Labour proposals to widen the membership of the Financial Policy Committee have been defeated in Parliament.
One amendment to the financial services bill called for there to be six external members of the FPC appointed by the Chancellor rather than the current four.
Another amendment said that as well as being satisfied appointees have relevant experience and knowledge for the role, the Chancellor must also have regard to “ensuring a broad representation of practitioners and consumers in the UK”.
Both were tabled by shadow Treasury financial secretary Chris Leslie and two other Labour MPs. Both were defeated by 10 votes to eight in a vote during the bill’s committee stage yesterday morning. However, the amendments could be re-introduced at a later stage.
Leslie told MPs in the committee that the current make-up of the FPC leans too heavily towards Bank staff, has too few independent members on it and does not represent consumers or industry widely enough.
Treasury financial secretary Mark Hoban said: “In the discussion that we had on Tuesday, Mr Leslie talked about representatives from the banking sector, the insurance sector, the professional services sector, the industrial sector, manufacturing, consumers and others. I think that he is looking for a rugby team to join the FPC, rather than a modest increase in the numbers.”
He added that giving the FPC more external members than Bank based members would undermine the Bank’s responsibility for “protecting and enhancing” financial stability.
Leslie first told Money Marketing he would be pushing for a more diverse FPC last July.
A Labour amendment to make the FPC have regard to the Government’s economic policy, employment and growth was also defeated.
In a Parliamentary debate on the bill earlier this month, Chancellor George Osborne said it would be “a mistake” to prescribe the qualifications of the external members of the FPC but that it was important they have a “broad and current” experience of the financial system. Hoban told MPs this is reflected in the current make up of the FPC despite past criticism that the make up was not drawn from a wide enough base.
Labour wanted the FPC to have six external members alongside the Governor, three deputy governors, two other members appointed by the Governor in consultation with the Treasury and the head of the independent Financial Conduct Authority.