Bank Of England Urges Labour: Cut ‘Burdensome’ Net Zero Mandates To Grow Economy

The Bank of England should be freed from burdensome net zero rules to help grow the economy, Rachel Reeves has been told. [emphasis, links added]

Sam Woods, the head of the Bank’s Prudential Regulation Authority (PRA), said the thicket of climate requirements imposed by Westminster was impeding efforts to boost growth.

In a letter to the Chancellor and Sir Keir Starmer, Mr. Woods said the requirement for the Bank to “have regard” for dozens of different “climate and the environment” issues made it harder to encourage risk-taking in the City and take a more light-touch approach to regulation.

Mr. Woods raised the issue in response to a call from Ms. Reeves for ideas on how to improve Britain’s flatlining growth rate.

The Bank of England’s main instructions from the Government are to keep inflation at 2pc and maintain a stable financial system.

However, the Government can also advise the central bank to “have regard” for other issues when making decisions. This means the issues covered by the notices have to be factored into decision-making.

Net zero requirements

The PRA, which sits within the Bank and is responsible for making sure individual lenders and financial institutions are operating soundly and safely, has more than two dozen of its own individual “have regard” instructions.

Mr. Woods wrote to ministers:

“The number of principles that the PRA is required to ‘have regard’ to has substantially increased in recent years, increasing the complexity of the analysis required when making or amending regulation. Depending on how they are counted, the PRA currently has around 25 such ‘have regards’.

“There is scope to rationalize some of these ‘have regards’ where they form a cluster, for instance in the set of ‘have regards’ which relate to climate and the environment.”

For example, the Prudential Regulation Committee, which effectively governs the PRA and on which Mr. Woods serves, must “have regard to … leading the world in sustainable finance, including by unlocking the full potential of the financial services sector to fund the green transition.”

Slashing back net zero requirements could help speed up the process of regulating companies and potentially make it cheaper to be certified. …snip…

Requirements to focus on climate change ramped up under the Conservatives in the era of Governor Mark Carney before being cut back under Jeremy Hunt, the last Tory chancellor.

They have since been reprioritized under Labour.

Read rest at Yahoo Finance