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Bank of England rate setters who voted to put up interest rates last month were accused of "lacking compassion" by a senior Labour MP who said higher mortgage rates would cripple the finances of many low-income families.
George Mudie, a member of the Treasury select committee, told the governor of the Bank of England, Mark Carney, that raising interest rates would also condemn the long-term unemployed to a longer period out of work.
He refused to address his remarks to monetary policy committee member Martin Weale who voted for a rate rise at the committee's last meeting.
"I would prefer the governor to speak," he told Weale, "because you are someone who would prefer to [raise rates]. The governor has got some compassion," he said.
Carney said there were "equal measures of compassion" across the rate-setting MPC but there were differences of opinion over the natural rate of unemployment the economy could sustain without causing inflation.
Weale, who voted for a rate rise along with former CBI chief economist Ian McCafferty, had previously defended his decision by saying that the jobs market looked healthier, especially after a significant fall in the number of people out of work for more than a year.
Carney appeared to back Weale when he said: "We have seen a more rapid absorption of long-term unemployed. It is one of the factors that has persuaded us to lower our estimate of medium-term unemployment."
But he went on to tell MPs on the select committee that he recognised many workers were taking jobs that were characterised by low pay and low skills or offered less hours than workers would like.
Mudie asked Carney how the MPC judges what level of unemployment would persuade them to put up interest rates, saying he was distressed to hear officials describe the unemployed with detachment and in terms of percentages.
He said: "Up in the north, in Yorkshire, Leeds, in the inner city, that's just no phrase. They are not a percentage. They're all people. And you are setting the rate and deciding, some of you, that it should go up when that would make it harder for them to find work.
"There will be people who are condemned to find a job without hope," he said.
Labour MPs have become increasingly agitated at the prospect of higher base rates, possibly from next spring, despite assurances from the governor that they will increase slowly and probably not go higher than 3%. A series of reports have shown large numbers of low- and middle-income families, already loaded with high mortgage and unsecured debts, are vulnerable to higher mortgage rates averaging 5% to 7%.
Business groups led by the British Chambers of Commerce have also lobbied for rates to remain low until the recovery is secured.
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