NEDs: choose carefully, listen closely

7 May 13

Ministers have called on business leaders to serve as departmental non-executive directors and help make Whitehall more efficient. But more could be done to ensure that the right people are recruited and departments make the most of the expertise they offer

When Francis Maude entered the Cabinet Office in 2010 and set about the task of making the civil service more efficient, he may have been surprised to learn that he was responsible for a group of leading lights from the business and voluntary sectors as well. This group, the government non-executive directors (NEDs), were first recruited under Margaret Thatcher and tasked with advising the government on how to operate in a more business-like way. While this sounded like a great idea on paper, in reality they were barely used and ministers were said to be almost entirely unaware of their existence.

But as the austerity regime kicked in and the need for efficient and controlled spending across government became apparent, the NEDs system has been given a second lease of life. Maude has recognised that a better-utilised team of NEDs could provide exactly the sort of commercial nous that departments need to deliver high-quality public services with increasingly tight budgets. In particular, the Cabinet Office minister acknowledged that the overspending and inefficient management that had become associated with major government projects would have to come to an end.

With the help of Lord Browne of Madingley, the former BP chief executive turned crossbench peer, Maude has begun to rebuild the NEDs system as part of his broad programme of civil service reform. A group of around 60 new NEDs have been appointed, including leading names from business and charitable sectors. Among them are GlaxoSmithKline’s Sir Andrew Witty, Diageo chief executive Paul Walsh and Oxfam’s Dame Barbara Stocking. The group were also given new powers, ranging from the ability to write a commentary on a department’s performance alongside its annual accounts to the “nuclear option” of recommending to the prime minister that a permanent secretary be removed from post. To make sure their advice is heeded, secretaries of state are now required to both attend and chair departmental board meetings.

Despite these improvements, the success of NEDs remains open to question. Lord Browne himself judged the NEDs’ performance as a four or five out of ten, and there is still a lack of awareness about their work, both inside and outside the Whitehall bubble. Recognising that these experts could be used to much greater effect, Insight Public Affairs has produced a report into the NEDs system: Non-Executive Directors: a quiet revolution transforming Whitehall. Our report includes our thoughts on the ways that NEDs could be better used to help meet the spending challenge facing Whitehall.

It was clear to us that NEDs should be asked to take a wider look at the government’s efficiency agenda. As we all know, individual government departments can become silos and fresh thinking can struggle to translate into best practice. NEDs could play a role in offering co-ordinated, cross-government advice to create more efficient ways of working and to save money in the process. Take an issue such as government procurement: who would be better to advise on a Whitehall-wide approach to procurement spending than these experts?

NEDs could also increase their visibility by becoming more accountable to their department’s select committee. These groups of MPs have engaged in some stringent questioning of ministers but the answers they receive will always be tempered by the politics of the day. If this level of detailed questioning was applied to the NEDs, it would be much easier to gain an unvarnished and open interpretation of a department’s performance and to fix any problems they identify.

We also feel that it would be useful if department’s became more selective when choosing NEDs. A few departments, such as education and environment, food and rural affairs, have chosen NEDs with an interest in relevant policy areas. While this will not always be possible, department’s should strive to appoint a mixture of NEDs with commercial experience and NEDs that are engaged with the issues at hand. Combining expert advice in this way would add a number of strings to the departmental board’s bow and would offer ministers a much wider range of independent advice.

The financial challenge facing Whitehall is undoubtedly great. But the challenges that major spending departments face are the same as those faced by businesses and voluntary sector organisations across the UK. If they are properly utilised, leaders from outside government have much to teach our public servants.

A copy of Non-Executive Directors: a quiet revolution transforming Whitehall can be downloaded from

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