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| Version 2 | Version 3 |
|---|---|
| Darling sets out new Bank remit | Darling sets out new Bank remit |
| (41 minutes 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. | 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. |
| READ THE FULL SPEECHES href="http://news.bbc.co.uk/1/shared/bsp/hi/pdfs/18_06_08_mansionhouse.pdf">Alistair Darling's inaugural Mansion House speech [1.5MB]Mervyn King's Mansion House speech [155.26KB] Most computers will open this document automatically, but you may need Adobe Reader Download the reader here | |
| "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. | 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. | More details will come in a letter to the Treasury Select Committee chairman John McFall on Thursday. |
| 'Right framework' | '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. | 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. |
| It is hoped the change will make the process more transparent. | 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. | 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. | 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. |
| Mervyn King on take-home pay | Mervyn King on take-home pay |
| 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. | 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. |
| And he warned that higher living costs were likely to restrain consumer spending to a far greater extent than tightening lending conditions as a result of the credit crisis. | And he warned that higher living costs were likely to restrain consumer spending to a far greater extent than tightening lending conditions as a result of the credit crisis. |
| "Rising fuel, gas, electricity and food prices mean that average real take-home pay will stagnate this year," he said. | "Rising fuel, gas, electricity and food prices mean that average real take-home pay will stagnate this year," he said. |
| "It will nto be an easy time, and I know that some families will find it particularly difficult." | "It will nto be an easy time, and I know that some families will find it particularly difficult." |
| But he said these pressures would be temporary - the opposite side of the coin to the falls in price of manufactured goods from countries such as India and China, which over the past few years allowed our standard of living to rise at a rate faster than productivity. | But he said these pressures would be temporary - the opposite side of the coin to the falls in price of manufactured goods from countries such as India and China, which over the past few years allowed our standard of living to rise at a rate faster than productivity. |
| Criticised | Criticised |
| The chancellor's speech was criticised by the Conservative Party. | 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. | "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." |