The Bank of England is the UK’s central bank. It is responsible for: regulating other banks, issuing banknotes, setting monetary policy (mainly by adjusting the Bank Rate, or base rate of interest), and ensuring the financial system is stable.
The Bank has committed publicly to contain its costs and improve effectiveness in the way it works and how it communicates. The Bank’s central services – HR, technology, property, procurement, security and financial management – are critical to these objectives, and, recognising this, the Bank has developed five initiatives to transform its central services which include cyber, data migration and security programmes.
Despite these initiatives, a recent National Audit Office report found that the cost of the Bank’s central services increased in real terms from £174 million in 2014-15 to £188 million in 2017-18. However, these costs did fall relative to total Bank spending which increased from £535 million to £647 million over the same period, as the responsibilities of the Bank expanded. Nevertheless, the NAO has also highlighted that Bank staff spent £10m without following proper procedures; 200 purchases above £25,000 were made without checking with the appropriate office.
The report found that in some areas the Bank’s central services are relatively expensive compared to other bodies operating in central government. For example, HR costs around 15% more, building operation costs are 35% higher, and the Bank has 800 unoccupied desks a day at its Threadneedle Street offices.
The report concludes that complex processes and traditional working practices are hampering the Bank’s effectiveness and contributing to costs. Although it is moving in the right direction to deliver value for money from its central services, the Bank needs to reduce existing costs as much as possible.
In its first ever hearing with Bank of England officials on 21 January, the Public Accounts Committee will question the Bank’s Chief Operating Officer and Chair of Directors about the action they are taking to reduce the costs of central services. In light of the Bank’s expanding responsibilities, the Committee will investigate how officials plan to find the resources needed for future investment as well as ensuring costs fall within the Bank’s self-imposed spending cap of £476 million.