HL Deb 15 January 1990 vol 514 cc411-2

2.52 p.m.

Lord Ezra asked Her Majesty's Government:

Whether they are considering giving the Bank of England a more independent role.

The Paymaster General (The Earl of Caithness)

My Lords, the Government have no such plans.

Lord Ezra

My Lords, does the noble Earl agree that there is a trend, particularly within the European Community, for central banks to achieve greater independence? In the light of that trend, would it not be desirable that we in the UK responded to it and made our central bank less an arm of the Treasury and more an independent body directly answerable to Parliament?

The Earl of Caithness

No, my Lords. The primary concern is to bring down inflation. That is the Government's responsibility which they will not abdicate.

Lord Taylor of Gryfe

My Lords, does the Minister agree that the relationship between the central bank and the Government is a very delicate one, and that it depends substantially on who occupies the important post of Governor of the Bank of England? May I have an assurance that, in any subsequent appointments to that great and important position, a distinguished banker with experience in that field would be a candidate, but not necessarily with political ties?

The Earl of Caithness

No, my Lords. I shall not give the noble Lord that assurance; but I shall certainly pass his thoughts on to my right honourable friend.

Lord Bruce of Donington

My Lords, does the noble Earl agree, as I am sure he will, that bankers have no monopoly of wisdom? Regarding the supplementary question put by the noble Lord, Lord Ezra, would it not be better if, rather than be required to react to what our colleagues think about these matters, we asked our colleagues to react to what we in Britain think?

The Earl of Caithness

My Lords, I agree with the noble Lord's first point. On the second point, that matter was discussed fairly extensively in our recent debate on the Delors Report. I am sure that noble Lords will recall that it was not the mood of the House that there should be an independent bank in this country.

Lord Jenkins of Hillhead

My Lords, without necessarily having enough old Treasury feeling to be sure that one wants the central bank to go off on its own and without necessarily endorsing that point of view, will the noble Earl tell us how he pursues his argument that there cannot be independence for the central bank because the Government's priority is to bring down inflation? Surely it is a striking and observable fact throughout the world that it is the countries with independent central banks—Germany, Switzerland and even the United States—which have notably lower inflation rates than those with more dependent central banks.

The Earl of Caithness

My Lords, I wish that the matter was as simple as that; but, as the noble Lord will be aware, there are constitutional differences and a different attitude, particularly in the countries mentioned by the noble Lord, which affect the situation.