MPs seek veto on Brown's appointments

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The Independent Online
MPs on the Treasury Select Committee could seek the power of veto over the Chancellor's appointments to the Bank of England's Monetary Policy Committee.

In a seminar held yesterday by the influential committee, US-style confirmation hearings for candidates for its top jobs emerged as the front-runner for increasing the accountability of the newly independent Bank to Parliament.

Some of the prominent experts present saw hearings on these appointments as a means of preventing a Chancellor of the Exchequer from making politically motivated choices.

The Treasury Committee, chaired by Giles Radice, hopes to report within two months how it will carry out its enhanced role in scrutinising interest rate policy.

In a letter to Mr Radice in July, Gordon Brown, the Chancellor, said he would like it to take on this responsibility. The Treasury Committee has since begun a big consultation process.

In the week after May's election, Mr Brown handed the job of setting interest rates in order to meet the inflation target over to the Bank of England. But the Chancellor continues to set the target himself.

At yesterday's seminar - held under the "Chatham House" rule of not identifying participants, but including senior politicians and bankers, academics, economists from the City and industry, and journalists - there was much support for the idea that the Bank of England should be asked to give evidence on its broad analysis of the economy and government policy as well as on its narrow task of hitting the inflation target.

In his announcement of the Bank's independence, Mr Brown emphasised that its task involved supporting growth and jobs as far as this was consistent with keeping inflation on target.

There was also strong backing at yesterday's meeting for the Treasury Committee continuing to monitor the Government's choice of inflation target as well as other aspects of its economic policy such as the Budget.

The committee is considering questions such as how often it should hold sessions grilling the Bank, what information it should ask for, whether it should question the Governor, Eddie George, only or all the members of the Monetary Policy Committee, and whether it should publish its own regular reports on the inflation outlook.

However, the idea of MPs playing a role in Bank appointments emerged as the most prominent proposal. Experts advised that the US system of Congressional approval for appointments to the Federal Reserve Board did not lead to the frequent use of Congress's veto power but did ensure that the names of unsuitable candidates were not put forward.

The Bank is unlikely to have any serious objections to this idea. However, the Treasury Committee will need to act swiftly if it wants to get these powers included in the Bank of England Bill. With the tight Parliamentary timetable it will have at most a few weeks to influence the drafting.

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