Conservative MPs are privately warning Chancellor Jeremy Hunt that he needs to intervene with the Bank of England or he will fail to deliver on the Government’s key pledge to halve inflation.
Senior Tories have told Express.co.uk that the Bank of England under Governor Andrew Bailey has “taken its eye off the ball” while others have said that its independence needs to be reviewed.
The row has broken out again at the CPI rate of inflation, which includes house prices and mortgages, has remained stubbornly high according to the latest ONS figures.
The rate remained at 8.7 percent in May, the same as April, despite a Bank of England prediction that it would fall to 8.4 percent.
With Rishi Sunak putting halving inflation as one of his five pledges, there are now serious concerns that his government will fail to deliver.
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A former cabinet minister told Express.co.uk: “The truth is that the management of the Bank of England were missing in action.
“They took too long to act last year, and people are paying the price now.
“As rates go higher than they would have needed to had they acted sooner, the government should look at reintroducing MIRAS (mortgage interest relief at source) to help hardworking people keep their homes.”
MIRAS was abolished by Gordon Brown who also was responsible for making the Bank of England independent outside democratic accountability in the government.
Criticism of the current economic policy is coming from across the Tory backbenches but much of it is coming from Liz Truss’s Conservatives for Growth group, who now believe the former Prime Minister’s controversial mini budget which led to her being ousted is being increasingly vindicated.
In particular many of them believe that the inaction of the Bank of England was what triggered the economic crisis in the wake of Ms Truss’ mini budget.
One Conservative MP said that he and other colleagues now believe “there needs to be a rethink” of the Bank of England’s independence.
The Tory MP said: “Really it is consistantly getting things wrong and failing to properly predict events.
“Independence was never supposed to be absolute but we need some accountability here and the Chancellor has to be able to intervene.”
However, Labour have pointed to the rise in the price of food.
Shadow Chancellor Rachel Reeve pointed out that the increase in food prices in the UK is 20 percent faster than France, 30 percent quicker than Germany and three times that of the USA.
She said: “That difference is leaving Brits paying over £1,000 a year more for food.
“This government can’t get a grip of this problem because they are the problem.
“Thirteen years of the Tories and their disastrous mini-Budget are damaging economic security and leaving families worse off.
“We need a more secure economy, more secure family finances and a plan to help us grab hold of the opportunities before us.
“With a relentless focus on the cost of living, our strong fiscal rules and our mission for growth, that is what a Labour government will bring.”
