Revisiting Rebuilding the House: the impact of the Wright reforms

Written evidence submitted by Andrew Tyrie MP, Chair of the Treasury Committee (WR 22)

1. Thank you for your letter of 4 March seeking views about the impact of the election of Committee Chairmen. I have added some more general comments about the Wright reforms which may also be helpful for your inquiry.

Impact of elected Committee Chairs

2. Select committees are now increasing the effectiveness of Parliament in its core tasks. They are requiring the Government to explain its proposals and justify its actions in unprecedented detail. More than the Chamber of the House, Committees are often able to question ministers closely and, if need be, relentlessly, and get to the bottom of why a Department is doing something. They are also the only realistic means by which Parliament can hope to hold the wider ‘quango state’ to account. They are now doing more than in previous Parliaments. It is natural that the executive might wish to resist having to provide more explanation of what it does. But in the long run, better quality explanation, and the knowledge that decisions must be tested in Parliament, will usually provide better government.

3. The election by secret ballot of the whole House of select committee chairmen played a crucial role in enabling more effective scrutiny. This is further helped by the measure of independence from the whips that has come with intra-party election of members of committees. Election has reduced the partisan influence of the whips. Elected chairs feel accountable not to their party machines but to those who elected them-their parliamentary colleagues. The mandate from the House gives them more authority to hold the executive to account and to press when necessary.

4. There is some way to go before the full effects of election in the committee system are known. It is probably the single most significant parliamentary reform since the creation of the present select committee system in 1979. It has also reinforced the tendency for the House of Commons to exercise its influence in the committee corridor rather than the Chamber.

5. The Treasury Committee has attempted a number of innovations. These could provide useful precedents for other committees. For example:

· The Committee has taken an innovative approach to holding the Financial Services Authority to account. The Committee appointed specialist advisers to act on its behalf within the FSA during the preparation of the Authority’s report into the failure of the Royal Bank of Scotland. For all practical purposes the specialist advisers acted as Parliament’s investigators. Their job was to investigate the FSA’s behaviour and performance, to ensure both that the report was a fair reflection of the evidence and also that the FSA did not shy away from addressing any of its own failures. The FSA undertook to provide the advisers with the resources and staff support they needed for their work.

This was the first time that a select committee had sent its own advisers into a quango to examine it from the inside and to report back. The Committee is now carrying out a similar exercise in respect of the FSA’s investigation into the collapse of HBOS. This is a route that other committees may wish to consider when faced with large and powerful quangoes.

· At the time of the creation of the Office for Budget Responsibility in 2010 the Committee pressed the Government for, and obtained, a statutory veto on the appointment of its Chairman and two principal colleagues, and over their dismissal. This was, I have been told, a first for Parliament. The so-called "double-lock" protects the independence of the OBR from political control. It also illustrates its direct accountability to Parliament.

· The Committee has developed its practice of holding appointment hearings with new members of the Bank of England Monetary Policy Committee to include external members of the Financial Policy Committee. The Committee also took a lot of detailed oral and written evidence from the new Governor of the Bank of England in advance of him taking up his duties. This amounted to a first pre-appointment hearing for the appointee to the Governorship. The Committee has similarly held appointment hearings with the new Deputy Governor for Prudential Regulation and with the Chairman appointed to the new Financial Conduct Authority. These hearings not only allow Parliament to ensure that the people concerned are up to the job; they also allow the wider public to reach a view, based on a good deal of written and oral evidence, on how they will address their new responsibilities. In the case of the Governor of the Bank of England, Treasury Committee endorsement should also reinforce the appointee’s independence from the inevitable day to day political pressures that can be expected when in office.

· The Financial Services Bill-the biggest shake-up of financial regulation for more than a decade-went through Parliament in 2012. The Committee has taken a number of novel steps to scrutinize it. First, the Committee tabled its own amendment at Report stage in the Commons. This produced a Government concession on the floor of the House. Second, the Committee published a Report containing its views on what was still needed to improve the Bill, to coincide with the introduction of the Bill in the Lords. The Committee’s proposals formed the basis for much of the debate in the Lords and a series of Government amendments to the Bill gave effect to some of our most important recommendations. The Bill was improved as a result.

Parliamentary Commission on Banking Standards

6. The creation of the Parliamentary Commission on Banking Standards is an important institutional step forward for Parliament. The select committee on the Marconi affair in 1913 split on party lines and discredited the idea of parliamentary commissions of inquiry into major policy questions or failures for a century. Since then extra-parliamentary inquiries have been the rule, supported by the Tribunals of Inquiry (Evidence) Act 1921. Some have been successful. There are, however, many recent examples of ineffective, over-long or expensive inquiries, suggesting that parliamentary commissions may sometimes offer a better route.

7. The Banking Commission comprises experienced members of both Houses. It has taken a vast amount of oral and written evidence in a comparatively short time. It has worked in innovative ways. For example, it has used legal counsel to examine witnesses; it has gathered much of its evidence through panels led by individual members. The Banking Commission will issue its final report before the summer. It has already examined the draft legislation on banking reform and agreed a report on the collapse of HBOS. It will conclude its work within 10 months of our creation. It will have cost a fraction of the cost of a judge-led inquiry. When there is a need for an inquiry into a major matter in future, the option of a parliamentary commission is now on the table.

Other Wright recommendations

8. T he Coalition Agreement stated that it would "bring forward the proposals of the Wright Committee for reform to the House of Commons in full". [1] There is some way still to go.

9. House Business Committee: The Wright Committee recommended a House Business Committee to draw up a weekly agenda for the House. The Coalition Agreement undertook to set it up by the third year of the Parliament. The Conservative Party’s Democracy Task Force, chaired by Kenneth Clarke, on which I served in 2008, recommended a similar body. My support for the idea was tempered at the time by the likelihood that any such body could and probably would be stymied by the executive. The effectiveness of a Business Committee, however constructed, will be under attack should the executive conclude that it is a serious threat to its freedom of action.

10. Intelligence and Security Committee: The Wright Committee thought it unsatisfactory that the proposed election of chairmen and Members of select committees would not apply to the Intelligence and Security Committee. Wright proposed applying the system of elected chairmen as far as possible to the ISC. You and I both recently tabled amendments to the Justice and Security Bill to that effect.

11. Committee size: Wright concluded that the appropriate size for departmental select committees should be no more than 11. Any more carries the risk of the committee being unwieldy. Although most committees have been reduced in size to 11 Members, the Treasury Committee is one of several which has more: the Treasury Committee has 13 Members. The Government originally proposed that it should have 16 Members. This was reduced to 13 only after a row with the Liaison Committee. The government committed to reduce the size of the Committee to 11 after the election but has subsequently declined to confirm this in writing. 11 is probably still on the large side. The temptation to inflate membership size in order to seek to ensure that a decent number of Members attend should be resisted. If the quorum is an enduring concern, there is probably a deeper problem to address.

12. These, and a few other, ideas have been set out in Mr Blair’s Poodle goes to War (Centre for Policy Studies 2004)

(http://www.cps.org.uk/publications/reports/mr-blair-s-poodle-goes-to-war-the-house-of-commons-congress-and-iraq/);

and Government by Explanation (Institute for Government, 2011)

(http://www.instituteforgovernment.org.uk/publications/government-explanation).

25 March 2013