THE government should use its overhaul of regulation to bring about a radical shift of power from the Bank of England back to the Treasury, an influential committee of MPs has recommended.
The Treasury Select Committee, headed by Conservative MP Andrew Tyrie, says that the Bank’s “antiquated” governance means it is not transparent or accountable enough to wield the new powers it is being given. Instead, ultimate responsibility for financial stability in a crisis must rest with the chancellor.
“A chancellor can be expected to take responsibility in times of turbulence,” the committee says, suggesting that the Treasury should have the power to seize control of decisions involving the use of liquidity and credit facilities that could risk public funds.
This would, it says, “create a clear line of accountability for decisions taken through the chancellor to parliament”. The MPs’ report on Bank accountability also suggests slimming down the court of the Bank from 12 to eight members and renaming it the supervisory board.
The board would then take responsibility for conducting reviews of the Bank’s activities and publishing them, which the Bank has refused to do despite recent requests.
In addition, the monetary policy committee and new financial policy committee must have a majority of non-Bank members, MPs say.