Lessons from the process of government formation after the 2010 general election - Political and Constitutional Reform Committee Contents

Written evidence submitted by Mervyn King, Governor, of the Bank of England

  Thank you for your letter of 3 December, which asks a number of questions about the background to the formation of the Government following the May election. My answers to your specific questions are given below. You might also refer to the transcripts of the relevant parts of the hearings of the House of Commons Treasury Committee on 28 July and 25 November, which covered these issues in some depth.

1.   Did you have input in the process of government formation after the general election in May 2010? If so, what was your role?

  I had no input to the process of government formation after the general election.

2.   Did you have conversations with representatives from the Conservative or Liberal Democrat parties during the process of government formation or shortly before?

  I had no conversations or meetings with any political party representatives during the election campaign. I made no public speeches or appearances, and gave no off-the-record talks.

  In the weekend immediately following the election (8-9 May) I spoke with the then Chancellor, Alistair Darling, concerning the crisis in Greece and a meeting of ECOFIN, at which he represented the United Kingdom. He also asked me to accept a call from George Osborne, in which we discussed only the position that the United Kingdom should adopt at the ECOFIN meeting. I had no other conversations with any other members of the future Coalition government until after the Coalition was formed; nor was I asked to take part in any. I also spoke with the Prime Minister, Gordon Brown, on the evening of Sunday 9 May about the crisis in Greece.

  After the Coalition was formed and George Osborne had been appointed as Chancellor, I had a conversation with George Osborne on the morning of Wednesday 12 May, in which he outlined the contents of the Coalition agreement on economic matters. On Saturday 15 May, I spoke by phone with the Deputy Prime Minister, Nick Clegg, at his request. As I explained in evidence to the Treasury Committee on 28 July, I said nothing in that call that I had not already said in public, most recently at the Inflation Report press conference on 12 May.

  In line with standard civil service practice, I held occasional meetings with Opposition parties ahead of the election to provide technical advice on aspects of their programmes relevant to the responsibilities of the Bank. On that basis, between January 2009 and the start of the election in April2010, I had five meetings with the Shadow Chancellor, George Osborne—who was sometimes accompanied by the Leader of the Opposition David Cameron, and sometimes not. And I had two meetings with Vince Cable, who was once accompanied by Nick Clegg. All of these were carried out according to the normal conventions governing meetings helping to prepare Opposition parties in the run-up elections. As such, the occurrence of each meeting was notified to the Chancellor's office. At no stage did I offer any advice on the composition of any measures designed to reduce the government deficit, in terms of spending and taxation.

3.   Are there limitations on what you as Governor of the Bank of England should say or do during a period of government formation? If so, what are those limitations?

  Yes, there are substantial limitations. The account set out above is, I believe, wholly consistent with them.

4.   Are the representations made in David Laws' book accurate and if not, can you give an accurate account?

  I obviously cannot vouch for the veracity of comments about events in which I was not a participant. But neither quotation suggests any meeting took place. My views on the need for a credible deficit reduction plan had however been made very clear, and in public, as far back as March 2009. I said nothing in private meetings that went beyond those public comments.

  I hope these answers help with your enquiry. I have copied this reply to Andrew Tyrie MP, as Chair of the Treasury Committee.

8 December 2010

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