HC Deb 05 November 1998 vol 318 cc1009-10
11. Mr. Ivor Caplin (Hove)

What assessment he has made of the effectiveness of his reforms to the monetary policy framework on meeting the inflation target. [56869]

The Economic Secretary to the Treasury (Ms Patricia Hewitt)

The new framework has been successful in reducing inflation and inflation expectations close to the target level, and has led to long-term interest rates falling to their lowest levels for 35 years.

Mr. Caplin

My hon. Friend may be aware that, last night, the shadow Chief Secretary to the Treasury refused to debate with me in interventions those important points about the framework. Is it not a fact that, in the 12 months leading up to the general election, the Conservative Government managed to meet the inflation target just once, and that the long-term stability and framework that we have put in place will take Britain forward?

Ms Hewitt

My hon. Friend is right. As we saw over and over again last night, the Conservatives cannot or will not tell us what they would do about the Bank of England and about the monetary framework that we have put in place, which has brought interest rates to their lowest level for 35 years.

Mr. Ian Bruce (South Dorset)

I am sure that, even before she became a Member of Parliament, the hon. Lady will have followed the debate about the independence of the Bank of England. We were all told that the one plus that would result was that real interest rates—the difference between the rate of inflation and the interest being paid—would go down. Since the independence of the Bank of England, people have been paying three times the rate of inflation. Why? Can the hon. Lady explain that to the House?

Ms Hewitt

As I just said, long-term interest rates are at their lowest level for 35 years. It was the Government whom the hon. Gentleman supported who, for short-term party political reasons before the last general election, failed to take the necessary action to stem inflationary pressures. This Government will take no lectures on interest rates from a Government who were responsible for interest rates of 10 per cent. for four consecutive years, and of 15 per cent. for 12 months. I remember, as do my constituents, what that did to our mortgage rates. We will not take lessons from the Conservatives.