ARCHIVE: Governance structure for new and existing executive agencies
The guidance is aimed at executive agencies and those looking to set up a new executive agency.
There is no prescribed governance structure for executive agencies and it is for the Department to decide on the nature and framework of governance for each of its executive agencies. However, each executive agency must have clear arrangements for overseeing its strategic direction, performance monitoring and review. These arrangements should be agreed by all interested parties, outlined in the framework document, and kept under review. This guidance explains the possible elements for the governance structure of an executive agency.
The following guidance on governance structures should be viewed as good practice and adapted as appropriate.
You can find central guidance on the four key documents on the Cabinet Office agencies and public bodies website. If you proposing to deviate substantively from the central guidance, we strong recommend you to discuss your reasoning for this with Cabinet Office officials in the agencies and public bodies team.
The executive agency must be governed to ensure:
- the shared strategic direction of the executive agency, Defra and other key delivery bodies
- suitable long- and short-term targets
- effective risk management and assessment
- effective high-level monitoring and review
It is usual that a steering or advisory board will have an effect on the governance framework.
Confusion often exists about the terms "ownership", "sponsorship", "advisory", "Fraser figures" and "management" when used in relation to the governance of an executive agency.
The chief executive is answerable, for managing the executive agency, to the secretary of state who is ultimately the owner of the executive agency. In rare cases, where the executive agency constitutes the predominant activity of the department, or where the secretary of state has a close working relationship with the executive agency, the chief executive can report directly to the secretary of state who will use his or her advisers to reach decisions.
In the majority of cases, however, the secretary of state usually appoints someone (often on the departmental management board) as a sponsor of the executive agency. He or she will advise the secretary of state on how well the agency and its chief executive are performing. The sponsor acts as the channel for giving directions to the chief executive, agreeing key targets and corporate / business plans before they are submitted to ministers. The sponsor is also responsible for interpreting departmental policy and ensuring that the executive agency conforms.
The departmental owner of the executive agency is usually the secretary of state, although the responsible minister will often act on his / her behalf. The departmental owner does not get involved in the day-to-day running of the executive agency but can, in exceptional circumstances, issue directions or instructions to the chief executive. The responsibilities of the departmental owner include:
- establishing the executive agency
- setting objectives and key targets
- agreeing corporate and business plans and approving resources
- appointing the executive agency’s chief executive
- nominating a chair for the executive agency ownership board
- determining the extent of suspension of normal services / key targets during an emergency
- signing the framework document
- receiving reports on the executive agency’s and chief executive’s performance
- being accountable to parliament for the executive agency
- being responsible for the overall policy and financial framework within which the executive agency operates
The chief executive is the head of the executive agency and is responsible for its day-to-day management. A chief executive is usually recruited through open competition for a fixed period. You can find more information on recruiting a chief executive in key staff.
The key responsibilities of the chief executive include:
- being directly accountable, and having direct access, to the minister for the operations of the executive agency, as set down in the framework document, and for performance against key targets
- being directly accountable, and having direct access, to the principal accounting officer on management, regularity and propriety of the executive agency and its financial performance
- meeting with the minister at least once a year
- meeting with the principal accounting officer at least once a year
- making changes to the executive agency as necessary to maintain and improve operating efficiency and overall performance
- providing the minister with information for parliamentary questions or other parliamentary business relating to the executive agency
- answering directly those parliamentary questions that relate to operational issues
- being answerable to devolved ministers in respect of delivery
- having regular dialogue with the ownership board chair and the executive agency sponsor
- preparing and signing the annual report and audited accounts and submitting them to the minister for presentation to parliament before the start of summer recess
- commissioning internal audit and management inspection services to ensure the executive agency’s affairs are conducted properly and efficiently
- carry out his or her responsibilities as executive agency accounting officer.
The principal accounting officer for Defra is the permanent secretary, and includes the following responsibilities:
- acting as principal adviser to the minister on matters affecting Defra as a whole, including expenditure allocation and finance
- being responsible for ensuring a high standard of financial management
- appearing before the committee for public accounts
- designating the chief executive as executive agency accounting officer by letter.
The principal accounting officer will usually delegate accounting responsibility for the executive agency to the executive agency chief executive.
You can find more detail on delegating this responsibility in the guidance on accounting officer appointment and responsibilities. Key responsibilities of the executive agency accounting officer are as follows:
- being requested to attend the committee of public accounts with or instead of the principal accounting officer
- establishing proper systems and procedures for securing efficient and economical conduct of business
- assuring the principal accounting officer that the executive agency has adequate financial systems and procedures in place to conduct its business efficiently and economically and to safeguard financial propriety and regularity
- producing data for resource estimates in a timely fashion and monitoring financial performance in-year, including resource, cash and capital expenditure and for executive agency resource accounts
- providing any other financial data required by Defra finance
- maintaining propriety and regularity throughout the executive agency and ensuring financial considerations are taken fully into account in decisions on policy proposals
- ensuring the requirements of Government Accounting are met
- observing any general guidance issued by Treasury or the Cabinet Office
- putting into effect recommendations, accepted by government, of the committee of public accounts, the select committee or other parliamentary authorities.
The concept of a Fraser figure was introduced early in the Next Steps agency process as someone neutral and often external who could act as a bridge between the chief executive and Defra. Much depends on the nature of the relationship between the chief executive and the sponsor as to whether the sponsor can also act as the Fraser figure, or whether an external member should be brought onto the ownership board.
The executive agency sponsor is usually a senior individual from the department. Responsibilities include:
- providing a focal point and key link between the department and executive agency and ensuring a clear understanding of objectives and methods of working
- supporting and facilitating the chief executive in meeting objectives and key targets
- keeping the chief executive informed of any central policy developments that might impact on the executive agency and providing advice on steering the executive agency’s activities to ensure it supports the delivery of departmental objectives
- ensuring the executive agency has the delegations and authorities necessary for effective delivery and continuous improvement
- acting as an arbiter for resolving inter-agency problems
- encouraging and supporting innovation, collaboration and the exploitation of intra-agency synergies
- providing constructive challenge on the performance of the chief executive.
To find out more, see the guidance on roles and functions of partnership working and Cabinet Office guidance:
- Executive agencies' background and development
- Creation, review and dissolution of executive agencies
The departmental management board sometimes takes decisions on executive agency matters, but this is unusual. In most cases the sponsor will chair a board for the purpose. This board has gone by various names – the sponsor's board, the owner's board, the owner's advisory board and so on. More commonly, the term ownership board is used and, for the purpose of this document, this term will be used. The title is not as critical as understanding its purpose. In most cases an executive agency has a wide range of stakeholders – inside and outside Defra – who have an interest in the performance of the executive agency. The ownership board provides a forum where the different (sometimes conflicting) stakeholder priorities can be discussed at departmental level in order to formulate policy for the executive agency.
Members of the ownership board represent their own divisional interests and monitor how effectively the executive agency’s plans and performance meet their individual needs. The board is not an executive board (unless when it is chaired by a minister or the permanent secretary, in exceptional circumstances) and as such plays no part in the day-to-day affairs of the executive agency. Members usually comprise relevant officials from Defra (including the policy lead), a sponsor figure, non-executive members and representatives from devolved administration. The chief executive is in attendance at meetings, but is not a member.
The role of the ownership board is to:
- set the strategic direction for developing the executive agency and agree a framework for strategic performance management
- advise ministers on the strategic direction of the executive agency in the context of wider departmental or cross-governmental objectives
- advise ministers on their response to strategic performance information
- give guidance and direction to the executive agency’s chief executive
- advise the minister (through the chair) on matters relating to the executive agency’s strategy, plans, priorities, risks, resources, objectives, key targets and performance
- advise the minister on executive agency matters that affect the departmental plan and priorities that affect the executive agency.
The ownership board is the secretary of state's management vehicle and, as such, must be in a position to assess and interpret pan-departmental priorities and imperatives. It is desirable that the chair of the board is a member of Defra's management board, so that the executive agency has strong representation at this level. It is also important that the membership and workings of the board do not dilute the role and pre-eminence of the chief executive, who remains personally answerable to the secretary of state.
It is accepted good practice to have at least one non-executive board member on civil service boards. This is based on a recognition of the value that non-executive board members can add to the board, for example giving a fresh, external perspective, bringing in specific skills or expertise, providing independent feedback and challenging approaches taken. Experience has shown that the greatest value is derived from having at least two non-executive board members on a board, since a lone individual can find it difficult to make an impact and may feel isolated. A non-executive member of the executive agency ownership board often sits on the executive agency management board and / or may chair the executive agency audit and risk committee.
The board effectiveness team in the Cabinet Office can provide further information on recruiting non-executive members.
Interests are reflected by representation on ownership board.
The chief executive is a member of the ownership board but, separate to these arrangements, the chief executive will be expected to have his / her own internal executive agency management board to manage the executive agency along business lines. The chief executive may invite the chair of the ownership board and the policy lead to sit on that board.
The chief executive is expected to establish proper internal controls, including setting up an executive agency audit and risk committee. The audit and risk committee is body which advises the chief executive and has no executive powers. Its purpose is to verify that there is a systematic and comprehensive review of corporate governance, to provide an independent and objective view on the effectiveness of internal controls, and to ensure the executive agency maintains effective processes to identify and manage risk. It also acts in support of the chief executive in his / her capacity as accounting officer of the executive agency.
It is usual for the chief executive to appoint the chairman, members and secretary of the audit and risk committee. In normal circumstances, the committee will consist of an independent chairman, at least one additional independent member and one external member, together with the chief executive and finance director.
Please see the guidance on internal controls and the Treasury audit committee handbook for more information.
If you require additional information on planning and management issues, and do not have access to the Defra intranet, please contact the Delivery Relationship Team.
- Cabinet Office guidance:
- Treasury audit committee handbook
- Government Accounting
- Committee of public accounts
Page last modified: 8 May 2006
Page published: 8 May 2006