David Prosser: Little pay restraint at the Bank of England

Outlook John Fingleton, the director-general of the Office of Fair Trading, might have enjoyed a wry smile reading the Bank of England's annual report, published yesterday. Unmasked as Britain's highest-paid civil servant earlier this week – and promptly pilloried by critics – Mr Fingleton will have noted that the Bank's Governor, Mervyn King, earns over £20,000 a year more than him.

Now, let's be fair to Mr King. He opted to turn down his 2.5 per cent pay rise this year (he says this was a personal decision rather than a desire to set an example for staff) and he is not entitled to a bonus.

Still, the Bank's remuneration report is hardly a shining beacon of the sort of restraint we are told the public sector must begin showing. The executives' pension scheme (non-contributory, by the way) may have been closed to new members but it continues to accrue and has been replaced with another expensive defined benefit plan. Mr King's two deputies each earn more than £250,000 a year, and each external member of the Monetary Policy Committee is getting the best part of £100,000 a year for their services.

So much for performance-related pay. The Bank is mandated to hit an inflation target of 2.5 per cent a year, but hasn't yet managed to get within a percentage point of that during 2010.