Help to Buy reassurances needed
In his letter to Dr Mark Carney, Tyrie, the Conservative MP for Chichester, lists seven points of concern and wants to make sure that if “the Help to Buy scheme carries risk for financial stability” the Canadian governor would make his concerns known to the Treasury committee.
Former Bank governor Mervyn King had previously said that the Financial Policy Committee’s objectives were protecting and enhancing the resilience of the financial system.
But Tyrie writes in his letter: “Given the close historical relationship between housing finance and the UK business cycle the Treasury Committee will want to see as much as practicable of the supporting work already prepared for the FPC on the links between the housing market, the economic cycle, and financial stability, as well as supporting work prepared during the scheme’s life.”
Tyrie wants to get the full facts before the next FPC meeting on November 20.
Specifically he wants the Bank to confirm that the Financial Policy Committee does NOT have a veto on any decision to maintain the scheme during its planned three year life, or later if extended.
Tyrie is also worried what the FPC’s statutory role is and what advice it or the PRA has already offered.
He also questions whether the Bank sees itself as a co-designer of the scheme in light of recent comments from Chancellor George Osborne that the FPC would be advising him.
And he also wants to know what the balance sheet risks are to the lenders taking part.
Prior to becoming MP for Chichester in 1997, Tyrie was a senior economist at the European Bank of Reconstruction and Development. He had previously worked as an advisor to successive Chancellors of the Exchequer, Nigel Lawson and John Major.
Since 2010 Tyrie has been Chairman of the Treasury Select Committee. He was one of the most persistent examiners of the banks after the 2008 financial crisis.