Minutes of the Meeting of the Court of Directors held on 7 February and 4 March 2024

1. Conflicts, Minutes and Matters Arising

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

The minutes of the meeting held on 14 December 2023 were approved.

The Chair said the present meeting of Court would happen over two days, with the second part scheduled for 4 March, where the Bank’s business plans and investment priorities would be discussed.

2. Governor’s Update

The Governor set out that the Bank’s latest Monetary Policy Report and MPC Minutes had been published since Court’s last meeting.

Court members noted the newly appointed House of Lords Financial Services Regulation Committee, as well as the recent publication by the Treasury Committee’s report on Quantitative Easing.

3. Audit and Risk Committee (ARCo) Update

Jonathan Bewes, Chair of ARCo, introduced the item. ARCo had received an update from the National Audit Office regarding their planned audit of the Asset Purchase Facility. ARCo also received an update from KPMG on its year-end audit planning. Internal Audit also advised ARCo of its activities.

ARCo was informed by the Risk Directorate that the Bank’s financial risks were largely unchanged.

ARCo discussed technology risk. ARCo noted the Bank’s enhanced banknote exchange process.

ARCo approved the annual update to the Bank’s Speak Up (internal whistleblowing) policy and reviewed the MLRO annual report. ARCo also received an update on model risks management standards and discussed Central Services Operations.

Jonathan Bewes added that it was hoped that the Bank’s new auditor would be announced in the coming weeks.

ARCo had discussed whether to split into separate committees covering Audit and Risk. ARCo members felt the current approach was a more efficient and effective approach for the Bank.

ARCo considered the external auditor’s fees and recommended Court approve them. The fees were duly approved.

4. Remuneration Committee (RemCo) Update

Diana Noble updated Court on the 24 January RemCo meeting.

RemCo had discussed Executive Director (ED) and Deputy Governor (DG) objectives, alongside the Bank’s overall approach to performance management.

RemCo approved the Annual Salary Review for EDs and DGs.

RemCo had also been updated on the Pensions Review.

5. Data and Analytics Strategy

(James Benford)

James Benford updated Court on progress made to produce the Bank’s updated Data Strategy, which was due to be published alongside the Bank’s Annual Report and Accounts.

James Benford noted that the Bank would explore Cloud storage solutions. Staff engagement with Data and Analytics had increased, supported by the decision to ask staff to familiarise themselves with the new data strategy as part of Our Code.

Ron Kalifa requested further information about how the portfolio of work was being delivered and what Court could expect to be delivered by the end of the year.

James Benford informed Court that the delivery plan would return to Court following the completion of the investment prioritisation process currently being undertaken, with the specific data deliverables being overseen by a Bank wide Data Board.

Ron Kalifa said that it would be critical to attract the right skills to the Bank to drive forward this work. Jonathan Bewes asked James Benford to consider carefully the risks presented by elements of the data strategy, alongside the potential benefits.

The Chair said that the success of the Data Strategy would play a substantial role in transforming the Bank. He observed that the Future Data Systems Programme would come for approval at the second part of the Court meeting, to be held on 4 March.

6. COO Update

Ben Stimson noted that progress was being made across a range of initiatives.

He updated Court on work, designed to help develop a collective view of the Bank’s key priorities over next three years – and agree the investment programme necessary to deliver them.

Non-executive members observed that the level of organisational change was high at present, so thought should be given to the ability of staff to absorb that change.

Ben Stimson updated Court on the progress of the National Audit Office review on legal, ethical and compliance risks.

7. RTGS Renewal Programme Update

(Victoria Cleland, Nathan Monk and John Stocker)

Victoria Cleland informed Court that the RTGS Renewal Executive Board had decided to postpone the go-live date for TS3 until the Autumn. A communications plan was being developed for stakeholders, while a new go-live date would be agreed.

Court supported the decision of REB to delay go-live. The Chair expressed his thanks to staff and asked Victoria Cleland to work with Technology and Ben Stimson to ensure implications of the decision on the Bank’s other technology modernisation programmes were clarified.

8. Viewpoint Survey Results

(Jane Cathrall and Mark Menary)

Jane Cathrall introduced the item on the Viewpoint staff survey.

Court asked the People Directorate to consider external benchmarking of the Viewpoint scores to provide context and challenge to the findings. It also recommended that People Directorate reflect on how frequently staff surveys were run. The Chair said he would like Jane Cathrall to identify 2-3 areas of focus for action from the next Viewpoint survey.

9. 2023/24 Q3/4 Update, Budget approval for 2024/25 and Payment in Lieu of Dividend

(Afua Kyei and Paul McArdle)

Afua Kyei introduced the item, highlighting that the next few years would be challenging.

The Chair said that the coming refresh of the Bank’s strategic priorities would be an important shaping device for the budget and business plans. He said that the Bank provided a number of critical services to both public and industry, where demand was growing, but it was nonetheless vital that the Bank could articulate its planned approach to realising productivity gains and driving efficiency.

Court agreed that the Bank should not make any payment in lieu of dividend to HM Treasury this year.

10. Communications Six-Monthly Update

(James Bell)

James Bell introduced the item on the Bank’s overall communications strategy and public sentiment. He added that the Bank would follow Cabinet Office guidelines on communications ahead of the next general election, in line with past practice.

Court members noted movements in public sentiment regarding the Bank, against the backdrop of falling inflation.

11. PRA Strategy 2024/25 Strategic Goals and Business Plan/Prioritisation

Sam Woods introduced the item. Court approved the strategy.

12. Court Effectiveness

Ron Kalifa introduced the item in his capacity as Senior Independent Director. Court reflected on the feedback that had been received from a range of stakeholders on the performance of Court. The overall conclusion was that Court continued to operate effectively. A couple of areas were proposed for increased focus recognising Court’s priorities for the coming 12 months.

13. Committee Appointments and Conflicts Update

(Sebastian Walsh)

The Secretary introduced the item.

Court approved the appointment of Shoib Khan as the Bank nominated member to the Pension Fund Trustee Board.

Court approved the appointment of Vicky Saporta as a Director of the Bank subsidiary companies Bank of England Asset Purchase Fund and Bank of England Alternative Lending Fund from 13 February 2024, and as Chair of both companies from 14 February 2024.

Court approved the unchanged membership of Financial Markets Infrastructure Committee, with Vicky Saporta remaining a member.

Court noted that Ruth Smith had been appointed as ED, Resolution.

Court approved a number of appointments to the EDMC.

Court Meeting – Continued 4 March 2024

14. Conflicts and Appointments

The Chair noted the appointment of Clare Lombardelli as Deputy Governor for Monetary Policy.

15. 2024/25 Investment Portfolio: Delivery of holistic portfolio management and the emerging 2024/25 Investment Portfolio

(Afua Kyei, Ed Moore and Jo Hill)

The Chair welcomed Jo Hill to her first Court meeting since taking up role of ED Change and Planning.

Jo Hill introduced the item to Court. She noted a major priority was to assess how best to sequence the new portfolio, based on resourcing, change capacity and dependencies particularly linked to critical technology enablers. She said her priority was to take a more thematic approach to investment to help Court see how different priorities link together. She also updated Court on progress in building her directorate and its capacity. The finalised plan would be brought to Court in May.

Diana Noble sought greater clarity regarding the role of Change and Planning relative to other directorates. Jo Hill explained some of the priorities for the directorate, including standardisation of approaches around investment and ensuring governance was effective, but noted it would be critical to avoid duplication of functions with other areas.

The Chair requested a heightened focus on benefit realisation with clear line of accountability established at the onset of projects.

Court agreed the shape of the investment portfolio and asked Jo Hill to put forward a standardised approach for engaging Court in future on projects.

16. 3-year Business Plans 2024/25 to 2026/27

(Afua Kyei, Ed Moore and Jo Hill)

Afua Kyei introduced the item, noting the challenge of hitting the 3-year target for cost growth whilst recognising the increased scope of the Bank, along with the need to support significant investment and associated ongoing costs to modernise the organisation. She also highlighted the upcoming end of the investment supporting the Strategic Priorities with the consequence that any ongoing costs will need to be accommodated within the business-as-usual cost base.

The Governor said there was a clear cost control challenge and finding opportunities to improve productivity and efficiency would be critically important. Headcount management would therefore be an important component, especially given the consequences of headcount expansion for the Central Services budget.

Diana Noble said that technology investment would be an important part of efficiencies in future years. The use of AI was another important example of this process.

The Chair noted that performance management and driving efficiency would be the focus of the coming away day.

The Chair concluded that this was vital to progress the focus on productivity given the pressures the Bank was under, with a real need for a systematic and strategic look at efficiency over time rather than purely in the context of meeting an annual budget.

17. Technology Modernisation Update

(Nathan Monk, Pete Townsend and Jo Hill)

Nathan Monk introduced the item.

In response to questions, Nathan Monk and Pete Townsend noted that there needed to be an uplift in organisational leadership in Technology to help drive progress, including the new Chief Technology Officer at Director level – and the Chief Information Officer roles for individual governorships. A very strong candidate pool had been identified and he was confident we could attract strong external talent to the roles. He highlighted the slowing technology talent market and the use of recruitment strategies.

Diana Noble welcomed the proactive, strategic approach to technology as outlined in the paper. She asked whether the change programme had increased attrition in Technology and the extent to which Technology was comfortable with its capability in managing vendors and suppliers.

Nathan Monk explained that with regard to sourcing there was a need to move from a tactical to a strategic approach based on a better understanding of aggregate demand, and this was under active discussion with the procurement team.

18. Future Data Systems (FDS) Programme

(James Benford and Martine Clark)

Martine Clarke explained the history and purpose of the FDS. She also invited views from Court on the structure of the programme.

Sam Woods noted that transforming data collection, a separate project, was an important priority. James Benford stressed this was an enterprise-wide piece of work that could help the Bank’s entire business, for example the Bank’s post-Bernanke review and response.

Court approved the Programme.

19. Governor’s Objectives

The Chair asked Court to consider the Governor’s objectives.

Court approved the Governor’s objectives and requested Deputy Governors consider them in setting objectives for their areas.

20. Papers for Information

Court noted:

• Monetary Policy Committee Report
• Deputy Governors / COO Objectives

The meeting of Court was closed.