Page last updated at 19:25 GMT, Tuesday, 6 November 2012

Labour concerned about new Bank of England governor role

Labour has expressed concerns about the powers being "heaped upon" the Bank of England governor by the Financial Services Bill.

Shadow Treasury minister Lord Eatwell said that under the plans the governor will be handed extensive powers, including chairing the Bank's court of directors, the Monetary Policy Committee, the Financial Policy Committee and the Prudential Regulatory Authority.

"On top of that he or she is designated by this bill to be the sole interlocutor between the Bank and the Treasury in the designated meetings with the chancellor."

"This is a ridiculous amount of power in the hands of an unelected official," Lord Eatwell protested during report-stage debate on the bill on 6 November 2012.

The governor will become "yet more excessively politicised", he warned, arguing that the House of Commons should be allowed to debate the appointment, "at least after the appointment has been made".

The prospect of such a debate would "focus the mind" of the chancellor in making a recommendation, in the knowledge he will have to defend his decision to MPs.

Labour peer Lord Barnett echoed Lord Eatwell's concerns but said the House of Lords should also be allowed to have its say on the appointment.

However, Treasury Minister Lord Sassoon said Labour's amendment was unnecessary and inappropriate.

If the appointment was debated by Parliament the candidate would not be present to answer questions or "defend" themselves, he said.

Moreover, it could risk "politicising the process" and undermine the appointment of a candidate, he argued.

Lord Sassoon maintained that the pre-commencement hearing by the Treasury Committee "strikes the right balance" in terms of scrutiny of the appointment.

Lord Eatwell agreed to withdraw the amendment but urged the minister to consider the points raised.

Sir Meryvn King retires as governor of the Bank of England next year after eight years in the job. The government is in the process of recruiting for his successor.

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