TUC Conference: Eddie walks into the den and tames the lions

The Sketch

THE GOVERNOR of the Bank of England scarcely needed any advance billing for his appearance at Blackpool's Winter Gardens. Daniel had been invited into the lion's den and the beasts were demanding to be thrown some red meat.

By this, the 130th annual Trades Union Congress had in mind an immediate cut in the interest rates that were doing so much to destroy its members' livelihoods.

Eddie George, the first Governor to address a TUC conference, looked the brothers in the eye, fed them nothing but a few scraps and yet escaped with his person and his anti-inflationary credentials intact.

Historic the occasion may have been, but the outcome was not quite what the TUC's ringmasters had scripted in their dreams. Mr George, as he confessed, has been called many things, ranging from "inflation nutter" to "manufacturing hooligan" in his role as chairman of the Monetary Policy Committee, the group that sets interest rates each month. But he showed himself to be a political operator of some guile.

The "nation's bank manager" promised his audience nothing more than that the next movement in rates was less likely to be upwards and still managed to sit down with applause ringing in his ears. Mr George had arrived braced for some sort of onslaught, his consumption of Rothmans rising in line with the political heat.

Barely 100 yards from the Winter Gardens, "Blackpool's No 1 discount clothing store" was conducting a closing-down sale - proof, if any more were needed, of the ruinous impact his monetary policy was having on the High Street as well as manufacturing. Inside the hall, delegates were blaming him for the latest round of job cuts at the Alvis armoured vehicles factory in Coventry. "Tanks for nothing, Eddie".

As Daniel prepared to take the stage, the lions roared. "Millions unemployed and a skills shortage," thundered the AEEU's Ken Jackson. "If we are to defend industry, if we are to defend jobs, interest rates must come down." The man from the MSF meanwhile reminded Mr George that whatever planet he inhabited "the rest of us live in the real world, not a computer-generated Treasury model".

George took it in his stride. He did not preach to his audience about wage inflation although he could have done so. (The Governor may have just bought a pounds 650,000 manor house in Cornwall for his retirement but he is not a paid-up member of the Greedy Bastards. He accepted a wage freeze on first getting the job and passed up his bonus last year.).

Nor did he patronise them, though his references to the "internationally exposed sector" and "supply-side capacity" were in danger of losing some of the delegates. Instead he sympathised as if a nurse dispensing unpleasant but life-saving medicine. The MPC was every bit as concerned with prosperity and jobs as they were, he said.

Low inflation was not an end in itself but a means to an end - growth and employment that was sustainable. If the unions doubted his word, then they should "turn down the noise" and just look at the record since the end of the last recession - output at 3 per cent, well above the trend rate, employment up by 1.2 million, unemployment down from 10 per cent to under 5 per cent and the lowest inflation for a generation.

Mr George knew this was "cold comfort" if you happened to be an exporter coping with the high pound. But he held out the hint of a winter warmer. The inflation target of 2.5 per cent was "symmetrical", meaning that if the MPC was in danger of undershooting it would be "just as rigorous in cutting interest rates" as it has been up until now in ratcheting them up. The lions clutched this promise to their breasts even as Daniel skipped away, telling them that was "still not the most likely outcome".