Parliament finally detaches from reality

Yesterday Parliament continued with what this government laughingly calls a budget debate.
It wanted to ignore the fear that stalks the markets (See my post of March 15th).
Outside the cocoon of the Commons chamber fear continued to spook the markets. Large sums of money were made available to the banks to ease them through the persistent credit crunch and liquidity crisis. The US were tidying up the loose ends of the rescue of America’s fifth largest investment bank. The dollar and the pound were in freefall, bank shares crashed, and the Chinese market fell as the authorities there threatened higher interest rates to combat inflation.
Inside Parliament the government had decided the whole day could be given over to debating climate change again. We have recently had a full day on this topic as part of the so called EU scrutiny, and will have a second reading soon of the government’s Climate Change Bill. Surely that would be the appropriate time and place to discuss green taxes and regulations, not the budget day debate that coincides with such gripping and worrying events in financial markets?
Hilary Benn was the appointed Cabinet Minister, who dutifully droned on with his script about worthy green initiatives. Most speakers in the debate stuck to the guidelines that yesterday was the day to speak – often for the umpteenth time – about lower emission cars, cleaner homes and higher taxes on profligate energy users – but not on the most profligate of all, the government itself.
I decided to break the silence, and seek to connect the Chamber to the real world beyond. I made a speech about the need for reform of the Bank of England so it is properly equipped to influence and control our money markets, to keep them more liquid. I recommended giving the Bank back the power to run government debt issuance, and the power to supervise the day to day actions of the clearing banks.
I explained how the Bank would both need to cut interest rates and make cash and government paper available to the banking system in exchange for their higher quality paper that the market currently does not trust.
Those Labour MPs that have engaged at all with this crisis take a certain delight in seeing a true “crisis of capitalism”, and seem happy to think rich people in the City will suffer. I tried to explain to them that banking crises hurt us all. Those most in need of credit because they have the least by way of income and assets will suffer first and longest, as they will be squeezed out of the lending market by the pressures.
When Angela Eagle came to “reply” to the debate she surprised even me by the way she simply ignored all that anyone had said during the course of the proceedings, making no attempt to sum up or respond. When I asked for a specific reply to my proposals on strengthening the Bank of England she told me there is currently a consultation on that and I could contribute. As far as I was concerned I had just contributed, but these Labour Ministers now do not think that an MP contributing to a debate in the Commons is responding to a consultation! Gone is the idea that everything said in the Commons is taken seriously, and referred to the appropriate department and officials for consideration.
The Treasury had been stung into some bland prose which Miss Eagle read out about the crisis. We were told that it is serious, but because it is international we cannot do anything on our own and it will all be taken care of by international co-operation.
Has the once great Treasury of the UK really come to this? Is it now just the office boy of the EU and the US authorities? Does it have no understanding of its own of this crisis? As the supervisor of the world’s largest banking centre does it have no leadership to offer? For how much longer is the Treasury going to remain mute and inactive, hoping the problem will go away?

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11 Comments

  1. Francis Irving
    Posted March 18, 2008 at 11:04 am | Permalink

    “green taxes and regulations” — I’m confused. Stopping Climate Change is about securing the long term future of the economy, I’m not sure in what sense you are calling it “green”.

    I agree that we should be very worried about the current economic situation, but we should also be worried about the economy in 30/40 years time as food prices rise, and a refugee crisis reduces world trade.

    We’re the wealthiest people to have ever been in the whole history of humanity. It’s the least we can do to use some of that wealth to secure it for future generations!

  2. Letters From A Tory
    Posted March 18, 2008 at 12:35 pm | Permalink

    "crisis of capitalism"? Oh please. The Bank of England is pretty powerless these days and is not able to strengthen our position in financial markets thanks to their diluted powers. We need a central bank we can count on in tough times.
    http://lettersfromatory.wordpress.com

  3. Matthew Reynolds
    Posted March 18, 2008 at 1:58 pm | Permalink

    I think that the gist of your message is John that the Labour Party & Government in particular and polictical class in general are out of touch with reality and that we face a growing & present danger as the UK economy is not well placed to cope with an imploding world economy and in the wake of this The Bank of England & Parliament are pretty helpless . They have not got a clue about solving this which therefore explains why economic confidence & Labour’s popularity are on the slide . The customers who I speak to at work ( @ M&S in Summertown , Oxford ) view the alcohol duty increases as being a wolf in sheeps clothing in the sense that they are depicted as being for public health so that our booze intake is limited – but really it is for revenue raising . Our wine sale came to an end on Sunday & the duty increase took effect on midnight Sunday . Sales surged as a result – so thanks to the Chancellor being so hamfisted & incompetent we had a nice boom in alcohol sales last weekend . I must remember to toast Mr Darling when I crack open a bottle of 2001 red Rioja with my evening meal later today !

  4. Matthew Reynolds
    Posted March 18, 2008 at 2:58 pm | Permalink

    I think that the gist of your message is John that the Labour Party & Government in particular and polictical class in general are out of touch with reality and that we face a growing & present danger as the UK economy is not well placed to cope with an imploding world economy and in the wake of this The Bank of England & Parliament are pretty helpless . They have not got a clue about solving this which therefore explains why economic confidence & Labour's popularity are on the slide . The customers who I speak to at work ( @ M&S in Summertown , Oxford ) view the alcohol duty increases as being a wolf in sheeps clothing in the sense that they are depicted as being for public health so that our booze intake is limited – but really it is for revenue raising . Our wine sale came to an end on Sunday & the duty increase took effect on midnight Sunday . Sales surged as a result – so thanks to the Chancellor being so hamfisted & incompetent we had a nice boom in alcohol sales last weekend . I must remember to toast Mr Darling when I crack open a bottle of 2001 red Rioja with my evening meal later today !

  5. Oscar Miller
    Posted March 18, 2008 at 4:31 pm | Permalink

    It's rare for me to watch BBC Parliament in the evening – but I did last night – and I wholly concur with John's description. I was actually stunned by Angela Eagle's performance – and my expectations are as low as they can be. The sheer arrogance and utter disdain with which she refused to answer the questions put to her showed just how unfit for power this government is. Instead of replying to questions Eagle recycled stale old jibes at the Conservatives as if they were in power and the government was in opposition. The idea she should be held to account over the budget just didn't figure. Why doesn't the Speaker (or in this case the Deputy Speaker) intervene when Ministers refuse to answer questions like this? The contempt Angela Eagle has for the House was palpable.

  6. Brian Tomkinson
    Posted March 18, 2008 at 6:48 pm | Permalink

    Labour has badly devalued Parliament over the past eleven years. The calibre of their MPs is, with a few exceptions, dreadfully poor. The Labour government has manipulated the civil service and parliamentary procedures to emasculate the activities and power of the Commons. Our democracy is withering but there is no ringing warning or outrage from the Conservative Party to whom most people look to replace this discredited shower.

  7. Freeborn John
    Posted March 18, 2008 at 7:46 pm | Permalink

    To what extent though are the problems described due to the current government rather than systematic problems with the Westminster system? It seems to me that when the government controls the legislature rather than being held accountable then members of the government such as Miss Eagle really don’t need to do much more than go through the motions. And when MPs know that real power lies outside the legislative chamber then they will begin to behave less responsibly and the quality of the debates will suffer.

    If the problems are systemic then we might hope that the Opposition would propose changes that would compel future governments to respect Parliament more. After all this is the only body able to claim to truly represent the British people rather than the single will of the Prime Minister. The LibDems of course would propose proportional representation such that most governments would need to win consent in the legislature from one or more of the other parties for whatever they propose. Personally I would like to see an elected 2nd chamber with real power to block legislation (rather than simply delay it) and whose assent would be required for the ratification of foreign treaties. And for EU law that does not address cross-border issues to be clearly subordinate to Westminster such that it can be overruled in this country when a majority in Parliament so desires. But with the Conservatives 13 points up in the polls only 14 months before an election the need for reform no doubt will be forgotten as the prospect of becoming the over-mighty executive becomes tangible.

  8. londonerr
    Posted March 19, 2008 at 1:24 am | Permalink

    Mr Redwood, you pulled up the govt on the important matter of the banking sector's regulation, a structure which the PM tinkered with and with which we now suffer the consequences.

    I hope that Mr Cameron takes this up at PMQs tomorrow as the US actions and interventions these last weeks contrast sharply to this govt's actions. The US seems like it means business, while we dither. A clear indication of Labour's – the PM's – weakness on the economy. He fluffed it when we needed strength of resolve and swift leadership in teh budget.

    You shone a bright light in this debate, sadly I'm afraid it takes more than one match to set fire to wet wood.

  9. mikestallard
    Posted March 19, 2008 at 11:37 am | Permalink

    Let me see. You say that we have a parliament run by people entirely out of touch with the growing international banking crisis. The Ministers are of the opinion that everything will be all right. "Leave it to us." Meanwhile the EU is in full control of all our futures, or rather, the Commission, unelected, pretty well unaccountable, is in full control.

    Even Newsnight led on the international crisis last night. If the EU handles the impending crunch with the same finesse as it handled the foot and mouth crisis, Wow!
    I read your excellent speech, by the way, in full. You said all the right things, too, in a simple straightforward way. And you say that nobody from the government listened!

    Scary times indeed.

  10. adam
    Posted March 20, 2008 at 3:53 pm | Permalink

    There is no doubt this labour government hates parliament, they make no secret of it.

    Really it is MPs in general to blame though. Its like turkeys voting for christmas in there; Lisbon; Leg.+Reg. Reform
    X2.

    The country has been dying for over 100 years, we are just watching the last few spasms.

  11. Over Night Cash Syst
    Posted March 26, 2008 at 8:07 pm | Permalink

    This is an incredible blog, with highly effective information. I do recommend this for anyone to read.

  • About John Redwood


    John Redwood won a free place at Kent College, Canterbury, and graduated from Magdalen College Oxford. He is a Distinguished fellow of All Souls, Oxford. A businessman by background, he has set up an investment management business, was both executive and non executive chairman of a quoted industrial PLC, and chaired a manufacturing company with factories in Birmingham, Chicago, India and China. He is the MP for Wokingham, first elected in 1987.

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