Carney Told to Be Ruthless in Pushing Through BOE OverhaulBy
Bank was advised that workers blocking reforms may need to go
Governor’s new organizational shakeup to begin within weeks
Mark Carney is being advised to be ruthless with Bank of England staff who hold up internal reforms as he finalizes the central bank’s new three-year strategic plan.
The BOE’s overhaul, called Vision 2020, will focus on the BOE’s communications, workflow and collaboration. The program is due to be launched later this month and will seek to encourage employees to share ideas with each other and talk directly with policy makers.
“It was accepted that to make the internal changes happen, in communication and management, it would require changes in behavior that would need to be ruthlessly imposed and would probably require external support,” the BOE’s Court of Directors, its governing body, said in the minutes of a meeting in February published on Wednesday.
In 2014, Carney pushed through a McKinsey & Co.-assisted shakeup that fused departments, created a new management layer, and integrated a vastly expanded set of policy functions. The BOE has since reallocated staff to handle the extra burden related to Brexit and officials warned the additional work is making it harder to meet financial targets.
As Carney finishes drawing up the latest revamp, his previous program is being scrutinized by the the U.K.’s independent public-spending watchdog, the National Audit Office. The preliminary conclusions inform the new overhaul.
Amyas Morse, the watchdog’s comptroller and auditor general who was present at the Feb. 7 meeting of the Court, told officials that there would be setbacks as institutional change was "a long process and often required the departure of those blocking reforms."
In terms of external communications, the central bank will seek to talk to a wider audience with a more interactive approach, the minutes said. After the BOE was criticized for its forecasts ahead of the European Union referendum last year, Brexit will continue to be one of the main challenges, officials said.
“Politics were polarized at present and the bank should not be seeking a high profile, even though given its remit it would at times be thrust into events,” the minutes said. Carney told Court that it would be key for the BOE to always “do the right thing and always to explain why.”
The minutes also showed work related to Brexit had boosted costs, at at time when lower interest rates were reducing projected income. A plan to find cuts of 20 million pounds ($25.9 million) “would require tight controls on direct spending and the achievement of planned savings from headcount control and the remuneration strategy,” officials said.
The BOE’s new strategic program will extend one year after Carney plans to step down as governor. His first overhaul was led by former Chief Operating Officer Charlotte Hogg, who quit as deputy governor for markets and banking in March after she failed to disclose that her brother works for a bank she would help to regulate.
In separate minutes of a call at the time of her resignation that were also published on Wednesday, Court officials said the departure of Hogg, who would have also overseen the new program, "came at a critical time and represented a material loss to the management of the bank."