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"after consultation with the Chancellor of the Exchequer".

After all, if the Chancellor of the Exchequer has appointed the Governor and the deputy governors, he has decided that they are sufficiently reliable men and women to be able to appoint these two executives to these two senior positions and the Monetary Policy Committee, without the Chancellor having a further role in their appointments. It is not much of a change, but it would go some way towards taking out the hand of the Chancellor as regards those appointments. I can see no harm in this, given that the kind of people who will fill these two posts will clearly be defined by their need to be experts in monetary policy analysis and monetary policy operation. I would like to think that the Government might be able to make some sympathetic noises to that amendment.

The next amendment, Amendment No. 23, deals with Clause 13(2)(c). I shall call these the away members of the team as opposed to the home members--the Governor, the deputy governor and the two employees. I have no problem with the four current away members, aside from a problem which I shall draw to your Lordships' attention later, in that they are drawn from a fairly narrow band of people. They all share some common factors, and I shall address that later with the noble Lord, Lord Montague of Oxford. However, here I am concerned with how they are appointed.

As the noble Lord, Lord Eatwell, is here today, I shall not quote him on the different kinds of monetary theorists and how they have changed our mind over time so that yesterday's received wisdom is today's heresy and vice versa. However, the way in which the appointments are made is important. They could indeed come from the same stable of economic thought--perish the thought--which has the Chancellor's ear, or worse, they could come from the stable of the members' supporters or donors of the Labour Party.

The last government decided, with the total support of the Opposition--and indeed, some may say under pressure from the Opposition--to change the whole way in which people are appointed to quangos. The report of the noble and learned Lord, Lord Nolan, certainly brought that about: adverts are placed, interviews are conducted, and names are suggested to Ministers. It is a simple fact that Ministers can no longer appoint people to quangos in the way they once did; namely, from a list of the great and the good. They have to go through a selection process. The same should be done here.

There is not a more important quango in the land than the Monetary Policy Committee. It has been given a very special and important role by the Government, and we ought to look at the possibility of the appointments being made along the lines suggested by the noble and learned Lord, Lord Nolan. Indeed, in Committee in the other place, Mr. Geoffrey Robinson, after congratulating my honourable friend Tim Boswell, who introduced a similar amendment there, on the manner and tone in which he had moved his serious amendment, indicated that the Government would like to consider

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the matter and if my honourable friend would not press it to a vote they would consider what had been said, without commitment, and I appreciate that he said "without commitment". I should be interested to hear what the Government now think about the way in which we should appoint the four away-team members of the Monetary Policy Committee, and whether we should be using a more Nolan-like procedure with adverts and appointments. The adverts, of course, would clearly state the skills and expertise that would be required of anybody who applied.

The last point returns to a matter I talked about yesterday regarding the court, but here it is more important and more serious than the court; that is, whether or not members of the away team--if I may continue to call them that--should be appointed for only three years, or if they should have appointments lasting five years, as do the members of the home team--the Governor, the deputy governor and the two deputy governors who are appointed for five years. I am putting this down because, again, it reinforces the independence of the four outside members. As noble Lords know, the Fed, for example, is a 14-year appointment--and I should not dream of suggesting anything as long as that--the Bundesbank is eight and the Bank of France is nine. Therefore, I am being quite modest in my suggestion of five years. I know we discussed yesterday that perhaps in five years the person appointed might get out of date, or might leave the employment or the field of expertise that led to the Chancellor appointing him. However, that is very unlikely and, if we are not appointing those people along the lines of the Nolan Committee, I hope that the suggestion will not be prayed in aid that other committees of non-executive directors last for only three years before they are re-elected, or, in this case, reappointed.

The Minister told us about the staggering of appointments yesterday and I presume the four appointments will be made in exactly the same way in order to have some kind of rolling programme. Perhaps he might say something about that because there are only four members here, unlike the courts where there are 16 members, and it is easier to have a rolling programme with 16 members than it is with only four.

It would certainly look better and more independent if, first, the Governor could be relied on to appoint the two employees of the Bank appointed for their expertise; secondly, if the Government would consider using the Nolan procedures for the appointment of these important people; and, thirdly, if they would consider a five-year term rather than a three-year term, which, as I said yesterday, would take people beyond the length of the lifetime of one Parliament, or indeed one Chancellor. It would also mean that it would not be so easy for a Chancellor to clear out the whole lot if he did not particularly like what they were doing, and put in his own men over the space of only three years. I beg to move.

Lord Peston: Much of what the noble Lord, Lord Mackay of Ardbrecknish, has said strikes a chord with me as being something one would not obviously wish to oppose. If he is mistaken, I certainly would like to hear from my noble friend why he is mistaken.

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As regards five years, it seems to me quite reasonable that five years rather than three years is the sort of period for which people should be appointed to the Monetary Policy Committee. My general view is that people serve on committees for far too long. The last time, many years ago, that I had an influence on these matters, I learnt that people could serve on committees for 20 or more years and it was still felt that it was premature to suggest that someone should replace them. Therefore, I am not one who believes in indefinite membership of committees. As noble Lords will know, in connection with at least one of the things I have done in your Lordships' House, I am a great believer in resigning before people ask, "Why is he still doing this job?". I would, therefore, prefer five years rather than three years. I am not going for an indefinite period and I certainly do not believe that there should be any presumption, having appointed someone to this committee, that he should be reappointed.

With regard to Amendment No. 23, I have taken it for granted that from now on all future appointments will be precisely along these lines. It is sad that our society is such that we need all these Nolan guidelines, but I have certainly taken it for granted that that would happen generally across the public sector and so on. Even if it has not happened in this specific case, bearing in mind the informality (because the Bill is not yet law), I had assumed that in future--we are talking a little way ahead now--these posts would be advertised. Again, I shall be interested to hear what my noble friend says about likely future arrangements.

Let me emphasise that the reason for this is not that I distrust the Chancellor, nor for one moment that I would have thought he would be choosing people who had the same view of the way the economy works as he has--assuming that he has such a view to start with--but simply that nowadays we have to behave in that way. I am not suggesting for one moment that the people currently appointed are not properly appointed and would not meet the Nolan guidelines, but I should like to think that in future we would do it anyway.

If those views are mistaken, I should like to hear from my noble friend why they are mistaken, but they do strike a chord.

3.45 p.m.

Lord Cobbold: I should like to support the amendment. I believe very strongly that the wording of subsection (2)(b) suggesting that the appointment of the two members by the Governor should be after consultation with the Chancellor of the Exchequer compromises the desire for independence of the Bank. It implies that the Chancellor has the ability to interfere with executive appointments within the Bank. That, I believe, must be wrong, and it would be detrimental in any large organisation. It is certainly important that the Bank should be seen to be generally independent and that the Governor should have full rights to appoint, together with the court, the executive directors.

Lord Eatwell: Could I urge my noble friends to reject Amendment No. 22 in the name of the noble Lord, Lord Mackay of Ardbrecknish? One of the

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characteristics of the Monetary Policy Committee is that the payroll vote, so to speak, of the Bank of England has a majority on the committee. That is what I consider one of the more unfortunate aspects of the committee in the sense that it diminishes the impact of independent members. To accept Amendment No. 22 will simply reinforce the position of the Bank of England in the control of the payroll vote and diminish the committee's perceived independence.

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