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The oversight committee will be entirely non-executive. That is absolutely vital to ensure that the non-execs are able to scrutinise the policy-making processes and outcomes. It will be well resourced and will be able to commission both internal and external reviews. It will be an important way of challenging the policy-making functions within the Bank. Clearly, the position of the oversight committee will be a matter for the court to decide. It requires the court to ensure that its membership is properly equipped to undertake these tasks.
The Government are keen to see effective governance of the Bank and to ensure that the court is properly equipped to carry out this role. The Government therefore welcome the court’s proposals. The Chair of the Treasury Committee himself acknowledged that there was much to welcome in the court’s response to the Treasury Committee’s recommendations. However, in its report published on 23 January, the Treasury Committee outlined a number of areas where it felt that the court’s proposals did not go far enough. The Committee reiterated its call for the replacement of the court with a new supervisory board.
The Government do not agree with the Treasury Committee that replacing the court with a new supervisory board is the only way to enhance the Bank’s accountability. Although the solution proposed by the court takes a different approach from that put forward by the Treasury Committee, there is no reason why it should not be just as effective in achieving the aims set out in the Treasury Committee’s report.
One area that the Treasury Committee raised in its 23 January report was the ability of the oversight committee to commission internal policy reviews. As a consequence of that, the Chancellor has agreed with the Governor and the chair of the court that the new oversight body will also be expected to commission retrospective internal reviews from the Bank’s policy makers of their policy making and implementation performance.