Lord Barnett – 2014 Parliamentary Question to the HM Treasury

The below Parliamentary question was asked by Lord Barnett on 2014-03-27.

To ask Her Majesty’s Government whether they consider that an agreement between the Chancellor of the Exchequer and the Governor of the Bank of England overrides the reserve powers given to HM Treasury in section 19(2) of the Bank of England Act 1998.

Lord Newby

The powers set out in section 19 of the Bank of England Act 1998 cannot be removed or amended except by further legislation approved by Parliament which amends that section of the 1998 Act.

The Treasury may only make an order giving directions under section 19 after consultation with the Governor of the Bank of England, if the directions are required in the public interest and by extreme economic circumstances.

Since the Monetary Policy Committee was given operational independence in 1997, covering the worst financial crisis in generations leading to the deepest recession since the Second World War, these powers have never been used.