Bank of England

Lord Sassoon Excerpts

Monday 26th November 2012 Lords Chamber

[Lord Sassoon]

I am very grateful to the noble Lord, Lord Eatwell, for commending the appointment. I am pleased that he recognises what a great catch Mark Carney is for the Bank and the country. To answer the noble Lord’s last question first, he ought to ask Mr Carney directly about his change of mind. However, as the noble Lord says, we are very fortunate that he did change his mind.

On the other questions, there was no question of bringing the announcement forward. My right honourable friend the Chancellor has always said that he sought to complete the appointment process by the end of the year. I do not believe that there was any statement to say that the announcement would be made in the Autumn Statement or at any time; people may have been speculating on that, but it was pure speculation.

The noble Lord, Lord Eatwell, asked about Mr Carney’s role as chair of the Financial Stability Board. At the moment, Mr Carney combines being chair of the Financial Stability Board with being a central bank governor, so he is quite used to doing the two things. The main thing is that, subject to his term on the FSB being renewed—as I would expect it to be—it is very good news for the United Kingdom that we will have a Governor of the Bank of England who is also taking this lead central role through the Financial Stability Board in the G20’s leadership of the future shape of financial regulation globally.

The first time I had the pleasure of working with Mr Carney was when, in earlier lives, he and I sat on the predecessor body, the Financial Stability Forum, so I know from my own direct experience going back over 10 years what a contribution he has made over a long period. He will, of course, be very well supported by three deputy governors in the Bank of England on the important and wide-ranging responsibilities that he will have. One of the things that the interview panel will have looked at is Mr Carney’s management experience, which is unquestioned in his present job. I believe he will be able to combine his responsibilities.

As for accountability, the key thing is not so much how other countries do it but whether we have got the right accountability for the Governor and the Bank in the new structure. We have spent many hours, quite rightly, in the heart of the Financial Services Bill, that we are considering again this afternoon, to get that right. Most importantly, partly as a consequence of the debates in your Lordships’ House, we have introduced the oversight committee of non-executive directors, which introduces an important new strand of accountability that has not been present hitherto in the Bank.

Lastly, the important thing is that for the first time a Governor of the Bank of England will go through—has volunteered to go through—a pre-commencement hearing with the Treasury Select Committee. That is a major step. I am not going to offer thoughts on what other cases it may be appropriate for, but in this case, it is breaking new ground and totally appropriate. However, the main thing here is that I am very grateful to the noble Lord, Lord Eatwell, for confirming, as I am sure the whole House will agree, that this is an extraordinarily good appointment of the best available person.

[Lord Sharkey]

I thank the Minister for repeating the Statement and congratulate the Government on the appointment of Mr Carney. I send congratulations from these Benches, and perhaps commiserations too, to Mr Carney.

I note that two weeks ago, in a speech to the Canadian Club of Montreal, Mr Carney addressed the question of whether we have ended “too big to fail”. He concluded by saying that it is not yet clear that it has been ended. He said, quite explicitly, that each “global systemically important” financial institution,

“ must have mandatory recovery and resolution plans”

in place. I look forward to discussing Mr Carney’s views on this subject with the Minister when Report stage of the Financial Services Bill resumes later this afternoon.

[Lord Sassoon]

I am grateful to my noble friend and look forward to our further discussions on that important topic later this afternoon.

[Lord Cormack]

My Lords, does this prove that “never” is a short time in politics?

[Lord Sassoon]

And, it seems, in central banking as well.