GOV0067

Written evidence submitted by Claire Clancy, Chief Executive and Clerk, National Assembly for Wales

Thank you for your letter and the opportunity to contribute to the work of the House of Commons Governance Committee. If you would like to explore anything that I say in this letter in greater detail, I would be happy to provide further explanation in writing or to meet the Committee in person.

My response is in two parts: first, I offer my perspective on the specific questions you ask about my professional background, recruitment and how I view the combination of the roles of chief executive and senior procedural/parliamentary adviser; secondly, I include a description of our corporate governance framework in the National Assembly, which I hope offer useful information in respect of the more general issues in which the Committee is interested.

Part One: The role of Chief Executive and Clerk of the Assembly

The role of Clerk of the Assembly is a statutory position required by the Government of Wales Act 2006 (the Act). When I applied for the position in 2007, it was advertised as Chief Executive and Clerk of the National Assembly. Though one of the requirements of the role was to act as the ‘ultimate source of advice to the Presiding Officer on procedural matters’, equal emphasis was put on other skills that one would normally associate with Chief Executive positions, such as leadership qualities, an ability to motivate staff and take them through a period of significant change, and the capacity to act as Principal Accounting Officer.

My role immediately prior to this was as the Chief Executive of Companies House and Registrar of Companies in England and Wales. Prior to that, I held Director level posts in the Patent Office and Companies House and various managerial positions in the civil service.

So, though my current job title mirrors that of Clerk of the House, I am not a constitutional or procedural expert by background and I view my role very much as that of Chief Executive of the organisation. That is what I was recruited to be and where my skills lay.

Of course, in any parliament, the provision of high quality procedural and constitutional advice is one of the most important elements of service provision. That has been demonstrated and put to the test during my time as Chief Executive and Clerk. When I took up the role, the new constitutional settlement provided for by the 2006 Act was coming into force, separating the legislative and executive arms of government in Wales for the first time and providing the Assembly with primary legislative powers for the first time. Since then, a national referendum has led to the further devolution of legislative competence to the Assembly. That evolution continues today with a Wales Bill currently before the House taking forward recommendations of the Silk Commission to confer fiscal powers on the Assembly.

Since 2007, as well as the day to day conduct of parliamentary business and its associated pressures and tensions, the Assembly has dealt with some significant political and constitutional crises. It feels that not a day goes by without there being some ‘first’ delivered by, or thrown, at the Assembly. The fact that every one of those challenges has been overcome successfully, and that public support for the Assembly continues to grow, is tribute to the uniformly excellent service and procedural advice provided to our Presiding Officer and Members.

To ensure the delivery of that service and advice, however, I do not need personally to be the ultimate source of procedural and parliamentary expertise in the organisation. Indeed, if I were to be viewed in that way, I believe it would have negative consequences in terms of the confidence and authority of my procedural staff and send a damaging message to others about the relative value to the organisation of their particular expertise. We draw our advice from a number of quarters, not just from the clerks – expert though they are. For example, our lawyers make an essential contribution. Together this wider team ensures that advice is considered from all necessary perspectives.

I also believe that 21st century parliamentarians need many forms of advice. Procedural and constitutional expertise is high on the list but it is also essential to ensure that Members are provided with the very best advice on, say, ICT provision, contract and employment law, public engagement or estate management. As Chief Executive, I must surround myself with high quality staff capable of providing the Assembly with high quality service in every aspect of its work.

It is also important to note that I am formally the Principal Accounting Officer for the Assembly Commission, so I am the individual who is personally called to account for the stewardship of the organisation’s resources.

In summary, I view my priority as being to lead the staff of the Assembly Commission to deliver the highest quality services to our Members. To do so I need a wide range of skills, some of which are peculiar to such a publicly visible, political environment, but many of which are common to any significant public organisation. To assume that to do so I need, first and foremost, to be a procedural expert is, to my mind, mistaken.

My own appointment was made by a panel of the whole Shadow Commission who were supported and advised throughout the appointment process by Assembly staff and external recruitment consultants. The same approach is likely to be taken to the appointment of my successor, with the Commissioners being the decision makers, advised by their staff. The Commissioners will also have access to our independent advisers who could assist with the selection process. Three of the independent advisers make up our Remuneration Committee, which assists me and the Commission in ensuring that we meet the highest standards of probity and accountability for the use of public funds and specifically, for appraisal and remuneration polices and systems.

My appointment was made on the basis of a plenary resolution moved by a member of the then Shadow Commission. However, the 2006 Act had not come into force at that time and the Assembly Commission did not exist so the options were limited as the Shadow Commission had no powers to appoint staff. Under the present legislation, the appointment of a Clerk/Chief Executive is purely a matter for the Commission but a plenary resolution, or a pre-appointment Committee hearing, could be used by the Commissioners to get the support of the Assembly for the appointment. That choice will be a matter for the Commission when the time comes.

Part Two: Corporate Governance

I attach a chart at Appendix A mapping the governance assurance framework of the National Assembly for Wales Commission. It illustrates a thorough approach that I would say represents best practice in public sector governance. I would stress, however, that its strength comes not through its completeness or sophistication, but through our operation in practice of the tools and structures in place. In any organisation, good governance requires its leaders to find the balance of process and assurance that is appropriate to the organisation. In our case, we apply the governance procedures shown in the chart in as light a touch manner as we are able. Our aim is to balance the need for flexibility and pace demanded in any parliament with the assurance required of a body whose position and status in the public eye mean that it must demonstrate best practice in all that it does.

The Assembly Commission

The National Assembly for Wales Commission (“the Commission”) is the statutory body created by the Act to provide the National Assembly for Wales with the staff, property and services required to carry out its role effectively and efficiently. The Commission consists of the Presiding Officer and another four Assembly Members, one nominated by each of the four party groups represented in the Assembly.

The Commissioners are corporately responsible for the exercise of the functions conferred on the Commission and for the governance of the organisation and, accordingly, act in the interests of the Assembly as a whole[1]

In practice, Commissioners take individual responsibility for separate portfolios that are cross-cutting and strategic in approach, and allow them to work across a range of services.

In undertaking its work, the Commission is subject to a number of guiding principles of operation that contribute to overall good governance. These principles fall into three broad areas:

• common principles of operation agreed between the Commission and senior management;

• corporate governance principles adopted by the Commission at the inaugural meeting of each Assembly; and

• statutory principles - in accordance with which the Commission’s functions are to be exercised.

Common principles of operation

These principles outline the shared values and rules by which senior management and Commissioners exercise their responsibilities. The aim is to ensure that the Commission and senior management work together to establish an effective working relationship to deliver effective democracy in Wales.

The shared values endorsed by the Commission and senior management include: a commitment to always acting in the best interests of the Assembly; maintaining high standards and delivering its aims; being professional and innovative; working openly and collaboratively; and treating everyone with respect.

Corporate governance principles

In undertaking its role and functions the Commission adheres to an agreed list of corporate governance principles. These principles are consistent with HM Treasury’s Corporate Governance Code of Good Practice.[2]

The aim of these principles is to ensure acceptable working customs within the organisation and to assist with the management of key risks. I set out the principles below as they seem highly relevant to the core issues that you listed in your letter. The more detailed supporting provisions are included in Appendix B.

Principle 1: Accountability

The Commissioners are responsible and answerable to the Assembly for the exercise of the statutory functions of the Commission. They have a duty to the Assembly to account, and to be held to account, for all the policies, decisions and actions of the organisation.

Under the Commissioners, the Chief Executive, as the Principal Accounting Officer, is also personally responsible and accountable to the Assembly for the management and organisation of the Assembly Commission, including the use of public money and the stewardship of its assets.

Principle 2: The Commissioners and senior management

The Commissioners collectively are responsible for setting the strategic framework for the organisation and overseeing its performance.

The senior management, headed by the Chief Executive, are responsible for advising the Commissioners, and for leading and managing the organisation within the strategic framework set by the Commissioners and taking ownership of its performance.

Principle 3: Skills

The Commission’s senior management should have a balance of skills and experience appropriate to directing the business of organisation.

Principle 4: Independent advice

The Commission should be supported by independent advisers acting in a non-executive capacity to ensure that they and the senior management are supported and constructively challenged in their role.

Principle 5: Internal controls

The Commissioners and the Accounting Officer are responsible for ensuring that effective arrangements are in place to provide assurance on risk management, governance and internal control. In this respect, they are independently advised by: an Audit and Risk Assurance Committee chaired by an independent adviser; and an internal audit service operating in accordance with the principles of Government Internal Audit Standards.

Statutory principles of operation

Schedule 2 to the Act outlines the statutory principles in accordance with which the Commission must exercise its functions.

Specifically, the Act places a duty upon the Commission to make appropriate arrangements to ensure that its functions are exercised with due regard to the principle that there should be equality of opportunity for all people.[3]

The Act also requires that, in the exercise of the functions of the Assembly Commission, due regard must be had to the principle of promoting sustainable development.[4]

Finally, in exercising its duties, the Assembly Commission is subject to the National Assembly for Wales (Official Languages) Act 2012 -an Act of the Assembly initiated by the Commission itself which places duties on the National Assembly and the Commission in relation to the provision of bilingual services in Welsh and English.

Delegation of functions to the Chief Executive

In accordance with Schedule 2 to the Act, the Commission has delegated its functions to me as Chief Executive, subject to a number of exceptions and conditions. The following matters are currently excepted from the delegation of Commission functions to me:

• the appointment, terms and conditions and remuneration of the Chief Executive and Clerk, independent advisers to the Commission, and members of the Audit Committee; and

• the authorisation of expenditure under paragraph 6 of Schedule 2 to the 2006 Act (provision of financial assistance to the Electoral Commission).

I must consult the Commission before:

• making appointments to the Director posts;

• changing the remuneration and terms and conditions for the staff occupying those posts;

• creating new director posts or abolishing existing director posts;

• authorising capital expenditure for projects in excess of£ 1 million; and

• authorising expenditure on matters that could be regarded as novel or contentious.

In practice, and in keeping with the agreed way of working described earlier, we engage Commissioners directly on many matters that are, strictly speaking, delegated to me. In particular, if actions or programmes that we intend to undertake are likely to have a particularly high public or political profile or will be of obvious interest to Members, I will engage the Commissioner with portfolio responsibility or the Commission as a whole. Recent examples include our annual programme of public engagement events and investment decisions below the £1 million threshold related to public reception areas and to the main debating chamber.

The Assembly Commission's Strategic Goals

At the beginning of its mandate, the Commission agreed four strategic goals to guide its work and that of the staff of the Assembly for the duration of the Fourth Assembly (20 11-16). These are to: Provide outstanding parliamentary support; Engage with the people of Wales; Promote Wales; and Use resources wisely.

These four goals anchor all of the actions of the Commission and Assembly staff- feeding through to various more specific policies and strategies, service plans, investment decisions, individual personal development programmes and so on.

Responsibility for translating the goals into practical action and delivery by staff rests with my Management Board. It produces a corporate plan that sets out priority areas for investment and innovation and spells out the specific actions that we will take to deliver them. The Plan is popular with staff as it gives them clarity about managerial and Commission expectations and priorities and a very direct guide for their individual and team work. Though an internal document produced and used by Assembly staff, the Commissioners themselves are fully aware of it and have been clear that it does indeed meet their strategic expectations.

Investment and Resourcing Board

The corporate plan is key to focusing the work of the Investment and Resourcing Board, which is made up of myself and a small number of key senior staff. Its role is to manage the investment budget of the Commission and to maintain a high level grip on the overall staff and resourcing position of the Assembly. It meets every two to three weeks, considers business cases requiring any significant degree of investment or resource, monitors our overall funding position allocating resource as necessary, and considers our staff and resource capacity to deliver the Commission’s goals.

Mechanisms to ensure the effectiveness of governance and internal controls

An annual internal assessment is carried out to test staff awareness, understanding and effectiveness of the corporate governance and internal control framework, details of which are published in my annual Governance Statement as part of Commission's Annual Report and Statement of Accounts.

There are also several ways in which the Commission and I receive independent advice on the management and governance of the Assembly.

• Audit and Risk Assurance Committee - an advisory committee chaired by one of our independent advisers. Also on the Committee is the Commissioner with responsibility for budgetary matters and representatives from the Wales Audit Office and our own internal audit function. It operates in accordance with HM Treasury's Audit and Risk Assurance Committee Handbook.

• Internal Audit- operating in compliance with Public Sector Internal Audit Standards.

• External Audit- by the Wales Audit Office.

• Independent Advisers -the Commission has appointed four nonexecutive, independent advisors who provide independent, constructive challenge to the Assembly Commission and its work.

Their responsibilities include performance monitoring and maintaining a critical overview of the Assembly's financial controls and risk management procedures.

In addition, the following bodies have been established by the Assembly to carry out specific functions.

• Independent Remuneration Board - established by the National Assembly for Wales to set the pay and pensions of Assembly Members and to ensure that they have fair and appropriate resources to carry out their job.

• The National Assembly Commissioner for Standards - providing advice and assistance on any matters of principle relating to the conduct of Assembly Members, and is an independent investigator of complaints that Members of the Assembly have breached any Code, Protocol or resolution of the Assembly.

Accountability of the Commission

The Commission is accountable to the National Assembly for Wales for the exercise of its functions. This accountability is exercised in a variety of ways, including questions to the Commission for oral and written answer, the Finance Committee's scrutiny of the Commission's budget, and the possibility of the Commission's Accounting Officer being questioned by the Public Accounts Committee on matters of financial management.

It is for the Assembly and its committees to scrutinise the Commission's stewardship and to satisfy itself that the Commission is acting prudently and responsibly. However in doing so, the Assembly has to bear in mind the fact that the discretion as to how to discharge the duty of providing the Assembly with the necessary property, staff and services is vested by the Acin the Commission and subject to the financial oversight of the Commission's Accounting Officer.

The Act and the Standing Orders of the National Assembly provide the Assembly with two reserve powers of control over the Commission.

First, the Assembly may, by motion, give the Commission special or general directions in relation to the Commission's functions.[5] These could require the Commission to take a particular course of action although they could not require the Commission to act unlawfully (for example in a way which was contrary to European Law).

Secondly, the Assembly may, by motion, remove all or any of the current Commissioners (other than the Presiding Officer who is a member of the Commission as long as he or she holds that office).[6] Separately, the Assembly may remove the Presiding Officer by a motion of no confidence in which case he or she also ceases to be a Commissioner.

I hope this information is of interest to the House of Commons Governance Committee. Once again, if I can be of any further assistance please do not hesitate to let me know.

November 2014

Appendix A DRAFT NAWC Assurance Framework

Appendix B - National Assembly for Wales Commission Governance principles and supporting provisions Introduction

The National Assembly for Wales Commission has adopted the following governance principles and supporting provisions. Together they are intended to help instil an acceptable operational culture throughout the organisation which, in turn, will aid the process of managing key business risks.

The principles and supporting provisions are consistent with the Corporate Governance Code of Good Practice[7] and they will used to guide the work of the Commission and the senior management

Principle 1: Accountability

A. The Commissioners are responsible and answerable to the Assembly for the exercise of the statutory functions of the Commission. They have a duty to the Assembly to account, and to be held to account, for all the policies, decisions and actions of the organisation.

B. Under the Commissioners, the Chief Executive, as the Principal Accounting Officer, is also personally responsible and accountable to the Assembly for the management and organisation of the Assembly Commission, including the use of public money and the stewardship of its assets.

Supporting provisions

a) The Commissioners must operate within their statutory remit as set out in the Government of Wales Act 2006. Under that Act, the Assembly may give special or general directions for the purpose of or in connection with the exercise of the Commission's functions.[8]

b) Where the Commissioners delegate authority to officials (through the Chief Executive), there should be a clear definition in writing of the delegation of those responsibilities. The decisions taken using such delegated powers remain decisions for which Commissioners are

accountable to the Assembly.

c) The Chief Executive is the Commission's Principal Accounting Officer. [9] The Accounting Officer should establish and document a clear allocation of responsibilities amongst officials in the organisation, but retains personal responsibility and accountability to the Assembly for:

• propriety and regularity;

• prudent and economical administration;

• avoidance of waste and extravagance;

• efficient and effective use of available resources; and

• the organisation, staffing and management of the Assembly Commission.

d) The Accounting Officer is also required, in respect of the deployment of public money, to consider value for money from the point of view of the Welsh Consolidated Fund and the wider Exchequer.

Principle 2: The Commissioners and senior management

A. The Commissioners collectively are responsible for setting the strategic framework for the organisation and overseeing its performance.

B. The senior management, headed by the Chief Executive, are responsible for advising the Commissioners, and for leading and managing the organisation within the strategic framework set by the Commissioners and taking ownership of its performance.

Supporting provisions

a) The Commissioners should:

• set the organisation's strategic aims and objectives;

• agree the organisation's standards and values;

• oversee the process of change, encouraging innovation, and where appropriate enterprise, to enhance the organisation's capacity to deliver; and

• take part in the process for assessing and managing risk.

b) The senior management should:

• advise on the allocation of financial and human resources to achieve the set aims and objectives;

• manage the organisation's resources, monitoring the achievement of performance objectives;

• maintain a transparent system of prudent and effective controls (including internal controls); and

• assess and manage risk.

c) Commissioners should take decisions both corporately and objectively, acting in the public interest in keeping with the Nolan principles of public life.

d) Commissioners should meet sufficiently regularly to discharge their duties effectively. They should agree a formal schedule of matters reserved for their decision, i.e. those which should not be delegated to officials.

e) The Commissioners' decisions should be recorded and made available to the organisation's management. If the Commissioners decide to delegate certain matters for consideration by a committee, each of those committees should be chaired by a Commissioner. The Commissioners should ensure that they receive adequate feedback on the work of any such committees and is able to consider their decisions formally.

f) Where a Commissioner has concerns that cannot be resolved about the running of the organisation or a proposed action, he or she should ensure that the concerns are recorded in the minutes.

g) Appointments to the Executive Board should be made on merit and against objective criteria. On joining, new Board members should receive appropriate induction in the Commission's responsibilities and procedures.

h) The Commissioners should satisfy themselves that they are supplied in a timely manner with information in a form and quality appropriate to enable them to discharge their duties. Such information will depend on the matters which they have determined should be reserved for their decision, but should include reports of:

• monthly management accounting information relating to the actual use of financial and human resource as well as periodic in-year forecasts of the expected out-turn against financial budgets of resource and capital expenditure, of income and of salient balance sheet information;

• progress in relation to outputs and outcomes (performance targets); and

• the identification and management of risk.

i) The Commissioners and the Executive Board should be supported by a dedicated Corporate Unit, which should be responsible for ensuring compliance with agreed procedures.

j) Commissioners should be required to notify and register with the Corporate Unit any issues on which they might have a conflict of interest. The Commissioners should consider collectively how they should discuss a matter on which an individual Commissioner may have a conflict.

k) The Commissioners should undertake an annual evaluation of the organisation's performance. As part of its annual report[10], the Commission should include information on its modus operandi, including a high level statement of which types of decision are to be taken by the Commissioners and which may be delegated. This report should refer to the existence, responsibilities and work of any committees.

Principle 3: Skills

A. The Commission's senior management should have a balance of skills and experience appropriate to directing the business of organisation.

Supporting provisions

a) The senior management should provide corporate leadership to the organisation as a whole, and not merely be a collection of individuals responsible for separate parts of the business.

b) The senior management should have an appropriate balance of people with skills in:

• leadership and management of change;

• communication;

• operational delivery, and process excellence; and

• corporate services skills, including human resources management,

information systems and technology, and communications.

c) One of the senior management should be designated as the Commission’s Finance Director, whose responsibilities should include advising the Commissioners and the Chief Executive in the financial management of the organisation’s operations.

d) Building on their experience, senior managers should undertake continuous professional development to ensure that they maintain the necessary level of skill and expertise, both as individuals and as a group.

e) The senior management should consider succession planning and talent development. This should include how to harness talent from outside the organisation to bring in wider experience and broader perspectives.

Principal 4: Independent advice

A. The Commission should be supported by independent advisers acting in a non-executive capacity to ensure that they and the senior management are supported and constructively challenged in their role.

Supporting provisions

a) It is important to ensure that the Commission and its senior management can draw upon a wide range of experience to support them in the discharge of the Commission's statutory functions. Current best practice suggests that the governing board of an organisation should consist of a reasonable balance of both executive members and independent non-executive members. Only Assembly Members are eligible to be chosen as Commissioners so it is not possible legally to appoint or co-opt nonexecutives in this way. However, it would be possible for the Commission to secure the services of independent advisers to fulfil such a role.[11]

b) The Commissioners should satisfy themselves that the advisers are independent in character and judgement and that there are no significant relationships which could affect their judgement.

c) The independent advisers should be prepared to offer constructive challenge across all the Commission's business with a view to ensuring that all aspects of strategy and delivery are scrutinised for effectiveness and efficiency. They should in particular:

• be involved in the monitoring of performance and progress of the organisation, including the use of human and financial resources; and

• maintain a critical overview of the organisation's financial controls and procedures for assessing and managing risk, drawing on their wider experience.

d) Independent advisers should be appointed by an open and transparent process. On appointment they should be:

• provided with written terms of reference including the specification of their role and terms of appointment; and

• given an induction programme covering not only the organisation but also the operational environment as a whole.

e) The Chief Executive should hold meetings periodically with the independent advisers without other officials being present. The advisers may propose that they should have the opportunity to meet Commissioners periodically, without officials being present, to discuss the work of the Commission.

f) The advisers should ensure that arrangements are in place to allow staff a channel to raise appropriate concerns outside the normal line management chain.

Principle 5: Internal controls

A. The Commissioners and the Accounting Officer are responsible for ensuring that effective arrangements are in place to provide assurance on risk management, governance and internal control. In this respect, they will be independently advised by:

• a Corporate Governance Committee chaired by an independent adviser;

• an internal audit service operating in accordance with the principles of

Government Internal Audit Standards.

Supporting provisions

a) The Commissioners and Accounting Officer should assure themselves on the effectiveness of the organisation's internal control and risk management. This will necessitate:

• a proper framework of prudent and effective controls, so that risks can be assessed, managed and taken prudently;

• clear accountability for managing risks; and

• that managers are equipped with relevant skills and guidance.

b) The Commissioners should establish a Corporate Governance Committee, of at least three members chaired by an independent adviser. At least one of the committee members should have recent and relevant financial experience. The committee should be established and function in accordance with the principles set out in the Audit Committee Handbook.[12]

c) The terms of reference of the Corporate Governance Committee should be made available publicly. The Commission's annual report should cover the work of that Committee.

d) The internal auditors should be appointed by an open and transparent process following the production of an audit needs assessment and terms of reference.

November 2014

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