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Mrs. Liddell: I hear the baying of Pavlov's dogs. We have just seen a vignette of the problems currently being experienced in the Conservative party. Schedule 7 is not about disclosure to the EU but about avoiding the possibility of the Bank and its officials being faced with a conflict between EU and UK laws.

This is not a measure taken by the Government to advance our position in Europe. The specific provisions in the Bill that the right hon. Member for Wells

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(Mr. Heathcoat-Amory) seeks to remove exactly mirror section 85(1)(h) of the Banking Act 1987 and section 180(1)(t) of the Financial Services Act 1986. The previous Government included no fewer than 18 identical provisions in the legislation that they enacted. There was one per year on average while they were in office, including the Pensions Act 1995, the Railways Act 1993, the Water Industries Act 1991, the Friendly Societies Act 1992, the Companies Acts, the Gas Act 1986, and the Competition Act 1980. The exemption is in the Bill as a failsafe, to answer the point raised by the right hon. Member for Wells, and the hon. Member for Rochford and Southend, East (Sir T. Taylor). It was not included with any particular obligation in mind. The point is to avoid a conflict of law and a dilemma for officials who might otherwise be potentially open to prosecution for fulfilling a binding legal obligation under Community law. An identical amendment was tabled in Committee. What is more, as regards amendment No. 12, it is clear that the obligations concerned would have to be legally binding.

Amendment No. 13 would unduly narrow the exemption by ruling out disclosure in meeting an obligation expressed in terms of collaboration or co-operation. Indeed, the obligation, the amendment, would do exactly the opposite of what Opposition Members are seeking to achieve. The term "Community obligation" has the meaning given to it in schedule 1 to the European Communities Act 1972, which refers to


The term "enforceable" in this context refers directly to the applicable Acts of the Community.

Sir Teddy Taylor: I am sure that the Minister will accept that there is always the possibility that the previous Government may have made an error, too. I know that the previous Government achieved great things, but they made some mistakes. What is the point of putting in the line in question if Community law is superior to our law? How could a case arise? I just want to know why it has been included.

Mrs. Liddell: The hon. Gentleman is showing an obsession with this matter. We are seeking to give protection to officials of the Bank so that they are not put in an invidious position. Opposition Members seek to put them in an invidious position. The Government cannot, therefore, accept the amendments. I urge the House to resist them.

Mr. Heathcoat-Amory: That response rather typifies the Government's whole handling of the Bill. The Minister agreed that we are talking about legal obligations, which is not clear from the Bill as drafted, yet she is unwilling, for unspecified reasons, to accept the amendment, or, indeed, to table one of her own that will make the matter clear. The phrase "Community obligation" is incredibly vague and incredibly wide, and it was our intention to restrict it to what is more properly the intention of the House and, I think, the Minister. I am not surprised by her response, because she has done this before at other stages in the Bill's progress. We will not press the amendment to a Division because we want to get on to Third Reading so that we can review the Bill in its entirety. I beg to ask leave to withdraw the amendment.

Amendment, by leave, withdrawn.

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Schedule 8

Transitional provisions and savings


Amendment made: No. 45, in page 43, line 5, leave out from 'satisfied' to 'shall' in line 6 and insert--
'(a) any requirement to consult before making an order under this Act, or
(b) any requirement of paragraph 2(1) of Schedule 6,
that requirement'.--[Mrs. Liddell.]
Bill reported, with amendments.
Order for Third Reading read.

9.43 pm

Mr. Darling: I beg to move, That the Bill be now read the Third time.

This is an historic Bill. For many years there has been much talk and discussion about the merits of an independent central bank; indeed, there have been many debates in the House. On entering office we made it clear that we believed that the best way to obtain price stability and a commitment to low inflation was to give the Bank of England operational independence to meet the Government's inflation target of 2½ per cent. The Bill is a cornerstone of the Government's economic strategy. It is a major step forward. The passing of the Bill will put in place another plank in our economic policy.

We have already made it clear that we want to promote stability and long-term growth. We are prepared to face up to the long-term issues, which the previous Government ignored for far too long. Those include the need to end the damaging cycle of boom and bust, which has affected this country badly for many years, and to put in place a framework for long-term stability. Controlling inflation is an essential precondition for growth.

We are taking steps to tackle the structure of unemployment and to equip people for the future by improving educational standards and providing opportunities for people to acquire skills. The welfare-to-work reform and the new deal for the young and the long-term unemployed are major steps forward that no Government in recent history have attempted. Our tax and benefits system will be overhauled so that it encourages work and makes work pay.

We have encouraged long-term investment; we shall abolish advance corporation tax; we have announced cuts in corporation tax, with more to come; we have overhauled the private finance initiative; and we have provided leadership so that we can influence Europe in the interests of this country.

The reform of the Bank of England is a major part of that strategy. It shows our determination to achieve economic stability and low inflation, which is good for business, for savers, for pensioners and for anyone on low and fixed incomes. The new Bank of England will have one of the most open and accountable systems of any central bank in the world. It has a clear target. Its procedures are open; as we discussed this evening, there are many ways in which its policy and commitment are open to scrutiny, by this House, the country and the world at large. That marks a commitment to openness and transparency which this country has not seen before.

This country depends on its international trade and on markets having confidence in the Government's ability to deliver economic stability and low inflation. The

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independence of the central bank, the code of fiscal stability and the pre-Budget report are all planks in the same strategy to ensure that there is openness. Openness brings confidence and certainty that the Government will not be moved from their determination to deliver low inflation.

We therefore have a clear policy for monetary stability and for fiscal stability and, unlike the Conservative party, we have a clear policy on Europe. Nine months after the announcement by my right hon. Friend the Chancellor of the Exchequer that we would give the Bank of England operational independence, we still do not know where the Conservatives stand on this question. It is less than 15 minutes before we shall vote and they have not told us whether they are for or against the measure.

Mr. Heathcoat-Amory: The right hon. Gentleman has not been here.

Mr. Darling: I have been here at nearly every stage of the consideration of this Bill and not once have Conservative spokesmen told us whether they are for or against the Bill. The Conservatives are all over the place on this Bill, just as they are divided on Europe. Anyone listening to the debate tonight will have been struck by the fact that every time Europe was mentioned, the Conservative party went into a flurry of confusion and hatred. Every time they looked at a clause that might have involved Europe, all the old divisions and confusion resurfaced.

We have a clear idea of the interests of this country, in both European and domestic policy. Reforming the central bank was an essential part of that. In nine short months we have achieved a major reform, which will deliver great benefits for this country. We took action almost immediately on entering office on 2 May last year, and we now have a central bank that is fit for the 21st century and an economic strategy that will rebuild this country. This Bill is a central part of that strategy. I commend it to the House.

9.48 pm

Mr. Edward Davey (Kingston and Surbiton): I do not wish to detain the House for long, partly because the Liberal Democrats' support for the principle of the Bill is widely known and has been long-standing. Uniquely among the major parties, we campaigned for the reform of the Bank of England and we welcome the Labour party's conversion to that policy now that it is in government.

The Chief Secretary to the Treasury explained the benefits of an independent central bank. It is important to have those benefits on record because we have heard so many arguments against an independent central bank. As the Bank of England builds its reputation as an institution that is ready to fight inflation, it is important that public and political support is strengthened and that people recognise the strong arguments for its independence.

I reiterate the comments of the Chief Secretary to the Treasury about the need for the Conservatives to put their view of this policy on record. They should acknowledge their mistakes in government and their failure to produce a strong, anti-inflation policy through an independent central bank. They have still not changed their policy, but it is important that they do so, because for the Bank to be effective in the long term, there must be cross-party consensus on its independence.

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It may be presumptuous of me, as a young, new, junior Member, to give advice to the Conservative party, but I suggest that it will lack credibility if it does not change its position before the next election. Although I am not too concerned about the Conservative party's lack of credibility, it would do this country a great disservice if it did not change its policy, because that could create instability in the financial markets. We would have the intriguing prospect of a flight of capital from this country if a Tory victory at the next election were predicted and it had not changed its policy.

The Liberal Democrats did not give the Bill their total support in Committee because of its shortcomings, especially on accountability. We are disappointed that the Government have not accepted our amendments or any of the cross-party amendments. However, we shall give them our support in the Lobby tonight, because the Bill is a major step forward for British economic policy.

It is important that interest rates have been taken out of the political arena. Economic policy makers can now concentrate on the real issues that determine a country's prosperity, such as investment in education and in research and development, free, fair and sustainable open markets and an open trade policy. That is what determines the long-term economic future.

The Liberal Democrats will support the Government, and we will look with interest to see which Lobby Conservative Members go into if they decide to vote.


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