Bank of England (Appointment of Governor) Bill

Mark Durkan Excerpts

Friday 6th July 2012 Commons Chamber

[Brandon Lewis]

Indeed. One of the problems with the Bill, as I noted a few moments ago, is that it focuses on one appointment from one Select Committee. What would be more interesting is a debate in the House on the role of Select Committees in the public appointments that they scrutinise.

[Mark Durkan (Foyle) (SDLP)]

Is the hon. Gentleman therefore saying that Parliament got it wrong on the Office for Budget Responsibility?

[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.

--- Later in debate ---

[Mark Durkan (Foyle) (SDLP)]

I support the Bill, to which I have attached my name, and I hope it will be supported in the Chamber today.

Many arguments have been made, and I have listened closely to those made by the hon. Member for Great Yarmouth (Brandon Lewis). I did not agree with many of them, and indeed, as he developed some of them, he seemed not to agree with what he had previously said. None the less, several points have been made and some touched on yesterday’s business, too.

[Brandon Lewis]

The hon. Gentleman will not be surprised to know that I must challenge that comment. The core point I was making throughout my speech, from start to finish, was that there is an important distinction between what the Executive do and their power, and that we should not give a Select Committee an Executive power to make Executive recruitment decisions.

[Mark Durkan]

The hon. Gentleman made a long contribution, and I am sure that that top-up will add value to it.

At the start of this debate and in a number of interventions, reference was made to yesterday’s motions and debate, and a challenge was laid down: “How could anybody support this Bill if they didn’t vote for the parliamentary inquiry yesterday?”. The argument was that the Bill seeks to give an enhanced role to the Treasury Committee and that we cannot support it if we did not support yesterday’s motion for a parliamentary inquiry.

I did not support the vote for the parliamentary inquiry yesterday; my name was on the other motion, precisely because I really value the role of the Treasury Committee and the service it provides to the House. People have talked about the dangers to the Committee if its gets the powers in the Bill, and that it will fall apart and start to divide along party political lines, but there is more danger to the Treasury Committee from the decision that the House took yesterday, because its Chairman will find himself committed to a significant inquiry, which we are told will be time-intensive and extensive.

The Chairman said yesterday that he wanted the membership of the inquiry Committee to be heavily drawn from the Treasury Committee, so a select number of the Select Committee will also be absorbed by the inquiry throughout the autumn when what the Treasury Committee needs to do is concentrate on many other things, not least following up what emerges from the Wheatley review, which the Chancellor has announced. That review will recommend amendments to the Financial Services Bill, so the Government have recognised that in the light of what has happened with Barclays and the whole LIBOR issue, significant amendments to that Bill will need to be considered.

In essence, the Bill that my hon. Friend the Member for Hayes and Harlington (John McDonnell) has tabled today is a prompt, which canvasses for a fairly modest amendment to the Financial Services Bill—a modest amendment that might have its case reinforced by whatever recommendations emerge from the Wheatley review and the amendments we make to that Bill. As hon. Members on both sides have said, it already creates significant added powers, responsibilities and potential difficulties for the Governor of the Bank of England, the Bank and the whole hinterland of authorities and agencies around it.

Parliament has devolved more responsibility to the Bank and the Governor, and the appointment of the Governor will remain an appointment of government, although, as the Minister in the Financial Services Bill Committee, when correcting me and others, insisted on saying, “It is not appointment by the Government or the Treasury, but by the Crown.” I understand the distinction; I do not believe the fiction; and it is quite clear from his hon. Friends’ contributions today that they do not, either. They are ruthlessly defending the appointment as an Executive—ministerial—appointment.

[Kwasi Kwarteng]

The hon. Gentleman talks about modest amendments, but what is his view of the Bill before us and the large constitutional change that it embodies?

[Mark Durkan]

The hon. Gentleman tries to take up a point that the hon. Member for Wimbledon (Stephen Hammond) made earlier, when he talked about the Bill representing “a major constitutional departure”, a phrase that he used, I think, three times. But he ended up criticising the Bill for not going far enough or ranging wide enough. He wanted a Bill to give all Select Committees responsibilities and powers of appointment in relation to all sorts of other things. Hon. Members can have it both ways in their own contributions, but they are not going to have it both ways in mine.

[Brandon Lewis]

The hon. Gentleman is being generous with his time, but he misunderstands the point that my hon. Friend the Member for Wimbledon (Stephen Hammond), and certainly I, was making. We do not necessarily think that a Bill that changes the whole structure of Select Committees and how they work is the right thing to do or that we would vote for it; we just think that it would make more sense, if people feel that way, than a Bill that focuses on one Committee and on one particular power.

[Mark Durkan]

That is not what the hon. Member for Wimbledon said and certainly not what I heard. We seem to be hearing a lot of interventions from Government Members interpreting what each other said. Several Members have mentioned what the Treasury Committee Chair, the hon. Member for Chichester (Mr Tyrie), is saying in private, and that it is different from what members of the Committee have said and different from the fact that the hon. Gentleman’s name is on the Bill.

[Matthew Hancock]

I do not want to ask about the hon. Gentleman’s interpretation of somebody else’s point. I want to ask about his view, because given the point that he made before the two recent interventions, I do not quite understand whether he thinks that the Bill is a major constitutional innovation.

[Mark Durkan]

I do not think that it is a major constitutional departure; I think that it would be a significant step and gain for Parliament. I do not go as far as my hon. Friend the Member for Nottingham East (Chris Leslie) in saying that the appointment of the Governor of the Bank of England should be subject to a full debate and vote in this Chamber, however, because that would cause all sorts of difficulties. Many of the difficulties that people allege could occur if the Treasury Committee had the role given to it by the Bill would certainly become risks in a highly charged debate and Division in this Chamber on the appointment of the Governor of the Bank of England. The issue would become highly political and potentially partisan, and it would cause market shakes and do nothing for the reputation of this House.

This Bill, which would give a parliamentary stamp of approval to the appointment, is a modest measure, because it would involve the relatively contained, constrained and considered forum of the Treasury Committee. In yesterday’s debate many hon. Members told us how special the Treasury Committee is. They said that it was a partisan-free zone where people are wise and worthy and do not go into it with any ulterior agendas. Then suddenly we are told today that if it were given the extra role that it seeks for itself in the context of the Financial Services Bill, all that would change. I do not believe that it would. This is not the power of appointment that Conservative Members are describing; it is a power of consent and confirmation. The Treasury Committee would not be doing the interviews, drawing up the shortlists, and so on.

[Kwasi Kwarteng]

Will the hon. Gentleman give way?

[Mark Durkan]

No. I have already been generous enough, and some Members were too greedy in terms of the length of their speeches.

The Treasury Committee would have a power of confirmation. Some hon. Members are saying that it would have a power of veto, but what appear to be powers on paper would not be exercised in that way.

Earlier we heard reference to appointments to the National Audit Office. Some appointments are notionally appointments by Parliament because they are subject to votes in this House—for example, appointments to bodies such as the National Audit Office and the Electoral Commission—and my hon. Friend the Member for Nottingham East would say that there could similarly be a vote on the appointment of the Governor of the Bank of England. However, I do not believe that that is a comparable situation. Given the significant extra powers and functions that the Governor will have, particularly after our experiences over the past few years and the allegations that we heard yesterday about the whole murky interface between the Government, the Bank of England and the City, it would be remiss of Parliament to say “We’re quite happy to leave this in that odd black box that exists somewhere between Whitehall and the City. We as Parliament do not want to step up to the plate and say, yes, when this appointment is made in future there will be a parliamentary stamp on it.” That is all that the Bill is asking for, and it would entrust and delegate that parliamentary stamp to the Treasury Committee.

[Mr Gyimah]

The hon. Gentleman seems to be ignoring the fact that the Treasury Committee already scrutinises the work and operations of the Bank of England. In fact, only last week the Governor gave evidence to the Committee. There is already parliamentary scrutiny of the substance of what the Bank of England does, and I do not see why we need to give the Treasury Committee this major constitutional power to veto the appointment as well.

[Mark Durkan]

I am not ignoring anything that the Treasury Committee does, but nor am I here to filibuster and rehearse everything that it does. The hon. Gentleman needs to recognise that the Committee itself has unanimously recommended this change.

We heard in yesterday’s debate, and we heard from the Chancellor on Monday, about the importance of a parliamentary Committee of inquiry being able to produce a unanimous report and about its being worth nothing if it is not unanimous. Here we have a unanimous recommendation from the Treasury Committee, and the very people who have been telling us about the power and significance of parliamentary Committees and the compelling power of unanimity are saying, “We don’t care about it, we don’t want to know.”

[Kwasi Kwarteng]

Will the hon. Gentleman give way?

[Mark Durkan]

No. The hon. Gentleman will have plenty of time to come back to this or any other point.

It has been argued that the Bill could be dangerous because it might enable the Treasury Committee or other Committees to go on shopping sprees for all sorts of other powers or abilities. I do not believe that this is a vanity trip on the part of the Committee. Most people would think it odd if the parliamentary Committee that was considering a change of the scale and importance of the new architecture in the Financial Services Bill did not say that Parliament wanted to have at least a bit more of a role regarding the key appointment to this fixed eight-year term. I will not get into the arguments that we had in the Bill Committee about the Putin clause whereby a Governor might be reappointed as a deputy governor for certain reasons.

In yesterday’s debate we heard people who supported the call for a parliamentary inquiry say that it was about Parliament stepping up to the plate. In many ways, the Treasury Committee seeking this role is about Parliament stepping up to the plate. If there is another financial crisis or banking scandal in a few years’ time and the new regulatory regime is seen as confused and difficult to understand—as we heard earlier, even hon. Members who support the Financial Services Bill do not understand what it means and are confused about its architecture—people will turn round and ask, “Who’s to blame this time?” Of course, the current Government will simply blame the previous Government for the way in which legislation has come about. In my view, yes, legislation can be blamed on the Government who sponsored it, but when it is wrong and flawed, that is also the fault of Parliament. Parliament, as well as the Government, should take its fair share of the blame when we get legislation wrong. We will be to blame, as a Parliament, if there are mistakes in the current Government’s legislation such as those that I hope they will remedy when they make further changes to the Financial Services Bill after the Wheatley review in the autumn.

We cannot turn round in future and say “It was all the fault of the Government—it was their legislation. The Bank of England got it wrong and the regulatory regime did not work. It is the Governor’s fault and the Bank appointed him.” The public are fed up with politicians washing their hands of responsibility—with all of us being in the business, as we saw in yesterday’s debate, of trying to fix the blame rather than trying to fix the problem and taking responsibility. If hon. Members trust the new arrangements in their Financial Services Bill, they should be prepared to trust Parliament to take its stake in the key decisions that will be made. We are told that Governor of the Bank of England is a key appointment, but it is odd that it should not receive a parliamentary stamp of involvement and approval despite the fact that people want that parliamentary stamp on many other appointments.

That is why I support the Bill. It is not a starter for 10 whereby we then go on to say that we will appoint the deputy governors and others. It is modest even on its own terms. It does not even say that the Treasury Committee should have the power of consent over the appointment of the deputy governors. Those are also key appointments given the distinct roles that they will play. Conservative Members need to stop exaggerating in their arguments against the Bill. They need to listen to the compelling case for it and to remember that this would be a much more modest amendment than the significant changes that we will probably have to make to the Financial Services Bill in the autumn.

--- Later in debate ---

[Mike Freer]

I certainly agree that the fixed-term appointment is a huge step towards independent stability. As I was trying to explain, what concerns me is that if the vacancy arose after a change of Government, the new governing party could seek to ensure that the new Governor was much more in tune with its own political views. I fear that both the appointment and the removal are much more likely to be politicised if the Select Committee gets its way.

[Mark Durkan]

The hon. Gentleman has suggested that the Government might have a partisan agenda in appointing the Governor. Surely the best way of protecting the appointment from the allegation that the Chancellor’s motivation was purely partisan is to give the Select Committee a role, whether the appointment is made at the start of a Parliament or, even more interestingly, at the end.

[Mike Freer]

The hon. Gentleman is absolutely right. I do not think that any appointment is without politics, but I fear that a Select Committee is much more likely to adopt a political method. We have recently seen Select Committee investigations involving minority reports, and the pursuing of party political agendas in the interrogation of witnesses.

[Mark Durkan]

Did the hon. Gentleman vote for a parliamentary inquiry yesterday? Did he support all the arguments that were advanced in its favour? He seems to be contradicting those arguments now.

[Mike Freer]

I did vote for a parliamentary inquiry, and I do not disagree with some of the points that the hon. Gentleman has made. However, I believe that a Select Committee’s role is to investigate. There is a huge difference between investigating issues and appointing executives with Executive powers who can intervene daily in monetary policy, and there is a significant difference between making such appointments and the interviewing of bank chief executives for wrongdoing.

I have not set myself against reforms. I have no doubt that the appointment of Governors and other senior public officials requires greater transparency than we have seen hitherto. What worries me is that, while pre-commencement hearings are a good thing, involving the Select Committee in the right of veto will not help and, indeed, could hinder the appointment of Governors. I believe that the Treasury Committee should have a voice but should not have a veto, and I therefore cannot support the Bill.