1 The conduct of MPC appointment hearings
Professional competence and personal
independence
1. Previous Treasury Committees have conducted appointment
hearings since the inception of the Monetary Policy Committee
(MPC) in 1997. In its Report The Accountability of the Bank
of England, the Treasury Committee of the time stated that:
Candidates for the Governorship, Deputy Governorships
and other Monetary Policy Committee posts should be selected to
meet the twin requirements of demonstrable professional competence
and personal independence from the Government.[1]
That Committee, and successor Treasury Committees
in the 2001 and 2005 Parliaments followed these principles in
all Monetary Policy Committee appointments. While proving professional
competence is a necessity for any job interview, it may be worthwhile
to consider why personal independence was also considered a prerequisite
for Monetary Policy Committee positions.
2. The Monetary Policy Committee was expressly created
to ensure that its members would conduct monetary policy to meet
the inflation target. The fear had been that a government would
always be tempted to use monetary policy to meet political ends.
When the then Chancellor of the Exchequer wrote to the Governor
of the Bank of England on 6 May 1997, announcing the creation
of the Monetary Policy Committee, he stated that "Our Manifesto
commitment is to 'ensure that decision-making on monetary policy
is more effective, open, accountable and free from short-term
political manipulation'".[2]
The Treasury Committee of that time noted that:
Freeing monetary policy from the 'inflation bias'
associated with governments which succumb to a "succession
of temptations" is one of the principal reasons advanced
to support central bank independence, and so we would regard any
politicisation of the appointments process as undesirable. If
the Bank is to withstand what could conceivably be intense political
pressure, the Governor and other members of the MPC will need
to be secure from the threat of dismissal for doing so and should
also be free from the perception of an association with a particular
government.[3]
Given that votes on the Monetary Policy Committee
are conducted under a one-person, one-vote system, for the Committee
as a whole to be considered independent, its members must be seen
to be independent too. Independence
is especially important given the high-profile nature of the role,
where members of the Monetary Policy Committee are expected, via
speeches and interviews with the press, to ensure that the process
of monetary policy is accountable to the wider public.
3. The requirement that appointees should be independent
was adopted by the Liaison Committee in the previous Parliament
for the formalised process of pre-appointment hearings agreed
following the publication of the previous Government's Green Paper
Governance in Britain. The Liaison Committee concluded that "Personal
independence is a key requirement in all public posts and most
obviously in those such as a regulator, or the Chairman of the
BBC Trust. It should be included explicitly as a focus of any
hearings [...] ." [4]
4. As noted above, the criteria of professional competence
and personal independence have been used by previous Treasury
Committees as the basis for which to assess potential MPC appointees.
We will follow previous practice
and continue to use the criteria of professional competence and
personal independence against which to consider appointees to
the Monetary Policy Committee.
1 Treasury Committee, First Report of Session 1997-98,
Accountability of the Bank of England, HC 282, para 46 Back
2
Bank of England website, The New Monetary Policy Framework, Letter
from the Chancellor to the Governor dated 6 May 1997 Back
3
Treasury Committee, First Report of Session 1997-98, Accountability
of the Bank of England, HC 282, para 45 Back
4
Liaison Committee, First Report of Session 2007-08, Pre-appointment
hearings by select committees, HC 384, para 12
Back
| 
