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Lord Mackay of Ardbrecknish: I am grateful to noble Lords who took part in this short debate. I am grateful to the Minister for confirming what I thought was the position: that all the matters in the Bill are indeed reserved in the devolutionary settlement, and that there will be no need for concordat in any of them.
I fully accept the point made by the noble Lord, my noble friend Lord Boardman and the noble Lord, Lord Montague, about the position of the Bank of England, and the fact that it is known throughout the world and its reputation, and so on. I fully accept that and I see the force of their argument. However, I must say to the Minister that to argue that if it has been running for 300 years nothing should be done to change it comes ill from a Government who are changing the Constitutional Settlement and the Treaty of Union which has been running for something like 300 years. If the Government are truly radical, they should be looking at
all the ancient traditions and not just the Treaty of Union, which some of us feel is even more sacrosanct than the Bank of England ought to be.
Lord McIntosh of Haringey: I think the noble Lord would enjoy this afternoon and tomorrow afternoon rather more if he recognised that the Bill makes substantive changes to the role of the Bank of England. We are interested in the proper conduct of economic, fiscal and monetary policy, which is why we are making changes. What we are not doing is making trivial changes to the name.
Lord Mackay of Ardbrecknish: I fully understand. In fact I said in my introduction that we were making major changes, which is why I thought we ought to look at the name, especially as the major change, in my view and in the view of the noble Lord, Lord Barnett, and the noble Lord, Lord Peston, is but an introductory change to the greater change to come when we move to be part of the European single currency. The noble Lord, Lord McIntosh of Haringey, should not dismiss this too much out of hand.
The noble Baroness, Lady Carnegy of Lour, made some telling points about the Scottish position. One source of great irritation to the people of Scotland is to come south and find that Royal Bank of Scotland bank notes are not accepted here. In the new geography we are creating in the United Kingdom, I suspect that by the time the noble Lord comes back with the next Bill to make the Bank of England truly independent there will be a devolved government in Scotland. He will then find that it will be a little more than just myself and the Law Society of Scotland who will be asking, "Isn't it time we looked at the reality of this and called the Bank what it really is, not the central Bank of England, but the 'Central Bank of the United Kingdom'?".
Whether the noble Lord, Lord McIntosh of Haringey, will be discussing these matters two or three years down the road, who knows? We may have been translated to other responsibilities. But if we are, I hope he will remember my prophecy, that the government of Scotland will be suggesting that this ought to be changed.
I am grateful to the noble Lord for his assurances about the position of the Bill vis-a-vis devolution and for his understanding at least of the importance of the Bank in the economic life of the whole of the United Kingdom. I beg leave to withdraw the amendment.
Amendment, by leave, withdrawn.
Schedule 1 [Court of directors]:
4 p.m.
Lord Mackay of Ardbrecknish moved Amendment No. 2:
The noble Lord said: In Schedule 1 we are dealing with the composition of the court of directors. I do not want to make too much of this because further on we come to the terms of engagement of the members of the
The court of directors is important, although later on we are going to tease out just exactly what its role is going to be vis-a-vis the Monetary Policy Committee. At present the court is composed of people whose appointment is on a four-year term basis. The Government propose here as elsewhere to change it to a three-year term. That is quite a short term. Indeed, it is much shorter than the life of Parliament. In the course of the schedule it is suggested, quite rightly, that the Government will look to stagger some of the appointments. They will not make them all for one year to begin with. Perhaps the Minister can give us some of the Government's thoughts on how they will do it. Will they make a few of the appointments for one year, a few more for two years, and a few more for three years in order to get to the position that I believe is necessary? I welcome what the Chancellor of the Exchequer said in the Official Report in the other place on 20th May:
Given what I said in my first amendment, I obviously welcome that. Indeed, five of the recent appointments very much accord with the Chancellor's view.
We have Mr. Graham Hawkes from Wales, Roy Baillie from Northern Ireland, and we have Mr. Jim Stretton from Standard Life from Scotland. Although two of the others do not currently live in Scotland, they both have their roots there--Sheila MacKechnie of the Consumers' Association and Mr. John Neil, the Unipart boss. I am sure we could add some more names, reflecting the whole of Britain. In fact Mr. John Neil, although he does not reflect Scotland now, reflects other parts of Britain. I welcome these appointments, and I welcome the decision of the Chancellor being brought into reality to broaden the geographical base and the spread of interest of members of the court. I would like to see a similar spread of interest, and I notice that the noble Lord, Lord Montague, also wants to see it in relation to the Monetary Policy Committee.
In its preliminary report on corporate governance, the Hampel Committee recommended that directors should submit themselves for re-election at regular intervals and at least every three years. I suspect that the noble Lord, Lord McIntosh, might pray that in aid. However, we are not talking about quite the same thing, because we are not talking about re-election by a company but we are actually talking about reappointment, and about the control by the Chancellor of a bank which is supposedly moving towards independence. That will be the theme of many of our discussions on amendments this afternoon.
In the court's terms, three years does not seem to me to be long enough to show proper independence. It gives the Chancellor the opportunity to weed out anyone
I suggest to the Minister that it might be worth considering a longer term of engagement for the members of the court, so that at least some of them--perhaps not all of them--will inevitably spill over into another parliament. One Chancellor in one parliament will not be able to clear out the whole lot if he discovers that his appointments do not sing from the hymn sheet from which he thought they should.
I accept that the court is not as important as the Monetary Policy Committee. It is not quite the same issue as I believe it is for the Monetary Policy Committee, but it is nevertheless important. It is a reflection of the independence of the Bank. I welcome the decision about appointing members to the court representing a wider spread in Britain that perhaps we have had heretofore. That would be greatly helped if the Government would accept my amendment of five years, or even put in their own amendment of four years, for the term of office for the court of the Bank. I beg to move.
Lord Montague of Oxford: In some areas, we are thinking along the same lines. I am just rather nervous about this idea. Attention has rightly been drawn to the distinguished members of the court, but they are distinguished because they are already well into their careers. If we appoint them for five years, I am worried that we could well have within the court a very large number who have retired, although I have not looked at the statistics of this. It is wise to bear in mind that there is nothing to stop these people being reappointed. There is the political risk, to which reference has been made, but I venture to suggest that the noble Lord may be over-stating that. For example, as regards quangos, we do not say that no quango leader should be appointed for less than five years. We should bear very much in mind the flexibility that comes with three years, and the possibility of reappointment.
Lord McIntosh of Haringey: I notice that the noble Lord has not explained why it is different from the amendment moved by his party in Committee in the House of Commons. The existing provision is that members of the court should serve for four years. When we proposed in the Bill that it should be reduced to three, his colleagues in another place suggested that it should stay at four. He has not given any particular justification for it going up to five, but it is a sign of welcome flexibility of which I am sure we shall see more this afternoon and tomorrow.
The reasons are straightforward for reducing the term. These are issues of corporate governance which are pretty widely accepted nowadays. The noble Lord anticipated me by quoting the Hampel Committee:
That seems to us a perfectly good justification in itself for what is being proposed. We have to balance the possible conflict of having people there long enough to gain experience to learn on the job with ensuring that we have an opportunity to get rid of people after their terms of office are completed if they are not pulling their weight--not so much if they disagree. They are there to disagree and their disagreements will be well known, but if they are not acting actively as members of the court it is right that without undue formality it will be possible simply not to renew their terms of office.
The noble Lord asked me about staggering appointments to get a staged turnround. All the existing members will be reappointed for the balance of their existing terms which vary in expiry date from 1999 to 2001, and then the new members, as the Chancellor announced on 18th February, will have terms designed to ensure that roughly equal numbers of appointments expire each year. I believe that that meets the noble Lord's objective.
This is not an issue of fundamental principle. However, we believe that, on balance, the interests of good corporate governance lead to a term of three years as proposed.
Page 18, line 9, leave out ("3") and insert ("5").
"The Court will be substantially reformed, so that it is able to take account of the full range of industrial and business views in this country, and for the first time it will be fully representative of the whole of the United Kingdom".--[Official Report, Commons, 20/5/97; cols. 508-9.]
4 p.m.
"All directors should be required to submit themselves for re-election at regular intervals and at least every three years".
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