Written evidence from The Department for Business, Enterprise and Industrial Strategy (NED11)

Public Administration and Constitutional Affairs Committee

The Role of Non-Executive Directors in Government inquiry

Summary of BEIS Evidence

The Department for Business, Enterprise and Industrial Strategy welcomes the opportunity to respond to the Committee’s inquiry into the Role of Non-Executive Directors in Government.

In response to the request for evidence from the Public Administration and Constitutional Affairs Committee regarding Non-Executive Directors, BEIS submits the below information which is based upon the central guidance from the Cabinet Office regarding the recruitment, role and impact of Non-Executives.

BEIS Written Evidence

Public Administration and Constitutional Affairs: Inquiry into the role of Non-Executive Directors in Government

Submission from the Department for Business, Energy and Industrial Strategy, August 2022

Introduction

  1. Our NEBMs are appointed from the public, private and voluntary sectors. They provide advice, challenge and scrutiny as well as bringing a crucial external perspective into departments on a range of areas. The biographies of our NEBMs have been submitted as part of our evidence.
  2. The Cabinet Office has provided a response outlining further details around the evidence asked as BEIS follows the guidance set by them.

The roles and activities of non-executives

  1. The role of NEBMs is set out in the Corporate Governance Code for Central Governance Departments (2017).  NEBMs use their skills and experience to contribute to the work of the board of which they are a member. However, their contribution doesn’t start and end at Board meetings as outlined in the response submitted by the Cabinet Office.
  2. The roles and responsibilities of board members, including non-executives, are set out within our Departmental Board Terms of Reference, which we have submitted as part of the evidence.
  3. In addition to board meetings, NEBMs form committees responsible for audit and risk assurance, and nominations. The Nominations Committee and Audit and Risk Assurance Committee Terms of Reference have been submitted as part of the evidence.

Experience and expertise

  1. One of the greatest strengths of NEBMs is the breadth of skills and experience they bring to support delivery of the government’s agenda.
  2. The Corporate Governance Code seeks to provide each department with flexibility to ensure that the skills and deployment of NEBMs meets their distinct needs. The biographies of our Non-Executive Board Members have been submitted to the Committee as part of the evidence.
  3. Skills requirements for Audit and Risk Committees are set in the Audit and risk assurance committee handbook,.

Maintaining objectivity

  1. NEBMs are bound by the Code of Conduct for Board Members of Public Bodies and Ministers are responsible and accountable to Parliament for the appointments that they make and for the activities of their departments, including those appointed to provide advice.  All board members must also uphold the seven principles of public life.
  2. The principles set out in the code apply to all non-executive members on the boards of government departments, non-ministerial departments, executive agencies, non-departmental public bodies (NDPBs) and national public corporations. The Code should be observed alongside the 12 Principles of Governance for all Public Body Non-Executive Directors. The response from the Cabinet Office outlines this in more detail.

The NEBM appointment process

  1. All NEBM and Lead NEBM appointments must comply with the Code of Good Practice for Corporate Governance in central government departments (2017) and associated guidance. (paras 2.12-2.21).
  2. BEIS NEBMs are appointed by the BEIS Secretary of State. The appointment of Lead NEBMs also requires the approval of the Prime Minister. Appointments follow the principle of selection based on merit. To achieve this, the process set out in the Governance Code is to be open and transparent, meaning that information must be provided in the public domain about vacancies, the process of appointment and the appointments made. Roles are advertised on the HM Government Public Appointments website.
  3. The Cabinet Office response outlines further detail on regulation and diversity.

Managing conflicts of interest

  1. Managing conflicts of interest are of the utmost importance in making appointments and in ensuring effective boards. All NEBMs are required to complete a Declaration of Interest as part of appointment. The published form has been submitted as part of our evidence.

Governance and accountability

Accountability

  1. NEBMs carry out an advisory role as non-statutory office holders. They do not have decision-making powers. The Department follows the advice of the Cabinet Office. Further information can be found in the response from them.

Transparency

  1. NEBMs report their views in their own section of the department’s annual report and accounts. BEIS have submitted their last Annual Report and Account as part of this response.

Monitoring effectiveness

  1. An effective Board is crucial and delivers better outcomes for the public. Each year the Lead non-executive board of each department undertakes a board effectiveness evaluation, carried out annually on behalf of the Chair. At least every three years this is undertaken with independent input. The findings of these evaluations are summarised in the governance statement of the department’s annual report and accounts. BEIS will be undertaking an external review this year.

 

August 2022

 

 

 

 

 

 

 

 

 

 

 

Annex 1

Non-Executive Board Member Biographies

 

Biography- Ann Cairns  

Ann Cairns is the lead Non-Executive Board Member of the Department for Business, Energy and Industrial Strategy (BEIS). 

 

Ann is the Executive Vice Chair at Mastercard, where she sits as part of the company’s global management committee. Ann is also chair of ICE Clear Europe, global chair of the 30% Club, the chair of the Financial Alliance for Women and serves as a member of the UK government’s AI Council and the IBDE advisory board. 

 

Ann has a Pure Mathematics degree and honorary doctorate from Sheffield University and a M.Sc. with research into medical statistics and honorary doctorate from Newcastle University. 

 

Biography- Vikas Shah 

Vikas Shah MBE DL is a Non-Executive Board Member of the Department for Business, Energy and Industrial Strategy (BEIS) and a Non-Executive Director of the Solicitors Regulation Authority. 

 

Vikas is an entrepreneur, investor and philanthropist. He is CEO of Swiscot Group alongside being a venture-investor in a number of businesses internationally. 

 

Vikas was awarded an MBE for Services to Business and the Economy in Her Majesty the Queen’s 2018 New Year’s Honours List and in 2021 became a Deputy Lieutenant of the Greater Manchester Lieutenancy. 

 

He is an Honorary Professor of Business at The Alliance Business School, University of Manchester and Visiting Professor at the MIT Sloan Lisbon MBA. 

 

Biography- Peter Mather  

Peter Mather was appointed as a Non-Executive Board Member of the Department for Business, Energy, and Industrial Strategy (BEIS) on 30 March 2022. 

 

Peter has a wealth of knowledge in energy policy and strategy, with nearly 40 years of experience at BP. He has recently stepped down from BP as Regional Senior Vice President, Europe, and UK Head of Country, where he was deeply involved with the company’s net zero strategy. He has sat on government councils for Jet Zero, Hydrogen, Carbon Capture Usage and Storage, as well as chairing the Business in the Community Climate Action Leadership team and the CBI’s Climate Change and Energy Board. 

 

 

 

Biography- Stephen Hill 

Mr Hill is Chairman of the Alzheimer Society, a Non-Executive Director of Applerigg Ltd, an investment holding company, and manages his own family’s investment and philanthropic businesses. 

 

Stephen has extensive board experience having served as an independent director on the boards of Channel Four Television, Royal SunAlliance PLC, Psion plc, Aztec Ltd and IG Group plc in the UK and as Chairman of the Board of Interactive Data Inc in the US. He was also an independent member of the board of OFCOM, the media regulator, from 2014 to 2016. 

From 1996 to 2002 he was Chief Executive of the Financial Times Group and a member of the Pearson Management Board, and, prior to that, he had held Managing Director roles at a number of entities within Pearson in a career spanning 15 years. More recently, he was a Senior Adviser at, and Founder of, 3iQPE (Quoted Private Equity) plc, Chief Executive at Betfair Ltd, and CEO in Residence at Permira Partners. 

 

Until 2017, Stephen was Chairman of Action on Hearing Loss, previously the Royal National Institute for Deaf People, and served on the Board of the Cambridge University Judge Business School, where he is now a Patron. 

 

Stephen was awarded an OBE in 2017 for his work in philanthropy, particularly for those with hearing impairment. 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Annex 2

Nominations and Governance Committee, Departmental Board and ARAC Term of Reference

                    BEIS Nominations and Governance Committee 

Terms of Reference and Operating Principles 2021 

 

 

The Nominations and Governance Committee is a key body to which the Departmental Board delegates the oversight of senior talent management and effective implementation of good corporate governance in BEIS.   

 

Responsibilities  

 

The Nominations and Governance Committee is an advisory committee of the Departmental Board, providing assurance and input to key decisions and processes.  Its purpose is to provide assurance on the Department’s strategies and plans for talent management; succession planning; capability building; Board appointments; senior performance management; incentives & rewards and the implementation of corporate governance policy.  

 

It advises on whether the Department’s people related processes (e.g. for rewarding senior executives) are effective in helping BEIS achieve its goals.  It does not have a role in deciding individual cases (for example the level of reward of a particular senior executive):  

The role of the Nominations Committee covers the following six central elements: 

 

 

 

 

Membership and attendance 

 

Lead Non-Executive Board Member (Chair)- Chair 

Permanent Secretary- Sarah Munby  

HR Director- Alice Hurrell   

As requested, Chief Operating Officer - Freya Guinness  

 

The Nominations Committee is quorate when the Chair (or the member the Chair has appointed as deputy) and one full Committee member is in attendance. 

The Chair will be able to invite other officials to attend as required.  The Permanent Secretary will act as deputy chair in the event that she is absent.   

 

If a vacancy arises and the role is covered on an interim basis, the individual will attend and assume the responsibilities of a full Committee member. 

 

All Committee members should uphold the Seven Principles of Public Life: 

 

Members of the Committee will not be present for discussions relating to their own post, or when issues relating to their role or themselves personally, are being considered. Members are expected to declare this at the start of the meeting. Conflicts of interest will be managed by the Governance Deputy Director. 

 

The Nominations Committee will meet twice a year in June and October.  Meetings will normally last one hour.   Additional meetings may be set at the request of the Departmental Board and in agreement with the Chair. 

 

The role of Committee members is to: 

 

The Governance Secretariat has overall responsibility for supporting the Department’s senior governance systems.  Given the sensitive nature of some of the issues considered by the Committee, the Head of Governance will provide secretariat support to the Committee, including: working with the Committee to develop and agree agendas; commissioning and circulating papers; providing a summary of the meeting and ensuring that action points are followed up.  

 

Papers should be circulated three days in advance of the meeting.  

 

Success for this Committee, over time, will be judged by:  

 

Evaluation of the committee will be led by the Head of Governance and will conducted on an annual basis as part of the Board evaluation process.  The achievement in these areas will be considered by the Board, People and Operations Committee and Audit and Risk Assurance Committee. 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Annex 3

BEIS Departmental Board

Terms of Reference  

 

Purpose  

 

To provide expert advice, support and challenge to ministers and senior officials on the operational implications and effectiveness of policy proposals and corporate functions in BEIS, focusing on getting policy translated into results. 

 

 

Roles, Functions & Delegations of the Board 

 

To provide strategic and operational leadership of the Department by advising on the operational implications and issues affecting the Department’s performance and scrutinising departmental programmes, policies and performance. 

 

To operate according to the recognised principles of good corporate governance in business:  

 

Objectives  

 

  1. To support delivery against the Department’s vision, in particular through the agreement of a Single Departmental Plan reflecting the strategic agenda, and on-going monitoring of delivery against implementation plans and robust performance objectives.  
  2. To provide constructive challenge on the real-world impact and deliverability of policies and scan the horizon to ensure the Department is sufficiently prepared to face future challenges and exploit opportunities, ensuring strategic decisions are based on a collective understanding of evidence-based policy issues. 
  3. To ensure there is sound management of and clear accountability for finance, resources and risk within the Department, underpinned by clear standards and values.  This includes scrutiny of organisational design and the allocation of resources; identification and oversight of key Major Projects requiring specific attention; and ensuring risks are clearly defined and managed, setting the Department’s risk appetite, and ensuring risk controls are robust via the Audit and Risk Committee. 
  4. To ensure the Department has the capability to deliver and to plan to meet future needs, assessing current levels and plans for improvement, reviewing overall talent development, and scrutinising staff engagement plans and results. 
  5. To ensure the Board has the capability to deliver, evaluating its performance and that of its members, and ensuring succession plans are in place.   
  6. To oversee effective governance of the Department, its Agencies and Sponsored Bodies, and to scrutinise their performance to ensure the Department is held to account for its outcomes and measures itself against best practice in the public and private sectors. 

 

Membership  

 

Current membership: 

 

 

 Other Ministers and DGs may also be invited to attend, depending on the subject matter. 

 

Other officials will attend as necessary to assist with discussions on their area of work.  

 

External delegates may be invited for specific Board items.  

 

 

Frequency, length of meetings and quorum 

 

The Departmental Board will meet quarterly.  Meetings of the Committee will normally last two to three hours. Business can be done by correspondence, where necessary. 

A quorum of the Board will consist of two Ministers, two Executives and two Non-Executives, including at least one of the Secretary of State or the Permanent Secretary or the lead Non-Executive. 

 

Relationship with other governance structures 

 

The Board is directly supported in its work by the Audit, Risk and Assurance Committee, and the Nominations Committee.   

 

The Board is also supported by the Executive Committee which is responsible for driving and managing the daily business of the Department.  The Executive Committee in turn delegates to its Committees (People and Operations; Performance and Risk; and Projects and Investment). 

  

Secretariat support, evaluation and conflicts of interest  

 

The Secretariat will work with the Chair, the Permanent Secretary and the Lead Non-Executive Board Member to develop and agree agendas; it will commission papers and send out papers; provide a minute of the meeting and ensure that action points are followed up.   

 

The Chair is responsible for the agenda but suggestions of items for discussion are welcome from all members.  Suggestions should be made to the Secretariat. 

 

Papers should be circulated five working days in advance of a meeting. 

 

The Board will be evaluated annually, as part of a three year cycle in which the first two reviews will be led by BEIS Governance Business Partner Team and the third review will be independently run with support of Cabinet Office. 

 

The Secretariat will maintain a Register of Interests which all members will be expected to update. This Register will inform the secretariat of any conflicts of interest that they need to take into account when circulating papers for the Departmental Board.  The Register could be subject to FOI requests and the release of any information will be determined on a case by case basis. 

  

Success measures  

 

Success for this Board, over time, will be judged by whether: 

 

 

 

 

 

 

 

 

Annex 4

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 The purpose of the Audit and Risk Assurance Committee is to support the Departmental Board and Accounting Officer in their responsibility to ensure that BEIS is a financially sound and efficient organisation which makes effective use of its resources in pursuit of its strategic objectives. Specifically, the Audit and Risk Assurance Committee reviews the effectiveness of the risk management framework established by management to identify, assess, and manage risk; thereby playing an important role in supporting BEIS’ reputation for excellent financial and risk management. 

 

The Audit and Risk Assurance Committee will advise the Board and Accounting Officer on: 

  1. the effective operation of the overall control (including financial), risk and governance arrangements, including ensuring adequate assurance is available to the Accounting Officer for the annual Governance Statement. 
  2. the accounting policies, the accounts, and the annual report of the organisation, including the process for review of the accounts prior to submission for audit, levels of error identified, and management’s letter of representation to the external auditors. 
  3. the planned activity and results of both internal and external audit (including the NAO’s audit of the Resource Accounts) and their implications for BEIS. 
  4. the adequacy of management response to issues identified by audit activity, including calling Directors to account as necessary, and advising on how to promote effective learning of lessons emerging from them. 
  5. proposals for tendering for Internal Audit services.  
  6. anti-fraud policies, whistle-blowing processes, and arrangements for special investigations; and effective enforcement of Business Appointment Rules. 

 

The Audit and Risk Assurance Committee is not an executive committee of BEIS. As such it will endeavour to complement rather than duplicate the work of the Departmental Board and the other committees, through independent non-executive scrutiny. It will consider items remitted to it by the Departmental Board and report back on progress as appropriate.  

 

 

 

 

 

Members of the Audit and Risk Assurance Committee are non-executives appointed by the Permanent Secretary. The Chair should be a suitably experienced Non-Executive Board Member.  

 

The Committee is considered quorate when at least 3 members are present.  Others may be invited to attend Committee meetings as and when subjects for which they are responsible are discussed.   

 

The following non-members also attend: 

 

The Audit and Risk Assurance Committee may: 

 

The Head of Internal Audit and the representative of External Audit will have free and confidential access to the Chair of the Audit and Risk Assurance Committee separately from management. 

 

The Audit and Risk Assurance Committee will be provided with a secretariat function by BEIS Governance team. 

 

 

For each meeting, the Audit and Risk Assurance Committee will be provided (one week in advance of the meeting) with: 

 

As and when appropriate the Committee will be provided with additional material including: 

 

Internal and External Audit 

 

Risk and assurance 

 

Finance 

 

Governance 

  

Each member of the Audit and Risk Assurance Committee should take personal responsibility to declare pro-actively any potential conflict of interest arising out of business undertaken by the Department, arising on the agenda or from changes in the member’s personal circumstances.  

 

The Chair of the Audit and Risk Assurance Committee will then determine an appropriate course of action with the member. For example, the member might simply be asked to leave while a particular item of business is taken; or in more extreme cases the member could be asked to stand down from the Committee.  

 

If it is the Chair who has a conflict of interest, the Board should ask another member of the Audit and Risk Assurance Committee to lead in determining the appropriate course of action.  

 

A key factor in determining the course of action will be the likely extent and duration of the conflict of interest: a conflict likely to endure for a long time is more likely to suggest that the member should stand down. 

 

Members should comply at all times with the Code of Conduct for Board Members of Public Bodies and other appropriate guidance including with the rules relating to the use of public funds and to have regard to the principles of public life: selflessness, integrity, objectivity, accountability, openness, honesty and leadership and act in the best interests of the Department.  

 

The Committee will, in consultation with the Department's Accounting Officer and the Directors of Finance and Commercial, establish appropriate arrangements to identify the Arm's Length Bodies and Partner Organisations with the greatest potential to impact the Department's objectives and its consolidated financial statements.    

 

The Committee will support the Department's Accounting Officer by establishing appropriate relationships with BEIS Partner Organisations. This includes Committee members observing Partner Organisation ARAC meetings and feeding back to the Committee. Partner Organisation ARAC Chairs/members will also have the opportunity to annually observe a BEIS ARAC meeting. The Committee will endeavour to ensure that additional opportunities for communication exist for the sharing of good practice and issues of mutual concern e.g.  ARAC Chair's conferences and networking meetings. 

 

 

 

 


Annex 5

NEBM Published Conflicts of Interest

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