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Single Currency
8. Dr. Julian Lewis (New Forest, East): If he will list the constitutional issues which he assessed as not creating a bar to United Kingdom membership of the single currency. [72420]
The Economic Secretary to the Treasury (Ms Patricia Hewitt): In his statement to the House of Commons on 27 October 1997, my right hon. Friend the Chancellor of the Exchequer set out clearly the Government's view of the constitutional implications of joining the single currency. Sharing a common monetary policy would represent a major pooling of economic sovereignty, so the constitutional issue is a factor in the decision, but it is not an overriding one. Rather, what it means is that, for monetary union to be right for the UK, the economic benefits should be clear and unambiguous, and the final decision should be made by the British people in a referendum.
Dr. Lewis: Is it not clear that the Minister has just dodged the whole point of the question? It was not about the pooling of economic sovereignty, but about the loss of democratic sovereignty and democratic accountability.
Given that continental politicians have repeatedly admitted that one of the main purposes of economic and monetary union is to create a political entity--a single state in Europe--will the Minister now confirm the logical implication of the Government's position, which is that, if the five economic, and they are only economic,
tests that the Government have set are fulfilled, there is no amount of loss of political and democratic sovereignty and accountability that they would not be content to put up with?
Ms Hewitt:
The hon. Gentleman has made it clear why the Conservative party is completely marginalised on one of the most important questions that faces this country. Again, he has made it clear that the Conservative party--the anti-European Conservative party--is saying that, even if joining a single currency were good for Britain, for the economy and for jobs, it would be against it and against it for ever. The Labour party is the party that speaks for the British interest.
Mr. Denis MacShane (Rotherham):
There are constitutional issues at stake involving parliamentary democracy. In the past 24 hours, we have seen two major developments. An all-party committee set up in good faith to allow Parliament to help business to prepare for the single currency has been boycotted by the Tory party, and boycotting is a 19th-century weapon. Also, has not the shadow Chancellor said that he is so indifferent to the House that he proposes to lead the Tory party on to the streets of this country? It has become the party of Trotskyists on European issues. We have "Militant Maude and the Tory Trots against Europe".
Ms Hewitt:
I am sure that you will be as grateful as the rest of the House, Madam Speaker, for the fact that my hon. Friend asked that question in English. He is absolutely right. When the Conservative party was in government, it opted out of the social chapter which would have given the British people fair standards at work. It has now opted out of the cross-party group on preparations for the euro and out of defending the national interest. It is wholly marginalised in the debate.
Mr. Nick Hawkins (Surrey Heath):
Will the Minister recognise that my constituents and businesses--particularly small businesses--throughout the country think that the most important constitutional issue is that of the Government spending taxpayers' money before they have any democratic mandate to do so? Will she admit that the words "changeover plan" are seen by people and businesses as a handover plan, handing over British democratic sovereignty without any mandate to do so? If she and her friends in the Government were honest, they would have a referendum now. They have no mandate to spend a penny piece of taxpayers' money without a referendum--they know that they would lose it, so they dare not hold it now.
Ms Hewitt:
Let me stress once again that we have made it clear that the final decision on whether to join a successful single currency will be made by the British people in a referendum. Businesses want economic stability, low interest rates, low inflation and practical support to ensure that they can take advantage of the opportunities created by the euro. The Government are giving them that support. Perhaps the hon. Gentleman will speak to those on his Front Bench and urge them to join the cross-party group that we have set up to ensure that there is parliamentary involvement in the preparations for the possible decision to join.
Mr. Kevin McNamara (Hull, North):
Does my hon. Friend agree that, if the Conservative party were logical
Ms Hewitt:
My hon. Friend is right in his criticism of the official Opposition. It is impossible for them to have any intelligent view on the matters to which he refers when they are now so clearly the anti-European party. The Government will continue to ensure that British interests are defended by our policy of constructive engagement in the European Union.
9. Mr. Owen Paterson (North Shropshire):
If he will make a statement on the impact on the United Kingdom economy of proposed European tax harmonisation measures. [72421]
The Paymaster General (Dawn Primarolo):
The Government will continue to judge every tax proposal according to the United Kingdom national interest. We will not support any action at a European level that will threaten the competitive position of British business or harm investment and jobs in Britain.
Mr. Paterson:
Does the Minister fully understand that, thanks to the fact that the total tax burden in the United Kingdom is 20 to 25 per cent. lower than that in the euro zone, in the past six years the United Kingdom has created 2.5 million more jobs than the whole of the euro zone countries put together? Therefore--as she has just said that it is a matter of vital national interest--will she promise to the House and to the United Kingdom that the Government will use the national veto to prevent any tax harmonisation upwards, as was recently demanded by Mr. Gunter Verheugen, the German Minister for Europe?
Dawn Primarolo:
That was a very interesting intervention. I thank the hon. Gentleman for confirming that we are a low-tax Government.
Ms Sally Keeble (Northampton, North):
Does my hon. Friend agree that some of the pressures from the Germans for tax harmonisation are based on pressures from their own financial institutions, and that there is concern about those pressures in our own financial sector? Does she agree also that the strong constructive role played by our Government is the best way of countering those pressures, and that use of the types of tactic employed by Conservative Members--with all their prevarications, splits, U-turns and muddles--would leave our financial institutions and economy very much exposed?
Dawn Primarolo:
I am happy to confirm to my hon. Friend, and other hon. Members, that the Government believe that tax harmonisation is not the way forward for Europe. Our European partners agree with us that Europe's priority is the promotion of employment reforms
Mr. John Whittingdale (Maldon and East Chelmsford):
The hon. Lady has stated on a number occasions that the Government are opposed to the proposed European withholding tax and to further European tax harmonisation. Will she therefore take this opportunity to condemn Mrs. Pauline Green, leader of the European socialist group, and other British Labour Members of the European Parliament who voted for the 20 per cent. withholding tax and for further extension of tax harmonisation to cover capital gains tax?
Dawn Primarolo:
The Government's position on the draft directive on taxation of savings, which is under discussion, is very clear. As the hon. Gentleman knows, we have made it very clear that we shall not agree to anything that damages competitive markets. Moreover, he is in no position to say anything about disagreements within parties on any subject, particularly Europe.
Mr. Dale Campbell-Savours (Workington):
Is not the issue of European tax harmonisation one that could be raised in the new House of Commons euro committee, which the Tories are boycotting? Will my hon. Friend tell me who will represent Conservative opinion in my constituency in favour of the euro? Tories in my constituency who are in favour of the euro would like their voice to be heard in the Westminster committee. Perhaps my hon. Friend will comment on that.
Dawn Primarolo:
I am sure that Conservative voters in my hon. Friend's constituency will make up their own minds, as they did at the previous general election, and decide that their interests are best served by voting Labour--which is there, defending their interests.
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