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Friday, September 11, 1998 Published at 15:32 GMT 16:32 UK


Stepping into the lion's den



When Eddie George walks up to the rostrum next Tuesday he will be the first governor of the Bank of England to speak at a TUC conference. BBC Industry Correspondent Stephen Evans looks at the sort of reception he might receive.

If there were a list of stage villains lodged in the trade union memory, governors of the Bank of England would surely be near the top of it.

Mythology, folk memory and tradition feature strongly in the psychology of "the trade union movement". There are the saints - like Aneurin Bevan, the left-wing "founder of the health service" or A J Cook, the leader of the miners through the General Strike. No amount of revisionism can dim their haloes.


[ image: Anuerin Bevan: hailed as a hero]
Anuerin Bevan: hailed as a hero
And there are the "baddies" whose names are still spat out, vilified for eternity. Top of this list is Ramsay Macdonald, Labour's first prime minister who split the party in economic crisis and left it in oblivion when he formed the National Government. His chancellor, Philip Snowden, also remains a figure of scorn, 70 years after what are still seen as their black deeds.

Rogues' gallery

Close to them in the rogues' gallery are governors of the Bank of England, portrayed in the minds of the left as the figures of financial orthodoxy who sabotaged the great socialist project.

If they didn't do the deed themselves, they symbolise the forces of orthodox finance which did. They remain the embodiment of those men in striped trousers and top hats who populated the cartoons of the 1930s.

The left, even those far too young to be there, still remember Lord Cromer. It was he who told the Prime Minister, Harold Wilson, on the evening of November 20, 1964 that the government must "remove trade union restrictive practices", restrict government expenditure and abandon steel nationalisation. It was by all accounts a heated exchange, with the governor of the Bank of England saying he was servant of the Queen not of the elected government.


[ image: Harold Wilson: popular Labour PM]
Harold Wilson: popular Labour PM
That at least is the version which survives in trade union mythology.

Montague Norman, the governor in the 1930s, similarly needs no introduction to left-wing audiences as a villain, intimately associated with the Gold Standard and the disastrous financial orthodoxy of the time - which was challenged only by outsiders like Maynard Keynes, Oswald Mosely, the union leader Ernest Bevin and the TUC.

The villain of the piece?

So spare a thought for Eddie George when he becomes the first governor of the Bank of England to address the Trades Union Congress.

He drags with him considerable baggage when he steps into an atmosphere which will be charged (politically and emotionally, of course).

Already, a head of steam is building up, with union leaders blaming the Bank of England's monetary policy committee for the spate of recent redundancies - even for the ones clearly brought about by global forces like the collapse in the price of computer micro-chips.

There are two charges: the committee is packed with dry, academic economists unaware of the needs of the real world and of real industry, in particular. And, secondly, that the Bank of England, unlike the Federal Reserve in the United States, has one aim and one aim alone: to hit the government's inflation target. Thoughts of economic growth and unemployment must be banished.

In fact, this second charge isn't quite accurate. Unlike the European Central Bank (which really does have to look at inflation and only inflation), the Bank of England has some discretion, in that a time-scale for hitting the target isn't stipulated. It can take account of unemployment as long as it reaches the target at some date in the future.

The austere chancellor


[ image: Gordon Brown: a stern figure]
Gordon Brown: a stern figure
That, though, isn't the issue. The governor of the Bank of England is simply following government policy. And it's government policy that is ultra-orthodox.

Gordon Brown takes great pains emphasising his "toughness". He oozes rectitude, with his austere public demeanour (not borne out in private where the chancellor is a bit of a wit). It is, incidentally, ironic that many recent Conservative chancellors have been a bit colourful while Labour's likes to flaunt his hair-shirt.

If the economy really does dive, the real tensions will no doubt emerge between Labour's freemarketeers and the more interventionist brothers and sisters in the union movement.

In the meantime, the rumbling gripe will be unjustly directed at the Bank, perhaps vociferously when its governor makes his brave entrance into the Winter Gardens.



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