Backlash after bank boss demands pay restraint
Bank of England governor Andrew Bailey has sparked an angry response from trade union leaders after saying workers should not ask for big pay rises.
Mr Bailey said pay restraint was essential to control inflation, already at 5.4% and expected to hit 7.25% in April.
His comments came a day after the central bank raised interest rates to 0.5%, the first consecutive monthly increases since 2004 in an attempt to bring price rises back to the Bank’s target of 2%.
However, Mr Bailey – whose salary is £575,538 – drew criticism from the leader of two unions by saying workers needed to accept a period of pain during which prices would rise faster than wages.
“I don’t want to in any sense sugar that; it is painful. But we need to see that in order to get through this problem more quickly,” he said in an interview.
Gary Smith, general secretary of the GMB said: “Workers don’t need lectures from the governor of the Bank of England on exercising pay restraint,”
He said the governor’s comments were a “sick joke”. In comments to Bloomberg, he added: “The nerve of Mr Bailey is scarcely credible. Telling the hard-working people who carried this country through the pandemic they don’t deserve a pay rise is outrageous.”
His sentiments were echoed by Sharon Graham, general secretary of Unite, who said. “Why is it that every time there is a crisis, rich men ask ordinary people to pay for it?”
The Bank of England’s nine-member monetary policy committee, which sets interest rates, was divided over its decision to raise interest rates from 0.25% to 0.5%. The other four wanted a 0.5% hike.
The decision was taken as the Treasury announced a package of support for households to meet a 54% rise in energy bills.
Treasury funding offers a £200 rebate on energy bills paid in October to be repaid over five years, beginning in April next year.
In England, homes in the council tax bands A to D will also be paid a £150 cash rebate in April that they will not have to repay. The Scottish Government, which has a different system of council tax reliefs, is yet to decide how it will pass on the funding support through the Barnet formula.