Bank of England needs 'cost-conscious culture' - spending watchdog

The Bank of England (BoE (Shenzhen: 000725.SZ - news) ) must "embrace a more cost-conscious culture" if it is to meet obligations to rein in poor spending practices, according to the National Audit Office (NAO).

The public spending watchdog launched the broadside at 'The Old Lady of Threadneedle Street' - as the Bank is affectionately known - at a time when the BoE is attempting to mend its ways following criticism over its costs.

The NAO inquiry identified a series of issues including purchases worth millions of pounds being made without procedures being followed, 800 desks sitting empty and 700 job titles among its 4,300 staff adding to complexity in its functions.

It said that in 2017 alone, 200 purchases - mostly IT related and worth more than £25,000 each - were made without staff consulting the Bank's central procurement team.

The NAO said the Bank would need to "transform" the way it operates the central services function to continue meeting its self-imposed target to cap annual costs at £476m.

Total (LSE: 524773.L - news) spending had increased from £535m in 2014/15 to £647m by 2017/18 as the BoE's responsibilities expanded under the tenure of governor Mark Carney.

NAO chief Amyas Morse 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 Bank has made a series of promises since 2017 to bring down costs.

The most recent was an overhaul of its expenses policy after MPs (BSE: MPSLTD.BO - news) slammed "staggering" costs including more than £11,000 spent on one flight and a bill of over £100,000 for a summer party.

In its response to the NAO study the BoE said it was on track to meet its budget target this year.

Chief (Taiwan OTC: 3345.TWO - news) operating officer Joanna Place said: "As a result of a great deal of hard work and commitment from colleagues, we have held our budget flat for the current financial year and aim to do so in the medium-term.

"This is despite the additional demands placed on us as a result of the UK preparing to leave the European Union."

She (Munich: SOQ.MU - news) added: "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."