Source · Select Committees · Public Administration and Constitutional Affairs Committee
Recommendation 6
6
Rejected
Paragraph: 37
Non-executive director appointments from within government undermine independence and public confidence.
Recommendation
The Corporate Governance Code says NEDs will be “experts from outside Government”. However, we have highlighted examples in this Report of individuals that appear to have been recruited to NED roles from within Government or through personal connections. This includes examples of NED roles being a stage in 34 The Role of Non-Executive Directors in Government the careers of some Special Advisers or Ministers, and certain NEDs moving across to new departments with their Secretaries of State after machinery of government changes. Whilst this may relate to a relatively small minority of individuals, we remain concerned by the impact this may have on the ability for NEDs to provide effective challenge to Ministers and departmental boards, and the perception of such appointments on the public’s confidence in NEDs. We strongly believe that there should be a clear separation between the role of political or personal advisers and that of objective non-executive board members. If NEDs do not bring to departments genuine experience from senior positions in large and complex organisations outside Government and can offer independent challenge to departments, we are unclear of their purpose at all.
Government Response Summary
The government largely rejected the concern about NEDs from within government or with political connections, asserting that previous political activity is not a bar to appointment and former civil servants or political advisers can bring advantageous experience, while stating it will continue to follow the Governance Code.
Paragraph Reference:
37
Government Response
Rejected
HM Government
Rejected
A small number of NEBMs may be appointed directly in cases where their skills and experience qualify them as a suitable candidate and matched the requirements of the Governance Code. There are currently 11 NEBMs directly appointed, from a cadre of 94 departmental Non-Executive Board Members. Of these, 7 are NEBMs for the Department of Science Innovation and Technology. This department was formed following the Machinery of Government announcement in February 2023. The department directly appointed 7 NEBMs, on an interim basis, pending a fair and open recruitment process for permanent appointees and to ensure that the department could be established with a functioning Board in place. The results of a survey of NEBMs (page 41, paragraph 8 - methods of approaching potential candidates) do not reflect the data on actual appointments and the wording of the question is open to wide interpretation. For example, in some cases departments use recruitment consultants who approach potential candidates and therefore may not have responded to a related advertisement. In such cases, applications and the usual appointment process and scrutiny is still followed. The wording of the Committee’s report has interpreted the responses to this question as a proxy for direct appointments, which is not the case. The Government has regulated NEBM appointments and these align with the approach for all other regulated appointments. The Governance Code for Public Appointments states that previous or current political activity is not a bar to appointment. Appointees are expected to abide by the general principles of the Code of Conduct and avoid engaging in political activity directly related to the work of the department which they support. An exclusion for former Special Advisers would not align with the Governance Code for Public Appointments, which states that previous or current political activity is not a bar to appointment. In post, Special Advisers are (temporary) civil servants. There is no inherent reason why any former civil servant should be barred from holding a public appointment at a point in the future. Past experience of government can clearly be advantageous, especially when combined with further voluntary or private sector experience. The same point would stand in relation to former Members of Parliament who may wish to contribute to public life. Similarly, being a member of the House of Lords should not be a bar. This has been the case under successive Administrations of all political colours. This is clearly set out in the Code of Conduct for Board Members of Public Bodies. We will continue to follow the Governance Code for Public Appointments and maintain a strong emphasis on the Nolan Principles and handling of conflicts of interest.