According to the Independent, Nick Clegg wants to take on the ‘left’ in his Party.
In doing so he accuses the Social Liberal Forum’s amendments to the economics motion as “ending the Bank of England’s independence by ordering it to do more to create jobs” and “tearing up the fiscal mandate.”
Let’s deal with the first accusation. The 1998 Bank of England Act granted the Bank independence to set interest rates. That is instrument independence. However, the remit for the Bank is set by the government and so The Bank does not have goal independence, it takes its goals each Spring from the Government.
That is why, this March, George Osborne, in clear view of the Deputy Prime Minister on the Front Bench changed the Bank of England’s monetary remit in pursuit of growth and jobs.
This is how the Daily Telegraph reported it: Budget 2013: Bank of England’s monetary policy remit changed.
Here are the two key sections of The Act:
Section 11 – the objectives of the Bank of England:
(a) to maintain price stability, and
(b) subject to that, to support the economic policy of Her Majesty’s Government, including its objectives for growth and employment.
And Section 12 specifies the matters relevant to objectives:
(1) The Treasury may by notice in writing to the Bank specify for the purposes of section 11—
(a) what price stability is to be taken to consist of, or
(b) what the economic policy of Her Majesty’s Government is to be taken to be.
(2) The Treasury shall specify under subsection (1) both of the matters mentioned there—
(b) at least once in every period of 12 months beginning on the anniversary of the day on which this Act comes into force.
Thus, the independence being threatened here is not that of the Bank of England – it is the absolute independence of the Liberal Democrats to set our own economic policy.
On the second issue: the fiscal mandate, the Independent interview goes on to say that the Leader is about to reassure Conference, “that it will fight the 2015 election on a distinctive Lib Dem economic policy – including a plan to free local authorities to build hundreds of thousands of new homes.”
Bravo! How is this not ‘tearing up the fiscal mandate’? How is this done except by increasing public debt? If this is what he wants, why is it not in his motion? As it isn’t in his motion, why doesn’t he accept the amendment?
When we win the next election and these amended policies become government economic policy, under the Bank of England Act, they automatically become the new goals of the country’s ‘independent’ central bank. And the housing initiative is made possible by altering the fiscal mandate.
Vote for the amendments to drive the recovery forward. Vote for an independent economic policy as befits an independent political party.
* Bill le Breton is a former Chair and President of ALDC and a member of the 1997 and 2001 General Election teams