The Bank of England’s IT expenditure is far higher than central government departments as a result of its continued use of legacy systems and a high proportion of manual processes, a damning report has found.

The report, from parliament’s Public Accounts Committee, found that the bank’s technology operations and HR cost £101.4m and £15.8m respectively in 2017-18, meaning the government-owned institution had spent a third (33.6%) more on IT than other central government departments, and this is despite the bank claiming it has two major initiatives under way to modernise its central services and improve efficiencies.

"The Bank’s credibility is at risk if it is perceived as failing to keep its own house in order." Meg Hillier, chair of the PAC.

The PAC, which was able to delve into the Bank of England’s operations for the first time, said that the bank lacks a clear vision of the significant changes needed to modernise its ways of working. The bank believes it will deliver its change projects on time and that its central services will be smaller and more efficient, saving around £15m a year from 2020-21, but the PAC said it did not have an overarching strategy in place specifying what central services will look like in three or five years. It recommended that the bank should write to the PAC by June with these details, including how the services will integrate, and how they will be measured for effectiveness.

The PAC found that many of the bank’s processes were overly complicated, inefficient and very costly to administer, but there is potential for it to make savings in its systems and support by reducing its over reliance on legacy systems and manual processing. It is aiming to replace 25 central services systems with a single cloud-based system, which may help.

However, the rate of modernisation has lagged behind the UK public and private sectors. The PAC said that basic practices such as hot desking are not in place.

“The bank’s ICT systems are expensive and need updating, its procurement systems are not fit for purpose, there are too many job titles creating complexity and cost, and the estate is too large for its needs,” the PAC said.

“The bank has not routinely and systematically benchmarked the costs of its central services with the public and private sectors,” it added.

“While we are encouraged by the bank’s commitment to develop a clear vision, the devil is in the detail and we expect the bank to explain how it will ensure financial savings and other benefits are realised,” said Meg Hillier, chair of the PAC.

“We would also like clarity on the action it will take to meet its diversity targets, rationalise its property portfolio and modernise processes that are, in many cases, needlessly complex and costly.

“The Bank’s credibility is at risk if it is perceived as failing to keep its own house in order. As part of this transformation project, we urge it to aim for 100 per cent compliance with all its policies,” she said.