Select Committee on Treasury First Report


  7. Accountability is an elusive concept and trying to find an accurate and comprehensive definition is correspondingly difficult. The Public Service Committee examined one aspect of accountability - Ministerial accountability to Parliament - in 1995-96.[12] The Committee cited the classic doctrine as spelled out by Sir Edward Bridges, the then Permanent Secretary to the Treasury, in 1954: "executive powers are conferred by Parliament on Ministers of the Crown.... Both in regard to these powers and to others which derive from the prerogative and not from statute, it has long been the established constitutional practice that the appropriate Minister of the Crown is responsible to Parliament for every action in pursuance of them."[13] The Committee, in its elaboration of the doctrine, saw Ministers as owing a fundmental duty to account to Parliament in two specific ways. First the Executive is obliged to give an account - to provide full information about and explain its actions - in Parliament; second the Executive must respond to concerns about its actions because Members of Parliament are elected representatives of the people.[14] In this traditional sense of Ministerial accountability only the Chancellor, not the Bank of England, can be directly accountable to the House of Commons but we recognise that the Bank is answerable for its actions in seeking to meet the inflation target and in giving an account of its stewardship to the Committee.

  8. The Cabinet Office in its submission noted that functions could not be taken out of the ambit of direct Ministerial accountability without the express authority of an Act of Parliament. "Ministers remain directly accountable to Parliament for their discharge of their responsibilities under the relevant legislation. In the majority of cases these responsibilities will include appointments, and securing funding. Ministers also have an overall responsibility for their sponsorship of, and policy towards, such bodies. As such they may be held to account for the success of the institutional arrangements in securing the envisaged policy and other benefits."[15]

  9. The Treasury in its evidence drew attention to the "clear distinction between the roles of the Government and the Bank of England. The Government is responsible for achieving its economic goals and therefore it sets the target for monetary policy. The Bank's job is to set interest rates so that the monetary policy target is achieved. Both are accountable for the performance of their respective tasks." In the Treasury's view it "is not unusual in a constitutional sense to delegate authority to public bodies to execute certain functions at arms-length from the Government. However it is for Parliament to approve the powers which are being delegated."[16]

  10. Scrutiny of legislation and the way in which the Government discharges its responsibility under such legislation are not the only ways in which Parliament can seek to hold the Executive accountable. One of the main opportunities available to individual Members is the Parliamentary question. Clearly under the new arrangements the Chancellor will not be in a position to answer directly in the House of Commons questions relating to those aspects of monetary policy, responsibility for which has been devolved to the Bank of England but he will continue to be directly accountable to Parliament in the traditional way for those aspects of monetary policy for which he has retained responsibility. We will be raising with the Procedure Committee whether it will be possible for individual Members under the new arrangements to raise all monetary issues on adjournment debates.

  11. The opportunity for a report to be debated in the House is another important method of enhancing accountability. We share the view of the Liaison Committee, as expressed on its report on the work of select committees in the last Parliament, that six days should be provided each session for debates on select committee reports.[17] We recommend the Committee on the Modernisation of the House to consider how it can best enable more Committee reports to be debated in the House and, in particular, to secure an annual debate in the House in Government time on the Treasury Committee reports on the Bank of England.

  12. We recognise, however, that Ministerial accountability is not the only paradigm for holding organisations, or individuals, accountable. In his submission to the Public Service Committee, Mr David Faulkner of St John's College, Oxford, emphasised that accountability can "take different forms - political, financial, managerial, operational, legal, professional. It can be to different authorities, institutions or individuals.......[It] can operate through direct supervision or contact, through formal arrangements for reporting or consultation (in public or in private), through procedures (such as complaints) which can be activated when required ...Accountability should take multiple forms and operate through multiple, and often reciprocal, channels."[18] The Government envisages the Bank of England's "accountability" or more precisely "answerability" as being to the non-Executive members of the reconstituted Court, the Government, the Treasury Committee, Parliament and the public at large.[19]

  13. The Treasury Committee's responsibility in relation to monetary policy is to provide a forum for it to be examined, by exposing to public scrutiny the thinking and actions of those responsible for its formulation and delivery. We believe that by bringing information into the public domain we can help to clarify the issues and that rigorous scrutiny of the basis for policy decisions will enhance the credibility and effectiveness of the monetary policy framework as a whole. The Bank can thus be held "accountable" to the public as well as to Parliament through being more open and transparent and by having to explain its actions in an independent forum. It is in this respect that our Committee can most effectively and most appropriately exercise its role of holding the Bank accountable. We discuss in section IV how we intend to fulfil this responsibility.

12   Second Report from the Public Service Committee, Ministerial Accountability and Responsibility, Session 1995-96, HC313 Back

13   Ibid., para 8 Back

14   Ibid., para 32 Back

15   Appendix 5. Back

16   Appendix 4. Back

17   First Report from the Liaison Committee, The Work of Select Committees, Session 1996-97, HC 323, para 38. Back

18   Op.cit, para 170. Back

19   Appendix 2. Back

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Prepared 29 October 1997