Burnham team may reconsider Bank of England mandate, article reports
6 reported
A Guardian article reports that economists are questioning whether the Bank of England’s mandate will be re-examined under a potential Andy Burnham administration. The article notes that Louise Haigh, a former transport secretary now part of Burnham’s operation, wrote in May about re-examining the Bank’s mandate as the 30th anniversary of its operational independence approaches. The Bank’s current remit, set by the chancellor, targets 2% inflation, but some experts argue that monetary policy alone cannot handle frequent supply-side shocks. Proposals include better coordination between the Treasury and the Bank, a dual mandate including growth, or adaptive inflation targeting during climate shocks. The article also mentions that Burnham’s team may consider urging the Bank to re-examine its quantitative tightening programme, which critics say costs the Treasury. The article states that Burnham confirmed in a leadership speech on Friday his intention to cut the cost of essentials, and working more closely with the Bank could be part of that.
What’s reported
The article reports that Louise Haigh, a former transport secretary who quit in 2024 after a fraud conviction over a missing work phone, is now part of Andy Burnham’s operation.
Haigh wrote in May that the time is right to re-examine the Bank of England’s mandate, given the 30th anniversary of Gordon Brown granting it operational independence in 1997.
The Bank’s monetary policy committee (MPC) sets interest rates to achieve price stability, defined as a 2% inflation target set by the chancellor.
The article states that some experts argue monetary policy cannot be the only defence against inflation, especially with frequent supply-side shocks from events like Covid, Russia’s invasion of Ukraine, and the Iran conflict.
Proposed solutions include a Treasury-Bank coordinating committee, a dual mandate including growth, adaptive inflation targeting, or re-examining quantitative tightening.
The article says Burnham confirmed in his leadership speech on Friday that he intends to take action to cut the cost of essentials.
Key figures
Louise Haigh, former transport secretary, now part of Andy Burnham’s operation
Andy Burnham, potential future prime minister
Andrew Bailey, governor of the Bank of England
Swati Dhingra, independent MPC member
Theo Harris, New Economics Foundation thinktank
Jo Michell, professor of economics at the University of the West of England
Rachel Reeves, chancellor
Shabana Mahmood, current home secretary, tipped for No 11
Richard Tice, Reform party figure
Sources: The Guardian
