Bank of England (Appointment of Governor) Bill

Debate between Mark Hoban and Stephen Hammond

Friday 6th July 2012 Commons Chamber

[Stephen Hammond]

I can only concur.

The Financial Services Bill, now in the other place, is designed to redress the inadequacies of the current regulatory regime. As the hon. Member for Hayes and Harlington noted, the new proposals view the Bank of England as absolutely at the heart of the regulatory system. It will now be charged, which it was not previously, with the protection and enhancement of the UK’s financial system. I do not need to rehearse in detail the fact that the Bank of England is therefore charged with looking at the working of the Financial Policy Committee and, underneath it, the Prudential Regulatory Authority and the Financial Conduct Authority.

[Mr Hoban]

To clarify, let me point out that the Financial Conduct Authority is not part of the Bank of England; it is an independent body. Failure to understand that is a mistake that the hon. Member for Nottingham East (Chris Leslie) regularly made in Committee, and I would not want my hon. Friend to make the same mistake.

[Stephen Hammond]

The Minister is technically correct, but I think he would agree that there is a line, dotted or otherwise, between what the Financial Policy Committee and the Financial Conduct Authority would do and their respective impacts.

[Mr Hoban]

My hon. Friend is correct, but I would not want to say that that makes the Financial Conduct Authority a part of the Bank of England. It will have an independent board. Martin Wheatley, the chief executive designate, has been appointed and is leading the review of LIBOR. The FCA is very much an independent body. Engagement with the Financial Policy Committee is relevant only when the FPC identifies a threat to financial stability that requires some action from the FCA. The circumstances in which the Prudential Regulatory Authority can veto acts of the FCA are limited. It is very clear in this approach that the FCA is not part of the Bank of England family.

[Stephen Hammond]

I bow, of course, to my hon. Friend’s greater knowledge of this matter. My key point was that the Bank of England and its family, cousins and outside friends will now have a much greater role at the centre of the regulation of our financial system and, indeed, of our overall economy.

It is in some ways understandable that the immediate drive of the Bill before us is to increase the powers of parliamentary accountability, but I think there is some confusion between accountability and independence. Parliament will gain further powers of control, scrutiny and accountability under the Financial Services Bill. The exact powers are clearly defined, with reference made to the new financial stability objective, to the position of the deputy governor and the Financial Policy Committee, to the Governor’s appointment for eight years and to the fact that the Treasury Committee and, indeed, Parliament can hold the Bank of England to account. That being so, it is not necessarily the case that giving the Treasury Committee the power of veto over the appointment of the Governor would enhance that accountability, although it might impede the Governor’s independence. It is right for Parliament to have greater accountability and greater scrutiny, but we need to be clear that the Governor, who is at the centre of the operation of macro-economic policy and macro-financial and prudential control, must be independent.

The Bill before us contains not only a power of veto but a power of appointment, which could be seen as a step backwards in the whole argument about independent policy making. The Bank of England Act 1998 took a momentous step forward in respect of the independence of the Bank and the Governor by giving the power of decision over interest rates to the Monetary Policy Committee. That was, and will remain, the historic achievement of the Labour Government. It followed from and was a continuation of what the previous Governor had introduced, in tandem with the then Chancellor, my right hon. and learned Friend the Member for Rushcliffe (Mr Clarke), with the publication of the minutes of the interest rate-setting committee.

Northern Rock

Debate between Mark Hoban and Stephen Hammond

Monday 21st November 2011 Commons Chamber

[Mr Hoban]

As I have already made very clear, Virgin Money is paying £747 million to the taxpayer, and other proceeds of sale will come our way. Our view is that this is far and away the best deal on the table. It is the best deal when it comes to value for money for the taxpayer, it is the best deal for consumers and the best deal for the north-east. I am sorry that the hon. Gentleman has not sought to welcome this opportunity to give the people of the north-east and those who work at Northern Rock some new hope for their future.

[Stephen Hammond (Wimbledon) (Con)]

I thank my hon. Friend for his statement. If I understand it, the deal done by the Labour party that forced Northern Rock to be sold before 2013 put a deadline in place, and if losses were being made, the book value was more likely to fall. May I urge my hon. Friend to stick to his guns, as this is a good deal for taxpayers? I remind him that the Labour party’s timing meant that gold was sold at the bottom of the market.

[Mr Hoban]

My hon. Friend makes a good point. I am not sure I would ever want to turn to those on the Opposition Benches for advice on when to sell assets.

Oral Answers to Questions

Debate between Mark Hoban and Stephen Hammond

Tuesday 22nd March 2011 Commons Chamber

[Mr Hoban]

The hon. Gentleman should pay attention to the forecast produced last year by the OBR indicating that the economy would continue to grow in each year of this Parliament.

[Stephen Hammond (Wimbledon) (Con)]

Does my hon. Friend agree that real progress on growth has to be made through not only matching expenditure, but cutting the deficit, and that the OECD says that the only way we will get future growth is by ensuring that the deficit plans are continued and this Government pursue their policy?

[Mr Hoban]

My hon. Friend is absolutely right. The OECD is one of a number of organisations that have supported our plans. The IMF has said:

“The government’s strong and credible multi-year fiscal deficit reduction plan is essential to ensure debt sustainability.”

That theme continues to come across from international organisations, which demonstrates that we are on the right track to get this economy growing again and ensure that Britain continues to live within its means after a decade of a Labour Government who maxed out on the nation’s credit cards.

Equitable Life

Debate between Mark Hoban and Stephen Hammond

Thursday 22nd July 2010 Commons Chamber

[Mr Hoban]

The hon. Gentleman makes a sensible point and I am grateful for his welcome of today’s statement and the progress that I announced. He is absolutely right about an appeals mechanism, and the Treasury are looking at that proposal at the moment. Policyholders who question the data that are used—some data are quite old and policies are complex—will want a mechanism by which they can appeal, so that is important. However, I am keen to ensure that the appeals process is quick and thorough, so that people are comfortable with the outcome they get.

[Stephen Hammond (Wimbledon) (Con)]

I congratulate my hon. Friend. As someone who took part in the Equitable Life debate in March, I do not recognise some of the wilder accusations that are being levelled against him. May I press him on the key point of his statement, which is the capped figure? I think he confirmed to my hon. Friend the Member for Cities of London and Westminster (Mr Field) that he will review the figure when he reflects on Sir John’s report, but will he confirm that he will publish, and make a statement on, his methodology as to how he reaches it, whether or not he agrees with the report?

[Mr Hoban]

As part of the spending review process, I have already committed to publishing not only the amount of compensation the taxpayer can afford to pay, but the final loss figure. My objective is to be as transparent as possible on that calculation.