Bank of England must keep ‘own house in order’ or risk credibility, warns report

The Bank of England must modernise its “out of date” way of working, slash costs and overhaul its compliance or risk damaging its credibility, a Commons report has warned.

The Public Accounts Committee (PAC) said while the Bank has acknowledged it needs to improve its operations, it “lacks a clear vision” of the changes needed to drive the widespread overhaul needed.

In a critical report on the Bank, the committee of MPs said it had ways of working that “appeared years out of date” and hit out at its failure to follow its own procedures, a lack of diversity in the workforce, an unnecessarily large property portfolio and “needlessly complex and costly” processes.

The Committee called on the Bank to “practice what it preaches” and demanded it provide a coherent vision of how it will overhaul its operations by June.

It comes after a probe by the National Audit Office (NAO) revealed in December that the Bank made £10 million of purchases without following proper procedures and has 800 desks sitting empty at its Threadneedle Street offices.

The NAO inquiry unearthed 200 purchases above £25,000 that were made in the year to December 2017 without staff consulting the Bank’s central procurement team.

Meg Hillier, chair of the PAC, said: “The Bank of England wants to overhaul its ways of working but it is still not clear what this will mean in practice.

“Without a coherent vision it will not be possible for the Bank to make informed decisions about the people, technology and locations it needs.”

On the NAO findings, she added: “It was concerning to learn that staff had faced no disciplinary action for violating the Bank’s outmoded procurement policy some 200 times in a year.

“The Bank’s credibility is at risk if it is perceived as failing to keep its own house in order.”

The Committee wants the Bank to aim for 100% compliance.

It also wants the Bank to take extra steps to increase gender diversity among staff, with the proportion of female staff remaining at between 44% to 45% since 2015 – well below its 50% target by 2020.

The Bank’s ethnic diversity is also far short of its 20% target, with Black, Asian and Minority Ethnic (BAME) staff making up just 18% of the workforce.

The report added that 23% of staff leaving the Bank are BAME employees.

“The Bank is some way off its diversity targets for 2020, with little evidence the gap is closing quickly enough,” the Committee cautioned.

Other areas for the Bank to tackle include a look at trimming its office network and the possibility of setting up a more prominent regional head office outside London or sub-letting parts of its Threadneedle Street building.

It also said the Bank needs to simplify its staff structure, overhaul its processes to cut costs and improve in areas such as technology.

The report said: “The leadership of the Bank in the past has not modernised the Bank in line with the rest of the public and private sector in the UK.”

A spokesman for the Bank said: “We have received the report and will study it and respond in due course.”

The recent damning NAO report found the Bank would need to “transform” the way it operates the central services function to continue meeting its self-imposed target to cap annual costs at £476 million.

As well as hundreds of empty desk, it found the Bank has more than 700 job titles, which it said is creating unnecessary complexity.