33.In 1998, the 1997–2001 Treasury Committee provided the following guidance on how it expected to report on its hearings with members of the Monetary Policy Committee:
We expect our reports following the hearings to be brief; if, however, we were to conclude that an appointee did not, in our opinion, fulfil either (or both) of the criteria [of professional competence and personal independence], we would expect to indicate which criterion was at issue. The nominees and the Governor or Chancellor as nominators will normally receive copies of our report in confidence in advance of publication. We would expect an early response from the Government and/or the Bank, as appropriate.
34.This guidance has, in the main, been followed by the Treasury Committees that followed. After a process of iteration, most Reports on appointments, whether to the Monetary Policy Committee, or more recently to the Financial Policy Committee or the Budget Responsibility Committee, take the same form:
Such Reports are then published alongside the transcript of the oral evidence provided by the appointee. Their CV and the answers to the Committee’s questionnaire are normally published at the time of the oral evidence session with the Committee.
35.There have been times where the Treasury Committee has provided further commentary about an appointment. This additional commentary can be about the appointment process, where for example on the appointment of Andy Haldane to the Monetary Policy Committee the Treasury Committee, in the last Parliament, noted that:
The usual practice of the Bank of England—which the Treasury Committee supports—is to fill Executive Director posts by fair and open competition. This was not done in this case. On this occasion, a case could be made for an exception to the usual practice because of the wider reorganisation of the Bank that was being undertaken and the recent expansion of the Bank’s responsibilities. Nevertheless, we would expect the usual appointment process to be followed in future.
It may also be about the appointee themselves. For example, the Treasury Committee, in the last Parliament, made the following recommendation about Alastair Clark’s appointment to the interim Financial Policy Committee:
We are satisfied that Mr Clark has a great deal of professional competence. Whether he has the necessary direct experience to be an external member is not so clear. […]
We accept the case for Mr Clark being appointed to the interim FPC while it has no legislative basis. He has much to offer the body from his knowledge of regulatory issues. But to ensure that the interim FPC has the intended representation of wider views, we recommend that a fifth external member also be appointed.
In the same Report, the Treasury Committee, in the last Parliament, also provided the following advice to Michael Cohrs: “We note the apparent reticence of Mr Cohrs about speaking out in speeches and statements about his work while on the FPC, and we would ask him to reconsider.”
Other examples of such additional commentary exist. The 2010-15 Treasury Committee made the following comment on the appointment of Dr Nemat Shafik as a Deputy Governor of the Bank of England:
We are satisfied that Dr Nemat Shafik has the professional competence and personal independence to be the Deputy Governor of the Bank of England responsible for Markets and Banking. She has extensive experience of macroeconomics, global financial issues and international development. Her apparent inexperience of the conduct of monetary policy, management of a central bank balance sheet, and market structures and practices suggest that it will be important that her knowledge of these areas be developed quickly so that she can become fully effective in her new role. We wish her every success in her role.
36.The only example of a Committee not approving a candidate was in May 2000, when the then Treasury Committee concluded in respect of Mr Christopher Allsopp that:
In the case of Mr Allsopp, however, we were disappointed in his answers to our questions, and believe that this casts doubt on whether he possesses the skills required to take part in meetings of the Monetary Policy Committee. We therefore call on the Chancellor of the Exchequer to think again about Mr Allsopp’s appointment.
However, the Government allowed Mr Allsopp to continue as a member of the Monetary Policy Committee, and replied to the Committee that:
Mr Christopher Allsopp fully satisfies the criteria for appointments to the Bank of England Monetary Policy Committee. He is one of a line of distinguished academics who serve on the MPC. A specialist in international macroeconomics, Mr Allsopp’s previous experience includes work at the OECD in Paris and three years as Adviser at the Bank of England as well as consultancy appointments with many other leading UK and international organisations. His appointment has been widely welcomed, including personally by the Governor and Deputy Governor.
37.Treasury Committees, in former Parliaments, have found it useful, at times, to provide additional commentary on both the appointees and the process of appointment in their Reports. To enhance the transparency of the Committee’s work, the Committee has concluded that there may be merit in expanding such commentary.
38.The Treasury Committee will be clear about whether an appointment has its approval. Where the questioning of the Committee raises concerns that need to be addressed by an appointee, these will be specified in the Report of the Committee on that appointment.
39.Concerns around personal independence, if they do not completely rule out an appointee, are most likely to relate to conflicts of interest or the perception of such conflicts. We would expect candidates to deal with such conflicts immediately, and inform the Committee of their resolution.
40.Concerns about professional competence may take several forms. They might, for example, be to do with an appointee’s ability to engage and communicate with the public, or a lack of relevant knowledge or experience.
41.Where concerns about an appointee’s professional competence do not rule them out, the Committee may simply acknowledge the current weakness, in an expectation that over time the appointee will seek to build up strength in the area identified. The Committee may also follow up such concerns in subsequent hearings with the appointee, or request additional written evidence after a period of time. In the most exceptional cases, the Committee may require an appointee to return to give evidence after a period of time has elapsed.
42.The Committee will undertake to provide its approval (or not) of an appointment by publishing its Report as soon as reasonably possible after a hearing. This may mean a longer interval of time between the hearing and notification of the Committee’s decision.
43.Should the concerns of the Treasury Committee be too great to merit approval of an appointee, or should an appointee not respond to the recommendations of the Committee, other routes are available to the Committee. For example, the Cabinet Office guidance for pre-appointment scrutiny by House of Commons select committees notes that:
Committees with concerns about an appointment have in the past raised concerns about a preferred candidate in private correspondence or discussion with the Minister, as an alternative to issuing a report in the first instance. Ministers in receipt of such approaches will want to consider whether or not it is advisable to press ahead with approving the appointment. In these circumstances, the committee can agree that the Minister shall inform the candidate of the committee’s reservations before a formal report is made to the House.
44.As discussed, Treasury Committees, in former Parliaments, have also pushed for the veto on appointments to the MPC, and a double lock on the appointment of the Governor of the Bank of England. While these may not be currently available, the Committee has another route available to it, as suggested in the Treasury Committee’s Report, in the last Parliament, into the appointment of Mark Carney as Governor of the Bank of England:
When the Chancellor announced the appointment, he told the House that Dr Carney wished to appear before the Treasury Committee before taking up his appointment, and that Dr Carney would not otherwise be commenting at length on British economic policy until he took up his post. The Committee announced later that day that it would hold what would amount to a pre-appointment hearing with Dr Carney and report its conclusions to the whole House. If necessary, the Committee said that it would request that its recommendations be debated on the floor of the House.
45.Should the Treasury Committee disagree with any putative appointment, and should the person making the appointment, whether the Chancellor or another, not be swayed by its disapproval, it may refer its Report on that appointment for debate by the whole House, may call the Chancellor before the Committee for an explanation of his decision, or both.
35 Treasury Committee, Confirmation Hearings, Third Report of the Session 1997-98, HC571, para 11
36 Treasury Committee, Appointment of Andy Haldane to the Monetary Policy Committee, Twelfth Report of Session 2013–14, HC1235 , para 7
37 Treasury Committee, Appointments of Michael Cohrs and Alastair Clark to the interim Financial Policy Committee, Fourteenth Report of Session 2010–12, HC 1125, paras 10, 13
38 Treasury Committee, Appointments of Michael Cohrs and Alastair Clark to the interim Financial Policy Committee, Fourteenth Report of Session 2010–12, HC 1125, para 5
39 See for example Treasury Committee, Appointments of Dame Clara Furse, Richard Sharp, and Martin Taylor to the Financial Policy Committee, First Report of Session 2013–14, HC 224, paras 9-10,13;
40 Treasury Committee, Appointment of Dr Nemat Shafik as Deputy Governor of the Bank of England, Third Report of Session 2014–15, HC 492, para 6
41 Treasury Committee, THE MONETARY POLICY COMMITTEE OF THE BANK OF ENGLAND: CONFIRMATION HEARINGS, Seventh Report of Session 1999-2000, para 5
42 Treasury Committee, THE MONETARY POLICY COMMITTEE OF THE BANK OF ENGLAND: CONFIRMATION HEARINGS: THE GOVERNMENT’S RESPONSE TO THE COMMITTEE’S SEVENTH REPORT OF SESSION 1999-2000 Seventh Special Report of Session 1999-2000
43 Cabinet Office, Cabinet Office Guidance: pre-appointment scrutiny by House of Commons select committees, November 2013
44 Appointment of Dr Mark Carney as Governor of the Bank of England, Eighth Report of Session 2012–13, HC 944, para 13
Prepared 24 February 2016