Recommendation 7

HM Government · verbatim extract Acknowledged

NEBMs are not bestowed with any formal powers. They are able to recommend the removal of a Permanent Secretary from their post, where all other options have been explored first. NEBMs follow and abide by the Seven Principles of Public Life. In doing so they ‘‘must act and take decisions impartially, fairly and on merit, using the best evidence and without discrimination or bias’. The Committee recommends that the Corporate Governance Code is updated to reinstate the “independence” of non-executive board members, which was removed from the 2011 and 2017 editions of the Code. The updated Code should outline the expectation that Secretaries of State should avoid appointing individuals with clear political or personal connections, including former or current Special Advisers, serving Members of Parliament or Peers, to NED roles. In the event that any are appointed, there should be a clear justification for doing so in the governance statements of departments’ annual report and accounts. (Paragraph 39) Within the current NEBM cadre, there are no current Special Advisers. There is no intention for this position to alter, given serving Special Advisers are civil servants. However, as stated above, 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. A former Special Adviser who has also pursued a varied career can be a valuable and independent contributor to a departmental board. Again, it is not clear why former Special Advisers could not serve, but a former Member of Parliament could. There are no serving MPs within the NEBM cadre. The House of Commons Disqualification Act 1975 also restricts MPs being members of certain public bodies, as set out in the Act. The Code of Conduct for Board Members of Public Bodies does not provide a prohibition otherwise, but requires that Board Members must not be ‘embroiled in matters of political controversy’. There are six serving Peers within the current NEBM cadre. The appointment term of one individual will end in September 2023. As stated above, we do not agree that there should be restrictions on members of the House of Lords holding a public appointment. The Corporate Governance Code for Central Government Departments states that non-executive board members will be primarily from the commercial private sector and the Committee recognises the value individuals with this experience can bring to departmental boards. However, written evidence from Government departments suggests that skills and experience across a range of sectors are deemed valuable, depending on the needs of the department. Therefore, we do not feel that commercial experience should take such priority, particularly if there is a risk this could limit the diversity of applicants. (Paragraph 40) The current NEBM cadre contains experience from highly varied organisations, such as: Mastercard, Alzheimer Society, Deliveroo, British Heart Foundation, Burberry, Rolls-Royce, Mitie, Virgin Media and Centrica. A number of NEBMs are leading practitioners in senior corporate roles such as Directors, Chief Executive Officers, Partners, HR Directors and senior digital experts. Our data shows that NEBMs experience spans a wide range of sectors which includes commercial experience: Charity 48% Government (central) 47% Financial and Insurance Activities 45% Technology 32% Retail 28% Consumer Goods & Services: Consumer services 25% Professional and business services: Management consulting 25% Arts, Entertainment and Recreation 22% Education 22% Health and Social Work Activities 22% Media 22% Consumer Goods & Services: Consumer non-durables 20% Online Retail 20% Government (other) 18% Information and Communication 18% When considering new appointments, departments examine the results and skills needs identified in their board effectiveness reviews. This process helps to identify where there are any gaps in skills and experience and new appointments can be made taking this into account. This will ensure that departments have the right people around the table so that the board as a whole is functioning optimally and equipped to respond to the needs and priorities of the department. However, the benefits of commercial experience being strongly represented at Board level we believe to be very apparent. We recommend that the Corporate Governance Code is updated to include a standard set of skills and qualities which are deemed desirable to undertake the role of a departmental NED or Lead NED, rather than express a preference for individuals from specific sectors. This would not preclude further specific expertise being outlined in job advertisements, but would seek to provide more clarity, transparency, and accountability on what skills and experience are relevant for the specific role. (Paragraph 41) The Secretary of State needs to consider (having taken advice) what combination of specific