Bank of England accused of hypocrisy over its pay plans after telling public to shun big increases

·4-min read
Andrew Bailey has urged the public not to accept big salary rises - House of Commons/PA
Andrew Bailey has urged the public not to accept big salary rises - House of Commons/PA

The Bank of England has been accused of hypocrisy after launching a pay review scheme for its 4,000 staff as its governor,  Andrew Bailey, urged the public not to accept big salary rises.

The new "performance and salary review process" was signed off by the Bank's board in December, at a meeting attended by Mr Bailey, and takes effect this year, The Telegraph can disclose.

The move comes despite Mr Bailey warning in February that workers should not demand significant pay rises, in an intervention that sparked widespread controversy. Last week, he added that higher earners should "think and reflect” about demanding more money from their employers.

The Bank is facing mounting criticism over its handling of inflation, with Lord King, the former governor, saying last week: "Monetary policy has been too loose... And the problem for central banks is that, for very understandable reasons, they don't want to say: 'You know, maybe we got it wrong in the last year or so.'"

Last week, The Telegraph disclosed that some Cabinet ministers were turning on the Bank, with one warning that it had been failing to "get things right" for "a long time" and another suggesting that it had failed a "big test".

Robert Jenrick, a former Treasury minister, has called for greater scrutiny of the Bank - House of Commons/PA
Robert Jenrick, a former Treasury minister, has called for greater scrutiny of the Bank - House of Commons/PA

Last night, Robert Jenrick, a former Treasury minister, called for greater "scrutiny" of the Bank, saying: "Despite the clear warnings in the real economy, the Bank of England misjudged the scale and longevity of inflationary pressures - not least by continuing their enormous expansion of quantitative easing for far too long.

"Our addiction to quantitative easing has finally caught up with us. There should be no question of undermining the independence of the Bank, but that does not preclude healthy and necessary scrutiny of its poor performance in recent times."

Details of the new salary review scheme are contained in the minutes of a meeting of the Bank's Court of Directors, which was held on December 2, 2021.

Under an agenda item titled 'New performance and salary review process', the minutes state: "Following two years in which performance ratings had been suspended on account of the Covid disruption, [the] Court noted plans for a new performance approach.

"The aim was to encourage high-quality feedback and constructive development discussions as well as providing a basis for reviewing pay. There would also be more emphasis on values and behaviours."

End-of-year ratings will also be introduced in line with how employees are to be monitored, which staff said was in line with "most progressive firms". The system follows an 8.9 per cent increase in the number of staff earning more than £80,000, between 2019/20 and 2020/21 - before Mr Bailey's calls for pay restraint - according to figures reported on Friday.

Appeal to 'think and reflect'

Appearing before the Treasury select committee earlier this week, Mr Bailey said: "I do think people, particularly people who are on higher earnings, should think and reflect on asking for high wage increases."

Insisting that he was not "preaching" about the issue and it was for businesses to "make their own judgment", he added he had personally told the Bank not to give him a pay rise this year.

Liam Fox, the former Cabinet minister who is calling for a parliamentary inquiry into the Bank's handling of inflation, said on Saturday: "Having taken its eye off the ball on inflation, there will be intense scrutiny of how the Bank of England behaves in future.

"I assume that when they tell the rest of the British people not to ask for a pay rise, they will apply the same rules to themselves knowing the public are watching as never before."

Gary Smith, the general secretary of the GMB trade union, said: "Andrew Bailey has spent the past few weeks lecturing low-paid workers on why they shouldn’t ask for a proper pay rise.

"Now it turns out 4,000 of his own staff are in for a tidy wage boost. It’s sickening hypocrisy.

"Keeping inflation under control is literally Mr Bailey’s job. It’s not the responsibility of the carers, NHS workers, refuse collectors and shop workers who are at breaking point with out-of-control food and energy bills."

Mr Bailey faced previous criticism in February after calling for a "moderation of wage rises" and "broadly" asking workers not to demand a big increase. Downing Street and the Treasury distanced themselves from his remarks at the time and Boris Johnson’s official spokesman pointed to the Government's ambition for a "high-wage, high-growth" economy.

The Bank said that "no changes have been made to remuneration as a consequence of what was agreed by Court". It is understood that 2022 is the first year in which the system applies, so the first pay rises arising from the scheme have yet to be awarded.