20 February 2024 , 08:47
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The Bank of England is "no longer showing itself to be competent" and its freedom "must be questioned", according to a former business secretary.
Conservative MP Sir Jacob Rees-Mogg took aim at the BoE's response to economic events as Labour used a Commons urgent question to raise concerns over the UK falling into recession. Speaking to the Treasury Secretary Bim Afolami, he referred to former chief economist at the Bank of England, Andrew Haldane's statement: "I refer him to what the former chief economist at the Bank of England, Andrew Haldane, has said today, referring to a double blow to the credibility of the Bank of England which was late to put interest rates up and missed inflation and has been slow to reduce them, hammering the economy."
He further added, asking Bim Afolami: "Does my honourable friend agree that the Bank of England is no longer showing itself to be competent and its independence must be questioned?" To this, Mr. Afolami replied: "I don't think I will quite agree with (Sir Jacob)."
Mr. Afolami added: "What I will say is it's very, very important that we leave the Bank of England to do its work, respect their independent mandate but from the Treasury we do what we can to make sure we bring inflation down and support them in that mandate."
Tory ex-minister Sir Edward Leigh also encouraged the Government to lower legal migration and claimed there are "too many people on benefits dragging down our economy". He remarked: "For too long too many people in the Treasury, not (Mr Afolami) who's an excellent minister, but too many people there have thought the best way to grow the economy was to fill the country with more and more people."
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"So will the Government now commit itself or recommit itself to insisting that if you come here to work you should earn average UK earnings around £33,000, no shortage schemes, no exemption for care workers or the NHS, that in those sectors we pay proper wages, we get people off benefits, there's too many people on benefits dragging down our economy, we cut seriously mass legal migration, and by the way if there is a general election we give something for our people to vote for."
Mr Afolami replied: "I completely agree with him that what we need to see is an economy where we get higher earnings for British people, that does not mean that we have an economy where we import too many people and keep earnings down. What is also worth pointing out to the House is in relation, for example, to last year's immigration numbers there were certain individual things that happened last year, in particular people fleeing from Ukraine, in particular people from Hong Kong as well that meant that last year had particularly high immigration numbers."
Earlier, Shadow chancellor Rachel Reeves called it an "insult" that Chancellor Jeremy Hunt did not come to the Commons to answer the urgent question. She said: "The Chancellor should be here in Parliament explaining why Britain has fallen into recession. Can the minister explain why he has been left to answer these questions and where exactly is the Chancellor today?"
She added: The Chancellor should be accountable to MPs and to our constituents and answer for his failure in this House. What an insult to all those people who go to work every day and experience the reality of 14 years of Conservative economic failure that he has simply failed to turn up."
"Let me ask the minister, does he accept that the Prime Minister's promise to grow the economy is now in tatters? Will the minister explain why the economy is now smaller than when the current Prime Minister entered 10 Downing Street?"
Mr Afolami responded: "Where she started was to talk about the Chancellor, well I am the economic secretary. I am perfectly entitled to answer on behalf of the department, and I will do so today. But the main thrust of her remarks was on growth, and let me deal with those in detail. The first point to recognise is indeed the international context that we all find ourselves in. Well, it happens to be true. For example, to describe that international context, 10 EU countries were in recession in 2023."
Mr Afolami finished by suggesting that the UK economy had "significantly outperformed" Office for Budget Responsibility forecasts for growth.