Jacob Rees-Mogg just gave Mark Carney the politest of beatings

The Conservative MP gave the Governor the most courteous of thrashings over the Bank of England's intervention in the Brexit debate

John Rentoul
Tuesday 24 May 2016 19:00 BST
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Mark Carney and Jacob Rees-Mogg clash at Treasury Select Committee

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Louise Thomas

Louise Thomas

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Jacob Rees-Mogg was literally laid back when he asked Mark Carney, the Governor of the Bank of England, a devastatingly simple question at the Treasury select committee this morning: "In general elections you do not give a view on parties' economic policies. Why not?"

Carney started his answer and then said, "let us take a step back", which is often a sign that the interrogation had taken an unexpected turn. His attempt to explain why a referendum is different from a general election failed to convince Rees-Mogg, and I would have thought would have failed to convince any open-minded observer.

The Bank of England had given its view of the effect of a "Leave" vote – very bad, possible recession and so on. But it would not dream of offering an opinion on an opposition party's economic policy, even though that could have a similarly dramatic effect on the economy.

That was because a general election is "not a discrete risk", said Carney. At the last election, we might have had a coalition government, or a different coalition. "Actual policies don't always unfold in lockstep with a manifesto."

Rees-Mogg pointed out that there have been occasions within living memory when the Labour Party had proposed the reintroduction of foreign currency controls. Carney talked of "uncertainties of whether those policies would be put in place".

Sometimes the difference between the government and the opposition's policies could have just as dramatic an effect on the economy as this referendum vote, insisted Rees-Mogg. No, said Carney, the impact of the referendum is far higher.

He said that the uncertaintly about the referendum was already "having an identifiable effect on the economy", and so the Bank was "statutorily obliged" to be open with the British people about it. But there have been periods of uncertainty before general elections that have affected the value of the pound on foreign exchanges, for example, said Rees-Mogg.

Rees-Mogg asked: "Don't you have a responsibility to be apolitical?"

Carney replied: "We are apolitical, which may be inconvenient for you, but to suggest otherwise is to try to undermine that."

Rees-Mogg: "I do suggest otherwise –"

Carney: "Then you try to undermine that."

Rees-Mogg asked if the Bank would give its opinion on Jeremy Corbyn's "new economics" speech, which proposed radical changes. "I don't think that's worth a reply," said Carney.

When Rees-Mogg called the Bank a "creature of the Government", Carney was stung into repeating his defence. The Bank was obliged by law, having been made operationally independent of Government, to give its view on a prospective impact on the economy. It would be political to ignore it, he said.

At this point he was rescued by the chair of the committee, Andrew Tyrie, another Conservative who wants to leave the EU, who said that, if the Bank had taken a "vow of omerta" on the subject of Brexit, Carney might have had difficulties in getting through a hearing such as this.

Rachel Reeves, the Labour MP and former employee of the Bank, added: "If anyone's reputation has been damaged today I don't think it is the Bank of England's."

I disagree. It would have been straightforward for the Bank to have said that the referendum was a political decision and that it would not comment on it at all. Rees-Mogg's questioning was a model of cross-examination.

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