Tigger, I think we probably all realise now that banks dont have huge amounts of cash around to lend yto us consumers. Instead, they borrow it themselves.
The rate at which banks borrow money (which they then lend you) is not the same as the Bank of England rate - they have their own money market rates (wholesale, if you like).
So, a Bank's decision to cut rates will be more dependant on the LIBOR rate than the BoE rate. Although historically close, the LIBOR rate is a fair bit higher than the BoE rate (and that was before yesterdays slash). So, if they were to pass on the rate cuts immediately the Bank would be paying a higher interest rate than you would be and they would be making a loss.
Try this:
http://www.telegraph.co.uk/finance/personalfin ance/borrowing/mortgages/3386953/Lenders-faili ng-to-pass-on-rate-cuts-are-not-profiteering.h tml