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UK Government Investments
Framework Document
April 2018
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UK Govemment
Investments
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UK Government
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© Crown copyright March 2018
This publication is licensed under the terms of the Open Government Licence v3.0 except
where otherwise stated. To view this licence, visit nationalarchives.gov.uk/doc/open-
jovernment-licence/version/3.
Where we have identified any third party copyright information you will need to obtain
permission from the copyright holders concerned.
This publication is available at www.gov.uk/government/publications.
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Contents
INtrOCUCTION .........seeeeseseseseseseeeseessesssesssessses cusseseussssessssesssssssssscesscesssesseasseasssasssasesssesisseisieess 7
Background...
Purpose and Objectives oo... ec ceceeseseeseceseseeeseee ceeesesseceeeesecseeseseseeseaeeaessesieseeesaeeaeeaesaeseeenee 9
PUPPOSC......eeeccee cece ccc cececceceeseeeeseecseseceesanee ceeceeacsesesessecensececsesessesassssenesseseseeseeesessesesonaeees 9
Objectives
Governance and accountability.
Ministerial responsibility
Principal Accounting Officer
Responsibilities of UKGI’s chief executive as Accounting Officer ...........ccceceeeteeeeeee 10
Corporate Governance .........ccccceecceseseseeeeeeseseseeeee ceseeeeseseeesseseeaeseeesseeetseeesseeeneeeeeeeaeeeneeeeaes 13
Shareholder relationship 0.0.0... cece cee cesses neeneeceeceensnecsnecenecsnenseesenesenenaneee 13
Customer responsibilities... cece ce cceeeeeeneeeeee ceeeeeseeeeseeeeeeeeeseneseeeeeesaeeseeeeeeeeeseeeeeaees 14
The UKGI Board ........ccccccccscececeseseseceseeseenes sesescsescsesssesesesesesesesesesseeesieeenetensteatenae o8 16
Board appointments
Board composition
Board responsibilities
Responsibilities of the Chair
Board members...
Board Committees .
The Board's Freedom to Ac
Annual report and ACCOunt ............cccccccceecceeeccecee ceseeeeecscsecaesesesseecseseseeaseeseseseeeenseeecasneees 22
Internal AUIt 2... eee ecee eee eeeeeeeenenenee sesnessnsssnsssnsssesssnsssnsssnssssssssesisesieesieeeeeieeeiee coe 22
External AUGit.......cccccecesseessseseeseseeesesesssssee sesussssesssesssssesessssesisissessssssesissssisssseaeessanen ote 23
Access to UKGI records and personnel ...........sccscsssesese cessesssesseeseseneenenenensnensnensneanees 23
Management and financial responsibilities «2.0.0.0... cece cece cee eee teee eee teeeeteneeneteeneee 24
Grant-in-aid and any ring-fenced grants..........0...c:cccee cece cscs e secs cee ceeeeeesseecaeseeeeneneeaeneeeee 24
Risk management........
Providing Budget monitoring information
Delegated authorities
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Board responsibilities «2.0.0.0... ccceceeecceccceeecsee ceseseeececseceesecessasesseseseeeaseseeeessesenseeeenenesines
Staff costs .
Pay and conditions
Pensions, redundancy and compensation. ..............:0:c:ccc0: ceseeeceeses cesses ceteeeeeeetecesseeaeaeeee 28
End Matters ..........cccecssesesesssessseessesssesssesssnsss seseessesnseesseesseesseessvesseesseessvessnessnesinesinesinine cases 29
Review Of UKGI’s Status..........cccccceseessseseseseseessssstesssessssssesssessnes seesseanssesesesssseeeseaeensseses 29
Appendix A o....cceccecececce cece cscseeecscecseseceeseene seeeeeesessnsecessesessesesseseeeseceseessesseessnseeanenens ceeiee 30
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Introduction
1.1. This framework document (the “Framework Document”) has been drawn up by
HM Treasury in consultation with UK Government Investments Limited (“UKGI”) (the
“Company”) a private limited Government-owned company.
1.2 This document sets out the broad framework within which UKGI will operate.
The document does not convey any legal powers or responsibilities. It is signed and
dated by HM Treasury and UKGI. HM Treasury will place copies of the document in
the Libraries of both Houses of Parliament and UKGI will make it available to members
of the public on the gov.uk website.
1.3. This Framework Document should be interpreted in the light of the Company's
articles of association and English company law and is without prejudice to the
statutory and other rights and obligations of HM Treasury or the Company.
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Background
2.1. The Prime Minister and Chancellor of the Exchequer announced in May 2015
that the Shareholder Executive group from the Department for Business, Innovation
and Skills would form the basis of UK Government Investments Limited, a new
Government company owned by HM Treasury. The Chancellor of the Exchequer also
announced that UK Financial Investments Limited (“UKFI”), a company owned by HM
Treasury would become a subsidiary of the new company and the two would merge
over time.
2.2 From 1 April 2016, the functions and operations of the Shareholder Executive,
formerly a group within the Department for Business, Innovation and Skills, were
transferred to the Company.
2.3. Furthermore, on 1 April 2016 HM Treasury’s entire shareholding in UKFI was
transferred to the Company.
2.4 On 31 March 2018 the operations and staff of UKFI were transferred to UKGI
and UKFI ceased operating. Responsibility for the execution of the former UKFI’s
investment mandate (which provided the framework by which UKFI developed and
executed its investment and management strategy) also transferred to UKGI at this
time. HM Treasury and UKGI have entered into a memorandum of understanding
(“MoU”) in relation to the management by UKGI of NatWest Group plc and UK Asset
Resolution(“UKAR’) (including UKGI’s management of agreements under which loan
facilities are made available by HM Treasury to UKAR, and arrangements put in place
by HM Treasury in respect of UKAR). The MoU builds on the former UKFI framework
document and investment mandate.
2.5 HM Treasury has secured a power in section 32 of the Enterprise Act 2016 to
fund UKGI.
This Memorandum of Understanding with HM Treasury was updated on 23 July 2020 to reflect
RBS Group Plc changing its name as a parent group to NatWest Group plc.
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Purpose and objectives
Purpose
3.1. The Company’s overarching purpose is to be the UK Government's centre of
excellence in corporate finance and corporate governance.
Objectives
3.2. Torealise this purpose, the Company will deliver, as agreed with HM Treasury,
against the following objectives (“Objectives”) to:
* prepare and execute all significant corporate asset sales by the UK
Government;
+ to advise on other major corporate finance matters, including all major UK
Government financial interventions into corporate structures and on major
UK government corporate finance negotiations; and
+ act as shareholder for, and lead establishment of, UK Government arm’s-
length bodies, as required and in line with HMT priorities.
3.3. The UK Government's stated policy aim is that it should not be a permanent
investor in UK financial institutions and other commercial enterprises it does not
have a policy reason to retain. The Company should, having regard to this
policy objective, develop and execute an investment strategy for disposing of
those investments in an orderly and active way, to protect and create value for
the taxpayer. In doing so, the Company should, where applicable, (i) seek to
maintain financial stability by having due regard to the impact of transactions it
executes, and (ii) act ina way that promotes competition and orderly competitive
markets consistent with a UK financial services industry that operates to the
benefit of consumers and respects the commercial decisions of those financial
institutions. The Company should manage any investments or assets in a
commercial way, exercising any rights attaching to the Government's
shareholding in them.
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Governance and accountability
Ministerial responsibility
4.1. The Chancellor of the Exchequer will account for the activities of UKGI in
Parliament. Responsibility may be delegated to another HM Treasury Minister. At the
time of publication this is the Economic Secretary to the Treasury.
Principal Accounting Officer
4.2. The Principal Accounting Officer (“PAO”) of HM Treasury is accountable to
Parliament for the issue of any grant-in-aid to UKGI. The PAO is also responsible for
advising the responsible Minister on:
* an appropriate framework of objectives and targets for UKGI in the light of
the department's wider strategic aims and priorities;
* an appropriate budget for UKGI in the light of the department's overall public
expenditure priorities; and
+ how well UKGI is achieving its strategic objectives and targets, and whether
it is delivering value for money.
4.3. The PAO is also responsible for ensuring arrangements are in place in order to:
* monitor UKGI’s activities;
+ address significant problems in UKGI, making such interventions as are
judged necessary;
+ periodically carry out an assessment of the risks both to the department and
UKGl’s objectives and activities;
+ inform UKGI of relevant Government policy in a timely manner; and
+ bring concerns about the activities of UKGI to the Board, and, as
appropriate, to the departmental board requiring explanations and
assurances that appropriate action has been taken.
4.4 The Enterprise and Growth Unit in the department is the primary contact for the
Company. It is the main source of advice to the responsible Minister on the discharge
of his or her responsibilities in respect of UKGI. They also support the PAO on his or
her responsibilities toward UKGI.
4.5 The PAO has designated the chief executive of UKGI as UKGI’s Accounting
Officer.
Responsibilities of UKGI’s chief executive as Accounting Officer
4.6 The chief executive as Accounting Officer for UKGI is personally responsible for
safeguarding the public funds for which he or she has charge; for ensuring propriety,
regularity, value for money and feasibility in the handling of those public funds; and for
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the day-to-day operations and management of UKGI. In addition, he or she should
ensure that UKGI as a whole is run on the basis of the standards, in terms of
governance, decision-making and financial management that are set out in Box 3.1 of
Managing Public Money.
4.7 As Accounting Officer, the chief executive has specific responsibilities to
account to Parliament as covered by the Accounting Officer’s letter of appointment and
as described in Managing Public Money. The accountabilities include:
« signing the accounts and ensuring that proper records are kept relating to
the accounts and that the accounts are properly prepared and presented in
accordance with any directions issued by the Treasury;
* preparing and signing a Governance Statement covering corporate
governance, risk management and oversight of any local responsibilities, for
inclusion in the annual report and accounts;
+ ensuring that effective procedures for handling complaints about UKGI are
established and made widely known within UKGI;
« acting in accordance with the terms of this document, Managing Public
Money and other instructions and guidance issued from time to time by the
Department, the Treasury and the Cabinet Office;
+ giving evidence, normally with the PAO, when summoned before the PAC
on UKGI’s stewardship of public funds.
4.8 Particular responsibilities to HM Treasury include:
+ establishing, in agreement with the department, UKGI's corporate and
business plans in the light of the department's wider strategic aims and
agreed priorities;
« informing the department of progress in helping to achieve the department’s
policy objectives and in demonstrating how resources are being used to
achieve those objectives; and
«ensuring that timely forecasts and monitoring information on performance
and finance are provided to the department; that the department is notified
promptly if over or under spends are likely and that corrective action is
taken; and that any significant problems whether financial or otherwise, and
whether detected by internal audit or by other means, are notified to the
department in a timely fashion.
4.9 Unless agreed by HM Treasury, UKGI will follow the principles, rules, guidance
and advice in Managing Public Money to the extent applicable, referring any difficulties
or potential bids for exceptions to the sponsor team in HM Treasury in the first
instance.
4.10 The chief executive is responsible for:
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+ advising the board on the discharge of UKGI’s responsibilities as set out in
this document and in any other relevant instructions and guidance that may
be issued from time to time;
+ advising the board on UKGI’s performance compared with its objectives;
+ — ensuring that financial considerations are taken fully into account by the
Board at all stages in reaching and executing its decisions, and that financial
appraisal techniques are followed;
+ taking action as set out in paragraph 3.8.6 of Managing Public Money if the
board, or its chairman, is contemplating a course of action involving a
transaction which the chief executive considers would infringe the
requirements of propriety or regularity or does not represent prudent or
economical administration, efficiency or effectiveness, is of questionable
feasibility, or is unethical.
4.11 The Company chief executive will be authorised to act as the "qualified person"
under section 36(5)(0) (iii) of the Freedom of Information Act 2000.
Parliament
4.12 The chief executive, chair, deputy chair and other members of UKGI will attend
meetings of relevant Parliamentary committees (including the PAC and the Treasury
Select Committee) as appropriate, for scrutiny and otherwise to answer questions
about the Company.
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Corporate Governance
Shareholder relationship
5.1. HM Treasury's relationship with the Company will be underpinned by the
principles of the UK Corporate Governance Code, so far as applicable to its
circumstances. The Board of the Company are responsible for the day to day running
of the Company. In normal circumstances, and save as provided in this Framework
Document, the Treasury will not intervene in the running of the company. Subject to
this Framework Document, any decisions taken by the Board (or any committee of the
Board) will be taken in accordance with the directors’ statutory, common law and
fiduciary duties. The Chief Executive, as Accounting Officer, must take care that his or
her personal legal responsibilities do not conflict with his or her duties as a board
member. In particular, the Accounting Officer should vote against any proposal which
appears to cause such a conflict; it is not sufficient to abstain.
5.2 The Company will operate a corporate governance structure that provides a
relationship between its Board and HM Treasury which, so far as practicable and in
the light of the other provisions of this Framework Document or as otherwise may be
agreed with HM Treasury, accords with best corporate governance practice.
5.3 Interactions between the Treasury and the Company must be conducted in a
professional, efficient, and trust-based dialogue:
+ professional: professional people engaged in dialogue relevant to delivering
the Company’s objectives, with commitments delivered on time and to
specification;
* efficient: both parties ensuring a joined-up and efficient approach amongst
their respective constituent elements; and
+ trust-based: open dialogue, based on a shared commitment to providing the
Company with the ability to realise its purpose and pursue the Objectives
effectively.
5.4. HM Treasury, in consultation with the Company, will be entitled to reports or
other information, on reasonable notice, to enable the performance of the Company to
be assessed and as part of its broader oversight of the Company. The Company shall
report financial and non-financial performance, including performance in helping to
deliver ministers’ policies, and the achievement of key objectives regularly.
5.5 The Company’s performance against the Objectives will be monitored by the
following means:
+ quarterly shareholder meetings between representatives of HM Treasury
and the Company to discuss the Company's activities and performance
against the Objectives. Each meeting is primarily intended to be weighted
towards being a forward-looking and risk-based analysis of progress against
the UKGI Budget and Objectives;
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+ the Company will promptly and without delay disclose to HM Treasury any
information regarding the Company that may otherwise have a significant
bearing on the delivery of, or may have a significant impact on, the
Objectives;
+ in addition to the regular shareholder meetings, at HM Treasury’s request,
the directors or other representatives of the Company will meet HM Treasury
representatives to discuss the affairs of the Company; and
+ in addition to the monitoring procedure described above, HM Treasury will
be entitled on reasonable notice to such information in relation to the affairs
of the Company as it may consider necessary or desirable from time to time.
5.6 HM Treasury has the following rights (the “Shareholder Reserved Matters”):
+ appointment of the Company’s Chair;
* appointment of the Company’s Chief Executive;
* appointment of the Shareholder Representative Director;
* approval of other appointments to the Board;
+ setting the Company’s Objectives;
* approving the Company’s forward strategy or high level priorities;
* approval of the terms (including remuneration and policy regarding payment
of expenses) of all appointments to the Board;
* approval of the remuneration framework for all staff including executive
directors and individual pay awards outside the delegated framework;
* approval of the UKGI budget and funding.
5.7 Details on arrangements for appointments are set out in section 6 of this
Framework Document.
5.8 In view of HM Treasury's broader functions, including its functions in relation to
financial stability and financial and economic policy, HM Treasury reserves the right,
on an exceptional basis, to give the Board directions of a general or specific nature
from time to time. The Board will comply with such directions, providing they are in
accordance with statutory, common law and fiduciary duties, or resign. HM Treasury
will, in making any such direction, have regard to the Objectives. Such directions will
be given in writing and will be promptly published by HM Treasury unless financial
stability or economic conditions require that publication is delayed or withheld.
Customer responsibilities
5.9 The Company will provide independent advice in areas pursuant to the
Company's Objectives to Government departments and their Ministers to deliver such
department's objectives. Any direct engagement with assets or projects will formally be
as an agent of the relevant client departments.
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5.10 To facilitate UKGI in managing its work and resources, and to enable the
constructive engagement of UKGI with the departments it provides advice to,
memoranda of understanding will be put in place for the benefit of UKGI and the
departments it works with. These arrangements should ensure that UKGI is
indemnified by departments where it acts as the agent of a department in accordance
with a departmental decision.
5.11 The Company will have access to sensitive or confidential information through
working with Government departments and their assets or projects. The Company
must establish professional customer relationships and give departments confidence
in its services. HM Treasury acknowledges that, when working for Ministers in other
Government departments, the Company will therefore treat its customer's sensitive or
confidential information and the advice it provides to its customers with the same
degree of confidentiality as that Minister might expect of his or her own officials, in
accordance with the Civil Service Code.
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The UKGI Board
Board appointments
6.1. The UKGI chair and non-executive board members are appointed for a period of
three years by Treasury Ministers. Such appointments will comply with the
Commissioner for Public Appointments Code of Practice for Ministerial Appointments to
Public Bodies and may be subject to regulation as determined by government policy
and the legal framework at the time an appointment is made.
6.2 The Chief Executive is appointed by Treasury Ministers in consultation with the
Chair.
Board composition
6.3 Inline with the Government's Code of good Practice’ the composition of the Board
is a critical factor for HM Treasury. The aim is to secure an environment in which HM
Treasury and the Chair share a common view regarding the composition of the Board
and proposals for succession, taking into account the balance of experience, skills,
diversity and background required. To this end, the following will apply:
i. the Board will consist of no fewer than 5 directors;
ii. the Chair and other independent, non-executive private sector directors are to
constitute the majority of the Board;
iii. HM Treasury will appoint the Chair, Chief Executive and Shareholder
Representative Director, and will approve other appointments to the Board;
iv. HM Treasury will consult with the Chair about the identity of the proposed
Shareholder Representative Director;
v. the nominations committee of the Board will be responsible for considering and
making recommendations in respect of appointments to the Board and
approving executive appointments to the Board in addition to the CEO;
vi. the Chair and HM Treasury will discuss the proposals for appointments and
succession on a regular basis;
vii. the Board must ensure that, at least annually, suitably rigorous appraisals are
made of the effectiveness of the Board, its committees and individual members
of the Board;
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viii. the Chair is responsible for periodic internal and external reviews of Board
performance, composition and succession planning; and
ix. HM Treasury retains responsibility for conducting overall evaluation and review
of the Chair's performance.
Board responsibilities
6.4 The Board will meet at least six times per year.
6.5 The Board must provide strategic direction to the Company, and ensure it is
equipped to perform its functions, including having sufficient resourcing and a suitable
organisational structure.
6.6 The Board should enable effective arrangements to be put in place to provide
assurance on risk management, governance and internal control. The Board is expected
to assure itself of the effectiveness of the internal control and risk management systems.
6.7 The Board will have specific responsibility for UKGI matters, including:
i. recommendations to HM Treasury of appointments to the Board; and
ii. reviewing and managing the Company’s risk.
6.8 The Board will have specific responsibility for Company matters including:
i. monitoring and reviewing performance of the Company;
ii. agreeing a business plan and the accounts, seeking agreement from HM
Treasury as required in this Framework Document;
iii. establishing and delivery of the Company Objectives, ensuring that the
responsible Minister is kept informed of any significant changes which are
likely to impact the attainability of Objectives;
iv. in-depth consideration of Company matters that the Board deems
significant including new projects, exiting projects, approvals and
endorsement of advice;
v. collectively supporting the Accounting Officer to account to Parliament for
the Company's performance and stewardship of public funds;
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vi. demonstrating high standards of corporate governance at all times,
including by using the audit committee to help the Board to address key
financial and other risks; and
vii. ensuring that any statutory or administrative requirements for the use of
public funds are complied with; that the Board operates within the limits of
its authority and any delegated authority agreed with HM Treasury, and in
accordance with any other conditions relating to the use of public funds;
and that, in reaching decisions, the Board takes into account guidance
issued by HM Treasury.
6.9 In addition, HM Treasury does not condone rewards for failure, and would expect
the Board to support the removal of any director or member of senior management
responsible for a serious failure to adhere to the Budget, comply with the arrangements
in this Framework Document or for any other serious failure.
Responsibilities of the Chair
6.10 He or she is responsible for ensuring that policies and actions support the
responsible Minister's and where relevant other Ministers’ wider strategic policies and
that the Board’s affairs are conducted with probity. Where appropriate, these policies
and actions should be clearly communicated and disseminated throughout UKGI.
6.11. In addition, the Chair has the following leadership responsibilities:
+ formulating the Board’s strategy;
+ enabling the Board, in reaching decisions, to take proper account of
guidance provided by the responsible Minister or the department;
* promoting the efficient and effective use of staff and other resources;
+ delivering high standards of regularity and propriety; and
* representing the views of the Board to the general public.
Board members
6.12 Individual Board members should:
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* comply at all times with the Code of Conduct for Board Members of Public
Bodies and with the rules relating to the use of public funds and to conflicts
of interest;
+ not misuse information gained in the course of their public service for
personal gain or for political profit, nor seek to use the opportunity of public
service to promote their private interests or those of connected persons or
organisations;
« comply with the Board’s rules on the acceptance of gifts and hospitality, and
of business appointments; and
* actin good faith and in the best interests of the Company.
Board Committees
6.13 The Board will have the following committees:
. Remuneration committee
The remuneration committee will be responsible for setting the remuneration
within the framework agreed by HM Treasury for all employees and for ensuring
remuneration arrangements, including any incentivisation packages, are
informed by relevant benchmarks.
The remuneration committee will also set policy and arrangements in
accordance with the following criteria, such that remuneration levels:
i. are sufficient to attract and retain the high calibre individuals necessary
to drive the delivery of the Objectives;
ii. are reconciled to performance, adherence to the Budget and delivery of
the Objectives; and
iii. deliver value for money.
The Board will appoint one of the Company's independent non-executive
directors to chair the remuneration committee.
. Audit and risk committee
The audit and risk committee will be responsible for monitoring, oversight and
advice to the Board for financial reporting, external and internal audit, internal
control and risk, whistleblowing procedures and compliance.
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A suitably qualified director of the Company will be appointed by the Board as
the chair of the audit and risk committee.
. Nominations committee
The nominations committee will be responsible for considering and making
recommendations to the Board in respect of appointments to the Board and
approving executive appointments.
In addition, the nominations committee will make recommendations in respect
of membership and chairmanship of Board committees.
The chair of the nominations committee will be the Chair.
e Transactions committee
The transactions committee is responsible for determining advice to HM
Treasury and Ministers on the stewardship of, and preparation and execution
of disposal strategies for, assets in relation to which the Government has
determined it has no policy reason to retain, including but not limited to the
Government's investments in NatWest Group plc and UK Asset Resolution.
The UKGI Board has delegated to the transactions committee the responsibility
for determining the advice to HM Treasury or Ministers on these matters.
Such advice will not be subject to further approval by the Board. Final decisions
on which assets are delegated to the transactions committee are to be made
by the Board, in agreement with HM Treasury and, where applicable, the
relevant sponsor department.
A suitably qualified director of the Company will be appointed by the Board as
the chair of the transactions committee.
The Board’s Freedom to Act
6.14 HM Treasury is committed to giving the Board the commercial freedom to adhere
to the UKGI Budget and fulfil and deliver the activities and objectives set out in this
Framework Document. In that context, and save as provided in this Framework
Document, HM Treasury will not interfere in day-to-day operational and commercial
matters.
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6.15 Subject to this Framework Document and the Company’s articles of association,
decisions on the day-to-day running of the Company will rest with the Board in
accordance with the directors’ statutory, common law and fiduciary responsibilities.
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Annual report and accounts
7.1. The Company must publish a consolidated annual report of its activities together
with its consolidated audited accounts after the end of each financial year.
7.2 The annual report and accounts must:
cover any corporate, subsidiary or joint ventures;
comply with statutory requirements as detailed in the Companies Act 2006
and any other relevant legislation (as amended or replaced from time to
time);
apply International Financial Reporting Standards (IFRS), issued by the
International Accounting Standards Board (IASB), as adapted and
interpreted by HM Treasury’s Financial Reporting Manual and in accordance
with the Financial Delegation Letter to the Accounting Officer; and
outline main activities and performance during the previous financial year
and set out summary form forward plans.
7.3. The report and accounts will be laid in Parliament and made available on the UKGI
website.
7.4 UKGI will be consolidated into the HM Treasury Group accounts.
Internal audit
7.5 UKGI will:
establish and maintain arrangements for internal audit in accordance with
the Treasury’s Public Sector Internal Audit Standards (PSIAS)? through the
Government Internal Audit Agency;
forward the audit strategy, periodic audit plans and annual audit report,
including the UKGI Head of Internal Audit opinion on risk management,
control and governance as soon as possible to HM Treasury; and
keep records of, and prepare and forward to HM Treasury an annual report
on fraud and theft suffered by UKGI and notify HM Treasury of any unusual
or major incidents as soon as possible.
7.6 The internal audit service, including where the service is contracted out, has a
right of access to all documents.
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External Audit
7.7 The Company must arrange audits of its accounts in accordance with statutory
requirements. The Comptroller & Auditor General (C&AG) audits UKGI’s annual
accounts and passes the audited accounts to HM Treasury who will lay the
accounts together with the C&AG’s report before Parliament.
7.8 UKGI will permit audit procedures of the Company to be carried out by the
National Audit Office (with or without the involvement of external professional
advisers) as required.
Access to UKGI records and personnel
7.9 HM Treasury has the right of access to all UKGI records and personnel for any
purpose including, for example, sponsorship audits and operational
investigations. In exercising this right, the Treasury will aim to respect commercial
confidentiality to customer departments.
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Management and financial
responsibilities
Budget
8.1 HM Treasury will approve the overall budget for the Company (the “Budget”). The
Budget will be fully funded by HM Treasury (and as such the Company will not make
profits or losses from its operations). Resources will be overseen by the Board and
discussed with HM Treasury as necessary.
8.2 Once the Budget has been approved, UKGI can incur expenditure approved in
the Budget without further reference to HM Treasury, on the following conditions:
« _UKGI will comply with the delegations set out in Appendix A. These
delegations must not be altered without the prior agreement of HM Treasury;
+ UKGI will comply with Managing Public Money regarding novel, contentious
or repercussive proposals; and
+ inclusion of any planned and approved expenditure in the Budget does not
remove the need to seek formal HM Treasury approval where any proposed
expenditure is outside the delegated limits or is for new schemes not
previously agreed
8.3. Each year, in the light of decisions by HM Treasury on updated corporate plans,
it will send to UKGI by the end of February each year:
+ aformal statement of the annual budgetary provision allocated in the light of
competing priorities across HM Treasury; and
* astatement of any planned change in policies affecting UKGI.
8.4 The approved annual business plan will take account of both approved funding
provision and any forecast receipts, and will include a budget of estimated payments
and receipts together with a profile of expected expenditure and of draw-down of any
departmental funding and/or other income over the year. These elements form part of
the approved business plan for the year in question.
Grant-in-aid and any ring-fenced grants
8.5 Any grant-in-aid provided by the department for the year in question will be voted
in the department's Supply Estimate and be subject to Parliamentary control.
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8.6 The grant-in-aid will normally be paid in monthly instalments on the basis of
written applications showing evidence of need. UKGI will comply with the general
principle that there is no payment in advance of need. Cash balances accumulated
during the course of the year from grant-in-aid or other Exchequer funds shall be kept
to a minimum level consistent with the efficient operation of UKGI. Grant-in-aid not
drawn down by the end of the financial year shall lapse. Subject to approval by
Parliament of the relevant Estimates provision, where grant-in-aid is delayed to avoid
excess cash balances at the year-end, the department will make available in the next
financial year any such grant-in-aid that is required to meet any liabilities at the year
end, such as creditors.
8.7 In the event that separate grants for specific (ringfenced) purposes are provided,
the department would issue the grant as and when UKGI needed it on the basis of a
written request. UKGI would provide evidence that the grant was used for the purposes
authorised by the department. UKGI shall not have uncommitted grant funds in hand,
nor carry grant funds over to another financial year.
Risk management
8.8 UKGI shall ensure that the risks that it faces are dealt with in an appropriate
manner, in accordance with relevant aspects of best practice in corporate governance,
and develop a risk management strategy. It should adopt and implement policies and
practices to safeguard itself against fraud and theft, in line with Treasury guidance on
tackling fraud. It should also take all reasonable steps to appraise the financial standing
of any firm or other body with which it intends to enter into a contract.
Providing Budget monitoring information
8.9 UKGI shall operate management, information and accounting systems that
enable it to review in a timely and effective manner its financial and non-financial
performance against the budgets and targets set out in the corporate and business
plans.
8.10 As a minimum, the Company shall provide the department with information
monthly that will enable the department satisfactorily to monitor:
+ UKGI’s cash management;
+ — its draw-down of grant-in-aid;
+ forecast outturn by resource headings; and
+ other data required for the Online System for Central Accounting and
Reporting (OSCAR).
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Delegated authorities
8.11 UKGI’s delegated authorities are set out in Appendix A. UKGI shall obtain HM
Treasury's prior written approval before:
+ — entering into any undertaking to incur any expenditure that falls outside the
delegations or which is not provided for in UKGI’s annual Budget as
approved by the department.
+ incurring expenditure for any purpose that is or might be considered novel or
contentious, or which has or could have significant future cost implications;
« making any significant change in the scale of operation or funding of any
initiative or particular scheme previously approved by the department;
+ making any change of policy or practice which has wider financial
implications that might prove repercussive or which might significantly affect
the future level of resources required; or
+ carrying out policies that go against the principles, rules, guidance and
advice in Managing Public Money where appropriate to a Government
company.
Business plan
8.12 The Board must prepare a business plan to support the Objectives of, and control
arrangements for, the Company (the “Business Plan”). The Business Plan is subject to
review by, and the approval of, HM Treasury.
8.13 The Business Plan will cover a period of at least 12 months and will be reviewed
by the Board on a regular basis to take account of any additional or amended obligations
or responsibilities assumed by the Company. This will include key targets and
milestones for the year immediately ahead and will be linked to budgeting information
so that resources allocated to achieve specific objectives can readily be identified by
HM Treasury.
8.14 UKGI will agree with HM Treasury the issues to be addressed in the Business
Plan, coverage of the plan in relation to the Group and the timetable for its preparation.
The Treasury will be consulted on any significant changes to the Business Plan.
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Staff
Board responsibilities
9.1 Within the arrangements approved by HM Treasury in this Framework
Document and through the Remuneration Framework, UKGI will have responsibility for
the recruitment, retention and motivation of its staff. UKGI staff will not be Civil
Servants or Crown Servants. The broad responsibilities toward its staff are to ensure
that:
+ the rules for recruitment and management of staff create an inclusive culture
in which diversity is fully valued; appointment and advancement is based on
merit: there is no discrimination on grounds of gender, marital status, sexual
orientation, race, colour, ethnic or national origin, religion, disability,
community background or age;
+ the level and structure of its staffing, including grading and staff numbers,
are appropriate to its functions and the requirements of economy, efficiency
and effectiveness;
+ the performance of its staff at all levels is satisfactorily appraised and the
UKGI performance measurement systems are reviewed from time to time;
+ _ its staff are encouraged to acquire the appropriate professional,
management and other expertise necessary to achieve UKGI’s objectives;
* proper consultation with staff takes place on key issues affecting them;
+ adequate grievance and disciplinary procedures are in place;
+ whistle-blowing procedures consistent with the Public Interest Disclosure Act
1998 are in place; and
+ acode of conduct for staff is in place based on the Cabinet Office’s Model
Code for Staff of Executive Non-departmental Public Bodies
Staff costs
9.2 The Remuneration Framework will delegate to UKGI the ability to set pay and
staff policy within the delegations provided. Subject to its delegated authorities, UKGI
must ensure that the creation of any additional posts does not imply forward
commitments that will exceed its expected ability to pay for them.
Pay and conditions
9.3. HM Treasury will delegate the remuneration policy for Company staff to the
Board (which will be set within the agreed Budget), following agreement of a
remuneration framework. Changes to the remuneration framework will require the
consent of HM Treasury.
9.4 In respect of the rates of pay and non-pay allowances paid to the staff and to
any other person entitled to payment in respect of travel expenses or other
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allowances, payment must only be made in a manner consistent with the Civil Service
Management Code? except where prior approval has been given by HM Treasury to
vary such rates. UKGI will adopt HM Treasury Group policies on travel, subsistence,
entertainment and hospitality, gifts and other expenses.
9.5 Staff terms and conditions and policies will be made available to staff and to HM
Treasury together with subsequent amendments.
9.6 UKGI will operate a performance-related pay scheme that will form part of the
remuneration framework approved by HM Treasury.
9.7. UKGI will agree with HM Treasury how government policy in respect of pay and
conditions of service will be applied to the Company.
Pensions, redundancy and compensation
9.8 UKGI staff should normally be eligible for a pension provided by its own scheme
or PCSPS for staff transferring into the company from the Civil Service. Staff may opt
out of the occupational pension scheme provided by UKGI.
9.9 Any proposal by UKGI to move from the existing pension arrangements, or to
pay any redundancy or compensation for loss of office, requires the prior approval of
HM Treasury and should comply with relevant Government policy in respect of
pensions, redundancy and compensation arrangements. Proposals on severance
must comply with the rules in chapter 4 of Managing Public Money.
9.10 The cap of public sector exit payments will apply to UKGI.
3 https://www.gov.uk/government/publications/civil-servants-terms-andconditions
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End Matters
10.1. This Framework Document may be amended or supplemented from time to time
where required by HM Treasury. In particular: (i) if the activities of the Company are
extended; and (ii) to reflect the current Business Plan.
10.2 Any amendments or supplements to this Framework Document resulting from
the provisions of this section may alter the Objectives or will be made having due
regard to the existing Objectives.
10.3 Any amendments, updates, or replacements of this Framework Document must
be published in the same way as this document and copies must be placed in the
Libraries of both Houses of Parliament.
Review of UKGI’s status
10.4 UKGI will be reviewed periodically. The date of the next review will be in 2022.
Signed
Date...
(On behalf of HM Treasury) (On behalf of UK Government Investments Ltd)
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Appendix A
Delegated authority
The Treasury will set out annual financial delegations for UKGI through a delegation
letter covering one or more financial years. This will also confirm details of the budget
allocated to UKGI.
HM Treasury requires that all financial actions (other than business as usual activity
such as payroll) shall be:
e agreed by the Treasury where the value is equal to or greater than £2m on
recommendation of the Board of UKGI
e agreed by the Board of UKGI where the value is equal to or greater than £1m
e agreed by both the Chief Executive and Chief Finance Officer of the Company
where the value if less than £1m
All activity that could be novel, contentious or repercussive, and other matters
reserved for the Treasury in Managing Public Money, will always require the consent
of the Treasury.
UKGI does not have delegated authority to take on directly or any assets, liabilities,
contingent liabilities or other commitments or obligations in managing shareholdings or
the deliver of the Objectives without the consent of Treasury.
Any funding or assets proposed to be transferred to UKGI from another department
will require the consent of the Treasury.
In addition, the regular delegation letter may include additional requirements as may
be needed from time to time.
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