Select Committee on Treasury Eighth Report

2  Professor David Blanchflower

Background to the appointment

5. On 22 March 2006, the Chancellor of the Exchequer announced to the House of Commons that he had appointed Professor David Blanchflower to the MPC to succeed Professor Stephen Nickell.[4] Professor Blanchflower's appointment will take effect on 1 June 2006.

6. Professor Nickell served as a member of the MPC from 1 June 2000 to 31 May 2006 and gave oral evidence to the Committee on the Bank of England's inflation reports on several occasions. We would like to thank Professor Nickell for his contribution to the work of the MPC and for the evidence that he has given us and our predecessors.

Background on Professor David Blanchflower

7. David Blanchflower has been the Bruce V Rauner Professor of Economics at Dartmouth College, Hanover, New Hampshire, USA, since 2001, and a Professor of Economics at Dartmouth since 1993. He was also a Research Associate at the National Bureau of Economic Research, a Research Fellow at the Centre for Economic Studies at the University of Munich and a Research Fellow at the Institute for the Study of Labour at the University of Bonn. He was previously an Associate Professor of Economics at Dartmouth from 1989 to 1993. He was born in the United Kingdom and holds a bachelor's degree from the University of Leicester, a masters degree from the University of Wales, both in economics, and a PhD from the University of London (Queen Mary and Westfield College).

8. Professor Blanchflower has published wide-ranging research across a host of different economic and social questions. However, a considerable part of his work has focused on understanding how wage dynamics and unemployment are related. He has also published articles on youth unemployment, trade unions, job creation, employment growth, the housing market, self-employment and small businesses. Professor Blanchflower has recently published several papers on well-being and happiness with the aim of understanding why, despite rising gross domestic product, time series measures of well-being are remarkably flat.

Role as member of the MPC

9. In view of the economic and political importance of the MPC, there is a considerable degree of informed interest in both the general stance of its members and their individual positions at meetings. MPC members play a key role in representing that body to a wide range of audiences around the country and in gathering views from market participants.

10. We therefore questioned Professor Blanchflower about his general stance on interest rate decisions and his approach to such matters as inflation expectations, household debt and the labour market.

Other roles and responsibilities

11. External members of the MPC are appointed to the Bank staff and are expected to spend the equivalent of about three days per week on MPC-related work. However, they may engage, with the permission of the Chancellor of the Exchequer, in outside activities that do not present a conflict of interest to their role on the MPC.

12. Professor Blanchflower noted in his answers to the preliminary questionnaire:[5]

I will continue to keep an office at Dartmouth College but will have no teaching duties and will be on 'leave on own charges'. I will also have a part-time visiting appointment at the University of Stirling and will give a few classes a year to graduate students in the Scottish Graduate Programme in Economics. I will continue with my consulting practice in the United States which involves work as an expert witness in public sector wage setting and as a consulting expert for a variety of public entities on the operation of programs for Disadvantaged Business Enterprises in the construction industry.

13. We questioned Professor Blanchflower on the possible practical difficulties in combining his roles as an academic and consultant with his work as a member of the MPC. Professor Blanchflower assured the Committee that, despite working in both the United Kingdom and the United States, he intended making regular speeches and regional visits in the United Kingdom, and that he would make himself available to this Committee in order to give evidence on the Bank of England's inflation reports.

Assessment of personal independence and professional competence

14. Professor Blanchflower brings considerable relevant experience and knowledge to the MPC, in particular on labour market issues. In addition, Professor Blanchflower has considerable experience of the economy of the United States and his continuing experience of the US economy will be useful in MPC discussions on the global factors influencing the United Kingdom economy. We note that Professor Blanchflower intends to maintain working commitments in the United States. In setting interest rates, it is important to take account of the whole range of regional factors in the United Kingdom economy. In addition, the credibility of the MPC is enhanced through members meeting with members of the public and business leaders, both to explain the reasons behind MPC decisions and to gain further insight into the British economy. Accordingly, we would expect Professor Blanchflower to take an extremely active role in the Bank's efforts to communicate with business people and others in the United Kingdom economy, notwithstanding his working commitments in the United States. Indeed, the fact that Professor Blanchflower will be dividing his time between the United Kingdom and the USA means that he will need to devote particular energy to fulfilling diary commitments in the regions of England and in Scotland, Wales and Northern Ireland.

15. We are satisfied that Professor Blanchflower fulfils our criteria for appointment of personal independence and professional competence. We wish him every success in his new role as a member of the MPC.

4   HM Treasury, press notice, Appointment to the Monetary Policy Committee, 22 March 2006 Back

5   Ev [reference to evidence] Back

previous page contents next page

House of Commons home page Parliament home page House of Lords home page search page enquiries index

© Parliamentary copyright 2006
Prepared 30 May 2006