Select Committee on Treasury Minutes of Evidence


Examination of Witnesses (Questions 40-43)

MR MERVYN KING, MS RACHAEL LOMAX, MR PAUL TUCKER, PROFESSOR TIM BESLEY AND PROFESSOR DAVID BLANCHFLOWER

28 JUNE 2007

  Q40  Mr Love: We can understand how what you have said would send signals to the business community in relation to expectations, but how do you reach out to the wider community? What is the strategy to ensure that people out there either in their trade unions or in their daily lives who are affected by inflation have got that clear signal from you that expectations are critical?

  Mr King: Obviously, as you do in your job, much of what we say and do is mediated to the public through the press, radio and television. We give press conferences, we make regional visits and on each of these regional visits we visit not just business groups—the trade unions—but we talk to the local press and we get our message across. This is a question, I think, not of doing one thing but of a patient exercise building up the contacts we have right across the United Kingdom over a period of many years. We have been doing this now for ten years; we have over 8000 business contacts in the UK; they have friends and families. We go to schools, we have a schools competition. We put a lot of effort in but I think it has to be first and foremost a continuous process. Every month I go out of London for two days on a regional visit; my colleagues do likewise. It is this patient effort year after year after year which eventually builds up the view that the Bank of England does listen, it does notice, it does come to where I live, it does not just stay in the City and it is very clearly focussed on its targets. These hearings also play an important part.

  Q41  Mr Fallon: Governor, can we just come back to your personal vote last month? There seems to be widespread agreement now that the last time you were outvoted you were probably right. That makes me wonder whether you were not right last month. Could you just explain to us how this works, that you always vote at the end although you put the proposition at the beginning? Presumably last month the vote was already lost before you voted.

  Mr King: It is important that we stress that this is not a game in which we go round a table and everyone is forced into casting their vote like the Eurovision Song Contest and then you cannot take it back. We go round the table because you cannot have everyone speaking at once but sometimes people say, "Look, I'm inclined to leave rates where they are or put them up, but actually I would like to hear others before I come to a final view". Sometimes people will say, "Well, actually I have decided this is what I want to do". Nobody is called upon to put their vote in concrete, as it were, until they know what everyone else round the table thinks. In that sense everybody is in a position of knowing where the vote is going to come out before they record the vote and go final on it. There is not a fixed order where you vote and you cannot take it back. You can always say at the end, "Well actually, having heard every opinion that has been expressed today, now I would like to go final and vote for this action or that action". I hope that clarifies how the process occurs.

  Q42  Mr Fallon: Is it right that you always vote last?

  Mr King: I vote last in the sense that I try not to say to people, "This is what I think should happen today" because I think it is wrong to put unfair pressure on people and say, "Follow or not". If I feel very strongly I might indicate that that is where my mind is going but normally I do not do that. I think that what is most important is that nobody feels under any pressure to say what they have to do before they can hear what others think as well. It is a genuinely collective process in which nobody goes into this saying, "My sole objective in going to this meeting is to batter the others into agreeing with my view". It is a process we go into in order to find out how we want to vote by teasing out the questions. The discussion is robust, but it is robust in a sense not of saying "Why don't you vote for an increase instead of no change?"; it is robust in the sense of "Why do you think this argument follows? Why do the data tell us this? What is going on here?" It is that intensity of discussion that leads to better decisions. When it comes to the final vote everyone can take their time and they only have to record their vote when it is final and that is true for me as well.

  Q43  Chairman: Governor, can I thank you and your colleagues very much for coming this morning. It has been very helpful to us and I hope it is helpful to the wider community as well.

  Mr King: It gives us a chance to explain ourselves and that is an important part of the process. Thank you very much indeed.





 
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