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Mr. Robert Sheldon (Ashton-under-Lyne): I offer my good wishes to my right hon. Friend for being a most outstandingly reforming Chancellor of the Exchequer, with few equals in the post-war world.
There is no question but that the single regulator for financial institutions is greatly needed. Banks, insurance companies, pension funds and other financial services bodies are becoming increasingly amorphous, and, as a result, the distinctions between them are becoming increasingly blurred. That has been shown in particular by the building societies and the way in which they have transformed themselves. The single regulator is therefore especially welcome, and I look forward to seeing it implemented in legislation.
Mr. Brown:
I am grateful to my right hon. Friend, who has had a distinguished role in previous Parliaments as Chairman of the Public Accounts Committee. He has rightly pointed to the overlap, the confusion and the extra costs, and I can assure him that there will be full consultation and a full chance for the House both to look at the details of the proposals before they reach legislative form, and to look at the Bill itself.
Mr. Malcolm Bruce (Gordon):
I congratulate the Chancellor on taking up his role and on making his mark in his first two weeks. I also congratulate him on adopting a policy that was a central component of the Liberal Democrat manifesto. May I extend an invitation to him and his colleagues to come round to my office for tea any time, to discover other aspects of policy that he might usefully implement?
The Chancellor has said that his new policy committee will have regional representation, but can he ensure that it will represent all sectors and all parts of the United Kingdom? We want to ensure that it encapsulates not only Gordon's view but perhaps the view from Gordon. We need to ensure that it is fully representative of the whole UK economy.
What measures, apart from the transfer of Howard Davies, will be taken to ensure that there are continuing links between the SIB and the Bank of England, so that the Bank does not lose the useful knowledge that it has acquired on the workings of the monetary system? Formal arrangements need to be made for the continuation of those links.
Given that the Chancellor has made a major step in proposing new statutory financial regulation, what consultation will take place with all interested parties, to ensure that the statutory proposals that emerge are workable and do not damage the functions of the financial markets, which, as he rightly points out, are important to jobs and to consumers of their services?
Mr. Brown:
I am grateful to the hon. Gentleman. This is probably the only one of the central economic policies of the Labour party that he has supported. He has opposed the windfall tax and other measures, but I am grateful for his support in this area.
As far as the Bank of England is concerned, and the reform--
Mr. Kenneth Clarke:
But it was not in your manifesto.
Mr. Brown:
We said in our manifesto that we would reform the Bank of England to create a monetary policy decision-making system that was more effective, open and
On the subject of the Court of the Bank of England, I agree with the hon. Gentleman. When the Bank of England was nationalised in the 1940s, no real change was made in the organisation of the Court. It is time to ensure that it represents business and sectoral interests throughout the United Kingdom, and all sections of the United Kingdom. When I studied the composition of the Court of the Bank of England, I found that what Courts had in common was that they always included the chairman of a football club in the English league. I want industry to be properly represented, and I want every region, including Scotland and Wales, to be represented on the Court of the Bank of England.
On the hon. Gentleman's other points about the SIB, I can assure him that there will be full consultation, and that the existing good relationship between the SIB and the Bank of England will be maintained, not least by the appointment of the existing deputy Governor as the chairman of the SIB.
Mr. Giles Radice (North Durham):
Is my right hon. Friend aware that, following the collapse of the Bank of Credit and Commerce International and Baring's, the Treasury Select Committee, with a Conservative majority, said that there was a strong case for separating the supervisory functions from the Bank? Is it not the case that the Government's welcome proposal for operational independence for the Bank, again as first suggested by the Treasury Select Committee, makes the case for separating the supervisory functions stronger?
Mr. Brown:
I am grateful to my hon. Friend, because he reminds me, not only that the Treasury Select Committee recommended those things, but that he was a prominent member of the Select Committee that made the recommendations.
We shall listen to the Select Committees as we discuss the issues of the Bank of England and of regulation, but my hon. Friend asked the right question--why did the previous Government not act when all the evidence was available?
Sir Peter Tapsell (Louth and Horncastle):
Does the Chancellor recall that, after every one of the five Labour Governments whom the country has had to endure, unemployment has always been higher when they left office than when they took office? Against that unhappy historical record, will he at least ensure that, under his new arrangements, the Bank of England is given published goals for economic growth and unemployment, as well as for inflation?
Mr. Brown:
I am grateful to the hon. Gentleman. The real record is that the former Conservative Government left more Conservative Members unemployed than at any time in any century.
I agree that high levels of growth and employment are the stated aims and objectives of the Government. Our objective will be to raise the trend rate of growth in the
economy. Over the past 18 years--partly because of the recessions, the booms and busts, and the stop-go policies that characterised the performance of the Conservative Government--the average non-oil growth rate was only 1.7 per cent.: 30 per cent. below our performance in the 30 years following the war. We must do something about that. That is why monetary and fiscal stability are our platform on which to build. We shall introduce measures to encourage investment and growth in the economy.
Mr. Stuart Bell (Middlesbrough):
Will the Chancellor accept that the statement by the shadow Chancellor just now was entirely false? He talked about insecurity in the City of London arising from the changes being made to the financial services regime, but surely the rapidity of my right hon. Friend's decision will bring certainty to the City, because it has accepted independent statutory regulation.
The Chancellor did not specifically mention Lloyd's of London, although he did mention insurance. Will Lloyd's be covered by the new body, or will the prudential supervision of insurance stay with the Department of Trade and Industry?
Mr. Brown:
I pay tribute to my hon. Friend's work over a long period in opposition building up good relations between the Government and the City. Lloyd's has asked to be recognised by the SIB. That issue will be pursued. Secondly, I believe that there will be a broad welcome throughout the financial community, not just for ending uncertainty in a situation in which action had to be taken, but for the specific details of the proposals and for the appointment that I have made today.
Mr. Michael Jack (Fylde):
Central to the Chancellor's new role for the Bank of England in operationally setting interest rates is the question of the inflation target. Will he undertake to publish the criteria that he will consider when setting the inflation target? Will he also publish details of the lead indicators that he will use in that exercise? Finally, will he agree, in the new spirit of audit which abounds in the Treasury, to have his work in this area audited by independent economists?
Mr. Brown:
I am glad to see the right hon. Gentleman return to the House. As I understand it, apart from the shadow Chancellor, he is the only member of the former Treasury team to be re-elected--which may say something about the previous Government's record in financial matters.
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