August 3, 2016

Finance & Economics

John Redwood MP believes it is time we moved back to a system where Ministers set policies based on public need, rather than the whims of supposed experts.

The rise and rise of EU powers which has so damaged UK democracy has been accompanied by the doctrine that many things are better run by experts than by politicians taking professional advice. It has been the mood of the last 20 years that independent quangos staffed by experts will do a better and fairer job than elected Ministers.

It was with this in mind that both main parties in office have paid lip service to the idea of Bank of England independence. Gordon Brown claimed to have given independence to the Bank of England in a much spun change of policy in 1997. Instead he gave the Bank limited new powers to control interest rates in return for taking away from the Bank the main regulatory powers over commercial banks and giving them to the FSA. This meant that the Bank lacked crucial powers to deal with the emerging banking crisis and crash in 2008, and spent part of the pre-crisis period in a turf war with its rival independent body. The elected official, the Chancellor, left these two warring institutions to get on with it, with disastrous results.

We have now suffered from 20 years of a so called independent Bank. During that time period we have seen two speculative bubbles, in 2000 and again in 2008, a banking crash in 2008-9, the Great recession which resulted from the crash, the adoption of more extreme monetary policies based on printing extra cash and the buying up of government bonds. Far from creating stability, the Bank has supervised market extremes, substantial economic volatility and two stock market crashes, including one with a  banking crash.

The Bank has demonstrated it is not independent, whilst governments have continued to interfere behind the scenes. Gordon Brown changed the powers of the Bank, then changed its inflation remit. Alastair Darling rightly overrode the Bank to get interest rates down in the middle of the banking crash. Governor Carney’s independent judgement looked very similar to the Remain campaign in the referendum.

The same thing has happened with the Environment Agency. The Agency developed its own policy of allowing parts of the country to flood. It removed pumps and failed to keep ditches clean and rivers dredged. It allowed substantial new development to be added without always making necessary provision for handling surface water and household waste water. The whole system broke down in the Somerset levels, prompting Ministerial intervention to demand pumps and dredging be resumed.

It is time we moved back to a system where Ministers set policy based on public needs, rather than relying on experts who can offer policies that are not wanted allied to incompetence in delivery. In the end the public thinks the Chancellor is to blame for the economy and the Environment Secretary for flooding, however much power has in theory been delegated.

 

August 3, 2016

Beware the cult of independence

John Redwood MP believes it is time we moved back to a system where Ministers set policies based on public need, rather than the whims of supposed experts.
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August 1, 2016

It’s time for a Brexit budget

John Redwood MP sets out the spending proposals he would like to see implemented in the country's first post-Brexit Budget.
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June 30, 2016

Ensuring a smooth Brexit

John Redwood sets out important next steps to ensure a smooth and efficient transition from European Union membership to UK independence.
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June 29, 2016

Post-Brexit: The road ahead

What we need is a budget to promote expansion and prosperity, spending the saved contributions as soon as we are out, says John Redwood.
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