Barely a month in post and new Bank of England Governor, the Canadian Mark Carney, has catalysed far-reaching changes set to reach beyond the confines of the Bank.
Last week’s “forward guidance” has shaken up the Bank’s approach to interest rate setting and monetary policy generally. But arguably as far-reaching are his strictures on the lack of women on the Bank’s Monetary Policy Committee.
This, together with the decision to elevate Jane Austen to the gallery of honour on English bank notes, has been well-received. And it is working to swell a fast-rising tide for the advancement of women, not only at the Bank of England but across the corporate world.
From two leading institutions – the Prudential Regulatory Authority and the Financial Conduct Authority – come proposals which, according to legal experts, would require UK businesses to set targets for the number of women on boards. These stem from little-noticed provisions in the EU Capital Requirements Directive IV which will require banks, building societies and investment companies across Europe to promote gender diversity in the boardroom. And, once established in the financial services sector, there would be a compelling argument for its extension into other business areas.
Now, while the desirability of the end goal of this directive is not in doubt, there is considerable reticence over the idea of quotas as a means by which to advance diversity policies, and not least among women who would have concerns that their selection was less on the basis of merit and experience but the result of politically-driven quotas. And many businesses would object that such regulation would place the politics of quotas above the overriding fiduciary duty of directors to appoint those most qualified and appropriate to senior positions within their companies.
However, that said, it may well be that the threat of such regulation may be a necessary and welcome spur to action. Despite the fact that the lack of women in senior corporate positions has been recognised and discussed for years, leading UK quoted companies in the FTSE 100 Index still have only 16.7 per cent female representation on their boards. The prospect of the imposition of quotas by EU Directive could – and should – help to concentrate minds.
As for the Bank of England’s MPC, it has been well served by four female members in the past, including the eloquent and perceptive DeAnne Julius, who did outstanding work in explaining its functions and purpose in its early days, and by the economist Kate Barker. And there is no lack of worthy and credible candidates who would fully merit consideration now.
Mr Carney has described the current absence of women on the MPC as “anomalous” and “striking”. He is right in this assessment – and it is one that holds true across the corporate sector overall. The time for action is overdue.
Falling wages will not aid recovery
How can there be an economic recovery of any magnitude while pay packets keep shrinking? There is little doubt that the Achilles heel of Chancellor George Osborne’s economic strategy is the continuing downward pressure on UK wages. This has worked to force households to dip into their savings while cramping domestic demand. And with inflation continuing to outstrip the growth in wages there is little likelihood of any early improvement.
Figures from the House of Commons library show average hourly wages after allowing for inflation have fallen 5.5 per cent since mid-2010, the fourth worst decline across the
27-nation EU. Only Greek, Portuguese and Dutch workers have had a steeper decline in hourly wages. Adding to the headache of household finances has been the relentless rise in energy and utility bills.
However, set against this has been the rise in the tax-free personal allowance threshold to £10,000, which has taken 2.7 million people out of tax. Another helpful measure has been the freezing of fuel duty. And for millions of owner-occupiers paying off a variable rate mortgage, the historically low rate of mortgage interest has undoubtedly helped to keep money in household pockets and mitigate the low level of pay increases.
But financial constraint is taking its toll. Recent surveys showed more than half of UK households say they are struggling to cope. The fact that we have record numbers in work should not blind us to the fact that average wages are lower than before the financial crisis and that the chancellor needs to relieve the pressure by further reductions in tax thresholds as soon as possible.