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Lord Mackay of Ardbrecknish: I thank the noble Lord for his reply and the noble Lord, Lord Montague, for the points that he made. They are reasonable points. Having sat on Government Benches and discussed these things, it does come down to a matter of judgment.

I have to say to the noble Lord, Lord McIntosh, that paragraph 8 in the schedule gives the Bank, with the consent of the Chancellor, the power to remove people who do not attend or are unable or unfit to discharge their functions, so the idea that somebody could be stuck on the court without attending and pulling his weight in that way is not really a good argument.

However, I appreciate the point that has been made about the three years. I put in five years rather than four years simply because I was attempting to be logical with the appointment of the governor three or four lines above. If the noble Lord had given me four years I would have been more than happy to accept that. The point is that three years is rather short.

As I have said, I am not sure where the election is. The electorate seems to be about one man, the Chancellor of the Exchequer, unless there is to be a cabal in No. 11 Downing Street and various Ministers are to be brought in and they are to have a vote on who should be on the court. To describe it as a "re-election" is not strictly accurate; "reappointment" perhaps, but not re-election. I understand that people can be reappointed.

I am grateful to the Minister for his explanation of the position. There does seem to be a major difference between the court and the Monetary Policy Committee

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and I give him notice that I shall be taking the position on the Monetary Policy Committee a good deal more seriously than this essentially probing amendment. With that, I beg leave to withdraw the amendment.

Amendment, by leave, withdrawn.

Schedule 1 agreed to.

Clause 2 agreed to.

Lord Mackay of Ardbrecknish moved Amendment No. 3:


After Clause 2, insert the following new clause--

Parliamentary scrutiny of Bank appointments

(" .--(1) A joint committee of both Houses of Parliament may, within thirty calendar days of a nomination being made in relation to an appointment under section 1(2) or 13 of this Act, make a report to both Houses--
(a) stating its conclusion that a nominee for the post of Governor or Deputy Governor meets the criteria of competence and personal independence or that a nominee for membership of the Monetary Policy Committee meets the criteria specified in section 13(4); or
(b) giving its reasons for considering that a nominee for the post of Governor or Deputy Governor does not meet the criteria of competence and personal independence or that a nominee for membership of the Monetary Policy Committee does not meet the criteria specified in section 13(4), and inviting the Chancellor of the Exchequer to reconsider the nomination.
(2) A nomination of which the Committee signifies its approval or on which it decides not to make a report to both Houses shall be confirmed by the Chancellor of the Exchequer on receipt of the Committee's report or after thirty days, whichever is the sooner.
(3) A nomination which the Committee invites the Chancellor of the Exchequer to reconsider shall not be confirmed until seven days after the Chancellor has written to the joint committee giving his reasons for continuing with the nomination.
(4) The provisions of subsections (1), (2) and (3) above shall apply only when the joint committee has been formally constituted.").

The noble Lord said: In moving Amendment No. 3, I shall speak also to Amendment No. 28, and the noble Lord, Lord Newby, will speak to Amendment No. 24, which all cover the same subject.

The problem here is that there are a number of amendments that try to address the same problem; that is, the independence of the Monetary Policy Committee. The way in which this particular amendment is framed includes the court but, if it is of any help to the Minister, I am not addressing the substance of these amendments to the court. I wish to address our attention to Clause 13 of the Bill and the Monetary Policy Committee. Because the court is not nearly such an important body as far as economic and monetary policy is concerned, I am content to leave it the way it is. However, the Monetary Policy Committee is entirely different.

As I said at Second Reading--a number of other noble Lords drew attention to this also--the members of the Monetary Policy Committee are either appointed directly or indirectly by the Chancellor, who has his finger in every one of the pies. I refer to the Governor and the deputy governors, the two members appointed by the Governor after consultation, and the four members appointed by the Chancellor of the Exchequer. A number of amendments, of which this is just the first, suggest that perhaps it would be better if the Monetary

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Policy Committee was less beholden to the Chancellor; less the creature of the Chancellor--or at least his creature on appointment and potentially his creature on reappointment if it does not perform in a way the Chancellor wants it to perform. That may not be because it performed badly, but that it performed in a different way because it has a different view of monetary policy than the Chancellor thought when he appointed it.

In the other place the Treasury Select Committee came forward with an amendment--agreed, I believe unanimously, by all the members of that committee, Labour and Conservative, and indeed with a Labour Chairman--to say that there should be confirmatory hearings. There was considerable discussion in the other place as to whether it would be a case of nodding through after a hearing, or whether it would be confirmatory hearings as per the hearings in the United States where, if the Treasury Select Committee said, "We do not like this person", it could black-ball them, and there are variations on that theme. I fully accept that to go down the American road would be a huge break with the traditions in this country but, on the other hand, granting the Monetary Policy Committee even operational independence is also a huge break in the way in which we have operated things in this country, because the Chancellor is no longer directly responsible for these matters.

If we go to the next step--and inevitably one cannot avoid looking at the next step--the Monetary Policy Committee will have even greater independence, and therefore the appointment of people to the Monetary Policy Committee will be of huge concern to the monetary and fiscal policy of the United Kingdom and to the well-being of almost all the people of the United Kingdom. It is important therefore that we look at how the members of the Monetary Policy Committee will be appointed.

I have changed the amendment a little simply to introduce the fact that perhaps some of your Lordships have enough expertise and interest in these matters to want to play a part in any hearings that may be conducted by both Houses of Parliament. I should not like the poor people suggested by the Chancellor to have to go through two grillings, one from the Treasury Committee of the other place and another from a committee set up in this House. I therefore suggested that we have a Joint Committee of both Houses to look at the nominees and question them, and to explore whether or not they meet the criteria of Clause 13(4) of the Bill. If they do not meet the criteria in the opinion of the Joint Committee, it should give reasons why they do not. It would then approve or not approve and report to both Houses, which report the Chancellor would receive as well. The implication here is that if the Chancellor is advised that the committee does not approve his nominee, he would not proceed with that nominee; but that if it approved, then of course he would proceed.

The way Clause 13 is currently tabled gives the Chancellor considerable powers of patronage. There is not much accountability. We will explore what accountability there is to the court, but there will in fact be precious little. We believe that the Select Committee

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of the other place and a suitable committee of this place joined together would be a proper forum in which to examine the people nominated by the Chancellor.

In the other place an amendment was moved by my right honourable and honourable friends, but there was also an amendment moved by the chairman of the Select Committee, who is a Labour Member. The Labour members of the Select Committee have not exactly been chosen from the potential rebels in this issue. I did not note, for example, the names of Mr. Austin Mitchell or Diane Abbott on the Treasury Select Committee, or indeed other Labour Members who are a little unhappy. It seemed to me to be a collection of people whom, in the nicest way, one could describe as pretty reasonable loyalists who could be expected to be kind to the Government. I am not complaining about the Government doing that; all governments try to do that if they possibly can. So the proposal from the Treasury Select Committee is made stronger by the fact that some of the Government's critics, as far as the monetary policy moves here are concerned, were not members of the Select Committee.

The noble Lord, Lord Newby, simply dealt with the Treasury Select Committee. Perhaps because I have been here a little longer, I decided to take the feelings of noble Lords into account and suggest a Joint Committee. Undoubtedly, the Treasury Select Committee will be able to call on the members of the Monetary Policy Committee and will be able to discuss matters with them. What it will not be able to do, however, is to say whether or not it approves of their appointment, which I accept is a major step for us in this country. Indeed, in the other place the Government made much of the fact that we were not asking for this to be done in relation to other quangos.

I know that there are many other important quangos in the country, but I honestly cannot think of a more important quango than the one we are setting up in the Monetary Policy Committee. It is very important. It will play a key role in the economic life of our country, and there ought to be some checks and balances on the Chancellor's ability to appoint his own nine good men, or women, and true. This is one suggestion as to how we might go about it. I beg to move.

4.15 p.m.

Lord Newby: Amendment No. 24, which seeks to do essentially the same as the amendment moved by the noble Lord, Lord Mackay of Ardbrecknish, equally has as its root the thought that the appointments that are here being made are among the most important public appointments which a Minister has to make. When one thinks of the absolute importance that Ministers or Chancellors in the past have given to the setting of the interest rate, the secrecy in which that has been shrouded and the importance with which that decision has been taken, we must recognise that this is not just any run-of-the-mill series of appointments. These really are important appointments. It is therefore important that the people who are appointed have the confidence of Parliament and, as far as possible, the confidence of the country.

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As far as the country is concerned, it is probably the case that members of the Monetary Policy Committee will never be household names. However, one of the advantages of confirmation hearings is that they at least have some exposure to the public gaze, which at the moment they do not, and at a time when members are being appointed rather than a month--or, as may be the case, months--later when a decision is being made which changes interest rates.

I believe also that it is important that Parliament should feel that it has had a say in quizzing people who are appointed to this particular committee as well as, indeed, to other important public appointments. The very fact of having confirmation hearings will have some influence, or could do, on appointments at the margin. There is an idea, or concern, held by some people, that the Chancellor could put all his chums on this committee to obtain the result he wished for. However remote a possibility that may be--and one, I am sure, to which the current Chancellor would never fall prey--the very fact that the appointments have to stand public scrutiny at the point of appointment, rather than later on, may give him pause.

Again, at the margin, the Chancellor has to be made aware of any proposed change in the appointment and any decision to appoint someone else to the Monetary Policy Committee, rather than continuing with an existing member. If the Chancellor knows that that change is to be considered by the committee and the new appointment scrutinised, it may give him pause from standing down an independent-minded committee member.

As we have looked at the arguments for what seems to us a sensible and relatively modest change, which would enhance the credibility of this committee, we have tried to understand the reticence of the Government to agree to it. There seems to be an increasing tide of opinion in Parliament that confirmation hearings of various kinds are the way to proceed. It is interesting to note that not only do we now have the Treasury Select Committee proposing, in effect, confirmation hearings here, but as the Liaison Committee reported last year in another place, a number of committees are now doing this informally. The Defence Committee, for example, effectively has confirmation hearings for the Chief of Defence Procurement. There are also a number of other cases where Select Committees in the other House see this as being a sensible use of their authority and influence. This is an area of activity which will gain--and is gaining--support.

We have therefore looked to see what major arguments in principle the Government have adduced for not agreeing to that change at this stage. In another place, the Minister explained that the Government had an open mind, but that the issue needed more thought; that it should not be bolted on to the Bill. I always grimace at the idea of something needing more thought, particularly when it is not exactly a difficult or complicated issue. To say that the matter needs consideration is often, in my experience, a substitute for real thought. That does not, by itself, constitute a good reason for delay.

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There is an argument that these poor characters might be questioned across too wide a range of their experience. Indeed, they might be asked about their private life--the John Maynard Keynes question, as it became known in another place. The Treasury Select Committee has already dealt with that point adequately by producing its report on confirmation hearings. That sets out exactly how it would constrain the areas of questioning, so that one was looking at the technical competence of the people, rather than their private lives, or their stances on monetary policy. To the extent that there was an argument about questioning, it has been answered.

It has been argued also that the confirmation hearings would give members of the committee the opportunity to get at the government of the day. Perish the thought that Select Committees should get at the government of the day, but I thought that was their purpose: to make the government of the day, and their nominees, justify themselves! I do not believe that is an adequate explanation.

Finally, the paradoxical objection has been raised--having said that this is a major change and we should not rush--that it would be wrong to have the change without a whole raft of other confirmation hearings, across the whole range of public authorities and that it cannot be done alone. If one is to have any at all, a whole raft of public appointments must be dealt with. That seems to be extremely thin gruel.

If one believes, as we do, that it makes sense to have confirmation hearings for these appointments, one should go ahead and do it. Confirmation hearings for other public appointments could equally be made on their merits and we could have an evolutionary development that as changes occur in the structure of the appointments made by government, the whole question of confirmation hearings could be dealt with on a case-by-case basis. I am looking forward to the Minister's reply today, but I have not heard any compelling arguments as to why this change should not take place.

I make one final point about the difference between our amendment and that of the noble Lord, Lord Mackay of Ardbrecknish. It relates to the question of a Joint Committee between this House and another place, as opposed to the hearings being heard by the Treasury Select Committee alone. My first thought was that this was an extremely good idea, not least because of the experience which we see in the Committee today and elsewhere in this House. I have been persuaded in discussions with colleagues that given the role that this plays in respect of taxation and macro-economic policy is very limited and given that we do not have a committee which looks at economic policy across the board, it would be strange to select this small area and suddenly give the House an authority which it does not have in any other area of economic policy.

While I believe it is an on-balance argument, we remain of the view that the most appropriate way of dealing with this at the moment would be to give power to the Treasury Select Committee to scrutinise these appointments.

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