Economic Stability

Oral Answers to Questions — Treasury – in the House of Commons at 12:00 am on 30th October 1997.

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Photo of Professor Ross Cranston Professor Ross Cranston Labour, Dudley North 12:00 am, 30th October 1997

What measures he is taking to strengthen economic stability in the United Kingdom. [12663]

Photo of Mrs Helen Liddell Mrs Helen Liddell Economic Secretary, HM Treasury, The Economic Secretary to the Treasury

As my right hon. Friend the Chancellor has already made clear this afternoon, the Government have taken decisive steps to strengthen economic stability. In May, we established the new framework for monetary policy, giving operational independence to the Bank of England. In July, my right hon. Friend introduced the deficit reduction plan, based on tough fiscal rules, designed to put public finances on a sustainable course.

Photo of Professor Ross Cranston Professor Ross Cranston Labour, Dudley North

Does my hon. Friend agree that market expectations indicate that interest rates will go down next year and that, since May, long-term interest rates have gone down by 1 per cent.? Does that not show that the measures taken by the Government since May have directly encouraged economic stability?

Photo of Mrs Helen Liddell Mrs Helen Liddell Economic Secretary, HM Treasury, The Economic Secretary to the Treasury

The measures taken by my right hon. Friend the Chancellor were aimed at the long term. In fact, since his announcement in May, long-term interest rates have fallen. The Government are seeking to bring about a climate of stability which was sadly lacking. All of us remember the Ken and Eddie show, when interest rates went up, went down and then went up again. That is not a sustainable way to run an economy. In the long term, we hope that companies and individuals will be able to plan ahead with a degree of consensus, with politics taken out of the setting of interest rates.

Photo of Mr Peter Brooke Mr Peter Brooke Chair, Northern Ireland Affairs Committee, Chair, Northern Ireland Affairs Committee

If the Government claimed to be so clear and so economically stable on Monday, why did the markets so misunderstand them in the previous 30 days?

Photo of Mrs Helen Liddell Mrs Helen Liddell Economic Secretary, HM Treasury, The Economic Secretary to the Treasury

Given that share values are up since May, I find the right hon. Gentleman's point rather difficult to take. The action that my right hon. Friend the Chancellor took in giving operational independence to the Bank of England has been widely welcomed. The only answer that we cannot get is whether the Conservative party is prepared to support the Bank of England Bill. Conservative Members have been asked three or four times this afternoon for a response but have failed to give one.