Conclusions and recommendations
Appointments to the Office of Tax Simplification
1.The Office of Tax Simplification (OTS) has been put on a statutory basis. This is welcome. The independence of the Office of Tax Simplification’s senior staff should be entrenched. Those nominated as the Chairman and Tax Director of the OTS should be available for pre-appointment hearings before this Committee. The legislation should ensure that such appointments, and any dismissals, should be made with the consent of the Treasury Committee. This will mirror the statutory requirements for appointments to the Budget Responsibility Committee of the Office for Budget Responsibility. It is crucial that the scope and limitations of that independence are fully understood by HM Treasury, the OTS, Parliament and the public. (Paragraph 11)
Appointment of the Governor of the Bank of England
2.This Committee agrees with its predecessor, and with the Parliamentary Commission on Banking Standards, that giving Parliament the effective veto over the appointment and dismissal of the Governor of the Bank of England would bolster his or her independence. The Bank of England Bill should be amended to reflect this. (Paragraph 18)
Appointments to the Prudential Regulatory Committee
3.The Bank of England and Financial Services Bill will create a Prudential Regulation Committee (PRC). Should the Bill be enacted, it is the intention of this Committee to hold pre-appointment hearings with those who will sit on the PRC, in line with the current arrangements for those who sit on the Monetary Policy Committee and the Financial Policy Committee. The Treasury Committee will use the same criteria of personal independence and professional competence to assess appointments to the PRC as for the other policy committees of the Bank of England. (Paragraph 21)
The Chief Executive of the Financial Conduct Authority
4.In the last Parliament, the Treasury Committee recommended that there should be pre-appointment hearings for the Chief Executive of the FCA. We agree. The Government should ensure that it nominates its preferred candidate for the current vacancy sufficiently in advance of the proposed start date of the Committee to enable this Committee to undertake a pre-appointment hearing. The independence of the FCA from interference from the executive is essential. That independence can and should be entrenched by a statutory veto on appointments and dismissals to the post of Chief Executive of the FCA. (Paragraph 24)
The Regulatory Decisions Committee of the FCA
5.The Committee has acted on the Treasury’s recommendation to conduct pre-commencement hearings with the Chairman of the FCA’s Regulatory Decisions Committee and intends to continue this practice. It also intends to conduct pre-appointment hearings for the Chairman of the PRA’s Decision-Making Committee, if and when it is constituted. (Paragraph 29)
Conclusion
6.It has been the practice of Treasury Committees, in former Parliaments, to consider two criteria when considering appointments to the Monetary Policy Committee, the Financial Policy Committee, the Budget Responsibility Committee, the Office of Tax Simplification and the FCA’s Regulatory Decisions Committee. These criteria are personal independence and professional competence. The Committee will continue with that practice for all appointments to these bodies during this Parliament. (Paragraph 30)
7.In considering the appointment of the Governor of the Bank of England, the additional executive responsibilities of the position were reflected in the TSC’s detailed cross-examination and more extensive reporting, two months prior to taking up post. Governors of the Bank of England and those who hold executive functions within an organisation, may also expect additional commentary, along with the Committee’s consideration of their personal independence and professional competence. (Paragraph 31)
8.Consideration by the Treasury Committee of appointments to the Chairman of the Court of the Bank of England or to the Chairman of the Financial Conduct Authority will be more wide-ranging, and the Committee may decide to provide a more detailed conclusion in its Reports on appointments to these posts. (Paragraph 32)
Enhancing the Reports
9.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. (Paragraph 37)
10.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. (Paragraph 38)
11.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. (Paragraph 42)
12.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. (Paragraph 45)
© Parliamentary copyright 2015
Prepared 24 February 2016