Lord Lawson, Chancellor of the Exchequer from 1983 to 1989, told the Treasury and Civil Service Committee that the case for an independent bank was stronger now than it was when he tried to persuade Baroness Thatcher of its wisdom in 1988.
If the Government did not follow the mood worldwide and divorce the Bank from political control, the task of controlling inflation would become much harder and the markets would require a premium on British interest rates, he argued.
Giles Radice, Labour MP for Durham North, linked Lord Lawson's departure from the Thatcher Cabinet with the May sacking of Norman Lamont and wondered why former chancellors only revealed their support for an independent Bank in their resignation speeches.
But Lord Lawson said they could hardly have revealed it while they were in office. 'If ministers resigned every time they failed to get their way, most of us as ministers would not last 10 or 15 minutes,' he added.
Rejecting Mr Radice's assertion that he had hit upon the idea because in 1988 Britain was 'in the middle of Lawson boom and the economy was out of control', Lord Lawson said he had been 'anxious to have greater credibility for the Government's anti-inflation policy'.
'I had felt at an earlier time that membership of the exchange rate mechanism would add to credibility . . . It subsequently became clear to me that the then prime minister was highly unlikely, to say the least, to agree to membership of the ERM.'
Nicholas Budgen, MP for Wolverhampton SW, suggested that Lord Lawson would have been seen to have a more independent ally in the Governor when arguing with Lady Thatcher if he had not publicly treated the Bank as 'a subordinate creature of the Treasury'.
Lord Lawson replied: 'This is not only a figment of your imagination, and I know your imagination has many figments, but in addition it clearly seems to me to be beside the point of this inquiry.' Its subject is the role of the Bank of England.
Lord Healey was equally dismissive of his inquisitors, addressing Quentin Davies, Tory MP for Stamford and Spalding, as 'my dear boy', as he disputed claims of a correlation between degrees of independence of central banks and
inflation, or that the International Monetary Fund is the 'ultimate independent monetary authority'.
Lord Healey, Chancellor from 1974 to 1979 and aged 77 to Mr Davies's 49, said: 'Anybody who thinks that the IMF is independent needs his head examining . . . The IMF is directly controlled in negotiations by the monetary and political authorities in the United States'.
He said Lord Lawson had started out as 'the greatest sado-monetarist of them all' but 'slipped away and started pursuing strange gods such as stable exchange rates'. As for an independent Bank, Lord Healey was 'agnostic veering towards scepticism'. Chancellors who were not succeeding hoped for 'some gimmick' to pass responsibility to somebody else. Lord Lawson had made this 'pretty clear' - first the medium-term financial strategy, then the ERM and now an independent Bank.
Lord Healey said he would be very reluctant to entrust the value of the currency to individuals who had presided over the debt explosion or thrown away a large part of the reserves in a 'clearly doomed' attempt to save the pound.
'The central question is whether politicians have the guts to do what is necessary and the wit to do what is necessary. And both of these are rare qualities, not just among politicians.'
In the Commons chamber another politician whose zenith was the Healey-Lawson era was protesting against a proposal which could one day see him joining them in the Upper House. Sir David Steel, the former Liberal leader, was challenging Scottish Office ministers over a leak of Boundary Commission recommendations under which his Borders constituency would be combined with that held by a younger Liberal Democrat, Archie Kirkwood.
Joining Labour accusations of 'gerrymandering' to create Tory safe havens, Sir David said the Foreign Office was trying to promote a policy of good governance throughout the world, one principle being that the party in power should not seek to manipulate the constitutional or electoral rules to its advantage.
'The Scottish Office is in danger of being in breach of that policy if the Scotsman leak is anything to go by, because not since South Africa created Bophuthatswana out of 20 different bits of the map will there have been such naked corruption.'Reuse content