Bank of England and Financial Services Bill [HL]

Debate between Lord McFall of Alcluith and Lord Lester of Herne Hill

Tuesday 15th December 2015 Lords Chamber

[Lord McFall of Alcluith (Lab)]

My Lords, I add my thanks to the Minister and others on this issue. I have had a letter from the Comptroller and Auditor-General, who clearly says that the Government listened to many of the concerns at Second Reading and that the threat to his role as Parliament’s auditor has been reduced. That aspect is very important.

The power of veto was one of the first things on which people came to their senses. It was explained to me that the Bank would publish its view when it refused the NAO, to which I said, “Well, it means that it would go before the Treasury Committee, and the NAO would probably go before the Public Accounts Committee”. If the Treasury Committee and the Public Accounts Committee felt that that was not very good, they would probably have a Joint Committee. I think they thought that it was the best idea to drop the power of veto, which was a good outcome.

I accept that the Bank of England’s independence is essential, particularly in the former role I had as chair of the Treasury Committee. That was very important, particularly during the financial crisis. But the democratic accountability element is important. I see this memorandum of understanding not as something set in stone but as something that can adapt to time as we go along. The noble Lord, Lord Higgins, made a point about whether it would be public. I am sure that it has to be public if there is to be credibility. If there is no intention to have it be public, that would be a backwards step on that issue. If it is not going to be public, the Treasury Committee and the Public Accounts Committee need to have sight of this as it goes along. Let us hope that we do not have that second aspect and that the memorandum of understanding is a public document. As the noble Lord, Lord Young, said, it should be here before we finish the passage of the Bill.

[Lord Lester of Herne Hill (LD)]

My Lords, I have not taken any previous part in the debates on this Bill. I intervene only to explain why I fully support these amendments and the Minister’s statement. Many years ago I represented clients in the Crown Agents inquiry, which was concerned with how millions of pounds came to be lost in an unwise investment in Australia. The Bank of England’s role in that inquiry was important. It turned out that there was no legal adviser within the Bank at all. It seemed to me and many that the amateur system that then prevailed was quite bizarre. I very much welcome the fact that this Bill moves the Bank of England from the dark ages to an enlightened situation.