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Economic And Monetary Union

Volume 301: debated on Thursday 27 November 1997

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What steps he proposes to take to help business prepare for economic and monetary union. [16589]


If he will make a statement on the steps he is taking to help businesses prepare for economic and monetary union. [16602]

The Government are committed to ensuring that British business is well equipped to take advantage of the introduction of the euro in other member states from 1999. We have set up a new standing committee, the members of which include the president of the Confederation of British Industry and the president of the British Chambers of Commerce, alongside the existing business advisory group to co-ordinate and press forward the preparations agenda. I will be publishing a summary of the advisory group's findings early in the new year.

I have also arranged for the Treasury to publish a practical guide to EMU for business and 55,000 copies have already been issued to a wide range of businesses.

I thank my right hon. Friend for his answer, especially in relation to the establishment of the standing committee. He will be aware that Marks and Spencer has announced that it will install tills to take the euro. Does not that show how British business is getting on, in a practical and pragmatic way, with dealing with the single currency, while the Conservative party is in an ideological time warp?

I agree entirely with my hon. Friend that what frustrated British business was the previous Government's inability to help them with preparations to cope with the introduction of the euro in other member states in 1999. Marks and Spencer has said that it will have the capacity to deal with the euro in the United Kingdom as well as Europe. Other companies such as the National Westminster bank are preparing to trade in euros and to train staff to do so. The Conservative party should wake up to the fact that this is something that is going to happen in other member states in 1999, and it should stop its ideological opposition to a single currency.

Does my right hon. Friend agree that large companies will, in future, increasingly be manufacturing and marketing their products on a pan-European basis and that, as such, they will be concerned about the predictability and stability of exchange rates when making their investment decisions? How does my right hon. Friend think British business will react to the Conservative party when it pursues a policy of saying that it will not join a common currency even if it is in the national interest to do so?

I am grateful to my hon. Friend. British business is reacting: business men in Scotland are about to set up their own party even though they are Conservatives because they are so out of touch with the Conservative party. As for business preparations, I think that business understands and the Conservative party will soon understand—if it does not listen to what its Conservative Members of the European Parliament are telling it, the public will tell it—that 50 per cent. of our trade is with the European Union, more than 60 per cent. of our trade is with Europe and 30 per cent. of inward investment into Europe comes through Britain. It is important for the Conservative party to wake up to those realities.

What is the point of spending all this public money on so many publications if they are shoddily produced or even deceptive about the facts? The document that I have with me, which I think every hon. Member has received, called "UK Membership of the Single Currency", deals on page 10 with the important matter of interest rate convergence. It sets out and compares current nominal interest rates. The Chancellor knows perfectly well that it is not nominal, but real, interest rates that are important for economic behaviour.

If we compare current real interest rates—nominal interest rates minus inflationary expectations—we see that the gap is very much less than that set out in the document. Was that just a schoolboy howler, or were the document's authors, the Treasury Front-Bench team, determined for their own reasons to exaggerate, even dishonestly, the difficulties that this country will have to overcome to converge on interest rates and join a single currency?

The hon. Gentleman is advancing an interesting case: he is putting a case for entering the single currency in 1999; he is totally at odds with his colleagues on the Opposition Front Bench who want to delay entry for 10 years. I have made it clear that we shall have to meet five economic tests, not one. Some of those tests are: unemployment must come down; investment must benefit; inward investment must benefit. The hon. Gentleman should start questioning his own Front-Bench team, as they do not seem to have any answers for him.

In the committee that the Chancellor of the Exchequer has announced, how are the views and concerns of self-employed people and small businesses to be taken into account?

The small business community is already represented on the business advisory committee; it will be on the wider group; it will be consulted on such matters. The Federation of Small Businesses is represented on the business advisory group. The shadow Chancellor is out of touch with events, and should go back and do his homework.

Is my right hon. Friend aware that, long before Marks and Spencer is using the euro, lone parents will be visiting the stores to spend money, and that some of those parents will have less money if the Government continue to implement the Tory dogma contained in the Social Security Bill? I know that my right hon. Friend is against Tory dogma, so let us get rid of the proposal that will penalise lone parents.

It is because we are against Tory dogma that we are giving lone parents new opportunities that they never had under the previous Government. We are giving them opportunities for work, opportunities for training, opportunities for child care—up to 1 million child care places as a result of our £300 million investment. When people see the range of new opportunities available as a result of a £200 million welfare-to-work programme and a £300 million child care programme, they will welcome the changes that we are making.

A written answer from the right hon. Gentleman's Department on 11 November confirms that the Government have no estimate or idea of the cost to businesses, the public or even the Government of converting to the euro. Is it not a disgrace that the Government are calling for a national debate on monetary union without having any idea of what the costs are likely to be? Since unofficial estimates of those costs range up to £19 billion for the private sector alone, will the Chancellor replace his hot air and rhetoric with some hard estimates and facts about what the likely costs of conversion will be, and will he report them to the House?

If the right hon. Gentleman is so interested in that question, why did he not bother to find out the answers when he was the Treasury Minister responsible for those issues? We are now making the preparations and looking at all the necessary detail. The previous Government failed to do that, because they are completely divided over Europe.