Yahoo Finance Bank of England must reform to meet spending targets, says NAO
The Bank of England must “bear down” on costs and ramp up reforms if it hopes to meet its own spending targets, the National Audit Office has said.
The central bank has capped its staff numbers to 4,281 and committed to limiting spending – excluding pensions and the cost of producing banknotes – to £476m per year.
While the NAO report said the Bank was “moving in the right direction”, it warned against underestimating the “scale of change” needed to meet its targets.
The auditor said the Bank of England’s central services – which cover human resources, technology, property, procurement, security and financial management – were “relatively expensive” compared with other central government bodies, with human resources costing 15% more, while tech support was 34% higher.
The bulk of its costs come from operating and maintaining its London offices, coming in at £20m, or 35% higher than the central government benchmark.
That is despite the Bank’s City of London headquarters hosting about 800 empty desks on any given day, though it has now committed to increase desk sharing and occupancy by early 2020.
Amyas Morse, the head of the NAO, said: “The Bank of England has rightly recognised that its central services need reform and has started to take action. However, the Bank should not underestimate the scale of change required. Improvements will only be possible if staff across the Bank are encouraged to embrace a more cost-conscious culture.”
The NAO acknowledged that changes will be harder to push through at a “relatively conservative institution” like the Bank of England, but urged the central bank to “step through the changes needed firmly and expeditiously, bringing its people with it”.
“It will need to bear down on its existing costs as much as possible if it is to find the headroom needed for investment and live within its self-imposed spending cap,” the NAO added.
The report comes as the Bank faces criticism over staff expenses after two of its US-based economic advisers racked up a £390,000 travel bill over two and a half years.
It has since cut meal and hotel allowances and clarified when staff can book business-class flights as part of its first publicly released expenses policy. The Bank will also require greater detail in expense reports and force more of its directors to release their reports “proactively”.
The central bank recently defended spending £100,000 on its summer party, saying it “carefully budgeted” for the lavish event that featured £58,000 worth of food and drink and over £27,000 on entertainment.
Responding to the NAO’s latest report, the Bank’s chief operating officer, Joanna Place, said: “We welcome the NAO’s report and its conclusion that the bank is moving in the right direction.
“Our existing transformation programmes provide a roadmap for how the Bank’s central services will operate in future. The recommendations contained in the NAO report will feed into these efforts to update and streamline those functions.”
