Financial Services Bill

I have heard a good number of those concerns from the practitioners to whom my hon. Friend refers. What they say, what he has just said and the fact that I was quoting a former Chancellor all illustrate an important point: new clause 1 is not just supported by the Treasury Committee and by many independent experts who have taken a look at it. My impression, which has been gained from talking to fellow MPs and many others, is that the purpose behind the new clause is supported right across the House of Commons. New clause 1 would bolster parliamentary accountability in two ways. First, it would place a duty on the court of directors to conduct retrospective reviews of the Bank's performance and publish the results for Parliament to examine. Secondly, it would require the court to publish its full minutes. Those two suggestions sound, to me at least, pretty reasonable, but they encountered a wave of objections from the Bank. The Bank's frequent refrain to us has been that the current accountability arrangements are pretty much okay just as they are. We need to be clear that the current arrangements for the court simply will not do. The board of the Bank—the court—is currently prohibited from examining the Bank's performance and it cannot make recommendations about what it may discover if it does ask any questions. The court's role is strictly confined to process—mainly to auditing the budget. Any well-governed institution must have a board capable of examining its performance and permitted to comment on how to learn lessons from mistakes or from successes. That is why we propose that the court be required to conduct and publish reviews of the Bank's policy. Of course that would also give Parliament an opportunity to make recommendations on what it should look at. It is astonishing that the Bank has still not conducted and published a review of its own performance during the 2007-08 crisis. The Financial Services Authority and the Treasury have done this, enabling both to face up to weaknesses in organisation and performance, and to work out how to remedy some of them. The Bank should have done the same some time ago, and the fact that it has not done so tells us that the court seems to owe more to the dignified than the effective part of the Bank's constitution. What can I say about the Government's position on all this? I find their position to be off beam—let us leave it at that. Their response to the Treasury Committee report states that"““the Government considers that the governance of the Bank should primarily be a matter for the Bank itself.””" It must be clear to most people that the Bank cannot be left to decide how it can be made accountable, as it is an interested party. This is the one issue, above all, that Parliament certainly should not leave to the Bank, and nor should the Treasury do so. After all, the Treasury is its 100% shareholder; it is legally responsible for the Bank's accountability. None the less, the Government and the Bank have both begun to shift their respective positions, albeit only under pressure. It is just a pity that a move towards common sense is being wrung as blood from a stone. First, the Bank conceded that some form of oversight sub-committee could be created but it maintained that such a committee should not have the power to examine the merits of decisions and should not have the authority to commission internal reviews. Now, more helpfully, the Financial Secretary has edged a bit closer to the Treasury Committee's position by saying that the sub-committee could commission retrospective internal reviews. What we now need to do is give statutory effect to all this, rather than rely on pledges. We need to ensure that the court can look at the merits of decisions and that it is accountable to Parliament for doing this work. We need to have that put in the Bill. That, in a nutshell, is what new clause 1 would achieve. The second part of new clause 1 would require the court to publish its minutes, as the Monetary Policy Committee already does, subject to some specific confidentiality concerns. The Treasury Committee finds the notion that that might be inappropriate a little strange to say the least. It must be right for Parliament to have at least that measure of transparency in respect of the affairs of the Bank. It is very disappointing that we have been asking the court for its minutes for the period of the crisis for more than a year and still have not received them—that simply will not do. The fact that we have not been given those minutes only illustrates the need for a statutory duty of accountability on this unprecedentedly powerful institution.