With some exceptions, this has been a rather enjoyable debate, contrary to the expectations of some of us, certainly on the Conservative Benches. My right hon. Friend the Member for Chingford (Mr. Tebbit) was in cracking form when he spoke earlier, but his view that Chancellors should be the sole controllers, and could be the sole controllers, of modern economies was a bit romantic.
It is risky to hold such a view because that devalues the role of the other authority in any modern economy, whether a large continental one or a national one, and that is the role of the central bank and its governor—the central monetary authority. Therefore, I am concerned when I hear hon. Members talk as if there were some magic world to which we could somehow return in which all the economic factors of our nation could be controlled by the politicians, the Minister of Finance or, in our case, the Chancellor.
I go further and say that if there is one overriding and burning need in Britain in order that we may perform more effectively and have a sounder monetary policy and be better members, or effective members, of the ERM, it is that we should somehow achieve a less politicised monetary policy. It is the countries that can run a depoliticised monetary policy, with perfectly sensible and democratically controlled fiscal policies and broad national policy, which have been most successful in getting their currencies to perform and whose currencies are most respected, traded and sought in world currency markets.
Whether we are in the ERM or not, and on the whole it adds some reinforcement, it is no substitute for the fundamental need for Britain to secure and run a sound monetary policy. When world markets look in on this country and see that, however determined are our political leaders, they are still the people who pull the precise levers of monetary policy—short-term interest rates—those markets are bound to attach less credibility to such decisions than if we had a separate, more independent monetary authority.
There can never be a completely independent authority, because a subtle nexus of relationships must exist between central bank governors and any democratically elected Government. However, unless we can establish greater separation of the powers of our central monetary authorities in operating monetary policy, and remove from the shoulders of my right hon. Friends the burden of carrying the political responsibility for setting and changing short-term interest rates, we shall not succeed in establishing credibility for our currency and thus the lower interest rates at which it can be traded in a stable way that we really deserve. That touches on a fundamental misunderstanding that I believe that I saw reflected in some of the notions of my right hon. Friend the Member for Chingford, much as I agreed with many of his other remarks and enjoyed his speech.
However, the real muddle in this afternoon's debate was to be found not in the remarks of my right hon. Friend but in those of the right hon. and learned Member for Monklands, East (Mr. Smith). I do not deny that we are in a bit of a muddle, too—it would be silly to suggest otherwise. However, it was comical to witness the right hon. and learned Gentleman—who is usually so incisive and crisp, and considered such a dreaded lawyer, and who will carve everyone up at the Dispatch Box—wade into deeper and deeper difficulties as he tried to grapple with his own party's policies on Europe and its monetary affairs.
The right hon. and learned Gentleman is himself being sucked into a religious war—from which my right hon. and hon. Friends have not been entirely free—over issues of tax theology that are of remote practical importance. The great religious wars of the late middle ages were fearsome affairs and were fought with terrible ferocity, but when they ended, few people could remember what they were about or the point of those conflicts. I fear that he same is true of our arguments over a single currency and a European central bank.
Some of my right hon. and hon. Friends and Opposition Members fail to realise that the chances of a central bank ever coming about are very remote. If it happens in years to come, that will be decided not by politicians, on dates set by bureaucrats in Brussels, and riot even by treaty amendments. It will be determined by markets—industry, customers, consumers, and to some extent by central bank governors. They will decide whether it will be more convenient to operate a single currency running from Lisbon to Berlin, and from Reggio Calabria to Glasgow, or whether it will be more convenient, sensitive, flexible and articulated to operate separate currencies broadly within national zones.