Economy: Quantitative Easing

Lord Peston Excerpts

Monday 19th March 2012 Lords Chamber

[Lord Sassoon]

My Lords, I am certainly not going to pre-empt any announcements this week of that kind or any other, or I may not be here to answer the next Question at the Dispatch Box. I think that the £20 billion, which has already been announced, and reducing the interest rate that SMEs would otherwise have to pay by the order of 1 per cent would be a very good start.

[Lord Peston]

My Lords, can I ask the Minister whether he agrees—which he seemed to say—that quantitative easing is part of monetary policy? If it is part of monetary policy, what business is it of either the previous Chancellor or the present one to claim that they have a decision-making role in this matter, since the Bank of England Act makes it absolutely clear, when discussing the reserved powers of the Treasury, that they can intervene only if they lay before both Houses of Parliament an order authorising them to intervene? Have not the Chancellor of the Government whom I supported and the present Chancellor both been acting illegally?

[Lord Sassoon]

No, my Lords, even the previous Chancellor, I am happy to say, was not acting illegally in this matter and the current Chancellor certainly is not. As I have already explained to the noble Lord, Lord Barnett, the only reason for the Chancellor having to authorise this is because HM Government indemnify the Bank for any losses that it may suffer by exercising purchases under the asset purchase facility.