Source · Select Committees · Public Accounts Committee
Recommendation 3
3
Accepted
Publish comprehensive data on non-executive directors, panel diversity, and independence standards.
Conclusion
The Cabinet Office does not publish transparent information about NEDs, the diversity of panels who select them, or the requirements for independence in these roles. The Cabinet Office publishes an annual report on regulated public appointments, of which there were 4,476 in post as of March 2022. However, this report does not break the data down by role so we do not know how many of those appointments are NEDs as opposed to other types of public appointment. Furthermore, the Cabinet Office does not collect or publish any data on either unregulated public appointments (an unknown number of which are NEDs) or about those who serve on Advisory Assessment Panels (which interview applicants and produce a list of appointable candidates, such as their diversity characteristics). Advisory Assessment Panels are required to include independent panel members, with some “significant appointments” requiring a “senior independent panel member”. The Cabinet Office has not set out what determines a suitable level of political independence for NEDs, independent members, or senior independent panel members. It says that around 3% of all regulated appointments have declared a political interest, but it relies on self-declaration by candidates of, for example, conflicts of interest or donations to political parties. Recommendation 3: The Cabinet Office should: a) Include data in its annual public appointments data report about numbers and diversity of: Ȥ non-executive directors specifically; and Ȥ unregulated public appointments. b) Centrally collect data about those who serve on Advisory Assessment Panels, including diversity data, and publish the aggregate data at least annually. c) Set out clearly the standards of independence expected of non-executive directors, independent panel members, and senior independent panel members, including what matters must be registered.
Government Response Summary
The government states it considers current processes for integrity and independence, governed by existing codes and principles, to be rigorous and therefore does not deem further guidance or process necessary. They also disagree with a separate recommendation regarding consulting the Commissioner on unregulated appointments.
Government Response
Accepted
HM Government
Accepted
The government agrees with the Committee’s recommendation. Recommendation implemented The government agrees with the Committee’s recommendation that all published guidance on public appointments should be very clear on the expectations placed on all those directly involved in the public appointments process, whether as prospective candidates, those newly appointed to roles or those involved in appointment process. These expectations should stress the integrity, and where appropriate independence, of all involved. All appointees are governed by the Seven Principles of Public Life and the rules on political activity and impartiality set out in the Code of Conduct for Board Members of Public Bodies. Each department or arm’s length body will also develop their own policies on impartiality and independence which will align with the Code. The Governance Code on Public Appointments supports the Code of Conduct. It clearly sets out a comprehensive set of principles governing the process and goes into some detail on the roles and responsibilities of key participants (including ministers, the Commissioner, departments and independent panel members). It also clarifies the extent of allowable political activity, including that political activity should not affect any judgement of merit nor be a bar to appointment, nor should it be a bar to being an independent panel member on an assessment panel (though it does require the public disclosure of political activity within the last five years). Senior Independent Panel Members are governed by a stricter regime - they should be independent of the department and/or body concerned and should not be currently politically active (which the Governance Code defines). The government considers the current processes rigorous on these issues, and does not therefore consider further guidance or process necessary, and therefore considers this of the “Governance Code on Public Appointments” that apply when Ministers appoint a non-executive director without competition should apply to both regulated and unregulated appointments. 7.1 The government disagrees with the Committee’s recommendation. 7.2 While the government agrees that there should be transparency around the process of any appointment it makes, in this case the government disagrees with the Committee’s specific recommendation. This would require ministers to consult the Commissioner for Public Appointments on appointments over which he has no remit, given that they are unregulated.