May I add my congratulations to my right hon. Friend the Chancellor on presenting to the House an autumn statement which has won plaudits not only in the House but amongst many independent commentators. His emphasis on capital spending, his commitment to keeping a lid on inflation and his commitment to reviving growth have been greatly welcomed.

The events of the last four months have produced a number of instructive lessons. A financial whirlwind forced us to leave the ERM but the whole country now welcomes the cuts in interest rates since our departure. However welcome the new minimum lending rate of 7 per cent. is—hopefully with more to come—it marks a stage in a volatile roller coaster ride of interest rates—7·5 per cent. to 15 per cent. and back to 7 per cent. While I greatly welcome the Chancellor's firm commitment to low inflation, the post-war swings and roundabouts of interest rate policy have bedevilled the economy. For example, the credit boom of the late 1980s bore great similarities to credit conditions in the early 1970s. Sadly, history has had a habit of repeating itself.

The Maastricht treaty requires during the second stage that member states should start the process leading to the independence of their own central banks. It is not clear that we would find it desirable to move towards a single currency or indeed that the convergence criteria will ever be successfully met.

I turn to the domestic argument. There is no doubt in my mind that the wave of money moving into the deutschmark this year was due to the belief of the markets that the Bundesbank would pursue policies essentially unfettered by political influence. The markets were proved right. In its policy objectives, the Bundesbank has been by and large successful.

The Bundesbank is more substantially independent than the Bank of England. That is important. The IMF working paper, "Central Bank Independence: Issues and Experience", noted that the results of most studies are that countries with independent central banks tend to deliver better inflation outcomes. Had the Bank of England been considerably more independent, over the past four decades we would have enjoyed lower inflation, a more stable currency and less volatile interest rates. Surely it is time, particularly after the turbulent experiences of the summer, to look seriously at the structure of the bank and thereby the conduct of our monetary policy.

Given the enormous and justified importance which hon. Members place upon debate and parliamentary scrutiny, there might be concern that an independent Bank of England would be unaccountable. There is clearly a difficulty, with a tension between parliamentary sovereignty and central bank independence. That needs to be addressed.

The fears of lack of democratic accountability to Parliament could be addressed if the Governor were made regularly accountable to the Select Committee on the Treasury and Civil Service. The ingredients for that exist already. The Select Committee could have an enhanced role in monitoring the bank's performance. Basic to the independent bank's charter would be an absolute commitment to stable prices. The Select Committee could examine the conduct of the bank's monetary policy. A mix of a statutory commitment to price stability and parliamentary accountability would enhance the conduct of future monetary policy.

If ever, heaven forbid, we were beset again by the same financial whirlwind that we saw in the summer, we would be better able to withstand it. I urge my right hon. Friend to give serious consideration to that proposal.

There has been a great upsurge in concern about the future of small business. The huge increase in small businesses and entrepreneurial activity in the 1980s was welcomed and was a great triumph for the Conservative Government. As is happening tragically everywhere in the world, small businesses here are being hit very hard by the recession.

My hon. Friend the Member for Colchester, North (Mr. Jenkin) very ably highlighted small business problems in the House last Friday, and in Adjournment debates my hon. Friends the Members for Langbaurgh (Mr. Bates) and for Tiverton (Mrs. Browning) dealt with specific difficulties facing the small business community.

Small businesses face a liquidity crisis despite lower interest rates. My hon. Friend the Member for Surrey, North-West (Sir M. Grylls), with all his years of distinguished commitment to small businesses, has spelt out eloquently the lack of long-term assured capital which has been so damaging and debilitating.

Has the desire of banks to repair profitability by extending margins something to do with lack of liquidity in the banking system? In the 1980s bank credit to the private sector, which is most sensitive to interest rate changes, grew by 20 per cent. per annum. The growth of money supply in the early 1980s fell to a more sustainable 12 per cent. because of Government overfunding, that is, selling more Government debt to non-banks than the PSBR and using the excess proceeds to repay Government debt held by banks. Surely now we are in exactly the reverse position, as indicated by my hon. Friend the Member for Milton Keynes, South-West (Mr. Legg). We need to liquefy the system by underfunding, that is, by the Government financing at least part of their PSBR from the banks. That system was in force prior to 1985 and was considered to be successful. That approach to monetary policy is practised widely in other parts of the world. The collapse of broad money growth from 18 per cent. in 1990 to 5 per cent. now suggests that greater short-term monetary expansion is called for.

May I be technical and illustrate the extent of this dire problem? In the year to the third quarter of 1988 the rise in bank deposits held by unincorporated businesses, mostly small businesses, was 28·9 per cent. In the year to the second quarter of 1992 it fell by 0·1 per cent. Small business liquidity has been severely cut at a time of recession by lack of growth in broad money. Surely, therefore, the Treasury should consider under-funding to make up for the lack of credit growth. Broad money needs to grow, to boost liquidity in the short term before levelling off in years to come. That is the real world that business—small businesses in particular—has to live in. By liquefying the banking system, the lending practices of banks would surely not be so damaging and obstructive as they clearly are at present. Therefore, I urge the Treasury to address that problem, in the face of rising business illiquidity and bankruptcy.

All that having been said, the business community in west Suffolk, in my Constituency of Bury St. Edmunds and in the nation at large greatly and without reserve welcomes all the measures that the Chancellor took so boldly last week. We now have in place a strategy for new growth, which I greatly welcome and fully support.