Strategic engagement between the Scottish Government and Scotland's NDPBs

The Government and public bodies in Scotland are facing a period of unprecedented challenge. The demands and expectations on public services will continue to rise, while resources are severely constrained. Against this background, it is vital that the Scottish Government and Scotland's public bodies work together as effectively as possible to maintain and improve the services delivered to the people of Scotland.

In particular, the Scottish Government and its NDPBs need to work together to ensure that:

• public services are resilient in the face of future challenges, focussed on collective impact on outcomes
• opportunities for improvement and reform are identified and pursued
• strategic policy choices are underpinned by high quality advice, evidence and analysis
• risks are managed proactively across the system

Achieving these objectives will require effective strategic engagement between the Scottish Government and Scotland's NDPBs. Going forward, there needs to be a relentless focus on this engagement and developing new, innovative and radical ways of working that deliver improved outcomes with less resource. Effective strategic engagement means:

• sufficient senior level time is invested throughout the system, to develop and maintain positive relationships characterised by openness, trust, respect and mutual support
• the complementary roles and responsibilities of Ministers, Chairs, Boards, Chief Executives and senior officials (as defined in the formal governance framework) are respected, and are actively built upon to support positive, practical working relationships
• joint strategic business planning is the norm, including the joint identification of risks and joint planning for delivery
• within this, specific consideration is given to workforce issues, including how best use can be made of the skills and knowledge of the whole workforce across the Scottish Government and its agencies, NMDs and NDPBs
• families of NDPBs in specific sectors or portfolios come together to engage jointly with the Scottish Government on strategic issues, including the scope for improving efficiency across the sector
• NDPBs are involved in the policy-making process, and the Scottish Government and NDPBs work jointly on policy implementation

Scottish Government and Scotland's NDPBs: accountability and governance

Introduction

1. Non Departmental Public Bodies (NDPBs) play an important role in the delivery of public services in Scotland, carrying out a wide range of functions on behalf of Government but with varying degrees of operational autonomy from Government. They deliver Minister's priorities through promotion, funding, regulation and the scrutiny of services as well as by providing independent, expert advice to Ministers and, often, strategic policy input to Government.

2. NDPBs add value to Government through their specialist knowledge and skills; their focus on specific issues; and their authenticity, credibility and reach to stakeholders and other interests.

3. NDPBs are, by nature, delivery focussed. They are expected to be high performing, Best Value organisations and to align their business to the Government's Purpose and National Outcomes. They deliver against agreed priorities within clear policy, financial and performance management frameworks set by Government. Those frameworks are designed to ensure the proper stewardship of public funds and a proper balance between operational autonomy and public accountability.

4. NDPBs are also expected to work with other public bodies and the Government to improve service design and delivery, share services and integrate activities with one another and to work across organisational boundaries to focus on outcomes.

5. Each NDPB has its own purpose and founding legislation or administrative arrangements and its own variation on the framework described below. The accountability and governance arrangements for each body will be captured in a Framework Document which will also set out its relationship with Government, how that will work and respective roles and responsibilities.

Types of NDPB

6. There are three main types of NDPB. Executive NDPBs normally have their own legal identity and carry out administrative, commercial, executive or regulatory functions on behalf of Government and provide specialist advice to Ministers. Advisory NDPBs provide independent specialist or expert advice to Ministers and others or policy advice on particular subjects and are normally established administratively. Tribunal NDPBs are responsible for tasks and advice relating to specialist areas of the law and carry out judicial functions such as determining rights and obligations of private citizens, although they are not part of the courts system.

7. The governance and accountability arrangements described here apply to Executive NDPBs. Many of the same arrangements will apply to advisory and tribunal NDPBs although there will be some differences, reflecting the different nature and purpose of those bodies. Many of the elements described here will also apply to public corporations.

Accountability and governance

8. NDPBs operate in an environment of multiple accountability. They have duties to continuously improve and strengthen accountability to stakeholders, customers and the general public as well as being accountable to Ministers and Parliament. They are required to provide effective stewardship of public funds and be fully accountable for their decisions and performance. They must have effective arrangements for the management of risk and performance and have duties (often statutory) to publish audited annual reports and accounts.

9. A key requirement is for NDPBs to operate within the terms of the Scottish Public Finance Manual which sets out specific arrangements for financial control, internal and external audit arrangements and effective risk management procedures. NDPBs are also required to comply with a range of other requirements including for example those relating to ethical standards, complaints handling and freedom of information.

10. NDPB Boards are appointed by Scottish Ministers. They are formally accountable to Ministers and ultimately to the Scottish Parliament for the decisions they take and the money they spend. NDPB Boards are supported in their role by a Chief Executive who is responsible for organising delivery. Boards and Chief Executives both have responsibilities for the efficiency and effectiveness of their organisations and securing Best Value in the use of public funds.

11. The Chief Executive is almost always appointed as the NDPB's Accountable Officer. As Accountable Officers they are central to the accountability and governance framework within which public bodies operate. The Accountable Officer is personally responsible for propriety and regularity in respect of public funds and has a personal duty to secure Best Value for the organisation. Their role is to ensure that the expenditure of the public body and any decisions taken by it comply with public sector accountability standards, both through advice to the Board and in their own decisions about expenditure. These standards are set out in the Scottish Public Finance Manual and the Memorandum to Accountable Officers.

12. Accountable Officers can be held to account for their decisions and actions by their Board, the Principal Accountable Officer and the relevant Committee of the Scottish Parliament. The intention is that the Board and the Chief Executive, as Accountable Officer, should act as a check and balance on each other and therefore ensures robust decisions which satisfy both Ministers and Parliament.

13. Key roles in the accountability framework for NDPBs include:

1. Parliament questions and challenges Ministers, NDPBs (normally through Chairs, and Chief Executives in their capacity as Accountable Officer) over delivery of their objectives and propriety and stewardship of public funds.

2. Scottish Ministers set the strategic direction and the framework of accountability and governance for NDPBs. Ministers are in turn accountable to the Scottish Parliament and ultimately to the public for how NDPBs carry out their responsibilities within the statutory framework set out in their enabling legislation. Subject to the requirements of governing legislation Ministers determine the objectives the NDPB is expected to deliver and the funding that is available to them. Ministers also approve an NDPB's corporate plan and will be kept aware of any significant issues affecting an NDPB.

3. The Chair of a public body is accountable to Ministers for the body's performance and for strategic leadership of the Board. The Board as a whole provides strategic direction, support and guidance to the NDPB ensuring that it discharges its functions effectively and that Ministers' priorities are implemented. Board members are personally and corporately accountable for the Board's actions and decisions. Boards scrutinise plans and proposals and hold the Chief Executive and senior management to account. The body will normally have an Audit Committee to advise the Board and the Accountable Officer.

4. The Chief Executive is employed by the Board and is accountable to the Board for the performance, management and staffing of the body, and ensures that its functions are delivered and targets met through effective and properly controlled executive action. The Chief Executive supports and advises the Board in carrying out its functions and responsibilities; participates actively in Board business; provides operational leadership to the NDPB; and is responsible for preparing corporate and business plans for the Board.

5. Each NDPB will have a Deputy Director and Director who are responsible for ensuring effective relationships with the Scottish Government, usually supported by a sponsor team and accountable to a Director General. They will work closely with the Chief Executive, as the senior representative of the NDPB.

6. Sponsor teams are the first point of contact between the NDPB and the Scottish Government. They provide advice, help and support to NDPBs and advice on accountability, governance and performance to Ministers and Portfolio Accountable Officers. Sponsorship should be flexible, proportionate and responsive; and should facilitate positive relationships between the body and the Scottish Government.

Strategic Engagement Working Groups December 2011