New Bank of England chief Mark Carney defends his £874,000 salary

- His pay package is £874,000 including £5k per week for housing- Bank staff endure pay freeze while he gets raise- Mr Carney grilled by MPs on deal he was offered
Mark Carney

The incoming Governor of the Bank of England was today forced to defend his £874,000 pay package, which includes a £5,000-a-week housing allowance.

Mark Carney, currently Governor of the Bank of Canada, was grilled by MPs on the deal he was offered to become the first foreign head of the Bank of England in its 319-year history.

Andrew Tyrie, the Conservative chairman of the Commons Treasury committee, contrasted Mr Carney's huge pay rise on taking his new job with the pay freeze which the bank’s staff have had to endure.

“Your current pay in sterling terms is around total remuneration a third of a million pounds and your total remuneration is going to be in excess of £800,000 in your new job — that’s a rather large rise bearing in mind that there is a pay freeze on at the bank,” said the senior MP.

Mr Carney stressed he was not taking a pension so his pay package was equivalent to that of the current governor Sir Mervyn King.

“The housing allowance relates to the fact that I’m moving from one of the cheapest capitals (Ottawa) to one of the most expensive capitals,” he added, saying this was consistent with many arrangements for international executives moving for a period to this country.

It is estimated that after taxes and national insurance, Mr Carney will have about £132,000 a year for a London home for his wife and four daughters. He could rent a five-bedroom home in some of the most sought-after areas such as Chelsea.

Mr Carney, who is due to take up his post in July, has had his basic salary of £480,000 increased by £144,000 because he opted not to receive a pension. Overall this is more than 30 times the average wage and compares with Sir Mervyn’s £305,000 a year and health care worth about £3,000.

Mr Carney waived sizeable pay rises and has voluntarily frozen his salary since 2010, though his pension will pay him more than £200,000 a year.

Questions are growing about Canada’s rising consumer debt and its housing market as Mr Carney nears the end of his tenure at its central bank.

Today, Mr Carney said it was important that UK monetary policy is “reviewed periodically”, saying that in Canada it was done every five years.

But he insisted in his written evidence to the Commons Treasury committee that had not looked at whether UK monetary policy should be altered and that any decisions in that area would be taken by the Government.

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