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Lord Peston: I thank my noble friend for his answer, though I have to tell him, for once, that I am not entirely satisfied. He referred to the "best people", but the range of best people is quite large. I must be careful not to put words into the mouth of my noble friend, but I somewhat interpreted what he was saying about how we make appointments in future in a general way. If those posts were advertised, we might well gain access to a much larger group of people, which is worth reflecting on. Professor Minford, as far as I know, is in Cardiff and not London nowadays, having left Liverpool, so that even though his views on the economy and my own are slightly different, he would meet some of the relevant criteria.
I shall make two more remarks and the noble Lord, Lord Mackay, also wishes to make a remark. There was a third target for me--and one reason for my putting this down was slightly mischievous--that as the noble Lord, Lord Mackay of Ardbrecknish, pointed out, what we observe here will be observed on a much larger scale when we have the single currency and the Central European Bank. Not least for our country, the regional impact will be vital in the monetary policy that they conduct there. I support a move in that direction, but underlying my view is the fact that we will need very powerful regional intervention if it is to be made to work. So I did have a third string to my bow there.
My last point, and I would like my noble friend to reflect on this, is that a relevant word here is "credibility". Anyone who reads the press locally, and indeed the national press in the form of the Financial Times, cannot but doubt that the people out there--I do not apologise to my noble friend Lord Sefton in so
calling them--do not believe that their interests are taken care of by this committee. Indirectly, I am trying to advise my right honourable friend the Chancellor that when making these appointments in future he should bear in mind the words "what is credible" in terms of regional interests and business interests. Credibility is extremely important here.I will not quite withdraw the amendment until the noble Lord, Lord Mackay of Ardbrecknish, has spoken.
Lord Mackay of Ardbrecknish: Perhaps I can start on a note of agreement with the Minister. Yes, I am indeed pleased to see that the new members of the court have been widely drawn. That is very welcome. As I indicated yesterday, however, there is a difference between the court and Monetary Policy Committee. We teased out the relationship, and it did not seem to me as though the court would have any influence over the decisions of the Monetary Policy Committee. I am therefore left with the feeling that, although the court may correctly represent the wide interests in the United Kingdom, that still leaves me with a problem in the Monetary Policy Committee.
I accept the criticism that the noble Lord, Lord Newby, made of my Amendments Nos. 31 and 32 that for somebody who might have been in the Bank or in the Treasury for a year or two in their early careers, it would not be very fair to knock them out if in their subsequent career they had become quite serious players outside either the Bank or the Treasury. The trouble with the noble Lord's argument is that the two people I have prayed in aid on the Monetary Policy Committee were not just casual employees of either the Treasury or the Bank of England. Professor Charles Goodhart was the Chief Adviser to the Bank and Sir Alan Budd was the Chief Economic Adviser to the Treasury since 1991. If I may say so, they were not just middle rank people gaining some experience on their way through.
While I agree with the point the noble Lord made in criticising my amendment, I was more aiming at people who were senior or serious players in either the Bank or the Treasury then finding themselves translated--in one case an immediate translation--to be considered one of the away team. My concern still remains, although I accept that perhaps my amendment is too widely drawn.
On the question of manufacturing industry and the various parts of the economy, I would be just a little more reassured by the explanation by the Minister if the Chancellor had made one of the four appointments from outwith the particularly tight circle from which these people are drawn. Anybody reading their CV will see that they have not done much moving around. I have read their careers and, apart from time abroad--which may be important, and the noble Lord, Lord Rees, was about to correct me--because two were born abroad and two have worked in very serious positions abroad, I am actually talking about the United Kingdom. There did not seem to be much moving about in the United Kingdom by any of them in the small CV put out in the Treasury biography. They do move abroad somewhat to take great tasks, but they return to the "magic triangle" in order to undertake their tasks in Britain.
If the Chancellor appointed somebody from Sheffield University--I know nothing about the professor who wrote to The Times, and I may thoroughly disagree with his economic position--or somebody from Newcastle (the noble Lord, Lord Eatwell, has indicated that I probably would) or somebody from Wales, I would be rather happier. Perhaps even the noble Lords, Lord Sefton and Lord Montague, would be happier if someone from Scotland were included. If there was just one person from outside this magic circle or magic triangle, I would be encouraged, but I am discouraged by the fact that there is nobody.
My noble friend Lady Carnegy is quite right about the position of the Scottish economy, and I suspect that the noble Lord will withdraw the amendments. However, I say this simply to the noble Lord, Lord McIntosh. He can take it to his right honourable friend the Chancellor, and it will nor surprise the Chancellor. Once the government of Scotland is up and running, the Westminster Government will not get away with a Monetary Policy Committee without somebody from Scotland. I give him that warning. When that day happens I shall look out for the noble Lord in the corridors and he can buy me a very large wine of my country.
4.45 p.m.
Lord McIntosh of Haringey: Before my noble friend winds up the debate, I recognise that I did not respond to Amendments Nos. 31 and 32 which were grouped with the main amendment. I should have done so because they show such a nobility of spirit on the part of the noble Lord, Lord Mackay of Ardbrecknish, that the matter should not pass. What he is doing in Amendment No. 31 is to exclude himself, as he recognises, from consideration, and so reluctantly I withdraw the nomination which I had had in mind of putting forward.
More seriously, he talked about people who have extensive responsibilities in a senior position. He has had extensive experience in a senior position and it would be paradoxical if we were to make the kind of exclusion that he is proposing. We should also have excluded John Maynard Keynes from consideration as a member of the Monetary Policy Committee as a former employee of the government.
I do not in any way want to underestimate the importance of the thrust of the amendments. It is absolutely fundamental that we should show solidarity between regions and countries of the United Kingdom and that our monetary and economic policies generally should be concerned with the support of those regions and not concentrated on the south-east and on the financial sector. That is fundamental.
It also follows from what I have just said that we must be concerned with business generally and with manufacturing industry in particular. The only query that we have with that thrust, with which we agree, is that we do not believe that it can or should be carried through into the membership of this very small Monetary Policy Committee.
Lord Peston: I thought I had summed up. I shall not say anything further other than that I look forward to what the noble Lord, Lord Mackay of Ardbrecknish, has said about the likely behaviour of the Scottish parliament and the resulting drinking to which we may all be looking forward. I beg leave to withdraw the amendment.
Amendment, by leave, withdrawn.
[Amendments Nos. 26 to 28 not moved.]
Schedule 3 [Monetary Policy Committee]:
Lord Mackay of Ardbrecknish moved Amendment No. 30:
The noble Lord said: I felt I might withdraw the amendment. On the other hand, it is the only amendment that will give the Minister the opportunity to explain to us what will happen if the Monetary Policy Committee fails to meet the Chancellor's target of 2.5 per cent., plus/minus 1 per cent.
I have suggested in the amendment that if it fails to meet the target we might have some negative performance-related pay with regard to the members of the Monetary Policy Committee: they should have some of their pay docked. It is a slightly serious point because it would concentrate their minds. More importantly, it seems to me that it would be interesting to hear from the Minister exactly what will happen.
As far as I understand, the Monetary Policy Committee will send a letter to the Chancellor and say, "Whoops, sorry, Chancellor, we've got it wrong and this is what we are going to try to do about it". It does not seem to me that much will happen to the members of the committee. Will they be told to write out 100 times, "I must not go beyond 3.5 per cent."? What is going to happen? I read a book recently about the family who built Richmond Terrace where, in the now becoming dim and distant days of ministerial life, I had my office. One of the daughters married Charles James Fox and what I found interesting was the way government Ministers, or people who appointed the government Ministers, had a measure of performance-related pay. They were allowed to keep a small portion of what they collected or distributed or, while they had the money in, they invested it and were allowed to keep the interest. They built some very grand houses and ran some very grand estates on that. Unfortunately, I understand that that was all stopped early in the last century and I doubt if it would be acceptable today.
Performance-related pay is not unknown and this is a suggestion that, if the committee fails to meet its targets, it receives a little more than just a letter; a little more than just an explanation, and some reduction in members' pay might be considered by the Chancellor.
I doubt if the Minister will accept this amendment but perhaps, in turning down my amendment, he will explain to us exactly what is going to happen if the Monetary Policy Committee fails to meet its target. I beg to move.
Page 22, line 43, at end insert (", except that, in any case where the inflation performance of the economy falls outside the targets specified under section 12 for a specified period, the Chancellor of the Exchequer may make such modifications as he thinks fit to the remuneration of members of the Committee.").
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