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Comment: Brown's band of Roundheads would not work

Thursday 10 April 1997 23:02 BST
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Where Ken Clarke is a laughing Cavalier, Gordon Brown is a Roundhead. No matter how sure one is that the stern Scot would run a tighter monetary policy than our current Chancellor, tough on inflation and tough on the causes of inflation, one is bound to feel a few pangs of regret over the likely demise of the monthly monetary meeting, which during its three- year run has provided considerable entertainment. A clash of personalities might not make for wonderful interest rate policy, but boy has it been fun.

Nor is it obvious that the Cromwellian committee Chancellor Brown would install at the Bank of England will turn out to make better decisions than we get from the present system. Labour's advisers emphasise that the point of a Monetary Policy Committee is to get away from the distracting focus on personality. But the suspicion must be that the point is to remove the possibility of a clash - to make sure the Bank of England does not disagree effectively with the Chancellor.

There is, after all, a contradiction in Labour's plans for institutional change. Mr Brown would abolish the Treasury's advisory panel, the six wise persons, because its members never agree and cannot give consistent advice. How true - as cynical commentators said when it was first established, that was the entire point of setting up the panel. But he would create a new committee at the Bank.

No wonder many in the City suspect that the point of Labour's proposals is to create a more compliant Bank of England. Certainly the nature of Mr Brown's appointments will be watched like a hawk, although he has already emphasised that they would all be respected experts on monetary policy.

At best the new committee would be window-dressing. If Labour really believes the current arrangements have not served the economy well because of Ken Clarke's cheery disregard for stern advice, Mr Brown should make the Bank independent. Britain is the last big modern economy not to have an independent central bank. Other countries have managed to overcome any difficulties about political accountability.

Meanwhile, as Mr Clarke rides off into the Nottinghamshire sunset, he deserves some praise not only for panache in monetary policy, but also for doing a much better job of it than his more cavalier predecessors.

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