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Mervyn King 'has an unholy alliance with Conservatives'
Paul Waugh, Deputy Political Editor26 Jun 2009
The rift between the Government and Mervyn King turned vitriolic today as the Bank of England boss was accused of forging an "unholy alliance" with the Tories.
An unnamed Cabinet minister said that Shadow Chancellor George Osborne had appealed to Mr King's "vanity" and used him to undermine the Treasury on its plans to balance the public finances.
The fresh low in relations between Labour and Mr King came as it emerged that Alistair Darling is planning to beef up the Financial Services Authority as a rival power to the Bank.
The unexpected move comes after criticism that the Bank of England failed to warn adequately of the impending banking crisis and that Mr King didn't "shout loudly enough".
The new Banking Act will give the FSA a statutory objective of maintaining financial stability, making it partly responsible for a function now entrusted to the Bank. One Cabinet minister - suspected by the Conservatives to be Lord Mandelson - told The Independent: "King is fighting a turf war with the FSA.
"The Tories are flattering him, appealing to his vanity and using him to play politics." The minister admitted that the Governor was an academic rather than a politician, but claimed that his controversial remarks this week to the Treasury Select Committee could damage confidence in the British economy.
Mr King attacked the Government's lack of a plan to get public debt under control. He also revealed that he had not been consulted about next month's Treasury's White Paper, expected to outline the new Banking Act. The Chancellor, who met Mr King at 11 Downing Street last night for a routine private meeting, was surprised at the claim because the pair have discussed the blueprint previously.
Last autumn, the Chancellor told Mr King that he suspected him of passing on to David Cameron and George Osborne details of secret plans to recapitalise the banks. Mr Cameron called for the move publicly before the Government announced it.
One senior Tory said: "George Osborne meets Mervyn King regularly, which is normal practice. No one is playing politics. Labour is upset because Mr King endorsed our critique that borrowing was out of control before the recession."
Mr Darling yesterday insisted relations with Mr King were good.
Reader views (12)
Well, let's hope he is in an alliance with the Conservatives. That is the only way we are going to get some sense back into our shattered economy.
- Ken, Bexleyheath, 26/06/2009 11:28
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Typical Labour; when they lose the argument, they spin and smear.
- Beatriz, London, 26/06/2009 11:28
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Once again, members of this administration are trying to damage the reputation of a public figure who points out its appalling policies.
Surely by now most reasonable people understand that Brown has been spending/wasting far too much since 1997.
The debt has to be paid - not by Brown and Co. but by everybody else; and the sooner a start is made the better.
Watching Brown at PM question time shows how deceiptful he is.
- Sally70, Bedford, 26/06/2009 11:17
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Rattle and pram come to mind here?
Labour whining about a better relationship being cemented between the Tories and King.
We will need that relationship, as we all know who will be governing Britain in a year’s time and why wait till then.
I think King knows he's been battling Browns polices as much as the countries problems and wants to be with a winning team not the losers.
- P. C., rainham. essex., 26/06/2009 11:14
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The Labour smear merchants come out to play because King tells the truth and blast through Gordon's endless barrage of fibs.
Smearing is deeply ingrained into this PM and his cronies.
- Mark, London, UK, 26/06/2009 11:08
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Labour spin. Mervyn King is stating the obvious and his stance has been repeated by the OECD - we need clear plans about how public debt will be reduced... or the country will pay a high price if confidence in the UK's ability to manage debt is undermined. Furthermore, Labour put supervision of the banks under the wings of the FSA who failed abysmally......trying to throw mud at the BOE is Labour reverting to the usual smears.
- Ab, London, 26/06/2009 10:56
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Gordon Brown took the credit for giving the Bank of England control of interest rates and its independence. Being independant in reality though is only fine while they toe the government line. When Mr King has any independant thoughts, its obviously time to start the very effective labour machine to discredit him. Maybe before sticking the knife in, our great leaders perhaps should stop and consider the possibility that Mr king might actually know what he is talking about. Maybe they are really destroying the country. Infact I am certain of it.
- Stephen, London, 26/06/2009 10:42
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Spending on public finances was out of control long before the crash. Labour are now acting like churlish children.
- Frank, Home Counties, England., 26/06/2009 09:51
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Labour seems to be successfully diverting our attention away from the fact that Messrs Brown and Balls were the architects of the UK's current economic decline, which has, relatively, been particularly severe in the UK because of their ineptitude. It is extraordinary that we can attach any credibility to these comments from anonymous Labour spokespeople, when, in the past 48 hours, Brown has been at the dispatch box in the House of Commons, deliberately lying about Labour's spending plans.
- Bingham Macnamara, lymington, hampshire, 26/06/2009 09:41
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"An unnamed Cabinet minister said"
Name your sources or the thrust of your story is nothing more than hearsay and speculation
- Steve, london, 26/06/2009 09:29
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Truth hurt then? Once again a labour minister hasn't got the bottle to say this face to face. Back to the old lies and spin. Conversley, claims by labour that this could damage confidence in Britains economy are rediculous. It's the garbage spoken by Gordhelpus about real increase in spending at a time when the tax payer can ill afford such a course of action that could really damage confidence. It clarifies one thing though, the sand deposited in London, to illustrate Bondi Beach, must have been put there for Nulabour ministers to bury their heads in. They've made up their minds and don't want confused with ant facts.
- Alan, carlisle uk, 26/06/2009 09:12
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The only alliance is the recognition that Labour have destroyed the economy, a huge bill is looming and needs to be addressed.
- Dave Davies, Basingstoke, Hants, 26/06/2009 08:57
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