House of Commons Treasury Committee

Appointment of Dr to the Monetary Policy Committee of the

Twelfth Report of Session 2010–12

Volume I

Report, together with formal minutes

Ordered by the House of Commons to be printed 17 May 2011

HC 1051–I Published on 23 May 2011 by authority of the House of Commons : The Stationery Office Limited £5 .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.

Current membership Mr Andrew Tyrie MP (Conservative, Chichester) (Chairman) John Cryer MP (Labour, Leyton and Wanstead) Michael Fallon MP (Conservative, Sevenoaks) 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 George Mudie MP (Labour, Leeds East) Jesse Norman MP (Conservative, Hereford and South Herefordshire) David Ruffley MP, (Conservative, Bury St Edmunds) John Thurso MP (Liberal Democrat, Caithness, Sutherland, and Easter Ross) Mr Chuka Umunna MP (Labour, Streatham)

Powers The committee is one of the departmental select committees, the powers of which are set out in House of Commons Standing Orders, principally in SO No 152. These are available on the Internet via www.parliament.uk.

Publication The Reports and evidence of the Committee are published by The Stationery Office by Order of the House. All publications of the Committee (including press notices) are on the Internet at www.parliament.uk/treascom.

The Reports of the Committee, the formal minutes relating to that report, oral evidence taken and some or all written evidence are available in printed volume(s). Additional written evidence may be published on the internet only.

Committee staff The current staff of the Committee are Chris Stanton (Clerk), David Slater (Second Clerk), Adam Wales, Jay Sheth, Peter Stam and Daniel Fairhead (Committee Specialists), Phil Jones (Senior Committee Assistant), Caroline McElwee (Committee Assistant), Steve Price (Committee Support Assistant) and Nick Davies (Media Officer).

Contacts All correspondence should be addressed to the Clerk of the Treasury Committee, House of Commons, 7 Millbank, London SW1P 3JA. The telephone number for general enquiries is 020 7219 5768; the Committee’s email address is [email protected]

Appointment of Dr Ben Broadbent to the MPC 1

Contents

Report Page

1 Introduction 3 Background 3 Current vacancy 3

2 The appointment of Dr Ben Broadbent 4 Background on Dr Ben Broadbent 4 Our evidence 4 Conclusions 5

Formal Minutes 6

Witness 7

List of written evidence 7

List of Reports from the Committee during the current Parliament 8

Appointment of Dr Ben Broadbent to the MPC 3

1 Introduction

Background

1. In our Report into the Appointment of Dr to the Monetary Policy Committee of the Bank of England, we stated that we would follow previous practice and continue to use the criteria of professional competence and personal independence against which to consider appointees to the Monetary Policy Committee.1

2. In this Report, we have considered the suitability of Dr Ben Broadbent for his role as a member of the MPC against those criteria.

3. The Chancellor announced the appointment of Dr Broadbent on 7 March 2011.2 We took evidence from Dr Broadbent on 17 May 2011. This evidence, for which we are most grateful, will be published shortly, together with Dr Broadbent’s answers to our questionnaire and his curriculum vitae.

Current vacancy

4. The current vacancy on the MPC arose from the departure of Dr , who was appointed as an external member of the Monetary Policy Committee in 2006. We would like to thank Dr Sentance for his work on the Monetary Policy Committee.

1 Treasury Committee, Second Report of Session 2010–11, Dr Martin Weale to the Monetary Policy Committee of the Bank of England, HC 475-I, para 4 2 HM Treasury press notice, Chancellor appoints Ben Broadbent as external member of the Monetary Policy Committee, 7 March 2011

4 Appointment of Ben Broadbent to the MPC

2 The appointment of Dr Ben Broadbent

Background on Dr Ben Broadbent

5. Prior to his appointment to the Monetary Policy Committee, Dr Broadbent was a Senior European Economist with Goldman Sachs.

6. Dr Broadbent is a member of the Advisory Panel of the Office for Budget Responsibility, a role he will continue while being an external member of the MPC. Dr Broadbent also intends to pursue a graduate teaching job alongside his appointment.

7. Dr Broadbent has experience as a specialist in the UK economy, having worked at Her Majesty’s Treasury from 1989. Dr Broadbent received his doctorate, which he pursued as a Fulbright Scholar, from Harvard University in Economics in 1997. He then lectured in Economics at Columbia University. Dr Broadbent joined Goldman Sachs in 2000.

Our evidence

8. In oral evidence, we questioned Dr Broadbent about issues currently facing the UK and international economy, as well as about how he foresaw himself undertaking his role as an external Monetary Policy Committee member. Topics we questioned Dr Broadbent about included: x His voting intentions; x The work of Dr Sentance; x Quantitative easing; x Inflation overshooting the target; x Inflation expectations; x Assumptions of future commodity prices; x Using interest rates to counter asset price bubbles; x The interaction between the MPC and the FPC; x The output gap and the size of the structural deficit; x The impact of the Government’s fiscal policy on output; x Potential market reaction to changes in government policy; x The target set for the MPC; x The financial surplus in the corporate sector; and x The MPC’s exercise of constrained discretion.

Appointment of Dr Ben Broadbent to the MPC 5

Conclusions

9. We are satisfied that Dr Ben Broadbent fulfils our two criteria for appointment to the Monetary Policy Committee of professional competence and personal independence. We wish him every success as a member of the MPC.

6 Appointment of Dr Ben Broadbent to the MPC

Formal Minutes

Tuesday 17 May 2011

Members present:

Mr Andrew Tyrie, in the Chair

Mr Michael Fallon John Thurso Mark Garnier Mr Chuka Umunna Mr George Mudie

*****

Draft Report (Appointment of Dr Ben Broadbent to the Monetary Policy Committee of the Bank of England), proposed by the Chair, brought up and read.

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

Paragraphs 1 to 9 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.

*****

[Adjourned till Monday 23 May at 3.15 p.m.

Appointment of Dr Ben Broadbent to the MPC 7

Witness

Tuesday 17 May 2011

Dr Ben Broadbent, external member of the Monetary Policy Committee, Bank of England

List of written evidence

Dr Ben Broadbent: Response to Treasury Committee questionnaire and curriculum vitae

8 Appointment of Dr Ben Broadbent to the MPC

List of Reports from the Committee during the current Parliament

Session 2010–12 First Report June 2010 Budget HC 350 Second Report Appointment of Dr Martin Weale to the Monetary HC 195 Policy Committee of the Bank of England Third Report Appointment of Robert Chote as Chair of the Office HC 476 for Budget Responsibility Fourth Report Office for Budget Responsibility HC 385 Fifth Report Appointments to the Budget Responsibility HC 545 Committee Sixth Report Spending Review 2010 HC 544 Seventh Report Financial Regulation: a preliminary consideration of HC 430 the 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

Printed in the by The Stationery Office Limited 5/2011 12041 19585

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