David Roberts, Chair
Andrew Bailey, Governor
Sir Dave Ramsden, Deputy Governor – Markets & Banking
Sam Woods, Deputy Governor – Prudential Regulation
Ben Stimson, Chief Operating Officer
Sir Jon Cunliffe, Deputy Governor – Financial Stability
1. National Audit Office (NAO) – overview of Bank of England study plans
(Gareth Davies, Max Tse, Rich Sullivan-Jones)
The Chair welcomed the NAO to the meeting. Gareth Davies, Comptroller and Auditor General, gave a brief overview of the NAO’s Bank of England study plans, with the first part to focus on the Bank’s approach to managing legal, ethical and staff compliance risks.
Gareth Davies explained that assessing the Bank’s approach to risk management in this way would allow them to study its economy, effectiveness, and efficiency, as per the NAO’s remit.
In response to questions, Gareth Davies said the NAO team would benchmark the Bank against best practice across the public and private sector, including its central bank counterparts internationally.
Ben Stimson said that he would lead on the review for the Bank and looked forward to further engagement with the NAO as the process continued.
Several non-executive directors noted that the Bank was subject to extensive review and oversight, both internally and externally. This oversight included that provided by Court, the Independent Evaluation Office and the Treasury Select Committee in Parliament. They added that it was important to ensure appropriate alignment and to avoid duplication.
The Chair thanked the NAO for the overview and looked forward to welcoming the NAO at a future Court meeting.
2. Conflicts, Minutes and Matters Arising
The Chair welcomed Jonathan Bewes as an observer to Court, noting that he would take up his role on 1 October. He added that Jonathan Bewes had agreed to take over as Chair of ARCo from Diana Noble this autumn.
There were no conflicts declared in relation to the present agenda.
The minutes of the meeting held on 5 and 6 July were approved.
Matters arising from the previous meeting were noted.
3. Governor’s Update
i. Monetary Policy
The Governor outlined the judgements made by the Monetary Policy Committee in its latest interest rate decision, noting that policy would need to remain sufficiently restrictive for sufficiently long to return inflation to the 2% target sustainably in the medium term, in line with the MPC’s remit. He added that the MPC’s communications appeared to have been well understood by observers.
ii. Balance Sheet Governance
The Governor also updated Court on work to rationalise and clarify the internal governance of the Bank’s balance sheet.
The Governor noted that, since the Global Financial Crisis of 2007-8, the Bank’s balance sheet had expanded in scale and scope as has the Bank’s role (eg regarding non-bank financial institutions). The number of internal stakeholders had also increased; the MPC, FPC, PRC and Court all had different and distinct interests in the balance sheet. While there were public “concordats” previously agreed with the PRC, FPC and MPC, these arrangements were not set out in one place and a refresh was considered appropriate to take account of subsequent developments since the concordats were first drafted.
In light of this, the Governor updated Court on the proposal to replace the concordats with a consolidated set of Principles of Engagement with the Bank’s balance sheet, which placed the framework in a single coherent structure. For each of the committees the document set out (i) their primary interest in the balance sheet; (ii) the matters they approve (where relevant); and (iii) other responsibilities (including in extraordinary circumstances). In addition, the text had been updated, filling in gaps where appropriate and taking account of developments since the concordats were last reviewed.
The document did not purport to set out the relationship between the Bank and HM Treasury, which were subject to separate arrangements.
Court first discussed a draft of this in April 2023 and agreed both with the articulation of its own role in the documentation and that the policy committees should be sighted on this work. As such, the relevant sections of the Principles of Engagement had been discussed and agreed by each of the statutory policy committees over the Summer.
Court approved the documentation – including minor drafting changes proposed since the April 2023 meeting - and agreed that publication of the Principles on the Bank’s website would coincide with the release of the minutes from its meeting.
iii. Forecast Review
The Governor noted that, since Court’s July meeting, Ben Bernanke had agreed to lead the Forecast Review, with the support of the Independent Evaluation Office. The Chair said that he had discussed the Review’s Terms of Reference with Ben Bernanke and was satisfied that they would deliver an important and useful piece of work. Court approved the Terms of Reference.
4. Remuneration Committee (RemCo) Update
Anne Glover updated Court on the work of RemCo.
5. COO Update
Ben Stimson updated Court on the progress of CS2025 Programme, highlighting improvements made to some key processes in Central Services, notably workplace adjustments and recruitment processes. He noted that the operating model of the People Directorate was also being reviewed. He added that two new Executive Directors were due to join Central Services in October, leading on Change & Planning and Operations.
Ben Stimson also discussed the upcoming Annual Salary Review (ASR) with Court.
Ben Stimson also raised the outage of RTGS that had occurred in August, he commended staff working on the incident, highlighting that the teams involved in its resolution had done so professionally and quickly. Governors said that the outage had demonstrated lessons from the previous outage in 2014 had been implemented successfully. The Chair said that Court would be updated on the post incident review once it was completed.
6. Technology’s approach to obsolescence remediation and strategy architecture
(Nathan Monk, Pete Townsend, James Benford and Paul Robinson)
Nathan Monk introduced the item and invited views from Court with regards to the Bank’s approach to technology obsolescence remediation and strategy architecture.
Court noted the scale of the challenge. Court agreed that technology obsolescence would be best managed whilst progressing with a target architecture and the Bank’s data strategy.
Court highlighted the need for the entirety of the Bank’s leadership team to engage closely with this work. Dave Ramsden highlighted that Markets and Banking had already made some progress in this area. Court asked Nathan Monk and Ben Stimson for further details regarding likely costs and dependencies. Court also noted Technology had established an expert advisory panel comprised of external leaders in this area, and requested it receive the relevant Terms of Reference.
The Chair noted that it was important to learn from recent successful programmes, including RTGS renewal. He added that an update to the technology obsolescence programme would come to Court in December. This update should include an outline of prioritised next steps, a fuller implementation plan and an initial understanding of delivery implications and costs.
i. IEO evaluation on data
(Melissa Davey, David Ronicle, Michael Lever, Catherine Charnock and Will Sayers)
Court commended the IEO for producing a clear, constructive report and thanked the team for their work the evaluation, which it approved for publication.
ii. The Bank’s Data and Analytics Strategy and its response to the IEO evaluation on data
(James Benford and Paul Robinson)
James Benford outlined the Bank’s response to the IEO review and his refreshed strategy for Data and Analytics.
Court was supportive of the Bank’s data and analytics strategy. In response to questions, James Benford set out that early priorities were to focus on recruiting and deploying data scientists in the most immediately impactful areas, notably use of the Cloud and AI.
Diana Noble stressed the importance of considering the skills and capabilities that would be needed to make a success of the strategy. Frances O’Grady observed that the data strategy, and any associated recruitment, should be mindful of diversity. In response to questions, James Benford said he would be producing metrics by which progress could be assessed.
Sam Woods noted the importance of senior leadership using new data tools personally – and being seen to do so, to help drive potential productivity gains.
The Bank’s response to the IEO evaluation on data was approved.
The Bank’s data strategy was due to return to Court in February 2024. This update should include an outline of prioritised next steps, a fuller implementation plan and an initial understanding of delivery implications and costs.
8. Union presentation
The Chair welcomed Faisel Choudhry to the meeting.
Faisel Choudhry updated Court on the work of the Union. The Union had been engaging with new joiners and younger members of staff as well as providing support to those impacted by the cost of living crisis.
Faisel Choudhry noted that the Union had begun planning for this year’s ASR negotiations and hoped that the Bank and Union would maintain an open, constructive approach.
9. Committee Appointments and Conflicts update
Court noted the paper and discussed future recruitments.
Since the previous meeting of Court, Sarah Breeden had been appointed as Sir Jon Cunliffe’s successor as Deputy Governor for Financial Stability.
The Secretary informed Court that HM Treasury would advertise for Ben Broadbent’s successor as Deputy Governor for Monetary Policy in the coming days.
10. Items for Information
- Monetary Policy Committee Report
- RTGS Renewal Update
- Scottish & Northern Ireland Banknotes Annual Report
The meeting of Court was closed.