MPs call on BoE for more transparency

The chairman of the House of Commons' Treasury Committee said yesterday that the Bank of England and the Treasury needed to do more to inform the public about their decisions to prevent future crises like the exit of savers from Northern Rock.

John McFall pointed out that the support of the Bank of England, the Financial Services Authority and the Chancellor had not calmed savers.

He said: "You can take what has happened at Northern Rock as a good example... we have to anchor expectations."

Mr McFall defended the governor of the Bank of England's response to the crisis which, he said, had been "spot on" and added that the division of powers between the Bank and the FSA was working well.

The committee will question governor Mervyn King and other officials on Thursday. Some Conservative members have questioned Mr King's hard-line attitude to helping financial institutions and the effectiveness of the Bank's working relationship with the FSA.

It is 10 years since the Bank of England gained independence for setting interest rates. The Treasury Committee yesterday urged greater clarity from the bank's Monetary Policy Committee as the economy enters a tougher period. The MPs said the policy makers should publish their votes at the same time as their monthly decision on interest rates – not two weeks later – and their minutes should also show which member expressed a particular view.

Mr McFall said: "The system at the moment seems to encourage two weeks of greater uncertainty than is necessary. The next decade may not be as benign as the last. The recommendations aim to ensure the MPC is ready for the challenge."

Other recommendations included MPC members submitting an annual assessment of their voting records to the Treasury Committee and the advertisement of the jobs of governor and deputy governor.