Why diversity at the Bank of England matters

We need to be looking at more than just gender to ensure the central bank reflects wider Britain, argues REBECCA ZACK

Yesterday, in a speech, Anil Kashyap, member of the Financial Policy Committee (FPC), disparagingly referred to himself as the “token academic”, meekly stating how he was, “not sure how much value he adds” to a committee so heavily made up of long-time central bankers and financial service industry heads.

However, this is exactly the type of attitude that must be challenged at the Bank of England, especially as Kashyap himself acknowledges how his 25 years of research into financial stability in Japan has allowed him to “approach issues in a way that others might not have considered.”

Diversity, particularly gender diversity at the Bank of England, has been a matter of intense debate lately. The appointment of Prof Jonathan Haskel to the monetary policy committee (MPC) has been viewed as undermining a push to improve the representation of women at senior levels. Currently, only 1 of the 9 members on the MPC is a woman, and this woman, Silvana Tenreyro, is only the eighth woman to serve on the committee in its 21-year history. Furthermore, the fact that this follows a controversial comment by the deputy governor Ben Broadbent, in which he described the economy as ‘menopausal’, hasn’t done much to address the suspicion that such sexist comments could have been avoided if there’d been more senior women on his team.

Given all the furore over the gender disparity, it is surprising that the discussion has not moved on to the many other ways diversity is lacking on the Bank of England’s policy making committees. Diversity is important not for its own sake but to create diversity of thought and to protect against echo-chambers. For instance, as well as being dominated by men, most of the monetary policy committee members have indistinguishable professional backgrounds. For instance, at some point in their careers, three members have served as economic advisors, four have been academics and five have worked in the banking sector. In contrast, a very small minority have had experience in non-financial industries or the third sector. Andy Haldane, the Bank of England’s Chief Economist, co-founded a charity called ‘Pro-Bono Economics’, where economists donate their expertise to charities, and Ian McCafferty has worked as a journalist for the Economist, but they still represent a small and privileged section of society.

Furthermore, the academic background of the committee members is very homogenous; six of the nine members have an economics degree, at least four of which came from top universities such as Cambridge and Harvard. This is not to say that having an education from a top-tier institution is undesirable, but only that it is unlikely to produce out-of-the-box thinking as the curriculums of these institutions tend to be the most narrow and most conservative. This gives economists a less comprehensive framework from which to understand and analyse economic problems.

The MPC and the Bank of England more broadly also lacks ethnic diversity. The committee’s ethnic makeup is important because ethnicity informs our worldview, our views on everything from religion to politics.The proportion of BAME people is just 6.2% among senior staff roles, which is far lower than the civil service average and significantly below the population as a whole. The fact that we have such a homogenous MPC can only be a detriment to making decisions which affect black and ethnic minorities, (BAME) which make up 15% of the UK population.

Also, the Bank of England needs to address the lack of disabled people in senior jobs. The absence of disabled people on their policymaking committees means they are unlikely to consider how their policies might impact them or other vulnerable groups in society.

If the Bank of England wants to be informed enough to make decisions that affect a wide range of people, it needs to include people who have come from all walks of life. It must seek out people who have perspectives not currently prevalent at the institution, whether that is in local council or community projects, healthcare, education or the creative industries, who have much to add to the conversation over economic policymaking. Because until the Bank of England actually looks like them, it will struggle to get the engagement it needs from ordinary people which, after all, underpins how all economic policy functions.

Rebecca Zack is a student at the University of Glasgow and Positive Money supporter