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Steve Baker MP: BofE governor will be too powerful

Steve Baker MP MM blog

I’m not excited about the appointment of a new governor of the Bank of England. The money power is one too pervasive and too dreadful to be trusted to an individual or a committee: the prospects of tens of millions of people ought not to depend on the talents and character of an individual or a small group.

I believe managing the currency and interest rates is an impossible task. That is a minority view these days but more or less anyone ought to agree that the governor of the Bank of England has now a vast power over the collective and individual life of the country and that this power will increase under the new regulatory system.

That’s why the Treasury select committee’s pre-appointment hearing is so important.

Given the undoubted power of the governor, it is vital that this appointment is subject to democratic scrutiny. If the TSC does not support the appointment of Mark Carney, then the House must have the opportunity to debate and endorse or reject their decision – and the chancellor’s.

These select committee debates are usually held in back-bench time, which is precious and which the Government seems to ignore. The role of governor is too important for that: any debate should be in Government time and any motion should be binding on the Government. A free vote is probably too much to ask, but nevertheless the vote should be free.

The power to set interest rates and to control the exchange value of money is either a power too dreadful to tolerate in a free society or, if it must be tolerated, it is one which can only properly be wielded by someone ultimately under democratic control. Parliamentary scrutiny matters, first through the TSC, then through the whole House if necessary.

Steve Baker is Conservative MP for Wycombe

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Comments

There are 3 comments at the moment, we would love to hear your opinion too.

  1. Presumably you will be making exactly the same arguments of accountability for the FSA’s replacement too.

    If not, you really only have half grasped the problems with the regulatory landscape.

    You are making the right noises, but you now need to join the dots!

  2. our politicians, as a whole, know nothing about business.
    the track records of both main parties from thatcher’s 1985 legislation to brown’s light touch (“because you run your industry so well” per his 2008 speech) are appalling.
    why does this MP think the electorate would wish politicians to become involved with the process of putting right the mess that they have helped to create?
    the candidate looks excellent and he will no doubt recruit and seek the counsel of experienced advisers.
    being accountable and being subject to ill informed and political interference are two different things – the latter is an appalling prospect

  3. If, it is “too pervasive and too dreadful to be trusted to an individual or a committee” who should it be trusted to?

    If you have too many voices and too many votes, the whole thing surely gets messy. The monetary policy committee meets, with representatives from industry as well as bankers, and they discuss the issues.

    I’m sure that no process would be described as perfect, but would have thought that the current arrangements would be ‘fit for purpose’.

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