The Treasury select committee has withdrawn an amendment to the Financial Services Bill aimed at boosting the accountability of the Bank of England after the Government said it would try and find a way of putting the committee’s recommendations in place.
The amendment, tabled by TSC chair Andrew Tyrie, would have required the Bank’s court of directors to carry out and comment on findings of retrospective reviews of the work of the Financial Policy Committee and given the court a duty to publish minutes of its meetings within two weeks. He said the move was necessary because the scale of the powers being given to the Bank under the bill could see its Governor end up more powerful than the Chancellor.
Speaking at a Parliamentary debate on the bill last night, Treasury financial secretary Mark Hoban conceded there is a “consensus” that governance of the Bank needs to be improved. He added the court would have to “evolve” to be able to play the “full role” Government wants it to in holding the Bank to account.
He said: “We are very clear, we want to see the minutes published, that is vital and we want to see the retrospective reviews in place. The question Mr Tyrie has put are we going far enough, should the proposals be on the face of the bill. What I have committed to is to listen to his arguments and return to those issues [when the bill gets to the House of Lords].”
“We will do all we can to strengthen transparency arrangements for the Bank of England,” he added
Tyrie said he wants to see the requirements put into statute and that recent concessions for the Bank’s court to simply produce retrospective reviews and not be able to comment on them do not go far enough.
He said: “[As it stands] the bill seems to us to fly in the face of all ideas on modern governance, let alone Parliamentary accountability”.
Shadow Treasury financial secretary Chris Leslie supported the amendment, describing the Government’s position on accountability at the Bank as “ridiculous”. He said: “Mr Tyrie is not asking for the moon on a stick.”
MP for the Cities of London and Westminster Mark Field said there were “deep concerns” among financial institutions within his constituency over the powers the Bank is being given and the lack of accountability.
TSC member and Conservative MP Mark Garnier said: “If there was one surgical cut that could be made to most improve the bill, this amendment is it.”
The climbdown comes after the TSC and the bank clashed over the committee’s request for it to release minutes from court meetings during the financial crisis. The bank said revealing the minutes would not allow space for private discussions in future but Tyrie said not releasing them was stopping the committee properly scrutinising the bank.
The TSC’s report on the Bank’s accountability, published last November, said it will become a “super-regulator” after the regulatory shake-up and called for the court to be replaced with a modern supervisory board.
The bank rejected the TSC’s call for the court to be made into a modern supervisory board. Instead it proposed an oversight committee to be set up under the court, a move later backed by the Government.