The Bank of England was sharply criticised by MPs yesterday for mismanaging a serious row about resources for the four external members of the bank's monetary policy committee (MPC).
The British Treasury select committee issued a report which said that the MPC's reputation had been put at risk by the dispute.
It said the situation was more serious than Mr Eddie George, the bank's governor, had claimed.
"We do not agree with the governor's characterisation of the dispute as `a storm in a teacup'," the report said, referring to Mr George's words when appearing before the committee last month. "The bank should learn from this experience and ensure that such a widely publicised incident does not re-occur."
The row, which became public in October, followed demands by the external members of the MPC for greater access to resources within the bank to pursue their own research. They were rebuffed by Mr George and Mr Mervyn King, his deputy, leading to the most serious dispute in the bank's two years of independence and the bank's governing court being called in to resolve the matter.
The row eventually ended in partial success for the four independent members, who had asked for a team of up to 20 economists to work for them collectively. They were eventually given two dedicated economists each. The MPC also instituted a formal procedure to determine research priorities for mainstream bank staff.
Yesterday's report said that, while the new arrangements were welcome, the issue should have been "better managed and more quickly resolved" by the bank.
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