'We need a government who can tell the banks how to keep inflation down,' says John Redwood

John Redwood and the Bank of England

John Redwood says "We need a government that will tell the Bank it needs to change its forecasting model"

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John Redwood

By John Redwood


Published: 28/06/2024

- 10:32

Sir John Redwood says the main parties need to answer how anything is going to change for the better

In this election the main parties duck the answers and the mainstream media ducks asking the important questions.

We should be debating how come a so called independent Central Bank charged with the main task of keeping inflation down to 2% landed us with 11%? It’s not good enough to say it was down to the Ukraine war, when Switzerland, Japan and China kept their inflation down to around 2% despite world energy and food prices going up. All three of them imported plenty of dearer power and food, but kept inflation down because they did not print so much money and buy so many bonds as the Bank of England did.


We need a government that will tell the Bank it needs to change its forecasting model and put some people around the decision making committee table who believe controlling money and credit matters to keeping inflation down. We cannot afford another nasty bout of inflation followed by a damaging money squeeze to correct the mistake.

We should be debating why the Bank of England has just taken £49bn of cash from Taxpayers to pay its losses and plans to take tens of billions more this year and next. All the parties think the Bank selling lots of bonds at big losses is just fine.

Reform does want to stop the Bank from paying interest on commercial bank deposits which would save taxpayers some money, but the real damage is selling the bonds years before they mature to lock in the temporary loss. The Bank is stopping the tax cuts and spending increases we need to promote growth and better public services by pre emoting so much tax revenue to pay its bills.

We should be debating just how the next government will get migration down, and how many fewer people we will be inviting in. Most of the people coming to the U.K. come legally.

It is entirely within the power of the U.K. government to offer many fewer visas. Conservatives and Reform say they want lower migration, and Conservatives have put in some changes this January to start to bring numbers down. Conservatives need to clarify what their first year target for migration would be as they say they will get Parliament to impose a maximum.

Reform could usefully clarify what changes they would make to current categories of permitted migrants. Labour need to clarify both numbers and qualifying rules. They also need to spell out what further safe routes for asylum seekers they would create and what that might mean for numbers.

All parties want to get NHS waiting lists down. Who will make the lists more accurate? The current lists combine people in genuine need of treatment sooner with people awaiting a first consultation, people waiting for treatment to an agreed timetable, people counted more than once and people no longer needing an appointment or treatment.

How will any party improve the access to GP services to avoid the public 8 am phone scramble to ring some surgeries? How will a new government settle the disputes with medics and create better working conditions that assists recruitment and retention of staff?

Those parties committed to faster progress to net zero have been unwilling to tell us who will pay the huge bills to close down all our gas power stations and many gas using factories, to be replaced by renewable power.

That will take more grid installation, more storage and more backup. This will be a very expensive transition. Are these parties going to force us to buy electric cars and heat pumps or are they going to subsidise us to do so? Either way, it would be a big cost to voters, either from our family budgets or placed on our tax bills.

In the last few days can we have some more honesty about these issues and some tougher questions on how anything is going to change for the better?

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