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I think that the hon. Lady is labouring under a massive misapprehension about monetary policy and the main tools available to the authorities. I hope that that misapprehension is not informing the higher reaches of policy making in the Labour Government, because if it is, it must be partly responsible for the talk about using all sorts of other tools, which in my view is probably premature.
At least three monetary tools are still available. The first, as the hon. Lady correctly implies, is 1.5 percentage points of interest rate cuts. Secondly, there is the use of funding policy. I find it quite baffling that the Government should be allowing the Debt Management Office to issue so much long-dated stock, when they should be asking it to fund at least part of the deficit at the short end, thereby generating some further monetary easing. The third tool is the exchange rate, which she has ignored completely. The dramatic fall in the exchange rate is by far the biggest event to have taken place in monetary policy—bigger even than the fall in interest rates that we have seen—and it will have considerable effects. However, those effects will take some months to come through. Until they do, monetary policy needs to be given a chance to work.
Fiscal policy is broadly working—that is, the fiscal stabilisers are already operating as they should. It is monetary policy, and in particular that part which pertains to banks and the credit system, that needs a good deal of Government attention. However, they have been remiss in not acting on that earlier, first, by not underwriting the banks with recapitalisation, and then, when they did, by recapitalising the banks in a way that encouraged them to strengthen their balance sheets at almost any cost, thereby negating part of the purpose of the recapitalisation in the first place.
Given that so little time is available and given the fact that we are going to hear a couple of Front-Bench speeches in a moment, let me quickly make one or two further points. [ Interruption. ] I am getting a signal that it might be helpful if I make only one further point, so I will do that, and in only one minute, too. It might be misrepresented as being party political, but the point that I am going to make, which is almost universally accepted by all dispassionate observers of economic policy, is that there is absolutely nothing left of Labour's economic policy at all.
The policy that was put together a decade ago has been completely dismantled. The idea—the rhetoric or the mantra—of so-called spending to invest was long ago replaced by spending to consume. Indeed, the use of the word "investment" for current spending in the public sector has devalued the term, which has been damaging. The fiscal rules were consigned to the dustbin at the time of the Northern Rock episode—it was the first time that they were seriously tested, and they collapsed. Then there was the Chancellor's autumn statement, which tore up all the Labour Government's remaining pledges on taxation—the pledges that they used to try to persuade middle Britain that the economy was safe with them.
It is against that backdrop that in just over a year we will hold an election. The conduct of economic policy will be central to that election. I leave the House with one thought. When they go to the polls, the electorate will have in their mind a simple question. When looking at the Prime Minister and the running of the economy over the previous decade or so, will they be able to say well done?
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