EVERY month, the nine-member monetary policy committee (MPC) of the Bank of England takes a decision on interest rates – raising or lowering them as the economy requires. Inflation rising? Turn it up a few notches. Economy slowing down? Adjust downward accordingly.
Although, to some, the monthly pronouncements may seem like a small tool in the monetary policy box, interest rates make a significant impact on trade, sterling and decisions people make every day about loans, saving and mortgages.
And to critics
of the MPC who say it might have adjusted interest rates earlier or by more to staunch the current economic crisis, it is sobering to note that the UK's interest rate is at its lowest level in 300 years.
Nor is the rate decision simple, as the MPC makes its call on the basis of a number of factors – risk of inflation, value of sterling, unemployment. In fact the macroeconomic data on which it bases its decision is vast and as up-to-date across the UK as possible. But how does it collect this information?
The answer, in Scotland, is Tony Strachan (pronounced "Strawn"). He is one of 12 agents of the 310-year-old bank who collect, collate and present the raw data. Across the UK each month, the agents interrogate as many as 700 businesses, each providing a tiny dab that is collated into a big picture of the British economy. It is through Strachan that news on business confidence gets from a small cheese shop in Aberdeen to the doors of the Bank in Threadneedle Street.
Strachan has been the Bank's agent in Scotland for five years – he previously covered Manchester and the north-west of England. His job is to meet people all over the country, from small business owners to the heads of the biggest corporations, from union reps to employers' organisations.
Strachan, 52, was educated at the prestigious, independent Merchant Taylors' School in Northwood, on the borders of Middlesex, Buckinghamshire and Hertfordshire. He qualified as a chartered secretary in 1981 and studied for an MBA though the Open University.
A lifer with the Bank, he joined in 1974, initially in its exchange control department, before moving to the administrative side of its pension fund.
He spent three years in the international division as a North America analyst, before moving to the banking supervision division as a personal assistant. After a two-year secondment to the government's panel on takeovers and mergers, Strachan joined the Bank's business finance division in 1991.
With that experience behind him, the reports he produces – and the occasional turn he takes presenting information about Scotland's economy to the MPC – are of crucial importance.
"The data we all see and produce, a lot of is backward-looking; it has happened already," explains Professor Donald MacRae, the chief economist for Lloyds TSB Scotland. "What is really critical about what Tony does is present what is happening now and the expectations people have about what is going to happen. That is very hard to replicate, but it is really important."
Strachan's work on the ground provides some of the most up-to-date views of the economy, whereas other reports, such as unemployment figures and quarterly statistics, are often described as lagging indicators.
He and his deputy, Iain Duff, a former chief economist for the Scottish Council for Development and Industry (SCDI), hold a relentless schedule of meetings, the results of which make up the regular reports.
"I do honestly believe that, as much as I like figures myself and use them and produce them, I always like to talk to people about what they are experiencing at the time," says MacRae.
"You need the data the Bank of England gathers from all of us, but you also need to speak to people face to face."
Naill Stuart, press and government affairs manager for the SDCI, says: "Few people appreciate how much work Iain and Tony do. They have an intensive programme of meetings. They have a structured way of capturing the information and feeding it back to the system."
And, for the most part, the people interrogated by Strachan enjoy talking to him.
Andy Willox, the Scottish policy convener for the Federation of Small Businesses, says the educational aspect of Strachan's work goes both ways. Strachan meets members of the FSB at least twice a year, putting on a lunch or attending meetings.
As a member of the Bank of England, he gets all sorts of questions – from issues related to petrol taxes to whether banknotes can carry the swine flu virus. (They can't.)
"He has always been appreciative. He is good at listening," says Willox. "Tony has always been responsive. He's quite humorous as well – he can take a joke and give one as well. He gets it as it is.
"There are a few organisations such as ourselves and NFU that are very straight-talking people. That isn't only with Tony – that is with the Chancellor or the First Minister or anyone we are speaking to. When they say this isn't going to bother you, we say this is exactly how it is going to affect us."
Strachan also acts as a gatekeeper to those influential people who sit on the MPC. Earlier this month, Strachan took MPC member Andrew Sentance to speak at an SCDI dinner in Aberdeen.
What is not always clear to people he meets is how the information Strachan collects is used. "I have always enjoyed meeting with him," says Willox.
"We don't know what benefit it has when we get down to it, of course. Maybe we never know that, but we put our views across and we think they have been valued."
The Bank publishes summaries of the reports Strachan produces. According to MacRae, looking back on these reports provides an insightful view of how the economy has performed.
"They have looked back over the years and found what the agents have said bears a close resemblance to what actually happened," he says.
With all the information available to the Bank, it is possible to question how it managed to miss what, in retrospect, seems obvious – that the surplus of global debt would eventually collapse with catastrophic effect.
Although governor Mervyn King was warning about the potentially dire effects of a property bubble back in 2003, senior members of the Bank admit they may have missed a trick. But recessions have a nasty habit of coming along and blind-siding even the most astute.
"If there is a general lesson for monetary policy-makers from this financial crisis and the resulting recession, it is a sense of humility. Like the bankers, we are not the Masters of the Universe either," admits Sentance.
MacRae puts it this way "Hindsight is a wonderful thing. We all can say that.
"However, it is my belief – a personal belief – that all central banks will have to monitor the appearance of so called asset bubbles more going forward and act to prevent the asset bubble from getting too much."
He continues: "I think it is really important from a Scottish economy point of view that the Bank of England has a well informed and reliable listening source in Scotland.
"It is very, very critical, given the Bank of England is setting interest rates for the whole of the UK.
"It is critical it has some monitoring in place telling the MPC what is happening in the Scottish economy."
Bank's eyes and earsFOUNDED by a Scot, William Paterson, the Bank of England opened its doors in 1694 to act as the government's banker and debt-manager. Since then, its role has developed and evolved, centred on the management of the nation's currency and its position at the heart of the UK's financial system.
Across the country, the Bank's agents maintain contact with a wide range of businesses and institutions, covering all sectors of the UK economy.
They provide a flow of regular reports to the Bank, where the monetary policy committee uses the information to help its understanding and assessment of current economic conditions. The agents are also involved with a wide range of business organisations such as chambers of commerce and the CBI at local level, and they maintain close contact with business support services and universities.
Part of an agent's role is also to represent the Bank and explain its work and policies. It has a network of 12 agencies covering the UK.
