MPs have hit out at the Treasury for indemnifying the Bank of England against losses from its £375bn quantitative easing programme, claiming it does not understand the risks involved.
The Public Accounts Committee published a report last week into the activities and role of the Treasury, in which committee chair and Labour MP Margaret Hodge criticises the Treasury for its “impenetrable” accounts.
Hodge says: “The Treasury has not convinced us it understands either the risks it has taken on by indemnifying the Bank of England against losses on QE or the expected economic benefits. Some £375bn has so far been injected into the economy as an ‘experiment’ but the department could not explain to us what the effect has been on the whole economy or on different parts of society.
“The Treasury acts as both the finance ministry and economic ministry. But it appears to neglect its role as finance ministry. Its own accounts are impenetrable and this committee keeps seeing instances of poor decision making by departments, which the Treasury could and should have prevented.”
IMLA executive director Peter Williams says: “Given the experimentation the bank and the Treasury have been engaged in regarding financial policy, nobody could be clear about the outcome.”