PARLIAMENTARY REPORT
as his preferred candidate in an oral statement to the House of Commons on Monday 26 November 2012. As Governor, Mr Carney will take on responsibility for the
UNITED KINGDOM
England needs as it takes on its heavy new responsibilities for regulating our banking system.” The Shadow Chancellor of the
Rt Hon. Ed Balls, MP
management of the Bank, for setting monetary policy in line with the Government’s two per cent inflation target, and also, following a series of reforms implemented after the banking crisis of 2008, responsibility for many aspects of financial regulation. Making his statement, the Chancellor paid tribute to Mr Carney’s predecessor, Sir Mervyn King, who had served in the post for nearly ten years, “five years of which have been during the most difficult period of economic policy making of the modern age”. Mr Carney will replace Sir Mervyn on 1 July 2013. The Chancellor told the
House that this was the first time that the job had been openly advertised and interviewed for. He announced that Mr Carney would remain in post for five years – stepping down in July 2018 and that, although not required for the role, would be applying for British citizenship. He summed up the case for Mr Carney’s appointment: “Britain needs the very best
at a time like this, and in Mark Carney we have got him. He is acknowledged as the outstanding central banker of his generation, and I believe he will bring the strong leadership and external experience that the Bank of
Mr Jesse Norman, MP
Committee for a pre-appointment hearing. This was the first time that a Governor had appeared before
72 | The Parliamentarian | 2013: Issue One
Exchequer, Rt Hon. Ed Balls, MP, (Lab), welcomed the appointment of Mr Carney, saying he had “a long and distinguished record of public service, great financial expertise and a track record of handling tough and complex challenges”. However, the Shadow Chancellor questioned the government’s reforms to the regulation of financial services sector, which include provisions giving micro and macro-prudential regulation in the hands of the Bank. The Shadow Chancellor argued that the Financial Services Bill “heaps far too much power on the Governor” that would be able to supress the inevitable disagreements within the Bank about the direction of policy. The Chancellor welcomed
the Opposition’s support for his choice – saying he “hoped we could bottle this cross-party consensus and use it on future occasions.” On the Shadow Chancellor’s point the Chancellor argued that it was for the Bank to resolve its internal disagreements however it chose to do it. The new Governor also agreed to appear for the Treasury Select
the Committee before taking up their post – although post- appointment hearings have been standard practice since the Bank of England was first made independent in 1997. One area of dispute between
the Chancellor and Shadow Chancellor following the statement was the Government’s opposition to amendments to the Financial Services Bill
committees mitigated against it. He said that it was not possible to run a zero-failure institution, but that he preferred a “low to medium” level of failure. Mr Stewart Hosie, MP,
(SNP) asked whether, given his “consensual” style of decision- making, Mr Carney was ready to deal with the external members of the MPC and the possibility that they would vote against him, possibly that the Committee as whole might out vote him. Mr Carney said that he would expect to be on the right side more often than not, but yes, he was ready to be outvoted. He also observed that meeting 12 times a year to examine inflation was a little on the high side. Mr George Mudie, MP,
Mr Andrew Tyrie, MP
which would give such hearings statutory force. At his appearance before
the Committee, Mr Carney was asked a number of questions on the appointment process by the Committee Chair, Mr Andrew Tyrie, MP, (Con). Mr Tyrie wanted to know
whether Mr Carney thought it was fair that he had been approached to apply for the job after the formal application deadline. Mr Carney replied that he thought the process was fair – he had faced the same interview with the same questions as the other candidates. Mr Jesse Norman, MP, (Con)
pressed Mr Carney on the extent of his powers as head of the reformed Bank of England. He asked whether Mr Carney would be like an absolute monarch, a new “Sun King”. Mr Carney argued that this
would not be the case. The structure of the committees – the Financial Policy Committee and Monetary Policy Committee – and the voting required on those
(Labour) asked about the present economic situation in the U.K. He noted that the economy had been “flat-lining” for two years. Mr Carney noted that he was not due to take up his post for another six months and that he was not yet expert in the U.K. economy. However, he saw the possibility for monetary stimulus to the economy for some considerable time to come – in view of the “considerable slack” in the U.K. economy. In answer to a question from Mr Pat MacFadden, MP, (Lab), Mr Carney confirmed that he had some high-level
Mr Pat McFadden, MP
discussions about the merits of re-examining the remit given to the bank in terms of inflation, however he stressed that
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