European Committee, 29 Jan 2002

Meeting date: Tuesday, January 29, 2002

Official Report 192KB pdf

---

Committee Report (Euro)

The next item is discussion of the Executive's formal response to our report on the euro in Scotland. We have received a comprehensive and timeous reply. I understand that the reply is being made quite widely available, which will give the report the attention that it deserves.

The Executive commented on learning from the experience of other member states. As a member of the Committee of the Regions, I felt that the forum would present opportunities to find out what preparations are being made in other regions of Europe. We could find out about the difficulties that they are facing, the lessons that they are learning and the good practice that is being shared. I am sure that the Committee of the Regions will produce a report. I would be happy to feed that information into this committee's deliberations, because the matter is of interest to us.

Is grant aid from the European Union now calculated in euros?

My understanding is that, for a considerable number of years, calculations were made in ecus and that they are now made in euros.

I appreciate that. However, given that we now have the single currency and the currency zone, as opposed to the exchange rate mechanism and the ecu, is there compensation for fluctuation in the exchange rate between the pound and the euro? Is it the same system as was used vis-à-vis the ecu?

I understand that it is. Perhaps Ben Wallace has some information.

There is a system of compensation for the common agricultural policy. Obviously, our contribution to Europe will now be in euros, so a strong pound will buy us more euros for our contribution.

It would be worth while knowing what the regulations are and being aware of the potential for gain or loss depending on the euro exchange rate. The impression was given that the situation is different for different schemes. If the CAP uses euros, do structural funds or other projects do the same?

It is scheme-based.

Historically, the green pound corrected CAP support, but I could not tell you whether the same applies to structural funds.

I do not think that it applies to structural funds, but it would be interesting to know, because the structural funds budget was set from the end of 1999 to 2006. How we draw funds down from the Treasury and how the Treasury draws them down from Brussels is what will make the difference.

Would it be possible for us to get clarification on that?

Yes, I am happy to ask the clerks to look into that.

Presumably it is open to people to receive payments directly in euros, if they so choose, except the euro is not legal tender here, is it?

It would be useful to know whether there is an additional cost to the administrators of the funds, be it Scottish Enterprise or whatever, which may or may not be compensated for in the context of the exchange rate.

Historically, all calculations were made in ecus. I imagine that that has continued, but we should ask the clerk to look into the matter and report back to the committee.

I want to register my strong dissatisfaction with paragraph 17 of the Executive's response, which states:

"the Scottish Executive does not consider that there are needs for … a separate programme of general familiarisation … a targeted campaign for educating young people … or … the creation of a working party … for vulnerable groups".

The Executive gives no reason for that dismissal of what I thought were good recommendations. Is the Executive using paragraph 16 as a justification? As far as I know, paragraph 16 is factually accurate and no doubt the measures that it describes will help the business community and people who go to the euro zone on holiday, but there are people in our schools and in the population in general—vulnerable groups, such as people with learning disabilities—who do not have the opportunity to travel abroad. We should ask the Executive to reconsider its response to our recommendations in the light of experience.

I know what you are saying. However, the report explains that member states that are using the euro and member states that are outside the euro zone have differing needs. That explains why the Executive does not feel that a targeted campaign for young people is necessary.

I know from my experience of the Committee of the Regions that there were many familiarisation campaigns in member states long before January. I suppose the point is that we have not committed to entering the euro yet, which is the Executive's point in the preliminary arguments to paragraph 17. However, when we drafted the report, the committee felt that familiarisation for vulnerable groups—and I recall asking for a paragraph on that issue to be inserted in the report—would be a worthwhile exercise. I would not be averse to writing back to the minister on that point.

I have a slightly different point, which is about how we use the response. I was struck by the extent to which different industries have slightly differing views on their relationship with the euro. People in the tourism industry have specific views, so I wonder whether we could ask the Executive to come back to us after the first tourist season following the introduction of the euro. Although the Executive has said that it is doing as much as is necessary and thinks that all the plans are in place, I would like a review of how the mechanisms have worked, with a specific focus on training. Some of the tourism organisations that lobbied us a couple of weeks ago have concerns about the extent to which smaller tourism companies can access and use the information that has been prepared. If we asked the Executive for a review, it would take the work a bit further.

That brings me back to Dennis Canavan's points. There is the question of preparing for the euro—if we are to have it—but we must also deal with the reality of its existence. A few months down the line, we will be able to see how things have gone and whether there is a need for the Executive either to take a slightly different tack or to refresh the campaigning work that is already being done.

I strongly support what Sarah Boyack has said. We should certainly take stock during or at the end of the coming tourist season. I am grateful to Dennis Canavan for flagging up the fact that paragraph 17 does not really square with paragraph 16. Paragraph 16 lists the actions that have been taken to inform business, industry and commerce, but the recommendations that he referred to concern much wider education. It is important to establish with the education department whether the curriculum in schools and colleges has been brought up to date. There is no point in continuing to teach people about deutschmarks, francs and lire. Kids should be aware as early as possible that something new is happening and that we may be involved in it in due course.

That is a good point. I would like to make a couple of points about monitoring and reporting, but Ben Wallace has some comments to make first.

I understand the emphasis on making people familiar with the euro, which is predominantly the concern of the business and tourism sector, but I agree with John Home Robertson's point about education. I also agree with what Dennis Canavan said. If the UK were committed to joining the euro—although I do not think that that will happen—the points made in paragraph 17 should not be neglected.

It is interesting to note that paragraph 16 ties in with enlargement. The fact that the Treasury has committed only £9.9 million to business education and familiarisation with the euro is pathetic, because £9.9 million will not get us very far. It might cover writing one letter to every business in the UK. If the Treasury thinks that that will encourage people to be familiar with and take advantage of the euro—whether it is a strong currency or a weak one—that is simply not good enough. I find the figure extraordinary, unless there has been a typing error.

Is that an expenditure commitment from the Conservative party? [Laughter.]

I think that it is, because you would get that money back. If your business was familiar with a weak currency, you could take advantage of it and get your money back in profits.

So you are a creative accountant.

Am I wrong in thinking that we were being put back in our box a little bit? Reading the response, I felt that the Executive was telling us all the time, "We've done this and this and this." As has been said, the failure to mention teaching kids about the euro is a quite conspicuous omission. Earlier, I wanted—but did not have the opportunity—to comment on the view that it is inappropriate for the UK Government or the Scottish Executive to comment publicly on the success of preparations for the euro. We can understand the diplomatic reasons why they would not want to do that, but is there any reason why they should not be able to publish a summary of the conclusions of other people who have already introduced the euro—for our delectation and delight or to help anyone else who wants an overview of the euro situation?

The Government may have been worried that we would appear to criticise our European colleagues if we were to pass judgment on the success or otherwise of their introduction of the euro, but that is not to say that it could not be done more diplomatically. The information could still be made available.

That is not what the committee intended when it was writing the report. The intention was to learn from the experiences of other member states that are ahead of us on the time scale. That is a reasonable point.

Did the Treasury misinterpret what we were trying to say?

We intended to say that we would like to learn from the experiences of other regions. I believe that there is an opportunity to do that because there is no doubt that the Committee of the Regions will produce an opinion within the first year of the introduction of the euro on mainland Europe. I would be happy to feed back to the Committee of the Regions.

A number of points have been raised in relation to monitoring and review. It is important that we follow through on that and that we identify the points about monitoring in relation to education and tourism. Sarah Boyack made a point about the first tourist season after introduction of the euro—some kind of analysis of how that goes would be useful.

Paragraph 22 of the Executive's response mentions a newly established working group to consider local authority planning. Again, that is a matter on which we can ask to be updated.

Paragraph 23 makes reference to the European monetary union co-ordination group. There is a list of the key players in the Scottish business sector that are contributing to that group, including the Convention of Scottish Local Authorities and the Federation of Small Businesses. I note that there does not seem to be any input from the Parliament. I wonder whether it would be appropriate for the Parliament to input to the process. Do members feel that we should raise that point with the minister? Parliament's involvement does not have to be in relation to the European Committee—it might be in relation to the Enterprise and Lifelong Learning Committee or at some other level within the Parliament. Local government, business and the Treasury all seem to be represented on that group. Do members feel that we should raise that point?

That would be appropriate. We need to push for parliamentary representation, rather than there just being Executive representation, on any such bodies. This is the first Parliament since devolution and we are in the early stages of building relationships and structures. It is essential that we at least bid for such involvement.

I would like to make some points in relation to paragraph 17. I agree with almost everything that has been said until now, but I have a slight difference of opinion with Ben Wallace. I would like clarification of why the Executive came to the conclusion that it expresses in paragraph 17. We live in a free employment market and it is incumbent upon us to train or to educate our kids and the broader work force to take advantage of free movement of labour in the euro zone, and to fully appreciate and understand the use of the euro. That seems straightforward and obvious.

Correct me if I am wrong, but there was a budget from the European Union to cover education costs in the countries that agreed to join the euro.

That is right.

Although at this stage, the UK is not committed to joining the euro, can it access that education fund to pay for the change in our curriculum, for example? The change must have large cost implications throughout the country as well as through all educational establishments, which will have to provide new materials and, potentially, to train teachers. That has implications for COSLA, the Scottish Executive education department and the Parliament.

It is important that we find out whether that education programme is going on. Paragraph 17 gives the impression that it is not. If it is not going ahead, we need to find out whether that is because of its cost and whether we can access EU funds to cover that education programme, without making a commitment to joining the euro.

The European Commission set up a programme called the PRINCE programme, which aimed to provide funding for such matters. If my recollection is correct, a smaller proportion of the budget was set aside for member states that wanted to undertake information campaigns generally and exchange information with other regions. I am not sure whether that money has been accessed.

Can we ask whether it has?

We can certainly look into that and find out whether the programme is still in operation. Stephen Imrie tells me that the UK has received some PRINCE programme money, possibly for the City of Edinburgh Council. We can produce further information on that for the committee, and we might want to disseminate the information further if the fund is accessible by local authorities and groups in the voluntary sector—as I suspect it might be—rather than just by member states.

It is part of our scrutiny role to consider potential costs that are not related directly to directives or law made by the Parliament or the European Union. If joining the euro has cost implications for us, surely it is important that we research the issue and seek potential funding from the EU to cover the additional costs, particularly in education.

As I recall, the PRINCE programme was not available for curriculum development but for information campaigns—especially for elderly and vulnerable citizens—such as leaflets for libraries and so on.

We should not labour the point. The introduction of the euro will simplify the experience of most citizens in Europe, which is the whole idea behind it. I presume that it will not make life any more difficult for teachers. The point about material in schools is the one that needs to be addressed.

My primary concern is the potential costs. We and the education authorities should be aware that, irrespective of whether we join or do not join the euro, it is incumbent on us to educate our people to allow them to maximise their opportunities in the free employment market—although we do not teach them languages.

Not very well.

We are getting much better at it.

We have agreed to write to the Executive, asking whether we can have the situation monitored and a report submitted to us in respect of issues such as the education programme, the euro's effect on tourism after the first season during which the euro is used and some information about the PRINCE programme. We will report back on all that at the next committee meeting. Is that agreed?

Members indicated agreement.