The Treasury is not doing enough to prepare for the possibility of another financial crash, a cross-party committee of MPs said on Monday.
The Commons public administration committee said that it was surprised financial and economic risks were not included in the government’s national risk register and that, although some planning has taken place, it has not been thorough enough.
“The Treasury has done a lot, but there is more to be done to be ready for another financial crisis,” said Bernard Jenkin, the Conservative MP and chair of the committee, which set out its comments in a general report on how Whitehall addresses future challenges.
“We still have institutions which are ‘too big to fail’ but with so much national borrowing capacity used up, they may prove ‘too big to save’ if it happens again. We did not find evidence that government and the City are actively practising and exercising for this worst case scenario.”
The committee said that financial risks should be included in the government’s national risk register, and that the Treasury should plan for financial crises that could be triggered by non-financial events.
It also said there was “no comprehensive understanding across government as a whole of the future risks and challenges facing the UK”.
But a Treasury spokesman flatly rejected the committee’s analysis, saying the report “takes no account of the relevant facts”.
He went on: “By focusing on Whitehall procedures they have entirely missed the point: the lessons of the financial crisis have been learned and acted upon by putting in place a reformed regulatory system, ring-fencing the banks, ending the ‘too big to fail’ problem, and dealing with the risks posed to the economy by an unsustainable deficit.
“Taking the action needed to protect hard-working people from the effects of future financial shocks is at the heart of our long term economic plan.”
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