Stop the infighting and get on with the job
We expect Tory and Labour spokesman to be political but it is worrying to find the Bank of England and Financial Services Authority playing them at their own game. Aren’t the Bank and the regulator meant to be seeking stability? And isn’t the Bank supposed to be independent?
There was an element of fall-out between the three members of the tripartite after the credit crunch struck as each tried to blame the other. But the real fall-out has come over the reforms for ensuring there is never another crunch.
We’ll take it as read that the Conservatives don’t like the government’s proposals and Labour is against their Opposition’s measures - they probably decided that even before hearing their opponent’s plans. But the in-fighting between the other two legs of the tripartite - the civil service legs - is worrying.
The dispute emerged at July’s Mansion House dinner when the Bank governor both criticised the chancellor’s fiscal policy and set out regulatory reforms he knew were contrary to the Treasury’s plans and those the FSA had recommended. Shortly afterward he pointedly told the Treasury select committee he had not been consulted on the reforms.
The Treasury reforms indeed shunned the Bank’s ideas and backed the FSA proposals. But the Tories announced plans to merge the FSA into the Bank if they win the election, thus backing the governor.
Now the FSA has come out fighting, issuing statements criticising the select committee for comments on mortgage abuse and the government for questioning the regulator’s curbs on bankers’ pay, telling the politicians to set their own rules.
And having said policy is for ministers, the FSA chairman has suggested a Tobin tax on financial deals and suggested the City is too big. The FSA has never raised its head above the parapet like that.
The danger is that now we know there is dissent between the parties the conspiracy theorists can see disguised attacks in every move. Is the Bank being deliberately bearish on the end of the recession when the government is trying to talk up the economy? Did the FSA provoke the stories about how hard it is to recruit and hold staff now it faces the Tory axe? As long as people wonder whether this is deliberate mischief, the damage is done.
Indeed, whether or not the Bank has courted the Conservatives, the Tory politicians are so close to the governor’s view it threatens the Bank’s much-lauded independence.
All this bickering may be entertaining in the Westminster village but in the real world - where the tripartite is supposed to be ensuring financial stability, getting banks to lend again and the recovery to start - it is not healthy to have the three key players locked in dispute. The fighting cannot be allowed to continue until the next general election.
