Equality and Human Rights Commission - Public Accounts Committee Contents

Conclusions and recommendations

1.  Delays in appointing key staff meant that the Equality and Human Rights Commission was not ready for business on 1 October 2007. Fifteen out of 25 Directors had yet to be appointed and the team put in place to manage the start up did not have the right balance of skills for the job. When new bodies are set up the Government should ensure that a comprehensive project plan is in place from the very start, which identifies when key staff need to be appointed and what skills they should have.

2.  Three changes in sponsor departments in the months immediately before the launch undermined Departmental leadership and led to a lack of continuity in Departmental guidance. When machinery of government changes are being planned, Departments must undertake a thorough evaluation of the risks that would arise from changing governance arrangements for high risk projects. Sponsorship for sensitive and time-critical projects should not be transferred to a new Department where there is a risk that transferring responsibility would undermine the success of the project.

3.  Problems with the start-up were exacerbated because the Commission did not delay its launch date, even though its business plan, job descriptions and the allocation of staff to roles had not been finalised. The Commission now acknowledges that its launch date should have been delayed. When new bodies are being set up, management and the sponsor department should take an objective view of how ready the entity is to take on its functions. Accounting Officers should flag up clearly where there is a risk that pressure to adhere to an unrealistic start date will result in poor value for money, and should be prepared to seek an Accounting Officer Direction where necessary.

4.  The Board did not effectively oversee or scrutinise the set-up process or management's decisions. The Chair of the Commission should have ensured that the Board more closely reviewed and scrutinised the progress in setting up the Commission, particularly in the period before the Chief Executive was appointed. The Board should have challenged management's proposals more robustly and should have been more proactive in holding management to account. The Commission's Board should clarify the respective roles of the Board and the management team and be proactive in seeking evidence to satisfy itself that management have processes in place to effectively deliver their responsibilities.

5.  We are surprised and concerned that the process of setting up the Commission cost over £38.8m. This Committee has commented previously on problems with set-up of new bodies, most recently in our report on HM Revenue and Customs Prosecution Office. HM Treasury should draw up best practice guidelines for the creation of future public sector bodies. The guidelines should highlight the common risks and the steps which should be taken to mitigate those risks, and provide benchmarks for the reasonable cost of a merger.

6.  Staff with valuable skills were allowed to leave the Legacy Commissions through an early exit scheme and then had to be re hired by the new Commission at a cost of £338,708. The Commission had no control over who left through the scheme. The Treasury and the Cabinet Office should ensure that they provide clear guidelines on the need to consider the retention of key skills when devising early exit schemes and on who should be responsible in such circumstances for designing schemes and communicating with the staff affected.

7.  The Comptroller and Auditor General qualified the Commission's accounts for 2006-08 because it did not follow proper process in re-engaging former staff as consultants. The Commission did not understand what needed to be included in the business case, did not hold an open competition for the appointment of the consultants, and did not obtain formal approval before the consultants started work. The Department should issue clear guidelines to the Commission on how future business cases should demonstrate the achievement of value for money. The Department should also clarify with the Commission at what point it expects to be brought into these decisions, especially where prior approval from the Treasury is required before action can be taken.

8.  Serious weaknesses in the Commission's controls have continued beyond the period covered by the 2006-08 Accounts. The late disclosure of an additional £15,000 paid to one of the re-engaged consultants and the breaches of the Commission's pay remit and staff complement show that the Commission's controls over staff costs remain weak. We welcome the Accounting Officer's assertion that stronger controls are now in place. The Department and the Accounting Officer must ensure that the Commission follows proper procedures with regard to the management and use of public money in future.

9.  The Commission has not had a permanent Chief Executive since May 2009. An interim Director General has been in post since May 2009 and is paid at a daily rate of £1,000 (excluding VAT), which will have cost a total of £138,000 (excluding VAT) by the end of January 2010. A new Chief Executive will need to tackle the continuing weaknesses in the Commission's controls. The Commission, with the agreement of the Department, should seek to appoint a permanent Chief Executive as soon as possible, having followed a rigorous competitive appointment process designed to ensure the appointment of the best-equipped candidate.

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