The UK government is bringing forward legislation to improve the governance of the Bank of England and consolidate its financial regulation powers.

Chancellor of the Exchequer George Osborne yesterday announced that a Bank of England Bill would be brought forward to improve governance and accountability within Britain’s wider financial sector.

It carries on a programme of reforms under Prime Minister David Cameron, which began with the Financial Services Act 2012, and also follows a series of changes made within the Bank of England by governor Mark Carney.

A consultation document published yesterday includes proposals such as replacing the Prudential Regulation Authority (PRA) with a new Prudential Regulation Committee within the bank to “maximise the synergies of having monetary policy, macroprudential policy and microprudential policy under the aegis of one institution”.

It would end the PRA’s status as a subsidiary and make it into a statutory committee alongside the Monetary Policy Committee and the Financial Policy Committee.

Other proposals include making the Court of Directors a smaller, more focused unitary board, bringing the Bank within the purview of the National Audit Office, and strengthening “coordination arrangements between the Treasury and the Bank” to protect taxpayers and the economy from bank failures in the future.

Andrew Tyrie, chair of the Treasury Select Committee, welcomed the bill’s provisions on governance, telling the Financial Times: “The Bank of England has been granted vast new powers on monetary and particularly financial policy.

“It is crucial, therefore, that the Bank be required to explain fully its actions and decisions.”

Mr Osborne said: “Ensuring the Bank is well positioned to fulfil its vital role of overseeing monetary policy and financial stability is a key part of the government’s long term economic plan.

“The measures in the Bank of England Bill will ensure that the Bank is on the best possible footing to oversee its expanded remit, delivering Governor Carney’s ‘One Mission, One Bank’ strategy, and take further steps to protect tax payers from firm failure.

“Bringing the Bank of England for the first time within the purview of the National Audit Office is an important reform and will improve transparency and accountability.”