Government non-exec directors to undergo parliamentary probe

Written by Tevye Markson and Sam Trendall on 15 June 2022 in News
News

MPs will consider the duties and accountability of NEDs

Credit: Tom Chapman/CC BY 2.0

Parliament’s Public Administration and Constitutional Affairs Committee has launched an inquiry into the role and regulation of non-executive directors in government amid concern over "cronyism".

The inquiry will investigate the trend towards ministers appointing political allies as non-executive directors.

PACAC will also examine how conflicts of interest are managed, the lack of independent regulation for both NEDs’ activities and their appointment, and what work it is appropriate for NEDs to undertake.

Non-executives are appointed by secretaries of state to sit on the boards of government departments and challenge departments on their performance and delivery.

“The government point to non-executive directors as an important part of civil service governance, with the ability to wield considerable influence over departmental direction and delivery, yet there is little awareness of what they do," PACAC chair William Wragg said. “Several appointments have also raised questions about the appointment process itself and the absence of independent oversight. Our inquiry aims to shed light on the activities of non-executives and consider how they should be held accountable.”

The ministerial code states appointees should be drawn largely from the commercial private sector.


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In recent years, the technology sphere has provided government with an array of prominent non-execs, including former Amazon UK chief Doug Gurr, who was part of the Department of Health and Social Care boardroom between 2019 and 2021, current Home Office board member Tim Robinson, a former IBM and Thales senior manager, and Henry de Zoete – a Cabinet Office non-executive famed for negotiating a record-breaking investment in his online business on TV’s Dragons’ Den, as well as being a key figure in the Vote Leave campaign of 2016.

Last year, the Department for Digital, Culture, Media and Sport added a brace of tech execs to its boardroom line-up, including Deliveroo chair Claudia Arney as its lead NED, as well as Priya Lakhani, founder and CEO of AI learning specialist Century Tech.

Last year, think tank the Institute for Government found that 20% of non-executive directors surveyed had political experience.

MPs’ inquiry will also look into the lack of transparency about the role and activities of an NED.

Government committed to “make better use of NEDs to challenge performance in their departments and across government” in the Declaration on Government Reform published last June. This included ensuring that every department has a delivery board with NED involvement to monitor performance on Outcome Delivery Plans. However, there is not yet any information available on NEDs’ activities.

The reform plan also included plans to review what roles in governance are appropriate for NEDs.

The PACAC review comes amid increased scrutiny of government non-execs. The government was acused of “naked cronyism” by Labour last month for appointing a businessman who had donated more than £700,000 to the Conservatives in the last seven years. Oluwole Kolade was appointed as a non-executive director and deputy chair of NHS England for three years on 31 March.

And last summer Labour called for a crackdown on appointments to departmental boards after it emerged that then-health secretary Matt Hancock had made his aide and lover Gina Coladangelo a Department of Health and Social Care non-exec. Coladangelo was one of 16 NEDS – of a total of around 80 – with close ties to the Conservative Party, the campaign group Open Democracy said at the time.

They included former Conservative and UKIP MP Douglas Carswell and former Conservative vice-chair – and Jacob Rees-Mogg’s business partner – Dominic Johnson, both at the Department for International Trade; and Nick Timothy, former joint chief of staff to Theresa May, at the Department for Education.

Labour’s criticism followed an earlier warning by then-public appointments commissioner Peter Riddell about “growing concerns” over political bias and the lack of regulation of NED appointments.

"The original idea of bringing in people with business and similar experience from outside Whitehall has been partly replaced by the appointment of political allies of ministers, in some cases without competition, and without any form of regulatory oversight,” he wrote in a letter to Lord Jonathan Evans, chair of the Committee on Standards in Public Life, in late 2020.

 

About the author

Tevye Markson is a reporter at PublicTechnology sister publication Civil Service World, where a version of this story first appeared. He tweets as @TevyeMarkson.

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