Balls warns Osborne over Bank powers
CHANCELLOR George Osborne is creating a “dangerous” concentration of power and information in the Bank of England, according to opposition critics of his new financial regulation bill.
Shadow chancellor Ed Balls said that it was a mistake to channel information only through the BoE governor in the event of a crisis.
He complained that the heads of the new statutory bodies that will replace the FSA will not be able to air their views directly to Number 11.
“The statutory stakeholders are kept out of the room in his own memorandum,” said Balls. “The concentration of power and access to the chancellor in the government is highly unstable.”
Balls was mocked, however, for his prominent role in designing the previous regulatory regime that presided over the crisis.
The new bill gives the Treasury sweeping powers to direct the Bank in the event of a crisis if the latter “considers there to be a material risk of circumstances arising in which public funds would be at risk”.
But the role assigned to the heads of several new regulatory bodies in the event of a crisis is not specified.
MPs also raised concerns that the new regulator could prioritise “the stability of the graveyard” over growth.
George Mudie MP of the Treasury Select Committee said the Bank should “have regard to growth and the government’s economic policies.”
FAST FACTS | NEW FINANCIAL BILL
● The Financial Services Bill, released a week ago, reached its second reading yesterday.
● It replaces the FSA with two new Bank of England committees and one independent committee.