The Treasury needs to work harder to find a woman to succeed Mark Carney as governor of the Bank of England, according to two of parliament’s most influential select committee chairs.
The Labour MP Rachel Reeves, who chairs the business select committee, and the independent MP Frank Field, the head of the work and pensions select committee, said the central bank also needs to use the appointment of a new governor to reach out beyond its City of London HQ. This will help them to better understand the effects of its policies on regional businesses and the poorest in society, they added.
Philip Hammond is expected to announce the appointment of a new governor in the spring or summer of 2019 to take up the post in January 2020.
The chancellor must find a successor to Carney in the new year after the Canadian agreed to extend his term of office by a year to avoid a clash with Britain’s scheduled departure from the EU.
Under a regime brought in by Hammond’s predecessor George Osborne, the governor chairs the monetary policy committee, which sets interest rates, and the financial policy committee, which oversees the financial system.
Hammond is understood to be seeking someone with Carney’s experience who can help maintain the UK’s international standing.
Carney has led the G20’s Financial Stability Board since 2011. Since last year he has also chaired two influential committees at the Bank of International Settlements (BIS), a global regulator that is often called the central banker’s central bank.
During his tenure, which began in July 2013, Carney has gained a reputation for centralising the Bank under his control and dominating the debate over interest rate policy. Critics have also accused him of failing to increase the role of women at the top of the organisation after the institution’s gender pay gap increased last year.
Reeves, who was an economist at the Bank before becoming an MP, said: “We’ve had two women prime ministers and yet have had no women chancellors or Bank governors.
“The sad truth is that the Bank has not done enough to recruit, train and promote talented women. More needs to be done to bring forward a generation of women economists who can be considered for the top job.”
Field said the Bank needed to urgently tackle the imbalance at the top of the organisation, especially on the MPC, which counts only one woman among its nine members.
The MPC member Silvana Tenreyro is chair of the women in economics committee of the European Economic Association and a professor at the London School of Economics. Despite these roles, the Italian, who studied economics in the US, has stayed in the background and is rarely mentioned as a possible successor.
Field argued that Britain would need someone with a deep knowledge of the economy and its people in the wake of Brexit.
“There are too many people at the top of the organisation who are at home with algebraic equations, but less knowledgeable about the effects of their policies on the poorest in society,” he said.
Reeves said the bank needed to beef up its network of regional agents, which she warned lacked the resources to convey in-depth information from the nations and regions of the UK back to London.
The Bank under Carney has argued strongly that efforts are under way to reduce the gender imbalance, but it is powerless to influence the makeup of the MPC, which is appointed by the chancellor. Carney has also published for the first time the university background of new recruits to show that its reliance on Oxford and Cambridge graduates has declined.
The former MPC members David Blanchflower and Andrew Sentance said the next governor should devolve more power to the four deputies and the MPC, and allow them to have a greater public role in defining and defending the bank’s policies.
Sentance, who stepped down from the MPC in 2011, said a governor should behave more like a company chairperson, guiding the strategy rather than running every aspect of the organisation. “Everything is very concentrated around the governor when there should be a more devolved structure and deputies who take more responsibility for their areas,” he said.
Blanchflower, who was a member of the committee during the 2008 financial crash, said the then governor, Mervyn King, fostered groupthink that meant the Bank misread the biggest crisis in 100 years.
He agreed with Field that an understanding of the UK economy was important. He said the Treasury should approach the former MPC member Rachel Lomax, 73, who he argued was one of the few officials to confront King.
“She held King in check and was always excellent,” he said. “The job is a poison chalice. All the outsiders have a better job than Carney’s. It’s why I think there are strong grounds for reducing the MPC by a half and paying them more and having less importance on a single governor.”
Potential candidates for banking’s biggest job
Current job Chief executive, Financial Conduct Authority
Bailey is considered a safe pair of hands after 30 years at the Bank, where he rose to be a deputy governor, before taking up the role of consumer watchdog. He is likely to maintain the current position on interest rates of slow and incremental increases.
But he is not a macroeconomist (someone who studies the bigger picture) and has not sat on the monetary policy committee (MPC). If Hammond thought he was right for the role, he would probably have appointed him last year before pleading with Carney to stay on for an extra year.
Sir Jon Cunliffe
Current job Deputy governor, Bank of England
The ultimate insider, Cunliffe knows his way round Whitehall after two decades at the Treasury, which he followed with a stint as the UK’s senior representative in Brussels.
He helped set the government’s interest rate policy in the 1990s before Gordon Brown made the Bank of England independent. He is affable and well-regarded by MPs on the Treasury select committee, which sanctions appointments to the MPC.
Dame Nemat Shafik
Current job Director, London School of Economics
Shafik, nicknamed Minouche, lasted little more than two years on the MPC before leaving to join the LSE as its first female director. She is well-connected on the international circuit after her time as deputy director of the International Monetary Fund. Not afraid of making tough decisions, she would bring in fresh thinking at Threadneedle Street but is understood to be enjoying her role in academia.
Current job Chief economist, Bank of England
Haldane is another MPC member understood to have clashed with Carney over both the presentation of the Bank’s policies and his conversion to a more hawkish stance on monetary policy. His votes to raise interest rates will irritate the Treasury, which wants rates to stay low during Brexit. He is possibly too thoughtful and academic to be the institution’s leader, though his chairing of the government’s industrial council could be an effort to burnish his leadership credentials.
Current job Chair, Santander UK
A Labour peer not known to be close to the Labour leadership, she is a well-connected former investment banker and fixer, who came to prominence in the Treasury during the financial crash as one of Gordon Brown’s chief aides. She has directorships with the mining firm BHP and the pharmaceuticals business AstraZeneca, giving her the widest business experience of any candidate. Like Bailey, she has plenty of management experience, but has not been involved in the core activity of setting interest rates.
Current job Deputy governor, Bank of England.
Like Carney, Broadbent is a former Goldman Sachs banker but unlike him is considered aloof and more concerned with technical point scoring. He appeared to rule himself out last year after causing a political storm by referring to the economy as “menopausal”, which he said was a metaphor for economies that were “past their peak and no longer so potent”.
Yellen was forced out of the Federal Reserve earlier this year by Donald Trump, who refused to reappoint her to a second four-year term. She is on the payroll of the Brookings Institution in Washington and is understood to be unwilling to uproot herself. Were she to accept an offer from Hammond, Yellen would bring a wealth of experience to monetary policy and a packed Rolodex of international contacts.
Current job General manager, Bank of International Settlements
Mexican-born Carstens was finance minister in his home country before swapping to head the central bank. He runs the central banker’s central bank in Switzerland. A fixture at International Monetary Fund meetings for decades, he was schooled at Chicago Booth, which is known for its neoliberal leanings and the now-discredited theories of rational expectations and efficient markets. Hammond is known to be an admirer but many consider him more of a backroom operator than a Carney-esque communicator.
Current job Professor of finance, University of Chicago’s Booth school of business
Indian-born Rajan is eminently qualified after stints as chief economist at the IMF and as head of the Indian central bank. Last year, when Carney looked like he would step down, he said he didn’t want the job. The Financial Times said: “Attracting Rajan would be a coup.” However, he lacks in-depth knowledge of the UK economy.
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