INDEPENDENT MONETARY POLICY COMMITTEE APPOINTMENTS, NOT "CALLS FROM BALLS" - OAKESHOTT

9.39.21pm BST (GMT +0100) Tue 17th Jun 2003

Lord (Matthew) Oakeshott, a Liberal Democrat Treasury Spokesman and member of the House of Lords Economic Affairs Select Committee, today called for reform of appointments to the Bank of England Monetary Policy Committee, following evidence on the MPC appointment process given by former Financial Times Editor Richard Lambert to the House of Commons Treasury Select Committee.

Lord Oakeshott said: "Gordon Brown must now finish the job he started when he handed the Bank of England power to set interest rates six years ago. If independent experts, not a single politician, fix rates, why should the Chancellor pick them personally and in secret, and decide whether to re-appoint them to a second term? "

"It ignores the Nolan principles – there is no advertisement, no application process, no questions asked and no reasons given."

"MPC Members should now be picked, not by "calls from Balls", but by a new nine-member independent Monetary Policy Appointments Committee. It should have representation from the Treasury, the Bank of England, both Houses of Parliament, business and the trade unions and expert former members of the MPC."

"ENDS "

"Notes to Editors."

"• Lord Oakeshott is suggesting that a potential Monetary Policy Appointments Committee might be constituted as follows:"

"Gus O'Donnell Permanent Secretary to the Treasury"

"Mervyn King Governor of the Bank of England"

"John McFall MP Chairman, Treasury Select Committee, House of Commons"

"Prof. Lord Peston Chairman, Economic Affairs Select Committee, House of Lords"

"Niall Fitzgerald Chairman, Unilever"

"John Monks"

"General Secretary, ETUC"

"Dr. DeAnne Julius "

"Prof. John Vickers Former MPC Members"

"Dr. Sushil Wadhwahi "

"• The House of Lords Select Committee on Economic Affairs calls for a "more open process of appointing the Monetary Policy Committee, partly as a matter of principle and partly as a way of enlarging and deepening the pool of people who might be considered for membership."

"• The Chancellor has always rejected the Committee's view, believing appointments to be "market sensitive"."

"• But Sir Edward George, in evidence to the Committee did not think appointments which had been made to the MPC were market sensitive."

"• Lord Burns, Permanent Secretary to the Treasury for seven years, is also "wholly unpersuaded by the arguments on market sensitivity".