Oral Answers to Questions
Debate between Brandon Lewis and Andrew Love
Mr Speaker
I was going to call Mr Love, but he is not standing, so I won’t. But if he does, I might.
Mr Andrew Love (Edmonton) (Lab/Co-op)
I did not think that you would call two Opposition Members in a row, Mr Speaker.
The level of home ownership has fallen to its lowest level for 30 years. Will the Government now admit that their failure to build homes is pricing home ownership out of the reach of ordinary families?
Brandon Lewis
I gently point out to the hon. Gentleman that in 2010 we inherited the lowest level of building since 1923. We have been rebuilding that market, which is now back at the 2007 level. We have started building affordable homes at the fastest rate in 20 years. The latest figures we have show that, in 2013, we had the highest level of first-time buyers in the market—almost 230,000—for many years.
Bank of England (Appointment of Governor) Bill
Debate between Brandon Lewis and Andrew Love(12 years, 4 months ago)
Commons ChamberRead Full debate Read Hansard Text Read Debate Ministerial Extracts
Brandon Lewis
Not at all. I shall come to that in a few moments. That is not the point that I am making. There is a clear difference between a role in making an appointment to the OBR and a role in making an appointment to a position that has Executive powers and makes Executive decisions. If this were a Bill that considered the role of Select Committees, there would be an interesting debate to be had about whether Select Committees should have a power of appointment or veto, but that would apply equally to all Committees and all appointments, particularly where they have an Executive role. That is an important delineation, of which we should be aware.
It would be wrong to give one Select Committee, as important as the Treasury Committee is, a power of Executive appointment over and above that of other Select Committees, which I am sure would take the view that they have equal power and an equally important role in the House, but which would thereby potentially be put in a second category of Select Committee. Creating divisions and different types of Select Committee would impede the function of all Select Committees.
Mr Love
The Public Administration Committee had a debate on Executive agencies and appointments. The Public Accounts Committee has included its Chairman in the decision on the appointment of the Comptroller and Auditor General. The Treasury Committee has developed the chairmanship of the Statistics Commission. In other words, piecemeal change is going on. Does not the hon. Gentleman accept that the proposal is part of that piecemeal change, and that we ought to give the Bill a Second Reading not so that we can pass it in its current form, but so that Parliament can have an honourable debate about the arrangements between the Executive and the legislature in relation to major appointments?
Brandon Lewis
The hon. Gentleman makes a very strong point. I do not entirely agree because there is a clear difference between the type of appointments we are talking about and the role that those appointees take on and the powers that they have. However, a good argument can be made for the House to consider the role of Select Committees in public appointments, the associated power and at what level it sits. Perhaps he would like to come to business questions one week and make the case to the Leader of the House for time for such a debate, or make a case for it to the Backbench Business Committee.
The hon. Member for Hayes and Harlington argued that part of the aim of a private Member’s Bill such as this is to get the Government to listen, to hear a message, to take a view. The Minister will hear the points made in the debate. He will hear various arguments from various Members about the role of a Select Committee, its power or lack of power to appoint or veto an appointment, and will take that into account as part of the Government’s plans for the future. That is quite different from whether the Bill should have a Second Reading, when it is fundamentally flawed by giving priority and special treatment to one Select Committee over and above others. As much as I respect the Treasury Committee and all its members, I, as a member of the Work and Pensions Committee, do not think it fair that the Treasury Committee should be seen in a premier league, above the other Select Committees.
The Treasury Committee has argued for a role in appointing the Governor of the Bank of England by using as a precedent, as the hon. Gentleman did, the establishment of the OBR and the Budget Responsibility and National Audit Act 2011. The provisions of that Act give a statutory role, I agree, to the Committee in the appointment of the chairman of the Office for Budget Responsibility. Additionally, they give a statutory role to the Public Accounts Committee when a new Comptroller and Auditor General is appointed. However, that argument ignores a fundamental and crucial difference between the roles undertaken by those organisations and the role of the Governor of the Bank of England.
The Bank of England sets policy. Although the Office for Budget Responsibility is important, it primarily has an analytical or forecasting role, not an Executive ability to set monetary policy. It provides independent information to Government. That information is a powerful tool for Parliament to use in its scrutiny role and it is right, therefore, for Parliament to protect that role from political interference.
The Government’s position on the issue has been sensibly pragmatic. They have encouraged the involvement of the Treasury Committee in the appointment of the Governor. It has been interesting to hear from two speakers the private views of the Chairman of the Treasury Committee, my hon. Friend the Member for Chichester (Mr Tyrie), in his comment that what he thinks the Treasury Committee is looking for is the ability to have a clear and open influence on the role, which indicates that there is not necessarily a strong view from the Chair—it is a shame that he is not in his place, but he made a comment earlier—about having the power of veto or appointment. That is an important distinction from such an eminent Member of the House, who would be the Chairman who benefited from any change.
The Government made a commitment in the coalition agreement to
“strengthen the powers of Select Committees to scrutinise major public appointments”.
The key word is “scrutinise”. That emphasises a right to examine, challenge, query or inspect closely and thoroughly appointments to major public bodies. My Select Committee has done that as well. However, it rightly makes no mention of a right to appoint or veto. As my hon. Friend the Member for Wimbledon (Stephen Hammond) said, that would be a substantial constitutional change to the way in which Select Committees work.
It is worth exploring what would happen if there were a right of veto and the Government and the Treasury Committee reached a stalemate in the appointment of a new Governor. If the Government—the Treasury—were unwilling to back down, and the Treasury Committee were determined to uphold its right to veto, given to it by this Bill, that could lead to uncertainty, creating turmoil in the markets, and at the moment we do not need any more of that. We can certainly see what such turmoil means for international relationships as much as internal markets. It could lead to a loss in international confidence in the Bank of England and the United Kingdom, which we benefit from at the moment. The result would be untold economic chaos and damage.
Brandon Lewis
My hon. Friend makes a good point. The way in which the American system can create turmoil is the very point I am making. As my hon. Friend the Member for Wimbledon said, we in this House know that the Treasury Committee would deal with the issue properly. The problem is the perception outside of such turmoil. We have seen in the press how such matters have been dealt with in the United States, which shows that what matters is what the public and the markets would think of such an impasse, particularly if there is a lengthy process.
Mr Love
The hon. Gentleman uses the term “turmoil” and makes lurid comparisons with the United States. The US Congress endorses literally hundreds of appointments every year. The Treasury Committee has had confirmation hearings, and on only one occasion has it vetoed an appointment. The Committee has no buy-in; they are only confirmation hearings. Is not the so-called turmoil that the hon. Gentleman suggests vastly overstated?
Brandon Lewis
The argument that something has not happened so it will not happen could have been put some years ago about the present financial turmoil in the eurozone. The argument that something will not happen because it has not happened before has unfortunately been proved wrong time and again. As has been said, one sees regularly in the press and hears in the markets in America the argument that a particular appointment has been made purely because it will get through a committee. There is no disrespect to the successful applicant, but it can give the impression that the appointment is a second choice. It is a matter of the most acceptable common denominator rather than the person wanted by the Executive or any other body; it is the person they can get through the door. That in itself detrimentally affects the individual’s credibility and authority to do their job. Such an impasse here, if the Treasury Committee and the Treasury were at loggerheads for any prolonged period in deciding on the appointment of the Governor of the Bank of England, could result in chaos in international markets and our markets.
I appreciate that it is unlikely that an impasse would result in an unfilled post. It is almost unthinkable, but, as we have seen in recent years, too often now the unthinkable can become the reality. I hope that, in reality, the Treasury and the Select Committee would reach a compromise, such as extending the tenure of the incumbent Governor until a successor was confirmed. Although before my time, some hon. Members will have seen how a person’s authority wanes as soon as it is known that they are about to go. Continued uncertainty about the next appointment, with no decision and no sign of an end to the impasse, would damage the Bank of England’s credibility, which would be hugely detrimental to the role, not just of the Governor but of the Bank of England itself, in both our internal and external markets.
The constitutional quagmire would be further exacerbated if the Treasury Committee adopted the procedure proposed by the Institute for Government. After a Select Committee hearing with the proposed candidate, the Committee would deliberate before announcing its verdict. Then it would have the opportunity to call the Chancellor before it to tell him why the nominated candidate was unsuitable, expecting him to justify why it should change its mind and agree with his proposal. Then we would be into further deliberation before the Committee decided that it did not wish to change its mind. Potentially, the appointment would then be referred to the House for resolution. If, after that lengthy process, the original candidate were confirmed, there is no doubt that their credibility and authority would have been fatally undermined by the whole political ping-pong between the Government and Parliament, never mind the trouble that that would cause to the markets during the weeks or months that passed while parliamentary time was made available.
Even if the Treasury and the Select Committee could agree on a compromise candidate quickly—regardless of this morning’s examples, we all know what “quickly” can really mean—the new appointee would be undermined before they had even taken up the post. The media would portray a second-choice candidate as not having the confidence of the Treasury, the Chancellor of the Exchequer, the Government or the Select Committee, whichever had originally been against the appointment. In those circumstances, what confidence would the wider banking and financial sector have that the new Bank of England Governor would be able to fulfil their role while working closely with the Government?
As I said earlier, the very Select Committee that scrutinises the role of the Bank of England and the Governor might be the Committee that appointed the Governor. For that reason there is a strong argument for allowing the Executive to appoint the Executive-imbued role of the Governor, and for allowing the Select Committee to scrutinise and comment on it, rather than having a Bank of England Governor who is answerable to the Committee for their job in the first place. As was said earlier, we in the House know that the integrity of members of Select Committees is strong enough and powerful enough to deal with that properly, but what matters is not necessarily what we in the House think about the role of the Governor of the Bank of England, but what people outside think, and what the markets think. It is the perception that becomes the reality, and we need the markets to have confidence and faith in the Governor and in his ability and independence, which the House can scrutinise.
Why stop with the Governor the Bank of England? The Bill’s purported aim is to preserve the Governor’s independence, to remove the appointment from political considerations and pressures. As I have said, it would do quite the opposite, but why stop there? Surely if there is a suspicion that the system is sullied by political interference because the appointment is made on the recommendation of the Chancellor, the appointment of the deputy governor or any members of the court of the Bank of England are likewise politically contaminated. Yet we hear little suggestion that their appointment process politically compromises those positions. In fact, these people act as a powerful check and balance within the Bank of England’s internal governance structure, to prevent any Governor of the Bank of England acting in a politically motivated way. At the moment he does not have to be concerned about the views and role of those on the Select Committee who appointed him.
There is also a substantial list of other public appointments made by her Majesty the Queen following recommendation by the Prime Minister or other Ministers. The Bill’s supporters could end up advocating that the relevant Select Committees should have an opportunity to veto or to make those appointments too. As the hon. Member for Edmonton (Mr Love) said, with the changes that have already happened there is a drip, drip effect, and we gradually see the evolution of change around such appointments. If the Bill were to be enacted there would be a big jump, and bigger jumps would follow. Perhaps members of the Culture, Media and Sport Committee should have the ability and opportunity to veto or choose the appointment of the chairman, vice-chairman or other members of the BBC Trust. Perhaps members of the Defence Committee should have an opportunity to veto the appointment of the Chief of the Defence Staff. I have no doubt that members of the Environment, Food and Rural Affairs Committee would enjoy the power to veto the appointment of the chairman of the Forestry Commission or any of the other 10 forestry commissioners, particularly in the current climate.
Where should we stop? It is a valid question, and one that I think deserves some time in this House. Indeed, the power that Select Committees have to veto appointments might be a good topic for the Backbench Business Committee to put forward for debate. However, I do not think that it is right for a single private Member’s Bill to give that Executive power to a single Select Committee. The Minister is here and has heard the views expressed and no doubt will take those thoughts forward. Should Parliament have the final say on the president of the Valuation Tribunal for England, or on which judges are elevated to the Supreme Court, or even on who is installed as the next Archbishop of Canterbury, a debate that I am sure would be of great interest to Members on both sides of the House?
As odd as some of those examples might be, they are all appointments made by Her Majesty following recommendations from her Ministers. I could list many more examples, but I assure hon. Members that they will not have to listen to that right now. Those are all positions of which the holder has a responsibility for making decisions that affect people’s lives.
Brandon Lewis
My hon. Friend makes a valid point, and one that counters the argument made a few moments ago on the continual drip, drip in that direction. He highlights the fact that that has not been happening. There have been some changes in some areas, but in others things have moved in a different way. It is also interesting that that decision was made potentially by the same Member who decided not long ago to ignore the Treasury Committee’s comments on the appointment of a member of the Bank of England’s Monetary Policy Committee.
We must be clear that in all the positions I have mentioned the holder has responsibility for making decisions that affect people’s lives. As has been commented on a few times now, there is a clear and precise line between those positions and the appointments in which some Select Committees have been involved—the Public Accounts Committee and the Treasury Committee, with the Office for Budget Responsibility and the Comptroller and Auditor General—because those Committees have a different type of role. They have a scrutiny role and a statistics role, but they do not have Executive powers to make decisions affecting people’s lives. That is what we in this House are elected to do through legislation and the appointments that flow from Ministers.
Mr Love
The OBR is responsible for bringing forward an economic forecast on the basis of which the Government must set out their public expenditure plans. That makes it an incredibly important body that can have significant influence on the direction of the Government’s economic policy.
Brandon Lewis
It is a joy to be able to agree wholeheartedly with the hon. Gentleman, who makes a good point. He highlights and confirms the argument I am making. The OBR makes forecasts, but it does not have Executive power to set monetary policy. As he has just pointed out, it is the Government, following those forecasts, who make Executive decisions on how to move forward. Indeed, the Governor of the Bank of England might use Executive powers to decide the Bank’s monetary policy. There is a difference between the role of making forecasts and scrutinising and the Executive power that the Government hold.
Brandon Lewis
I thank the hon. Gentleman for further enhancing my point about where Executive power actually sits, in contrast to the scrutiny and forecasting role, as important as it is, which is very different from the Executive power wielded by the Government and some of the Executive bodies we are talking about.
If we are to extend the right to veto the appointment of one public official to any given Select Committee, the natural extension is to do so for other public appointments. In doing so, we would turn our Select Committee system and this House into a new form of Executive recruitment agency. Our Select Committees were established to scrutinise, investigate, consider, report and recommend. Principally, our Select Committee system is there to hold the Executive and other public officials and bodies to account. It was not created to veto the Executive, and it was not envisaged that the Committees would be used as quasi-recruitment advisers.
We should be striving to make the Bank of England more accountable to Parliament—I have no disagreement with that—but we should be looking to do so without shackling its sovereignty with more direct control over certain aspects by Parliament. Current concerns from constituents about the Bank of England do not focus on how the Governor is appointed. I certainly have not had in my postbag any letters, let alone a deluge of letters, on that.