BURNHAM TEAM CONSIDERS RETHINKING BANK OF ENGLAND MANDATE

Louise Haigh, currently operating as a senior figure within Andy Burnham's political operation, proposed in May that the Bank of England's mandate should be re-examined. Haigh's suggestion, published in the Renewal journal, called for greater focus on economic growth alongside the Bank's existing price stability objective. The proposal has prompted economists to consider whether a future Burnham administration would pursue changes to the Bank's operational remit. Haigh noted that the timing coincided with the approaching 30th anniversary of Gordon Brown's 1997 decision to grant the Bank operational independence.

The Bank of England's Monetary Policy Committee currently sets interest rates to maintain price stability, defined by the chancellor as a 2 per cent inflation target. The existing remit, reaffirmed annually in a letter from the chancellor to the Bank's governor Andrew Bailey, already permits the committee to allow inflation to miss its target when rapid rate increases could cause "undesirable volatility in output". Andrew Bailey recently invoked this flexibility when explaining why the committee had not raised borrowing costs in response to Middle East-related energy price increases. Some economists have expressed concern that interest rates set at current levels risk damaging economic growth by raising borrowing costs for consumers and businesses.

Haigh's earlier work in transport concluded in 2024 after she resigned following the emergence of a fraud conviction relating to a missing work phone. Her current role places her in a position to influence economic policy should Burnham lead a future government. The proposal to broaden the Bank's mandate represents a departure from the framework that Brown established as part of Labour's efforts to strengthen its economic credibility in the 1990s.