Financial Services Bill
The Committee consisted of the following Members:
James Rhys, Marek Kubala, Committee Clerks
† attended the Committee
‘and must have regard to the desirability of ensuring a broad representation of practitioners and consumers in the UK financial services sector.’.
‘(c) allow sufficient time for the Treasury Select Committee to hold appointment hearings with candidates to be appointed under (1)(e) before their appointment to the Committee.’.
These amendments would make changes to the membership of the Financial Policy Committee, including on how external members are appointed. I agree with the hon. Member for Nottingham East that getting the membership of the FPC right and, in particular, ensuring a good mix of experienced experts serving as external members is vital, but the changes that he has put forward are neither necessary nor desirable. I will explain to the Committee why I take that view.
I will explain why I disagree with amendment 9. First, as part of that, I will correct the misunderstanding that the hon. Member for Nottingham East has of the committee’s make-up. In column 77 of our proceedings on Tuesday afternoon he said there was a ratio of seven Bank appointees to four external appointees. The reality, which is evident in the Bill, is that the ratio is 6:5. There is the Governor, the three deputy governors and two executive directors. There are also four external members and the CEO of the Financial Conduct Authority, who is not a Bank appointee and is independent of the Bank. We will discuss the constitution of the FCA later. The chief executive of the FCA will be able to bring in an insight from the FCA’s role as the supervisor and regulator of financial conduct matters, looking at both markets and consumer issues.
Chris Leslie (Nottingham East) (Lab/Co-op): We have had an initial discussion already about whether the Minister is correct when he claims that the FCA is fully independent from the Bank of England. That is a moot point. Even if it is 6:5, can he confirm that that is still a ratio where there are more executives appointed by the Governor and the Bank than there are external? Does he really think that the chief executive of the FCA can be genuinely classed as an external member of the FPC?
Mr Hoban: I agree that the ratio is 6:5 and that the six are Bank employees. I would not describe the Governor as an employee, necessarily, but the six are the Governor, the three deputies and two members appointed by the Governor of the Bank under proposed new clause 9B(1)(d), so the ratio is 6:5.
The hon. Gentleman should reflect for a moment on the FCA’s status. As we will discuss later, it is an independent body. The chief executive is not appointed by the Governor of the Bank of England. The chairman is not appointed by the Governor of the Bank of England. Its remit is around conduct issues, not prudential issues. Potential issues of equity with banks and insurers are under the remit of the Prudential Regulation Authority. There is independence, and suggesting that it is in some way a subsidiary of the Bank of England or part of the Bank group is fundamentally to misunderstand the nature of these reforms. I know from conversations with the CEO designate of the FCA that he has some clear views and that he will provide a clear input based on his experience to the discussions with the FPC, as we would expect. Therefore, it is wholly wrong to say that the CEO of the FCA should be counted as a Bank employee or within the Bank group. That just does not reflect the status of the FCA.
The 6:5 ratio that we have mirrors closely the ratio on the Monetary Policy Committee, where the ratio is five Bank people and four externals. I think that we would all agree that the MPC model has worked well and is much admired not just in the UK, but around the world. I see no reason to fix something that plainly is not broken.
Chris Leslie: If that is the case, why, on 30 October 2008, did the Minister, when he was a shadow Minister, submit an amendment to the Bill that became the Banking Act 2009 that was designed to ensure that the
Mr Hoban: That was an attempt to modify what I felt was a failed structure of regulation. The Financial Stability Committee does not have the power or responsibilities that the FPC has. It was a shadow of what we are proposing today. There is a distinct difference between the Financial Stability Committee, which the 2009 Act set up, and the FPC that we have today. I will come on to why I think it important to have this particular mix between externals and internals.
The change suggested by the hon. Member for Nottingham East would create a committee of 13 members, or 14 if the non-voting representative of the Treasury was included. I have to say that I was not sure whether the proposed change of appointing two more externals would be enough to cater for his ambitions, because certainly in the discussion that we had on Tuesday, he talked about
“representatives from the banking sector, the insurance sector, the professional services sector, the industrial sector, manufacturing, consumers and others”.––[Official Report, Financial Services Public Bill Committee, 21 February 2012; c. 77.]
This is the challenge. As the committee grew, it would become so large as to become unwieldy and could obstruct effective decision making. The external members are a key part of the FPC. The viewpoint and challenge that they provide is critical. However, there is a genuine risk that if there are too many members, none of them, including the externals, will have the time or space within the meetings to put their points across effectively.
It is clear that that view was shared by the Labour party when it was in government, because it decided that the original size of the court—19 members, including 16 non-executive directors—was too large. The consultation document from July 2008—it is not just the hon. Gentleman who has access to quotes from history—stated:
We want the FPC to be a committee of experts where each member has a voice to bring to the table and a point of view to put forward on each issue. That is much more likely to be workable and effective in practice if the numbers are such that there is time and space for each member’s view on each issue to be heard and debated.
I come now to the third and most crucial argument why I do not believe that Bank executives should be a minority on the FPC. It goes back to the issue about responsibility. We are placing primary responsibility for financial stability with the Bank of England—including the responsibilities being given to the FPC—because we think that it is the right body, in terms of its expertise and its position in the financial system, to take on that role and to make the judgments that it entails. We intend that the Bank will be held fully accountable, including by the House, for fulfilling those responsibilities and making those judgments.
On Tuesday, the hon. Gentleman drew an analogy between the membership of the boards of the PRA and the FCA, which have non-executive majorities, and the FPC. That is a false analogy. Corporate governance best practice dictates that the governing body of organisations, whether private or public, should include a majority of non-executives, and in line with that principle, the governing bodies of the PRA, the FCA and the Bank itself all have a majority of non-executives. But the FPC is not a governing board; it is a policy-making committee accountable to a governing board—the court of the Bank of England. So the analogy between the boards of the PRA and the FCA is inappropriate.
Cathy Jamieson (Kilmarnock and Loudoun) (Lab/Co-op): I have listened closely to what the Minister has said, and I have read carefully what the Joint Committee said. Will he explain why he believes the Committee was wrong to recommend that the non-executives should be in the majority?
Mr Hoban: The speech I am making sets out why we think the Joint Committee reached the wrong conclusion. We have listened to the Committee, and we have responded to much that it opined on during its deliberations. We are grateful for its work, but the key point is how will the FPC function, what should the balance of membership be, and what should its lines of accountability be. There is simply a difference of opinion between us and the Joint Committee.
The distinction between non-executive and executive members that the hon. Member for Nottingham East seeks to import into the operation of the FPC is also inappropriate. Effectively, all 11 voting members of the FPC will be executive members, as they will all be actively involved in the committee’s executive policy-making. The relevant distinction for the FPC is whether a person is an executive of the Bank of England, not whether he has an executive or non-executive role.
The external, independent voices on the MPC and the FPC are vital, and the Government are committed to ensuring that the external members on those committees continue to provide challenge and different perspectives to the decisions that are taken. But ultimately, both the MPC and the FPC must be Bank-controlled committees if we are to hold the Bank to account for its decisions.
I agree entirely with the sentiment behind amendment 8. Both the Chancellor and the Governor are committed to getting the strongest possible candidates to serve as external members of the FPC, and ensuring that the external members bring different areas of expertise and experience to the table from across the financial services industry. However, as the Chancellor made clear on Second Reading, we do not want to create prescriptive and inflexible requirements in the Bill around the appointment process for external members. That would be a mistake. However, I can assure the Committee that the Government are committed to ensuring that the external members have broad and current experience of different aspects of the financial system. I do not believe that the amendment is necessary to achieve that goal.
Mr Hoban: Of course, there is a wide definition of “consumer”. Consumers in the context of the FCA may range from consumers of retail financial services, such as the hon. Lady and me when we buy our motor insurance policies, to people who are trading many billions of pounds of foreign exchange on international markets. Some terms do not get to the point of what we want to achieve.
One of the independent members of the FPC is the chief executive of the Financial Conduct Authority, and will have particular insight into issues affecting consumers, because that organisation is charged with securing certain outcomes for consumers, focusing particularly on retail consumers. I do not think we need a representative of the CAB or Which? on the committee, but the hon. Lady is right to make the broader point that we must ensure that there is a good cross-section of people on the committee to represent a wide range of views.
Mr Hoban: I hesitate to use the phrase consumer champion because that creates all sorts of anxieties among product providers. However, we have somebody who will run the FCA, who will be a strong voice for consumers and who will understand the impact on consumers of the measures that the FPC will take and the way in which developments in retail financial services markets could impact on financial stability. He is well placed to provide that consumer voice on the committee.
As I said, it is vital to ensure that external members of the FPC provide a broad spectrum of views, experience and relevant knowledge to the FPC’s deliberations in an even-handed way. However, it will never be possible to ensure that all interest groups are represented on the FPC at all times. If we want to ensure the effective and constructive working of the FPC, we will need to avoid having a situation whereby certain external members are supposed to represent or defend the interests of specific sectors or groups. That could easily lead to views within the FPC being unhelpfully skewed in favour of or against a certain sector.
Mark Durkan (Foyle) (SDLP): I take the Minister’s point that it would not be possible to construct the measure on the basis of specific representation for specific groups. However, surely amendment 8 refers to a broad representation of practitioners and consumers. That is precisely what he says will happen. If he believes that that will happen in practice, what is wrong with spelling it out in the Bill?
Mr Hoban: It is such a clear point, which we have made and is reflected in the current membership of the FPC, that it does not need to be in the Bill. The procedures surrounding appointments already cover some derivatives. This is rather reminiscent of the debate we had on Tuesday about appointments to the court. Standard processes are in place, and the Chancellor and the Governor will need to consider the balance of the FPC and take into account whether there is broad representation on the committee.
I reiterate this point. If we see the FPC as an opportunity for people to defend sectional interests, it will work against its effective functioning and working. We need people to be able to understand a broad range of financial issues, rather than, to take a matter that the hon. Gentleman has close at heart, someone being there as a champion of the Northern Ireland credit unions, for example. We need to be very careful that we do not get into saying, “We must have a representative from asset management; we must have a life insurer; we must have a general insurer.” We want a broad range of user representatives on the committee. The Chancellor and the Governor clearly understand and respect that.
In an earlier intervention, the hon. Member for West Suffolk said that the amendment was redundant because the chief executive of the FCA will represent consumers, as if consumers are not to be considered in the context of any other appointments.
Mr Hoban: The amendment is redundant. The normal practice on such boards is to look for a range of views to be expressed. That happens already; it does not need to be in the Bill. If we included every aspect of general administrative practice, the Bill would be three volumes rather than two.
On amendment 10, the Government are supportive of the Treasury Committee’s role in holding hearings to question individuals who have been appointed as members of the MPC, and now the FPC, before they take up that appointment. Pre-commencement hearings add an important element of challenge and transparency to the appointments. We always aim to leave time between the announcement of the appointment and the person taking up their post to allow the Treasury Committee to carry out a hearing. However, in some cases, that simply will not be possible.
We would not want to find ourselves in a situation where the MPC or the FPC has to operate with a vacancy to allow the Treasury Committee to summon the appointee to a hearing before they take up their post. It would be far better to allow that person to start immediately, with the Treasury Committee calling him or her to a hearing in the first few months of the post. We would be rightly criticised if we made the work of the MPC or FPC more difficult by forcing them to operate without a full membership.
I have underlined the Government’s support for the Treasury Committee’s role in undertaking pre-commencement hearings, but such hearings should not be carried out before the appointment is made. The decision to appoint an external member to the FPC or
The hon. Member for Nottingham East queried why appointments to the MPC and FPC are market sensitive and therefore unsuitable for pre-appointment hearings. In recent practice, all MPC members have undergone pre-commencement and reappointment hearings. The previous Government identified MPC appointments as among several particularly market sensitive-posts for which pre-appointment scrutiny might not be appropriate. New appointments to the MPC attract significant market interest. A huge amount of time and effort is spent examining every scrap of information relating to the MPC to gain insight into the Committee’s thinking and to determine likely future policy responses. Examination extends to the MPC’s composition, with market participants attempting to judge the likely position of a candidate as an inflation hawk or dove relative to the existing members and the potential to alter the dynamic of the Committee, with possible implications for asset prices. We can expect the same level of interest in appointments to the FPC, given its powers to shape macro-prudential regulation.
Because of the current pre-commencement hearings held by the Treasury Committee for external members of the MPC and, in future, the FPC, the Government have already announced who has been appointed, which provides markets with certainty. When candidates are announced, their particular leanings can be priced into asset prices. The hearings are a useful insight into the professional competence and personal independence of the appointee.
Pre-appointment hearings, however, would exacerbate market uncertainty about appointments. An appointment could not be fully priced in until after it had been confirmed, because of the element of uncertainty about whether a candidate would be offered the position. For example, if the Chancellor announced the appointment to the FPC of a person perceived to be in favour of minimising the burden of regulation on banks, we would expect to see shares in banks rise as that influence was factored into the FPC’s likely behaviour. If the Treasury Committee recommended that that person should not be appointed, there would be a market correction. The uncertainty regarding who would fill the appointment might cause fluctuations in share prices until a suitable candidate was announced and confirmed.
The appointments are important and will affect the shape and direction of financial regulation and how macro-prudential tools are exercised. It is therefore important to ensure that correct procedures are in place for appointments, and hearings by the Treasury Committee. In addition, we must strike the right balance in the FPC’s membership, which is why I resist amendments 8, 9 and 10.
On amendment 10, it is a shame that we have not heard from Government Members who were on the Treasury Committee when the recommendations were made. That Committee has a history of making great strides forward in seeking pre-appointment powers. Although I hear what the Minister has said about market sensitivity, the issue is symmetrical, because there is also a market shock on appointment without having prepared the wider understanding of a candidate’s views. That process is perfectly adequate in other developed countries, so I do not see why it could not happen here as well. Nevertheless, this is an important point, and I am glad that we have had the chance to debate it.
The Minister’s views on the other amendments surprise me. As I said, we were simply trying to adhere the spirit of the Minister’s cherished views; in 2008 he felt so strongly about this issue that he tabled an amendment on having equal numbers of executive and external appointees. I like to learn occasionally from the wisdom of the Minister and he inspired me with his forethought on some of these matters. I hoped, however, that we might have seen a chink of light, a bit of understanding, or the chance to improve our amendment and come back on Report.
Chris Leslie: That could have been the case, although I doubt it. I know that the Minister is a centrist at heart, although that is not necessarily the case for his hon. Friends. I take his point: people are allowed to change their minds over time, and it is perfectly possible that he has done so. He was resting, however, on the argument that the chief executive of the FCA should be classified as an external member of the Financial Policy Committee. To a certain degree I was grateful for the intervention by the hon. Member for West Suffolk. Given his quasi-ministerial status, I often take his views as being, in a sense, those of Her Majesty’s Treasury.
If we are to regard henceforth the chief executive of the FCA as a consumer champion, this provision is great news and we should possibly think about embedding it in a more formal way in the Bill. I would like to see the chief executive of the FCA held in such regard. The Minister fell short of saying that, and his comments included the caveat that there are all sorts of consumers, including those who trade billions on foreign exchange markets. Perhaps that is the case in his world—I do not want to imply in any way that the Minister is out of touch with reality, but it stretches things a little to define consumers in such a way. There is still a fundamental question over to what extent the FCA is independent of the Bank and how far it can be considered an independent member. The Bill states that the Bank and the FPC can direct the FCA, that the FCA has a duty to co-ordinate with the Bank of England, and that the Bank can overrule the FCA. Independence must be taken at its widest possible definition.
Fabian Hamilton (Leeds North East) (Lab): I am intrigued to hear that the chairman of the FCA will be the champion of the consumer, even if the definition of consumer is broad. Does my hon. Friend agree that if that is to be the case, the Government should table an amendment to enshrine that more firmly in the Bill?
Chris Leslie: Absolutely. We will soon consider provisions on the FCA, and that will give us the opportunity to look at the constitution and establishment of the FCA, as well as the role of the chief executive, and we may wish to touch on the point raised by my hon. Friend. We do not put forward these arguments in a partisan way; the CBI has argued the need to ensure that voices from business are represented. The amendment goes hand in hand with amendment 8 because we want to ensure a broad representation of practitioners and consumers, and that there are sufficient numbers of people on the FPC to allow that. No one suggested a strict sectorial representation of rugby team size, and that is not a strong argument. It would be desirable to have that level of diversity, but we could never be quite that prescriptive.
Cathy Jamieson: I heard a great deal of talk about the voice of the consumer. Does my hon. Friend agree that it will be vital that ordinary people who are purchasing and taking advantage of various products understand who is standing up for them, rather than for the interests of institutions?
Chris Leslie: This is why we need to have regard to the consumer voice and how it is aired, particularly in the FPC. I shall give the Minister an example. The headline story that came out of the first financial stability report from the current interim FPC, which was published last June or July, was that the banks must be careful when looking at stability questions. That was primarily because there was a great deal of forbearance towards consumers who might have been falling into minor arrears on their mortgage repayments and forbearance on some of those credit areas. The message sent by the FPC at the time was that the banks needed to think about tightening up because perhaps there was too much forbearance.
This is at the heart of the construct that the Minister is putting in place. While, yes, banks need to have an eye to those risks, there are plenty of consumers—our constituents, householders—who have depended on that forbearance and who have been grateful for it. In many ways it prevented our woefully weak economic situation from becoming even more decrepit. It is important that we have an FPC that can say, “Hang on a minute. There are positive reasons for a forbearance strategy by the banks, as well as possible downsides.” It is important that that voice is heard to ensure a balanced judgment from the FPC. I queried at the time of that first report whether sufficient attention had been paid to that issue. That is why it is not just a dusty academic question. This is right at the heart of the central powers that the Bank of England will be taking.
The Minister says he agrees with the spirit of amendment 8. That is great news. I like it when consensus breaks out across the Committee. This is how we should do our politics. It is a pity that he could not go that
One could make the same argument. Do we really need to put that sort of thing in the Bill? Is that not superfluous? The Minister’s argument is knocked down by the fact that he has taken that view himself in the drafting of the Bill. I do not think that it is superfluous. It is an important thing to recognise. Therefore I want to press amendment 8 to a vote. I also think it is important to test amendment 9.
Amendment proposed: 8, in clause 3, page 3, line 24, after ‘functions’, insert ‘and must have regard to the desirability of ensuring a broad representation of practitioners and consumers in the UK financial services sector.’.—(Chris Leslie.)
I understand that the Treasury gave that concession in response to significant pressure from the Treasury Committee and others in respect of the role of the court of directors and the oversight that it will have over the work of the Financial Policy Committee. That is an important point of internal accountability. The Chairman of the Treasury Committee has talked a considerable amount about it, and other Members have done so as well.
Amendment 11 would replace the word “procedures” with “activities”. Hopefully, it is a helpful amendment for the Minister. We thought that the Bill might have been written in that way as the result of a drafting error. I say that because page 170 of the Bill, schedule 1, includes almost consequential amendments relating to the Financial Policy Committee as it affects the Bank of England Act 1998. The Minister seeks to substitute section 4(2)(a) of that Act with a new section 4(2)(aa) reading:
Having read the Bill, I thought that he was correct at page 170, because there is a difference in emphasis between the word “activities” and the word “procedures”. Having read the Bill, I thought that he was correct at page 170, because there is a difference in emphasis between the word “activities” and the word “procedures”. Activities is a better, broader word, and I will explain in a moment why I feel that. It seems incongruous to refer to activities on page 170 and procedures on page 3. I hope that the amendment is helpful, and that the Minister will see it in the spirit in which it is intended.
Using the word “activities” allows the court and its sub-committees to be a supervisory board and to exert more rigorous scrutiny over the work of the Financial Policy Committee. If the court is able to review only the procedures of the FPC, there is some doubt over whether it will be able to examine and assess the FPC’s work sufficiently deeply and robustly. If the court were allowed to review the FPC’s activities, which is a more active concept than simply looking at procedures, it would be able to scrutinise the effectiveness of the FPC. It would also be able to assess the impact of the FPC and make a judgment about whether its actions are sub-optimal and need to be changed. Strengthening the consistency of the Bill would improve and clarify the court’s powers and proper role vis-à-vis the FPC, and I think it would be dangerous to leave that lacuna in the Bill. We need to align the provisions in clause 3 and schedule 1 so that there is no dispute in the court about how far it can go and at what point it is supposed to stop talking about particular matters.
a review of its procedures alone would be insufficient. Although there is nothing wrong with proper oversight of procedural matters, the court needs to be able to review more than simply the architecture of the FPC’s operation—procedural matters such as the minutes, and the agendas and how well they are delivered. The ability for the court to review activities encompasses the wider concept of not only the mode of performing a task but the actions involved. For those reasons, and
Mr Hoban: In responding to the amendment, I think it is helpful to set out the court’s different roles in relation to the FPC. The Bill gives the court two distinct responsibilities regarding the FPC. First, the court is responsible for the strategic oversight of the Bank’s financial stability work, primarily through setting and reviewing the Bank’s overall financial stability strategy as set out in clause 3(1), which contains proposed new section 9A of the Bank of England Act 1998. That role is also reflected in paragraph 1 of part 2 of schedule 1, to which the hon. Gentleman referred earlier, which creates a requirement for the Bank’s annual report to include a report by the court on the FPC’s activities. The court will undertake that report as an integral part of its remit for the strategic oversight of the Bank’s financial stability responsibilities, which includes the FPC.
Secondly, the court has a responsibility to oversee the procedures followed by the FPC. That is set out under clause 3 in subsections (4) and (5) of proposed new section 9B of the 1998 Act, and it is explicitly delegated to the sub-committee established by section 3 of that Act. That committee, which is known as NedCo, is made up of all the non-executive directors of the court, and it has a number of important responsibilities including oversight of the financial management of the Bank. NedCo’s responsibility in relation to the FPC consists of ensuring that the committee, including its external members, has the support and resources that it needs to perform its role. NedCo performs an identical role in relation to the MPC, as established by section 16 of the 1998 Act. So the two roles—overseeing the procedures and having strategic oversight—are different, and therefore the language used in the Bill to describe both roles is also different. I hope that explanation helps to illuminate the language that is used in the Bill.
I also make the point that the provision that the hon. Member for Nottingham East seeks to amend is unchanged from the draft Bill, because primary legislation is not required to establish the oversight committee.
Mark Durkan: I fully take the points made by my hon. Friend the Member for Nottingham East about the amendment, but I also recognise the strength of some of what the Minister is saying. The amendment would change the clause to read that the court of directors must keep the “activities” followed by the committee under review; it is not the “activities” of the committee that would be kept under review, but the “activities” followed by the committee. If that amendment were made, it would mean that the court of directors, in essence, would be reviewing the same general activities as the FPC.
Let me give an example. If we were to talk about the “procedures” of the Treasury Committee, we in this House would understand that to mean just the mechanics and the dos and don’ts; the highway code of how the Treasury Committee conducts its business. By contrast, the “activities” followed by the Treasury Committee obviously cover a much wider range of issues.
It is for that reason that the amendment would create a serious difficulty. I do not think that it would iron out the problem that the hon. Member for Nottingham East has identified. The question of the wider report being done on the “activities” of the FPC is different from the duty to keep under review the FPC’s “procedures”. So, although I accept that there is a difference of language that the hon. Gentleman has identified, that difference is both deliberate and important.
Chris Leslie: I am grateful to the Minister, and it is important that we have this particular debate, because in this Committee we have already been trying to shine a bit of light on what the various committees and sub-committees of the Bank will actually be doing. My hon. Friend the Member for Foyle makes a strong point in saying that we need to be clear about the fact that, if there are NedCos or oversight committees, they will carry out particular functions and the court will carry out other functions.
Perhaps it is the way that the Bill is drafted, but I am not very clear from page 170 if the report of the court of directors on the activities of the FPC will be undertaken by the court itself or delegated to an oversight committee. I do not know whether that is mentioned elsewhere, just as “procedures” are mentioned elsewhere, as the Minister has said. “Procedures” are mentioned in subsection (5) of new section 9B and they would be delegated to the sub-committee constituted under section 3, which is the NedCo. So the NedCo has the responsibility for procedural oversight—that seems to be the case—and I think that the Minister said before that the oversight committee will have responsibility for reviewing the “activities” of the FPC. So the court itself will not oversee the “activities” of the FPC. A sort of sub-committee of the court will do that. That sub-committee might have a similar composition to the NedCo, but overseeing the activities will not be debated by the court as a whole.
Mr Hoban: I said that there was no requirement to set up the oversight committee in primary legislation. The Bank—the court—has agreed, in response to the Treasury Committee report, to set up an oversight committee that will be comprised of non-executive directors of the court, in the same way that corporate bodies can choose to set up committees of the board for a whole range of reasons. It does not need to be in statute. In response to the concerns expressed by the Treasury Committee, the Bank was clear that the committee will be set up and will have the power to look at the work of the FPC in policy making. Returning to the point made by the hon. Member for Foyle, on ensuring that the review is adequately resourced, that is the responsibility of NedCo, which covers all non-execs.
Given the Minister’s commitment, I am more satisfied. It was important to clarify because it is difficult to follow the internal structures of the Bank, but I am now happy to beg to ask leave to withdraw the amendment.
We remain on page 3 but are down to line 34, so we are making progress. We are now at proposed new section 9C, on the “Objectives of the Financial Policy Committee”. The amendment is probably one of the more important amendments in Committee, because it concerns not only a glaring omission from the Bill, but something that has been widely debated outside this place and to which the Government need to respond—hopefully by accepting amendment 5, so as to make the proposed new subsection read:
“The Financial Policy Committee is to exercise its functions having regard to the Government’s growth, employment and other economic objectives with a view to contributing to the achievement by the Bank of the Financial Stability Objective.”
We feel that there is a need for a proactive focus on economic growth, job creation and employment generally, which is such an important facet of our social and economic life that, in creating a new Financial Policy Committee, it is essential that we task it with responsibility to have regard to efforts to improve the quality and strength of our economy. It should go without saying, but it does not. The Bill does not explicitly say that, so the amendment seeks to make that point.
The Bank of England Act 1998 included an explicit reference to the economic objective of growth of employment for the Monetary Policy Committee. It is necessary to have a read-across between the broad remits of all such significant committees or, as in this case, sub-committees of the Bank of England. To have a Financial Policy Committee that does not properly consider the prospects for growth and job creation, especially at a time—