Plans by ministers to wrest key powers from the Bank of England for use during any future crisis in the banking system emerged yesterday amid fresh signs of tensions with the Treasury.

Alistair Darling, the Chancellor, is considering reforms that would allow him to take control of all decisions during an emergency such as the one that triggered the run on Northern Rock.

Treasury sources confirmed that this would include injecting extra funds into the money markets, traditionally an operational matter for the Bank, as well as decisions that have until now always been referred to the Treasury, such as emergency lending of large sums as a last resort.

If the Treasury were to take powers over this area, even if they were only to be used in a crisis, the City and markets worldwide would be bound to see such a move as compromising the Bank’s independence and challenging the credibility of its mission to pursue control of inflation without political interference. Details emerged as the Bank faced embarrassment over trenchant criticisms of Gordon Brown and the Government that were attributed to Mervyn King, its Governor. Irwin Stelzer, the columnist forThe Sunday Times and Daily Telegraph, reported that the Governor felt frustrated and believed that the Prime Minister and the Chancellor had been distracted by recent political setbacks. Writing in The Sunday Times, he quoted a “senior Bank official” who accused Mr Brown and Mr Darling of being “unable to focus because morale throughout the Government is so low”. Mr Stelzer and Mr King are believed to have had lunch together last week. The report coincided with a YouGov poll for the newspaper that showed Conservative support at 45 per cent, up four points on last month, with Labour down three to 32 per cent. The LibDems were on 14 per cent.

The Governor’s frustration was said to be over progress in implementing a guarantee for up to £100,000 in bank or building society accounts, replacing the scheme that was in effect suspended as savers rushed to withdraw money from Northern Rock in September, although the Treasury said that there was no delay.

A more likely cause of friction is the Government’s plan to reform the so-called tripartite system, under which the Treasury, the Bank and the Financial Services Authority share responsibility for Britain’s financial system.

Government sources said that Mr Darling was attracted to changes that in any future financial crisis would enable him to take sole charge.

Mr King and his embattled deputy governor for financial stability, Sir John Gieve, will appear before the Commons Treasury Select Committee tomorrow, when MPs are likely to press them on reforms to the financial system as well as on the scale of public funds committed to propping up Northern Rock.

The plan comes during a period of tensions between both sides, and between the Bank and Financial Services Authority, over the Bank’s handling of the Northern Rock debacle and the wider market stresses caused by the global credit squeeze.

The controversy will inevitably cast further doubts over Mr King’s chances of remaining as Governor after his five-year term expires on June 30.

Sir John Major, the former Prime Minister, also attacked Mr Brown’s economic record, saying that losses from his decision to sell off Britain’s gold reserves now outstripped those on Black Wednesday when sterling was ejected from the European exchange-rate mechanism.

Last night the Conservatives backed alternative plans to give more powers to the Bank of England in the event of a future crisis. George Osborne, the Shadow Chancellor, said the Bank should be given powers to seize control of a financial institution that was close to failing. Liquidity and capital triggers would be set to allow the powers to be used. Writing in the Financial Times, Mr Osborne said: “Everyone would be clear in advance how shareholders, savers, and all other creditors will be treated. And the authorities should be able to organise, if necessary, a rapid sale of the failing institution by setting aside normal considerations, such as competition requirements.”

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