One thing that’s interesting about the election is that no-one has seriously questioned the new settlement of powers within the Bank of England. Perhaps there is discord, but it simply gets filed under ‘too hard to worry the voters’ pretty heads with so we’ll do what we want afterwards.’
This new settlement means a much larger and more powerful Bank than before the crisis. It has had the supervisory functions re-incorporating into the Bank, following the dismantlement of the Financial Services Authority and the creation of the Prudential Regulatory Authority as part of the BoE. And it has been given new powers and responsibilities for altering regulatory levers through the cycle under the Financial Policy Committee. On top of that are more informal expansions of BoE power and reach through the agreements reached with HMT over unconventional monetary policy (QE), and other interventions like the Special Liquidity Scheme, the consultative role on Help to Buy, and Funding for Lending.
There have been spurts of scrutiny on the Bank. Surrounding the conduct of some of its officials in the markets area, and of the Bank itself in managing its part in reviews of those misdemeanours. And of the Governance of the Bank through the BoE’s court of directors. And of the BoE’s transparency – or lack of it – in its old practice of destroying recordings made of MPC meetings. But no broadside challenge to the new, larger and more powerful BoE.
This is pretty surprising. Because the changes described above constitute a pretty sizeable and important redrawing of responsibilities in economic management. And it is not as if the economy has not featured in the election battles. It has. It’s just that has not involved the BoE. It’s been about the extent of job creation and whether the government was responsible for that. And about the alternative trajectories for the deficit. None of the parties are complaining about the Bank’s response to the crisis.
I don’t myself think there is a huge amount wrong with what they are doing, in the grand scheme of things. But given the amount of imagination put into other aspects of government critique, it’s surprising that monetary and financial policy has escaped without a mention. With a bit of effort, one could caricature QE as overreach that did for pensioners; or as ineffectual; or one could caricature macroprudential policy as meddling, or a flop; and the FLS likewise [what has it done for SME lending?].
I can see why Labour are not gunning on this topic. Although the Coalition politicised the settlement by dismantling the FSA that the 1997 Labour government created (in my view spuriously putting the global crisis and near universal failure of analysis down to the arrangement of chairs in the UK) there’s nothing to be gained by reopening these debates and reversing institutional reform.
But the rise of the more radical, fringe parties has also come without any of them questioning the new status quo.
Contrast with the US, where the Fed’s powers and responsibilities – as a result of its post-crisis conduct – are coming under the spotlight.