This week, the Chancellor announced that Alex Brazier, Don Kohn and Martin Taylor will be re-appointed as external members of the Fiscal Policy Committee (FPC). The Governor of the Bank of England, Mark Carney, said: “I am pleased that Don Kohn, Martin Taylor and Alex Brazier have been re-appointed to serve new terms on the Financial Policy Committee. The Committee benefits greatly from a blend of different expertise… I look forward to continuing our work together.”
Last year, we launched a campaign highlighting the need for greater diversity at the Bank of England, and explained why this matters. With the re-appointment of Kohn and Taylor, the FPC is currently universally male.
We’re not the only group who has pointed out this worrying statistic. The Chancellor has also been taken to task by MPs about the lack of diversity at the top of the Bank of England. Shortly after Mark Carney was appointed as Governor, he also raised his concerns, describing the lack of women on the Monetary Policy Committee (MPC) as “anomalous” and “striking”.
Despite Carney’s comments, appointments to the MPC, FPC, and Prudential Regulation Committee (PRC) – three key policymaking committees at the Bank of England – have continued to be disproportionately male. Women fill just two out of 23 positions on the Bank’s three major policymaking committees.
The Bank doesn’t publish any information about the number of positions on its policymaking committees filled by black and minority ethnic (BAME) groups. BAME people face specific economic challenges such as growing labour market disadvantage, which are important for the Bank to understand. But among senior staff positions, where the data is available, the proportion of BAME people is only 6.2%. This is below the civil service average and is significantly below the population as a whole.
Committee members also continue to be drawn from a narrow range of occupational backgrounds. Out of the three appointments announced this week, two have a central banking background and one has experience of business and finance
Our research found that an overwhelming majority of members of the three major policymaking committees are drawn from financial and corporate sectors. Over 75% of MPC members were working in the City or in large companies before taking up their post. Despite the important role they play in representing the interests of working people, not one member of these committees worked for a trade union or not-for-profit organisation before joining the Bank.
The current challenges facing economic policymakers mean that real-world experience is hugely important. The impact of the Bank of England’s decisions are far-reaching and affect every person in the economy. The current lack of diversity creates a risk that the experience of BAME people, women and people on lower incomes will be overlooked. In order to understand all of the impacts of monetary policy and financial regulation on all communities participating in the economy, the Bank needs to be able to draw on a much broader range of perspectives.
While committee members have access to quantitative data, this may tell only part of the story. For example, while the headline unemployment rate might be declining, a rise in self-employment, flexible and part-time work and zero-hours contracts mean that for many people, being in work no longer guarantees a steady income. Without sufficient understanding or experience of a full range of different sectors in the economy, committee members will have an insufficient view of the forces at work.
Solving the long-term structural problems with the UK economy depends on drawing on a range of different viewpoints. Policymakers face tough questions about how to respond to stagnant productivity, weak wage growth and widening inequality. These challenges require radical solutions and will require the Bank’s policymaking committees to confront orthodoxies and break taboos. While the narrow makeup of the current committees risks propagating group-think and bias, diversity would instead promote more creative thinking.
The Governor has acknowledged the benefits of greater diversity, and the Bank has made some progress towards improving the representation of women and BAME staff in senior positions. We welcome these moves to ensure that the Bank’s staff represents the diversity of the UK as a whole. But the progress has not happened quickly enough, and efforts made in internal appointments have not been matched by those made externally.
The Chancellor has the power to choose the majority of members of the monetary and financial policy committees. There is no shortage of talented potential candidates who are women, BAME or from trade union or civil society backgrounds. Appointing members from a broader range of backgrounds will improve the committees’ abilities to understand and support the UK economy.
Please sign our petition calling on the Chancellor to appoint a more diverse range of candidates to the Bank of England’s policy-making committees now.