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I beg to move,
That leave be given to bring in a Bill to amend the Currency and Banknotes Act 1954 to allow banknotes in addition to those issued by the Bank of England to be legal tender;
and for connected purposes.
[ Interruption. ]
Order. I am trying to be helpful to the hon. Gentleman and I apologise for interrupting him, but I appeal to Members who are leaving the Chamber please to do so quickly and quietly, extending the same courtesy to the hon. Gentleman that they would want to be extended to them in comparable circumstances.
Thank you, Mr Speaker.
My Bill would amend the Currency and Banknotes Act 1954 to enable a range of different currencies to be used as legal tender in Britain. The idea comes from a 1989 Treasury paper from when John Major was Chancellor. What the Treasury proposed as theoretically possible 22 years ago, the internet now makes practically achievable.
The internet has given people unprecedented choice. We have access to a greater range of music, financial services, groceries and books than ever before, so why do we have legal tender laws that create a monopoly currency? Thanks to eBay and Amazon, it is possible to buy and sell hundreds of thousands of items at the click of a mouse. It is even possible to do so using whichever currency we please. By making a range of different currencies legal tender in the UK, my Bill would enable people to go a step further. People could buy things, store wealth and pay taxes in a range of different currencies too. Families would be able to plan their financial future without having to do so using a currency that is set to halve in value in the next 14 years. Businesses concerned about rising prices could protect themselves.
We would not need to carry multiple currencies about us in a multi-currency country. Non-cash payments, which since 2004 have exceeded cash payments, mean it would be as easy as using a debit or Oyster card. The 40 years since the collapse of Bretton Woods have been a grand currency experiment. People in Britain might have been using pounds as the unit of currency for centuries, but for the past 40 years the pound has been a fiat—or paper only—currency. Until 1971, the British state could not simply print off as much money as it liked, but since then, a mere 40 years ago, the year that I was born, how many pounds there are in circulation—the money supply—has been directed by Government and by the state. With a fiat pound, there has been no external constraint limiting the amount of money in circulation besides the self-restraint of the British state.
Government turns out not to be very good at restraining Government. UK money supply has grown from £31 billion in 1971 to more than £1,700 billion today—many times faster than the economy. For 40 years, monetarists have argued with those who claim that they follow Keynes about the rate at which the money supply should be increased. There has been much debate about which branch of the state should take the decision. Should it be Ministers, who are accountable to this House, or experts sitting in the Bank of England? Monetarists or Keynesians, the Monetary Policy Committee or Ministers: so long as it has been left to Government to manage our currency, our currency has been debauched. State officials proved to be no better at managing a nationalised currency than they are at running nationalised airlines or telephone lines.
Just as a broken clock manages to tell the correct time twice a day, our monetary managers have got the settings right on occasion. More often, however, we end up hearing how the state planners lacked the benefit of hindsight. Perhaps we should stop expecting planners to get anything right.
Our paper-only currency system emerged out of the 1960s and 1970s. Like many ideas that grew out of that technocratic age—such as urban tower blocks, child-centred education or DDT pesticide—what seemed terribly modern, forward-looking, progressive and scientific turned out to be a disaster. A small but growing number of academics now see the west’s unfolding financial crisis not simply as a banking problem. It was not simply caused by inadequate capital ratios or too much short selling. Instead, they see it as a fundamental failure of this fiat currency experiment.
A credit balloon was created by reckless management of the money supply. Using inflation, Governments were able to whittle away their debts. Monetary management favoured the debtor over the saver and the consumer over the producer. Monetary policy has encouraged us to over-consume and under-produce, to over-borrow and to save too little. In the space of a generation, fiat money has seen Government grow and the productive sectors of the economy shrink.
Under my proposal, we would no longer be forced to live under such a destructive regime. If the Bank of England keeps printing off more money—more quantitative easing, more loose monetary policy—there may be a fall in the value of its currency, but not necessarily in the value of the currency that the rest of us choose to use. At the click of a mouse, people and businesses would have an alternative. Incidentally, our ability to opt out as individuals and businesses from the MPC’s monetary monopoly might encourage it to stop taking liberties with our currency.
On both sides of the House people recognise that choice and competition safeguard the interests of both the consumer and the citizen. We do not think twice about people being able to tune into different radio and television stations or choose between different hospitals for medical treatment. One day, I hope that Britain will become a multi-currency country.
My proposal for competing currencies is not a new idea. It was the policy of the Conservative Administration in 1989. An excellent Treasury paper presented to this very House suggested competing currencies as an alternative to the European single currency. Perhaps the euro, which we mercifully kept out of, is the ultimate paper-only currency. It is not even backed by the fiat of a single state authority. It is, perhaps, the fiat currency to end all fiat currencies, although perhaps not in quite the way that the architects of economic and monetary union expected. If, as seems possible, the euro breaks up, we should revert to and revisit the ideas in that Treasury paper. By adopting competing currencies, Britain could save herself by her exertions, and save European economies by her example.
Replacing the monopoly of one failed fiat currency with multiple competing currencies would allow euro members the least painful means of extricating themselves from the monetary monster that holds them captive. With choice and competition, all Europeans might be free from the monetary mismanagement that always comes from on high.
I rise to speak because I think it is appropriate that someone from the Labour Benches should oppose this true bastion of Conservatism. History demonstrates to us that, given the opportunity and power, the Conservative party will always attempt to undermine, whittle away and eventually destroy the great institutions of this country. We are seeing it with the police service and the NHS. But Conservative Back Benchers want to go much further. Here we have them proposing a motion, which they wish to become legislation backed by their Front Bench, to take on, challenge and destroy sterling. I think that we on the Labour Benches want to defend the great currency of sterling against such an imposition of Euro-fanaticism—for that is what we have grown to expect from the Conservative party, although it is never up front, never to the public.
One recalls of course that, after Harold Wilson, Denis Healey and others blocked European adventurism, it was the Conservative party, inspired by Sir Keith Joseph, who resolutely took us into the European Union. Who was it who introduced all these new employment laws—maternity leave, paternity leave, a range of rights at work? Indeed, we backed them on that, rightly. It was none other than Margaret Thatcher and the Conservative party, who signed Maastricht. That was the fundamental—
I thank you, Mr Speaker. I was just drawing the parallels with this pernicious motion, which would destroy sterling at the moment of its introduction. We saw the coalition partner, Bob Russell give an example this very week of how on Eurostar the euro is the currency of use, not sterling. Mr Carswell wishes to impose the euro on every shop across the country, for every transaction. He would go further: he would allow the Iranian rial and other currencies to be used. When I go to buy my midget gems from the corner shop, I wish to use sterling; I do not wish to use the euro or the Iranian rial.
The idea was inspired by a paper from 1975 by Hayek, which dictated the monetary policy to which the Government are adhering. Hayek first made the proposal, to try to break down boundaries. The concepts of “ever onwards”, free trade, the breakdown of the nation state and the destruction of national currencies are really what Back-Bench Conservative Members are about; they would open the floodgates to euros at every corner shop in Britain.
We should not oppose the motion today; we should give it time, so that the arguments can be developed further, and so that we can hear the supporters’ true perspective—then we should vote it down. I resolutely stand up for sterling and the corner shop, and oppose the euro and the attempt to impose it on us, but I do not seek to divide the House. Let us give the hon. Member for Clacton more time to put forward his case, and let us then destroy him in the vote.
Question put and agreed to.
Mr Douglas Carswell accordingly presented the Bill.
Bill read the First time; to be read a Second time on