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Mr. Nicholas Winterton (Macclesfield): I congratulate the Chancellor of the Exchequer on the emphasis he
placed on the importance of long-termism. That is long overdue. Does he accept that manufacturing industry is the only genuine source of non-inflationary sustainable growth? Does he believe that what he announced today will genuinely help manufacturing industry, which is a critical and vital part of the UK economy?
Mr. Brown: I applaud the hon. Gentleman's campaign over a long period of years on behalf of manufacturing industry. I ask him to consider the fact that the percentage of total national investment in manufacturing stands at 1.7 per cent. at present--the worst figure since figures were first recorded. Whereas, in the 1970s and 1980s, investment rose significantly out of recession, in the 1990s manufacturing investment in particular has not risen. In real terms, it is still lower than it was in 1979, when the Conservative Government came to power.
It is therefore incumbent on us to see what more we can do to assist manufacturing industry, by helping it to invest for the long term and giving it the skills and education that are necessary for it to produce the value added products that are so important. I believe that the House will find this Government to be the true friend of manufacturing industry.
Dr. Lynne Jones (Birmingham, Selly Oak):
I welcome my right hon. Friend's comments this afternoon about the composition of the Court of the Bank of England. What criteria will he take into account when appointing the deputy Governors of the Bank of England and the four members of the Monetary Policy Committee? When will he name those appointees, and how long will they serve? At the risk of sounding churlish, how might they be dismissed, in line with their accountability to the Treasury Select Committee?
Mr. Brown:
My hon. Friend asks what the deputy Governors will do. One deputy Governor will be responsible for monetary stability and the other for financial stability. That reflects the full range of responsibilities of the Bank of England for the stability of the financial system as a whole, and for operational decision making about interest rates.
As for the range of expertise that is necessary to form the Monetary Policy Committee, I shall look--in consultation with others--for a range of monetary expertise, but the critical condition for appointment must be expertise in this area. The term of appointment will be three years. It is important to recognise that these decisions broaden the base for monetary policy decision making in an unprecedented manner, and put us in line with many other countries that have far more successful arrangements than we have had in the past.
I believe that, once it is up and running, the system will be successful. It will take effect, de facto, immediately. I hope that we shall be able to announce appointments to the Monetary Policy Committee within the next few weeks.
Mr. Damian Green (Ashford):
Will the Chancellor acknowledge that Opposition Members are genuinely afraid that the Government are prepared to ride roughshod over the interests of Parliament? In light of that, will he consider giving the House some say in appointing the members of the Monetary Policy Committee and the two
Mr. Brown:
The hon. Gentleman, whom I welcome to the House, talks about systems of consultation and proper accountability. He clearly was not present during the last Parliament. He was not here when the arms to Iraq and the Pergau dam incidents became known, or when suspicions surrounding the Downey report were raised by hon. Members on all sides.
First, through the Bank of England Bill and the discussions surrounding it; and secondly, through the Treasury Select Committee's ability to call the Governor of the Bank of England to account and our full debate on the Bank of England report in the House of Commons, we are putting in place far more accountability and reporting and a system of greater information flow than existed in any previous Parliament.
As to regulations and responsibilities in that regard, I have already said--if Conservative Members had followed my comments about the future of the Securities and Investments Board--that there will be full consultation before the legislation is finally put in Second Reading form to the House. The draft Bill will form the basis of consultation once it is drawn up. I assure all hon. Members that we intend to discharge our responsibilities to provide full information to the House.
Mr. David Winnick (Walsall, North):
While recognising that no lectures are required from the Conservatives about accountability or any other matter--especially in light of the high unemployment during the past 18 years--is my right hon. Friend aware that there is bound to be concern within the wider Labour movement about the amount of economic power that is being given to the Bank of England in the operation of monetary policy? Would it be unfair to say that, by and large, bankers have not been particularly sympathetic to what the Labour movement and the Labour party have stood for: full employment, policies that improve the lot of working people, and a decent welfare state?
Mr. Brown:
I must tell my hon. Friend that the previous system left more than 1.5 million people unemployed by the time that the Conservative Government left office. Of those 1.5 million, 600,000 young people did not have a chance under the Conservative Government of receiving the jobs and opportunities that they will receive under a Labour Government.
My hon. Friend talks about bankers. The Monetary Policy Committee that I have described will include four economic experts appointed by the Government, who will not be traditional bankers as he understands that term. As for economic power, it will be the Government who set the objectives of economic policy. The Government will set the inflation target, and we shall appoint the four members of the Monetary Policy Committee and the main members of the Court of the Bank of England.
I assure my hon. Friend that I believe that we are setting a long-term framework for economic policy that has the right balance between the decisions that must be made by
politicians and the decisions that must be left for operational responsibility, to be held by the Bank of England.
Mr. Iain Duncan Smith (Chingford and Woodford Green):
I congratulate the Chancellor of the Exchequer on assuming his new position. I should be grateful if in future he would place his statement in the Vote Office so that Back-Bench Members might have it when he rises to speak in the Chamber. That is a point for the future.
Secondly, the Chancellor has announced a major change in the regulatory structure of the City, and has made comparisons with other countries. The right hon. Gentleman will be aware that the City has been a major success for the United Kingdom in producing export finance, and in producing jobs throughout the country. Will he therefore be extremely careful, in making the changes that he has announced, to ensure that he is not taking a sledgehammer to crack a nut, and to ensure also that in reality he does not crush the very vibrancy of wealth creation that takes place in the City merely in chasing to the last degree what might be considered at times the excessive pursuit of wealth in the City?
Mr. Brown:
I think that the hon. Gentleman will find that there is a general welcome for my proposals for cleaning up the regulatory system and making it more co-ordinated. I am happy to pay tribute to the work that 2.5 million men and women undertake in the financial services industry. I believe that our proposals, which are about the long term in increasingly integrated financial markets, will do more to help to provide jobs than the hon. Gentleman is suggesting.
The hon. Gentleman proposes increased flows of information to Back-Bench Members. I am happy to consider, as my right hon. Friend the Leader of the House will be, any such proposals. Surely it is rather strange, however, that the hon. Gentleman never made such proposals when the Conservative party was in government.
Mr. Dennis Canavan (Falkirk, West):
I congratulate my right hon. Friend on his appointment, but may I put it to him that some of us would prefer to put trust in him as Chancellor of the Exchequer, being accountable to Parliament, instead of in a committee of bankers and so-called financial experts, especially when it comes to the setting of interest rates, which can have an effect on
Mr. Brown:
I thought that my hon. Friend was going to make the case for Falkirk or Cowdenbeath being represented on the Court of the Bank of England. It is precisely because of our anxieties to protect the position of pensioners and of those who are saving for their pensions that we have introduced reforms in the structure of regulatory organisations. It is precisely for that reason that my hon. Friend the Economic Secretary has acted immediately to try to deal with the misselling of pensions.
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