The Treasury Committee has agreed to the following Report:
APPOINTMENT TO THE MONETARY POLICY COMMITTEE OF THE BANK OF ENGLAND OF MS MARIAN BELL AND MR PAUL TUCKER
- In October 1997, in their Report Accountability of the Bank of England, our predecessors announced their intention to hold confirmation hearings to establish whether those nominated to the Monetary Policy Committee (MPC) of the Bank of England fulfilled the criteria which they specified, namely demonstrable professional competence and personal independence of the Government. They 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. In the event, provision for confirmation hearings was not written into the Bank of England Act 1998 and they were therefore held on a non-statutory basis. In their Eleventh Report of Session 2000-01, our predecessors summarised the work they had done in relation to both confirmation hearings, and the MPC more generally. They had previously 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."
- We agree with our predecessor's conclusions about the value of confirmation hearings for prospective MPC members and we have therefore decided to continue the practice. We also intend to continue their practice of restricting questioning to the two criteria of professional competence and personal independence, and of asking each prospective member to complete a preliminary questionnaire.
- The terms of office of two MPC members, Mr Ian Plenderleith, Bank of England Executive Director for Monetary Operations and Dr Sushil Wadhwani, an external member, expire on 31 May 2002. We would like to thank both of them for their contribution to the work of the MPC, in which capacity they have both given evidence to us and our predecessors. We wish them both well for the future.
- The Chancellor of the Exchequer, who is responsible for the appointment of the external members of the MPC, has appointed Marian Bell to succeed Dr Wadhwani with effect from 1 June 2002, although she will not attend meetings of the MPC until July, due to prior commitments. The Governor of the Bank of England, after consultation with the Chancellor of the Exchequer, has appointed Mr Paul Tucker, who is to succeed Mr Plenderleith as Executive Director for Monetary Operations on 1 June 2002.
- We took evidence from both Ms Bell and Mr Tucker on 22 May. This evidence, for which we are most grateful, will be published shortly, together with their answers to our questionnaire and their CVs. From the evidence, it will be apparent that we sensed a degree of obscurity in some of the responses we received. In view of the economic and political importance of the MPC, there is a considerable degree of informed interest in both the general stance of its members, and their individual positions at meetings. MPC members also play a key role in both representing that body to a wide range of audiences around the country, and in gathering views. We are sure that both the new appointees appreciate the importance of clear and effective communication in discharging both roles. We also reiterate the distinctive contribution which the external members of the MPC are designed to bring to its deliberations, and the consequent need for them to be prepared to express their independence clearly and robustly.
- We are satisfied that both Ms Bell and Mr Tucker fulfil our criteria for appointment. We wish them every success in their new role as members of the MPC.
1 First Report, Session 1997-98, HC 282, paragraphs 46 and 48. Back
2 The MPC's role is to set monetary policy so as to deliver price stability as defined by the Government's inflation target, currently 21/2% 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
3 Eleventh Report, Session 2000-01, HC 449-I. Back
4 Ninth Report, Session 2000-01, HC 42, paragraph 52. Back
5 Treasury Press Notice 38/02. Back
6 Bank of England Press Notice, 4 April 2002. Back
7 See HC 880-II (2001-02). Back