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Government Departments: Non-Executive Directors

Volume 813: debated on Thursday 1 July 2021


Asked by

To ask Her Majesty’s Government what consideration they have given, if any, to changing the arrangements for the appointment of non-executive directors of Government departments.

My Lords, the Committee on Standards in Public Life published an interim report last month, which recommended that the appointment process for non-executive board members of government departments should be regulated. We are grateful for the work being undertaken by the noble Lord, Lord Evans, and his committee, and we will respond formally to its final recommendations when they are published this autumn.

My Lords, I am grateful to the Minister for his helpful Answer, but I have here a list of the current non-executive directors. Quite apart from the girlfriend of a former Minister, it includes a number of Tory Peers, former special advisers, people who campaigned to vote leave and other Tory cronies. Since the purpose of non-executive directors is to supervise the work of government departments in an impartial way, could the Minister outline exactly what the arrangements and criteria are for making these appointments?

My Lords, I will not follow the noble Lord on specifics, but we should bear in mind that a very large number—the overwhelming majority, and probably all—of the people involved are dedicated to the cause of improving public service and have given good public service. So far as appointments are concerned, vacancies are advertised on the Government’s public appointments website, and appointees are subject to a shortlisting panel interview process. However, a Secretary of State can also make direct appointments, which account for a small number of appointments.

My Lords, the Minister will be aware that, aside from the range of people appointed to departments that my noble friend Lord Foulkes has just referred to, there are also a number of other bodies that have non-executive directors within departments. Will the Minister publish a list of all of those people, say what their salaries are and say whether they have been contributors to the Conservative Party’s funds? Will he say what advice will be given, even on an interim basis, to those who are supervising government departments, in terms of their relationship with senior Ministers?

My Lords, the noble Lord makes a point about arm’s-length and other bodies; he is right to say that they have board members, and I will take away his point in respect of them. Interests are required to be declared: currently, this is done in departments’ annual report, but clearly these matters are always subject to review and consideration.

My Lords, cronyism in public appointments weakens the quality of governance, to the detriment of the public. The problem has got a lot worse under the present Government. The outgoing Commissioner for Public Appointments, Peter Riddell, recently noted the growth in the number of unregulated appointments by Minister and said:

“there is an urgent need to publish a list of these appointments together with how they are appointed. At present, there is a lack of transparency and clarity, and this distrust can affect regulated appointments too.”

How are the Government going to clean up the whole system?

My Lords, as I have said, the number of unregulated appointments in this area is small, but I have told the House that, following the interim report of the noble Lord, Lord Evans, the Government will respond formally and give full consideration to the points that he made, including in relation to the regulation of appointments.

My Lords, was not the original concept of non-executive directors in government departments meant to be analogous to NEDs in plcs, to assure good corporate governance and to give completely independent advice? That was why people like the noble Lord, Lord Browne, and the CEOs of Centrica, Kingfisher and British Gas, were all appointed NEDs. Have we not departed somewhat from that original concept, and is it not important that non-executive directors of government departments are independent and not sort of super-spads?

My Lords, I agree with my noble friend that it is important that non-executives who provide advice and bring an external perspective to the business of government departments should be qualified to do so.

My Lords, having been a non-executive chair and director in various public bodies and having been very conscious of the importance of independent oversight of the process of appointment, I ask whether, in order to regain public confidence, it would be helpful if an official—not a politician—within No. 10 were to carry the governance responsibility for these non-executive directors for government departments.

Currently, the position is that the appointments are made by Secretaries of State. I hear what the noble Baroness says, and I repeat to the House that, following the interim report of the Committee on Standards in Public Life, consideration is being given to these matters.

Non-execs are meant to provide external advice to departments, but, as we know, Mrs Coladangelo, who had known the Secretary of State from university, worked on his leadership campaign and was his political adviser, was personally handed a £1,000-a-day job by Mr Hancock, head of the very organisation to which she was meant to provide that independent advice referred to by the noble Lord, Lord Lamont. Can the Minister assure us that, pending the review and response to the Evans report in the autumn, there will be no more jobs for the boys—or girls—in the meantime? There must be proper scrutiny, including of conflicts of interest.

I certainly agree with the noble Baroness that conflicts of interest should be clear and prevented. At the time of the appointment of the person to whom she referred, there was no evidence of any conflict of interest. The former Secretary of State, who strived hard to serve the country, recognised that he did wrong and he has left the Government, as has Ms Coladangelo her appointment.

My Lords, there is a large variance in the number of non-execs sitting on departmental boards. While some difference is to be expected between smaller and larger departments, the fact that BEIS, which has a policy lead for corporate governance and so should know something about well-functioning boards, has only two while the Home Office has a staggering eight seems extraordinary. Can the Minister explain the rationale for this difference and why the Home Secretary needs so many NEDs, paid for by the public purse? Can he also explain what central guidance exists on this point and who oversees numbers at the centre of government?

My Lords, I notice that there is a difference in numbers, but I could not comment on the specific motivations in appointments by Secretaries of State. There is corporate governance and a code of conduct for board members of public bodies in relation to their behaviour and their political role or otherwise. I can only repeat that the appointment of non-executive board members, who I think play an important role inside government—I pay tribute to the very large number who contribute every day to the betterment of government—is a matter which is subject to ongoing review.

My Lords, transparency and conflicts of interest are important. But it is also important for us to recognise too that Secretaries of State, in the context of analogies to a chairman, need NEDs to help them support driving change and holding the Executive—in this case, the Civil Service—to account in their departments. My question is about the appointment of non-executive directors to the boards of public bodies. Would the Minister consider whether that process could be made swifter and whether the chairs of those public bodies, who have been appointed to drive change and improvement in them, could play a greater role in the appointment process for the rest of their boards?

My Lords, I shall pay close attention to my noble friend’s remarks. I agree that having a balanced and skilled board with a broad range of perspectives and backgrounds is vital in ensuring that public bodies deliver the best possible services. There is an aspiration that appointment campaigns should complete within three months of competitions closing, but I will look into the matter that my noble friend raises.

Sitting suspended.