Clause 221
Banking Bill
2:45 pm
Angela Eagle (Parliamentary Secretary, HM Treasury; Wallasey, Labour)
In considering the amendments, it might help if I explain some of the context of clause 221 as it currently stands. In his letter to the Treasury Committee of 19 June 2008, the Chancellor set out his plans to strengthen the procedure for future appointments to key roles in the Bank and the Monetary Policy Committee. These measures include limiting external appointments made by the Government to the Monetary Policy Committee to a maximum of two terms, and limiting the Governor and deputy governors to serving a maximum of two five-year terms in a particular post.
While not captured in the legislation before us, the Chancellor also announced that in future, vacancies for Governor and deputy governor and external Monetary Policy Committee appointments would be openly advertised and be conducted in a way consistent with the principles of open competition. With respect to the tenure of the Governor, which these amendments seek to change, the current five-year term for the Governor and deputy governor was set at the time of nationalisation in 1946 and has proved itself perfectly effective ever since.
Turning to the specific amendments, we believe that having a maximum of two five-year terms in office offers a strong balance between certainty and continuity on the one hand, and flexibility on the other. A five-year term for the Governor, with the possibility of a second term, gives that individual a natural break point at which they can consider whether they wish to continue in the role. It also gives them something to work towards and provides an opportunity to consider their performance. In contrast, a single eight-year term might actually discourage some strong candidates from applying, as they do not feel that they can make such a long commitment. It might also increase the likelihood that a Governor would step down mid-term, potentially creating uncertainty and speculation in the financial markets. It is for those reasons that the Government oppose amendments Nos. 65 to 67. I hope that the hon. Gentleman will recognise that there are arguments on this side, as well as his own advocacy for a longer term, and he should take them seriously when considering whether he wishes to press the amendment to a vote.