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Finance Bill

I entirely agree, and I said that I would argue that I do not like some tax measures in the Budget, because they will make enterprise, jobs recovery and prosperity more elusive rather than easier to reach. Why, then, are the Government not more worried about the question posed—that the gap is too big and that that will be revealed by their not being able to borrow all the money? There are two reasons. The Government think that they will get away with it for a few months, because they have instructed the Bank of England to buy up to £150 billion of their own debt—debt that they are issuing. We have this bizarre money-go-round whereby one group of people in the Treasury is desperately trying to issue £175 billion in gilts, or however much it might turn out to be this year, and another bunch of officials in the Bank of England is busily buying in £75 billion, rising to £150 billion if it uses the full permissions and carries on with the programme. I am sure that people in the gilt markets love that; they are pretty clever at these things, and understand that if they sell gilts to the Bank of England at price A and buy back similar gilts at the more advantageous price B, they will make a turn, and a living. That money-go-round, apparently, is the height of modern Treasury and Bank of England policy making. It all means that if the full proposed quantitative easing plan is implemented, the Treasury and the Bank of England will be pretty relaxed about borrowing for the foreseeable future; they will not borrow anything net at all from other people, but will print the money or give it to themselves. They have another reason to be more confident than we might expect: their regulators are also instructing all the commercial banks to buy piles and piles of gilts, just to make sure. In the middle of this dreadful banking crisis and nasty credit crunch, the regulators have decided—now, of all times—to say that the banks need more cash for the amount of business that they are doing. If only they had thought of that rather good idea in 2005 or 2006, we would not have had to go through the whole grisly business of the crunch; there would not have been the "run on the Rock" or the uncertainties about some of the bigger banks. However, to implement the idea now—when the banking system is much weaker and extremely cautious, and the worry is that it will not finance enough transactions in the economy to get things going again—is rather perverse, to put it mildly.