Bank of England (Appointment of Governor) Bill

Lord Tyrie Excerpts

Friday 6th July 2012 Commons Chamber

[John McDonnell]

That is a really useful advert—it might be one of the most constructive things said this morning.

I shall be as brief as I possibly can. The message contained in the Bill is that the appointment of the new, powerful post of Governor of the Bank of England should not be left solely to the Executive, and that Parliament, on behalf of the people, should also play a decisive role. The appointment is too important to be left in the hands of a single Minister.

[Mr Andrew Tyrie (Chichester) (Con)]

As the hon. Gentleman knows, his Bill has the support of the Treasury Committee—it is similar to the Committee’s proposals. The principle of greater parliamentary engagement that he is articulating is a strong one, but does he agree that it could be enacted in a number of ways? Does he also agree that we need flexibility from the Government on accomplishing that engagement while the Financial Services Bill is in the Lords?

[John McDonnell]

That is an incredibly constructive proposal, and I hope the Minister heard it. There are other ways of approaching this matter and we should be open to considering them. Yesterday, the Government entrusted the hon. Gentleman with a major inquiry—the inquiry Committee will comprise members of the Treasury Committee and Members of the other House. If the Government have the confidence in Treasury Committee members to undertake that inquiry, it should have the confidence in their having a decisive role in the appointment of a new Governor of the Bank of England. I therefore welcome the hon. Gentleman’s constructive comments.

May I thank Kate Emms, the Clerk, and Gordon Nardell QC for their assistance in drafting the Bill and the explanatory notes? I am extremely grateful for their assistance. The Bill amends the Bank of England Act 1998 to give effect exactly to the recommendation of the Treasury Committee from its report of October 2011 that the appointment of the Governor should be subject to the approval of the Treasury Committee.

Between the time of choosing the appointment of the Governor of the Bank of England as the subject of my private Member’s Bill and debating it, the world has changed somewhat. Last week’s revelations about the role of Barclays bank—and, more than likely, others—in the LIBOR scandal have given the Bill a new context, and there is a new significance in the appointment of the Governor of the Bank of England. Mervyn King will retire in the next year, and the new Governor will play a pivotal role in what, it is increasingly clear, will of necessity be a radical reform and reconstruction of our financial system.