Economy: Monetary and Fiscal Policy

Lord Peston Excerpts

Tuesday 8th November 2011 Lords Chamber

[Lord Barnett]

To ask Her Majesty's Government how they are co-ordinating monetary and fiscal policy in the current economic climate.

[Lord Peston]

My Lords, on behalf of my noble friend Lord Barnett, and at his request, I beg leave to ask the Question standing in his name on the Order Paper.

[The Commercial Secretary to the Treasury (Lord Sassoon)]

My Lords, the independent Monetary Policy Committee has operational responsibility for monetary policy. Fiscal policy is a competence of the Treasury. When making its monetary policy decisions, the MPC takes into account fiscal policy, among other factors, when judging the outlook for growth and inflation. A non-voting Treasury representative attends monthly MPC meetings and plays a key role in ensuring the appropriate co-ordination of fiscal and monetary policy. This includes, when appropriate, briefing the MPC on the Budget.

[Lord Peston]

I thank the Minister for that. Bearing in mind that the monetary policy of the Bank of England is failing in its statutory duty to hit the inflation target set by the Government and does not even seem to be trying, and that fiscal policy has got us nowhere near full employment or a sustainable rate of real growth, is it not the case that far from there being co-ordination of monetary and fiscal policy, what we see on the part of the Government is simply an utter shambles?