This is an interesting little clause. It will give the Government, and particularly the Treasury through its executive agencies the Debt Management Office and National Savings and Investments, or whatever it calls itself now, the power to spend money in preparation for the possible introduction of the single currency. I shall resist all temptations to broaden the debate.
I have a few basic, simple questions. We have been unable to obtain answers to similar questions about departmental spending in preparation for the euro in other areas. In fact, the official Opposition have been hard at it trying to find out what is involved, and I have a raft of parliamentary questions illustrating the extent to which the Government have stonewalled. I hope that we can get some more accurate answers, at least in respect of the two Departments to which the clause directly refers. How much will they spend, is there a cap, has the Treasury worked out what would be reasonable, and how would that money be allocated? Whenever such parliamentary questions have been asked in the past, they have not been answered, but the answer given refers the inquirer to the third outline national changeover plan, which of course does not give the answer; it gives an answer for Departments that do not concern us here today. Only three Departments have published a cost, which is £30 million. We want to know how much will be spent.
We want a clear justification from the Minister on why we should agree to such open-ended powers. After all, the provision will enable the Treasury to spend any amount of money on the euro indefinitely. That is an unusual way to go about running any spending programme, even in the Treasury.
I do not know whether I am the only person who reads explanatory notes, but I was rather taken by paragraph 4, which says:
''the Chancellor announced that there would be 'paving' legislation to allow departments to make further, targeted investments as necessary for preparations for the possible introduction of the single currency.''
I wondered what the word ''investments'' was supposed to mean in this context, as if we are guaranteed a return if we spend money to prepare for the single currency. An investment that does not secure a return seems to me to be an abuse of the word ''investment'', and the complete collapse of language arrives shortly afterwards. Indeed, that has happened in a wide area of so-called public sector investment: when one scratches it, one finds that it is spending on salaries or other tasks and not investment in any normal understanding of the word.
I should be grateful if the Minister could tell us how much will be spent, what it will be spent on and how much, if any of it, will be capital spending, which could, at least in theory, call itself an investment. Does the Treasury intend, even though it is not to be put in statute, that the amount spent should be time-limited? Although this goes beyond the scope of the clause, will she, while she is at it, encourage other Departments to publish their figures for the amount that they are spending? Quite reasonably, the public want to know, and they are being denied an opportunity to find out.
I support the hon. Gentleman's comments, without wanting to take the debate too wide. We are entitled to know, if the Government are making provision to spend money on euro preparations, whether the money will go for any purpose or will go down the drain. We know that there are differences in the Government over the commitment to join the euro. We know that the Prime Minister is enthusiastic; we are not so sure whether the Chancellor is. We are entitled to establish whether the clause and some of the other measures that the Government are putting in place to spend money on euro preparations are simply a sop to the Prime Minister to keep him happy and to maintain his conviction that at some stage we might join the euro.
The Chancellor is increasingly giving the impression that there is an alternative model of macro-economic management for Britain, which is the one that he has established since 1997, and that, frankly, we might never join the euro. If that is the case, it is utterly pointless to spend large amounts of taxpayers' money simply to keep the Prime Minister happy. I hope that the Minister will let us know today how strong the Treasury's commitment to the euro is and whether she believes that, within, say, the next 10 or 20 years—quite a generous time horizon—we will have joined the euro or whether this is all about stringing along the Prime Minister.
Before I call the Minister, I should say that I think there is a danger of our going rather wide. This is an enabling clause: it does not commit the Government to expenditure. We will be able to debate elsewhere in the House proposals for such expenditure, as and when they arise. The clause is merely enabling and we should treat it as such.
I value your guidance, Sir John. I shall not get drawn into a long debate about euro preparations or our policy towards the euro. It is better if I deal with the clause, which, as you rightly pointed out, is an enabling clause. It authorises the United Kingdom Debt Management Office and National Savings and Investments to incur expenditure in preparation for the possible introduction of a single currency. As hon. Gentlemen well know, that assumes that the UK passes the five economic tests, that Parliament approves a decision and that the issue is put to the people in a referendum.
In his statement to Parliament on 9 June 2003, the Chancellor announced that there would be paving legislation to allow Departments to make further targeted investments as necessary preparations for the possible introduction of a single currency under those conditions. The clause achieves that targeted investment for the Government borrowing functions of the Debt Management Office and National Savings and Investments. As the hon. Member for Chichester (Mr. Tyrie) pointed out, the public sector had invested £36.8 million in preparing for a possible UK changeover, to the end of December 2002, the last time for which figures are available.
If the hon. Gentleman had more patience, he would have heard that I was about to give him more detail on how that money had been spent. The majority was spent in three critical path Departments, those that are likely to be most affected by the possible introduction of the euro. Those are the Inland Revenue, where £18.7 million has been spent, HM Customs and Excise, where £7.1 million has been spent, and the Department for Work and Pensions, which has spent £8 million.
The size of the task faced by those Departments meant that, if we were to be in a position to prepare and decide, they had to make that investment early. Otherwise the cost of a possible changeover would have been absolutely huge. The amount of money spent early reduces the total cost.
The clause allows the DMO and NSI to reduce the risks associated with a possible changeover by making small, targeted investments on euro preparations. It is up to the individual Departments, together with the DMO and NSI, to present a business plan for approval that says how the money would be spent, but we have clear evidence that, in the euro area, early planning reduces costs and the associated risks of changeover.
We are not talking about significant sums but about much smaller sums than those involved in the three critical path Departments. It is impossible to say with accuracy what the figure will be. Sometimes it is a question of preparing systems in a slightly different way than would otherwise have been the case and of building in euro compatibility—for example, by investing in new IT systems—where that represents value for money.
Given the key role that both the DMO and NSI play in our Government debt management and some of the issues that need to be considered, which were set out by the Bank of England in its ''Practical Issues'' City changeover plan, it is important that we prepare early to reduce future risk.
The money is for the very small, targeted expenditure that is needed to reduce the risk of any future changeover. The Departments have to decide how best to allocate that money and present a case for it. If the hon. Gentleman has the idea that vast sums of Government money would be used by the DMO and National Savings and Investments to carry out a full-scale nationwide information campaign, that is just not the object of the exercise.
National Savings has already presented a euro changeover plan and it is possible that it could achieve the timetable already set out in the national changeover plan, but we have concluded that the risks to it in trying to meet the changeover are unacceptably high. A little bit of targeted money now will reduce that risk substantially. It makes economic sense, leaves our options open and reduces the risks in a sensible manner, and I commend the clause to the Committee.
My understanding is that the banking industry has refused to spend any more money on such preparations on the grounds of probability. Clearly, it has a certain interpretation of the Government's stance. In practical terms, whatever happens will be bound by whatever the banking system does, so there is not much sense in the Government spending money if the banking system is not spending money.
I hope that these enabling clauses will be interpreted with the appropriate caution and restraint. There really is no point in spending that money; it is not a prudent investment and it will need to be spent as and when the banking system moves forward.
The Financial Secretary helpfully said that the sum would be much less than the £30 million-odd being spent primarily by three Departments, but we have not been told how much other Departments have spent. We have still not been supplied with the information that we asked of the Government. I should be grateful if she could provide a little more detail about how much she thinks will be spent—even
if she cannot do it now—or at least say that she will come back to us if spending goes beyond a certain threshold.
Is spending £5 million or £10 million? It is highly speculative expenditure of public money. As my hon. Friend the Member for Arundel and South Downs pointed out, based on the noises made by the Government most of the private sector has formed its own perfectly reasonable views and is not wasting money. The Government, however, are going ahead and spending, or at least planning to spend, the money. The public should know how much will be spent and, in more specific terms than we have been given, how.
I am often struck by how much more detail and transparency a budget prepared for a spending Department requires and how much scrutiny it can come under as a consequence of the work of the Comptroller and Auditor General, compared with how easily and with how little scrutiny the Treasury, often through tax relief and measures such as these proposals, can find ways of spending money. That is exactly what is happening now. There used to be many complaints about the Bank of England doing the same, although Ed Balls was excellent at working up transparency proposals from the Bank of England.
Now we have the same problem with these proposals, which I largely supported. In this clause, we have the problem in a microcosm. Can we please have the minimum level of detail expected for the vast majority of public spending in this country? How much will be spent? What is the cap? Will the Government come back to us if spending goes beyond the cap and, broadly, how much will be spent within that limit and how?
I have already told the Committee that it is quite difficult to predict how much will be spent, although we expect the amount to be fairly small in relation to other Departments. I talked about £8 million by the Department for Work and Pensions, which has a much bigger task to make the benefits system compatible with payments in euros. It has a much bigger task than the DMO and National Savings and Investments, but it is up to the Department to present a business case, think through what possible risks there are with a changeover and analyse where small, targeted amounts could be spent now. Currently, it has no flexibility whatever to do that because it is not authorised by Parliament. It is merely asking for a little bit of extra flexibility. Of course, as this progresses, if it is able to give detailed estimates I will try my best to answer the hon. Gentleman's question in more detail in writing.
We do not generally publish the business case, partly because National Savings and Investments operates in a commercial environment. It would not be right to share detailed information. This might form part of a wider business case. It may be possible to provide estimates of how much has been spent. I am
not sure about that. I will need to ask the individual Departments whether it is possible to isolate some of the costs. No doubt we will have this debate in future.
On the point that the hon. Gentleman and the hon. Member for Arundel and South Downs made about the banking sector, we are closely engaged with the sector in the working groups and in the preparation of the national changeover plans. We have regular meetings with representatives from banking, insurance, the wholesale and financial markets, retail and small businesses, utilities, accountancy firms and so forth about how to prepare for the introduction of the euro. Many private sector organisations have already made small, targeted investments. In some sense many of them are well prepared. It is only sensible that the Government should match that. I appeal to the hon. Gentleman's common sense and that of my hon. Friends to approve this sensible clause.
Question put and agreed to.
Clause 307 ordered to stand part of the Bill.