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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