Financial Services Bill

Debate between Lord Burns and Lord Flight

Tuesday 26th June 2012 Lords Chamber

[Lord Burns]

My Lords, I support Amendment 6 tabled by the noble Baroness, Lady Wheatcroft. As she said, in terms of strengthening the power of the court or the board of directors, whatever we are going to call it, giving the appropriate powers, respect and position to the non-executive chairman of that court would be a very important part of making it an effective functioning body.

I was Permanent Secretary at the Treasury in 1993 when Eddie George was appointed governor and Rupert Pennant-Rea deputy governor without any warning being given to any of the members of the Court of the Bank of England. It caused a great deal of upset among members of the court who felt that they had been undermined by the lack of warning. In a world where we are trying to build some good corporate, modern, transparent governance, as we have heard today, giving a role to the chairman of the court, at least in terms of informing him or consulting him, would be an important part of it.

With respect to the amendments covering the powers of the Treasury Select Committee, my noble friend Lord Turnbull has set out the analysis of that position. It would be wrong to underestimate the power of the Treasury Committee simply in terms of its ability to summon people and to question them. I regard the Treasury Committee—I have watched it for many years and I appeared before it many times—as a very skilled body in terms of oversight. It fulfilled its role in terms of challenge, questioning and advice. I would rather it did the job that way rather than by seeking to have vetoes over positions. It can make a huge impact simply by the way it brings people in, talks to them, summarises its opinions and then leaves it in the hands of Ministers to decide how far they wish to take account of those views and whether they really want to push it. At the point at which they want to push it, the points made by the noble Lord, Lord Turnbull, probably come into play.

I particularly agree with the noble Lord, Lord Peston. I cannot remember an occasion when the term of a Governor of the Bank of England was shortened other than by his own will. I would have thought that it would be an issue of some significance that would require not just the House of Commons but, as the noble Lord, Lord Peston, said, Parliament in general to agree it.

[Lord Flight]

My Lords, I also support the amendment tabled by the noble Baroness, Lady Wheatcroft, for essentially the reasons given by the noble Lord, Lord Burns, and as part of the process of restoring the court to being a proper board.

I want to comment on Amendment 5. I have mixed views, but I think it is quite healthy that someone being appointed to such an important role should be subject to vetting in the same sort of way that occurs typically in the United States and that it probably is the Treasury Select Committee that is equipped to handle that vetting.

If I may digress, the present Governor of the Bank of England studied economics at the same university as me at the same time, and anyone that knew that knew that the teaching of economics at that time at that university was appallingly bad. That illustrates that it takes some effort to assess the sort of mind that someone being appointed to that job has got. The absence of any form of politically accountable examination is probably wrong in today’s world. Therefore Amendment 5 is worthy of serious consideration.