom of that observation by the Chief Minister, would it not be appropriate for him to take full advantage of the opportunity to take part in the talks on behalf of the people of Gibraltar?

Finally, can the Minister give us an assurance that the Government will continue to press the Government of Spain to abandon absolutely any form of coercion, intimidation or obstruction if the matter is to proceed as we would all wish it to do?

Baroness Amos: My Lord, we would greatly welcome Chief Minister Caruana's participation in the talks. My right honourable friend the Foreign Secretary and my right honourable friend the Minister for Europe have both, in discussions with the Chief

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Minister, sought his participation in the talks under the "two flags, three voices" formula which was requested by them.

With respect to the noble and learned Lord's question about the harassment of the people of Gibraltar, he will know that we have raised our concerns about, for example, border delays with the European Commission. It has engaged in discussions with the Government of Spain. My noble friend Lady Symons reported to the House that, with respect to concerns about telephones, the Spanish Government have undertaken to ensure that 70,000 additional lines are made available to the people of Gibraltar.

Lord Radice: My Lords, does my noble friend agree that the joint sovereignty idea is one worth pursuing? Is there not something in it for all the parties—the British retain a share in sovereignty; the Spanish get a share in the sovereignty for the first time; and the Gibraltarians retain a special status? Would not joint sovereignty remove an issue which has bedevilled British/Spanish relations for many years?

Baroness Amos: My Lords, our intention is to work to resolve all the differences between the United Kingdom and Spain over Gibraltar. We aim to do four things: preserve Gibraltar's way of life; establish greater self-government in Gibraltar; deliver practical benefits, including a stronger economy and an end to problems such as border delays; and end the dispute with Spain through lasting agreement on issues such as sovereignty.

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