Select Committee on Treasury Eleventh Report


The Treasury Committee has agreed to the following Report:




1. In October 1997, in our Report Accountability of the Bank of England,[2] we announced our intention to hold confirmation hearings to establish whether those nominated to the Monetary Policy Committee (MPC) of the Bank of England[3] fulfilled the criteria which we specified, namely demonstrable professional competence and personal independence of the Government. We believed that such hearings would not only encourage the Government to appoint people with the qualities required, but would also underline the independence, credibility and competence of the Bank, and involve Parliament more closely in an important process.

2. In our report, we said that if confirmation hearings were not written into the Bank of England Act 1998 (which in the event they were not),[4] we would hold them on a non-statutory basis. We subsequently discussed further the form which the hearings should take, and reported our conclusions to the House in our Report Confirmation Hearings in February 1998.[5]

3. Among our decisions were that questioning should be restricted to the two criteria of professional competence and personal independence; that candidates should be asked to complete a preliminary questionnaire; and that a suitable time to hold the first hearings would be after the MPC appointments were made on a statutory basis under the Bank of England Act, which was brought into force on 1 June 1998. Accordingly, we took evidence from all nine of the Monetary Policy Committee members on 16 and 18 June and reported that, on the basis of the evidence, we found no reason to doubt that all the MPC members fulfil the criteria of demonstrable professional competence and personal independence.[6] In May 1999 we reported similarly on the re-appointment of Mr Ian Plenderleith and the appointment of Dr Sushil Wadhwani.[7] In May 2000 we approved the appointment of Professor Stephen Nickell but asked the Chancellor to think again about the appointment of Mr Christopher Allsopp.[8] In October 2000 we approved the appointment of Professor Charles Bean.[9] We have also, on three occasions, reported more generally on the work of the MPC, most recently in March in our Ninth Report, The Monetary Policy Committee—an End of Term Report.[10] In that Report we re-examined our confirmation hearings, reasserted our belief that they should be put on a statutory basis,[11] and concluded:

"We think that confirmation hearings, even on a non-statutory basis, act as a stimulus to the Chancellor to choose candidates who are competent and independent. We also believe that our questionnaire and hearings provide essential information about the background of the appointees which is not otherwise readily available. Above all, the hearings underline the fact that MPC members are accountable to Parliament and to the public."[12]

4. On 5 April 2001,[13] the Treasury announced that the Chancellor of the Exchequer had appointed Ms Kate Barker, currently Chief Economic Adviser at the Confederation of British Industry, to join the MPC on 1 June in succession to Dr DeAnne Julius, who has served on the MPC since September 1997 and whose term of office expires on 31 May.


5. We took evidence from Ms Barker on 1 May; this evidence will be published shortly, together with her answers to our questionnaire and her CV. We are satisfied that she fulfils our two criteria for appointment.

2   First Report, Session 1997-98, HC 282, paragraphs 46 and 48. Back

3   The MPC's role is to set monetary policy so as to deliver price stability as defined by the Government's inflation target, currently 2½% for RPIX (retail price inflation excluding mortgage interest payments), and subject to that, to support the Government's economic policy, including its objectives for growth and employment (sections 11 and 12 of the Bank of England Act 1998 and see Official Report, 4 June 1998, col 329). Back

4   See Official Report, 22 January 1998, col 1153-87, for a debate on a New Clause proposed by some members of this Committee, which was not agreed to at the report stage of the Bank of England Bill in the House of Commons. Back

5   Third Report, Session 1997-98, HC 571. Back

6   Sixth Report, Session 1997-98, The Monetary Policy Committee of the Bank of England: Confirmation Hearings, HC 822-I (Report) and 822-II (evidence). Back

7   Fifth Report, Session 1998-99, The Monetary Policy Committee of the Bank of England: Confirmation Hearings, HC 476-I (Report) and 476-II (evidence). Back

8   Seventh Report, Session 1999-2000, The Monetary Policy Committee of the Bank of England: Confirmation Hearings, HC 520-I (Report) and 520-II (evidence). For the Government's response, see Seventh Special Report, Session 1999-2000, HC 859. The Chancellor did not alter his appointment. Back

9   Tenth Report, Session 1999-2000, The Monetary Policy Committee of the Bank of England: Confirmation Hearing, HC 940-I (Report) and 940-II (evidence). Back

10   Ninth Report, Session 2000-01, HC 42. The previous reports were Seventh Report, Session 1997-98, Bank of England: Operation of Accountability-One year on, HC 993, and Eighth Report, Session 1998-99, The Monetary Policy Committee-Two years on, HC 505. Back

11   Ninth Report, para 49. Back

12   Ibid, para 52. Back

13   HM Treasury News Release 47/01. Back

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