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Lord Sefton of Garston: The noble Lord, Lord Peston, made a statement when opening the debate on Amendment No. 25. He referred to people from outside the area of the M.25. At one time, in the north of this country, we used to say, "Those people down there don't know what is happening north of Watford". There used to be a row about which Watford they were referring to. I always subscribed to the viewpoint that it was Watford Gap--just below the Midlands--but I am glad to hear it confirmed now that it is considered to be within the M.25. For many years we forecast that if the question of monetary policy and so on was not looked at in a national sense, that is what would happen. The concentration that was beginning to occur from the north to the south would become so bad that--as I said in my first speech in the House of Lords--the south-east would become a stranglehold and a barrier to the rest of the country taking part in Europe.
The implication of these three amendments is that not enough attention is being given to the outside regions, or to sectors which will have problems arising from a decision by the Monetary Policy Committee on the Bank of England. Before we had the proposals for the independent Bank of England, the Government made the
decisions as regards interest rates, among other things. Therefore, the Government and the machinery whereby the decision on interest rates were made were the same. But now they are going to be different. The Bank of England will be deciding interest rates. What concerns me is the effect on the regions, as the noble Lord opposite said. My experience in this springs from 43 years in which, first, I was an active member and once leader of a major city which has suffered severely from the change in industrial transport. Secondly, I was the Chairman of the North-West Planning Council. I was a regional officer in another movement dealing with regional matters. On every occasion--we have watched it happen--we have seen a change in monetary policy. Perhaps the worst was when Liverpool was beginning to recover from the depression caused by the change in transportation. We at last convinced central government that we needed some large-scale investment in a field that was not affected by transport, and the government kindly agreed that they would send in 5,000 civil servants. One can imagine the effect that that had on the city centre of Liverpool, spreading out across that particular region. Then there was a change of mind. Everyone decided that the economy was over-heating and they had to go back. The consequence was that we lost all that investment.I am not asking, and certainly would not suggest, that we should have a committee comprised of the people mentioned in the three amendments. That would be a very big committee indeed. I do not disagree with the proposals for the Monetary Policy Committee. It would be wrong of me and would not have the slightest effect. When the Minister finally decides to reply to the amendments, which he will ask Members of the Committee to withdraw, perhaps he would consider asking whoever takes on the position of monetary policy or any other kind of fiscal policy to report to the Government any possible adverse effects their decisions might have either on sectors such as manufacturing or on regions such as Liverpool. I would then be satisfied that the matter was being looked at.
Over 45 years I have known people responsible for that policy admitting the deleterious effect their decisions have had upon the regions I have spoken about, but they have never offered any solution. They forgot all about it and waited until the next time, when they decided on their future policies, instead of looking at the adverse effects of their decisions and doing something, or telling the Government to do something to rectify the situation.
I hope I have made myself clear. I do not usually participate in these high-sounding ideas; I leave it to the experts down here. But the country should not have had the economic problems that it has experienced so often from decisions taken in the south-east of England. Would the Minister give consideration to imposing upon the Bank of England or the Monetary Policy Committee a duty to inform the Government of any possible adverse circumstances that may arise in certain sectors or regions from the decisions they recommended?
Baroness Carnegy of Lour: Perhaps I might just take one moment of the Committee's time. I should like
to make a comment on my own experience as a member of the Scottish Economic Council over a number of years, where I represented the interests of education and training, and where I watched the procedures of that council and its study of Scottish Office figures of how the economy was moving in Scotland in relation to the economy of the United Kingdom.I do not know whether Members of the Committee realise the extent to which separate economic analysis of the Scottish economy has been done, and the resulting effects of the particular arrangements for bringing into Scotland industry inward investment and the somewhat separate arrangements for education and training. During that time, it interested me how frequently the economy of Scotland diverged and differed from the economy of the United Kingdom as a whole. Indeed, there were frequent comparisons, for example, with the south-east where competition between Scotland and the south-east interested industrialists very much. There are enormous differences which are partly cultural. For example, for a long time it was explained that people in Scotland saved more. I am not sure they still do, but at that particular time they were saving more, which affected the economy of Scotland. Expert members of the committee will understand various differences.
It seems to me that with the advent of the Scottish parliament, it is likely that there may be increasing divergence as regards legislation and arrangements, funding and costs for local government. I can understand what the noble Lord, Lord Newby, was saying--and I am sure the noble Lord, Lord McIntosh, was thinking it. But it is very welcome to hear it said that we do not want too many people on the body from specific areas of interest. One wants flexibility to achieve a balanced body. At the moment Amendment No. 27 is saying to the committee that these interests must be there. I am sure if there is nobody on that committee who knows what is happening in Scotland--one-ninth of the economy of the country, which may be doing something a bit different--it may be neglected. It might be that one of the industrialists or one of the academics is a Scotsman, as long as somebody is there to do that. It seems to me important, and I cannot imagine such a body working without it. It is a very amateur contribution, but I hope it is of interest.
4.30 p.m.
Lord McIntosh of Haringey: Before I start on the meat of the amendments, may I take advantage of the almost chance remarks of my noble friend Lord Peston, who said that he had considered tabling his amendment to Clause 12 because he thought it was as much about the objectives of the Bank as about the membership. If I look at the debate on Clause 12, I see that I am recorded as saying,
- "We are setting the approximate target and we are providing the Bank of England Monetary Policy Committee with the means--the control--of short-term interest rates in order to achieve that target".--[Official Report, 3/3/98; col. CWH 61.]
I meant to say "We are setting the proximate target" and not "the approximate target". Indeed I believe I did say that but it was recorded wrongly, and I am glad to have an opportunity to put that right.
I have a great deal of sympathy with the objectives of the first three amendments, which seek to provide for special expertise, knowledge and experience on the Monetary Policy Committee, and rather less with Amendments No. 31 and 32 which seek to deny the Monetary Policy Committee particular forms of knowledge and experience. I perfectly well understand why there should be concern that the interests of Scotland and Wales, and of the English regions, of business in general and most particularly of manufacturing business, should weigh heavily with the Monetary Policy Committee in making its decisions. However I am not convinced that in a body of this size, with four outside members, this should be expressed in the membership of the committee itself.
The noble Lord, Lord Newby, exposed the contradictions and constraints which are involved in a number of these amendments. If one were to have somebody with particular knowledge of Scotland and another with particular knowledge of Wales, one would only have two for England. If one were to have two with experience of business and industry, one would only have two others. The amendment of my noble friend Lord Peston is less prescriptive but leads very much in the same direction, as we all recognise. It is much more important that, rather than restricting the membership of the Monetary Policy Committee, we should be sure that this committee has the interests of the regions and of the home countries and of business and industry in its sight when it is making decisions. That is why, in Clause 16(2) of the Bill, it is provided that the court shall have the responsibility for,
- "determining whether the Committee has collected the regional, sectoral and other information necessary for the purposes of formulating monetary policy".
In other words, it is part of their concern for the procedures of the Monetary Policy Committee that they should have the interests of the regions and of the sectors--which means business and industry--at heart. That is the way in which we prefer to secure that the interests of business and of the regions and of the home countries are protected in the deliberations of the Monetary Policy Committee.
The fundamental view that we take about these amendments is that we want the best people, and the more restraints we put on where the members should come from, the more chance we have of sub-optimising and having people on the committee who are not the best people.
I have another concern which relates to the way in which our society operates. Of course I see the point that we do not want to have a charmed circle of London, Oxford and Cambridge, still less within the M.25. However, people in this country have a wide range of different experiences and have lived in different places. Would the noble Lord, Lord Newby, be qualified under
the regional criterion because he comes from Yorkshire, or disqualified because he works in London? Would Professor Patrick Minford be qualified because he used to be a professor at Liverpool, or disqualified because he now works in London, or because he has never been, so far as I know, in manufacturing business? We are not like that these days. We live in different places; we work in different places.
The professor from Sheffield who wrote to The Times on 18th February--I do not know him; he may have been in Sheffield only for this academic year--but he might come to work in London in the next academic year, in which case he would lose his qualification. The point is that people move around; they change their jobs and their knowledge and experience change throughout their lives. We have already had a debate on the membership of the court, and it was widely recognised that the court, the larger body, contains much better representation of business and manufacturing industry and of parts of the United Kingdom outside London. We should be satisfied with that and with the provisions in Clause 16(2) that the court shall ensure that the Monetary Policy Committee has the information about the needs of the regions and the needs of manufacturing industry at its disposal when it makes the decisions it has to make. However, the membership of the Monetary Policy Committee should consist of the best people in accordance with the criteria laid down in the Bill.
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