SHEX BOARD’S REMIT
Purpose: for discussion
I said at our last Board meeting that I would give consideration to the Board’s terms
of reference in the light of our experience both as an Advisory Group and as a Board
over the last three years.
Briefly, by way of history:
- on my arrival as Chairman in Summer 2007 I was charged with setting up an
Advisory Group which was duly established at the end of 2007
- since late 2008 its remit was extended to cover OEP issues, both in relation to
the asset management strand and latterly property
- in 2009, the Advisory Group metamorphosed into a Board, principally because
the Prime Minister announced that Gerry and Pat would be joining the “ShEx
Board”
- at the same time it was decided that the ShEx reporting lines should be
widened so that we report regularly on our OEP activities to PSX via CST. In
reality, this process has never been properly formalised, although the
relationship with CST on the OEP asset agenda was much closer than before
- since the election, further complexities have been introduced with the setting
up of ERG in the Cabinet Office. Whilst ShEx has retained responsibility for a
now expanded property function, in all material respects the Property Unit
reports to the Permanent Secretary in the Cabinet Office responsible for ERG,
rather than to CST
- the asset programme under this Government is now starting to be clarified and
is likely to be led by a sub-committee of PSX, with ShEx playing a major role
as HMT’s delivery agent.
J attach the Terms of Reference which we agreed in October 2009. Much of the detail
will need to be updated in the coming months, eg in respect of “son of OEP”
arrangements, but I believe the Board’s essential underlying purpose and function has
changed little over the last three years.
The very nature of ShEx, operating as we do within Government/ the Civil Service
and as a group within a Department, means that our governing body cannot have the
same powers and responsibilities as a corporate board, whether or not we choose to
style that body a “Board” or an “Advisory Group”; for instance, policy is decided by
Ministers and our budget is set by the Department, not in either case by the Board. On
the other hand, the Board’s role goes well beyond - putting it baldly to emphasise a
point - offering a few words of advice which the Executive is free to take on board or
ignore as it feels fit.
Paragraph 7 of the existing Terms of Reference sets out the Board’s overall remit:
“The Board has an advisory role in relation to the work of the Shareholder Executive
as a whole. This will include setting strategic direction in the light of Ministerial
objectives, periodically reviewing the delivery of objectives as set out in the Business
Plan and considering any specific issues referred to it by the Executive Committee”.
This still holds true but, more specifically, the Board should expect to:
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- whilst not responsible for policy formulation, give advice on the operational
implication and effectiveness of policy proposals having a significant impact
on ShEx’s work
- provide independent support, guidance and challenge on the progress and
implementation of the business plan
- ensure the sound financial management of ShEx in the context of the business
plan
- review the progress and status of big projects, with particular focus on value
for money for the tax payer
- be consulted on the cost/ benefit analysis for all major initiatives
- protect, promote and enhance ShEx’s reputation both within Whitehall and in
the wider business and financial community.
What happens if the Board’s advice is ignored? In theory, this could happen in two
principal ways: first, if the Executive submits advice to Ministers which is not in
accordance with the Board’s views; and secondly, if Ministers reject advice given to
them by ShEx. Such situations are unlikely to occur in practice, but it should always
be open to the Board to seek a meeting with the Permanent Secretary to discuss its
concerns. The ultimate sanction for any Board member is resignation.
J hope that this note is helpful in setting out my thoughts on what I believe is expected
of the Board. Whilst it is important that the Board does not try to assume
responsibility for issues not strictly within its purview, it is critically important that
Board members believe that their contribution is important, effective and valued. We
can discuss this at next month’s Board meeting but, if any of you have significant
reservations about anything in this note, I would appreciate an earlier call.
PJR
August 2010
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Governance of the Shareholder Executive
Purpose: for information
1.
The Shareholder Executive was formed in 2003 to improve the Government’s
performance as a shareholder in businesses. It now has a portfolio of 25-30 complex
businesses in which Government has a shareholding, and works with government
departments and management teams to help these businesses perform better. The
Shareholder Executive has developed a wider role as a corporate finance resource
within government which includes advising on launch aid, regional and industrial
assistance and rescue aid.
Building on these roles, since late 2008 the Shareholder Executive has acted as
programme manager for the asset management strand of the Operational Efficiency
Programme (OEP). This has involved reviewing selected corporate assets from the
perspective of efficiency, commercialisation and alternatives to public sector
ownership. These assets are now being brought into the core portfolio and the
Shareholder Executive is tasked with coordinating and accelerating the sale of corporate
assets as well as an ongoing role in identifying further corporate assets suitable for
review.
The remit of the Shareholder Executive has also been extended to include public sector
property following the recommendations of the property strand of the OEP. A new
unit is being created within the Shareholder Executive to provide a central source of
property advice across the public sector. It will identify surplus assets, assist with
portfolio coordination, act as a source of expertise and support complex land and
property transactions.
The Shareholder Executive will report regularly on its OEP activities to the Ministerial
Committee on Public Services and Public Expenditure (PSX) via the Chief Secretary to
the Treasury (CST). These reporting arrangements will be an adjunct to its formal
accountability through the BIS Permanent Secretary as Accounting Officer and to
Ministers.
In light of these changes the governance structure for the Shareholder Executive has
been reviewed. The new structure reflects the need to balance the specific requirements
in relation to the OEP with management and oversight of the core activities of an
enlarged Shareholder Executive.
SHAREHOLDER EXECUTIVE: PROPOSED GOVERNANCE STRUCTURE
‘Shareholder Executive Board
Asset Programme
Group
Ex Co
Property
Programme Group
Corporate Finance Asset Management Property
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Shareholder Executive Board
6.
9.
The Board oversees the work of the Shareholder Executive on the OEP and will
approve reports to CST on progress with achieving greater efficiency,
commercialisation and eventual disposals of corporate and property assets, for onward
transmission to PSX. Where these reports give rise to concerns about the pace of
change, or suggest potential opportunities for further efficiency gains, the Board will
flag these up for consideration by PSX.
The Board has an advisory role in relation to the work of the Shareholder Executive as
a whole. This will include setting strategic direction in the light of Ministerial
objectives, periodically reviewing the delivery of objectives as set out in the Business
Plan and considering any specific issues referred to it by the Executive Committee.
The Board is chaired by Philip Remnant, Chairman of the Shareholder Executive. The
Chief Executive, Deputy Chief Executive and Head of Property are executive Board
members. In addition to the Chairman, the Board currently consists of five non-
executive members with experience of the existing and new areas of the Shareholder
Executive’s business. Remuneration of non-executive Board members is in line with
current practice in the Department for Business, Innovation and Skills.
The Board meets six times a year in central London.
Executive Committee
10.
12.
13.
The Executive Committee is responsible for the day-to-day running of the Shareholder
Executive across the three strands of corporate finance, corporate asset management
and property. The Committee will regularly review progress with meeting objectives as
set out in the Business Plan. It will determine policies and procedures for the
Shareholder Executive within the framework of BIS policies and the direction set by the
Board. The Committee has the authority to make decisions.
The Executive Committee is chaired by the Chief Executive of the Shareholder
Executive. The Deputy Chief Executive, Head of Property and Chief Operating Officer
are members. Other members of the Executive Committee may be appointed by the
Chief Executive.
The Executive Committee has access to ad hoc advice from the Chairman and non-
executive members of the Shareholder Executive Board as required.
The Executive Committee meets at least fortnightly.
Board sub-groups
14,
For a transitional period the Board will have two sub-groups, the Asset Programme
Group and Property Programme Group. The Programme Groups will provide
coordination and oversight for activity undertaken as part of the asset management and
property strands of the OEP respectively. They will regularly review progress against
plans, identifying corrective action where this falls behind trajectory. It will be the
responsibility of the relevant team in the Shareholder Executive to take such action or
to agree with members of the Programme Group that they will take it. The Programme
Groups will report to the Executive Committee, providing input to the progress reports
prepared for CST and PSX.
Membership of the Programme Groups will be drawn from the Shareholder Executive,
HMT (public expenditure and corporate & private finance teams) and, for the Property
Programme Group, the Office of Government Commerce. The Asset Programme
Group will be chaired by Gerry Grimstone and the Property Programme Group by Lord
Carter of Coles.
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