 Felly, rhaid i'n ei wneud i'n gweithio i gilydd y cwrdd. Felly, rhaid i'n gweithio i gilydd y cwrdd, felly y byddwn i'n gwneud y Bank of England yn y Lleidwyr Gwmwyng. Rwy'n gyffredinol gyda'r Prifysgol ym Llywodraeth, mae'n prifysgol i'n gweithio i ddweud y ddechrau a'r cyfnodau a'r sydd cyflosig. Rwy'n gweithio i'r cwrdd o'r cyflosig, a'r cyflosig a'r cyflosig i ddweud y ffordd. Yn ei ddweud, mae'r gyfyrdd o'r ffrindio ym Mhenachol yn hyn o'r ddechrau i ddechrau y Llywodraeth. Yn gyhoeddwch y Llywodraeth eich lle i'r unig bethau bod eich cyfan a'r drefwyr lle o'r ddrafod y dros ym Llywodraeth mewn gwirionedd. I'm going to hand over to my amazing panel for their thoughts on a Labour bank of England under a Labour government, not a Labour government under the Bank of England. There's a few notifications so we've got a free bar so help yourself to drink. Feel free to get food. I'm going to use a hashtag BOE under Labour and obviously lab 16. The Wi-Fi is Pan Am Public and the password is Pan Am with a capital P 123. Just so you know that we're actually doing another event at 5pm at the World Transform, the Rementant Fringe. So if this topic is something you want to carry on conversations with then please do come along. Unfortunately Helen and Paul have to leave it early so I'm going to bias questions towards them. And our fringe event is called Money Den Democracy. So it's a really exciting time. All wings of the Labour Party are seen open to radical ideas, particularly on the economy. And I think if Labour's new economics is going to be really credible then it needs to consider the most powerful economic institution this country has, which is the Bank of England. Possibly it's at its most powerful in history and its actions have significant consequences yet it remains really poorly understood. And that's what positive money wants to change. So in essence it's role is to determine the amount of money in the economy and where that money goes. But it's overseen in the last decades and it's pressed into growth of money going into property and financial markets. And that results in our economy being skewed towards housing bubbles for the neighbour-sized financial sector and a lot of people ending up under debt. So where are we now? Well after Brexit with the political economic uncertainty the Bank of England stepped in in a big way and announced it's going to create 70 billion pounds of new money for a new scheme of quantitative easing. It's going to use that money to purchase 60 billion pounds of government bonds and 10 billion of corporate bonds from financial institutions. But growing number of economists are warning that QE English is an equality and by the Bank of England's own research it does. So we can see that we know that monetary policy has significant political consequences and yet it remains pretty underscreened by Parliament. There was a debate on the 50th on QE and its effectiveness and only eight MPs spoke of which of course was Helen who spoke very eloquently. Our aim is to change that. Also a couple of weeks ago Mark Carney announced the companies it's going to be considering buying bonds from through the corporate bond purchasing scheme. And he'd stated that he wants to buy bonds from companies which make a material investment in the contribution to the UK economy. So of course we're hoping to see some British icons of manufacturing and business. And the list includes companies like Apple who have recently been charged 11 billion pounds by the EU for illegal tax reasons. It also includes companies like AT&T who are headquartered in Dallas so they'll be celebrating over there. And Imperial Tobacco Company. So many people have pointed out that the bank shouldn't be picking and choosing companies like this at all. MPC former member David Blanchoutflower who was leading the Labour Revenue of the Bank of England said this is a mandated fiscal policy. So today there's basically been a cross-party consensus on monetary policy which is leaving it to the Bank of England. But that is changing. More and more people are pointing out that QE comes in a policy. And leading economic thinkers like Martin Morph and Adair Taylor are saying we should think about abandoning QE altogether and consider other options such as monetary financing which is where the Bank of England creates money but it gets spent into the economy through the government similar to people's QE which we obviously heard a lot about last year. Either way I think we'll long overdue a discussion about the Bank of England and its relationship with the Treasury and how monetary and fiscal policy can work together. So I'm really excited to bring together this excellent panel. Helen Goodman is MP for Bishop Auckland. She sits on the Treasury Select Committee but we're delighted that she can join us because she's one of a handful of MPs who's tirelessly scrutinised the bank and the banking system since the financial process. Paul Mason is a writer, journalist and thinker and he has been contributing to the debate on democracy and central banks. Francis Colla is a former banker and economics blogger and has been really talking about the issues with the banking system a lot since the financial process and causing a stir on lots of issues. So Williams is a journalist at the Guardian and he's been one of very few brave journalists who's talked about money creation. Most recently in the book The Alternative where she talks about ideas that hopefully will be discussed today. So I'd like to hand over to Helen to kick us off. Thank you very much for that very generous introduction. The Treasury Select Committee sees the government of the Bank of England quite a lot. Maybe six times a year, maybe ten times a year and we get the opportunity to ask him lots of questions. So when I discovered through the work of the New Economics Foundation, which I'm sure some of you probably know about and belong to, that the bank themselves have published work explaining that QE leads to inequality. I was quite struck by this. The Bank produced a paper in 2012 which found that the top 5% of the income distribution gained on average £185,000 per household from QE. The bottom 50% got nothing and this was because the effect of the QE had been to inflate the value of the assets which they hold. And as you probably know half the population don't have any net assets. They might have debts or they might be managing even Stephen, but they don't have any real assets so they can't gain from this. And I thought, well if the Chancellor of the Exchequer stood up on Budget Day and said, I'm going to give the top 5% another £185,000 each, I think even the Tory backbenchers would have a problem. That would be a very significant redistribution so I thought we better ask them about this the next time they came in. I asked what they thought they were doing and they said, I thought this was fantastic, he said he thought that to take account of the distribution effects would be political. So it's not political to give the richest people £185,000, but it is political to take this into account. So I thought, well maybe there's another way of doing QE that wouldn't have quite such extreme distribution effects. So I went over to Frankfurt to see the European Central Bank to find out how they do their QE and they do do it in a different way because they do buy different assets. And they said they did do it in a different way in a number of respects. First of all, they have a strand of purchases for their QE scheme which went directly into SME finance, which ours doesn't. Then they said that they bought bonds in infrastructure banks. So we don't really have successful business investment banks in this country. It's something that John MacDonald said he wanted to do from the main conference hall yesterday and it's something that we've looked at and discussed previously and we did persuade the Tories to set out the green investment bank. So we have made progress on this in the past. The Tories are now privatising the green investment bank. So we don't really have the kind of vehicles that they have in Germany which is where they have an infrastructure bank called KFW or France where they have an infrastructure bank called PADES. But Matt has enabled the ECB in its QE to concentrate its purchases in things where they are actually going to spend the money in the real economy on things which are useful for improving the productive capacity of the economy, rather than simply giving house price rises to people in London and the South East, which is what's going on at the moment. The other thing that was very interesting about what the ECB said when I was talking to them, which is different from the bank, is that they said they were very interested in running the monetary policy in a way that would benefit what they call the periphery they meant, you know, Southern Europe and so forth. And they said, but you don't really have a periphery. So I said, well my constituency is in the North East of England in category and actually we do have a periphery as well. And this isn't a concern of the Bank of England. So then we had another exchange and I'm not happy with their responses this summer either. I just want to be clear. I'm not saying that I don't think that the bank were right to take the steps which they took this summer in order to, first of all, calm the markets after the shock of the Brexit vote and introduce some monetary expansion. I'm not saying I'm opposed to that in principle. I'm saying the way they do it is not the best way, it's not the most helpful way. If, for example, they were buying assets in housing associations, that would be providing some money to build some real houses instead of just inflating the value of the fact that owns belong to people who already have houses, which in fact is just pushing other people further down the ladder. And they say in a rather airy way when I challenged them on the second occasion, well there are other policy tools that you could use to deal with this inequality. Well, I frankly cannot think of a policy tool which we could, in any real political reality, use to take £185,000 off the top 5%. I mean, this is just cloud cookie land. We know that we put forward to the British public a mansion tax before the last election where the average price tag was £3,000 and scorn was poured on us by all sorts of people. I mean, I think we should go back to that policy. I think it's a really good policy. But, you know, the notion that we can just tweak this all that and undo the damage that they've done with this, I think is completely unrealistic. So, this brings us to two questions. What would a better economic policy look like? Well, obviously, a better economic policy would include some more expansionary use of fiscal policy. And we're all hoping that Phil Hammond, having abandoned George Osborne's fiscal targets, will actually go for some fiscal expansion in the autism stage in no number. But it, in addition, raises the point that you made, which is about control of the Bank of England. I moved an amendment to the Bank of England Bill, which went through Parliament earlier this year, to make the Freedom of Information Act applied to the bank. The bank was very resistant to this, the Government was very resistant to this. But actually, I think it's completely reasonable for us to make the Bank of England subject to the Freedom of Information Act, which it is not at the moment. That does not mean that we would be engaging in second guessing in their open market operations in the money markets day to day. We can exclude that, but there is a real problem of accountability at the moment. And I think if we made them subject to the Freedom of Information Act, we would get more openness, and that would be a first really big and useful step. I'm good. Thanks for inviting me. I know apologies in advance that I have to run our pathway through, because like everybody, I seem to double boot all my meetings. So, I just want to say one other thing. As a writer to this, you know, people will know that I am not John McDonald's advisor, as alleged by George Osborne. Things didn't go so well for George after he misinformed the Commons about that. But, you know, I do feed in and try to feed in to Labour's economic policy. So, what I say now is me, it's not them, in the sense that I would quite like if some of John's team were here to listen to the ideas that are on this platform. Because I do think, if people say to me what's your economic philosophy, I just describe myself as a monetary Keynesian. And I think that the monetary weapons of a left social democratic government are potentially very important, especially given the situation. Now, I want to start, therefore, not from principle, and I think one of our discussions here in the Labour conference has to be, especially for those of us on the left, not a constant reiteration of what our principles and theories are, but what we want to do in the next crisis period that is opening up. So, I want to start by describing, I'm only looking at my phone because I've got notes on them, describing the situation as I see it. I think the danger of a secular stagnation is real. I am not in the school of Robert Gordon that says it's because the technological productivity miracle has run out far from it. I believe that technology is creating new business models and new economic flows in which there is no value. A credit system is based on returns from investment based on the growth of the market sector, which then pays back the debt. I think the fundamental problem in the world is that information technology makes a lot of things cheap or free. That leads me to worry about secular stagnation rather in the way that Larry Summers worries about it. That is that we have become over-reliant on monetary stimulus to keep the economy going. You know that Japan has been through two periods of slump and stagnation and is the world leader at the moment and indeed a certain kind of QE that I want to talk about. But we have $12 trillion worth of QE money flowing through the global economy and it's produced $9 trillion of largely government debt that is negative yielding. And as one bond market participant said to me, I came into my job to run a capitalist economy, not the Russian planning system, because a $9 trillion worth of negative yielding debt is a minus sign on capitalism. So the danger of stagnation was well realised at the March G20 where Carney spoke and where if you want to look at Claudio Boreo, who's the head of policy at the Bank for International Settlements, issued an equally start warning to the one that Carney gave and that is monetary policy in the way it's been done is clearly running out of road. It's creating negative yields, it's creating disincentives to invest and at worst it could create what we all fear from the 1930s. That is whilst countries realise that a negative sum game has been created in which what is good for China is also good in a positive sum game, what is good for China is good for Liverpool. So you open a port in Liverpool because you hope that trade in China increases. In a negative sum game everybody has to grab what growth is left in the economy and one of the ways of doing it is through currency manipulation and the surefire way to manipulate your currency is to undermine its value by printing a lot of it. And therefore what I fear and what I think was a very clear subtext at the G20 is that what they want to avoid is more currency warfare and so do I. And what they said is you've got one more chance, we can do one more radical piece of monetary policy but after that it is over to you, the governments, to do structural reform and fiscal policy. Now I'm in favour of doing a lot of fiscal policy but I do think here in the UK we are right to do more and should have done more earlier targeted monetary stimulus. So maybe I'm on a different wing of the panel than anybody else. Why? Because what the G20 and the central banks are saying is that the structural reform has to reignite productivity. I think we have to leave behind neoliberalism, I think we have to leave behind low wage and stagnant wage jobs but to reignite the productivity you're going to need to do things to unblock mechanisms for creating human capital and capital itself. I would have printed 75, I would have done 75 of QE billion and I've just bought every student load in the country. And I would have buried it in a big dump called student load dump in which there was a 30 year payment holiday on it. Thus removing the line on everybody's paycheck that says student loan repayment. That in other words is how you use QE to buy specific assets to get the money straight into the economy. I mean even in favour of doing it we have to, helicopter money but it's not particularly effective. But long term I think that to finish what I would say we need to think about then is to be avert in what we would need to do to be able to take political control of the monetary policy. I think we have to own up that good though it was that Ed Boers and Gordon Brown did what they did in 1997. It was the right thing for that economy but then its efficacy ran out and by the end I can remember sitting in the Bank of England press conferences thinking shit we're all trapped in a binary decision. There's a commodities boom we should be putting the brakes on and all they can do is put the brakes on in a period of commodity boom bust and yet we put the brakes on as the bank system collapses then we have to take them off again. That's not economic management it's kind of binary decision making and therefore I would just say there's nothing reactionary about saying as Cain said if the facts change just change your mind. We have a much more complex world economy, a danger, a clear and present danger of currency manipulation and negative sum game and the problem of leading fiscal and monetary policy to interact. So maybe we don't have to do everything through borrowing so we don't have to do everything through heavy lifting on a Cain's fiscal level and you can do innovative things like buying the book. I always say if you can buy 10 billion of VW bonds you can buy 60 billion of student loan bonds or you can buy everybody's mortgage. This is effectively what the Fed did in 2009-10. So think about that as a philosophy not rocket science and also not too heretical because we're billed on Blair on brown balls rather than scrapping. I was wondering what you thought about the idea of using QE in order to ban this problem and to have a direct effect of being idle and saying that you need businesses. We need a microphone, can everyone hear? Yeah. Okay, yeah. Go for it. Yeah. You said you haven't got some money to go. In what sense did you go where it actually increased a bit back to being managed? Thank you. Great. Very nice and short concise questions. Yes. I'm a chemo engineer by training. I remember the interest by Thomas Gureka. Okay. There's a microphone there. My name is Nigel Martin. I'm a chemo engineer by training. I'm interested in the work of Thomas Gureka. There's also a chemo engineer by training. What's at his point is that the quantitative easing created today to supply the interest you're doing to create more money tomorrow to pay for the interest created today. You're chasing a tail. Does the panel have a view on that statement? Thank you. Okay, so we'll just take a brief comment from all the panelists on those three. Can you hear from bottom up? Helicopter money no good even if it boosts demand and the interest question. We've spoken to one of the others. No, Paul can go first. Because I am going to go in a minute. I'm sorry because I want to hear what you're saying, friends, but I'm a new joe. You do. We know each other. I only want to focus on the helicopter money thing because I think your question is an interesting one. Your one, I think basically I agree with you. We've got to design once you free yourself from the binary decision making. The bank has to justify the binary decision making simply on what's the likelihood of hitting 2% interest in three years time. It's like being a goalie and saying, if I kick rather than roll the ball out of my hand, what is the likelihood of my team scoring? Once they've kicked it, they wouldn't have to care what the team did with the money. So all we're looking for is ways of having microeconomic effect, which brings me to the thing about helicopter money. If we have to do it, let's do it in a crisis, but remember what it does is it's not microeconomically changing anything. It simply says that if you've got 10 grand and you've got a low wage job where you're earning 12 grand and you get 10 grand put into your account, you're all right for a year. But if we did it via things like student loans, through mortgages, through company loans, through infrastructure loans, in other words, if we kicked down the walls between fiscal and monetary policy, which is what it does anyway, then you can microeconomically target it for the effect which we want, which is what the BIS and G20 are calling out for, which is structural reform of the actual economy. Do I want to go? Do I want to go? Can I apologise, because my taxis are upside them? Yeah, yeah, yeah, no. But all the apologies will be live on that. In response to three questions, should we have an unfinished job policy? We actually have a hard portion of the economy working in the moment they're done before, so I'm not too sure what we'll achieve. It seems to me a big problem we've had is that a lot of those jobs are burying away. Can you stand up? Can you stand up? It's just a microfamilie to read. I'm near a slight difference in data when I am standing up, so I'm not sure we'll help. I'll just try and shout, OK? Will that do? Yes. Right, money finance job guarantee. We have a hard portion of the working age population working at the moment than ever before. I'm not at all sure what the money finance job guarantee would achieve. It seems to me that what we really need to be doing is finding ways of actually increasing people's incomes so that the work they're doing actually gives them a better standard of use. So for my money, I would rather have a basic income than a money finance job guarantee. What's wrong with how many money? I think we have to distinguish between two things here. One is short-term stimulus, where we are putting some money into the economy. And I don't think the way you do it might work right now. I think there are ways of doing that. We've worked a lot better, including getting rid of existing debts. So in that respect, I agree with Paul that we could do a lot with money financing of existing debt levels, particularly among students and among other income people. There were two a lot to raise their disposable incomes and their spending profiles. And I think that would help to improve demand in the economy future. The second is the longer-term need for investment in the economy. And there is an opportunity there potentially for that being support for things like a much bigger British business bank. But I do think that we need to separate the two. There's a short-term and a long-term issue there. We need to think separately. And the third point about QE, that happens with all forms of interest of money creation, whether it is creating QE or any other sort of money creation. In fact, you could argue that QE actually creates money interest-free, whereas conventional forms of money creation don't. We can go into a greater discussion about forms of debt-free creation of money and whether we should go down that route. So I think that's where you all go. I have a huge problem with their interest and I think it should be confined to commerce and manufacturing but taken out of the domestic sector. We can have a debate about the role of interest in the economy and whether it is reasonable for households of horror to do so at zero interest regardless of their level of risk. I think we might have some issues around that. I think that's a much bigger topic than we can come to hear in my right from the end. I think there's also an issue isn't there about how likely it is that by cutting interest rates again by 0.2% we're going to see some great boost and this is going to change the decisions by businesses to whether to invest in another widget-making machine. It's just incredibly doubtful. I think one of the things that was very successful in 1997 was separating the bank out because I think what that did was it established credibility for the Labour government and basically having that economic credibility gave us a lot of room for maneuver. So when we're thinking about policies towards the Bank of England we do need to think also about what we do that maintains credibility and that's why I think steps like applying the Freedom of Information Act is kind of a reasonable thing to do. I must admit the central bankers themselves are divided on helicopter money at the moment and I'm not a monetary economist so I'm not going to apply on whether that's a good idea or not a good idea. I mean it probably is in some social services and not in others but I don't know enough to comment on that. Which in a way kind of makes the point because what you have central bankers for is to make useful technical judgments and it's our job to give them the right remit. Do we think having 2% inflation target is the right remit or not? Could we say we want them to have a remit which is about inflation and a remit about employment? That seems to me to be a reasonable thing for a government to do and not saying that there can't be anybody in the government who's better at monetary economics than me obviously there can be but I just want to just give a slight sort of put up a flag and say we do need to be careful about the signals we give on credibility that is important because if we suggest things which people who are extremely overhauled about this say won't work then we lose credibility and we undermine ourselves for the investments that we really do want to make and I need to get to my remit. Okay we're going to take a few more questions and the time is up to get. Okay so purple jumper and then glasses and then... If the price of big beans, what was in the basket is increasing more than 200% a year then apparently that's inflationary that's going to demand of my finances that's going to cause me to make the inflationary way to demand spiring inflation disaster pay funding. If accounts prices are going up by 10% to 15% a year then the rents are going to increase to 8.9% of inflation that doesn't even feature in the ranking and remit. That's a very good point. Look at that question next time they come up. Very good question. Great ahead and also supported what great work you're doing in trying to hold back financial account and it does seem like you yourself are sort of someone conflicted between your desire to look through and the statements that that thing needs but yet to respect their credibility and attendance. You say that you think that their best place to make technical observations that you've probably seen from the work you've done that there is a big ideological, contextual backdrop to a lot of the work that they do and the whole profession of monitoring versus other forms. People as credible as a dear turner have made alternative recommendations and obviously were not made back in England back over time or as possible. I've just sort of gently challenged that one should not be in awe of these people and I just hope that you don't think that somehow it's easy when someone is independent to make one feel that there is somehow some superior respect going on. Well, that's a very, a good but very fair point and I agree with you. In fact, if one looks back over the last six months the bank has come under far more attack from the radical right than from us. The radical right has been highly critical of Carney's interventions on climate change and green-stud where he's saying, for example that the oil companies are stashing up on their oil machines reserves of oil and gas which they will never be able to extract if it aims to meet our climate change objectives. He's been very clear on that and I'm saying you know we need to better get the counting system and the Tories were just ballistic when he said that Brexit was going to be a shock to the economy. So, I feel that the line we should take is kind of more probing less full-francule and using as you did in your question you know, well, a debt earner says blah blah blah I think that's better than saying you know we don't at all agree with your whole approach and as I said before if their approach is fundamentally wrong that's because we've given them the wrong terms of reference. There's one more question at the back. I'll stand up because it's happening again I'm not working at all, please. Is it working? I've got a lot of posts anyway. As far as I'm concerned politicians are greedy and do agree with their home and me that if they were in charge of creating money or printing money and they had free licence that we would end up in the rhyme of a republic in the 20s in a well-way hyperinflation and such like and therefore the best way of dealing with this sort of thing is to leave it to the central bank leave it to the monetary policy committee to make the decision how much and when money should be created and then give the money to the politicians but the politicians have no say whatsoever on how much and when the new money is created because otherwise we will just lose to the next election because the politicians believe that they're the stimulus. OK, well, I mean that was obviously very much the thinking after the hyperinflation of the 70s and 80s and very much the thinking that's informed the new institutional arrangements which were introduced by the Labour government in 1997 to be honest the danger we have now is this constant stagnation and this lack of growth so there is always that risk of course there is always that risk but just now in the world economy I think the bigger risk is not being able to get growth going and therefore people are looking more at instruments and kick-starting growth. We're going to need to bring in Zoe in the process now, right? Do you feel free to respond to any of those questions? I'm going to respond sort of to that last question about the Weimar Republic anyway because I've talked about it I seem to have spent a surprising amount of time talking about the Weimar Republic. Don't wheel! In the spirit of openness I should say I'm not an economist as Twitter keeps pointing out I've never taken any kind of economic qualification but what surprised me becoming involved at any level in the conversation is the very, very poor level of understanding which kind of iterates itself in a real aggression so if you say anything at all you get absolutely teaped with scorn by people who themselves don't really understand what they're being scornful of and you get a huge amount of there's no magic money tree and when you say how do you think money is created if not out of thin air they say where do you want to live? Zimbabwe and you say no no I'm happy here but I'd be interested too to know what you think money is made of and they never know and it's been really fascinating to me being involved with positive money to the small degree that I am how little courage there is around this how people are really frightened of the issue they're really frightened to say anything around money because they don't really understand how it's made and if you do say anything they're really, really angry with the level of citizenly engagement as though the audacity of a citizen in having a view on how money is created is completely beyond the pale and that's what I've really noticed that a positive money event a couple of years ago there were these two guys who had a positive money group in Greenwich and I got talking to them because they had it at the same pub that my uncle has, his basketball group and they were about the same age as my uncle and him playing basketball was completely preposterous and I thought they, them taking interest in money creation was completely preposterous it's like for God's sake you guys you're 67, you're not economists what are you going to do about it but actually the point was that if you don't engage with it then it rules you and there is no kind of if you can't engage at the level of the citizen with how your money is created then you are very much governed by a small technocratic group and I think that, Helen's point that these technical judgments have to be made by the Bank of England is not quite it actually because a lot of the points aren't technical points they are political points dressed up as technical points and we leave them to experts at our own expense keeping public understanding low and policing the parameters of debate so that only economists are allowed into it is a political act and the Bank of England has to take that seriously because if we accept money as a democratic resource then we have to have a democratic say in its creation to say politicians are greedy therefore nobody should be allowed anywhere near money is like saying politicians are greedy therefore they shouldn't be allowed to decide anything now that might be true they might be greedy and they might be illiquid to decide anything but if they're not going to decide it we can't say well let Mark Carney decide you know we can't say Carney decide what the NHS budget should be because politicians are too concerned with the political cycle you've got to come up with a better solution blaming politicians for personal faults which I'm sure are myriad once you kind of accept that money is a democratic resource then you accept that the creation of debt is a democratic resource or maybe you accept that first and then you accept the money second whichever way you kind of make this argument publicly if you have a kind of democratic agency over money then you need to be able to you need to be able to kind of understand that you need to be able to make the case for it and I think actually that's the best place to start for the Bank of England I suppose I'm kind of working up to the point that I think a kind of really key kind of remit for the Bank of England which they're not taking seriously at the moment is for everybody to understand money as a social resource that we all have a stake in and everybody to understand how it's made and everybody to understand who decides how it's made and everybody to feel as though they have a say in that going forward so I don't think, I mean I know Andy Howe that he does take that very seriously actually but I don't think Mark Carney does I think that you know that his point about distributional effects being a political act and his stuff being an apolitical act is really telling everything he does is a political act but the politics he agrees with are politics and the politics he disagrees with are suddenly political I think if you were to say if you were to kind of flip it round and stop trying to engage people at a technical level because there is so much shame around understanding or not understanding if you were to flip it round and describe debt creation as a democratic act simply because it is a hold on the future and the future without wishing to sound like a Nazi and go back to the Weimar Republic does belong to us you know tomorrow and it pains people quite easily that tomorrow belongs to all of us in an equal way then you kind of get to debt creation being a democratic resource and then you get to money as a democratic resource I think if you come at it from the other end from the kind of Felix Martin end of the kind of reality of what money is people will switch off if you come at it from the death end then people do understand that it's something that we all need to decide together at the very core of their reading is for everybody to understand that and they can't model that without kind of showing some humility to what voters want Take a round of questions Hold on You're going to give your five minutes responding to questions or comments or just whatever you want to say I'll do that to the person though because I have quite a few things to say as ever people who don't know me very well are talking quite a bit Okay I want to talk quite a bit about what we might call mixed messages because it seems to me that what's happening in the last six years or so is that we've seen the Treasury and Bank of England putting in the opposite directions all of the time so we've had the Treasury that is held out on cutting back, getting the debt to other control and a lot of those cuts have fallen with the bottom end of the income distribution continuing to do so there are cuts at hand that will drive down incomes and the bottom end of the income distribution even more At the same time as we have a Bank of England that is trying to kickstart the economy and get growth going and phishing out, as we've heard from Helen improving the value of assets at the top end of the income distribution result of this is a vital issue whether it's been affected or stimulated I have a serious doubt and the reason for that is that I actually think that when you've got on the one hand part for a government cutting back consolidating and encouraging all of us to cut back and save like crazy At the same time as we've got the another arm of government which is what Bank of England is depressing interest rates very much less beneficial to save in the hopes of encouraging everybody to spend strikes me as a fundamentally mixed message so the first thing for the first thing I would say is I think that the Treasury and the Bank of England actually need to be on the same page because historically they have not been and I want to allude to one of the questions actually which is this question about what just is called trusted is a very different point but where I see it is that we reach a stage now where the risk is not that politicians will spend too much but rather they will spend too little and so if we and so we as we've heard there's been a lot of pushback from the right wing against Bank of England for its policies and that has been going on ever since the financial crisis and not just in the UK the centre banks vilified really by the amount of money that they have created and spent in the economy in an attempt to get what is moving we can argue that they may not spend that money very effectively I would say that personally but that is not the criticism from the right the criticism from the right is that they shouldn't be spending it at all and so what the right wants is for there to be a consolidation on both the fiscal and the monetary side now I'm sure you can imagine what that would have done and would do now if we applied that now so in a way I'm slightly defending the Bank of England here and indeed centre banks generally who have carried really carried all the responsibility for creating what little recovery we've had and it's about time that the fiscal authorities recognise that this deficit mania oh my goodness we've got the debt back under control when they've got the lowest interest rates in history it does not make any sort of sense so first of all let's get the Bank of England which is adopting a generally explanatory attitude and the Treasury on the same page so the second the second part of that is actually within the Bank of England itself and again this is again pushed by the Treasury and again we have more mixed messages here there are two parts of the Bank of England there is the monetary policy side and there is also the macro-predential side the monetary policy side is trying to kickstart growth get inflation up a little bit to try and get energy into the economy that's what it's all about at the same time as the macro-predential side is clamping down like crazy on banks and imposing rules on them that make it more difficult for them to lend to small businesses to borrow income households macro-predential policies as they have been elected so far benefit those who don't need to borrow they do not benefit those who do and again I feel that the Bank of England itself is not fully not fully coherent on this we need to make a decision about what is more important of course we want to take the financial system of course we don't want banks to be taking ridiculous risks but it's worth remembering that part of the financial crisis the risks they were taking they thought were safe in my book properly managed lending to small businesses and to households that is properly managed is considerably safer then stocking up on safe assets then blow up in your face so it seems to me that we need to have a general rethink of the responsibilities of the Treasury and the Bank of England to ensure that we have a coherent policy an economic policy that addresses all parts of the economy equally and doesn't end up fighting each other and ending up with nothing a stagnant economy and stagnant wages and businesses that won't invest can't grow simply because we have not pulled the different parts together and said how exactly do you want this to work thank you a round of three questions now one here I'd love to see a hand for a woman if there is I mean I know this is we've managed to get a pretty good mostly female panel so some questions will be great too we'll take the grey waistcoat and then here with the grey jacket and then over there I know I'm taking your mixed message of your situation it was a good idea to make the Bank of England independent because it made the labour market good and that's what only people trust however by doing that you just lost control of the Bank of England so the sovereign money that we've always created by the sovereign is now created by the Bank of England so he's the king without a crown it's interesting it's done without too much company you can't be an information act etc and they don't particularly put the money where the politicians provide for well if you can't trust the politicians change them don't give the job away to somebody who's not holding control of that sounds to me like stupidity so should we take doing Bank of England and that should we get on our fiscal and monetary policies determined by groups who are closer to the population at a doubtful level and should we give it away and should we get it back Down here I would say if you wanted to come up with a plan that was going to create inequality as rapidly as possibly could be created then the plan you would come up with would be accurately on one side and austerity on the other side that would be your plan I think the whole sector as I think Mr Coppola was suggesting monetary policy and fiscal policy excuse the pardon are two sides of the same coin they have to work together for the long-term monetary policy and fiscal policy but really what we should be developing is an economic policy that takes both monetary and fiscal policy together what we probably should be doing instead of filling around the edges of monetary policy whether we were to by student loans instead of corporate bonds or to loans that are needed instead of by guilds we probably should reverse the whole policy altogether and the tighter monetary policy is much looser, fiscal policy you don't need to create the money and you don't need to borrow it the money is there the money is there in very great quantities and I'm going to tell you exactly where it is exactly where it is the money is sitting in untaxed corporate profits in offshore bank accounts I'll give you two very quick numbers two very quick numbers the financial times and I'll give you an exact reference to anybody who wants it the financial times 200 billion pounds worth of untaxed corporate profits goes out of the UK every year that's 40 billion pounds at a nominal rate of taxation 40 billion relative to the mansion tax which was going to create 1 billion the other things I'll give you from the Wall Street Journal and again I'm very happy to give you an exact reference if you want it companies active in the US are currently in possession of a trillion dollars of untaxed corporate profits so we're not sure thanks very much my name is Councillor Paul Grant and I'm a politician which I thought might be a sense to mention but it's not good enough I want to make two points back but normally before the fact of England to realise how unpopular it is I think it will be but the phrase we bailed out the bankers has put the residents right away across well beyond the land and it will potentially contaminate some of your capacity to carry out your function in the future because I'm under like public support and I think that's part for two reasons first of all QE has actually been used to deal with three separate issues over time and we have a propelling to make first of all when the credit crunch happened in 2008 it was used as a method of ensuring there's an activity in the banking system and actually that really was kind of keeping the bankers afloat although I tried to find people that would stop their savings and it would be better to know because in the end of the day we were bailing out as politicians not banks but nonetheless then it shifted towards inflating demand aggregate demand and I'd say for the best of reasons I can see why it was going the way it was but it was spectacularly unsuccessful but of course corporate bonds and corporate bore I was worried about aggregate demand in the economy and they were going to produce an effect that they didn't think there was a demand for it out there and then gradually now we've got to the point where you're looking at your inflation target so it probably is back to increasing aggregate demand which then comes back to the point about is the mechanism being used in the QE the right way to increase aggregate demand because if you're just going to inflate balance sheets but not give them the reason to produce them and therefore to one more people and then push up the weight in the number of productivity in the economy you're going to end up just having the same asset bubble in the corporate sector or the corporate bond sector that we've experienced and you'll continue to lose overall support so although it seems counter-intuitive because I honestly don't know if I was on the sensible wing of the party the whole idea of helicopter money does actually feel like the most egalitarian way of trying to increase demand now I suspect there are political reasons why I'll give that to this but it's almost unsellerable but Cora is huge and you obviously want to think up a way of trying to increase aggregate demand that has precisely a positive redistribution effect rather than a negative redistribution effect because if you don't you'll find that you're going to support what you're doing and even if a Labour government comes in the future we will be unable to support a continuation of the policies of QE even if it's necessary at the time Thank you, okay so three big questions basically should the Bank of England no longer be independent QE and austerity two sides and Munch policy and physical policy two sides of the same coin and issues with corporations sitting on loads of cash and basically what is so popular what does Labour need to do what does it need to promote can we just promote helicopter money what are the issues who wants to go first I'm going to do independent to the Bank of England this conversation happens a lot in the energy world should we have an independent energy commission because actually politicians what they're spectacularly bad at is like they'll do anything for like a job at G4S when there's money we don't ever look for the money but what they're really bad at is making decisions of more than five years hence so anything that you need a 15 year cycle or a 25 year cycle or a 50 year cycle for they're useless now and sometimes it does sound like a really good idea to have an independent energy commission to operate like the Bank of England only for energy and things if we want to be 100% renewable in 50 years what do we need to do this year to get there I do have my doubts about whether any politician of any political party will be able to make those decisions I just have my doubts so I think if you apply that then to the Bank of England how long are the decisions that they're making for the next 10 years and the next 15 years if we are looking at very long cycles I think they do need to be independent even though that does bring problems with it but obviously they can then be given a remit by politicians who are elected I don't agree that technocrats make good decisions they factor because they're imparsh I don't think there's any such thing in impartiality but I think any sphere in which you need a long lens you need to consider that unshackling of the immediate democracy with the long technocratic thing that actually brings me to the QE point which is that if you are talking about how to pump money into the economy while not having these negative distributional effects you need to invest in something that we will need it's just absolutely ridiculous we've known this since the new deal if you want to put money into an economy and how it would affect there's no point in putting money into an economy if they govern what effect that money is going to have so I'm not in favour of helicopter money particularly I am in favour of a green new deal with the long term becoming self-sufficient in terms of energy so you invest in huge renewable projects distributed where they're reasonably productive across the country and then you do a lot about regional disparities that are long term energy planning which I think is going to be our main challenge I don't think it's very complicated I don't think it would be hard OK Thank you Over to me should the Bank of England be independent it's very interesting what you mean by independence because the Bank of England actually isn't this kind of totally segregated institution that nobody has any control over the ECB which is independent in that way and interestingly the ECB because it is independent in that way is completely hedged around with treaties and directives that's seriously limited what it can do and it actually has much less freedom of movement than the Bank of England has which is an interesting perspective on things but in practice that's what happens is if you have a completely independent Bank of England you end up in a central bank you fence it in and you can't blow the place up So what we actually have here is what we call operation independence which means that the Bank of England has freedom of decision over operational decisions and that includes things like QE however for example for the recent round of QE that it's just embarked on it would have had to get agreement from the Treasury for that because the Treasury indemnifies it for any losses arising from QE so it can't embark on a QE programme without that indemnity in place so it has to have Treasury permission to do it the same is true with funding for lending I don't think people fully understand that independence in the UK independence of the central bank doesn't mean quite what you think it means it just means that the Managing Policy Committee have freedom of decision but it does not mean that they're completely cut off from government or from the Treasury and my plea is actually for a closer working relationship between the Bank of England and the debt management office as well which is the arm of government that issues government debt because of course most of the decisions that the Bank of England makes involve in some way involve messing around with government debt so there is this incredibly close working relationship and that arguably needs to be a bit close as well. These pieces of the puzzle need to be more closely joined I think I don't know that I would want to water down the operation independence I don't think we need the Treasury the Chancellor breathing down the Managing Policy Committee's neck but I do think they could work more closely together and co-operate better Great, thank you It's a lovely description Yesterday I suggested to the Minister that we should have a Tory dictionary when you have words like which means you're getting a crump in the cake and other words like Brexit and then you said C-Brexit well independence in this case would be another definition you can do anything you like and I agree with it and so if anybody would like to contribute to the Tory directory I'd be like it's a fun project It's fun and classic, you don't know what to say I'll just tell her off, I'm very sorry If you've got to go, kick We're losing them like price We're about to wrap up You won't be leaving France is those literally everything so she could hold it We do have some more questions so I'm quite happy to hang around We've got like five minutes left so I'll take them I know there's some questions out there but if I can just pick up a couple more points about this question of tighter monetary and looser fiscal policy is a very interesting one and one that's being discussed about whether we've actually got this hugely wrong because the way we've tried to go about things so far is to use loose monetary policy to offset tight fiscal policy and my take on it is that it doesn't work I'm also of the opinion that tight monetary and loose fiscal policy doesn't work either for exactly the same reason they have to complement each other and that means that if you're going to do loose you do loose and if you're going to be tight you do tight and you justify and the Treasury and the Central Bank work together not against each other Is it all right if we wrap up there because I feel like there's actually like plenty of food and people can hang around Absolutely, we can have a discussion over food and drink because I feel like possibly the first time in a while we've actually brought a conversation on monetary policy into the Labour party and I heard somebody say that they feel like it is a bit of a blind spot to have a really open and uninterrupted discussion on monetary policy and what we think about the Bank of England and positive money is really here to foster this debate we don't say we've got all the answers there's a lot of new ideas there's quite radical ones coming out around what we should do with monetary policy what we should do with the Bank of England and clearly there's a lot of intelligence and interest in this just the people in the room you obviously know a lot so we've had a really exciting discussion we've heard from Helen Goodman about QE's effect on inequality and how important credibility is for Labour party monetary policy Paul was quite outspoken in he feels like actually the Labour party should be talking about a targeted monetary stimulus he talked about a student loan dump Zoe talked about how we need to accept money as a democratic resource and it's a social resource and then have a really open and inclusive conversation and Francis pointed out very clearly how the Bank and Treasury are pulling in opposite directions and have been for a long time but we need to change that if we're ever going to have a chance of having a macroeconomic policy that works so I just want to finish by saying thank you for coming and thanking our panellists most of which have gone myself on Francis and other very interested people are going to be here until 2pm I can see there's still loads of cake left so I'd really invite you to join us to continue the discussion so if you just want to thank yourselves and the panellists and thanks for coming