Standing Committee D
Tuesday 18 November 1997
[Mr. John McWilliam in the Chair]
10.30 am
The Chief Secretary to the Treasury (Mr. Alistair Darling): I beg to move,
That during the proceedings on the Bank of England Bill the Committee do meet on Tuesdays and Thursdays at half-past Ten o'clock and half-past Four o'clock.
I welcome you, Mr. McWilliam, to the Chair, and Mr. Butterfill, who will deputise for you, and Mrs. Dunwoody, who will act as a substitute for both of you, at least during this week. I am sure that the Committee will join me in that welcome.
Parts I and II of the Bill relate to the Bank of England. The Governor of the Bank has said that if any member of the Committee wishes to discuss any part of the Bill for which he has responsibility, or to meet him or members of the Monetary Policy Committee, he would be pleased to do so. I should be happy to arrange a trip--probably not collectively, as to hire a charabanc to go to Threadneedle Street would be inappropriate--if members of the Committee wish to take up that opportunity.
Mr. Tim Boswell (Daventry): I thank the Governor, through the Chief Secretary, for that offer. I rise to say that I am sure that that will be helpful to the Committee, and to pick up one phrase used by Chief Secretary. He referred to any areas of the Bill for which the Governor had responsibility.
It is important to put on record that the responsibility for legislation is entirely that of the Government, and they should acknowledge that.
Mr. Darling: I think that the hon. Gentleman was intervening.
The Chairman: I had assumed that that was an intervention, otherwise it would have been out of order.
Mr. Darling: Of course the Government are responsible for the legislation. I think that all members of the Committee had grasped that point. That is why I detailed those matters for which the Governor could be answerable. When I met the Governor last week in connection with another matter, he said that he would be happy to speak to members of the Committee, but, clearly, questions about the legislation itself should be addressed to Ministers, not to the Governor. The invitation was extended on the understanding that if Members wished to visit the Bank, they would go there to ask about matters to do with the Bank. I am grateful to the hon. Gentleman, however, for what I take to be an acknowledgement of that gesture from the Governor.
I have nothing further to add at this stage, as I am sure that the Committee is anxious to make progress.
Mr. Boswell: On a point of order, Mr. McWilliam. I am sorry to delay my colleague. I recall from our summer debates on the Finance Bill that you are a stickler for procedure, which many of us welcomed. One question that was raised--which was rather more germane in the summer--was whether we could remove our jackets. I should love to do that, but I should hate to be pulled up by the Chair if I did so.
The Chairman: I thank the hon. Gentleman for his intervention. Of course, having asked, hon. Gentlemen may remove their jackets. That does not apply to hon. Ladies, who may or may not do so as they choose.
Mr. David Heathcoat-Amory (Wells): I, too, welcome you to the Chair, Mr. McWilliam, and I welcome Mr. Butterfill, when he takes over as your deputy, or alternate. I recall happy sittings in the Finance Bill under your chairmanship. I also recall, however, that you once made all of us put our jackets on again because we had anticipated your permission, and that we had to sit for half an hour in the heat as a penalty. During the rest of our sittings you were a model of correctness, helpfulness and humour.
Our sittings on the Finance Bill were successful, but I regret that that Bill--through no fault of the Chair--was rushed through in an unprecedentedly short time. We sat on every sitting day of the week, instead of twice a week as was always the practice with Finance Bills. Great areas of the Bill were left unscrutinised and undebated because its proceedings were under a guillotine and the Government wished to get it through before the House rose for the summer recess. Chunks of the Bill covering issues such as foreign income dividends remained in complete disarray at the end of the Bill's passage through the House. I hope that we can take this Bill at a more measured pace.
The Bill had an unfortunate origin in the rushed letter sent by the Chancellor of the Exchequer to the Governor of the Bank of England four days after the election. It was not until the House returned two weeks later that hon. Members were able to hear a statement. The Bill followed that. The original letter set out the independence of the Bank and everything that flows from that, but it got the balance between independence and accountability wrong. The flaws in that approach remain in the Bill.
It is particularly regrettable that there was nothing in the Labour party's manifesto about such an enormously important constitutional change. The manifesto contained a weasel-worded phrase about the possiblity of reforming the Bank of England, but it did not make clear the Labour party's clear intention--which it must have had--to make it independent in a number of important respects.
On Second Reading, the right hon. Member for Llanelli (Mr. Davies) pointed out that new Labour's important business manifesto not only did not announce the intention to move towards an independent Bank of England or to introduce a contractual arrangement, but proposed a different structure. The right hon. Gentleman reminded the House that the business manifesto stated:
``We propose a new monetary policy committee to decide on the advice which the Bank of England should give to the Chancellor.''--[Official Report, 11 November 1997; Vol. 300, C. 736.]
What ever happened to that pledge?
The Monetary Policy Committee will not advise, but will decide, on interest rate changes. It will operate according to a contract based on the inflation directive issued by the Chancellor of the Exchequer. The Government have clearly broken their promise, and it is one of the many that they have broken. However, the breaking of the promise in the business manifesto is especially regrettable because it was broken within days of the Government taking office. The Bill's origins are unfortunate.
I welcome the Chief Secretary's offer that the Government of the Bank of England will be able to talk to hon. Members about those elements of the Bill that involve the Bank. I expect, however, that the Governor regrets that more effort was not made to create a general coalition of interests in favour of the move towards the Bank's independence. In other countries with an independent central bank, a consensus has, over time, become established and all political parties assent to the arrangements. In setting up such arrangements, great efforts were made to create a coalition in favour of the central bank's independence.
In this country, the Chancellor of the Exchequer did nothing to assist that process. Not only did he not consult anyone else, but he did not give any notice, or tell Parliament of his plans. He disguised his intentions in the manifesto, and the Bill does not even make any genuflection towards trying to build a national consensus in favour of the move. I shall say more about that when we discuss the amendments later this morning. However, I welcome the fact that the Governor or the Bank will be available to meet hon. Members. I am sure that some of my hon. Friends will take him up on that offer.
We shall not seek to obstruct the Bill but we will subject it to proper scrutiny. The Prime Minister emphasised its economic, financial, political and constitutional importance. I am sure that I am speaking for all parties when I say that we must go through the Bill line by line, to discover its meaning and its future implications. We shall adopts a constructive approach and we look forward to the debate.
Question put and agreed to.
Resolved.
That during the proceedings on the Bank of England Bill the Committee do meet on Tuesdays and Thursdays at half-past Ten o'clock and half-past Four o'clock.
The Chairman: Before I call the first amendment I wish to make some announcements. First, I remind that Committee that adequate notice of amendments should be given. As a general rule, I do not intend to call starred amendments at morning or afternoon sittings.
The Committee comprises many new Members, which puts an additional burden on experienced Members to ensure that procedure is followed as closely as possible. In particular, I remind new Members that when the word ``you'' is used, it refers to me. On those grounds, I have been accused of some terrible things in the past.
Secondly, I should like to remind experienced Members and inform new Members that the grouping of amendments if for the benefit of the Committee, to ensure that we have only one argument on one subject. It is important that we keep to points arising from each particular grouping, though I know, of course, that there are times when an argument may need to be extended. I issue those small health warnings to encourage members of the Committee to think about what they are doing and saying in Committee.
Thirdly, new Members should not hesitate to ask me if there are matters that they do not understand.They should not worry; I shall not jump down their throats if they are wrong.
Resolved.
That the Bill be considered in the following order, namely, Clause 1; Scheduel 1; Clauses 2 to 6; Schedule 2; Clauses 7 to 13; Schedule 3; Clauses 14 to 22; Schedule 4; Clause 23; Schedule 5; Clauses 24 to 26; Schedule 6; Clauses 27 to 37; Schedule 7; Clauses 38 to 42; Schedule 8; Clause 43; Schedule 9; Clauses 44 to 46; any new Clauses; any new Schedules.--[Mr. Darling.]
Clause 1
Court of Directors
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