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Clause 1 - Deputy Governors

Part of Financial Services Bill – in a Public Bill Committee at 11:45 am on 21st February 2012.

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Photo of Mark Hoban Mark Hoban The Financial Secretary to the Treasury 11:45 am, 21st February 2012

We have had a helpful debate and I will set out some of the constraints that affect the appointment process to the court of the Bank.

As the hon. Member for Nottingham East alluded to, the Treasury Committee, in its report into the accountability of the Bank of England, concluded:

“The new responsibilities of the Bank will require its governing body to have an enhanced mix of skills.”

The Government agree with that conclusion, and committed in our response to take that point into consideration when making future appointments. In our publication, “Corporate governance in central government departments: Code of good practice 2011”—a title that all members of the Committee will have on their Amazon wish  list—the Government clearly state that a board should have a balance of skills and experience appropriate to fulfilling its responsibilities. Moreover, it stipulates that the membership of the board should be balanced, diverse and manageable in size.

In principle then, I am broadly in agreement with the position taken by the hon. Member for Nottingham East in his interventions, but it is not necessary to make a new legislative provision for this. The appointment of non-executive directors to the court is fully regulated by the Office for the Commissioner of Public Appointments, which ensures a fair, transparent and competitive process. It is worth bearing it in mind that the code for the Office for the Commissioner of Public Appointments states:

“Appointment on merit is the overriding principle within the public appointments process.”

It adds:

“Departments must seek to encourage a wide range of suitably qualified individuals from different backgrounds”.

Merit is the key consideration for the appointment of members to the court, but the Government should ensure that they seek a broader range of interest. For example, when an appointment was made last year to the court, the vacancy was advertised openly and the role profile sought people with substantial experience as: a board member or head of function in a major financial services organisation, and/or someone who had built up a successful enterprise of a significant size, and/or someone who had played a prominent role in a relevant area of public policy, the voluntary sector or a trade union.

The hon. Member for Nottingham East commented that he was happy with the suitability of the existing members of the court and then commented on their lack of diversity. All bar one of the non-executive directors were appointed under the previous Government and only one has been appointed since this Government came to power.