A group of 44 Tory MPs have called for a review of the Bank of England's independence, accusing it of costing taxpayers thousands of pounds. The MPs criticized the Bank for making taxpayers liable for any losses it made in selling government bonds, which would cost households £4,361 each between 2023 and 2025. They also blamed the Bank for higher inflation in the UK compared to other countries, costing families £1,185 over 2022 and 2023. The MPs have called for a Treasury-led review of the Bank's quantitative tightening (QT) program, its mandate, and its independence. The Bank of England has been independent of the government since 1997. Some of the MPs have previously accused the Bank of working against the economic policies of former PM Liz Truss. The Bank of England spokesperson defended the previous quantitative easing program, stating that the overall profit or loss from the scheme is still uncertain and that the figures do not assess the impact on reducing borrowing costs and supporting the economy. The Treasury also disputed some claims made in a report by Conservative Way Forward, stating that other central banks are pursuing similar QT programs and ending the scheme would not save money for the government.
In a related development, Labour could gain upwards of £20 billion in fiscal headroom if it changes the debt measurement to exclude Bank of England financial losses. The Bank of England's monetary policy committee is set to decide on the pace of quantitative tightening this month, with an expected increase in bond sales from £100 billion to between £120 billion and £127 billion. Maturing bonds are estimated at £87 billion over the next year, and changing the debt measure could provide £17 billion a year in additional headroom. Jeremy Hunt has criticized the government for potential manipulation of fiscal rules, although analysts believe that changing the debt measure won't alarm financial markets. This situation presents a complex interplay between the Bank's policies and Labour's fiscal strategy as the political landscape evolves. [df9bc6ec] [6a906b32]