Minutes of the Meeting of the Court of Directors held on 22 May 2024

1. Enforcement Decision Making Committee (EDMC) – Report to Court

(Sir William Blair, Duncan Cromarty and David Friar)

The Chair welcomed William Blair to the meeting and thanked him for his leadership of the EDMC.

William Blair updated Court on the EDMC’s activities over the past year. The EDMC had recruited three new Members to the Committee since the last update to Court. He noted that the expansion of the Bank’s statutory responsibilities as a result of the Financial Services and Markets Act (2023) was likely to increase the workload of the EMDC, notably to include Financial Markets Infrastructures.

William Blair also informed Court that the EDMC had been working with the PRA on how to expedite settlements. Court discussed the importance of firms understanding this option was available. He added that the Terms of Reference of the EDMC had been updated for the first time since establishment in 2018, to incorporate a pause in EDMC proceedings to allow for settlement arrangements.

In response to questions, it was clarified that the EDMC would have nine Members for a period of time before falling to six. The Chair observed that the membership of the EDMC was balanced and that the new Members brought valuable, broad skills to the Committee.

2. Conflicts, Minutes and Matters Arising

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

The minutes of the meeting held on 11 April 2024 were approved.

Sebastian Walsh notified Court that the next release of historic Court Minutes would be published alongside the Minutes of this meeting.

The Chair invited comments on Court’s forward agenda. Diana Noble asked that the Communications directorate return to Court following communication of the Bank’s pension review proposals, to inform Court regarding staff views.

The Chair also expressed his thanks to Ben Broadbent, who was attending his final meeting of Court, for his service to the Bank and the United Kingdom.

3. Governor’s Update

The Governor noted the latest fall in inflation, and observed there would be a number of data releases prior to the next MPC decision. He noted that ongoing challenges surrounding the production of labour force data by the ONS continued to pose a major difficulty for the MPC, but that agency intelligence indicated that while pay settlements remained elevated firms were not now passing as much of those costs through to customers.

The Governor reflected on the Bernanke Review and its importance, noting to Court that the immediate priority for the Bank would be making progress in updating FAME and accompanying systems, where work was under way.

The Governor noted that Liz Oakes – recently appointed as an external member to the FPC – had appeared before the Treasury Select Committee (TSC). The Chair of the TSC had written to the Governor to express concerns about the appointment process, with particular regard to how recusals were applied should an appointee have a real or perceived conflict of interest. He had replied to the TSC outlining the rigour of the Bank’s process.

4. Audit and Risk Committee (ARCo) Update

Jonathan Bewes updated Court on the work of ARCo, which had met on 13 May.

ARCo had been updated on progress being made with regards to the Bank’s five-year capital review, undertaken in consultation with HMT.

ARCo had also been updated on the RTGS Renewal Programme, and the Bank’s Cloud Strategy. ARCo agreed with the assessment that Cloud was a vital part of the Bank’s developing technology strategy.

ARCo had been updated on the work of the Change and Planning directorate and had recommended the team focus on increasing assurance and support around high-impact programmes.

ARCo had considered the Bank’s Annual Report and Accounts. Jonathan Bewes was content to recommend to Court that the Bank’s Annual Reports and Accounts should be prepared on a going concern basis and that they would be fair, balanced and understandable.

ARCo was presented with a draft of the Bank’s Climate Change disclosures.

Jonathan Bewes noted that the Bank’s Auditors – the NAO and KPMG – had made good progress with their audits and had not identified any material points of concern.

5. Remuneration Committee (RemCo) Update

Diana Noble updated Court on the work of RemCo, which met on 24 April.

RemCo had discussed the Bank’s plans for its Leeds presence.

RemCo had considered the Remuneration Report within the Bank’s Annual Report and Accounts, as well as the Gender Pay Gap.

RemCo had also approved the arrangements for the end of Ben Broadbent’s term as Deputy Governor.

6. Chief Operating Officer Update

Ben Stimson updated Court on progress in the transformation of Central Services, reflecting on the appointment of a new leadership team. He noted key priorities in the coming months included the pensions review and the Bank’s development of its Leeds operation.

In line with the discussion at the previous ARCo, Court discussed the increasing number of new recruits to the Bank over the past two years. Court requested an analysis of the experience of external recruits in the second half of the year.

Turning to investment planning, Ben Stimson noted that demand had exceeded supply, as Jo Hill would outline during the next item. Court members observed the Bank’s new Strategic Priorities, in development, must shape decisions.

Ron Kalifa asked that Court be given more information on the framework used to make investment decisions in due course.

Ben Stimson turned to items coming for approval.

Technology Support Services Framework

Court approved the framework, which supported the Bank’s ability to procure third party technology services. Ben Stimson set out that should the framework be utilised; individual contracts would be subject to the Bank’s usual governance processes.

Microsoft Enterprise Agreement

Court approved the item.

7. Investment Portfolio Update

(Jo Hill)

Jo Hill updated Court on work to refine and harmonise the Bank’s investment and change portfolio. Jo Hill said that, while demand continued to exceed available funding, good progress had been made to enhance how programmes are overseen. She also updated Court on the development of her directorate.

Dave Ramsden and Sarah Breeden welcomed the positive cultural change that was emerging around the investment challenge faced across the Bank, with better understanding of dependencies across the organisation.

Court members raised the RTGS Programme and Finance Modernisation Projects as examples where major projects – and decisions taken regarding them – would have substantial implications for decision-making elsewhere in the Bank’s investment portfolio.

The Chair thanked Jo Hill for her work to establish the Change and Planning directorate and recommended that the Bank maintains its focus on scoping programmes effectively, measuring and tracking outputs and associated financial and non-financial benefits.

8. The Bank’s Finances

(Afua Kyei and Kristy Eden-Green)

Afua Kyei introduced the item, noting that the previous financial year had closed with the Bank in a better position that had been forecast.

In response to questions, it was clarified that the Bank had not forecast costs to implement a Central Bank Digital Currency (CBDC), as a final policy decision had not been taken on this work.

Court discussed how the Bank intended to balance spending between the three principal areas where a need for investment was needed: Data, Technology and Property.

The Chair asked the Secretary to schedule a discussion of the Bank’s emerging thinking on the forthcoming 3-year plan including investment prioritisation, proposed run cost development, including proposed approach to efficiency, and high-level options for budget allocations. Court would consider this prior to the final budget guidance being communicated to the Bank towards the end of the year.

Court approved the Bank’s final Budget for the Financial Year 2024/25.

9. Bank of England Annual Report and Accounts

(James Bell, Jessica Beynon, Afua Kyei, Matt Cartledge, Aarti Sharma, Chris Peacock, Richard Faulkner, Ryno Swart – KPMG, Josh Simons, Caspar Siegert and Andrea Rosen)

Afua Kyei set out that ARCo had considered the draft Bank of England Annual Report and Accounts on 13 May, noting that the Bank had reached agreement on all questions posed by KPMG.

Court agreed to delegate approval of the Bank’s Annual Report and Accounts to the Signing Committee.

Court agreed that the Bank’s Annual Report and Accounts should be prepared on a going concern basis.

Court agreed to delegate the signing of the Letter of Representation to David Roberts.

The Chair thanked Finance colleagues involved in the preparation of the Bank’s Annual Report and Accounts.

Court commended KPMG for their services to the Bank, during their time as external auditor of the Bank of England.

The Bank of England’s Climate Disclosures

Josh Simons introduced the item, outlining the Bank’s methodology in calculating its emissions footprint.

Court members noted the important engagement on this subject the Bank had with other central banks.

Court agreed to delegate approval of the Bank’s Climate Disclosures to the Bank’s COO, CFO and Executive Director for International.

The Sterling Monetary Framework (SMF) Annual Report

Andrea Rosen introduced the report.

Court discussed and approved the report. Court also noted that it had received the PRA, BEAPFF and BEALF Annual Reports for information.

10. A 3-year plan to modernise Data and Analytics in the Bank

(James Benford)

James Benford introduced the item and set out progress made since the last update to Court.

Anne Glover and Ron Kalifa offered a number of reflections on work undertaken to date. They noted that while good progress had been made, more could be done to encourage idea generation for the use of Data and Analytics at the Bank. Governors noted that experimentation and ideas generation was happening across the Bank at working level but agreed that more could be done to promote and prioritise this.

Anne Glover and Ron Kalifa suggested that more could be done to highlight the costs and benefits of the programme as well as the dynamics of its work in practice.

Court observed that the enterprise approach being deployed was working and was beneficial for the Bank as a whole. This approach addressed a previous gap of collective oversight and leadership of Data and Analytics at the Bank and was seen to be having an effect on wider work to improve the Bank’s approach to project management.

Court agreed to delegate approval of the external publication of the Bank’s Data and Analytics Strategy to the Governor, the Chair, Ron Kalifa and Anne Glover.

Court requested a further update on the topic at its October meeting, which should be focussed on the topic of experimentation and the future operating model for Data and Analytics across the Bank.

11. Committee Appointments and Conflicts

(Sebastian Walsh)

Sebastian Walsh noted that since the last meeting of Court, Liz Oakes – recently appointed to the FPC – had undertaken her pre-appointment hearing with the Treasury Select Committee.

12. IEO Evaluation of the PRA’s secondary growth and competitiveness objective (SCGO)

(Melissa Davey, Dan Georgescu and David Bailey)

Melissa Davey introduced the item and gave an overview of the review and methodology.

Sam Woods welcomed the IEO’s review and noted its importance, coming shortly after the introduction of this secondary objective. He also informed Court that he was considering giving a speech following the publication of the IEO report, to serve as part of the Bank’s response.

The Governor and Chair agreed it was important that the Bank responds closely and directly to the points made in the IEO review.

Non-executive members of Court said it would be important to demonstrate that the PRA was working differently in some ways, in response to this objective.

The Chair concluded the discussion by noting the importance of the Bank not being the victim of an expectation gap regarding this objective.

Court agreed to delegate approval for the publication of the report to the Chair, the Governor and Deputy Governor for Prudential Regulation.

13. Chair’s effectiveness review of the MPC

The Chair updated Court on the outcome of his annual effectiveness review of the MPC. All Members of the MPC recognised the critical importance of Dr Ben Bernanke’s review and emphasised that the Bank should continue to prioritise its efforts to increase its technology and data capabilities.

The MPC considered the quality of papers and staff analysis to be good.

The Governor welcomed the review, noting the themes from the Chair’s effectiveness review were aligned to that of Dr Ben Bernanke’s review.

14. Support for Monetary Policy: Annual Report to Court 2023/24

(Fergal Shortall and Alan Castle)

Court assessed whether the MPC were in receipt of adequate sectoral and regional data. Court noted the critical role of the Bank’s Agents in delivering this data and observed that MPC members had taken part in a high number of regional visits over the course of the last year. Court confirmed its support for the MPC in this regard.

Court highlighted the importance of this work in the context of the Bank’s wider location strategy.

15. Papers for Information

Court noted:

• Monetary Policy Committee Report
• RTGS Programme Renewal Update
• PRA Annual Report
• BEAPFF Annual Report and Accounts
• BEALF Annual Report and Accounts

The meeting of Court was closed.