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| Darling sets out new Bank remit | Darling sets out new Bank remit |
| (about 1 hour later) | |
| Chancellor Alistair Darling has outlined plans to give the Bank of England new responsibilities in his Mansion House speech. | Chancellor Alistair Darling has outlined plans to give the Bank of England new responsibilities in his Mansion House speech. |
| Speaking in his first keynote address to business leaders, the chancellor said the Bank would now be accountable for the UK's financial stability. | |
| This is in addition to its statutory objective of setting interest rates. | This is in addition to its statutory objective of setting interest rates. |
| The radical new measures come in the wake of the collapse of Northern Rock amid global credit problems. | The radical new measures come in the wake of the collapse of Northern Rock amid global credit problems. |
| Part of the reforms will include setting up a new Financial Stability Committee, which will guide the Bank's operations in this field. | Part of the reforms will include setting up a new Financial Stability Committee, which will guide the Bank's operations in this field. |
| "It will bring valuable, external expertise with City experience to bear on the Bank's decision making," he said. | "It will bring valuable, external expertise with City experience to bear on the Bank's decision making," he said. |
| "The challenge for us is to ensure that the authorities can act quickly and decisively where necessary to support financial institutions," Mr Darling added. | "The challenge for us is to ensure that the authorities can act quickly and decisively where necessary to support financial institutions," Mr Darling added. |
| He intimated that the proposals would clarify and enhance the powers of the Bank of England and the UK financial watchdog, the Financial Services Authority, and improve co-ordination between the regulators. | |
| More details will come in a letter to the Treasury Select Committee chairman John McFall on Thursday. | |
| 'Right framework' | |
| Mr Darling also said that the government would in future advertise when it is looking for a new governor, deputy governors and external members of the Monetary Policy Committee - the committee that sets interest rates. | |
| Mervyn King on take home pay | |
| It is hoped the change will make the process more transparent. | |
| Bank of England Governor Mervyn King welcomed the new measures and the reforms to the Bank's governance that will come in the form of a Banking Bill. | |
| He said that the Bank had the "right framework" to make sure inflation returns to the government's target of 2% and that economic growth recovers. | |
| But he added that no monetary policy could prevent the current effects of rising food and energy prices on living standards or the reluctance of banks to lend to house buyers, which is causing the ratio of house prices to incomes to fall. | |
| Criticised | |
| The chancellor's speech was criticised by the Conservative Party. | |
| Shadow chief secretary to the Treasury Philip Hammond called it a "missed opportunity". | Shadow chief secretary to the Treasury Philip Hammond called it a "missed opportunity". |
| "Gordon Brown's reputation for economic competence has gone bust and this was the big test of whether the chancellor had the vision to steer Britain's economy through these difficult times," he said. | |
| "What Britain needed from the Mansion House speech was a display of economic leadership. Instead all we got were re-hashed announcements and no new ideas." | "What Britain needed from the Mansion House speech was a display of economic leadership. Instead all we got were re-hashed announcements and no new ideas." |