Scotland's public services are administered by some 200 public bodies. Most of these are run by boards that make the key decisions on the majority of public spending in our country. This means we should pay close attention to the governance of public boards.
In 2010 Audit Scotland published a report on the role of boards that made a number of recommendations. Holyrood's Public Audit Committee has recently conducted an inquiry into the same issue and have published their findings in a letter to the Cabinet Secretary.
Some of the key points they make include:
- Encouraging board members to provide an effective challenge to board chairs and chief executives, preventing ‘group think’ on our boards. As the recent SPA issue has highlighted, corporate responsibility should not be a means of silencing ‘difficult’ voices;
- The committee questions whether the involvement of a senior independent director on a board, as is the case in some parts of the private sector, could be a useful, additional check and balance on the performance of the board chair/ chief executive. Board's also need to establish a fully effective and transparent means of assessing the performance of all board members;
- It is essential that the public appointments process attracts the best possible candidates, who should not be discouraged by the complex process. The current system may reward those who are most adept at repeating public sector jargon;
- New legislation should give greater consideration to governance arrangements. Some of the problems have stemmed from poor initial decisions on governance arrangements;
- There is considerable variance in the governance arrangements across boards and not always a clear rationale for such differences;
- Boards also take differing approaches to transparency such as holding meetings in public or private. The committee's view is that boards should be as transparent as possible and should meet in public unless there are justifiable reasons for meeting in private.
I contributed to an informal evidence session during the inquiry and the recommendations are very welcome. The membership of boards has become very 'samey', with the usual suspects dominating appointments. I have heard more than one board Chair use the phrase 'a safe pair of hands'. This isn't likely to to provide the sort of challenge the Committee is referring to.
Workforce representation can provide a real challenge. The Fair Work Convention report recommended there should be a worker representative on every Scottish public body. Some have non-executive directors with a workforce interest. While these appointments offer an expertise that might otherwise be ignored, they are not a substitute for an employee director. However, such directors need to be supported and accountable, otherwise they can become isolated and less effective.
There is a tendency to use the shambles that is the SPA to highlight all that is wrong with public boards. The treatment of Moi Ali was both shocking and a 'good' example of the issues highlighted by the committee. However, we should remember that the structure of governance between Police Scotland and the SPA underpins many of the problems. There was a clear failure to recognise the governance problems this would cause when the legislation was going through parliament.
While the SPA is the most well known example, it isn't the only one. I can think of a number of NDPB boards that provide very weak governance. FE colleges are one as the severance packages row has illustrated. Food Standards Scotland is another, with the food industry having too great an influence. Most boards could do better on transparency.
In fairness it has to be said many of these governance failures are not unique to public boards. There has been a failure of governance in private and voluntary sector boards on pay and workforce issues. In addition, you can only appoint from applicants and many people of working age simply do not have the time to participate. On my way to giving evidence to the committee I bumped into an ex-steward who is now a senior manager in a private company that makes a big play of corporate governance. He told me that serving on public and voluntary sector boards used to be encouraged - now it is barely tolerated.
The Audit Committee recognises that some progress has been made in recent years, particularly over gender balance. Government now needs to focus on strengthening other aspects of governance. This report is a good starting point.