House of Commons Treasury Committee

Appointment of Spencer Dale to the Financial Policy Committee

Eleventh Report of Session 2013–14

HC 1236

House of Commons Treasury Committee

Appointment of Spencer Dale to the Financial Policy Committee

Eleventh Report of Session 2013–14

Report, together with formal minutes relating to the report

Ordered by the House of Commons to be printed 30 April 2014

HC 1236 Published on 02 May 2014 by authority of the House of Commons London: The Stationery Office Limited £0.00

The Treasury Committee

The Treasury Committee is appointed by the House of Commons to examine the expenditure, administration, and policy of HM Treasury, HM Revenue and Customs and associated public bodies.

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Current membership Mr Andrew Tyrie MP (Conservative, Chichester) (Chairman) Mark Garnier MP (Conservative, Wyre Forest) Stewart Hosie MP (Scottish National Party, Dundee East) Andrea Leadsom MP (Conservative, South Northamptonshire) Mr Andy Love MP (Labour, Edmonton) John Mann MP (Labour, Bassetlaw) Mr Pat McFadden MP (Labour, Wolverhampton South West) Mr George Mudie MP (Labour, Leeds East) Mr Brooks Newmark MP (Conservative, Braintree) Jesse Norman MP (Conservative, Hereford and South Herefordshire) Teresa Pearce MP (Labour, Erith and Thamesmead) David Ruffley MP (Conservative, Bury St Edmunds) John Thurso MP (Liberal Democrat, Caithness, Sutherland, and Easter Ross)

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Appointment of Spencer Dale to the Financial Policy Committee 1

Contents

Report Page

1 Introduction 3 Our inquiry 3

2 The appointment of Spencer Dale 4 Background on Mr Dale 4 Our evidence 4 Conclusions 4

Formal Minutes 6

Witnesses 7

Published written evidence 7

List of Reports from the Committee during the current Parliament 8

Appointment of Spencer Dale to the Financial Policy Committee 3

1 Introduction

Our inquiry

1. This Report considers the appointment of Spencer Dale as a member of the Financial Policy Committee. On 18 March 2014, the Bank of England announced that, under its new Strategic Plan, “Spencer Dale, currently Chief Economist and Executive Director for Monetary Analysis, will become the new Executive Director for Financial Stability strategy and risk. He will be a member of the FPC and will report to the Deputy Governor for Financial Stability”.1

2. We took evidence from Mr Dale on Wednesday 30 April 2014. He provided a CV and answered our questionnaire prior to giving oral evidence. We thank him for his evidence.

3. In our previous Report on the Appointment of Dr Donald Kohn to the interim Financial Policy Committee, we concluded that:

At present, we see no reason to differ from the practice undertaken at appointment hearings into the MPC and the OBR. Personal independence and professional competence are the criteria we will use to assess the suitability of the proposed candidates to the interim FPC.2

These are the criteria we have used to assess the suitability of Mr Dale’s appointment to the statutory FPC discussed in this Report.

1 Bank of England, Strategic Plan: Background information, 18 March 2014, p5 2 Treasury Committee, Appointment of Dr Donald Kohn to the interim Financial Policy Committee , Thirteenth Report of session 2010-12, HC 1052, para 7

4 Appointment of Spencer Dale to the Financial Policy Committee

2 The appointment of Spencer Dale

Background on Mr Dale

4. Spencer Dale has worked as an economist at the Bank of England since 1989. From 1997 to 1999 he served as Private Secretary to Mervyn King, who was then the Deputy Governor for Monetary Policy. In that capacity, Spencer Dale participated in the design and implementation of the structures and processes established to support the newly- created MPC. From 2000 to 2006, he was Head of the Bank’s Conjunctural Assessment and Projections Division. From 2006 until 2008, he worked as a Senior Adviser at the Board of Governors of the Federal Reserve System in the United States of America, attending policy meetings of the Federal Open Markets Committee. Since 2008, he has been the Chief Economist and Executive Director, Monetary Analysis & Statistics. He has an MSc in economics from the University of Warwick and has written or been co-author of articles relating to monetary policy strategy, central bank communications and financial markets.

Our evidence

5. In oral evidence, we questioned Mr Dale about his new role, the issues facing the FPC, and how he saw himself responding to those issues. The topics we questioned Mr Dale about included:

• Whether the MPC and FPC should be one Committee;

• The process of his appointment;

• The implementation of the Strategic Plan;

• Independence and consensus on the FPC, and how consensus should influence FPC members’ communications;

• The outlook for the housing market and the responsibility of the FPC towards it;

• The FPC’s response to changes in regional house prices;

• Concerns about, and the quality of information about, household debt;

• Risks to financial stability from IT; and

• Public understanding and awareness of the FPC.

Conclusions

6. We are satisfied that Mr Dale has the professional competence and personal independence to be a member of the Financial Policy Committee. We wish him every success in this role.

Appointment of Spencer Dale to the Financial Policy Committee 5

7. The usual practice of the Bank of England—which the Treasury Committee supports—is to fill Executive Director posts by fair and open competition. This was not done in this case. On this occasion, a case could be made for an exception to the usual practice because of the wider reorganisation of the Bank that was being undertaken and the recent expansion of the Bank’s responsibilities. Nevertheless, we would expect the usual appointment process to be followed in future.

6 Appointment of Spencer Dale to the Financial Policy Committee

Formal Minutes

Wednesday 30 April 2014

Members present:

Mr Andrew Tyrie, in the Chair

Mark Garnier Mr David Ruffley Mr Andrew Love John Thurso Jesse Norman

Draft Report (Appointment of Spencer Dale to the Monetary Policy Committee), proposed by the Chair, brought up and read.

Ordered, That the draft Report be read a second time, paragraph by paragraph.

Paragraphs 1 to 7 read and agreed to.

Resolved, That the Report be the Twelfth Report of the Committee to the House.

Ordered, That the Chair make the Report to the House.

Ordered, That embargoed copies of the Report be made available, in accordance with the provisions of Standing Order No. 134.

[Adjourned till Tuesday 6 May at 9.45am

Appointment of Spencer Dale to the Financial Policy Committee 7

Witness

The following witness gave evidence. The transcript can be viewed on the Committee’s website at www.parliament.uk/treascom.

Wednesday 30 April 2014

Spencer Dale, Executive Director and Chief Economist, Bank of England List of written evidence

The following written evidence can be viewed on the Committee’s web page at www.parliament.uk/treascom.

1 Spencer Dale’s response to the Treasury Committee’s questionnaire 2 Spencer Dale’s CV

8 Appointment of Spencer Dale to the Financial Policy Committee

List of Reports from the Committee during the current Parliament

All publications from the Committee are available on the Committee’s website at www.parliament.uk/treascom.

Session 2010-2012 First Report June 2010 Budget HC 350 Second Report Appointment of Dr to the Monetary Policy HC 475 Committee of the Bank of England Third Report Appointment of Robert Chote as Chair of the Office for HC 476 Budget Responsibility Fourth Report Office for Budget Responsibility HC 385 Fifth Report Appointments to the Budget Responsibility Committee HC 545 Sixth Report Spending Review 2010 HC 544 Seventh Report Financial Regulation: a preliminary consideration of the HC 430 Government’s proposals Eighth Report Principles of tax policy HC 753 Ninth Report Competition and Choice in Retail Banking HC 612 Tenth Report Budget 2011 HC 897 Eleventh Report Finance (No.3) Bill HC 497 Twelfth Report Appointment of Dr to the Monetary Policy HC 1051 Committee of the Bank of England Thirteenth Report Appointment of Dr Donald Kohn to the interim Financial HC 1052 Policy Committee Fourteenth Report Appointments of Michael Cohrs and Alastair Clark to the HC 1125 interim Financial Policy Committee Fifteenth Report Retail Distribution Review HC 857 Sixteenth Report Administration and effectiveness of HM Revenue and Customs HC 731 Seventeenth Report Private Finance Initiative HC 1146

Eighteenth Report The future of cheques HC 1147 Nineteenth Report Independent Commission on Banking HC 1069 Twentieth Report Retail Distribution Review: Government and FSA Responses HC 1533 Twenty–first Report Accountability of the Bank of England HC 874 Twenty–second Appointment of Robert Jenkins to the interim Financial Policy HC 1575 Report Committee Twenty–third Report The future of cheques: Government and Payments Council HC 1645 Responses Twenty–fourth Appointments to the Office of Tax Simplification HC 1637 Report Twenty–fifth Report Private Finance Initiative: Government, OBR and NAO HC 1725 Responses Twenty–sixth Report Financial Conduct Authority HC 1574 Twenty–seventh Accountability of the Bank of England: Response from the HC 1769 Report Court of the Bank Twenty–eighth Report Financial Conduct Authority: Report on the Governments HC 1857 Response Twenty–ninth Report Closing the tax gap: HMRC’s record at ensuring tax HC 1371

Appointment of Spencer Dale to the Financial Policy Committee 9

compliance Thirtieth Report Budget 2012 HC 1910

Session 2012–13 First Report Financial Services Bill HC 161 Second Report Fixing LIBOR: some preliminary findings HC 481 Third Report Access to cash machines for basic bank account HC 544 holders Fourth Report Appointment of Mr Ian McCafferty to the Monetary HC 590 Policy Committee Fifth Report The FSA’s report into the failure of RBS HC 640 Sixth Report Appointment of John Griffith–Jones as Chair– HC 721 designate of the Financial Conduct Authority Seventh Report Autumn Statement 2012 HC 818 Eighth Report Appointment of Dr as Governor of the HC 944 Bank of England Ninth Report Budget 2013 HC 1063

Session 2013–14 First Report Appointments of Dame Clara Furse, Richard Sharp, HC 224 and Martin Taylor to the Financial Policy Committee Second Report Appointments of Dr Donald Kohn and Andrew HC 259 Haldane to the Financial Policy Committee Third Report Spending Round 2013 HC 575 Fourth Report Re–appointment of Professor Stephen Nickell to the HC 688 Budget Responsibility Committee Fifth Report Appointment of Sir as Deputy Governor HC 689 of the Bank of England Sixth Report Re–appointment of Dr Martin Weale to the Monetary HC 313 Policy Committee Seventh Report Money Advice Service HC 457 Eighth Report OBR Fiscal Sustainability Report 2013 HC 958 Ninth Report Autumn Statement 2013 HC 826 Eleventh Report Appointment of Spencer Dale to the Financial Policy HC 1236 Committee Twelfth Report Appointment of Andy Haldane to the Monetary HC 1235 Policy Committee