HC Deb 30 October 1997 vol 299 cc1017-8
7. Dr. Iddon

What steps he is taking to end major fluctuations in the business cycle. [12654]

Mr. Darling

The Government have taken decisive action to strengthen economic stability. As my hon. Friend the Economic Secretary said, the damaging boom and bust legacy that we inherited has been extremely damaging to British industry. We attach great importance to stability, openness and transparency of policy—because from them flows the credibility that world markets now demand.

Dr. Iddon

Does my right hon. Friend agree that the Government have established a framework for monetary policy that is transparent, accountable and the best in the world? Does he agree also that the monetary policy reforms signal the Government's intention to get away from the boom and bust policies and short-termism of the past, allowing the United Kingdom to take decisions with the long-term interests of the economy rather than political expediency in mind? Does he think that the Conservatives will support the Bank of England Bill?

Mr. Darling

If Conservative Members cannot tell us their policy on the European single currency, perhaps they can tell us their policy on supporting the Bank of England Bill, which was introduced earlier this week; we shall see. My hon. Friend is quite right that we must have stability if we are to put the economy on a long-term footing and create an environment that encourages investment and increases prosperity. Our reforms—which the Bank of England Bill will soon introduce—are a part of that process. Those reforms must be considered alongside the actions taken this year by my right hon. Friend the Chancellor in his Budget, which were geared to achieving long-term stability, reducing the high debt level that had been encouraged and creating a climate in which British business can flourish.

Mr. Flight

Does the Minister accept the view of the International Monetary Fund that exchange rate flexibility is necessary to cushion business cycles, as has been witnessed recently in south-east Asia? The view has also been relevant to Europe and America over the past few years, and is supported by most central bankers.

Mr. Darling

The hon. Gentleman seems to forget that it was his party which took this country into the exchange rate mechanism, although it seems that the Conservatives are now collectively sorry for it. I am happy to accept that the IMF has been complimentary about the conduct of the economy in the hands of my right hon. Friend the Chancellor.