Balls: ‘Free Bank boosted Treasury’
Shadow chancellor Ed Balls said at Queen Mary University last week that granting the Bank of England independence in 1997 “increased the power of the Treasury, because it allowed the Treasury to say: ‘Well, I see you want to make that decision, prime minister, and I can see why you’d want to do that, but I’m not sure the independent Bank of England will wear it.”
Asked by Lord Hennessy whether “it was an anti-Tony device, a cunning plan?”, he responded: “No. It was a bit more subtle than that.” He suggested that the Treasury used Bank independence to restrain the growth of the minimum wage: the threat of “higher mortgage rates was enough to focus the mind of any prime minister,” he said.