Pre-Budget Report

I cannot give way because I have a time limit and other Members want to speak; I apologise. Of course we all agree that monetary policy should be used as far as it can be. We are now in a position where the further reduction of bank rates is inevitable. I think that the Bank of England is the one institution that has handled itself pretty well, both before and during this crisis. I exclude it from most of the blame for the catastrophic folly that led up to the beginnings of the current problems. The trouble now—I actually agree with the right hon. Member for Bolton, West (Ruth Kelly) on this—is that monetary policy, in its classic sense, is not working and will not work for some time. The levers are not connected to the system. The availability of credit and the price that one has to pay for it does not bear much relation to the Bank of England's base rate. At some point that will click into gear again, but it could be some way off, so we have to look to fiscal policy. My views have been quite well reported. Of course I accept that in these circumstances anybody will consider the prospects for fiscal stimulus. It is important, across the globe, that the surplus countries go in for very substantial fiscal stimulus. However, everybody has to consider whether the pressing problems of the forthcoming recession justify a degree of risk, and they do justify a degree of risk if fiscal stimulus will work. The key judgment is whether the state of the public finances makes the risk totally unacceptable. I agree with the hon. Member for Twickenham (Dr. Cable) that there needs to be a balance, but it is a key judgment call. He seems instinctively to rush in saying, ““Regardless of the quite appalling state of affairs that is revealed in the pre-Budget report, we still have to add another £20 billion to what is already there.”” I come to the opposite conclusion. We only have to begin at last to get some up-to-date figures, and to see what is revealed, on a very optimistic basis, in the pre-Budget report, to realise that another £20 billion is not available for fiscal stimulus. I thought that that was where the Liberals stood. Only a fortnight ago, we had an exchange in the previous debate where the hon. Gentleman ruled out fiscal stimulus.