Outlook: MPC arrogance

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The Independent Online
A CLASH of egos is always an ugly sight, and so it was with the spat between MPs on the Treasury Select Committee and Sushil Wadhwani, the new boy on the Monetary Policy Committee bloc. Mr Wadhwani made the mistake of copying his answers to a questionnaire from replies previously submitted to the Treasury Committee by his MPC colleagues. This must have seemed a reasonable enough approach. The questions were the same, the answers pretty obvious - trite, even - to a professional economist, and he did not want to cause a stir by using a form of words that might be interpreted as a difference of opinion.

But if he had thought about it, he would have realised it was a mistake. Some of the MPs took it as a sign of disrespect. They are the elected representatives charged with keeping the MPC accountable to Parliament. And, as clever and rather shy people often can, Mr Wadhwani came across as stand-offish. Brian Sedgemore, in his role as the Treasury Committee's troublemaker-in-chief, was in enough of a huff about the insult to his dignity to vote against confirming the new appointment.

No one would quarrel with the proposition that the MPC has to be subject to regular Parliamentary scrutiny, and MPC members must take that process seriously. On the other hand the Treasury Committee needs to be serious about its work too. To match arrogance with pomposity doesn't seem to cast much light on the darkness. There was no attempt to pick a quarrel with the substance of Mr Wadhwani's replies, or with his qualifications for the job. They just didn't like his attitude.

The lesson for the MPC is that it is not enough to get interest rates right. Members also have to explain their decisions, and moreover explain in the forum of the Treasury Committee, where some MPs understand more economics than others (to put it kindly), where some want to score party political points, and where some are just plain bolshy. It's a pain, but it is the core of the Bank's legitimacy as an independent determinant of interest rates.