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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