§ 12. Dr. Lynne JonesIf he will make a statement on the level of interest rates. [12660]
§ Mr. Gordon BrownInterest rates are now set by the Bank of England with the aim of meeting the Government's inflation target. I am satisfied that the new arrangements will deliver long-term price stability and prevent a return to the cycle of boom and bust.
§ Dr. JonesDoes my right hon. Friend agree that the Government need to give high priority to policies that will 1023 reduce interest rates and improve the competitiveness of the pound in preparation for joining the single currency? Would not the prospect of Britain joining sooner put us in a strong bargaining position to argue for a slowing down of the bandwagon to 1999?
§ Mr. BrownWe have made it absolutely clear that it is not practical for Britain to join in 1999, as the economic tests that we have set are not being met.
As for the level of interest rates now set by the Bank of England, we inherited circumstances in which inflation was about to rise as a result of the previous Government's failure to take action. We are not prepared to contemplate pursuing the same stop-go boom and bust policies that bedevilled the country for the past 20 years under a Conservative Government and were responsible for thousands of jobs and businesses being lost unnecessarily as a result of recession. That is why we took the action that we did and made the Bank of England independent and put it in operational charge of interest rates.
We still need an answer. Is the Conservative party now opposing our proposals to give independence to the Bank of England?
§ Mr. WilkinsonIs it not one thing to have an independent national central bank, namely the Bank of England, but constitutionally and practically quite another for our interest rates to be controlled by an independent, unaccountable central bank in Frankfurt over which the British people have no democratic control whatsoever and whose actions could decimate British jobs and do incalculable harm in this country? How can the Chancellor continue to say that there are no constitutional implications to a single currency?
§ Mr. BrownI take it that we have the answer to at least one of my questions: the hon. Gentleman is opposed to the principle of a single currency. On Monday I made it clear that there was a pooling of economic sovereignty involved—[Interruption.] If the hon. Member for Buckingham (Mr. Bercow) wants to follow the debate, he should really be in the Chamber and look at the issues. I said quite clearly on Monday, as he will acknowledge, that a pooling of economic sovereignty was involved. We have to ask ourselves whether there is a constitutional bar to economic and monetary union as a result. We say no. What does the hon. Gentleman say?
§ Mr. Bercowrose—
§ Madam SpeakerMr. Bob Blizzard.