Select committee inquiry
Bank of England’s central services inquiry
Closed
What the inquiry looked at
“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.”
The committee's words, from the inquiry page on parliament.uk ↗.
What it found
In the committee's words, from the summary of 84th Report - Bank of England's central services ↗
This is the first time that this Committee has examined the operations of the Bank of England. Our initial engagement has, in some respects, been a glimpse into the past, with ways of working appearing years out of date. The Bank has committed to cap its spending at 2017 levels and improving the effectiveness of how it works and communicates. It plans to deliver a series of change programmes to improve central services. The Bank expects these transformation programmes to deliver £15 million of annual savings from 2021–22.
Change needs to be delivered at pace to realise the potential efficiencies which the Bank has committed to. The Bank plays a fundamental role in making important decisions about monetary issues and the financial stability of the country, therefore it must demonstrate that it practices what it preaches. However, we are not yet convinced that the Bank’s new vision for central services is sufficiently clear, nor that it has fully considered the changes it could make to modernise practices and maximise efficiency savings. We will hold the Bank accountable for delivering on its commitments to us and the Committee shall return to this subject at a future date.
What the government said
No government response is linked to this report.
How the inquiry ran
Each dot is a dated item listed on this page, from the inquiry's opening on 15 November 2018 to 13 March 2019.
- Oral evidence 21 Jan 2019
- Report 13 Mar 2019
- Correspondence 14 Feb 2019
What it recommended 0 recommendations · 27 conclusions
1Despite multiple projects to improve its central services, the Bank lacks a clear vision of...
Concluded (the committee's words)
Despite multiple projects to improve its central services, the Bank lacks a clear vision of the significant changes needed to modernise its ways of working. The Bank has committed to transforming its central services over the next three years. It is confident that it will deliver its change projects on time and that its central services will be smaller and more efficient, saving around £15 million a year from 2020–
21However, the Bank does not have an overarching strategy in place specifying what central services...
Concluded (the committee's words)
However, the Bank does not have an overarching strategy in place specifying what central services will look like in three years or five years. It has committed to developing a clear vision for its central services by April 2019, including a target operating model and how it will measure progress from an early stage. This vision is vital because without one the Bank cannot make sound decisions about the people, locations or technology it needs. Recommendation: The Bank should, by June 2019, write to us with details of its overall strategy for central services, including how the services will work together. This should include how it will measure the effectiveness of changes and how people will be held to account for the delivery of the expected benefits.
2The Bank is some way off its diversity targets for 2020, with little evidence the...
Concluded (the committee's words)
The Bank is some way off its diversity targets for 2020, with little evidence the gap is closing quickly enough. The Bank’s target is for 50% of its staff to be female by 2020. But the proportion of female staff has remained at between 44% to 45% of staff since 2015. In the past year 43% of new recruits have been women, well below its overall target. The Bank has been regularly pressed to improve gender diversity by our colleagues on the Treasury Select Committee. The Bank also has a target for Black, Asian and Minority Ethnic (BAME) staff to be 20% of the Bank’s workforce by 2020. Currently, BAME staff make up 18% of the Bank’s workforce. But 23% of staff leaving the Bank are from this group, meaning the overall proportion of BAME staff within the Bank is unlikely to improve. Representation of women in senior management roles in the Bank has improved from 17% in 2013 to 32% in January 2019. In stark contrast, just 5% of senior management roles are held by BAME staff compared to a target of 13% by 2022. The Bank told us it had invested heavily in diversity by putting in place a wellbeing strategy, work on inclusion, and other initiatives, such as supporting its staff network. Recommendation: The Bank should, by June 2019, report back to us, setting out the additional steps it will take, beyond the work it outlined to the Committee, to ensure it meets its diversity targets.
3The Bank has not thought radically enough about its property needs or how to best...
Concluded (the committee's words)
The Bank has not thought radically enough about its property needs or how to best use its valuable property portfolio. The Bank has an extensive property portfolio, including some sites it has held for more than a hundred years and others it has acquired as it has taken on new responsibilities such as prudential regulation. The Bank cannot demonstrate that it has assessed the options available to it to ensure it gets the best value from its sites. The Bank has not thought hard enough about establishing a more prominent regional office outside London or sub-letting parts of its headquarters. It is clear that some of its property does not have a clear link to the Bank’s overall objectives or responsibilities. The Bank acknowledges that it is not defensible for a public body to still have its own sports ground and centre Bank of England’s central services 5 which only 13% of staff are members of. The Bank has sold the leasehold of some of its portfolio in the past, indicating that better management of its property portfolio has the potential to generate income. Recommendation: The Bank should, by June 2019, write to us setting out how it plans to rationalise its property needs and locations and optimise the value of its assets.
4The Bank’s failure to enforce compliance with its own policies undermines its credibility to demand...
Concluded (the committee's words)
The Bank’s failure to enforce compliance with its own policies undermines its credibility to demand compliance from others. The Bank’s role includes enforcing regulatory compliance in the financial sector. The Bank found evidence that its own staff had violated its procurement policy up to 200 times between December 2016 and December 2017 for purchases above £25,000. However, the Bank chose not to pursue any kind of disciplinary action against the people involved. The Bank accepts that its procurement policy and function were not fit for purpose. Nonetheless, this does not justify staff flouting the policy, nor the Bank taking no retrospective action against individuals. It only made clear a week before our evidence session that staff must consult the central procurement team for purchases of more than £25,000. The Bank will introduce a new procurement policy from April 2019 and it has started developing a new policy on the consequence of non-compliance. It has committed that in future all instances will result in action, including a written warning, or immediate dismissal where appropriate. Recommendation: The Bank should aim for 100% compliance with the its policies. In the event of non-compliance, the Bank should ensure that individuals account for their actions, that this is properly recorded, and that appropriate remedial action is taken.
5Many of the Bank’s processes are overly complicated, inefficient and very costly to administer.
Concluded (the committee's words)
Many of the Bank’s processes are overly complicated, inefficient and very costly to administer. The Bank’s technology operations and HR cost £101.4 million and £15.8 million respectively in 2017–18. These costs are expensive compared with public sector benchmarks. For example, the comparable cost of its ICT is 33.6% more expensive than the central government benchmark. The Bank concedes that the extent of legacy systems and manual processing means that there is significant potential for it to make savings in its technology systems and support. The Bank has over 700 job titles, rather than a simple role-based system: this creates complexity and inefficiency, as well as increased potential for staff to “play” the system. Non-competed, in-role promotions are used extensively to retain staff who have developed their expertise. The Bank needs to assess the use of in-role promotions when considering its overall recruitment policy. As part of the One Bank Services Transformation project the Bank is planning to move to a roles-based structure, and it aims to replace 25 Central Services systems with a single cloud-based system. Recommendation: The Bank should, by June 2019, write to us setting out how it will simplify its staffing structure and make sure that pay, promotions and recruitment are led by a clear understanding of the skills and capability needed by the Bank, not the skill levels and ambitions of staff currently in post.
6The rate of modernisation at the Bank has lagged behind the UK public and private...
Concluded (the committee's words)
The rate of modernisation at the Bank has lagged behind the UK public and private sectors. 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. Although 6 Bank of England’s central services basic practices such as hot desking are not yet in place, the Bank has made some progress modernising aspects of its technology and reforming its pension scheme. Many working practices in the Bank, however, still appear out of date and each area the Committee probed instead appeared to offer a glimpse into the past. The Bank’s ICT systems are expensive and need updating, its procurement systems are not fit for purpose, there are too many job titles creating complexity and cost, and the estate is too large for its needs. The Bank has not routinely and systematically benchmarked the costs of its central services with the public and private sectors. The Bank recognises that culture within in an organisation is often the hardest thing to change, but it is confident that there are signs of support from across the Bank for changes to central services and it has committed to involving the wider business in any changes it makes. Recommendation: The Bank’s leadership needs to ensure that its ways of working, systems and culture are brought up to date. The Bank has already agreed to write to the Committee in mid-2019 to set out its staffing requirements. In addition to this, the Bank should, by June 2019, put in place a more systematic approach to benchmarking itself against other organisations. Bank of England’s central services 7 1 The vision for central services
7The Bank told us it would design a new HR system around the organisational structure,...
Concluded (the committee's words)
The Bank told us it would design a new HR system around the organisational structure, rather than individuals. It expected to develop a roles-based framework so it can map roles onto the organisation, rather than the other way around. The Bank could not tell us how many roles it would need in the future. It told us that as part of the Bank’s target operating model work it will look at what roles the Bank needs and what central services are needed to support that.7 Property
8The Bank has an extensive property portfolio.
Concluded (the committee's words)
The Bank has an extensive property portfolio. Some of its sites, such as its Threadneedle Street headquarters and the Bank of England Sports Centre, it has held for more than a hundred years, Others, such as leased property at Moorgate Place, it has taken on with new responsibilities such as prudential regulation. We were concerned that there were 800 unoccupied desks in the Bank’s offices at Threadneedle Street in London and that it had bought 260 additional desks in 2017–18 for the same property. The Bank accepted that it could use the desks at Threadneedle Street more efficiently. It told us it was committed to increasing the use of flexible working at the Bank and reducing the ratio of desks to people to 0.85 by February 2020. It also told us it was developing a long-term property strategy, and that the first phase of the strategy was to refurbish the Bank for agile working. It explained that as part of this, the additional desks bought for Threadneedle Street were to replace equipment coming to the end of its life and to allow for more agile working by introducing adjustable desks.8
9We pressed the Bank about why it had taken so long to adopt agile desks...
Concluded (the committee's words)
We pressed the Bank about why it had taken so long to adopt agile desks when flexible working was common practice in major banks 20 years ago. The Bank asserted that the technology to allow flexible working was not available 20 years ago and there had not been the demand from employees to work from home. The Bank told us that it had adopted flexible working 10 years ago, but that it had not moved to desk sharing at that time. It further explained that when the Bank took on the Prudential Regulation Authority (PRA) in 2014, the priority was to move those people into the building. The Bank told us that it 5 Q 125 6 Qq 36, 88, 126–128 7 Qq 30, 32, 35–36, 5; C&AG’s report, para 4 8 Qq 84–85, 88 Bank of England’s central services 9 now had a desk sharing ratio of 0.9 desks per full-time equivalent in its Moorgate building, where PRA staff are based.9 The Bank committed to considering increasing occupancy levels in its Threadneedle Street headquarters after February 2020.10
10We asked the Bank whether it could rent out parts of its Threadneedle Street headquarters...
Concluded (the committee's words)
We asked the Bank whether it could rent out parts of its Threadneedle Street headquarters if more staff were working from home. It asserted that the sub-letting of Threadneedle Street was not a practical option because the site is used to store £140 billion worth of gold. We asked the Bank whether it had considered relocating the gold to another property. The Bank told us it had not because of the extent of security arrangements required at Threadneedle Street. It acknowledged that it still had “plenty of room to go with less contentious properties”, outlining that it had sold a 125 year lease on its property at Number 1 and Number 2 Lothbury in London in the early 2000s for £28 million and that it had an income from ground rent on the building.11 It suggested that its next most likely option for sub-letting would be its office at Moorgate Place, where the Prudential Regulation Authority is based. The Bank assured us that it was considering how it could make more flexible use of its real estate, but it was too early to commit to specific actions. It explained that increasing the occupancy of Threadneedle Street would create practical issues such as a shortage of bathrooms and a need to deal with asbestos, which would require careful consideration given its grade 1 listed building status.12 We similarly asked the Bank if it needed the printing facility at Debden or whether it could completely outsource banknote printing. The Bank told us that a limited number of companies could produce banknotes, but that it had not ruled out the complete outsourcing of banknote production.13
11We asked the Bank whether it was still sensible to have its headquarters in central...
Concluded (the committee's words)
We asked the Bank whether it was still sensible to have its headquarters in central London. The Bank accepted that with modern technology it does not need all staff to be in central London and recognised that a number of other banks had moved out of the capital. The Bank told us that a mapping exercise of the distances staff travelled to work showed that on average its 4,000 staff spent about 8,000 hours a day commuting, and that staff came predominantly from the south-east or sometimes further afield. The Bank highlighted that it had 12 regional hubs across the country, as well as a cash centre in Leeds and its printing facilities in Debden, and that it was starting to look at whether it could recruit more staff from the rest of the U.K. This included arrangements to have more people working outside of London, possibly attached to the Bank’s regional agents or another way of working such as serviced office space. The Bank accepted that it could reduce its headcount in London and become a more regionally focused Bank, but cautioned that this would depend on the necessary technology being available and further consideration of the travel requirements being placed on the staff involved.14
12As part of its property portfolio, the Bank runs a leisure centre for staff at...
Concluded (the committee's words)
As part of its property portfolio, the Bank runs a leisure centre for staff at Roehampton, which it has owned since 1907. However, only 13% of staff are actually members and more staff use the gym at Threadneedle Street - 1,522 in total, which equates to 36% of all staff.15 We asked the Bank how it could justify the cost of the leisure centre given that it is outside its core business. The Bank told us that while it holds the freehold for the site, it sold a 9 Qq 86–88 10 Qq 97 11 Qq 88–90, 92–93, 101–102 12 Qq 93–94, 97–99 13 Qq 136–139 14 Qq 104–105 15 Bank of England letter to the Committee of Public Accounts, 5 February 2019 10 Bank of England’s central services 125 year lease for a nine-acre site with tennis courts and facilities to the Lawn Tennis Association. The Bank explained that the sports facility had been part of its wellbeing package for staff and that it did not draw on the public purse because it made an operating profit of £77,000 before depreciation is accounted for. The Bank recognised that it did not need to own a sports site and that its governing body would be discussing the issue in February 2019. The Bank committed to updating the Committee on the outcome of this discussion.16 Diversity
13The Bank aims to improve the diversity of the Bank and it has targets to...
Concluded (the committee's words)
The Bank aims to improve the diversity of the Bank and it has targets to increase the proportion of female staff to 50% by 2020 and the proportion of Black, Asian and Minority Ethnic (BAME) staff to 20% by 2020. It also has targets to increase the proportion of senior managers who are female to 35% by 2020, and to increase the proportion of BAME staff who are senior managers to 13% by 2022.17 The Bank has been regularly pressed to improve gender diversity by our colleagues on the Treasury Select Committee, which has said that it will continue to challenge the Treasury in its appointment of senior staff at the Bank of England.18 The Bank told us it had invested heavily in improving diversity and inclusion, including introducing a wellbeing strategy, work to improve inclusion, and a range of other initiatives, such as supporting its staff network.19 Nonetheless, the proportion of female staff at the Bank has remained between 44% and 45% since 2015. The Bank’s annual report showed that over the last year, 43% of new recruits have been women. By January 2019 32% of its senior managers were female, compared to 17% in 2013.20 In February 2018 18% of the Bank’s staff were BAME, the same proportion as the previous year, and just 5% of senior managers were BAME. We were concerned that 23% of staff leaving the Bank are also from this group. The Bank told us that it looked closely at the number of BAME staff in reviewing recruitment, promotions and resignations, and that the Bank would be considering the issue in February 2019.21
14We asked the Bank if it had measured the effectiveness of its interventions as it...
Concluded (the committee's words)
We asked the Bank if it had measured the effectiveness of its interventions as it appeared to still have some way to go to reach its diversity targets. The Bank told us that its staff survey had very positive responses to questions about inclusion including respect for individuals, and whether individuals think the Bank takes diversity seriously. The Bank accepted that at 17% the proportion of female senior managers in 2013 was far too low. It explained that its target to reach 35% had been deliberately stretching, and that it wanted to go further in the future.22 16 Qq 143–148 17 Bank of England Annual Report and Accounts, 2017–18, page 39 18 Treasury Committee report, Women in Finance, Session 2017–19, HC 477, June 2018, paragraph 128 19 Q 2, 17 20 Q 59; Bank of England Annual Report and Accounts, 2017–18, pages 39–40 21 Qq 61–63; Bank of England Annual Report and Accounts, 2017–18, pages 39–40 22 Qq 59–60 Bank of England’s central services 11 2 Working practices in the Bank Complex and costly systems and processes
15The Bank spent £188 million on central services in 2017–18, including £101.4 million on technology,...
Concluded (the committee's words)
The Bank spent £188 million on central services in 2017–18, including £101.4 million on technology, £58.7 million on property, procurement and security, and £15.8 million on Human Resources (HR). The cost of the Bank’s central services is high compared to benchmarks with comparable central government bodies. The cost of HR within the Bank per full-time equivalent staff member was 15% above the central government benchmark in 2016–17, the latest year where comparable data is available. The Bank told us that the cost of its central services was high compared to the benchmark because it had invested heavily in bringing the Prudential Regulation Authority into the Bank. This had required a significant increase in staff and support, including harmonising the terms and conditions of staff across the Bank. It similarly told us that the cost of its HR was high compared to the benchmark because it had invested in diversity and inclusion, talent management and staff well-being.23
16The Bank has 700 job titles, which are divided into 11 salary bands.
Concluded (the committee's words)
The Bank has 700 job titles, which are divided into 11 salary bands. The Bank conceded that having 700 job titles does “clog the system” and prevented the Bank from being as efficient as it could be. It told us that it had reviewed the cost of its recruitment in light of benchmarking which showed that the Bank’s recruitment costs were 68.7% more than central government bodies. The Bank told us that its recruitment costs were affected by its need for staff to undergo a high standard of security vetting and the high cost of recruitment to policy committees. It admitted, however, that it had a “clunky” recruitment system which added to the costs of recruiting new staff. It told us that it had changed its recruitment system in 2018 and reduced recruitment costs by 9% as a result. The Bank committed to reducing costs further in 2019 but it did not specify by how much.24
17The cost of the Bank’s ICT was 33.6% more than other central Government organisations in...
Concluded (the committee's words)
The cost of the Bank’s ICT was 33.6% more than other central Government organisations in 2016–17. The Bank asserted that its IT requirements were different to government departments or other public sector organisations because it operates the UK’s financial settlement system, with £600 billion a day going through the Bank of England. It told us that it needed to have higher levels of service availability than central government as the UK depends on the service being available and the system cannot be in a position where it might fail.25 In 2016–17 the service was not available 0.01% of the time compared to 0.37% in central government.26 The Bank acknowledged that its larger spend on ICT was also due to high levels of manual processors and legacy IT systems. It pointed to the incorporation of the Prudential Regulation Authority which duplicated many applications and required much integration of data systems and data sets. The Bank told us that the integration of these systems took a substantial amount of time to deal with, and that its data centre migration programme had been cleansing many of those systems and applications, which took additional time.27 The Bank acknowledged there was “room for significant efficiency improvements” in areas of its IT.28 23 Qq 2–4; C&AG’s Report, Figure 2, page 15 and Figure 15, page 42 24 Q 3, 32; C&AG’s Report, Figure 15, page 42 25 Qq 18–19 26 Q 20; C&AG’s Report, Figure 15, page 42 27 Qq 25–28 28 Q 24 12 Bank of England’s central services
18The Bank has not routinely and systematically benchmarked the costs of its central services and...
Concluded (the committee's words)
The Bank has not routinely and systematically benchmarked the costs of its central services and has few measures to assess the cost-effectiveness of central services. The Bank accepted that it needed to be more systematic about its benchmarking. It told us it was reviewing which benchmarks it should use from the public sector, financial sector, central banks and central government, and that it would have benchmarks in place by mid 2019. The Bank committed to using these benchmarks to set its targets from 2020 onwards.29 Compliance in the Bank
19The Bank made £10 million worth of purchases without following its policy to consult its...
Concluded (the committee's words)
The Bank made £10 million worth of purchases without following its policy to consult its central procurement team. In June 2018, the Bank’s procurement team and its Internal Audit identified that between December 2016 and December 2017, 200 purchases above £25,000 had been made without staff consulting the procurement team, despite there being a policy that staff should do so. Further investigation by the Bank identified that the procurement team had not been consulted for £10 million worth of purchases. The Bank estimated that better value might have been achieved for £2 million worth of purchases and that this could have saved up to £200,000. The Bank told us that it had identified the issue of non-compliance internally and then considered whether or not to punish the individuals involved. The Bank said it had recognised that its procurement systems had not been fit-for-purpose and told us that in May 2017 it introduced a three-year programme to improve its procurement processes. The Bank told us that it expected this programme to achieve savings, but highlighted that the precise amount would become clear in April 2019 when the target operating model would be in place. The Bank told us that it expected that procurement, and particularly technology procurement, would contribute much of its target savings of £9 million by 2021 and £15 million a year from 2021–22.30
20There was no evidence to suggest that staff were required to explain why they had...
Concluded (the committee's words)
There was no evidence to suggest that staff were required to explain why they had not complied with the Bank’s procurement policy. We asked the Bank why it had not done anything about non-compliance with its procurement policy. The Bank told us that it had decided that it could not do this because its procurement policy was not sufficiently clear or fit for purpose. The Bank told us that its management and internal audit had agreed that the best way to fix the problem was to improve the procurement policy, to get the process and controls supporting those policies right and to make sure that they were implemented as quickly as possible. However, the Bank updated its procurement policy just one week before our inquiry to make it clear that staff must consult its central procurement team for any purchase over £25,000. The Bank told us that it had brought this forward from other planned changes to processes and controls which are due to take place in March 2019.31
22We asked how the Bank was going to police its updated procurement policy.
Concluded (the committee's words)
We asked how the Bank was going to police its updated procurement policy. The Bank explained that supplier invoices had to be matched to a purchase order or it would trigger a breach in the Bank’s procurement policy. Each breach was now reported to the Bank’s risk committee and the executive risk committee, who determined the consequences.34 We asked the Bank if it was concerned that instances of non-compliance in the Bank would affect its reputation and confidence among high street banks and other financial institutions that it regulates. The Bank asserted that it “could not be more clear” that non- compliance was not acceptable and there would be consequences.35 The need to modernise working practices
23The Bank is seeking to deliver cultural change within the organisation.
Concluded (the committee's words)
The Bank is seeking to deliver cultural change within the organisation. In 2017–18 it set a cap on its total headcount of 4,281 full-time equivalents. From 2018–19 the Bank committed to containing its costs, excluding the cost of producing notes and pensions, at £476 million. We asked the Bank about the scale of the cultural challenge it faced in areas such as personnel and procurement in order to control its costs. The Bank said that managing cost pressures from Brexit meant that the culture was changing rapidly.36 The Bank recognised that culture within in an organisation was the hardest thing to change. It told us that it was encouraged that the NAO had found that senior staff it interviewed were supportive of central services’ plans to modernise and simplify systems and hoped that change would translate to savings being recharged to the business.37
24The Bank asserted that its Court of Directors was attuned to efficiency and effectiveness.
Concluded (the committee's words)
The Bank asserted that its Court of Directors was attuned to efficiency and effectiveness. In recruiting new employees, the first point discussed with applicants was about making a public-sector contribution, while the work environment and investment in training were discussed alongside the actual pay.38 The Bank told us that the NAO’s recommendations around measurement had prompted a very important change because the idea of connecting cost and performance metrics was new for the Bank, and it was now working to implement the change.39 The Bank explained that it had also made changes to modernise its pension scheme. It made a significant adjustment several years ago to change longer-standing members from a final salary scheme to a career average scheme. New recruits make a percentage contribution of just over 1%.40
25The Bank has both competitive and non-competitive promotion processes, the latter of which involves the...
Concluded (the committee's words)
The Bank has both competitive and non-competitive promotion processes, the latter of which involves the re-evaluation of roles. Since 2015 it has re-evaluated around 200 roles and made around 200 in-role promotions. We were concerned that having 700 different job titles in the Bank meant that staff could more easily “game the system” by claiming that they had undertaken a special job or by asking for more money to remain 33 Qq 69–70 34 Qq 67–69 35 Qq 81–83 36 Q 71 37 Q 129; C&AG’s report, paragraph 2.17, page 29 38 Q 72 39 Q 126 40 Qq 73–77 14 Bank of England’s central services an employee. The Bank assured us that this could not happen. It asserted that it had 11 grades and that different job titles fell within those bands. It told us that all salaries were compared to benchmarks and that job titles were descriptors only and did not link to pay. The Bank explained that staff were paid more by being promoted to another band and the remuneration committee considered compensation and remuneration in those bands.41
26We asked the Bank why it had in-role promotions.
Concluded (the committee's words)
We asked the Bank why it had in-role promotions. The Bank explained that an external review in 2012, following the financial crisis, had recommended that the Bank should consider allowing technical experts and specialists to stay in their roles for longer, rather than incentivising them to move to a completely new role to get a promotion. For example, if a specialist such as a macroeconomist or a risk specialist developed their skills and experience so that they were the world expert, the Bank should promote them in-role. The Bank assured us that individuals or their managers could not make this decision without proper approvals because the Bank had a promotion process. It explained that managers had to nominate people against a number of criteria, which were considered by HR, and a panel interview decided whether they would be promoted. The process is overseen by a group of directors across the Bank. It told us that in 2017–18 63 people were nominated for promotion, 51 were given interviews and 47 were promoted, which represented just over 1% of staff.42
27We challenged the Bank about why there were so many in-role promotions and whether its...
Concluded (the committee's words)
We challenged the Bank about why there were so many in-role promotions and whether its new operating model would have only one system for promotions, or two or three. The Bank told us that this would be decided as part of its target operating model work and would be in place by April 2019. The Bank said it was not keen to stop in-role promotions because it needed to have sufficient depth of knowledge to enable its staff to challenge external members of the Monetary Policy Committee.43 We asked the Bank how many specialist roles are recruited from outside. The Bank told us it had recruited 641 staff last year including 142 graduates, school leavers, and apprentices and 499 people with experience, such as specialists in risk, cyber security, and economists. The Bank undertook to write to the Committee in mid-2019 setting out the roles and skills it will need across the organisation and the implications for recruitment, retention and redundancies.44 41 Qq 30–36 42 Qq 33–34, 37 43 Qq 40–42 44 Qq 47–54 Bank of England’s central services 15
Evidence
Oral evidence sessions 1
- 21 Jan 2019No witnesses recordedparliament.uk ↗