Minutes of the Meeting of the Court of Directors held on 8 February 2023

1. Conflicts, Minutes and Matters Arising

There were no conflicts declared in relation to the present agenda.

The minutes of the meeting held on 15 December 2022 were approved.

The Chair welcomed Sabine Chalmers to her first Court meeting.

The Secretary noted that all items listed under matters arising had been addressed.

2. Governor’s Update

The Governor updated Court on the transformation of the Bank’s central services, including technology, and how it proposed to prioritise within a challenging budget environment.

The Governor set out that the Bank had been able to implement the Annual Salary Review following successful negotiations with the Union. A fair framework had been used to assess individual pay awards, with lower paid colleagues receiving a proportionately higher pay award.

The Governor also noted that the Bank would continue to assess the appropriate balance between home and office working. Court members agreed and noted that this was an issue both for the Bank and other organisations.

3. Audit and Risk Committee (ARCo) Update

Diana Noble updated Court on the work of ARCo.

At its last meeting, ARCo discussed risks presented by the Bank’s technology estate. It was noted that a technology transformation plan – including its approach to obsolescence, architecture, and skills – would be tabled for discussion at Court in the coming months.

ARCo also discussed the Finance Modernisation Programme. ARCo had requested that the Bank’s COO, CIO and CFO return to ARCo with a revised timetable for the Programme.

ARCo had also reviewed the Bank’s contingency plans in the event of power outages and received updates regarding the process and timeline for the Bank’s Annual Report and Accounts.

The Chair thanked Diana Noble for continuing to act as interim chair of ARCo while a permanent ARCo chair was recruited.

4. Remuneration Committee (RemCo) Update

Anne Glover updated Court on the work of RemCo.

RemCo had agreed to discuss the Equal Pay Audit at a forthcoming meeting.

RemCo had approved the Bank’s approach to pensions for the following year but had agreed a review of pension arrangements would be a key focus for the sub-committee during 2023. Court members emphasised the importance of considering overall reward alongside this review.

RemCo approved the Annual Salary Reviews for Governors, Executive Directors, External Committee members. Anne Glover noted that Andrew Bailey had declined the pay rise he had been offered.

The Chair thanked Anne Glover for continuing to act as interim chair of RemCo.

5. COO Update

(Ben Stimson and Sushil Saluja)

Ben Stimson updated Court on the operations of central services, as well as the progress of the Central Services 2025 project.

Regarding current activities, Ben Stimson noted that some activities had been reprioritised or re-scoped to allow Central Services to focus on core operations, in particular technology. He also noted the high levels of recruitment over the past year. Court NEDs said large numbers of new staff posed challenges to an organisation and asked Governors to ensure appropriate induction was in place.

Ben Stimson noted that a further challenge had been posed by the Annual Salary Review, and thanked People and Culture, as well as the Union, for the work undertaken to deliver a constructive and successful negotiation. He also updated Court on the Bank’s performance assessment process.

Ben Stimson also noted he had taken a strategic decision to re-allocate spending from property to technology for 2023.

Sushil Saluja said he hoped the pace of change in technology would pick up over the next two quarters but he faced a challenging recruitment environment. Court members said the Bank should ensure it articulated the scale of technology careers available in the Bank, as demonstrated by RTGS renewal programme.

Ben Stimson also updated Court on the recruitment process for the Executive Directors for Data and Change & Planning.

Ben Stimson said that a review of programme management and delivery was being undertaken, supported by external consultants. Initial findings suggested that more emphasis was needed on programme initialisation and mobilisation.

6. Cloud Project

(Sushil Saluja)

Sushil Saluja introduced the item, which Court approved.

7. Review of Personal Financial Transactions (PFT) Policy

(Sebastian Walsh and Michael Salib)

Sebastian Walsh introduced the item, noting that approval was being sought for proposed changes to the PFT Policy, as well as the format of a new public register of interests for members of Court and the Bank’s statutory policy committees.

Sebastian Walsh outlined changes to the PFT Policy, including clarifications to the relevant language around type and timing of permitted transactions – and the process by which they must be approved. He noted the new approach would bring the Bank into line with some other central banks and regulators.

Sebastian Walsh explained that exemptions from the full requirements of the PFT Policy would be granted where investment assets were managed by a personal portfolio manager who has full discretion over investment decisions. It was outlined that the proposal was to add greater formality around the arrangements for discretionary management, with individuals expected to sign a set of undertakings that day-to-day control over all investment decisions would rest solely with the portfolio manager once the mandate has been agreed.

In response to questions, Sebastian Walsh said that the proposed register of interests would include financial interests relevant to the Bank, such as shares held in Bank-regulated firms upon appointment, as well as other relevant outside interests, including company directorships or charity trustee positions. He also noted that, consistent with past practice, where members of Court or policy committees had outside interests which posed potential conflicts or risked being perceived as such, they would be recused from committee discussions relevant to those outside interests. He added that the register of interests would be published in the Spring.

Court approved both the PFT Policy and the approach in relation to the proposed public register of interests. The Chair noted that the success of all policies of this nature would depend on the integrity of each individual working for the Bank.

8. Union Presentation

(Faisel Choudhry)

Faisel Choudhry updated Court on the work of the Union over the past year.

Faisel Choudhry said engagement between the Bank and the Union had been constructive, despite the difficult environment that surrounded pay negotiations this year.

He added that key areas of focus for the Union’s members were flexible working – where the Bank’s policy was generally seen positively – as well as the proposed pensions review and equal pay review. The Governor asked Ben Stimson to return to Court with an update on progress regarding both reviews.

The Chair and Governor thanked Faisel Choudhry for his continuing engagement with the Bank.

9. Viewpoint Survey Results

(Jane Cathrall and Mark Menary)

Jane Cathrall took the Court through the principal findings of the Viewpoint survey.

The Governor observed that the results of the Viewpoint survey were disappointing, particularly with regard to reward.

Non-executive members of Court highlighted the importance of communicating clearly what the Bank’s approach to pay and reward was, including the value of the pension to staff.

Some non-executive members of Court noted that flexibility was an important tool for staff recruitment and retention.

Court agreed that the action plan associated with the Viewpoint results should be shared with Court at the next meeting.

10. RTGS Renewal Programme Update

(Victoria Cleland, Sushil Saluja and John Stocker)

The Chair welcomed John Stocker to the Bank.

Victoria Cleland provided an update to Court.

Non-executive members of Court asked whether, following a re-plan stemming from delays in the ECB’s equivalent project, enough contingency had been allowed in the new timeline. Victoria Cleland said the Bank had engaged closely with RTGS Direct Participants, central banks and payments messaging providers to ensure that the timeline was robust.

The Chair asked Victoria Cleland to bring the criteria for a go/no go decision for TS2.1 to the next meeting of Court.

11. The Bank’s Finances

(Afua Kyei)

Afua Kyei presented the 2023/24 budget, the Bank’s 3-year business plans, Q3 financial forecast and payment in lieu of dividend.

Court approved the Budget for 2022/23. Court also approved the decision to make no payment in lieu of dividend.

Diana Noble added that it was important that Court was able to focus in a timely way on the Bank’s 3-year business plans. Afua Kyei agreed to provide further detail for non-executive members for discussion.

12. PRA Strategy 2023/24 Strategic Goals and Business Plan/Prioritisation

(Ben Martin and Sara Ward)

Court approved the item.

13. Communications Strategy Six-Monthly Update

(James Bell)

James Bell introduced the item.

Court members noted that the Bank’s gilt market intervention had been viewed positively in the media.

Court discussed the principal communications priorities and risks for the Bank, including those around a higher interest rate environment.

14. Membership of Court Committees

(Sebastian Walsh)

Court approved the membership of the sub-Committees of Court.

Court approved Ron Kalifa as Senior Independent Director.

15. Nomination Committee Terms of Reference

(Sebastian Walsh)

The Chair proposed that the remit for the Nominations Committee (NomCo) should expanded to include specific focus on matters relating to the Bank’s culture, including diversity and inclusion initiatives.

Court approved the change to the NomCo’s Terms of Reference.

It was noted that Matters Reserved to Court would be updated and published on the Bank’s website in due course.

16. Committee Appointments and Conflicts Update

(Sebastian Walsh)

Court noted the paper and discussed the timeline for coming recruitment.

17. Items for Information

Court noted:

• Monetary Policy Committee Report
• Central Banking Digital Currency Consultation Paper

The meeting of Court was closed.