Local Economic Solutions for Sustainability

Localise West Midlands
The Warehouse
54-57 Allison Street
Digbeth
Birmingham
B5 5TH
Tel: 0121 685 1155
Fax: 0121 643 3122
Email: info@localisewestmidlands.org.uk

Registered in England and Wales as a company limited by guarantee (not for profit) no: 6239211

  

 

Bank of Britain?

The Federal Reserve Bank of Chicago has a say in US monetary policy, but no-one in Chicago's twin city of Birmingham is involved in the Bank of England’s decision-making process. Even the devolved nations of Scotland and Wales have no influence on UK interest rate policy.

The ‘Chicago Fed’ runs its own indices measuring the impact of inflation upon a whole spectrum of Chicago society; with this information Chicago and its people can appraise and, if necessary, challenge what Washington is doing.

Our most detailed elaboration of the case for reform of the Bank appeared recently in the BirminghamPost.

Further research is to be done, funded by the Andrew Wainwright Reform Trust, arriving at options which could be presented to decision-makers in the English regions, Scotland, Wales and Northern Ireland.

Work on LWM's Regional Prosperity and Inflation Framework, funded in 2006 by the Joseph Rowntree Reform Trust, has highlighted the need for reform of the Bank of England, at a time when central bank reform has already been put on the Parliamentary agenda by the recent Northern Rock fiasco.
Another page on our website presents the framework: a set of targets for inflation, measured broadly for family households, pensioner and also key worker households – region by region.

In an email exchange, a representative of the Bank of England said that addressing regional inflation is beyond their interest-rate centred mode of operation. However, change in economic governance is now even more necessary to cope with global price inflation driven by the rise of China and India and political concerns about the world’s oil producing areas.

Our Vision

In 2008, there will be two complementary LWM campaigns on inflation and Bank reform. Progress on either front would further our aim that, in just a few years’ time, future chancellors and our central bank will ensure that inflation targets are properly defined for families, pensioners and key workers across the country.

These targets should be met without over-reliance on the use of the bludgeon of interest rates. Interest rates should foster saving rather than the current rates of unsustainable consumption and speculation in residential property or stock-market based investments. Current arrangements have increased the gap between rich and poor and have made ordinary homes beyond the reach of people on ordinary money – though this is systematically denied by state prosperity and inflation statistics.

In a more localised and accountable future economy, chancellors will use indices established through regional pressure during the initial years of the newly regionalised and independent Statistics Boards as the framework for progress. The Bank would be more open and transparent, reflecting the diversity of the countries it will represent. It would also move interest rates only when such a measure is clearly seen to be in the interests of the broadest geographical and social spectrum of the population.

Andrew Lydon
LWM
December 2007

Web-Bibliography

Recent LWM media coverage of this issue

Birmingham Post coverage, March 19th 08 - with particular reference to comparisons between UK and US central banks and inflation indices in the context of the credit crunch

Birmingham Post coverage, August 8th 07 - with particular reference to competitiveness, inflation and reform of the Bank of England

Birmingham Post coverage, March 9th 07 - with particular reference to inflation, housing and reform of the Bank of England

Other links

Bank of Chicago

Bank of Chicago inflation indices