Select committee: Treasury Committee
Conclusion 10
Fifth Report - Quantitative Tightening
Published 7 Feb 2024
Paragraph 64
Addressed to HM Treasury
Treasury Committee Quantitative tightening All items in this report Report on parliament.uk ↗ Inquiry on parliament.uk ↗
Conclusion (the committee's words)
Notwithstanding the need to ensure that the programmes are compatible with the operational independence of monetary policy, it strikes us as highly anomalous that decisions have been and are being taken about QE and QT concerning huge sums of public money without any regard to the usual value-for-money requirements. This may have been more easily tolerable had QE remained at the relatively modest scale originally envisaged, or had a lifetime loss remained an unlikely scenario rather than the central projection. As it is, with the benefit of hindsight there is no reason to think that the indemnity and cashflow arrangements devised in 2009 and 2012 are the most suitable available.
From: Treasury Committee, Fifth Report - Quantitative Tightening (HC 219), paragraph 64, 7 February 2024
Government response
The government responded to the whole report on 18 April 2024 (deadline 7 April 2024).
Summary written by Accountability Index from the government's response. It is not the government's own words.The Treasury, the Bank of England and the Debt Management Office each responded separately, and the Committee records that none of its recommendations has been fully accepted.
- The Treasury says evaluating the overall value for money of monetary policy decisions on an ongoing basis "would not support" the MPC's independence, but that it keeps the design of the framework "under review".
- On the debt metric, the Treasury's position is that "substantial fiscal costs should not be excluded"; it says fiscal rules are "not a matter for the Bank of England".
- The Bank says a deferred asset accounting approach "would not be feasible", and that changing the accounting treatment "would not alter the underlying public sector impacts" of QE or QT.
- The Bank is "working at pace to launch an initial version" of a lending facility for insurance companies and pension funds, and says its next MPC QT review is in September.