The Bank of England is closing its cash distribution centre in Leeds while planning to establish a new northern hub in the city as part of a move to bolster its regional presence around the UK.
The central bank is responding to two trends that have become ever clearer since the start of the pandemic: the declining role of cash in transactions and the shift to remote and hybrid working.
The BoE said on Thursday that lower use of cash in payments, together with the introduction of polymer banknotes, would cut demand for its distribution, which could be met from its main cash centre in Debden, Essex.
It said it would close its Leeds centre when the lease expires in 2023, affecting 34 staff, and had begun a consultation with the Unite union.
However, the BoE — often accused of taking too London-centric a view of the UK economy — is also playing its part in the government’s levelling-up agenda. It also announced a review of its geographic footprint aiming to “significantly increase its staff presence” across the UK.
This includes establishing a new hub in Leeds, where the BoE has operations dating back to 1827, while also bolstering the network of offices used by its agents in 10 cities around the UK.
The BoE said a “substantial” number of staff would be likely to move, including senior officials. It was also expecting a switch to a more flexible model of working for all staff, with employees given greater freedom “about when, where and how they work”.
Monetary policymakers have voiced some doubts about the effects of exclusive homeworking on productivity, with Andy Haldane, the BoE’s chief economist, pointing to “creative sparks being dampened” and “social capital being depleted” by the loss of informal, face to face contacts.
But Andrew Bailey, BoE governor, said that as “the country begins to open up again, it is more important than ever to think about what our future working arrangements look like. This includes the options for working more remotely and how we can gain better insights into the country and the people we serve.”
The geographic review comes as some of the institutions the central bank oversees have started to move more operations out of London. Last week, Goldman Sachs said it would open a technology centre in Birmingham, while Santander is moving its headquarters to Milton Keynes. Other banks, such as Nationwide, have started to embrace remote working.
Before the 2019 election, John McDonnell, then shadow chancellor, proposed moving parts of the BoE to Birmingham as part of an “economic policy hub” designed to spread investment more evenly across the country.
Rishi Sunak, the chancellor, is overseeing the move of part of the Treasury to a new northern campus in Darlington, while the UK’s new Infrastructure Investment Bank will be based in Leeds.
“We are committed to how we can best serve, and represent, all the people in the UK. Our physical presence in locations across the country is a critical part of that,” said Jo Place, the BoE’s chief operating officer.