Oral Answers to Questions

Jacob Rees-Mogg Excerpts

Tuesday 12th October 2010 Commons Chamber

[Mr Osborne]

Quite frankly, being in opposition involves choices, just as being in government does. The right hon. Gentleman talks about the Budget; there is a simple choice before the House today, which is whether we proceed with a graduate tax. Lord Browne’s report says that such a tax would add £3 billion to the deficit and would not produce savings until 2041. That is a real choice on the deficit before us today. The right hon. Gentleman is the shadow Chancellor and opposes a graduate tax; is he going to assert his authority over Opposition tax policy?

[Jacob Rees-Mogg (North East Somerset) (Con)]

5. Whether he has assessed the merits of returning responsibility for debt management to the Bank of England.

[The Financial Secretary to the Treasury (Mr Mark Hoban)]

The current institutional framework separates operational responsibility for debt and monetary policy by the establishment of a debt management agency. This properly reflects the importance that we attach to having a clear institutional divide between responsibility for setting interest rates and for issuing Government debt. The Government have no plans to return responsibility for debt management to the Bank of England.

[Jacob Rees-Mogg]

With the return of banking supervision to the Bank of England, I wonder whether it is worth considering giving the Bank of England its debt management responsibilities back. An active participant in markets may well prove to be a better regulator than one that approaches regulation from a more intellectual sense.

[Mr Hoban]

The Bank of England engages in market activities on a day-to-day basis, but before 1997 the same institutional separation existed, with the Chancellor setting interest rates and the Bank responsible for debt management. The separation of responsibilities improves transparency and confidence in debt management and helps to keep the cost of Government debt as low as possible. My hon. Friend will appreciate how important that is, given the size of the deficit that we inherited from Labour.