Beyond the Balance Sheet
Why the Bank of England’s Narrow Remit is Failing Communities
There is a fundamental tension between the Bank of England’s traditional approach and the urgent need for triple bottom line thinking in economic policy. The conversation reveals structural barriers that social value organisations must navigate – and the systemic changes needed to address them.
The Exchange That Exposed a System Gap
At last November’s Sefton’s Economic Forum, following Rachel Reeves financial deregulation aims, I posed a question about triple bottom line thinking – the integration of people, planet, and profit – to the Bank of England’s Deputy Agent at Sefton’s Economic Forum, the response was both revealing and frustrating. The Deputy Agent’s answer crystallised a fundamental problem: our central bank operates within a framework that systematically excludes the very outcomes that social value organisations work hardest to achieve.
The Deputy Agent acknowledged that while the Bank cares about climate and meets with charities representing vulnerable groups, their remit remains “important but narrow.” They position themselves as concerned with “economic and monetary stability,” leaving climate policy and redistributive welfare to “other parts of government.” This response, while technically accurate, exposes a dangerous gap in how we approach economic governance.
The Myth of Limited Independence
The Deputy Agent described the Bank’s independence as “limited” – they receive their job description from government but have freedom in how they execute it. This is where the structural problem becomes clear. The government sets the Bank’s remit annually through formal letters, meaning political decisions directly shape what the Bank considers its responsibility.
Under the previous Conservative government, climate change was actively removed from the Bank’s priorities. Chancellor Jeremy Hunt stripped climate considerations from the Bank’s remit in November 2023, a decision that effectively told the institution to ignore one of the most pressing long-term risks to economic stability.
This isn’t independence – it’s selective blindness imposed by short-term political priorities.
A Glimmer of Hope: Labour’s Intervention
The good news is that change is already underway. Chancellor Rachel Reeves has reinstated climate change as a priority for the Bank of England, telling the institution that “the climate and nature crisis is the greatest long-term global challenge and the risks it poses are relevant to its primary objective of maintaining financial stability.”
This represents a significant shift, but it also highlights how politically dependent the Bank’s social and environmental considerations really are. What one government removes, another reinstates – creating uncertainty that undermines long-term planning for social value organisations.
The Real-World Impact
For social value organisations, this systemic limitation has profound consequences. When the central bank’s economic modelling ignores social outcomes, several problems cascade down:
Funding becomes disconnected from need: Economic growth metrics that ignore child poverty, housing insecurity, or environmental degradation create a false picture of progress. This skews funding priorities and investment decisions.
Short-termism dominates: Without long-term social and environmental factors in economic forecasting, policy makers lack the data to make sustainable investment decisions.
Community impacts become invisible: Monetary policy decisions – interest rate changes, quantitative easing – have profound effects on housing costs, employment, and community stability, but these aren’t systematically considered.
The International Context
The UK is falling behind internationally on this agenda. The Bank of England has dropped to 7th place in international rankings of central bank climate action, sliding from 4th place just before COP26 when the UK was hosting the conference. Other central banks are increasingly integrating environmental and social considerations into their core functions.
This isn’t just about climate – it’s about economic resilience. Social inequality, environmental degradation, and community breakdown all create financial instability that eventually impacts the Bank’s core mandate.
Solutions: What Needs to Change
The structural barriers are clear, but so are the solutions. Here’s what needs to happen:
1. Mandate Reform
The government should formally expand the Bank’s remit to include social and environmental stability alongside financial stability. This isn’t radical – it’s recognition that these factors are interconnected and that ignoring them creates systemic risk.
2. Data Integration
The Bank needs to develop economic models that incorporate social outcomes. Child poverty, housing inequality, and environmental degradation should be tracked alongside traditional financial metrics in economic forecasting.
3. Democratic Accountability
The current system where government can arbitrarily add or remove priorities needs reform. Social and environmental considerations should be embedded in legislation rather than subject to annual political whims.
4. Community Voice
While the Bank does meet with community representatives, this needs to be systematised and given real influence over policy decisions, not just consultation.
What Social Value Organisations Can Do Now
While we work for systemic change, social value organisations can take immediate action:
Build the evidence base: Document the financial costs of social problems – homelessness, mental health crises, educational inequality. Make the economic case for social investment using language and metrics the financial system understands.
Engage with local financial institutions: Regional banks and credit unions often have more flexibility to consider social outcomes in their lending decisions.
Advocate strategically: Support organisations like the New Economics Foundation and Positive Money who are making the technical case for central bank reform.
Connect the dots: Help policymakers understand how social problems create financial instability – from the housing crisis’s impact on inflation to how child poverty affects long-term economic productivity.
The Bigger Picture
My question touched on something fundamental: we cannot solve 21st-century challenges with 20th-century thinking. The Bank of England’s narrow focus on traditional financial metrics while ignoring social and environmental factors isn’t just outdated – it’s dangerous.
The Deputy Agent’s response revealed both the problem and its solution. Yes, the Bank has limited independence, but that limitation is imposed by government choices, not natural law. If we want economic policy that serves communities rather than just markets, we need to demand that our central bank’s remit reflects that priority.
The climate crisis, child poverty, and social inequality aren’t “someone else’s problem” – they’re economic problems that require economic solutions. Until we reform our financial institutions to recognise this, social value organisations will continue fighting an uphill battle against a system designed to ignore the outcomes they’re trying to achieve.
The good news is that change is possible. Rachel Reeves has shown that government can reshape the Bank’s priorities. Now we need to ensure that this shift becomes permanent and extends beyond climate to encompass the full range of social outcomes that determine whether our economy truly works for everyone.
The conversation started at Sefton’s Economic Forum needs to continue in Westminster, Threadneedle Street, and in communities across the UK. Our economic institutions must evolve to serve all stakeholders – not just financial ones.
About this post: This analysis was prompted by my exchange with a Bank of England Deputy Agent at Sefton’s Economic Forum. It reflects ongoing debates about the role of central banks in addressing social and environmental challenges alongside traditional financial stability concerns.