June 27, 2009 / 10:19 AM / 10 years ago

Conservatives deny Bank leaked plans

LONDON (Reuters) - Shadow chancellor George Osborne denied on Saturday that Bank of England Governor Mervyn King had leaked confidential government bank recapitalisation plans to the party.

Shadow chancellor George Osborne speaks at the Conservative Party's spring forum at Cheltenham racecourse, in this file photo from April 26, 2009. REUTERS/Andrew Winning

King pointedly told a parliamentary finance committee on Wednesday that Prime Minister Gordon Brown’s Labour government had not consulted him on new bank regulation plans expected to be published in little over a week, and criticised Labour’s vagueness on how to reduce the country’s massive budget deficit.

Subsequently media widely quoted an unnamed Labour cabinet minister saying that King’s relationship with the Conservatives amounted to an “unholy alliance.”

Asked in a BBC interview whether King had leaked the Conservatives details of government plans late last year to recapitalise the banking system, Osborne denied this.

“These are allegations that are simply not true. They are made by Labour cabinet ministers, sometimes by the Prime Minister in private to people,” Osborne said.

“I think it says more about his government than about the entirely proper and correct relationship between the opposition and the independent central bank,” he said.

Osborne confirmed the Conservatives wanted to give the Bank more powers to ensure the stability of the banking system, and possibly detailed financial regulatory control, if they win power in a national election due within a year.

Labour’s upcoming proposals, by contrast, could strengthen the Financial Services Authority at the Bank’s expense.

Chancellor Alistair Darling insisted last week that he still had a good relationship with King.

On Saturday junior treasury minister Liam Byrne told the BBC he was not familiar with the criticism of King attributed to the unnamed Labour cabinet minister.

“All I would say is that Mervyn King and Gordon Brown and Alistair Darling work very successfully together and Mervyn King has worked very successfully with this government for many years,” Byrne said.

Reporting by David Milliken; editing by Sue Thomas

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