Two interesting bits of news on the Bank of England today: the Guardian reports that the Government is still planning to put the Bank in charge of regulating the City, rather than leaving it with the FSA (as the Lib Dems seemed to prefer). And, separately, it's emerged that Mervyn King has turned down the Government's offer of a whopping pay rise. Admittedly with his salary of £300k, he's not exactly on the breadline – but if his job is indeed about to get significantly harder, he might have been justified in pocketing the extras.
Today's Guardian suggests that Chancellor George Osborne will use his Mansion House speech on 16 June to announce the Bank will be given primary responsibility for averting future financial crises. Although he supposedly hasn't decided yet whether to scrap the FSA altogether – as the Tories have suggested in the past, but their new coalition partners have always opposed – the best the regulator can apparently hope for is a stripped-down role, probably subject to the control of the Bank. The theory seems to be that this would remove some of the weaknesses of the tripartite structure, with the FSA taking care of the day-to-day nitty-gritty supervisory work so the Bank can focus on the big-picture macroprudential stuff. Although what any of this actually means in practice remains to be seen.
Either way, it's an interesting time for news to emerge (in the Bank's annual report) that Mervyn King has turned down a pay rise for this year and next – having also turned down the Government's offer to increase his pay to somewhere nearer £400k. At a time of pay restraint across the board, particularly in the public sector, it's pretty remarkable that a hike of this size was even on the table – and, given the furore it would have caused, it's perhaps no wonder that Merv has politely declined. And he does apparently already earn more than most central bankers, including his counterparts at the ECB and the US Federal Reserve.
It's true that pay restraint seems to be easing off a bit in the private sector – Income Data Services reports today that the number of organisations imposing pay freezes is now at its lowest level since the start of last year, while average wages have inched up 2% in the last three months. But, as the Government prepares to chop state spending, that won't be the case in the public sector. So it's politic of Merv not to take the proposed hike. Though if this report about the FSA turns out to be true, how many of us would agree to a significant increase in responsibilities without a corresponding increase in pay?
In today's bulletin:
Bank of England Governor turns down pay hike - as job gets harder?
BP coughs up for sand barriers as Tony Hayward admits to failings
Punctuality up, but profits down - Network Rail under fire again
John Vincent: Brands should be wonderful from the inside
Coffee power is just a bunch of froth?