Bank of England mulls pay rise for its court

"Just" £15,000 for three days work a month.

The Financial Times' Patrick Jenkins reports that Bank of England officials are considering boosting the pay of the non-executive directors in the Bank's "court" (its governing body):

The eight external non-executives in the 12-seat “court” – as the BoE’s governing body is named – are paid just £15,000 a year for a time commitment of three days a month. The chairman of the court, Sir David Lees, who works three to four days a week in his role, is paid £30,000.

“This needs to change,” said one person who is backing the reforms. “£15,000 is pitiful. It suggests people are only turning up for tea.”

Although "just £15,000" is actually a pro-rata salary of over £150,000 per year, hard for most to reconcile with the phrase "pitiful", there's a new urgency to getting this sorted out sooner rather than later. With the demise of the Financial Services Authority, which was disbanded at the end of March, financial regulation has been split between the new Financial Conduct Authority, which is operated under the aegis of the Treasury, and two bodies run by the Bank of England: the new Prudential Regulation Authority, and the Bank's own Financial Policy Committee.

On top of that, the Bank also now has an explicit remit to protect financial stability in the UK. All of those changes have made the danger of regulatory capture (when a regulator begins serving the interests of the industry they are regulating over the interests of the state) a more pressing issue than it has been for much of the bank's past; and one of the key ways of avoiding that capture is to pay the regulator enough that they don't find themselves beholden to those they are regulating.

Of course, that's less of an issue in the Bank of England than it is elsewhere. For one, sitting in the court remains a part-time job. A number of the members have other work which hardly leaves them penniless. The managing director of Lloyds Banking Group, the chairman of Legal and General Group and the managing partner of Grovepoint Capital are unlikely to find themselves suddenly corruptible because they spend a few days each month working for less than their normal pay; and regulatory capture is less of an issue if the industry being regulated already has half the seats at the table.

Which is probably why the key argument being made internally is one of perception. As one reformer tells Jenkins:

Continuing to call this body the court and paying people so little conveys the wrong impression externally.

But perception differs inside and outside the industries the Bank regulates. While it may be important in conversations with other people working in the city, there's a markedly different perception of the bank in the real world. While it's insulated from public opinion to a certain extent, it may still be a good idea for the court to let the new financial regulatory regime bed in before awarding themselves pay rises – because right now, the crash is still firm in people's minds, and that is something which doesn't justify a large salary at all.

Photograph: Getty Images

Alex Hern is a technology reporter for the Guardian. He was formerly staff writer at the New Statesman. You should follow Alex on Twitter.

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Labour must unite idealists and nativists to beat Ukip

The party has no coherent economic policy, says Labour donor John Mills. 

The heart of the dilemma faced by Labour is that, by and large, its working-class supporters think that you should look after your own first and everyone else afterwards, while its more idealistic middle-class supporters don’t share these nativist views. Add to this the fact that the Labour party nowadays is more middle class, more internationalist, more public sector-orientated, more metropolitan, more intellectual and less interested in winning elections than it has ever been before, and you can see why Ukip is a huge potential threat.

Ukip started by attracting mainly disaffected Conservative voters who thought their party was weak on the EU and who didn’t like David Cameron’s liberal approach to social issues. More recently, especially during the EU referendum, Ukip picked up a huge amount of Labour support. Of the 9.3m people who voted Labour in the 2015 general election, close to 3.5m of them voted for Leave – and half of these people say they are not going to vote Labour in future. Where are they going to go?

The crucial issue is whether Ukip, having gone through all its recent traumas, will get its act together to scoop up these footloose voters. Up to now, the glue which has held Ukip together has been hostility to the EU and distrust of the political establishment. It has lacked coherent policy. This leaves Ukip still essentially a protest operation rather than as a potentially governing party. But this could change. 

With Labour now increasingly idealistic rather than nativist, Ukip may pull together a string of policies that promise support for working-class solidarity, immigration restrictions, social conservatism and a reindustrialisation plan – very much the platform which won Donald Trump the US presidency. Such a manifesto could attract sufficiently widespread working-class support to make large numbers of Labour seats vulnerable. Ukip came second in 120 constituencies during the 2015 general election. There doesn’t have to be a very large swing for Ukip to start picking up enough seats to make the prospect of a future Labour government more and more remote.

Faced with this prospect, what can Labour do? Three key strategies suggest themselves. One is to avoid alienating potential Labour supporters by trying to persuade them that they should have voted Remain. On the contrary, the party must clearly accept the referendum result, and fight hard and constructively towards getting the best possible Brexit deal. 

Second, Ukip is weak on economic policy. It is all very well to promise reindustrialisation and better jobs, but how is Ukip going to fulfil them? Populism shades very easily into protectionism. There is a principled case for open markets to produce more prosperity - but this may only be possible if there are also changes to monetary and exchange rate policy to avoid unmanageable commercial competition. Ukip may, like the Labour party, find this a hard case to make.

Third, Labour needs to change its tone. There needs to be less talk of abstract universal values and more of concrete steps to improve people’s lives. Labour must celebrate working-class attitudes to self-help, trade unionism, mutual support, patriotism and solidarity. The party must build on the huge influx of members, not least because they are the cadres for the future, but it also must avoid alienating old supporters with many years of experience and commitment. It is up to the party leadership to create such a change.

As it stands, too many Labour people are still trying to derail Brexit. The party has no coherent economic policy and it still looks too London-centric, divorced from its working-class roots. Not a good place to be if Ukip pulls itself together. 

John Mills is a businessman and a Labour donor. He founded the group Labour Leave ahead of the EU referendum and has recently published the pamphlet "Why Trump Won"