Financial Services Bill

Debate between David Rutley and George Mudie

Monday 23rd April 2012 Commons Chamber

[David Rutley]

I know that the hon. Gentleman is very knowledgeable about these matters and was on the pre-legislative scrutiny Committee, but has he not seen that proposed new section 9C(4) in clause 3 contains some clear wording about what the FPC should do? It states that subsections (1) and (2) of that proposed section do not

“authorise the Committee to exercise its functions in a way that would in its opinion be likely to have a significant adverse effect on the capacity of the financial sector to contribute to the growth of the UK economy”.

The matter is addressed, so what does he want in addition to that, and why does he feel the need for more?

[Mr Mudie]

I accept that point, which has been made clear all the way through, but that is negative language rather than positive. Instead of telling the FPC, “In carrying out your duties, you mustn’t adversely affect growth”, I would rather put it to work with the MPC on ensuring that we have a buoyant economy with steady, acceptable growth and employment levels. At the moment, apart from the negative words that the hon. Gentleman quotes, all we have is the requirement of financial stability.

The hon. Gentleman was with a number of colleagues here on the Treasury Committee. We go through accountability with the MPC. It is bad enough trying to get the Governor of the Bank of England to be accountable even when he has a named target; what would he be like, or what would a future Governor be like, when he came before the Committee to which he was accountable and only had to defend his actions on the grounds of financial stability, which cannot be defined? It is a case of the emperor’s new clothes. There really should be a joint mandate, with a definition of financial stability and an acceptance of the Government’s picture of growth and employment.