Friends in NED: why the UK government needs independent non-executive directors
Growing allegations of cronyism have raised questions about non-executive directors’ influence and put pressure on the UK government to be more transparent about their appointment. Jack Aldane hears from current and former NEDs about why government still needs them and the case for greater diversity of selection.
Public interest in the relationships between ministers and non-executive directors (NEDs) peaked earlier this year when news broke of the UK’s then health secretary Matt Hancock’s affair with Gina Coladangelo, a NED he’d appointed to the Department of Health and Social Care. For many, it was a particularly lurid example of the government’s seemingly growing desire to create a ‘chumocracy’; politicians had gotten so comfortable with bringing allies from the outside in, that not even a global pandemic could deter them from their most self-serving impulses.
The Hancock-Coladangelo scandal is just one of a string of controversies surrounding appointments to public bodies in the last 18 months alone. The appointment of Tory peer Dido Harding to chair of the now discredited coronavirus Test and Trace programme is another example. More recently, briefings that Paul Dacre, the former editor of the Daily Mail, was at one stage the favoured candidate to chair media regulator Ofcom (he has since been found by a panel to be ‘unappointable’), another.
In light of such events, a panel including current and former NEDs came together at an online event hosted by think tank the Institute for Government (IfG) last month, to discuss the true value, purpose, and political integrity of NEDs and the effectiveness of the boards on which they sit.
NEDs are experts, usually from the private sector, who sit on departmental boards alongside ministers and senior civil servants. On paper, a NED’s job is to harness the rigorous techniques used to evaluate corporate performance to raise the game of government departments. But appointments such as Coladangelo’s provide a sense that whatever their original purpose, NEDs are a symptom of state cronyism that threatens the ethical standards on which positions of public office in the UK are meant to be based.
Under the current system, some argue, it is simply too easy for a minister to manipulate a departmental board into performing special advisor-like functions.
Danger of creating an echo chamber
“If that’s what happens, then the system won’t work,” said Sir David Lidington, former secretary of state for justice, leader of the House of Commons and minister for the Cabinet Office, during the IfG event. “You’ll actually get a board that provides an echo chamber for the secretary of state, which is pretty useless.”
Director at telecommunications company Liberty Global and former lead NED at the Foreign and Commonwealth Office, Miranda Curtis, said that a NED’s independence should not prohibit senior ministers from using them as “sounding boards” for challenges that invariably arise in crafting policy. Far from creating echo chambers, she argued, these exchanges enable ministers to glean expertise that they would not otherwise have access to.
“Everybody at a senior level, in any kind of organisation, actually does need someone to provide constructive challenges, someone to work with and mentor them,” she said. “There’s nothing shameful about it.”
Issues arise, however, when NEDs interfere in policy decisions. Before a NED accepts the role, they will know they have a duty to stay as far away from shaping and honing policy as possible. But as one audience member pointed out during the discussion, their appointment often appears to be politically motivated. When then minister for the Cabinet Office, Michael Gove, appointed four new non-executive directors in May 2020, for example, only one was not a longstanding political ally.
“The boundary of policy is a difficult one,” Curtis said. “Once a NED strays into policy, they cease to be independent, and I think they diminish their ability to be effective and to fulfil the role properly.”
Sue Langley, lead NED for the Home Office and former interim government lead NED noted the distinction between supporting on policy implementation and interfering in the development of the policy itself.
“We are not there to contribute to policy. Of course, we will all have a view. But that would make us political NEDs,” she said. “We are there to talk about the implementation of that policy, or the implications of that policy, and therefore to look at whether it could be tweaked in some way if it’s high risk or difficult to implement.”
Lidington resisted the suggestion, put forward by an audience member, that ministers ought to be constrained from exploiting the elasticity of departmental boards.
“You can put as many constraints [on ministers] as you want [but] it’s got to be a cultural understanding,” he said. “This is why I think you’ve got to go back to trying to foster an approach to government that combines collaboration with challenge and sees those two principles as being complimentary, and the necessary tension within them as complimentary.”
He added, however, that the danger of NEDs becoming political remains real, and that once that line is crossed, others inevitably will be too. “I certainly agree… that we should not bring in NEDs to determine policy. I mean, as soon as you drift into that way of thinking, you raise questions about whether NEDs should have a parliamentary confirmation hearing before their appointment.”
Broadening the scope of NED appointments
Lidington isn’t the first to infer that the process by which NEDs are appointed could be more thorough. Peter Riddell, the recently retired commissioner for public appointments, who has overseen appointments to public bodies for the last five years, raised concern about cronyism and diminishing diversity of thought, and recommended a new system that would open debate about how such appointments are made.
Some, like director of pressure group Unlock Democracy, Tom Brake, believe that not only open debate, but real change, is sorely needed. In an article which highlighted that NEDs are paid up to £20,000 (US$27,000) for 15 days’ work a year, The Guardian quoted Brake as saying that in many cases “better-qualified NEDs will lose out [in interviews] to ministers’ sidekicks, [and] the best qualified won’t bother to apply at all when they know they will fail the political loyalty test”.
The IfG event panel wouldn’t be drawn on this, but agreed that a primary focus of reform should be broadening the scope of NED appointments, so that people of a certain profile or who live outside the south-east of England who are typically left out of the hiring process are included.
“Part of the risk of not having [NEDs] in full-time employment is that you end up with people who are either at a late stage in their career, or who can afford to do it [at an earlier stage]. That’s not necessarily healthy for the organisation,” said Curtis.
Langley agreed. “We cannot allow these roles to become just the people who can afford to do it,” she said. “I do a lot of speaking on social mobility as an EastEnder [a person from the traditionally deprived area east of the City of London], so I feel very strongly about that. It’s really important that we bring in private sector people that still have other interests.”
Dame Una O’Brien, former permanent secretary at the Department of Health, emphasised “a big south-east dimension” to current departmental board members. “[Boards] have been constructed so it’s been easy for people to turn up in person [in Whitehall], but I would certainly like to see more determined attention to make sure that there are people contributing from different parts of the country.
“We haven’t really paid enough attention to place. I think that that certainly could be addressed in the next phase of recruitment.”
There is no question that departmental boards serve a much-needed purpose and that the non-executive directors who sit on them are an important aspect of external oversight. But if people are to trust that NEDs are truly independent, and that that neutrality facilitates effective government rather than the self-interest of the hired individual or the relevant minister, the system will need some decisive tweaks. Perhaps ‘levelling up’ in this respect means levelling as well as widening the playing field on which NEDs are selected to begin with. Hiring more NEDs from diverse backgrounds and regions across the UK, and who don’t have personal loyalties to ministers, would be a good place to start.
About Jack Aldane
Jack is a British journalist, cartoonist and podcaster. He graduated from Heythrop College London in 2009 with a BA in philosophy, before living and working in China for three years as a freelance reporter. After training in financial journalism at City University from 2013 to 2014, Jack worked at Bloomberg and Thomson Reuters before moving into editing magazines on global trade and development finance. Shortly after editing opinion writing for UnHerd, he joined the independent think tank ResPublica, where he led a media campaign to change the health and safety requirements around asbestos in UK public buildings. As host and producer of The Booking Club podcast – a conversation series featuring prominent authors and commentators at their favourite restaurants – Jack continues to engage today’s most distinguished thinkers on the biggest problems pertaining to ideology and power in the 21st century. He joined Global Government Forum as its Senior Staff Writer and Community Co-ordinator in 2021.
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