The Bank of England has let the country down by failing to curb inflation, according to former Business Secretary Jacob Rees-Mogg.
In an exclusive interview to be broadcast in full tomorrow [Thursday] on GB News, he claimed the Government was forced to overlook mistakes made by the bank during the Summer.
Mr Rees-Mogg told Tom Harwood: “Mistakes are always made as it’s part of the human condition to make mistakes. Perfection is not within the human gift.
“There was a combination of circumstances that meant that the financial statement in late September 2022 had consequences that led to the end of that government pretty quickly.
“It coincided with the Bank of England failing to raise interest rates enough and being slow in dealing with the inflationary problem.
He said: “An independent Bank of England has one task, to keep inflation at 2%. And it has manifestly failed at that task.
“That is not the Government, that is the independent Bank of England.
“As a minister, we all had to pretend the Bank of England was doing marvellously – well it wasn’t. It’s an institution that has left the country down.
“Because the Government was covering up for the Bank of England, it took all the blame for difficulties in the financial markets, which was partly the Government’s fault, but not entirely of course.”
He added: “If you’ve got inflation, you’ve got to raise interest rates. Inflation is such a problem, you can’t just pretend it’s not there and not raise rates.
“What the Government, Bank of England shouldn’t have done was the final stage of quantitative easing during the pandemic, which added fuel to the fire and added a certain amount to the inflation rate.
“And going back further, it should have been normalising interest rates in the 20-teens.”
On changes to government plans to reform the planning system, he said: “The planning issue is one that has been holding back the growth of this country for some time.
“We have a socialist planning system based on the late 1940s Planning Act, which thinks that central government can predict and plan the amount of building that we need. And we actually know from history that these centrally directed targets don’t work.
“They don’t provide the housing that people need. Government is not omniscient in that sense. It doesn’t actually know what is going to be needed whereas the market can provide and I thought some time we need to move to a more market-based planning system.
“We need to free up the planning laws and I think voters are ahead of politicians in this.
“I think they are ready for planning reform, because they want their children and their grandchildren to be able to buy properties which they can’t at the moment.”
Later in the programme, Labour MP Graham Stringer said: “The Bank of England has suffered from poor leadership over the last six or seven years. As you say it hasn’t done what it is supposed to do, keep inflation under control.
“Now I think taking interest rates, taking all the responsibilities that the Bank of England has now which they didn’t use to have, I think some of those responsibilities should come back to central government because the Bank of England, as Jacob Rees Mogg said, has failed pretty abysmally.”