The chairman of the Treasury Select Committee has attacked the Bank of England for refusing to supply a full account of its governing court's discussions about the financial crisis that started with the run on Northern Rock.
Andrew Tyrie MP said the Bank's stance reflected a lack of accountability that would be covered in the committee's upcoming report on its governance. The Bank has gained extra powers during the financial crisis and will have responsibility for clamping down on risks in the banking sector passed to it from the Financial Services Authority next year.
Mr Tyrie said: "This was the most serious financial crisis for decades and the Bank's decision-making affected the economic future of the country. The committee on behalf of the Parliament is not able properly to carry out its function of holding the court of the Bank to account without access to the relevant information."
He has published the material that was sent to the committee – an internal Bank report on the Northern Rock affair and a summary of the court's discussions about financial stability. Information in the documents includes:
* The court was worried about further potential bank collapses as early as October 2007 – a month after the Northern Rock bailout;
* December 2007's "Tripartite Lessons from Northern Rock" report shows the Bank intervened with at least two other lenders in the autumn of 2007 and put pressure on one to restructure its funding;
* In the report, the court supported keeping the Financial Services Authority as a single regulator and thought it would be risky if powers were transferred to the Bank.
The Treasury Committee asked Sir David Lees, the court's chairman, earlier this year to send it the minutes from meetings that covered financial stability and also asked for any internal Bank assessment of its response to the Northern Rock crisis.
Correspondence due to be released today by Mr Tyrie between him and Sir David shows the Bank refused to hand over the minutes and instead supplied a summary of crisis-related matters covered at court meetings between July 2007 and June 2009.
In an exchange that occurred between April and September, Mr Tyrie insisted the committee needed the information to scrutinise the Bank's handling of the financial crisis as part of its review of the Bank's effectiveness. In his replies, Sir David said he had read 250 pages of crisis-related minutes but insisted that the Bank would not hand them over. He said court members needed to maintain "private space" for frank discussions and that the information would not be eligible for disclosure under Freedom of Information rules.
In an increasingly tetchy exchange, Mr Tyrie asked for a version of the minutes with confidential matters blanked out but in July Sir David refused again, leading Mr Tyrie to go public with his demands. Mr Tyrie said yesterday: "It is unsatisfactory to say the least that the court should be using the provisions of the Freedom of Information Act as a reason not to provide Parliament with information. The provisions of the FoI Act have no bearing on what Parliament may need to hold other bodies to account."
A Bank of England spokesman said: "The argument for not providing the court minutes are clearly explained in Sir David Lees' letter to the committee."Reuse content