Economy: Monetary and Fiscal Policy

Lord Eatwell Excerpts

Tuesday 8th November 2011 Lords Chamber

[Lord Sassoon]

The debt is going up. Far be it from me to criticise my noble friend, who quite rightly makes this point. If the deficit was running at the level that we inherited from the previous Government, of 11.1 per cent a year—the highest deficit level in our history—it would not take very many years before our debt got up to the level of the Italian and the Greek debt. That is why we will continue to keep our deficit policy on track and keep our interest rates low. I entirely agree with my noble friend that we must be reminded about the level of debt as well.

[Lord Eatwell]

My Lords, in his first Answer to my noble friend, the Minister said that the Monetary Policy Committee takes account of growth and inflation, but its statutory responsibility is to take account only of inflation. When did the Treasury change the policy?

[Lord Sassoon]

My Lords, I will let the noble Lord, Lord Eatwell, read the actual words in Hansard tomorrow. [Interruption.] No, I am not changing anything. The MPC has to take account of the prospects for growth and inflation when it is judging how to set the direction of monetary policy. Its target is an inflation target, but it needs to take account of a wealth of other factors when making its decision, so that is what it does.