Select Committee on Treasury Minutes of Evidence

Examination of Witness (Questions 1 - 19)




  1. Good morning, Sir Andrew and welcome to the Committee. First of all, may I congratulate you on your appointment as Deputy Governor. For the sake of the Hansard writer please could you identify yourself?  (Sir Andrew Large) Yes, I am Andrew Large, Deputy Governor of the Bank of England.

  2. Thank you. Sir Andrew, the newspapers in the summer were writing that the appointment of Deputy Governor followed weeks of procrastination by the Treasury and there was some criticism of them not putting the appointment in place earlier. I would like you to take us through the process of your appointment for the Deputy Governorship. Were you approached by the Treasury—and if so when—or did you submit your name to the Treasury for consideration?  (Sir Andrew Large) I can tell you precisely, Chairman. I was approached by the Treasury (I cannot remember the precise date but it was towards the end of July) and I was asked whether I would permit my name to be put forward for this appointment. I considered the matter—and it came as a complete surprise to me, I have to say, when I received the call—and said I would permit my name to be put forward. Thereafter, I was not privy to the discussions that took place by the Treasury and other people etc, but of course I read the newspapers, as we all did. I was then re-approached on the Monday, as a matter of fact, before the day of my appointment, and asked whether having been prepared on that earlier date to put my name forward I was still willing to go ahead with this, and I said I was.

  3. You mentioned that you were "re-approached".  (Sir Andrew Large) What I mean is I was called again.

  4. Did you have a feeling that your name was out of the ring?  (Sir Andrew Large) No, I had no particular feeling.

  5. Why do you use the word "re-approached"?  (Sir Andrew Large) Just because it was for a second time that I was contacted. I had had no contact in the intervening period.

  6. If someone puts a name forward for a position in July it is quite natural for the appointments process to take a month or two. It is intriguing that you mention the word "re-approached".  (Sir Andrew Large) There was no hidden meaning behind that. What I am trying to say is that as a factual matter, having had the first approach at the end of July and having said that I would be prepared to have my name put forward, when I received a call that Monday to say was that still the case, I answered yes.

  7. Did you feel in that intervening period at some stage that the trail had gone cold?  (Sir Andrew Large) No. I was aware that there must be discussion taking place but it really was not for me to try to intervene in that process at all.

  8. What meetings did you have with the Governor of the Bank or the Chancellor—whoever began the appointments process?  (Sir Andrew Large) I had a meeting with the Governor and I had a meeting with the Chancellor.

  9. Can you give us the date of those meetings?  (Sir Andrew Large) The meeting with the Governor was at an early time after I had first been approached; it was towards the end of July. I had been approached by the Treasury and the suggestion was that I might wish to go and visit the Bank, which I did. The discussion with the Chancellor was on the day of my appointment, on the Tuesday.

  10. You mentioned that you were told on the Monday before your appointment. Did the immediate nature of your appointment cause you some inconvenience?  (Sir Andrew Large) In a sense.

  11. In other words, why were you unable to attend the September meetings?  (Sir Andrew Large) Yes, yes, I understand. The difficulty in terms of attending that meeting was that, first of all, I had been able to make no plans at all for withdrawing from my existing activities, since it was only on the Monday that I was put into a position of having to consider that withdrawal. Therefore, it just was not going to be possible for me to prepare properly for the meeting that took place, if I recall, on the Thursday of that week.

  12. Good. Okay. We are on to the Parliamentary appointments hearings. On Monday there was a report in the newspapers about Bank research casting doubts on MPs' scrutiny. In the Quarterly Bulletin there was a report by, in fact, a former staff member of this Committee saying, in effect, that there was no requirement for Parliamentary scrutiny of the MPC. Would you agree with that article that is in the Quarterly Bulletin of the Bank of England this month?  (Sir Andrew Large) I have had a look at the article and it struck me that it was a rather professional piece of research that had just looked at the situation in different countries. I did not read into it any judgmental position at all as to the wisdom or otherwise of—

  13. You mentioned "professional piece of research". Would you elaborate on that for us?  (Sir Andrew Large) Professional in the sense that in looking at the article it appeared to have looked at the situation in this country and the situation in various other countries, and in order to do that they had to do some research to come up with the statistics and numbers.

  14. Do you know what the nature of that research was?  (Sir Andrew Large) Not in detail, no.

  15. Do you know, for example, that it was a questionnaire sent to 14 banks only? Did you know that it looked at the number of Parliamentary hearings but did not take into account how long the hearings lasted or the number of central bank officials? Did you know that the staffing levels it mentions highlighted disparity in staffing of economic and financial committees between the US Congress and others, that it only takes account of specialist staff and no account is made of the fact that not all specialist staff may work in monetary policy scrutiny? So it did not actually look into what individual staff members were doing. We have looked at that ourselves and we see it as far from a professional approach to a study. It concerns us somewhat that something as loose as that professionally finds its way into the Quarterly Bulletin of the Bank of England and now you, as a Deputy Governor, tell us it is a professional piece of research.  (Sir Andrew Large) I hear your comments, Chairman. Clearly I have not looked at it in the greatest of detail.

  16. Could I ask you, Deputy Governor, as maybe one of your first tasks, to look at that and give us your views—along with the Governor's—on how professional you think that is, and, also, particularly, your views as to whether you think it is useful for members of the Monetary Policy Committee to be exposed to public scrutiny?  (Sir Andrew Large) I will

  17. Thank you very much. On conflicts of interest, you kindly filled in a questionnaire for us and told us—I think in question 1—that you were in the process of putting your financial affairs at arm's length. What sort of financial interest, in your view, could pose a conflict with your new position?  (Sir Andrew Large) I suppose you could look at in two levels, Chairman. If I were to take decisions myself in relation to particular equity holdings or changes in equity holdings at given points in time, that could possibly conflict with information I might have. Secondly, I need to be very careful that I do not move assets, for example, at times when I am privy to information from one category of investment to another—from equity to debt, for example. I think it is clear for everybody to see that if one is privy to the manner in which interest rates are being set it is absolutely clear that you have to remove yourself from making decisions which could be seen in any way to be benefiting you in relation to your financial affairs. So that was what lay behind the comment I made.

  18. Could you define for us precisely what you mean by "arm's length"?  (Sir Andrew Large) "Arm's length" means that either I do not make any decisions myself or if I do make decisions that they are minuted and agreed to as being satisfactory decisions in the light of what I know at the time.

  19. So you will have some control over your own financial affairs in future whilst you are Deputy Governor at the Bank?  (Sir Andrew Large) I would expect to have some control over them but only on a basis that is itself controlled, such that there can be no possible insinuation of my acting improperly.

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Prepared 7 November 2002