§ Amendment made: No. 45, in page 43, line 5, leave out from 'satisfied' to 'shall' in line 6 and insert—
- '(a) any requirement to consult before making an order under this Act, or
- (b) any requirement of paragraph 2(1) of Schedule 6, that requiremene'.—[Mrs. Liddell.]
§ Bill reported, with amendments.
§ Order for Third Reading read.
9.43 pm§ Mr. DarlingI beg to move, That the Bill be now read the Third time.
This is an historic Bill. For many years there has been much talk and discussion about the merits of an independent central bank; indeed, there have been many debates in the House. On entering office we made it clear that we believed that the best way to obtain price stability and a commitment to low inflation was to give the Bank of England operational independence to meet the Government's inflation target of 2½ per cent. The Bill is a cornerstone of the Government's economic strategy. It is a major step forward. The passing of the Bill will put in place another plank in our economic policy.
We have already made it clear that we want to promote stability and long-term growth. We are prepared to face up to the long-term issues, which the previous Government ignored for far too long. Those include the need to end the damaging cycle of boom and bust, which has affected this country badly for many years, and to put in place a framework for long-term stability. Controlling inflation is an essential precondition for growth.
We are taking steps to tackle the structure of unemployment and to equip people for the future by improving educational standards and providing opportunities for people to acquire skills. The welfare-to-work reform and the new deal for the young and the long-term unemployed are major steps forward that no Government in recent history have attempted. Our tax and benefits system will be overhauled so that it encourages work and makes work pay.
We have encouraged long-term investment; we shall abolish advance corporation tax; we have announced cuts in corporation tax, with more to come; we have overhauled the private finance initiative; and we have provided leadership so that we can influence Europe in the interests of this country.
The reform of the Bank of England is a major part of that strategy. It shows our determination to achieve economic stability and low inflation, which is good for business, for savers, for pensioners and for anyone on low and fixed incomes. The new Bank of England will have one of the most open and accountable systems of any central bank in the world. It has a clear target. Its procedures are open; as we discussed this evening, there are many ways in which its policy and commitment are open to scrutiny, by this House, the country and the world at large. That marks a commitment to openness and transparency which this country has not seen before.
This country depends on its international trade and on markets having confidence in the Government's ability to deliver economic stability and low inflation. The 1240 independence of the central bank, the code of fiscal stability and the pre-Budget report are all planks in the same strategy to ensure that there is openness. Openness brings confidence and certainty that the Government will not be moved from their determination to deliver low inflation.
We therefore have a clear policy for monetary stability and for fiscal stability and, unlike the Conservative party, we have a clear policy on Europe. Nine months after the announcement by my right hon. Friend the Chancellor of the Exchequer that we would give the Bank of England operational independence, we still do not know where the Conservatives stand on this question. It is less than 15 minutes before we shall vote and they have not told us whether they are for or against the measure.
§ Mr. Heathcoat-AmoryThe right hon. Gentleman has not been here.
§ Mr. DarlingI have been here at nearly every stage of the consideration of this Bill and not once have Conservative spokesmen told us whether they are for or against the Bill. The Conservatives are all over the place on this Bill, just as they are divided on Europe. Anyone listening to the debate tonight will have been struck by the fact that every time Europe was mentioned, the Conservative party went into a flurry of confusion and hatred. Every time they looked at a clause that might have involved Europe, all the old divisions and confusion resurfaced.
We have a clear idea of the interests of this country, in both European and domestic policy. Reforming the central bank was an essential part of that. In nine short months we have achieved a major reform, which will deliver great benefits for this country. We took action almost immediately on entering office on 2 May last year, and we now have a central bank that is fit for the 21st century and an economic strategy that will rebuild this country. This Bill is a central part of that strategy. I commend it to the House.
§ Mr. Edward Davey (Kingston and Surbiton)I do not wish to detain the House for long, partly because the Liberal Democrats' support for the principle of the Bill is widely known and has been long-standing. Uniquely among the major parties, we campaigned for the reform of the Bank of England and we welcome the Labour party's conversion to that policy now that it is in government.
The Chief Secretary to the Treasury explained the benefits of an independent central bank. It is important to have those benefits on record because we have heard so many arguments against an independent central bank. As the Bank of England builds its reputation as an institution that is ready to fight inflation, it is important that public and political support is strengthened and that people recognise the strong arguments for its independence.
I reiterate the comments of the Chief Secretary to the Treasury about the need for the Conservatives to put their view of this policy on record. They should acknowledge their mistakes in government and their failure to produce a strong, anti-inflation policy through an independent central bank. They have still not changed their policy, but it is important that they do so, because for the Bank to be effective in the long term, there must be cross-party consensus on its independence.
1241 It may be presumptuous of me, as a young, new, junior Member, to give advice to the Conservative party, but I suggest that it will lack credibility if it does not change its position before the next election. Although I am not too concerned about the Conservative party's lack of credibility, it would do this country a great disservice if it did not change its policy, because that could create instability in the financial markets. We would have the intriguing prospect of a flight of capital from this country if a Tory victory at the next election were predicted and it had not changed its policy.
The Liberal Democrats did not give the Bill their total support in Committee because of its shortcomings, especially on accountability. We are disappointed that the Government have not accepted our amendments or any of the cross-party amendments. However, we shall give them our support in the Lobby tonight, because the Bill is a major step forward for British economic policy.
It is important that interest rates have been taken out of the political arena. Economic policy makers can now concentrate on the real issues that determine a country's prosperity, such as investment in education and in research and development, free, fair and sustainable open markets and an open trade policy. That is what determines the long-term economic future.
The Liberal Democrats will support the Government, and we will look with interest to see which Lobby Conservative Members go into if they decide to vote.
§ Mr. Heathcoat-AmoryProceedings on the Bill have been characterised throughout by the Government's contempt for the House, and this debate has been no exception. This huge change in monetary policy, whereby interest rate decisions have been transferred to a committee of the Bank of England, was first announced not to the House but in a letter to the Governor of the Bank of England. That attitude towards the House has persisted.
The Government have rejected the cross-party position on confirmatory hearings. They have rejected a modest suggestion that not only the decisions of the Monetary Policy Committee but the reasons advanced by its members should be published in the minutes, which is in line with the White Paper on the public's right to know. Now the Chief Secretary asks us whether we are in favour of the Bill. It is rather terrifying that the man who is in charge of the nation's finances cannot remember what happened as recently as 11 November. We gave our reasons for voting against the Bill on Second Reading, and nothing has happened since then to change our minds. Indeed, our careful scrutiny of the Bill in Committee showed up a number of deficiencies that were not clear at the time.
The Bill still worries some Labour Members who were not represented on the Standing Committee and who do not like the idea of transferring decisions on economic policy from elected politicians to unelected bankers and officials. All I can say to them is that they have seen nothing yet. If the Government go ahead with their plan to transfer everything to the European central bank in Frankfurt, those hon. Members will know what it means 1242 to transfer decisions on the British economy offshore entirely. That, however, is for another day and another debate.
In its current form, the Bill will not appeal to those of my hon. Friends who in principle support the concept of an independent central bank. The Bank provided for in the Bill will not be independent like, for instance, the Bundesbank or the Federal Reserve in the United States, and it does not qualify as an independent central bank under the treaty of Rome as amended at Maastricht. Further legislation will therefore be needed if and when we proceed to full economic and monetary union.
Rather than being independent and having genuine discretion in monetary policy, the Bank will work on a short-term contract from the Treasury. The only discretion that it will have, albeit an important discretion, will be in the setting of short-term interest rates; everything else will be decided by the Treasury. The Treasury will make all the appointments to the Monetary Policy Committee, and will ensure that they are all short-term appointments that will not last even for a full parliamentary term.
That brings us to the mysterious affair of the Treasury Committee. Conservative Members adopted in full the suggestions of that all-party Select Committee—
§ Mr. DarlingWill the right hon. Gentleman give way?
§ Mr. Heathcoat-AmoryI hope that the right hon. Gentleman will forgive me if I do not. I want to finish my speech shortly.
Conservative Members adopted the suggestions of the all-party Select Committee—chaired by a distinguished Labour Member—in regard to asking for confirmatory hearings. It was a modest request, as the Government had signalled in the Standing Committee that they were in favour of the principle. We wanted to ensure not that the House should have nomination rights, but simply that we could make certain that the Bill's requirements were implemented in regard to the competence and independence of candidates for membership of the MPC. That, as I said, had all-party support. Indeed, the Chairman of the Select Committee tabled an amendment to that effect, and one of his hon. Friends—also a member of the Select Committee—spoke in its support.
A Division was called, and all those Labour Members mysteriously disappeared. So much for democracy in the Labour party—but it should worry the House, as an institution, when, after the Opposition have picked up a modest, serious and well-argued proposition advanced in a Select Committee that has subsequently been tabled as an amendment and pressed to a Division, Labour Members are pulled off it by their Whips.
Other deficiencies came to light in the Standing Committee. I must say in passing that most of them were discovered by Conservative Members. The Liberal Democrats are fond of saying nowadays that they are the only people who put up proper opposition, but I must point out that the two Liberal Democrats on the Standing Committee turned up very seldom. I believe that the hon. Member for Twickenham (Dr. Cable) attended only four sittings. As usual, the real task of scrutinising the legislation and providing constructive opposition fell to Conservative Members.
Then there is the mysterious matter of the abstention, or disappearance, of the Paymaster General. We rather wish that he had been present this evening, because we 1243 all have happy memories of his not only attending the Standing Committee sittings, but answering a good many of our debates. For instance, he replied to many of the debates about the method of appointment to the MPC. Yesterday, when we debated the Paymaster General's tax affairs, he did not turn up for that debate, but I really think that someone should have told him that he could come out of hiding this evening, because we were debating not his personal affairs but the Bill on whose Standing Committee he served.
We have had some inadequate replies to the points that we have made, but that does not completely surprise us. The central point is that our opposition to the Bill does not signal our opposition to low inflation. Whereas we met our inflation targets in the previous Parliament, the Government weakened their inflation target, and then missed it in every succeeding month. They have tried to shuffle off responsibility for those decisions on to the Bank of England. They will not succeed in that. We have no confidence in the Bill, and we will be voting against it.
§ Question put, That the Bill be now read the Third time:—
§ The House divided: Ayes 207, Noes 116.
1245| Division No. 139] | [9.59 pm |
| AYES | |
| Ainsworth, Robert (Cov'try NE) | Cox, Tom |
| Alexander, Douglas | Cranston, Ross |
| Anderson, Donald (Swansea E) | Crausby, David |
| Anderson, Janet (Rossendale) | Darling, Rt Hon Alistair |
| Ashdown, Rt Hon Paddy | Davey, Edward (Kingston) |
| Ashton, Joe | Davis, Terry (B'ham Hodge H) |
| Atkins, Charlotte | Dean, Mrs Janet |
| Ballard, Mrs Jackie | Denham, John |
| Barnes, Harry | Dismore, Andrew |
| Beard, Nigel | Dobbin, Jim |
| Beckett, Rt Hon Mrs Margaret | Doran, Frank |
| Begg, Miss Anne | Dowd, Jim |
| Bell, Martin (Tatton) | Drew, David |
| Bennett, Andrew F | Eagle, Angela (Wallasey) |
| Bermingham, Gerald | Eagle, Maria (L'pool Garston) |
| Berry, Roger | Edwards, Huw |
| Blears, Ms Hazel | Efford, Clive |
| Breed, Colin | Fatchett, Derek |
| Brown, Rt Hon Gordon (Dunfermline E) | Field, Rt Hon Frank |
| Fitzpatrick, Jim | |
| Brown, Rt Hon Nick (Newcastle E) | Fitzsimons, Loma |
| Bruce, Malcolm (Gordon) | Flint, Caroline |
| Buck, Ms Karen | Follett, Barbara |
| Burnett, John | Foster, Michael Jabez (Hastings) |
| Butler, Mrs Christine | Foster, Michael J (Worcester) |
| Byers, Stephen | Gapes, Mike |
| Cable, Dr Vincent | Gardiner, Barry |
| Campbell, Mrs Anne (C'bridge) | George, Bruce (Walsall S) |
| Campbell, Ronnie (Blyth V) | Gerrard, Neil |
| Caplin, Ivor | Gibson, Dr Ian |
| Casale, Roger | Godman, Norman A |
| Chapman, Ben (Wirral S) | Godsiff, Roger |
| Chisholm, Malcolm | Grant, Bernie |
| Clapham, Michael | Griffiths, Win (Bridgend) |
| Clark, Rt Hon Dr David (S Shields) | Hain, Peter |
| Clarke, Charles (Norwich S) | Hall, Mike (Weaver Vale) |
| Clarke, Tony (Northampton S) | Hall, Patrick (Bedford) |
| Clwyd, Ann | Hanson, David |
| Coaker, Vernon | Harman, Rt Hon Ms Harriet |
| Coleman, Iain | Harvey, Nick |
| Colman, Tony | Heal, Mrs Sylvia |
| Cooper, Yvette | Heath, David (Somerton & Frome) |
| Corston, Ms Jean | Henderson, Ivan (Harwich) |
| Cotter, Brian | Heppell, John |
| Cousins, Jim | Hesford, Stephen |
| Hewitt, Ms Patricia | Pearson, Ian |
| Hill, Keith | Perham, Ms Linda |
| Hoey, Kate | Pickthall, Colin |
| Hope, Phil | Pike, Peter L |
| Howarth, Alan (Newport E) | Plaskitt, James |
| Hughes, Ms Beverley (Stretford) | Pollard, Kerry |
| Hughes, Kevin (Doncaster N) | Pond, Chris |
| Hurst, Alan | Pope, Greg |
| Hutton, John | Pound, Stephen |
| Iddon, Dr Brian | Powell, Sir Raymond |
| Ingram, Adam | Prentice, Ms Bridget (Lewisham E) |
| Jackson, Ms Glenda (Hampstead) | Prentice, Gordon (Pendle) |
| Jackson, Helen (Hillsborough) | Primarolo, Dawn |
| Johnson, Alan (Hull W & Hessle) | Prosser, Gwyn |
| Johnson, Miss Melanie (Welwyn Hatfield) | Quin, Ms Joyce |
| Radice, Giles | |
| Jones, Mrs Fiona (Newark) | Reed, Andrew (Loughborough) |
| Keeble, Ms Sally | Reid, Dr John (Hamilton N) |
| Keen, Alan (Feltham & Heston) | Rendel, David |
| Keen, Ann (Brentford & Isleworth) | Rooker, Jeff |
| Kelly, Ms Ruth | Russell, Bob (Colchester) |
| Kennedy, Jane (Wavertree) | Salter, Martin |
| Khabra, Piara S | Sanders, Adrian |
| King, Andy (Rugby & Kenilworth) | Savidge, Malcolm |
| King, Ms Oona (Bethnal Green) | Sawford, Phil |
| Ladyman, Dr Stephen | Sedgemore, Brian |
| Laxton, Bob | Shaw, Jonathan |
| Lepper, David | Sheldon, Rt Hon Robert |
| Levitt, Tom | Smith, Rt Hon Andrew (Oxford E) |
| Lewis, Ivan (Bury S) | Smith, Angela (Basildon) |
| Liddell, Mrs Helen | Smith, John (Glamorgan) |
| Linton, Martin | Soley, Clive |
| Livingstone, Ken | Spellar, John |
| Lock, David | Starkey, Dr Phyllis |
| McAvoy, Thomas | Stewart, David (Inverness E) |
| McCafferty, Ms Chris | Stewart, Ian (Eccles) |
| McDonagh, Siobhain | Stinchcombe, Paul |
| Macdonald, Calum | Stoate, Dr Howard |
| McDonnell, John | Stuart, Ms Gisela |
| McGrady, Eddie | Taylor, Rt Hon Mrs Ann (Dewsbury) |
| McIsaac, Shona | |
| Mackinlay, Andrew | Timms, Stephen |
| McNulty, Tony | Tipping, Paddy |
| MacShane, Denis | Todd, Mark |
| Mactaggart, Fiona | Turner, Dr Desmond (Kemptown) |
| McWalter, Tony | Vaz, Keith |
| Mallaber, Judy | Vis, Dr Rudi |
| Marshall, Jim (Leicester S) | Wallace, James |
| Marshall-Andrews, Robert | Walley, Ms Joan |
| Meale, Alan | Ward, Ms Claire |
| Michael, Alun | White, Brian |
| Milburn, Alan | Wicks, Malcolm |
| Miller, Andrew | Wise, Audrey |
| Moffatt, Laura | Wood, Mike |
| Moore, Michael | Worthington, Tony |
| Moran, Ms Margaret | Wright, Anthony D (Gt Yarmouth) |
| Morley, Elliot | Wright, Dr Tony (Cannock) |
| Morris, Ms Estelle (B'ham Yardley) | Wyatt, Derek |
| Mudie, George | |
| Naysmith, Dr Doug | Tellers for the Ayes: |
| O'Brien, Mike (N Warks) | Mr. Jon Owen Jones and |
| Olner, Bill | Mr. Clive Betts. |
| NOES | |
| Ainsworth, Peter (E Surrey) | Bruce, Ian (S Dorset) |
| Arbuthnot, James | Burns, Simon |
| Atkinson, David (Bour'mth E) | Chapman, Sir Sydney (Chipping Barnet) |
| Atkinson, Peter (Hexham) | |
| Bercow, John | Clappison, James |
| Beresford, Sir Paul | Clark, Rt Hon Alan (Kensington) |
| Body, Sir Richard | Clark, Dr Michael (Rayleigh) |
| Boswell, Tim | Collins, Tim |
| Bottomley, Peter (Worthing W) | Colvin, Michael |
| Brady, Graham | Cran, James |
| Brazier, Julian | Davis, Rt Hon David (Haltemprice) |
| Browning, Mrs Angela | Day, Stephen |
| Duncan, Alan | Maclean, Rt Hon David |
| Duncan Smith, Iain | McLoughlin, Patrick |
| Emery, Rt Hon Sir Peter | Malins, Humfrey |
| Evans, Nigel | Maples, John |
| Faber, David | Mates, Michael |
| Fallon, Michael | Maude, Rt Hon Francis |
| Flight, Howard | Mawhinney, Rt Hon Sir Brian |
| Forth, Rt Hon Eric | May, Mrs Theresa |
| Fox, Dr Liam | Moss, Malcolm |
| Gale, Roger | Nicholls, Patrick |
| Garnier, Edward | Norman, Archie |
| Gibb, Nick | Ottaway, Richard |
| Gill, Christopher | Paice, James |
| Gillan, Mrs Cheryl | Paterson, Owen |
| Goodlad, Rt Hon Sir Alastair | Pickles, Eric |
| Gorman, Mrs Teresa | Prior, David |
| Green, Damian | Randall, John |
| Greenway, John | Robathan, Andrew |
| Grieve, Dominic | Robertson, Laurence (Tewk'b'ry) |
| Hamilton, Rt Hon Sir Archie | Roe, Mrs Marion (Broxbourne) |
| Hammond, Philip | Rowe, Andrew (Faversham) |
| Hawkins, Nick | Ruffley, David |
| St Aubyn, Nick | |
| Hayes, John | Simpson, Keith (Mid-Norfolk) |
| Heald, Oliver | Spelman, Mrs Caroline |
| Heathcoat-Amory, Rt Hon David | Spring, Richard |
| Horam, John | Steen, Anthony |
| Howarth, Gerald (Aldershot) | Swayne, Desmond |
| Hunter, Andrew | Syms, Robert |
| Jack, Rt Hon Michael | Taylor, Ian(Esher & Walton) |
| Jackson, Robert (Wantage) | Taylor, John M (Solihull) |
| Jenkin, Bernard | Taylor, Sir Teddy |
| Key, Robert | Thompson, William |
| King, Rt Hon Tom (Bridgwater) | Townend, John |
| Kirkbride, Miss Julie | Tredinnick, David |
| Laing, Mrs Eleanor | Tyrie, Andrew |
| Lait, Mrs Jacqui | VValter, Robert |
| Lansley, Andrew | Waterson, Nigel |
| Leigh, Edward | Wilkinson, John |
| Letwin, Oliver | Willetts, David |
| Lewis, Dr Julian (New Forest E) | Wilshire, David |
| Lilley, Rt Hon Peter | Winterton, Mrs Ann (Congleton) |
| Lloyd, Rt Hon Sir Peter (Fareham) | Winterton, Nicholas (Macclesfield) |
| Loughton, Tim | Woodward, Shaun |
| Luff, Peter | Young, Rt Hon Sir George |
| Lyell, Rt Hon Sir Nicholas | |
| MacGregor, Rt Hon John | Tellers for the Noes: |
| McIntosh, Miss Anne | Mr. John Whittingdale and |
| MacKay, Andrew | Sir David Madel. |
§ Question accordingly agreed to.
§ Bill read the Third time, and passed.