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Mr. Tim Yeo (South Suffolk): I congratulate the right hon. Gentleman on his appointment as Chancellor of the Exchequer. Will he confirm, given his party's commitment to ensuring that decision making on monetary policy becomes more open and more accountable, that he and other Treasury Ministers will continue to answer questions on the Floor of the House about the level of interest rates?
Mr. Brown: We are answering questions on 12 June.
Ms Diane Abbott (Hackney, North and Stoke Newington): Is my right hon. Friend aware that his proposals to clean up the financial services industry will be widely welcomed, not least by many of those who work within it? In his far-reaching examination of financial service regulations, has my right hon. Friend considered the Government's supervision of the London stock exchange?
Mr. Brown: I thank my hon. Friend for the work that she does on the Treasury Select Committee. Such a review is part of the work that we are undertaking. It is precisely because we recognise the importance that must be directed to the misselling of pensions and jobs in the financial services industry that we have taken the actions we have on coming into government.
Madam Speaker: Order. I must now bring this exchange to a close.
Orders of the Day
Debate on the Address
[Fifth Day]
Order read for resuming adjourned debate on Question [14 May],
That an humble Address be presented to Her Majesty, as follows:--
Question again proposed.
Most Gracious Sovereign,
We, Your Majesty's most dutiful and loyal subjects, the Commons of the United Kingdom of Great Britain and Northern Ireland, in Parliament assembled, beg leave to offer our humble thanks to Your Majesty for the Gracious Speech which Your Majesty has addressed to both Houses of Parliament.--[Mr. Kaufman.]
The Economy and European Affairs
Madam Speaker: I have selected the amendment standing in the name of the Leader of the Opposition. I shall call the amendment standing in the name of the right hon. Member for Yeovil (Mr. Ashdown) for Division purposes, if that is required, at the end of the debate.
Mr. Kenneth Clarke (Rushcliffe): I beg to move, as an amendment to the Address, at the end of the Question, to add:
- "but humbly regret that there is no mention in the Gracious Speech of the healthy economic climate in the country with rising living standards, low inflation, public finances moving towards balance and further falls in unemployment; deplore the Government's granting of operational independence to the Bank of England without any Parliamentary debate or statement; and urge the Government not to sign the Social Chapter, introduce a minimum wage, or to damage the United Kingdom's flexible labour market in any way by adopting European labour and social legislation."
The Deputy Prime Minister and Secretary of State for the Environment, Transport and the Regions (Mr. John Prescott): Why not?
Mr. Clarke: I fear that when the Government get on to the serious business, we shall have more to worry about than being told that it is all Tony, Robin and Gordon at
Cabinet meetings, that the Elgin marbles are safe with the nation and that the Chancellor will wear a grey suit at the Mansion House, and so on.
Mr. Giles Radice (North Durham): Will the right hon. and learned Gentleman give way?
Mr. Clarke: No; I must move on to the serious discussion.
The Chancellor is made of sterner stuff. He has, as I just said, charged in and taken extremely serious decisions. I think that he will agree that, since moving from opposition to government, all the presentational stuff that so dominated Labour's activities before now has had to take its proper place. The secret of good government is to get the big decisions right, because one has to live with those decisions afterwards. The presentation should follow the correct decision, not come before it or instead of it, as so many of the right hon. Gentleman's colleagues seem to believe.
The Chancellor has a serious job to do, with extremely big decisions to take on the economy and Europe, the subject matter of our debate today. He has started taking them, in rapid succession, while his colleagues are still whooping it up in their offices, celebrating their arrival. The problem is that those are big decisions, the effect of which we shall all appreciate in two years' time and more, although he has taken most of them in two short weeks. I admire his confidence to plunge into those big decisions, but I must warn him that it will be no good repeating his election slogans when he comes to defend the consequences in two years' time.
I have been in many Departments and in most, decisions--some one gets right and some one gets wrong--are usually a matter of opinion some years afterwards, and a defence can be mounted of most of the things that one has done. The trouble with being Chancellor is that figures come out remorselessly. Out come results. The impact of the economy on the men and women of this country is felt by every household in the land. Decisions will be judged by whether, in two years' time and more, unemployment is falling at anything like its present rate; whether inflation has indeed been kept down to its present level; whether our growth record is being improved, as the right hon. Gentleman constantly implied it would when he fought the election; whether public finances remain healthy; and whether he sticks to his tax pledges. That is the problem that he faces.
The secret is to get the big decisions right. My opinion is based on a short fortnight, but I shall be generous. I shall keep an open mind on the subject and congratulate the right hon. Gentleman if he has got it right, but he has made a dreadful start, and in his enthusiasm he is taking decisions that he will regret and which the public will bitterly regret as the mistakes unfold.
The right hon. Gentleman has made at least four big mistakes already. One of them we have just discussed. I shall not repeat the points that I made, not one of which was answered. There was no explanation as to why all of this was not said a fortnight ago; no explanation as to why he did not agree with the hon. Member for Gordon (Mr. Bruce), the spokesman for the Liberal Democrats, when he said that he believed in an independent central bank, when all three of us appeared together on the platform and on television programmes. That policy was
not in the Labour party's manifesto. The right hon. Gentleman detached himself from the policy and within four days of taking office he actually carried it out.
However, the election is behind us, so let us move to what will happen. As I said, the starting point for the Chancellor's policy was an inflation figure for April bang on target--2.5 per cent. That inflation target has been inherited by the Government and they must deliver it. The main influences on that inflation rate were the decisions that I took as Chancellor, accountable to the House, 18 months to two years ago.
I do not criticise the Bank, Eddie George or Howard Davies, but it is a matter of history that the Chancellor's judgment about how far to go to bring inflation down was correct and that of the Bank and many other financial advisers was wrong. Without going into what happened before, I can remember at least one key decision where I could really only find two people remotely inside the system who agreed with what I was doing--my right hon. Friend the Member for North-West Hampshire(Sir G. Young), who will reply to the debate, and the former Minister for Trade, then the hon. Member for Chichester, Mr. Nelson, who has retired from the House.
Mr. Malcolm Bruce (Gordon):
The right hon. and learned Gentleman is bound to defend his record, but does not he acknowledge that Britain paid a premium on long-term interest rates during that time for his right to interfere politically, a factor that put us at the top of the European league for the most expensive interest rates?
Mr. Clarke:
The premium that we pay, which was referred to by the Chancellor, is what people must pay to protect themselves against the higher risk resulting from a good 30 or 40 years of being a more inflationary country than other western European countries or the United States, and our history of devaluation of our currency. To reduce that, we require a track record.
The French have proved that by bringing their long-term rates down by a 10-year record of low inflation. The Conservative Government achieved a four-year record in which inflation did not rise above 4 per cent. for 54 months. That was the best for 50 years. It takes time to win that. Short-term movements, as the hon. Gentleman knows only too well, are no judgment of a policy at all. Market reactions two days after a statement should not be taken as proving anything. What was needed was a consistent pursuit of the previous Government's successful policy.
The Chancellor has handed over responsibility to the Bank, which was wrong, before it had the track record, and at a time when it was publishing a quarterly report which, as I have said, was wrong. The Chancellor did not respond to that. It is inescapable that the report which was produced was making a wrong statement.
Let me move on from that, because we shall all judge how the new system works.
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