Excessive Deficits

Part of Orders of the Day — European Communities (Amendment) Bill – in the House of Commons at 7:30 am on 24th March 1993.

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Photo of Mr Denzil Davies Mr Denzil Davies , Llanelli 7:30 am, 24th March 1993

Amendment No. 81 seeks to strike out the whole of the second stage of economic and monetary union, including the European monetary institute and the protocol related to it. Perhaps I may respectfully remind the Committee that this group of amendments deals with the transitional arrangements, with the second stage and the third stage, so it covers the whole of the process towards the final act of a single currency, if that should happen. Amendment No. 409 seeks to exclude the protocol on the convergence criteria which have to be achieved before a member state can enter stage 3. Amendments Nos. 38 and 381 deal with the balance of payments crisis and the power given to the Commission, within those stages, to control and supervise any action taken by a nation state in respect of that balance of payments crisis.

Although chapter 4 of the treaty of union on page 25 is headed "Transitional Provisions", it deals in the main with the second stage and then with the third stage.

Before I discuss those, perhaps I could clarify the legal position. I should like the Financial Secretary to answer some questions. Despite the fact that he has been up all night, he is bright-eyed and bushy-tailed, and I am sure that he will courteously seek to answer questions on the literal interpretation of the text, which is not easy to understand. I give him warning that I shall have to ask such questions.

I am glad to see the Attorney-General here. During most of the debates he has kept a watching brief. We have not had the benefit of his words, but he has looked wise, as Attorneys-General are apparently supposed to do. I shall try to set out the legal position as I understand it. Some of the amendments may be desirable from the Government's point of view, but they may not be necessary—to use the language of the Foreign Secretary or of the Attorney-General.

Stage 2 of economic and monetary union imposes treaty obligations on us. We have not acquired an opt-in or an opt-out to stage 2, which is a treaty obligation. We are not supposed to refer to the gentlemen in the Box, and I do not know whether they are Foreign Office legal advisers, but I see that they agree with me. I am not sure whether that is worrying.

To return to the Attorney-General's helpful intervention on amendment No. 27, when he said in so many words—I should have thought that it was a fairly simple legal point—that if one has a treaty obligation, one must incorporate it into domestic law. The corollary is that, if one has no treaty obligation, one has nothing to incorporate into domestic law.

According to the Government, amendment No. 27 did not create a treaty obligation, so nothing was put into domestic law; thus, it did not really matter what one put into that law.

Stage 3 does not involve any treaty obligations. The Financial Secretary did not say so in so many words, but I am not criticising him. He does not have the courage of the Minister of State, who rushes into the legal arguments with great enthusiasm. Therefore, any amendments to stage 3 are not fundamental to the treaty. I mention that to Members on the Labour Front Bench, so that if they wish to be courageous on this occasion and to vote on an amendment relating to stage 3, they need not worry, because the treaty will be fine and can still be ratified. I think that the Attorney-General will confirm that that is correct. I want my hon. Friends on the Front Bench to be careful not to vote on stage 2 because it might badly hurt the treaty, which apparently the official Labour party supports.

First, I will deal with stage 2. On page 25, the first paragraph of article 109e states: The second stage for achieving economic and monetary union shall begin on 1 January 1994. There is not much time. The treaty may or may not be ratified by then—who knows? No one knows what will happen in the Danish referendum, or in this House and the other place.

Even if the treaty is ratified by 1 August—let us give the Government some hope—there is not much time for the Financial Secretary, the Foreign Office and the Treasury to get their tackle in order, as we shall be straight into stage 2 of economic and monetary union, which is obligatory. We cannot plead the opt-out or the opt-in.

Article 109e continues by stating that even "Before that date"—presumably the date when every country has ratified—and the second stage "each Member State shall" do certain things. In paragraph 2(a) we are told that each member state shall adopt multiannual programmes. I suppose I know what multiannual programmes are—lots of programmes in one year, I take it. As this is Treasury stuff, I hope that the Financial Secretary will be able to tell us whether we are to embark on these multiannual programmes in the middle of this year. These are very important programmes.