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Lord Montague of Oxford: I remind the Committee that yesterday I mentioned that I had been present at the Treasury Select Committee when it cross-examined the members of the Monetary Policy Committee. The Governor, when asked whether it was likely that members from the Bank would always vote as a block, said that was absolutely inconceivable: there were bound to be occasions when they would differ.
That is very healthy. I suggest that we might mute that if we were to accept the noble Lord's amendment. The fact that those people are secure in the knowledge that they have been appointed by the Chancellor and are not beholden to the Governor will ensure that there is a degree of independence on their part and they will be far less likely to vote as a block.
Lord McIntosh of Haringey: I shall preface my remarks on these three amendments by saying that this is not a Bill to provide for the privatisation of the Bank of England. If it were, we could in theory have repealed the 1946 Act. That might have done the trick and we would not be spending time here. What we are doing here is introducing a rather more complex procedure for establishing a degree of independence where it is important to maintain the ultimate responsibility that the Chancellor has to have on behalf of the people of this country for monetary as well as fiscal matters.
The Bank has a statutory responsibility to conduct monetary policy to meet the Chancellor's targets. The Bank is accountable to the Chancellor and, through him, to Parliament, so it is appropriate that the Chancellor should be involved.
I recognise, in response to Amendment No. 22, that it is a fine line. What we are saying is that the ultimate decision on the two home-team, inside members is that of the Governor. We are providing only that there should be consultation with the Chancellor, rather than that he should make the decision.
Incidentally, in case of any confusion over this, it is not necessarily that one or both of these should be directors of the Bank of England. The Bill states only that they should have executive responsibility. They are at the moment the executive directors but they could, in fact, be any one of a number of Bank employees. I say that to the noble Lord, Lord Cobbold, who made a related point. It is up to the Governor to decide who to appoint to the Monetary Policy Committee. The purpose of the requirement to consult is to ensure that the Chancellor can express a view about which of the officials the Governor wishes to appoint. It is, therefore, a fine line but we have arrived at the right side of it, rather than the wrong one.
As far as Amendment No. 23 is concerned, the noble Lord is, in general, pushing at an open door. He is well aware that we have objected for many years to the practice which did exist of Ministers saying, "Well, we've got a vacancy here"; preferably a nicely paid vacancy, "and we will go to the Whips' Office", by which I mean the Government Whips' Office, "and see who is available to fill this vacancy". We are determined that that should not be the case. The Cabinet Office did publish a paper opening up quangos, which I recommend to your Lordships, proposing the extension of the remit of the Commissioner for Public Appointments to nationalised industries and public corporations. At the moment, he oversees appointments for executive, non-departmental public bodies and for executive National Health Service agencies. This is out for consultation. We are expecting to respond to the consultation document in the course of the next few months.
The important point is that any proposal which extends the remit of the commissioners and, therefore, might affect the issue of the Monetary Policy Committee, does not and would not need primary legislation. It could and would be dealt with by an Order in Council. Indeed, it would be thoroughly undesirable to deal with it in primary legislation, because no doubt literally hundreds of Acts of Parliament would have to be amended in the way that is proposed now. Given our firm intention to open up public appointments generally, we think it inappropriate to put on to the face of this Bill a particular requirement for this particular committee at this particular time.
The argument for Amendment No. 29 was covered when we considered the earlier amendment relating to the court. My arguments will be similar to those I put forward then. Again, it is a matter of judgment. There are those--including some of my noble friends--who are sceptical about the Hampel Committee and the Cadbury Committee and whether they have performed any useful function. In so far as there has been consideration of this issue of corporate governance, the conclusion has been that three years is a suitable term. I recall that the noble Lord, Lord Mackay, tabled an amendment which would provide for the Chancellor to cut the salaries of members of the Monetary Policy Committee if they misbehaved. I prefer a shorter term of appointment and the possibility of not being reappointed, to the more violent means apparently preferred by the noble Lord. I am, though, generally opposed to unnecessary conflict if I can possibly avoid it!
I can confirm that, as with the court of directors, there will be staggered timing of appointments and there is the possibility--but no presumption--of reappointments. Thereby, members could remain on the Monetary Policy Committee for three, six and--dare I say to my noble friend Lord Peston--nine years or more. I am quite sure that he would think that thoroughly undesirable.
Lord Stewartby: May I ask the noble Lord, Lord McIntosh of Haringey, a couple of questions? Regarding subsection (2)(b) he referred to the non-executive directors and their being appointed. Are they directors of the Bank? The second question is that if they are internal experts within the Bank of England and are appointed, and their responsibilities within the Bank change, is there a mechanism for them leaving the Monetary Policy Committee, perhaps to be replaced by the individual who took up their previous job which was specifically connected with monetary policy?
Lord McIntosh of Haringey: The answer to the noble Lord's first question is that the requirement in the Bill is that they should be persons who have executive responsibility. They could--but need not--be directors of the Bank.
The answer to the second question is a matter for the Governor. If he takes the view that somebody is appointed to the Monetary Policy Committee in virtue of his particular appointment and that appointment changes, he could no doubt prevail on that person to resign his appointment and hand it over to his successor. That is not laid down, and I am not sure it ought to be laid down, as a matter of internal management on which the Chancellor would be consulted--provided that Amendment No. 22 is not carried.
Lord Mackay of Ardbrecknish: If I may deal with the three amendments, taking the second one first, on the Nolan Committee, I am grateful to the noble Lord, Lord McIntosh, for his explanation of where the Government are, and I appreciate that they are waiting for responses to a consultation. It sounds rather like another review, but one must not complain about that--
Lord Mackay of Ardbrecknish: I am not sure. I think I heard the first review of a review this afternoon at Question Time, but I will leave that to one side. I appreciate what the noble Lord, Lord McIntosh of Haringey, has said and I hope that if the commissioner decides in the consultation to point in the direction of using the Nolan principles for major appointments like this, the Government will accept that when it comes to the Monetary Policy Committee.
Regarding the length of time members serve, I would be attracted to five years with no possible reappointment. I was worried when the Minister said that the appointment should be for three years and they could be appointed for another three and yet a further three, making it nine years. We are getting towards the Bank of France, the Bundesbank and even after another three years it is the Fed. I would be concerned about that. I indicated in my introduction that I did not feel
Turning to the first amendment, I am not sure whether I should not rename this the "Chancellor's Bank". It is certainly not the people's bank. The defence of the way it was worded by the noble Lord, Lord Eatwell, was interesting. They did not want it to look like the Governor's Bank, yet we have just learnt that the Governor will appointment the pool from which the Chancellor will select, with the Governor's approval, the member of the Monetary Policy Committee. That is what I understood from the answer of one of the people who has executive responsibility in the Bank for monetary policy analysis--that there are a number of people in the Bank responsible for monetary policy analysis and they will have been appointed by the Governor and the court over time. The Governor will decide, "We shall have one of those on the Monetary Policy Committee", and the Chancellor will say "Yes, I am quite happy with that". That I believe is what the noble Lord said, which was in response to my question about whether the Chancellor would have a say in the original appointment to the job in the Bank, not the Monetary Policy Committee. I hope I am making myself clear about that, but I believe I understood what the noble Lord, Lord McIntosh, said.
I am a little disappointed that we did not make a little progress on even one of those amendments. All of them are designed to do the same thing, and even the Government's acceptance of one of them would help; but with the small crumb of comfort that perhaps the Nolan Committee's rules might apply to the four members of the away team, I shall rest my case.
Lord McIntosh of Haringey: Before the noble Lord withdraws the amendment, I am sure it is benign, but he was putting words into my mouth which I did not say. I did not say that the Chancellor can say yes or no. The Chancellor can express an opinion but ultimately it is the Governor who decides.
It seems to be a feature of this Committee that a number of noble Lords, particularly those on my side, attempt when they are summing up the amendment to put words into my mouth or to encourage me to re-phrase what I have already said. It reminds me of this. Anybody who has ever been interviewed by "World in Action" knows the trick is to ask you the same question 10 times and then use the most damaging answer. I will try to refrain from saying things more than once.
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