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All Aboard? Whitehall's new governance challenge

All Aboard? Whitehall's new governance challenge

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This summary report contains the Institute for Government's recommendations to ensure new look Whitehall boards can be as effective as possible. While new lead non-executive directors present an opportunity for improved boards, there remains some work to do to ensure they can overcome past problems.
This summary report contains the Institute for Government's recommendations to ensure new look Whitehall boards can be as effective as possible. While new lead non-executive directors present an opportunity for improved boards, there remains some work to do to ensure they can overcome past problems.

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Published by: Institute for Government on Feb 09, 2011
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09/29/2011

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Jonathan McClory, Vanessa Quinlan and Zoe Gruhn
 
ALL ABOARD?WHITEHALL’S NEWGOVERNANCE CHALLENGE
 
Summary document 
 
 
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Introduction
Management Boards in governmentdepartments have existed in one form oranother for nearly 20 years. Theirevolution as a fixture of Whitehallgovernance has varied significantly bydepartment, as some have embracedthem more enthusiastically than others.Previous, soft-touch attempts at reformhave been largely ineffectual instandardising or empoweringdepartmental Boards – not least becausethe remit and accountability of Boardsremain unclear.The new Coalition Government, however,has made explicit commitments tostrengthen departmental Boards andfoster a more business-like culturethrough a number of structural reforms.
Major structural changes to Boards areunderway and these reforms will beundermined if departments fail toarticulate the role of their Board
Major structural changes to Boards areunderway, and these reforms will beundermined if departments fail toarticulate the role of their Boards, theresponsibilities of its members, and theexpectations on the performance of thosein the boardroom.Having explored board structures in ourprevious report,
Shaping Up
, this projectfocuses on the performance of thoseindividuals serving on Boards, seeking tounderstand what characteristics are mostassociated with effective Board membersand what is required for thesecharacteristics to flourish. Our full reportis planned for publication in February2011.
New-look Boards
The Institute’s earlier research onWhitehall Boards reached the centralconclusion that the role of these Boards isoften poorly defined. From this centralproblem springs a number of issuesadversely affecting Board performanceincluding: poor engagement between theBoard and ministers; a lack of challenge inBoard discussions; misallocation of Boardtime and focus; ineffective use of non-executive directors; and opaqueaccountability arrangements.These issues have not gone unnoticed bythe new Government. Shortly after theGeneral Election, the Cabinet Officeoutlined the Coalition’s vision forgovernance reform, publishing anenhanced protocol for departmentalBoards. The protocol represents a genuineshake-up of Whitehall Boards and isbuttressed by strong political supportfrom the Prime Minister and the Ministerfor the Cabinet Office. The protocolintroduces several significant changesincluding:
 
Installing Secretaries of State asChairmen of their Department’sBoard
 
Altering the composition of Boardsto include junior ministers
 
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Reducing the number of officialson Boards and
 
Creating the new position of leadnon-executive director for eachBoard.Lead NEDs will have a key role to play onthese new-look Boards. They will serve asa mentor and adviser to the Secretary ofState in his/her role as Chairman of theBoard. Lead NEDs will also be responsiblefor coordinating regular meetings with therest of the department’s NEDs. They willregularly liaise with the government-widelead NED (Lord Browne of Madingley),providing him with feedback on theperformance of the Board and itsmembers. Finally, lead NEDs will be askedto assist in the recruitment of new non-executives to their Board.The addition of lead NEDs todepartmental Boards will significantlyalter the nature of the relationshipbetween non-executives and PermanentSecretaries as the latter will no longerhave unilateral power of appointmentover the former, as was previously thecase.
Setting out a clear role for departmentalboards
While these structural reforms aim toimprove departmental governance, theyfail to resolve the core issue afflictingdepartmental boards – namely thatneither the government nor departmentshave yet set out whether these boards willbe supervisory or advisory in nature.The enhanced protocol sets out the mainareas of responsibility for Boards.However, the ambiguity over the extentto which Boards might be drawn intomatters of a political in nature rather,than focusing exclusively on executionand delivery of policy could lead toconfusion of roles.
The ambiguity of boards’ role indecision taking on policy and operationwill likely prove problematic.
This problem is reinforced by the absenceof corporate ownership which bindsboards together as a corporate decisionmaking body. There are few mechanismsin place to deliver the sanctions andrewards required to support corporatedecision-making. Under proposedarrangements, the Board will takeresponsibility for setting strategy andresource allocation. However, the Board’sability to do so will be impacted by thefact that policy decisions, whichnecessarily affect resources and strategy,will take place outside of the Board.
Identity crisis: advisory or supervisory?
Lord Browne and Francis Maude havedescribed the new-look Boards as beingboth advisory and supervisory
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House of Commons Public AccountsCommittee,
 Accountability,
Corrected Transcriptof Oral Evidence (To be published as HC 740-i),19 January 2011, Q3.
. Howeverthe protocol emphasises the former. As aresult, boards will need to clarify roles,

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