§ 16. Mr. Michael Fabricant (Lichfield)If he will make a statement on the role of the Bank of England in setting interest rates. [38258]
§ The Chief Secretary to the Treasury (Mr. Alistair Darling)The Bank of England's Monetary Policy Committee sets interest rates to meet the Government's inflation target of 2.5 per cent.
§ Mr. FabricantInterest rates drive the value of the pound. Is the Minister happy with the value of the pound?
§ Mr. DarlingThere are many, many factors that influence the value of the pound. I repeat to the hon. Gentleman, in case he was not listening earlier, that the Government are determined to take whatever action is appropriate in the long-term interests of the economy. We are not prepared to see a recurrence of the boom-and-bust economy, which has been so damaging in the past. We—[Interruption.] Conservative Members do not like being reminded of the fact that, during the 18 years when they were in power, they were responsible for two severe recessions. The second was one of the deepest this century.
The Government are determined to avoid that happening again. That is why we took the necessary steps to reform the Bank of England. We now have one of the most open and transparent central banks in the world. The important point is that we now have the lowest long-term interest rates for 33 years.
§ Mr. Dennis Skinner (Bolsover)Is my right hon. Friend aware that, throughout this Question Time, and in particular in questions to my right hon. Friend the Chancellor of the Exchequer, the Tories have been talking 968 about a competitive pound? They have been talking also about the value of the pound, but they have never said that they are in favour of a weak pound.
The truth is that no one—representing any party—would get elected to this place if he said to the electorate, "Vote for me and I will introduce a weak pound." That is the truth of the matter, and people must face it. On 16 September 1992 the Tories chose to go for a weak pound. The net result was that they were defeated on 1 May 1997. The same thing happened to previous Governments.
I suggest to my right hon. Friend that he should not listen to the moaning Minnies on the Conservative Benches talking about a weak pound or a competitive pound; remember that devaluation does not win elections.
§ Mr. DarlingIndeed it does not. My hon. Friend is right. We have heard this afternoon that the Conservative party has no idea what its policy is on a host of issues, whether the pound, taxation or the future of the Bank of England. The only thing that unites an increasing number of Conservatives is their bitter hostility to anything to do with Europe.