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Mr. Ruffley: In my speech, I was negligent in not congratulating the hon. Member for Newark (Mrs. Jones) on her speech; I wish to do so fulsomely. It was an elegant, beautifully crafted and wonderfully delivered speech, and I should like to congratulate her. I apologise for not doing so earlier.

Mr. Fallon: Before advising the Opposition on the course of action that we should take on new clauses 1 and 3, I should like to speak briefly to the final four amendments in the group: amendment Nos. 3, 18, 20 and 19.

The object of amendment No. 3 is to ensure that the outside appointments to the Monetary Policy Committee really are outside appointments. Currently, five members of the Monetary Policy Committee are Bank of England employees. It should therefore be self-evident that the other four--the so-called external appointees--should not be Bank of England employees. That is certainly the understanding that the Select Committee expresses in its report, which--at paragraph 46, and again at paragraph 50--refers to those members being external.

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The Chancellor of the Exchequer, in his statement in May--which is helpfully included as appendix 1 in the Select Committee's report--makes it clear, at paragraph 20, that

However, it is not clear in the Bill whether that will happen.

The purpose of amendment No. 3 is to make it very clear that those four external appointments must be external, and that they cannot have been employed recently by the Bank. The amendment seems to be so self-evidently useful that I look forward to the Chief Secretary accepting it.

5.45 pm

Amendment Nos. 18, 19 and 20 deal with the length of appointment of Monetary Policy Committee members. Some hon. Members who have spoken in this debate discussed the nature and length of the appointments, and the House should be a little clearer about them. In Standing Committee, it was fairly obvious that the Government have themselves not decided on them.

I am sorry not to see the Paymaster General--who dealt with the Bill in Standing Committee--in the Chamber for this debate. Perhaps he has been--I must not say detained--occupied elsewhere. In Standing Committee, he said:

He even invited the Standing Committee members

    "to wait for us to introduce proposals."--[Official Report, Standing Committee D, 27 November 1997; c. 175.]

The Bill is now in the later stages of its passage through the House, and I should have hoped that by now we had had more proposals from the Government on how the appointments will be made, how they will be phased and staggered, and whether Ministers really do think that three years is the right length for membership of the Monetary Policy Committee.

It is precisely because the Government have not yet proposed firm ideas that the Opposition have. Amendment Nos. 18 and 19 distinguish between Monetary Policy Committee internal and external members. In the same sitting of the Standing Committee, the Paymaster General drew that distinction--which I think is important--between internal and external members. We would therefore allow the three-year period to apply to internal members, but suggest the longer period of four years for external members.

I must confess that amendment No. 20 is very much a fall-back amendment. If the Chief Secretary is not prepared to accept our suggestion of differing lengths of appointment for different Monetary Policy Committee members, we still think that there is a case for a term longer than three years--which has been accepted by hon. Members on both sides of the House. The advantage of four years over three years is that such a length is more likely to allow some membership crossover between general elections--which is an important point to which I look forward to hearing the Chief Secretary's reply.

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I return to new clauses 1 and 3. This has been a very good debate, and a very House of Commons debate--because, ultimately, we are dealing with a House of Commons matter. In Committee, the Chief Secretary himself said:

That is exactly what has happened. The Treasury Select Committee has gone off and considered the merits of the hearings, and, in a very persuasive and well-argued report, it has produced its conclusions. Today, the House has debated those conclusions.

Strong support has been shown on both sides of the House, and certainly among Conservative Members, for the principle that lies behind both the new clauses. The principle may be simply stated: to make the Bank--that quango bank--more accountable. If it is right for the Chancellor to delegate his responsibility for monetary policy to the Bank of England, it must be equally right for the House to ensure that its accountability is similarly transferred, and that the House continues to play a role by confirming some or all of the appointments to the Monetary Policy Committee.

I do not think--I sense that it is also the House's view--that there is any reason to delay further a decision on the matter. Nor is there any case for simply relying on further warm words from the Chief Secretary. As its Chairman has told us, the Treasury Select Committee is now likely to proceed on that basis even informally, and that reinforces the case for putting those arrangements into statute.

The only remaining question is which new clause we should put into the Bill, our new clause 1 or the Committee's new clause 3. They are slightly different. The Committee's new clause does not allow for open competition for the appointments, but it is a fuller new clause, and perhaps even better drafted than ours on the key principle.

Most important of all is the principle that as this is a matter for the House, we should perhaps be guided as a House by the advice of our principal Committee in making our decision. Depending on what the Chief Secretary says in his reply, I shall therefore probably suggest to my right hon. and hon. Friends that we withdraw new clause 1, and invite them to support new clause 3.

We have listened to what the House has said. Now we hope that Ministers will have listened, too.

The Chief Secretary to the Treasury (Mr. Alistair Darling): I begin by welcoming my hon. Friend the Member for Newark (Mrs. Jones) and congratulating her on her maiden speech. I understand that she was a journalist before entering the House. She is now a journalist turned politician, so she will know what it is like to be a shark that discovers it has cut itself, and finds itself at the centre of a feeding frenzy, the victim of its former friends.

My hon. Friend made a thoughtful speech and paid a handsome tribute to Richard Alexander who, as many of us remember, took an independent line when he felt that

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his constituents' interests were at risk. She also spoke in support of the Government's economic policy and of many of the measures in the Bill, which are central to achieving the objective to which she referred, economic stability.

My hon. Friend need have no fear; I am sure that she will have many useful contributions to make in debates both on the Floor of the House and in Committee, and she deserves to be congratulated.

Before I deal with the main debate, which is essentially about confirmation hearings, I shall speak briefly about what was said by the junior shadow Treasury spokesman, the hon. Member for Sevenoaks (Mr. Fallon). I suppose that I must congratulate him on his transfer from the shadow Department of Trade and Industry team, although perhaps the circumstances were not as he might have wished.

The term of office of members of the Monetary Policy Committee was debated at some length in the Standing Committee. We believe that three years is the appropriate time, and it is entirely in line with the interim report of the Hempel committee, which says that three years is a reasonable time. There is an expectation that members will be reappointed from time to time, and we believe that three years is the right period.

Mr. Andrew Tyrie (Chichester): If the Chief Secretary is so sure that three years is the right time, will he explain why he feels that the United Kingdom should be out of step with the Bank of France, which has terms of six and nine years, with the Federal Reserve, which has terms of up to 14 years, and with the Bundesbank, which has terms of eight years?

Mr. Darling: Simply because we are dealing with the Bank of England, not the Bank of France or of anywhere else.

Mr. Tyrie: Answer the question.

Mr. Darling: I happen to think that a term of office of 13 or 14 years is too long. It is for the United States to decide what is appropriate for its country, but I think that that is too long. There is an expectation that the Government will reappoint members from time to time, so three years can become six years or even nine years. Three years is therefore an appropriate period, and I am not inclined to accept the Opposition's advice on that point.

Equally, although I understand what the Opposition say about former employees of the Bank, I am not sure that I would want to take such a hard and fast line and say that somebody could not be appointed, just because he or she had worked for the Bank in the past five years. That may be something which the Chancellor the Exchequer would want to consider in deciding whether an individual was an appropriate person, but there still may be circumstances in which a former Governor or Deputy Governor would be an appropriate person. I do not know; we shall have to see, but I am not inclined to accept the Opposition's suggestion.

I shall now talk about new clauses 1 and 3, although new clause 1 is no longer with us because the Opposition, who presumably did not think that it would command a majority in the House, have withdrawn it. That new clause

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raised two matters that the Treasury Select Committee new clause--if I may refer to new clause 3 in that way--does not raise. It required the Chancellor to consult the Treasury Select Committee on a procedure for a competition in relation to appointments to the Monetary Policy Committee--

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