HC Deb 19 November 1968 vol 773 cc1105-7
27. Mr. Lubbock

asked the Chancellor of the Exchequer if he will direct the Bank of England not to employ United States management consultants.

40. Mr. Cronin

asked the Chancellor of the Exchequer what is his policy with regard to the employment of United States management consultants by the Bank of England.

44. Mr. Shinwell

asked the Chancellor of the Exchequer what is the policy of Her Majesty's Government regarding the employment of a United States firm to investigate the administration and organisation of the Bank of England.

Mr. Diamond

With permission, I will answer this Question and Question Nos. 40 and 44 together.

Mr. Speaker

It helps if the Chair is informed previously of groups.

Mr. Diamond

I apologise, Mr. Speaker. I regret the omission and will ensure that it does not occur again. With your permission, Mr. Speaker, I will answer this Question and Questions Nos. 40 and 44 together.

This is a matter of internal management and, as such, for the Bank to decide.

Mr. Lubbock

That may well be so, but is the right hon. Gentleman aware that one management consultant alone has undertaken no fewer than 14 banking assignments in the very recent past? What steps did the Bank of England take in this instance to obtain proposals from British management consultants? It is generally considered that the Bank went through a list of names and fastened on McKinsey for totally irrelevant reasons which had nothing to do with the pre-eminence of British consultants in this field throughout the world.

Mr. Diamond

I wish to help the hon. Gentleman without wanting to alter in any sense my original reply. I understand that the Bank considered this matter very carefully and went through extensive lists. I also understand that it had employed British consultants from time to time in particular fields. It did not come to this conclusion lightly. It is also to be noted, and is a matter in which delight should be taken, that many British consultants are also doing a good deal of consultation work abroad.

Mr. Shinwell

Surely this was a case in which the principle of import substitution might have been invoked. Why should we have to spend useful and scarce dollars to employ this firm, although no doubt competent, when there are competent firms in this country? Was this a Government decision, or was it made entirely by the Bank itself? Why do not the Government take action themselves in a matter of such importance?

Mr. Diamond

The answer to the first part of my right hon. Friend's supplementary question is that no payment of dollars is involved. The answer to the second part is that this is a matter for the Bank's internal management alone. [HON. MEMBERS: "Why?"] Because that is laid down in the Bank's Charter. The answer to the third part is that the Government do not interfere except on matters of very substantial principle, and it has never been found necessary since the Bank was nationalised to issue a direction of this kind.

Sir G. Nabarro

Is it not a fact that the Bank's going to America for financial advice creates the impression internationally that the Government are grossly incapable of managing this nation's affairs?

Mr. Diamond

No. That suggestion would not apply to anybody other than the hon. Member, who is incapable apparently of considering the facts.

Mr. Orme

Is my right hon. Friend aware that by bringing in foreign investigators to look into the way in which this organisation is run the Bank has destroyed the argument that it should not be looked into by this House, which is basically responsible for the nationalisation of the Bank of England? Is it not time that we made a thorough investigation into this public body?

Mr. Diamond

What this House decides to do is an entirely different question.

Mr. Lubbock

On a point of order. In view of the unsatisfactory nature of the reply, I beg to give notice that I shall raise this matter at the earliest possible moment.