John Mann MP: Mark Carney's reappointment: It should never have come to this

Posted On: 
1st November 2016

Treasury Select Committee member John Mann MP criticises Theresa May and Philip Hammond for dragging out the process of Mark Carney's reappointment.

Bank of England Governor Mark Carney
Credit: 
PA

The re-appointment of Mark Carney as Governor of the Bank of England should have been a simple no brainer for Theresa May and Philip Hammond when they took office. The day after the referendum saw the Prime Minister resign after previously promising he wouldn’t and the Chancellor disappear as the Treasury went silent at a time when the markets went into a panic. Into this breach stepped Mark Carney, speaking publicly from the Bank of England, who calmly stated the steps the bank had already taken to reassure the market and would be taking to ensure that the UK’s economic system remained functional. It should never have to come to the point where his re-appointment became a such a test of strength for the Prime Minister and Chancellor.

In recent weeks members of the House of Commons, Lords and vote leave wanted him replaced immediately due to his comments made during the referendum. He was accused of not being independent and of doing the former chancellor’s bidding. As a long standing member of the Treasury Select Committee I don’t remember any of these same voices complaining when George Osborne sacked the head of the independent FCA. There were no howls of anguish from them stating that the Chancellor had ignored the millions of consumers who had benefitted from the approach the FCA had taken under Martin Wheatley’s leadership. There was no comment on the search for his replacement which the Treasury appeared to undermine at every turn.

William Hague and Michael Gove didn’t voice their concerns with Mark Carney’s behaviour and policies when quantitative easing kept interest rates at record lows allowing George Osborne to borrow more and more. Following the news of his appointment in 2012 Mr Hague actually tweeted his congratulations to the Chancellor on securing such an impressive candidate. I’m sure they will both want to explain exactly when they decided he was no longer a suitable choice to run the Bank of England and what aspects of operational independence they no longer wish the bank to have.

During 2016 the Bank of England will have to have found two new deputy Governors to replace Andrew Bailey who was appointed to run the FCA by George Osborne, and Dr Minouche Shafik who is leaving her role as head of markets and banking. Their calls for a new Governor to be appointed at a time when the Government is about to start its negotiations with the EU was staggeringly short sighted and suggests a fundamental misunderstanding of the challenges facing the British economy.

The Bank of England isn’t perfect and like every organisation it make mistakes but the Governor and their independence must be protected. Theresa May and Philip Hammond have done the right thing, albeit after being dragged kicking and screaming by the markets. There are far bigger tests to come, they can’t afford to make similar mistakes again.