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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