Question to the HM Treasury:

To ask the Chancellor of the Exchequer, what assessment his Department has made of bringing forward legislative proposals to amend the Bank of England's stability mandate to account for trends in real-terms incomes.

An important feature of the UK’s macroeconomic framework is the operational independence of the Bank of England and the financial regulators. Part of the Treasury’s role within the framework is to set, maintain, and legislate for the overall regulatory architecture in a way that allows these independent institutions to achieve their objectives.

The Bank of England has price stability and financial stability objectives. Price and financial stability are essential pre-requisites to achieve strong, sustainable and balanced growth.

Price stability is defined in the remit letter sent to the Monetary Policy Committee (MPC) by the Chancellor once per year. This was last defined in October 2021 as 2% CPI year on year, and the Chancellor has fully committed to the MPC’s remit and 2% target. Since the MPC were given independence over monetary policy in 1997 CPI inflation has averaged close to the MPC’s 2% target. The Government retains full confidence in the Committee to meet their target.

The Bank of England’s financial stability objective is to protect and enhance the stability of the UK financial system. The Financial Policy Committee (FPC) has a primary objective to contribute to the achievement of this objective and a secondary objective to, subject to that contribution, support the broader economic policy of His Majesty's Government. The Chancellor makes recommendations to the FPC in the remit letter sent once per year, specifying the Committee’s responsibilities in achieving these objectives.

The government understands the rising cost of living is a concern for people across the UK. We have a responsibility to help those who, through no fault of their own, are paying the highest price for the inflation we face - on this basis, government support for dealing with the cost of living now totals over £37bn this year.