GRANTING the Bank of England independence is celebrated as a major success of New Labour. But then those whom politicians wish to destroy, they first heap with honours.
Certainly, the time has come to reappraise this sacred cow. Not the Bank exactly, nor its Governor Mervyn King, one of the few public figures on whom we can rely for probity and integrity. Rather its rules of engagement.
The Bank's brief is to set
interest rates so inflation as measured by the Consumer Prices Index never veers lower than 1% or higher than 3%.
But CPI is an emasculated index, excluding as it does mortgages and house prices and thereby ignoring the inflationary pressures which make or break us. Nevertheless, for years we have been invited to applaud the releasing of interest rate policy from self-serving politicians, thereby paving the way for cheap borrowing and ever-rising living standards.
In fact, the reverse was true. Politicians continued to practice their dark arts by setting the framework. Governments stay in power as long as house prices keep rising. So it should be no surprise this framework led to interest rates being set far too low for several years, thereby triggering a property boom, the consequences of which we are now reaping. In other words, we had the wrong interest rates in the good times, and as we lurch into a possible recession it looks like we are about to repeat the trick.
This column, along with others, has argued for many weeks that interest rates must come down and quickly. Fixed-rate mortgages are more expensive than at any time this millennium, with borrowers paying 6.64% on average for two-year deals, compared with 4.34% two years ago.
Yet King made it clear when delivering his inflation report that he had no scope for cuts. True, he was managing expectations and doesn't always live up to his sound and fury.
If, as looks increasingly likely, the economy beaches, the Bank will have to cut. The longer it hangs back, the deeper the cuts will be, but the more traumatic it will also prove for families and businesses. Chancellor Alistair Darling last week displayed the speed with which Government will ditch sacred fiscal rules to save its own skin. Surely, as we head closer to a painful downturn, he and King should look again at this flawed index if there is to be any hope of saving the rest of us.
In it for the moneyALL of that said, there is a small part of me that longs for house price Armageddon in the south of England, for the simple pleasure of watching that self-satisfied grin wiped off Cherie Blair's face.
I'm no apologist for Gordon Brown. Quite the reverse. I never believed in his economic miracle. But I always believed in Brown the man.
As a statesman, he is a giant compared with the pygmies and has-beens who rushed out their biographies last weekend with the sole intention of making obscene amounts of money by embarrassing and humiliating him, not to mention damaging the Labour Party ahead of a crucial and possibly historic by-election this week at Crewe.
As my Aunty Kitty used to say of anyone who got rich via dishonourable means: "It'll never do them any good." Or put somewhat more eloquently by Oscar Wilde: "It is always Judas who writes the biography." There may be honour among thieves, but not among the Labour Party, it seems.
It also exposes the great lie that people do not go into politics for the money. How can you devote your entire life to a cause, as in their different ways Cherie Blair and John Prescott have done, yet betray it to the highest bidder quicker than a cheque dries?
I cringed as I watched Thursday's Question Time as the politicians on the panel ridiculed the idea that you "did this job" for the money. What do they do it for then? Charity? Give me a break.
Do they not realise how arrogant this sounds to ordinary people, who have no option but to work long hours driving lorries, cleaning hospitals, filling supermarket shelves; yes, precisely for the money, a good chunk of which is taken off them to pay for our politicians' feather-bedded existence?
They must take us for idiots. As a member of the BBC audience put it so succinctly: "Not going into politics for the sake of the money is how you get a £4.5m house."
I think it was John Major who said: "No one forces you to do this job." If it's too big a sacrifice, then please don't bother.
On Friday, MPs lost their battle to keep past expenses claims secret. Personally, I wasn't convinced they should all be published retrospectively.
It seemed unnecessarily vindictive. But so disillusioned is the public with our political classes, few will waste much sympathy on them.
The full article contains 835 words and appears in Scotland On Sunday newspaper.
