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Clause 1 - Deputy Governors

Part of Financial Services Bill – in a Public Bill Committee at 11:00 am on 21st February 2012.

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Photo of Mark Hoban Mark Hoban The Financial Secretary to the Treasury 11:00 am, 21st February 2012

I am grateful for that. My hon. Friend makes the important point that “supervisory board” has different connotations. One of the things that the court was keen to see was the maintenance of a unitary board that comprised both non-executives and executives. The hon. Member for Nottingham East, in his relatively brief description of the different types of supervisory arrangement, highlighted as options both the corporate boards that we see in public companies and the scrutiny panels that we see in our local councils. There is no single model. The challenge is to ensure that the model is effective in providing the necessary scrutiny and challenge. My hon. Friend is right to focus on the substance of the proposals.

I have not yet covered a point that the hon. Member for Nottingham East made in his remarks. He referred to how the Bill gives rule-making powers to the FPC. Let me be clear: it does not give rule-making powers to the Bank or the FPC. When the FPC’s decisions must be implemented via rules, it will be done by either the Prudential Regulation Authority or the Financial Conduct Authority under existing powers and safeguards. We will discuss such matters in subsequent amendments.

I set out why the court’s proposals, including the creation of an oversight committee, represent real and constructive measures to strengthen Bank of England governance and accountability. I hope that the hon. Members for Nottingham East and for Kilmarnock and Loudoun will accept my assurances and that the hon. Gentleman will withdraw the amendment.

I understand why the hon. Members who tabled amendment 2 paused over the reference to “a Governor” when other provisions in the Bill refer to “the Governor”,  but I shall explain why their amendment is unnecessary. The provision replaces section 1 (2) and (2A) of the 1998 Act, which establishes the membership of the court of the Bank of England and creates a number of posts in statute. The posts of governor and deputy governors of the Bank are not created by any other legislation, which is why the wording in the provision takes the indefinite article. The hon. Member for Nottingham East alluded to that in his remarks.

Under the measure, “a Governor” will sit on the court of the Bank; we cannot refer to “the Governor” because without the provision, that post does not exist. When it has been established, however, all other references, such as those in new sections 9B and 9U, will be to “the Governor of the Bank.” The post must be created before other provisions can refer to “the Governor”, which is what new subsection (2) of section 1 of the 1998 Act does. I know that the hon. Gentleman has prepared well for this discussion, but he might wish to revisit the existing provision in the 1998 Act, which also uses the indefinite article in reference to the court’s composition. I hope that I have reassured him. I shall give way to the hon. Member for Foyle, who might suggest another reason why the indefinite article is inappropriate.