Corbyn adviser: Bank of England should not be independent

Posted On: 
24th August 2015

Jeremy Corbyn’s economic adviser has called the idea of Bank of England independence a “fiasco” and suggested the Government should be able to sack a governor who refuses to follow its policy objectives.

Richard Murphy, a tax expert who has become known as the architect of “Corbynomics”, said even under the current arrangements the Bank was not properly independent because it follows “the broad line that is being laid down by the Treasury”.

“There is no such thing as Bank of England independence, there never has been, it’s a fiasco put together, a façade created to appease people, to put forward a presentation of something that doesn’t exist,” he told the Today programme.

Mr Murphy also suggested that monetary policy such as the setting of interest rates should be down to elected politicians, rather than the governor and the Bank’s Monetary Policy Committee.

“Bank of England governors are responsible to democratically elected politicians. If we have governors who think they are over and above the rule of democratically elected politicians then I’m afraid to say, yes, they should be on the next plane,” he added.

He also repeated his call for so-called ‘People’s Quantitative Easing’, whereby the Government borrows money from its own National Investment Bank to finance infrastructure spending.

He argued this was an idea that had mainstream backing and would also not add to public debt.

“Actually it is the Government lending to itself - the Government owns its own bank but hasn’t borrowed from it, in effect. I’m saying that is possible, [Bank of England governor] Mark Carney has said it is possible so why aren’t we using the cheapest money that is available to achieve that goal?