Source · Select Committees · Public Administration and Constitutional Affairs Committee
Recommendation 11
11
Accepted
Paragraph: 50
Inconsistent, opaque, and unaccountable recruitment processes for departmental Non-Executive Directors are unsatisfactory.
Conclusion
The Corporate Governance Code stipulates that non-executive board members should be appointed on merit through a fair and open process. The current Government Lead Non-Executive told the Committee that a small proportion of NEDs currently in post have been directly appointed and, since he took on the The Role of Non-Executive Directors in Government 35 role in March 2022, every post had been advertised on the Cabinet Office public appointments website. However, our evidence suggests that these practices have varied considerably over time and the Committee is concerned by the lack of consistency, accountability, and transparency surrounding how NEDs are recruited. We believe it is completely unsatisfactory that departments are not consistently providing information in the public domain about the process for appointing NEDs, nor abiding by the requirement to justify departures from the Corporate Governance Code in departments’ annual report and accounts. The Committee also recognises the potential impact that departing from a fair and open process may have on the diversity of the candidates and the composition of the board.
Government response summary AI-generated
The government states that all NEBM appointments now comply with the Governance Code, ensuring transparency and consistency through public appointment processes. They agree that Code departures should be reported and will consider summarising these in the Government Lead Non-Executive's annual report.
Summary of the government's response below — read the verbatim text to verify.
Paragraph Reference:
50
Government Response
Accepted
HM Government · verbatim extract
Accepted
All NEBM appointments are now regulated and all processes will comply with the Governance Code. This will include consulting the Commissioner and declaring any direct appointments. The Public Appointments website sets out the recruitment process for every advertised role. This information is in the public domain, is transparent and consistent. Paragraph 45 of the Committee’s report infers that 14 NEBMs who responded to the survey were appointed to their roles without being subject to a fair and open recruitment process (also see response to point 6). However, there are currently 11 NEBMs directly appointed, from the current cadre of 94 departmental Non-Executive Board Members. Of these, 7 are NEBM’s for the Department of Science, Innovation and Technology and were directly appointed, on an interim basis following establishment of the new department, pending a fair and open recruitment process for permanent appointees. We agree that any departures from the Corporate Governance Code should be reported in the annual report and accounts for the respective department. We will also consider summarising any code departures within the annual report of the Government Lead Non-Executive. The Government Lead Non-Executive should ensure that every department is fully transparent about the recruitment process for its NEDs and that all departures from the Corporate Governance Code are justified in the governance statements of departments’ annual report and accounts. The Government Lead Non-Executive should work with departments and Ministers to encourage and share best practice regarding the appointment of NEDs. Furthermore, to improve the transparency of appointments in the immediate term, the Committee recommends that all departments be required to publish a GOV.UK news story within four weeks of an appointment being made, detailing the recruitment process (including whether the job was publicly advertised), the selection process, and the appointees’ suitability for the role. (Paragraph 51) The governance statement of departmental annual report and accounts should disclose all departures from the Corporate Governance Code. Appointment announcements are made by the appointing department via their gov.uk page. The governance code requires announcement of appointments including declaring any political activity. All adverts must also be published on the Cabinet Office website and will set out the process including the criteria used, timeline, composition of the panel. Additionally, each year the governance statement of departmental annual report and accounts should disclose all departures from the Corporate Governance Code. The Cabinet Office should confirm in their response to this Report that the list of NEDs by department has been updated on GOV.UK, given this transparency data is now two years out of date. In addition to their names and department, we recommend that this list includes the year that the NEDs were appointed, and that the list is reviewed and updated at least annually. (Paragraph 52) The most recently published list of NEBMs was contained in the Government Lead Non Executive Annual Report. This was published on 10 May 2023 and was for the reporting period 1 April 2021 - 31 March 2022. One list has been produced per year in the interests of reducing duplication. Moving forwards, a summary list will continue to be included in the Government Lead Non Executive Annual Report. A supplementary list will also be published and updated twice annually.
Read the full response on Parliament ↗