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Governance and Portfolio
Management
Board Update
March 2019
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Governance and Portfolio Management Update “"*”
The UKGI Corporate Governance Function
Background
° Why Government has Arms Length Bodies (ALBs)
° 2007 ShEx portfolio
. 2019 UKGI portfolio
What we do
. Common activities
° Activities not desired
. Enablers and levers available
° The difference made by UKGI
. Current processes
Near term focus
. Role, people, quality, communication, impact
I Ps UK Government Investments 2
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a 1. Why the Government has ALBs UKGI-BP-3260
e Arms Length Bodies are established with a specific purpose, distinct
from their parent department
e They are used:
* To separate implementation from policy making
¢ — In situations requiring independent assessment away from the
department
* To introduce commercial discipline especially in complex delivery
bodies
I Ps UK Government Investments
1. Portfolio comparison
How it has changed — 2007 to 2019
2007
¢ UK Export Finance * QinetiQ
¢ The Royal Mint * Actis
¢ Forensic Science Service * Partnerships UK
* British Energy * NATS
+ Royal Mail ° craig
¢« Working Links
2019
¢ UK Export Finance * Spectrum
¢ The Royal Mint ¢ East/West Rail
« RBS ¢« Homes England
« UKAR * Ordnance Survey
¢ Nuclear Liabilities Fund ¢ Highways England
¢ British Business Bank « Post Office Limited
* Channel 4 ¢ Network Rail
¢ Land Registry « Urenco
I Ps UK Government Investments
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UK Hydrographic Office
DARA
ABRO
Meteorological Office
UK Atomic Energy Authority
Red : Assets fully or partially sold
National Nuclear Laboratory
Nuclear Decommissioning Authority
UK Green Infrastructure Platform
London Continental Railways
Government Property Agency
Submarine Delivery Agency
Low Carbon Contracts Company
Electricity Settlements Company
Source: 2007 NAO Report “The Shareholder Executive and Public Sector Businesses”
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I 1. Current Portfolio Overview UKGI-BP-326a
Shareholder.” Both ™ NED-only >.
: S s
: : q .
/ Role role ‘,
’ ’ yy N
eo df Ny \
/ f Urenco \ London Continental ‘
i / Homes England = Railways \
1 / UK Export Finance \ \
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' i a Highways England \ t
! ' Post Office Limited \ Network Rail '
1 t 1 '
1 1 ~ . 1 1
Channel 4 British Business Bank East-West Rail I
: \ ' Government Property !
H q UK Green Infrastructure Platform ' Agency
1 1 1
1 Nuclear . t
' . uc i \ National Nuclear Laboratory ! H
1 Liabilities 7 q I . 1
‘ Fund \ feraineeiee j Submarine Delivery Agency }
AY Ay Ul
‘ q anak Nuclear / /
Ay \ . . . ’ /
% oe q Ordnance Survey oe d Low Carbon Contracts rd
_ x Royal Mint Y “ Company “
a SL UKAR --* Electricity Settlements Pa
eee ae _— Company weet
I Ps UK Government Investments
a
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2. UKGI Role UKGI-BP-326a
Working with departments and their ALB’s to optimise efficiency and
effectiveness of delivery via the ALB model
Clarifying Objectives
¢ Establishing framework document (covering governance roles, responsibilities and
relationships)
* Setting out departmental priorities
« Advising departments on strategy or business plans proposed by ALBs
Board and Governance
* Designing, implementing and advising on governance structures (eg Committees
and Terms of Reference)
¢ Holding board seat and membership of key committees
e Advising on board appointments and managing recruitment processes
* Monitoring board performance
Monitoring performance and MI
¢ Monitoring ALB performance
* Certain risk management responsibilities
I Ps UK Government Investments 6
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2. UKGI Role UKGI-BP-326a
Activities that UKGI should avoid
Setting Government policy
Assuring satisfaction of policy objectives
Mediating between departments on policy conflicts
“Holding the Board to account”
Assuring or approving business cases (before going to the Board)
Assuring or approving procurement activity
I Ps UK Government Investments 7
2. How we do it — tools
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Available levers vary considerably across portfolio assets
We can influence through...
¢ Board seat
¢ Managing senior recruitment
processes
¢ Leading Chair performance review
* Communicating departmental
priorities in annual Chair’s letter
¢ Setting Board and Sub committee
Terms of Reference
¢ Managing board review process
¢ Reviewing and commenting on
business plan
¢ Engaging departmental interlocuters
I a UK Government Investments
We don’t have formal power to...
¢ Directly hire or remove Chair,
NEDs, Executive Team - Minister
¢ Set policy - Department
¢ Set strategy to deliver on the
policy - ALB
¢ Determine funding allocation or
funding strategy - HMT
We don’t...
¢ Have executive authority
e Assume direct ministerial access
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I 2. The difference made by UKGI ll
a = Full governance reset — Board, KPIs, objectives
Rebasing relationship between ALB and Department
Homes England
= Full governance reset — Board, risk framework, monitoring
#8 and reporting
ata = Transformed transparency with other Government
stakeholders
des = Established governance required during implementation of
companies major transformation programme
= Through board seat, renegotiation of banking partnership
& = Significantly improved cash flow moving Post Office
towards self sufficiency
I Ps UK Government Investments
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I 2. Current Processes UKGI-BP-326a
a
a
a
x
I
Both systematic and ad-hoc review to manage
UKGI risk on governance assets
= Portfolio Panel — Review and support for core governance portfolio
Reviews
= Practice notes — Introductory ‘how to’ guides to selected
governance topics
= NED Forum — Sharing practical experiences from UKGI NED
cadre
= Corporate — Developing house views to inform best practice
Governance
Specialist Group
I Ps UK Government Investments
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__I 3. Near term focus UKGI-BP-326a
Context — Mixed understanding of purpose of ALBs across government
= Role — Clear & communicable target shareholder role model
— Understanding of “outlier” roles within portfolio
— Overview of whole UKGI governance landscape
= People — More relevant skill-sets in our target recruitment mix
— Focussed & sustainable training and development for existing
shareholder teams
= Quality — Setting & maintaining UKGI standards, with proportionate &
value-add supporting processes
— Continuous improvement (and risk reduction) by sharing best
practice from inside & outside HMG
= Communication — Clarifying our message on “what we do & why we're good at it”
for audiences across Whitehall & beyond
— Increased interaction with ALB NEDs & external expertise
= Impact — Measuring effectiveness - development of KPIs (both relative
and absolute); identifying things we are doing well & where we
are carrying greater risk
I Ps UK Government Investments
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