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Lord McFall backs TSC veto over BoE governor

Labour peer Lord McFall has tabled an amendment to the Financial Services Bill to require the Treasury select committee’s approval for the appointment and removal of the governor of the Bank of England.

Currently, the governor is appointed by the Treasury for up to two five-year terms. The bill has already been amended so future governors will only serve one eight year term, as a result of a recommendation from the TSC in its report on accountability at the Bank.

Lord McFall’s amendment says: “Any person appointed [to the role of governor of the Bank of England] shall be appointed with the consent of the Treasury committee of the House of Commons.”

The TSC report also called for the committee to have a veto over the appointment as it does over the chairman of the Office for Budget Responsibility, the Government’s independent spending watchdog.

A separate amendment tabled by McFall would also mean the committee has to be consulted by the Bank before it removes anyone from the role of governor.

Baroness Wheatcroft sat on the joint committee that scrutinised the draft bill last year. She has tabled an amendment that would mean the Chancellor would also have to consult with the Bank’s court of directors on the appointment.

McFall also wants the bill amended to beef up the role of the court so it can conduct a retrospective review of the Bank’s performance. This mirrors requests from the TSC who said it should be abolished and replaced with a modern ‘supervisory board’. McFall was chair of the TSC before Tyrie was elected to the role after the 2010 election.

Treasury minister Lord Sassoon has proposed amending the bill to implement the Bank’s recommendation of introducing an ‘oversight committee’ under the court that would scrutinise the Bank’s work, a proposal rejected by the TSC.

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