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July 5, 2010 7:04 pm
Andrew Tyrie, the chairman of the Treasury select committee, has warned that the government might be creating policy “on the hoof” in its attempts to improve financial regulation.
Mr Tyrie, a former Tory frontbencher, became the committee’s first elected chairman last month after winning more votes than Michael Fallon, the previous deputy chairman.
In his first interview since taking up the post, he said the committee of 13 would take a close interest in George Osborne’s plans to dismantle the Financial Services Authority and transfer many of its powers to the Bank of England.
The details of the process are still not entirely clear, with a turf war having already broken out over which watchdog will prosecute criminal insider dealing cases.
“It may turn out to be legitimate to make the point that some of this policy appears to be being made on the hoof,” he said. “I want to make sure it’s not made on the hoof and it is thought through very carefully ... I’d rather they get it right than be rushed.”
Mr Tyrie’s comments were likely to strike a chord in parts of the City where concerns exist that the imminent overhaul of the tripartite system of regulation is not entirely necessary.
Some figures claim the FSA has improved its supervision of the City since the crisis, while the Bank of England’s record during the run-up to the crash was equally flawed.
“Only when we find out exactly how it is structured and how it operates can we as a committee assess whether it strikes the right balance,” said Mr Tyrie. “It is clear that the architecture of financial regulation doesn’t seem to be settled, there seems to be an awful lot of questions knocking around resulting from the decision to end the FSA.”
He said, for example, that the reforms did not fully clarify who would be making the decisions in another financial crisis, in spite of the government’s stated policy that this would fall to the chancellor.
The MP for Chichester was a surprise victor in the election but he has formidable credentials as a former economic adviser to John Major and Nigel Lawson and as chief economist at the European Bank of Reconstruction and Development in the 1990s.
The committee will discuss its work programme once it has met to consider its priorities.
Mr Tyrie indicated that the independence and structure of the Office for Budget Responsibility would come under the committee’s gaze. “We need to look at the structure of the OBR, it is a new and potentially powerful institution,” he said. “I’m a little concerned about two things we need to keep a close eye on.”
The OBR was in the spotlight last week after Labour MPs accused it of speeding up the release of information useful to David Cameron, involving employment statistics, just hours before he appeared at prime minister’s questions.
“We need to make sure it is genuinely independent, have we created a body with the appearance of an independent body that is in effect still in the pocket of the chancellor? We will ask if its independence is underlined in statute and also who is in charge of it,” he said.
Mr Tyrie also promised to hold the government to account over its promise that Budget measures would be fair. “Next spring is when the measures will begin to bite,” he said.
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