Chancellor "cannot have it both ways" with debt

29 April 2004
Liberal Democrat shadow chancellor, Dr Vince Cable, had stern words for Gordon Brown yesterday on how to tackle consumer debt.

Speaking ahead of the Chancellor's speech at the Institute of Directors Annual Convention in London yesterday, Dr Cable said Mr Brown "cannot have it both ways".

Dr Cable feels Mr Brown may wish to use the Bank of England as a debt regulator by raising its interest rates, thereby taking it away from its main function of tackling inflation.

However, Dr Cable commented: "Having made the BoE independent, which we supported as a wise decision, he cannot now tell them what to do."

Continuing, he said: "The BoE has a genuine problem - their mandate does not include asset bubbles and household debt.

"The Chancellor and the BoE should urgently consider how to control the volume of bank lending by requiring higher reserve levels to influence balance sheets and dampen lending ability.

"Brown sugar and sweet words to the Institute of Directors are all very well, but the Chancellor would do well to acknowledge his responsibilities and act to resolve these issues."

During the speech Mr Brown carefully avoided both spiralling house prices and consumer debt.

"The modern role of government in the global era is to entrench stability, build a competitive environment, and to ensure the public investments necessary, in partnership with business, for a knowledge based economy," he said.