Bank of England Criticism After £23m Bonus Payouts

‘Performance awards’ despite Gov urging Brits to avoid raises.

August 18, 2022
Bank of England Criticism After £23m Bonus Payouts
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Ian Lewis

Written By

Ian Lewis

 

‘Performance awards’ despite Gov urging Brits to avoid raises

The Bank of England, which was criticised for underplaying the risk of growing inflation, last year gave out bonuses to its staff amounting to £23m, according to the Observer.

This honeypot was at least a two-year high, with more than 4,000 employees given performance awards. The bank’s governor, Andrew Bailey, received criticism earlier after warning Britain’s workforce to resist requesting large pay rises. Mr Bailey said that this would help to keep inflation from spiralling out of control.

The bank is responsible for minimising inflation where possible under government orders, however, the current rate is 9.4%. An Emeritus Prof of accounting at Sheffield University, Lord Sikka, responded by saying that bonuses were an incentive to be paid only for “extraordinary performance”.

However, there has been no evidence that the bank has even performed at the ordinary level. This means the bonus is not justified.

Bonus pot amid mishandled inflation

Each bank employee, other than Bailey himself, who was appointed governor in 2020 is eligible for an annual performance award. This discretionary provision was awarded to 4,260 staff members. Bank officials claim that most of its staff do not handle monetary policy.

Bailey was given a total package of nearly £600k annually, comprising his base salary of little under £500k and a pension of roughly £100k. Reports say that Bailey turned down a pay rise of 1.5%.

Bonuses should be for extraordinary performance, but there was no evidence the bank has delivered even an ordinary performance.

Lord Sikka

The sum bonus pot awarded to Bank of England workers 2021-22 was £23,325,265, which was more than a £1m increase from the year previous.

And figures revealed under the Freedom of information act to the Observer show that more than 30 staff members received awards of £15-20k. According to bank officials, this discretionary provision represents 10% of the grand salary budget — and this has been the case for the last two financial years, however, its number of staff has grown. The average payout dropped per staff member by nearly £100.

The bank has been criticised for mishandling inflation. But the criticism against British leadership is also shared by MPs, and Boris Johnson, for focusing intensely on the Ukrainian conflict, including giving large funding for the war effort, rather than focusing on domestic stagflation concerns.

This stagflation is now a recession, with the British pound sterling weakening against the dollar; putting into question why any award payment was paid at all.

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