Clause 3 - Financial stability strategy and Financial Policy Committee

Part of Financial Services Bill – in a Public Bill Committee at 6:15 pm on 21st February 2012.

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Photo of Chris Leslie Chris Leslie Shadow Minister (Treasury) 6:15 pm, 21st February 2012

I am grateful to the Minister for pointing out the defective nature of amendment 7. He has shone an unintended spotlight yet again on the rather bizarre set of internal committees and sub-committees existing within the Bank of England. The Minister asks us not to be doctrinaire or theological, and not to get too bound up or prescriptive about the compositions. That is an important point. I will try to remember that and quote it back to him at a future date.

If the Bank responds to the pressure that the court should become a proper supervisory board, and its response is to create a new oversight committee, whose role is to oversee the performance and activities of the Bank as a whole, including the Financial Policy Committee, it is reasonable to ask why we also then have a NedCo—a non-executive director committee. According to the Bank’s website, its functions include

“keeping under review the Bank’s performance in relation to its objectives and strategy for the time being determined by Court…monitoring the extent to which the objectives set in relation to the Bank’s financial management have been met…keeping under review the procedures following by the Monetary Policy Committee”,

as well as others, and

“determining…the Monetary Policy Committee”,

and so on. Existing NedCo arrangements are pretty broad as they stand. It prompts the question, what will an oversight committee bring to the party that the NedCo does not currently undertake? The issue of looking inside the Bank at its sub-committees is probably something that only members of the Bank itself would be concerned about, but it is important, given the principle that the Minister is expressing. Clarity matters, knowing who is responsible matters, and scrutiny and accountability with checks and balances matter as well. At some point, possibly later down the line, we need to look at the rather messy and blurred arrangement between the oversight committee and the NedCo. I do not know why that has not yet been spotted or resolved. I do not know whether the NedCo meets frequently, or whether the oversight committee is just about to be set up rather than has been set up. Perhaps we could talk about those issues on another occasion. Given that it was an unintended consequence of amendment 7, I will not push the amendment to further on at this point.

Regarding amendment 6, the question of a sub-committee and a committee matters. I understand the Minister’s logic: he wants the FPC to be a sub-committee of the court, so that the court can scrutinise it. However, I am now starting to think, “Hang on a minute. I thought that that function is being delegated to the oversight committee rather than to the court.” The mist is beginning to descend on where the lines of accountability between all the various committees go.