ELEVENTH REPORT
The Treasury Committee has agreed to the
following Report:
THE MONETARY POLICY COMMITTEE OF THE BANK
OF ENGLAND:
CONFIRMATION HEARING
Introduction
1. In October 1997, in our Report Accountability
of the Bank of England,[2]
we announced our intention to hold confirmation hearings to establish
whether those nominated to the Monetary Policy Committee (MPC)
of the Bank of England[3]
fulfilled the criteria which we specified, namely demonstrable
professional competence and personal independence of the Government.
We believed that such hearings would not only encourage the Government
to appoint people with the qualities required, but would also
underline the independence, credibility and competence of the
Bank, and involve Parliament more closely in an important process.
2. In our report, we said that if confirmation hearings
were not written into the Bank of England Act 1998 (which in the
event they were not),[4]
we would hold them on a non-statutory basis. We subsequently discussed
further the form which the hearings should take, and reported
our conclusions to the House in our Report Confirmation Hearings
in February 1998.[5]
3. Among our decisions were that questioning should
be restricted to the two criteria of professional competence and
personal independence; that candidates should be asked to complete
a preliminary questionnaire; and that a suitable time to hold
the first hearings would be after the MPC appointments were made
on a statutory basis under the Bank of England Act, which was
brought into force on 1 June 1998. Accordingly, we took evidence
from all nine of the Monetary Policy Committee members on 16 and
18 June and reported that, on the basis of the evidence, we found
no reason to doubt that all the MPC members fulfil the criteria
of demonstrable professional competence and personal independence.[6]
In May 1999 we reported similarly on the re-appointment of Mr
Ian Plenderleith and the appointment of Dr Sushil Wadhwani.[7]
In May 2000 we approved the appointment of Professor Stephen Nickell
but asked the Chancellor to think again about the appointment
of Mr Christopher Allsopp.[8]
In October 2000 we approved the appointment of Professor Charles
Bean.[9]
We have also, on three occasions, reported more generally on the
work of the MPC, most recently in March in our Ninth Report, The
Monetary Policy Committee—an End of Term Report.[10]
In that Report we re-examined our confirmation hearings, reasserted
our belief that they should be put on a statutory basis,[11]
and concluded:
"We think that confirmation hearings, even on
a non-statutory basis, act as a stimulus to the Chancellor to
choose candidates who are competent and independent. We also believe
that our questionnaire and hearings provide essential information
about the background of the appointees which is not otherwise
readily available. Above all, the hearings underline the fact
that MPC members are accountable to Parliament and to the public."[12]
4. On 5 April 2001,[13]
the Treasury announced that the Chancellor of the Exchequer had
appointed Ms Kate Barker, currently Chief Economic Adviser at
the Confederation of British Industry, to join the MPC on 1 June
in succession to Dr DeAnne Julius, who has served on the MPC since
September 1997 and whose term of office expires on 31 May.
Conclusions
5. We took evidence from Ms Barker on 1 May; this
evidence will be published shortly, together with her answers
to our questionnaire and her CV. We are satisfied that she fulfils
our two criteria for appointment.
2
First Report, Session 1997-98, HC 282, paragraphs 46 and 48. Back
3 The
MPC's role is to set monetary policy so as to deliver price stability
as defined by the Government's inflation target, currently 2½%
for RPIX (retail price inflation excluding mortgage interest payments),
and subject to that, to support the Government's economic policy,
including its objectives for growth and employment (sections 11
and 12 of the Bank of England Act 1998 and see Official Report,
4 June 1998, col 329). Back
4 See
Official Report, 22 January 1998, col 1153-87, for a debate on
a New Clause proposed by some members of this Committee, which
was not agreed to at the report stage of the Bank of England Bill
in the House of Commons. Back
5 Third
Report, Session 1997-98, HC 571. Back
6 Sixth
Report, Session 1997-98, The Monetary Policy Committee of the
Bank of England: Confirmation Hearings, HC 822-I (Report)
and 822-II (evidence). Back
7 Fifth
Report, Session 1998-99, The Monetary Policy Committee of the
Bank of England: Confirmation Hearings, HC 476-I (Report)
and 476-II (evidence). Back
8 Seventh
Report, Session 1999-2000, The Monetary Policy Committee of
the Bank of England: Confirmation Hearings, HC 520-I (Report)
and 520-II (evidence). For the Government's response, see Seventh
Special Report, Session 1999-2000, HC 859. The Chancellor did
not alter his appointment. Back
9 Tenth
Report, Session 1999-2000, The Monetary Policy Committee of
the Bank of England: Confirmation Hearing, HC 940-I (Report)
and 940-II (evidence). Back
10 Ninth
Report, Session 2000-01, HC 42. The previous reports were Seventh
Report, Session 1997-98, Bank of England: Operation of Accountability-One
year on, HC 993, and Eighth Report, Session 1998-99, The
Monetary Policy Committee-Two years on, HC 505. Back
11 Ninth
Report, para 49. Back
12 Ibid,
para 52. Back
13 HM
Treasury News Release 47/01. Back
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