House of Commons Treasury Committee Appointment of Charlie Bean as Deputy Governor of the Bank of England Fifteenth Report of Session 2007–08 Volume II Oral and Written Evidence Ordered by the House of Commons to be printed 2 July 2008 HC 917–II Published on 23 July 2008 by authority of the House of Commons London: The Stationery Office Limited £4.50 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 & Customs and associated public bodies. Current membership Rt Hon John McFall MP (Labour, West Dunbartonshire) (Chairman) Nick Ainger MP (Labour, Carmarthen West & South Pembrokeshire) Mr Graham Brady MP (Conservative, Altrincham and Sale West) Mr Colin Breed MP (Liberal Democrat, South East Cornwall) Jim Cousins MP (Labour, Newcastle upon Tyne Central) Mr Philip Dunne MP (Conservative, Ludlow) Mr Michael Fallon MP (Conservative, Sevenoaks) (Chairman, Sub-Committee) Ms Sally Keeble MP (Labour, Northampton North) Mr Andrew Love MP (Labour, Edmonton) Mr George Mudie MP (Labour, Leeds East) Mr Siôn Simon MP, (Labour, Birmingham, Erdington) John Thurso MP (Liberal Democrat, Caithness, Sutherland and Easter Ross) Mr Mark Todd MP (Labour, South Derbyshire) Sir Peter Viggers MP (Conservative, Gosport). 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. Publications 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. A list of Reports of the Committee in the current Parliament is at the back of this volume. Committee staff The current staff of the Committee are Colin Lee (Clerk), Sîan Jones (Second Clerk and Clerk of the Sub-Committee), Adam Wales, Jon Young and Jay Sheth (Committee Specialists), Phil Jones (Committee Assistant), Caroline McElwee (Secretary), Tes Stranger (Senior Office Clerk) and Laura Humble (Media Officer). Contacts All correspondence should be addressed to the Clerks of the Treasury Committee, House of Commons, 7 Millbank, London SW1P 3JA. The telephone number for general enquiries is 020 7219 5769; the Committee’s email address is [email protected]. Witnesses Wednesday 2 July 2008 Charlie Bean, Deputy Governor for Monetary Policy at the Bank of England Ev 1 List of written evidence 1 Treasury Committee Questionnaire: Response from Charlie Bean Ev 5 List of Reports from the Treasury Committee during the current Parliament Session 2007–08 First Report The 2007 Comprehensive Spending Review HC 55 Second Report The 2007 Pre-Budget Report HC 54 Third Report The Work of the Committee in 2007 HC 230 Fourth Report Climate change and the Stern Review: the implications for HC 231 Treasury policy Fifth Report The run on the Rock HC 56 Sixth Report Financial Stability and Transparency HC 371 Seventh Report Administration and expenditure of the Chancellor’s departments, HC 57 2006–07 Eighth Report Re-appointment of Dr Andrew Sentance to the Monetary Policy HC 454 Committee Ninth Report The 2008 Budget HC 430 Tenth Report Re-appointment of Mervyn King as Governor of the Bank of HC 524 England Eleventh Report Counting the population HC 183 Twelfth Report Inherited Estates HC 496 Thirteenth Report Budget Measures and Low-Income Households HC 326 Fourteenth Report Appointment of Lord Turner of Ecchinswell as Chairman of the HC 916 Financial Services Authority Fifteenth Report Appointment of Charlie Bean as Deputy Governor of the Bank of HC 917 England Session 2006–07 First Report Financial inclusion: the roles of the Government and the FSA, HC 53 and financial capability Second Report The 2006 Pre-Budget Report HC 115 Third Report Work of the Committee in 2005–06 HC 191 Fourth Report Are you covered? Travel insurance and its regulation HC 50 Fifth Report The 2007 Budget HC 389 Sixth Report The 2007 Comprehensive Spending Review: prospects and HC 279 processes Seventh Report The Monetary Policy of the Bank of England: re-appointment HC 569 hearing for Ms Kate Barker and Mr Charlie Bean Eighth Report Progress on the efficiency programme in the Chancellor’s HC 483 department Ninth Report Appointment of the Chair of the Statistics Board HC 934 Tenth Report Private equity HC 567 Eleventh Report Unclaimed assets within the financial system HC 533 Twelfth Report The Monetary Policy Committee of the Bank of England: ten HC 299 years on Thirteenth Report Financial inclusion follow-up: saving for all and shorter term HC 504 saving products Fourteenth Report Globalisation: prospects and policy responses HC 90 Session 2005–06 First Report The Monetary Policy Committee of the Bank of England: HC 525 appointment hearings Second Report The 2005 Pre-Budget Report HC 739 Third Report The Monetary Policy Committee of the Bank of England: HC 861 appointment hearing for Sir John Gieve Fourth Report The 2006 Budget HC 994 Fifth Report The design of a National Pension Savings Scheme and the role of HC 1074 financial services regulation Sixth Report The administration of tax credits HC 811 Seventh Report European financial services regulation HC 778 Eighth Report Bank of England Monetary Policy Committee: appointment HC 1121 hearing for Professor David Blanchflower Ninth Report Globalisation: the role of the IMF HC 875 Tenth Report Independence for statistics HC 1111 Eleventh Report The Monetary Policy Committee of the Bank of England: HC 1595 appointment hearings for Professor Tim Besley and Dr Andrew Sentance Twelfth Report Financial inclusion: credit, savings, advice and insurance HC 848 Thirteenth Report “Banking the unbanked”: banking services, the Post Office Card HC 1717 Account, and financial inclusion Processed: 18-07-2008 18:45:48 Page Layout: COENEW [SO] PPSysB Job: 405172 Unit: PAG1 Treasury Committee: Evidence Ev 1 Oral evidence Taken before the Treasury Committee on Wednesday 2 July 2008 Members present John McFall, in the Chair Nick Ainger Mr Michael Fallon Mr Graham Brady Ms Sally Keeble Mr Colin Breed Mr Andrew Love Jim Cousins Mr Mark Todd Mr Philip Dunne Witness: Charlie Bean, Deputy Governor for Monetary Policy at the Bank of England, gave evidence. Q1 Chairman: Welcome to the Committee of this Q5 Mr Fallon: You say in your note, and you have appointment hearing. Can you formally introduce just said to the Chairman, “I also intend extending yourself? my circle of personal contacts to include more Professor Bean: Charlie Bean, Deputy Governor for external market participants”. Can you decode that Monetary Policy at the Bank of England. for us? Does that mean having dinner with bankers? Professor Bean: That will include lunches and dinners with people from the markets and the Q2 Chairman: Some commentators have said you banking sector generally, yes. are the Governor’s choice, an inside job, it is all a screw up: discuss. Q6 Mr Fallon: Most of your career seems to have Professor Bean: I am not sure describing it as an been spent in the Treasury, academia or the Bank inside job is appropriate. What is true is that of itself. internal candidates the Governor did consider that I Professor Bean: That is correct, yes. was suitable for the position, but of course this is an appointment that the Treasury makes and it was a Q7 Mr Fallon: How do you think the Markets Treasury process. Directorate needs to reinforce its intelligence capacity? Professor Bean: It has been in the process of building Q3 Chairman: What is behind my question is how up that capability. One of the objectives that Mervyn will you convince the City you are the right person set the area when he became Governor was to try to for the job? build up that capability. It is still in the process of Professor Bean: The key thing to remember is that being built up so there is more to do in that this is the Deputy Governor for Monetary Policy not particular line. the Deputy Governor for Financial Stability. My core responsibilities are related to monetary policy Q8 Mr Fallon: But how? and ensuring that the Monetary Policy Committee Professor Bean: Part of it is actually increasing the gets the appropriate support from the Monetary links and actually putting more resources into it. Analysis and Statistics, and Markets Directorates and for that the background that I have renders me Q9 Mr Fallon: Do you mean more people? suitable. Despite my background, I feel that I have a Professor Bean: Yes. reasonable familiarity with the Markets area, although clearly I will need to acquire additional Q10 Mr Fallon: You also say you want to continue knowledge and I expect to be aided in that by Paul the “leaner but smarter strategy”. I am confused as Tucker, the director. I also expect to try to do more to whether it is more people or fewer people. in the way of meeting people from the markets and Professor Bean: There is a distinction between the from the City more generally. My links so far have Markets Directorate and the Monetary Analysis been more concentrated narrowly amongst the and Statistics Directorate. Over the past few years, economists. the Monetary Analysis and Statistics Directorate, which is where most of the economists supporting monetary policy are, has been trying to improve Q4 Mr Fallon: You will probably be the last Deputy experience levels—having fewer, but more Governor to be appointed without external experienced, people who can potentially add more competition, is that right? value added to the monetary policy support process. Professor Bean: If that is the case, then I think that Also we are trying to improve the information would be a move forward.