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Bank of England (Amendment) Bill [HL]

My Lords, I am most grateful to your Lordships' House for the time it has taken over this Bill and I am very appreciative of the three Front Benches and the noble Lord, Lord Dykes. I do not want to detain noble Lords for more than a minute in my response, save to deal with the Minister and the noble Lord, Lord Newby. Your Lordships will want to consider carefully the fact that both of them said that there is tremendous merit in a single objective. I think the noble Lord, Lord Newby, used the words, "a single target and a single aim gives a clear focus on decision making". The Minister used similar words when he referred to, "the primacy of a single objective". The point to remember is that the Government themselves have abandoned the concept of a single remit for the Bank of England. It went in the Banking Act, which was the Government's legislative response to this crisis. They have abandoned the idea of a single remit for the Bank of England, however attractive it may have seemed years ago to have that single focus. They have introduced a new remit for the Bank of England. We should note carefully the exact words the Minister used in his response, because he said repeatedly that the remit of the Monetary Policy Committee should be a "single remit". But the Government have changed the remit of the Bank of England because the Banking Act requires the Bank to consider how it will, ""protect and enhance the stability of the financial systems of the United Kingdom"." That is proof of the central premise of this Bill, which is that an inflation target may be a necessary condition but not a sufficient condition. In recognising that, the Government introduced a second mandate for the Bank of England, which is to protect financial stability. The only reason for possibly doing that is that they recognise the premise of this Bill, which is that an inflation target on its own is not sufficient to protect and enhance financial stability. I am grateful to my noble friend Lady Noakes. We always agree about everything, and I agree with her that, as I said at the outset, this Bill is not a guarantee of the prevention of further crises—I do not claim that for it—and it is not the end of the economic cycle. That was the claim made for the myth of inflation targeting, which we know is wrong. I do not claim that for this Bill, only that whichever Government are in power, I urge them to remember that an economic catastrophe can occur during a period of low inflation. I thank all noble Lords who have taken part in the debate. Bill read a second time and committed to a Committee of the Whole House.