There are a few moments in life where everyone remembers where they were when it happened and the impact it has on lives. The biggest moment in my lifetime is probably the September 11th attacks in the US, which is twenty years ago this week. It had profound impacts on so many areas of life; such as foreign policy, the Afghanistan/Iraq wars, airport security, immigration, surveillance, views on religion and general security and welfare. It has had lasting consequences that continue today. The Covid pandemic has created a similar shock and I wonder in twenty years’ time how many of the implications that we are seeing today will still be with us. I think a lot of the implications from the pandemic have been more subtle than the ‘shock and awe’ response from 9/11.
A lot changes in twenty years. In the FTSE 100, the index of the largest listed companies on the London Stock Exchange in 2001, there were household names such as Boots, Cadbury Schweppes, Granada, Marconi, P&O Steam and Woolwich. None are still in the index. Companies such as Facebook and Tesla, two of the largest ten companies in the world now did not exist in 2001. The way that investment portfolios are built is also completely different.
As Ernest Hemingway said, change happens “gradually and then suddenly”. It usually needs a catalyst for things to seriously change. A lot of things were changing pre-pandemic, however the pandemic has sped up the rate of change. There are a lot of technology examples, whether it is Zoom or Just Eat or Klarna highlighting how companies have embraced and enabled change in the last 18 months. You can also see and feel the changes in attitude towards the environment.
Another area that I thought that the UK was making good progress in is improving corporate governance and diversity, in particular the make-up of the boards of top UK-listed companies. A report earlier in the year highlighted that there are now no all-male boards in the largest 350 listed UK companies and the number of women on boards had gone from 682 in October 2015 to 1,026 in January 2021. This doesn’t just ‘happen’, it requires effective leadership.
I was therefore dismayed to see that the Bank of England (BoE) appointed Huw Pill to the job of Chief Economist and an internal member of the rate-setting Monetary Policy Committee (MPC). There was frustration with the BoE in 2019 when only two women were candidates for the Governor’s role (given to Andrew Bailey) and the Bank has continually said one thing about female representation and each time it acts differently. Back in 2019, then Governor Mark Carney said “our pipeline of future leaders also looks healthy; 46% of colleagues below senior management are women”. The Bank also spent £43,000 on a diversity consultant. However, of the five internally appointed members of the MPC, all five are white men.
Huw Pill is an Oxbridge graduate who was previously the Chief European Economist at Goldman Sachs and will now report to Ben Broadbent, who is an Oxbridge graduate who was previously the Chief European Economist at Goldman Sachs (unsurprisingly, Ben Broadbent was hired by Mark Carney, who is an Oxbridge graduate also previously at Goldman Sachs). The ‘Members of the Court’ at the Bank of England paints a similar picture, of the internally appointed members, all are white men (all look in their 50s). Can you spot the theme?
The MPC is one of the most important committees in the UK and it’s essential that there is diversity of thought and opinion. Having all white males, with very similar backgrounds is very unlikely to provide a diverse set of views or the best outcomes. David Blanchflower, a former member of the MPC said of the appointment “What did we learn from the Great Recession? We learned that groupthink was a major problem” the MPC had “eight people (who) thought the same, they were all wrong – groupthink was the issue”. I’m not doubting Huw Pill’s credentials or abilities, it’s the make-up of the committee that is the problem and the Bank’s inability or unwillingness to address it. I appreciate that WKM also does not have a female Director, however if we employed over 4,000 people rather than 5 and had over 300 years of history, I guarantee that our leadership team would not be all male, white and in their 50s.
I really hope for the sake of the Bank of England that the leadership team does acknowledge and address this issue. Change only happens with effective leadership. I’ve said for years that the Bank is ineffective, expensive (it costs over £700m to run the Bank) and feels like a cosy club. Despite the aim of reducing emissions by 63% to 2030, with ‘the greatest reductions to carbon emissions can be achieved by reducing the number and class of long-haul international flights’, one MPC member racked up over £57,000 worth of flights in 2019, all business class, of course.
At a time when taxes are being raised to help public finances, it’s imperative that public institutions are managed effectively and efficiently. I appreciate that the BoE isn’t specifically taxpayer funded, however the profits made by the Bank go to HM Treasury so it is important that it is lead and managed properly. It is also an institution that should lead when it comes to corporate governance and diversity and it is a clear laggard not leader.
So, in twenty years’ time will we look back at this period and be proud of the improvements we as a society has made to governance and diversity? I hope so and I hope that I can write again in the next couple of years to congratulate the BoE on appointing their first of many women taking one of the top jobs and creating a better future for all.
Thanks for reading and