Source · Select Committees · Public Administration and Constitutional Affairs Committee
Seventh Report - The Role of Non-Executive Directors in Government
Public Administration and Constitutional Affairs Committee
HC 318
Published 20 June 2023
Recommendations
2
Rejected
Para 19
Update or replace the Corporate Governance Code to define non-executive directors' comprehensive roles.
Recommendation
The Corporate Governance Code is not fit-for-purpose as the main guidance document for NEDs, given it does not encompass all of their work in Government. It should be updated or replaced by the end of the calendar year to set …
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Government Response Summary
The government rejects the recommendation that the Corporate Governance Code is not fit-for-purpose, stating it will only consider updates while prioritizing departmental flexibility rather than a prescriptive new document.
6
Rejected
Para 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 …
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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.
8
Rejected
Para 39
Update the Corporate Governance Code to reinstate non-executive board member independence and restrict politically connected appointments.
Recommendation
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 …
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Government Response Summary
The government rejects the recommendation to reinstate 'independence' and avoid appointing individuals with political connections, arguing that such exclusions are not aligned with existing codes or are inappropriate for former Special Advisers and serving Peers.
9
Rejected
Para 40
Prioritising commercial experience for Non-Executive Director roles risks limiting applicant diversity.
Recommendation
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 …
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Government Response Summary
The government rejected the recommendation to reduce the priority of commercial experience, arguing that while the current NEBM cadre includes diverse experience, the benefits of strong commercial representation on boards are very apparent.
19
Rejected
Para 69
Mandate the Government Lead Non-Executive to monitor compliance with the Corporate Governance Code
Recommendation
The Committee is concerned by the variability in board performance, the differing commitment of Secretaries of State in engaging with departmental boards, and examples of non-compliance with the Corporate Governance Code which are not being reported in departments’ annual reports …
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Government Response Summary
The government rejected the recommendation, stating that compliance monitoring lies with Principal Accounting Officers and it would be unhelpful for the Government Lead Non-Executive to intervene in a monitoring or enforcement role.
27
Rejected
Subject future Government Lead Non-Executive candidates to pre-appointment hearings with the Committee.
Recommendation
We recommend that future candidates to the role of Government Lead Non-Executive should be subject to a pre-appointment hearing by the Public Administration and Constitutional Affairs Committee. We also recommend that, as has been practice in the past, the Government …
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Government Response Summary
The government rejects the recommendation for the Government Lead Non-Executive to be subject to pre-appointment hearings, stating the role does not meet the necessary criteria for such scrutiny.