Source · Select Committees · Public Accounts Committee
Recommendation 15
15
Accepted
Explicit standards of independence for NEDs are lacking; political donations not tracked.
Recommendation
We questioned the witnesses about what standards of independence they would expect from NEDs, in particular how independent they should be from ministers with whom they will be working. The Cabinet Office told us that this is not set out explicitly and that it is a judgment call. It further clarified that “independence”, in this context, does not mean that they should be immune from politics, but it should be declared. The Cabinet Office told us that it relies on self-declaration. The Cabinet Office noted that about 3% of regulated public appointments have a declared political allegiance.25 We further questioned the witnesses about whether NEDs could be political donors. The Cabinet Office told us that appointees would be expected to declare donations above £5,000 (from 1 January 2024 the limit was set at £11,180).26 When we asked how many had done so, it told us that it did not track that information specifically. The Cabinet Office noted that public appointees are bound to follow the Code of Conduct for Board Members of Public Bodies and there is an expectation that they will abide by the Nolan principles.27
Government Response Summary
The government believes the current processes are rigorous and therefore does not consider further guidance or process necessary.
Government Response
Accepted
HM Government
Accepted
3c. PAC recommendation: The Cabinet Office should: • 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. 3.8 The government agrees with the Committee’s recommendation. Recommendation implemented 3.9 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. 3.10 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. 3.11 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). 3.12 The government considers the current processes rigorous on these issues, and does not therefore consider further guidance or process necessary, and therefore considers this