The Minister and the Official: The Fulcrum of Whitehall Effectiveness Contents

5Departmental Boards

94.Since the 1990s, government departments have had departmental boards that have included independent or non-executive members. These boards were first formally codified in 2005 and were typically chaired by permanent secretaries with non-executive members of the boards (non-executives) appointed by them.157 However, practice differed between various departments and agencies.

95.The Coalition Government enhanced the role of non-executives, placing a greater emphasis on their having commercial experience—the 2010 Ministerial Code was changed to stipulate that they should be “largely drawn from the commercial private sector”.158 Measures were introduced to standardise the role of departmental boards. The key components of this were:

Where permanent secretaries had been largely responsible for appointing the non-executives, this became the responsibility of the secretary of state.

96.The aim of these enhanced boards was to introduce best practice from the private sector in specific areas relating to operations rather than policy.160 Non-executives would provide scrutiny of, and advice on, progress towards fulfilling departmental goals.

Role of boards

97.Each departmental board is chaired by the secretary of state, and comprises equal numbers of ministers, officials and non-executive board members. Although the official guidance suggests that departmental boards provide “strategic leadership”, in reality, their role is advisory.161

98.Beyond their board membership, non-executives also often take on extra roles both within departments and also across government. In his 2016–17 annual report, Sir Ian Cheshire, the current Government lead non-executive highlighted some examples:

99.Each departmental board has a lead non-executive board member, who has additional responsibilities in supporting the secretary of state in his or her role as chair of the board.163 Departmental lead non-executives should meet regularly with other non-executive board members to ensure their views are understood and that the secretary of state is made aware of any concerns and they should also liaise with the Government Lead Non-Executive. The Prime Minister is responsible for appointing the Government Lead Non-Executive. The Government Lead Non-Executive meets regularly with departmental lead non-executives and feeds their views back to the Prime Minister and Cabinet Office. The Government’s lead non-executive, Sir Ian Cheshire, described his role thus:

My role, as lead of the network of over 80 non-executives, is to ensure we continue to offer stability and useful advice and challenge to departments at this time of national change.164

100.The Government Lead Non-Executive also reports to Parliament through an annual report to this Committee. This report should include the key concerns of the non-executive board member network and provide feedback on policy implementation. It also collates examples of best practice in the work of boards and non-executive board members.165

Board effectiveness

101.The emphasis given to boards varies between departments. There is, for example, a significant variation in the number of times boards meet. They are expected to meet a minimum of four times a year and though most met that threshold, a substantial minority did not.

102.Overall attendance at board meetings was 81% but it varied across different categories of attendees.

Cabinet Office Government Lead Non-Executive Annual Report 2016 to 2017 15 November 2017, p.5–6

103.The evidence we received suggested that, currently, boards are not effective. Professor Kakabadse said that “Except in a few cases, the emergent view is that boards deliver little value”.166 Professor Hazell, UCL, agreed, saying “Few Whitehall boards are said to be working well”, whilst the BGI said that there is “little evidence that Departmental Boards generally are fulfilling the prospectus offered at the time of their reform under the coalition government”.167

104.Professor Kakabadse blamed the poor chairing skills that ministers generally had for boards’ underperformance. His research found that:

The quality of chairmanship is reported as varying substantially. Certain NEDs report that they have hardly met their Secretary of State. Others state that the Secretary of State pursues their political agenda and attends less to the board oversight, advisory or support function. Equally the comment was offered that certain Secretaries of State do not seem interested in the work and contribution of the departmental board.168

105.Professor Kakabadse’s response to this tendency for secretaries of state to make poor chairs was to recommend that they should relinquish their chairing role:

in the few cases where an independent, external chair has been appointed, those boards are reported as providing effective oversight and making a valued contribution.169

106.Much of the evidence we received on this matter agreed that the role of the secretary of state was crucial in determining how well the board functioned. Where a secretary of state chaired the board badly or did not give adequate priority to their role as chair, board effectiveness suffered as a consequence. The BGI said that “The success of this form of governance depends upon the interest and involvement of individual Secretaries of State and the evidence is that this has been patchy”.170

107.However, concern was expressed that removing the secretary of state from the chair would damage boards further. If the level of engagement of the secretary of state was the main factor in determining whether a board was effective, removing responsibility for chairing was likely to reduce that engagement.

108.Lord Maude, who, as Cabinet Office Minister, was responsible for the change of board structure, said “Realistically, Ministers in charge of a department are not going to show up and sit through a meeting where they are just a member of the board”.171 By contrast, “requiring the Secretary of State to chair it is a good obligation to put on the Secretary of State and means that he or she has to get under the skin of the operational activity in the Department”.172 Sir Ian Cheshire was similarly sceptical: “If you remove the Secretary of State from the board, the relevance of that board changes”.173 The Minister agreed that secretaries of state should remain as engaged as possible and so should retain the chair.174 Professor Hazell agreed that secretaries of state often proved poor chairs but the solution did not lie in removing them from the chair:

Boards only work well when the Secretary of State takes them seriously, which not enough do. But there was no wish to revert to the pre-2010 model: it was felt NEDs would be taken less seriously by the department if not part of a board chaired by the Secretary of State.175

109.Professor Hazell suggested that secretaries of state should consider allowing the department’s lead non-executive to chair those parts of board meetings which involved close scrutiny of department’s performance or plans.176

110.It is clear that, currently, boards are not regarded as effective in many instances. That several departmental boards did not even meet the minimum threshold of four meetings a year is symptomatic of this. We agree that this is in large part due to the role of the secretary of state as chair: where secretaries of state do not take boards, or their role as chair, seriously, they deliver little value. We do not, however, subscribe to the view that the secretary of state should relinquish the chair. Instead, measures to establish a clearer role and expectations of departmental boards, including of the role of chair, should be introduced.

111.At the minimum, all boards should meet the threshold of four meetings a year.

112.The role of the board and of board members should be included in any induction for ministers new to a department. New ministers should establish with the permanent secretary and the lead non-executive clear goals against which board performance can be evaluated. Secretaries of state should, on a comply-or-explain basis, relinquish the chair for those parts of board meetings involving evaluation of the department’s plans or performance.

Non-executives’ roles

113.Although boards are not generally considered to be operating effectively, there was a greater satisfaction with the role of non-executives themselves and the wider role they played. The calibre of those appointed as non-executives was noted. Professor Kakabadse said that:

NEDs as individuals received high praise from Secretaries of State, the Permanent Secretaries and civil servants lower down the hierarchy. Their experience, facilitative skills and independence, and willingness to offer constructive challenges are viewed as invaluable. Most acknowledge that the NEDs on departmental boards are of a high calibre.177

114.It was noted that where non-executives added value to the department, it was largely outside their formal roles on the main departmental board. The external expertise they bring to roles on Audit and Risk Committees or to nomination or remuneration committees has been noted.178 Non-executives also work with their counterparts in other departments to provide a degree of cross-government working, learning and promoting best practice.179 Departments ask non-executives to take on roles outside boards on the basis of departmental need and their prior experience. Catherine Brown, a non-executive at the Cabinet Office, outlined the quite extensive variety of roles she currently performs:

In the development of the Single Departmental Plan what I will do is engage with the team developing that very early on to provide advice on how to think through its structure, how to ensure that all major areas that need to be covered are covered, whether they have thought about ensuring that the money lines up with the plan, and whether they have thought sufficiently about the organisation and its resources, to challenge the work in progress before it gets to a board situation. Alongside that, one of the activities that I undertake is that as part of a talent action group of cross-governmental non-executives, we review matters such as the Civil Service Leadership Academy’s proposed curriculum. We gave input to that. I was also in a group that oversaw the development of the new code of governance that has been introduced for the relationship between arm’s-length bodies and their departments, and alongside that I will assist with the recruitment of Directors General or other non-executives. There is quite a wide range of activities where I think there is a combination of me being able to add value given the professional experience I have, and some need or desire in the Department to bring in an additional perspective.180

115.Our predecessor Committee noted that ministers and, in particular, senior officials, have found non-executives a valuable source of advice and mentoring.181 As outside experts, it was also suggested that they can be better placed to offer candid advice or critical challenge to ministers than civil servants might be: “One of the advantages the non-execs have is that we are not trying to get into the political space or get promoted in the Civil Service. We have an independence of view that I think makes it easier to have some of those challenges”.182 Their practical experience can add weight to advice given to a minister, relative to that given by officials.183 However, in some cases, it seems that, despite this, non-executives can be reluctant to challenge secretaries of state.184 This was particularly the case with priorities and the constraints of departmental capacity.185

116.The role of board members is to “give advice and support on the operational implications and effectiveness of policy proposals, focusing on getting policy translated into results”. Policy itself is explicitly outside the remit of non-executives and “will be decided by Ministers alone, with advice from officials”.186 Whilst Sir Ian Cheshire was comfortable with this division of labour—he said non-executives “are not there as policy advisers, and we should not be”187—there was some sense that it creates a slightly artificial distinction between policy design and delivery and that can exacerbate an existing tendency to regard considerations of delivery issues as a later “add on” to policy design rather than integral to it. Whilst there is no sense that non-executives feel they should be driving policy formulation, Professor Hazell’s team found that some non-executives felt constrained by what they saw as flaws in policy conception at an early enough stage:

Policy formulated without a hard-headed appreciation of how to deliver it will be flawed policy. And the idea that independent, rigorous and expert policy challenge by NEDs is somehow inappropriate may help explain why so many projects which looked good in theory have disappointed their framers in practice.188

117.Sir Ian Cheshire acknowledged the balance inherent in advising on delivery without encroaching on policy.

I think we do approach that quite carefully in the sense of saying that we understand what the policy initiative is aiming to achieve, and our focus is on how well you land that and deliver it.189

He went onto suggest that it was the policy intent and general design that non-executives were excluded from but that they might be involved in the finer details of policy design.190

118.Non-executives are recruited as a source of expertise and advice. It is right that they should not be involved in the inception of policy in broad terms. It is for the government to decide on policy goals and to be held accountable for them. However, if this is interpreted to preclude non-executives from being used to full value then it is self-defeating.

119.Guidance should be clarified to ensure that non-executives can offer advice to ministers and officials about the overall design of policy where that is likely to impact on its delivery.

120.We acknowledge that the lack of a clearly defined role for non-executives outside their formal role on departmental boards allows them to be used flexibly. However, if non-executives are typically providing most of their value, and spending most of their time, on other areas, clearer acknowledgement of that should be included in the Corporate Governance Code, including a clearer statement of the limits to their activity.

121.A stronger statement of the duty of non-executives to challenge what they see as flawed policy design or planning should be added.

157 Non-Executive Members of the Boards are sometimes referred to as Non-Executive Directors or “NEDs” though it has been stressed that they are not Directors and their roles are not analogous with members of corporate boards (see Q336 (Sir Ian Cheshire)).

158 Cabinet Office Ministerial Code 2018 para 3.5. See also Cabinet Office and HM Treasury Corporate Governance in Central Government Departments: Code of Good Practice 2011.

160 Cabinet Office Enhanced Departmental Boards: Protocol 19 February 2013

166 CSE0014, p.47

167 CSE0009, p.2; CSE0004 para. 28

168 CSE0014 p.34

169 CSE0014, p34

170 CSE0004, para. 28

171 Q257

172 Q257

173 Q344

174 Qq612–3 (Oliver Dowden MP)

175 CSE0009 p.3

176 CSE0009, p.5

177 CSE0014, p.35

178 Robert Hazell et al Critical Friends? The Role of Non-executives on Whitehall Boards Constitution Unit 2018 para. 4.40. 4.47

179 Cabinet Office Government Lead Non-Executive Annual Report 2016 to 2017 15 November 2017 p.22–7

180 Q343

181 Public Administration Select Committee Truth to Power: How Civil Service Reform Can Succeed Eighth Report of Session 2013–14 HC 74 para. 104

182 Q351 (Sir Ian Cheshire)

183 Q305 (Julian McCrae)

184 Robert Hazell et al Critical Friends? The Role of Non-executives on Whitehall Boards Constitution Unit 2018 para. 4.40

185 Robert Hazell et al Critical Friends? The Role of Non-executives on Whitehall Boards Constitution Unit 2018 para. 5.74

186 Cabinet Office Enhanced Departmental Boards: Protocol 19 February 2013

187 Q336

188 Robert Hazell et al Critical Friends? The Role of Non-executives on Whitehall Boards Constitution Unit 2018 paras 4.43–4.44

189 Q352

190 Q352

Published: 18 June 2018