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Lord Peston: In speaking to these amendments, I start with Amendment No. 24 in the name of the noble Lords, Lord Newby and Lord Taverne. I am loath to tell the other place what it should do. Therefore, I certainly reject their amendment. It is up to them to make what progress they can. In so far as the subject is tempting, it seems to me that the noble Lord, Lord Mackay of Ardbrecknish, is nearer to a position than noble Lords could come to, although it is not one that I would go along with.

As I understand the argument of the noble Lord, Lord Mackay of Ardbrecknish, certainly as it is written down, I would regard the central wording as "competence and personal independence". That is what he is about. In a sense he is implying that the Chancellor, whether the present one or one of his successors, would be prone to appoint people who are not competent, incompetent, not personally independent or biased in some critical way. It is an example of the state that this country has come to that what we say about present and future Chancellors could be tabled as an amendment to a Bill. In the old days, given a Committee of this sort, we would have taken it for granted that although they would certainly appoint people that they thought well of, they would appoint the best people. That does not mean that the noble Lord, Lord Mackay of Ardbrecknish, is wrong in worrying about these things.

My view, however, proceeds along the following lines. For this to make sense, we have to ask ourselves whether in practice confirmatory hearings improve matters. Our main experience of confirmatory hearings is in the United States of America, and anybody who has seen those would walk a million miles before introducing anything like that into the British constitution; I certainly would.

I am well passed this sort of thing now, but in my younger days, I would have liked to have been thought of as a possible member of the Monetary Policy Committee. But being the arrogant person I was and still am, the notion then that a group of Members of Parliament could remotely query me on my competence or independence would mean that I should not want to be considered as a candidate. I know that is arrogant, but I am not alone in being the kind of person in this Committee who might take that view. We may have confirmatory hearings in this country because we occasionally make errors of that kind, but I would not like us to go down that path.

What I would like to see happen--and I believe it can happen--is for the Monetary Policy Committee to be seriously scrutinised by the Treasury Select Committee. I hope the Minister will confirm that there is nothing to stop the Treasury Select Committee sending for these people as individuals and saying to them, "Why did you take the line that you did in the minutes? Is it not strange that in your academic writings of several years earlier you took exactly the opposite view until you came on to this committee?", and so forth.

To refer to the noble Lord, Lord Newby, we do not have an equivalent committee, but he will recall that in my Second Reading speech I suggested that your

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Lordships should have the kind of committee which I regard as well within the Parliament Act where we, too, could scrutinise the Monetary Policy Committee. Indeed your Lordships might like to know--not to put on the face of the Bill--that my noble friend Lord Barnett and I will be writing to the relevant authorities in the House suggesting that we have such an all-party committee, itself independent, because it is a matter in which we are interested. As the noble Lord, Lord Mackay, pointed out, we might be able to make a small contribution on these matters.

I am glad that the topics have been raised. I certainly believe the Monetary Policy Committee must be subject to very powerful scrutiny, including scrutiny which would imply when it comes to reappointment that perhaps there was a lack of independence or a lack of competence--not necessarily, but perhaps. I am glad the amendments were raised, although I do not believe we should go down that line. However, in the case of your Lordships we should go down the line of positive response to the Monetary Policy Committee.

4.30 p.m.

Lord Boardman: I find it strange that a Government who held themselves up very clearly as requiring to give the Bank of England a larger degree of independence have managed to retain to themselves the control of the key appointments--those of the Bank of England and the monetary committee. The Chancellor of the Exchequer, under the scheme that is proposed, has control over both those bodies.

I can understand that the noble Lord, Lord Peston--although I do not agree--should find greater fear of being examined and rejected by a committee than being examined by a hostile Chancellor and rejected. I am sure none of us would wish to discard his experience. But the independence which is granted in the appointments by my noble friend's amendment is one which is compelling. I am particularly attracted by his suggestion of having a Joint Committee of both Houses. It saves a lot of duplication on time, and my short experience of Joint Committees when they have operated has been entirely fruitful. They seem to cut through a great number of the problems which arise in one House and with which the other House disagrees. That is one I would commend.

Turning to the monetary committee, my noble friend has already said that all of the nine members are either appointed by the Chancellor or appointed with his consent. There is no possible way in which one can claim this is giving them independence. I am sure they will be men of independent character, but they are appointed for only three years. My noble friend pointed out why five years would be more appropriate, but they are appointed only for three years, and in the last year, when they are coming up for reappointment, one wonders whether their judgment can be influenced by the longer-term outlooks that may be held within the Treasury. Assuming that would not be so, it still remains that it is the Chancellor's discretion to call for them.

I would urge in both the amendments put down by my noble friends for a Joint Committee that they should look at the directors of the Bank and decide whether

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they are appropriate people. I preferred Amendment No. 28, that with regard to the parliamentary scrutiny of the board appointments. This should also apply to members of the monetary committee. They should be coming in here with that degree of independence where the Government's reins have been handed over to the Bank of England. If it had been said, "We are asking the Bank and our nominees to do such-and-such a thing and they will tell us what they want", that would be one thing, and understandably would make the Bank of England quite independent in certain matters. What has not been said is, "We will make sure who runs the Bank of England".

I ask that these amendments should be carefully considered and supported.

Lord Barnett: I say to my noble friend Lord Peston, too little ability maybe to be a member of the Monetary Policy Committee, but too old--most certainly not! I would not accept that. As to whether any member of the Monetary Policy Committee could be brought before a Select Committee of the House of Commons, I must tell my noble friend that I would not want to be a member of a monetary policy committee, or any other committee, who refused to go before a Select Committee of the other place. He would find himself in serious trouble, and as a former chairman of the Public Accounts Committee, I do not know of anyone who ever refused to appear. I am sure that that will apply to the Treasury Select Committee.

Let me turn to the amendments. The noble Lord, Lord Newby, suggested that it should be done by the House of Commons Treasury Select Committee. As my noble friend said, that is nothing to do with us; this particular point is nothing to do with financial matters in the same sense as your Lordships' House does not deal with financial matters such as the Finance Bill. This is a quite different issue altogether. Of course this House can deal with it.

The noble Lord, Lord Mackay, talked about a joint committee. The words he used were "a suitable committee of this House". As my noble friend Lord Peston said, there is not such a suitable committee of your Lordships' House. That is nothing to do with this piece of legislation--or rather it is to do with this piece of legislation in the sense that there should be a suitable committee of your Lordships' House, and my noble friend Lord Peston and myself, as he indicated, will be seeking to ensure that there is such a committee. My noble friend will be pleased that he does not have to deal with that particular point because he does not have to decide that issue. Certainly it is quite wrong that there is no suitable committee.

It was suggested that the European Communities Committee Sub-Committee A could deal with it. As the noble Lord, Lord Boardman, will agree, it already has more than enough to do without having to deal with this as well.

I do not like confirmation hearings either, as the noble Lord, Lord Newby, has suggested, but the new clause that the noble Lord, Lord Mackay, has suggested is not unreasonable. On the other hand, even if it is not in the

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Bill, members of the Monetary Policy Committee, the Government and anybody else will undoubtedly be called before the Treasury Select Committee in another place, and I hope in due course a committee in this place, and they would be very foolish indeed to seek to refuse to appear.

That is the answer. I am not trying to usurp the role of my noble friend in replying to the amendment, but Amendment No. 3 with the new clause is unnecessary, I would think, if I may reply on his behalf. I personally do not support that, but I believe that there should be a Select Committee of this place to deal with these matters.

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