Carney to get $17,600 per month for London housing allowance
Bank of Canada Governor Mark Carney will receive an annual housing allowance of $407,000 a year when he takes over at the helm of Bank of England next year.
The allowance, which will be taxed at Britain’s top rate of 45 per cent, will be in addition to a salary of $770,000, according to a statement Wednesday from the Bank of England’s non-executive directors. After tax and social-insurance contributions of two per cent, the allowance means Carney will have about $17,600 a month to spend on a property.
Chancellor of the Exchequer George Osborne named Carney as Mervyn King’s successor on Nov. 26, saying Carney’s “fresh perspective” made him the best choice to run the 318-year-old central bank. Carney’s basic salary is about 57 per cent higher than King’s, while he also gets an allowance of 30 per cent of salary in lieu of access to a pension plan that is now closed.
“He’s universally acknowledged as one of the world’s preeminent central bankers and could have got multiples of that in the private sector,” said John Purcell, chief executive of Purcell & Co., a London executive-search firm.
“If you compare it to the size of the job he’s been asked to do, it’s fairly small beer so long as he gets it right.”
Average rents in the U.K. were at $1,500 a month in the third quarter. The average in London was $3,650. While Carney’s housing allowance is almost five times that, he has four children and that sum may not cover a suitable property in London’s most expensive locations.
Carney, 47, will become the first foreigner to lead the central bank and his appointment ended the bids of candidates including Deputy Governor Paul Tucker and Financial Services Authority Chairman Adair Turner.
In a Financial Times article, former Bank of England policy-maker Adam Posen said Carney’s salary means he may have to work harder to win public support.
“Anyone who needed to be wooed with promises of a 60 per cent salary rise over his predecessor’s, as well as London living expenses to have the honour of serving as governor, will have an uphill climb to be perceived as a British public servant rather than a globe-trotting corporate free agent,” said Posen.
Explaining Carney’s pay, the BOE non-executive directors said that although it is “considerably higher than the salary of the current governor ... the cost to the bank of enrolling him in the now closed pension scheme previously available to the governor and deputy governors would approximate to more than 100 per cent.”