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Last updated: April 23, 2012 11:21 pm
George Osborne returned to the Commons on Monday after a month of criticism of his Budget, only to walk into fresh attacks over new governance arrangements at the Bank of England and a £10bn loan to the International Monetary Fund.
Mr Osborne is under pressure from senior MPs to toughen up the powers of the BoE’s court – its supervisory body – including a provision that it carries out retrospective reviews of the Bank’s performance.
The chancellor has indicated he believes the oversight arrangements planned in the government’s Financial Services Bill are adequate, in spite of claims the court is not up to the task of supervising the beefed up Bank.
However Mark Hoban, City minister, said he would consider amending the bill in the Lords if he felt the complaints were valid.
Andrew Tyrie, chairman of the Commons Treasury committee, said Mr Hoban had opened the door to the court being turned into a more effective watchdog. Mr Tyrie and Alistair Darling, former Labour chancellor, are among those arguing the Bank needs enhanced accountability as it gains new powers over City regulation and to deal with the build-up of systemic risk in the economy.
Mr Tyrie, supported by Labour and Liberal Democrat Treasury committee members, said he believed the Treasury would now ensure the bank would in future have “sharply improved accountability”; the select committee is expected to hold the bank’s court to account for its work.
Meanwhile Mr Osborne was accused by Labour yesterday of “conspiring to allow the International Monetary Fund to become the de facto central bank of the euro area”, after the chancellor committed an extra £10bn to the fund.
Ed Balls, shadow chancellor, said Mr Osborne was “running scared of both sides of the House of Commons”, as Labour made cause with Tory eurosceptics in arguing Britain should play no part in any new eurozone rescue operation.
Mr Osborne, reporting back to MPs after the IMF spring meetings in Washington, insisted the fund needed the money at a time of “fragility” in the world economy.
“We will not turn our back on the IMF or turn our back on the world,” he told the Commons.
His decision to allocate just under £10bn – the “headroom” set by a parliamentary vote last year – means he does not need further approval from MPs.
John Redwood and Douglas Carswell were among the more hardline Tory eurosceptics who insisted the eurozone should sort out its own problems.
Mr Redwood said the IMF should in future insist that any bailout be tied to a requirement that the country receiving assistance must be able to devalue its currency – an impossibility in the eurozone – or an ability to withdraw from the euro.
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