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Public bodies must learn governance and financial lessons, say MSPs

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Jackie Baillie MSP
Jackie Baillie MSP

Scotland’s public bodies must learn the lessons from previous governance and financial management challenges, a Holyrood committee has warned today.

In a letter to the Scottish Government, the public audit and post-legislative scrutiny committee sets out areas for improvement within public sector boardrooms across Scotland.

The committee’s recommendations come after considering various reports by the Auditor General for Scotland that raised governance concerns. The committee also found that many of the criticisms made in an Audit Scotland report of 2010, on the role of boards in Scotland, were still valid seven years on.

Public audit and post-legislative scrutiny committee acting convener, Jackie Baillie MSP, said: “Our committee wants to be reassured that Scotland’s public bodies are spending public money wisely and delivering the best possible outcomes for the people they serve. In order to do so, they must be led by a well-functioning board with clear lines of responsibility and accountability.

“However, there’s been a steady stream of critical reports for many years now, highlighting often serious governance failings in public bodies. For example, our recent experience with the Scottish Police Authority highlighted that while board members must demonstrate corporate responsibility, this is not a means of silencing ‘difficult’ voices.

“It is not in anyone’s interest for there to be constant critical reports about our public bodies. This is why we’ve suggested several ways in which boards could be made more effective and have also called on the Scottish Government to demonstrate leadership by explaining how it tries to bring about improvements in governance and performance.”

Among the committee’s suggestions for improving board performance include:

  • There can be a risk of senior executives not sharing ‘bad news’ with their boards, perhaps to protect the organisation’s or the minister’s reputation. Board members – many of whom are non-expert lay people – must therefore be encouraged to provide an effective challenge to board chairs and chief executives, while understanding that they remain part of the team. Board members must not feel inhibited or be embarrassed about asking basic questions, indeed, this can often be the best means of uncovering a problem. In short, we wish to prevent ‘group think’ on our boards;

  • As our experience with the SPA highlighted, it is vital that board members of all public bodies have a clear understanding of the concept of corporate responsibility and exactly what it does and does not entail. For the avoidance of doubt, it is nota means of silencing ‘difficult’ voices;

  • If a board’s chair or chief executive is performing poorly, board members’ only redress may be to raise a concern with the relevant minister. This may not always be feasible. We therefore question whether the involvement of 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;

  • In order to improve service delivery and ensure public confidence, we need to establish a fully effective and transparent means of assessing the performance of board chairs and board members. All boards should have a clear, publicly-available set of criteria by which they are judged;

  • It is essential that the public appointments process attracts the best possible candidates. The process should be as simple, streamlined and non-bureaucratic as possible so that well-qualified people are not dissuaded from applying simply because of the amount of time required to do so. However, we understand that some potentially very capable candidates from the private sector are reluctant to take part for this reason;

  • We want to ensure that people with a successful track record in the public, private and third sectors have an equal chance of succeeding, not simply those who are most adept at repeating public sector jargon. We also want to avoid a situation whereby some people are on a large number of boards and, potentially, unable to devote sufficient time to each;

  • When the Scottish Government decides to introduce new legislation it should – where relevant – give greater consideration to any governance arrangements that would be created and how these could best deliver the desired outcomes. Some of the problems we have encountered have stemmed from poor initial decisions on governance arrangements;

  • Similarly, while it is entirely up to parliamentary committees as to how they scrutinise bills, a greater focus on governance issues at the outset may prevent a recurrence of the problems identified repeatedly through the audit process.

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