Corporate report

Animal and Plant Health Agency framework document

Published 7 March 2024

© Crown copyright 2024

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Introduction and background

Purpose of document

1.1 This framework document (the ‘framework document’) has been agreed between the Department for Environment Food and Rural Affairs (Defra) and the Animal and Plant Health Agency (APHA) in accordance with HM Treasury’s handbook ‘Managing Public Money’ (‘MPM’) (as updated from time to time) and has been approved by HM Treasury.

1.2 The framework document sets out the broad governance framework within which APHA and Defra operate. It sets out and describes:

  • APHA’s core responsibilities
  • the governance and accountability framework that applies between the roles of Defra and APHA
  • how the day-to-day relationship works in practice, including in relation to governance and financial matters.

APHA, and Defra as the sponsor department, will ensure that they understand each other’s strategic priorities and those of other relevant parties, agree plans that reflect these appropriately, and keep each other informed (in good time) of risks and issues with the potential to affect delivery or performance.

1.3 The document does not convey any legal powers or responsibilities but both parties agree to operate within its terms.

1.4 References to APHA include all its subsidiaries and joint ventures that are classified to the public sector and central government for national accounts purposes. If APHA establishes a subsidiary or joint venture, there shall be a document setting out the arrangements between it and APHA which is agreed with Defra.

1.5 Copies of the document and any subsequent amendments have been placed in the libraries of both Houses of Parliament and made available to members of the public at www.gov.uk/apha.

1.6 This framework document should be reviewed and updated at least every three years unless there are exceptional reasons that render this inappropriate that have been agreed with HM Treasury and the principal accounting officer of the sponsor department. The latest date for review and updating of this document is 2025.

Objectives – working as Defra Group

2.1 The Defra group Outcome Delivery Plan shows how the diverse range of outcomes and activities across the group contribute to Defra’s priority outcomes and strategic enablers. All of Defra’s public bodies, regardless of their role and positioning, act together on a shared agenda in contributing to the single vision of improving and protecting our environment by making our air purer, our water cleaner, our land greener and our food more sustainable.

2.2. Defra and APHA share the common objective to increase the sustainability, productivity and resilience of the agriculture, fishing, food and drink sectors, enhance biosecurity at the border and raise animal welfare standards. Delivery outcomes are agreed via an annual commission between APHA and Defra. To achieve this APHA and Defra will work together in recognition of each other’s roles and areas of expertise, providing an effective environment for APHA to achieve the outcomes through the promotion of partnership and trust and ensuring that APHA also supports the strategic aims and objectives of Defra and the wider government. Both partners will also commit to keeping each other informed of any significant issues and concerns. The terms of engagement are included in this document including a description of the meetings that will take place and how any disputes between the department and APHA will be resolved.

Classification

3.1 APHA has been classified as a central government organisation by the ONS/HM Treasury Classifications team.

3.2 APHA has been administratively classified by the Cabinet Office as an executive agency of Defra and was set up to support the strategic aims and business plans of Defra, the Scottish Government and the Welsh Government.

3.3 The agency is led by the chief executive officer (CEO) and advised by a steering board.

Purposes, aims and duties

Purposes

4.1 APHA was established on 1 October 2014. Its main purpose is to safeguard animal and plant health for the benefit of people, the environment, and the economy. The operations of APHA throughout Great Britain are subject to the relevant laws pertaining to either each administration or across Great Britain as a whole.

4.2 APHA has a leading role in controlling and eradicating animal and plant diseases and pests, plant and bee heath, improving animal welfare, as well as reducing the risk of new and emerging threats. APHA is also responsible for delivering and advising on the statutory services for the implementation of legislation and standards on animal health, plant health, bee health and plant varieties and seeds in England, Wales and when appropriate Scotland. It operates government inspectorates with the common aim of balancing effective regulation of risks to plants, animals and people with minimising the regulatory burden on industry and trade. APHA additionally plays a key role in facilitating GB trade in animals, products of animal origin, plants and produce.

4.3 Where permitted by statute, the government may ask APHA to take on additional functions or new work, on a permanent or temporary basis. The decision to take on the additional work will be made jointly by the Secretary of State and APHA Chief Executive.

Powers and duties

5.1 APHA fulfils the functions of the Secretary of State for Defra in relation to plant and animal health and welfare in domestic legislation (The Official Controls (Plant Health and Genetically Modified Organisms) Regulations (England 2019) and the Animal Welfare Act 2006). APHA operations are also subject to the relevant laws pertaining to either administrations or across Great Britain as a whole.

Aims

6.1 APHA works to safeguard animal health and welfare and plant health for the benefit of people, the environment, and the economy. APHA is responsible for:

  • identifying and controlling endemic and exotic diseases and pests in animals, plants and bees, and surveillance of new and emerging pests and diseases
  • scientific research in areas such as bacterial, viral, prion and parasitic diseases and vaccines and food safety and act as an international reference laboratory for many farm animal diseases
  • monitoring compliance with animal welfare regulations and respond to welfare reports
  • facilitating international trade in animals, products of animal origin, and plants
  • protecting endangered wildlife through licensing and registration
  • managing a programme of apiary (bee) inspections, diagnostics, research and development, and training and advice
  • regulating the safe disposal of animal by-products to reduce the risk of potentially dangerous substances entering the food chain

6.2 Detail on APHA’s responsibilities and what it does can be found at www.gov.uk/apha.

6.3 APHA will deliver its strategic aims in the context of the Defra Group Outcome Delivery Plan outcomes.

APHA governance and structure

Governance and accountability

7.1 APHA shall operate corporate governance arrangements that, so far as practicable and in the light of the other provisions of this framework document or as otherwise may be mutually agreed, accord with good corporate governance practice and applicable regulatory requirements and expectations.

7.2 In particular (but without limitation), APHA should:

  • comply with the principles and provisions of the Government Code of Good Practice for Corporate Governance (as amended and updated from time to time) to the extent appropriate and in line with their statutory duties or specify and explain any non-compliance in its annual report
  • comply with Managing Public Money
  • consider the codes of good practice and guidance set out in Appendix A of this framework document, as they apply to arm’s length bodies (ALBs)

7.3 In line with Managing Public Money Annex 3.1, APHA shall provide an account of corporate governance in its annual governance statement including the board’s assessment of its compliance with the code with explanations of any material departures. To the extent that APHA does intend to materially depart from the code, the sponsor should be notified in advance and their agreement in this approach should be sought.

Role of the department

The responsible minister

8.1 The designated minister of state under the Secretary of State will account for APHA on all matters concerning APHA in Parliament.

8.2 The minister will also:

  • have responsibility for the policy framework within which the arm’s length body (ALB) operates
  • provide guidance and direction to ensure the strategic aims and objectives of APHA are consistent with those of the department and government
  • have power of appointment in relation to the appointment of the APHA Lead Non-Executive Director and steering board chair in line with the Governance Code on Public Appointments
  • have power of appointment in relation to non-executives on the board in line with the Governance Code on Public Appointments
  • have power of approval in relation to the appointment of the APHA CEO

Devolved administrations

8.3 APHA will maintain service level agreements with the devolved administrations to agree separate and distinct arrangements for the provision, operation, delivery, and assurance or monitoring of services undertaken, to meet key targets. Representatives from the devolved administrations will be invited twice yearly to the steering board meetings. These agreements will also set out arrangements for means of engagement and legal and policy interface. APHA will have independent discussion and engagement with the devolved administrations on customer matters and requirements. Formal arrangements between devolved ministers and the agency will be through its chief executive. This also extends to the Scottish Parliament and Welsh Assembly, before which the chief executive may be called.

Appointment

8.4 The Chief Executive of APHA is appointed by the Food, Biosecurity and Trade (FBT) Director General with the approval of the Secretary of State. The chief executive will agree their objectives with the Director General for FBT, in consultation with the Chair of the board, which reflect both the accounting officer (AO) responsibilities as well as their role in delivering the policy framework set by the Secretary of State. The director general assesses chief executive performance annually in consultation with the chair of the steering board.

Appointments to APHA’s Steering Board

8.5 The steering board’s chair is appointed by the relevant minister and appointment should comply with the Governance Code on Public Appointments.

8.6 The other non-executive board members are appointed by the relevant minister. Appointments are for a period of up to 3 years and a maximum of 6 years following the principles as set out in the Government Code of Good Practice for Corporate Governance.

8.7 The recruitment and appointment process will be organised by APHA and take due cognisance of the requirements and guidance of the Office of the Commissioner for Public Appointments. The NEDs will provide independent expert advice and challenge to the chief executive on the performance of the agency. APHA will be responsible for payment arrangements for the NEDs. Payments made to NEDs are paid through payroll to account for the tax and national insurance in accordance with HMRC.

8.8 All such appointments should have regard to the principle that appointments should reflect the diversity of the society in which we live, and appointments should be made taking account of the need to appoint boards which include a balance of skills and backgrounds.

The principal accounting officer (PAO)

9.1 The principal accounting officer is the permanent secretary of the department.

Sponsor department’s accounting officer’s specific accountabilities and responsibilities as principal accounting officer (PAO).

9.2 The PAO of Defra designates the chief executive as APHA’s accounting officer and ensures that they are fully aware of their responsibilities. The PAO issues a letter appointing the accounting officer, setting out his or her responsibilities and delegated authorities.

9.3 The respective responsibilities of the PAO and accounting officers for ALBs are set out in Chapter 3 of Managing Public Money.

9.4 The PAO is also responsible, usually via the sponsorship team, for advising the responsible minister on:

  • an appropriate framework of objectives and targets for APHA in the light of the department’s wider strategic aims and priorities
  • an appropriate budget for APHA in the light of the sponsor department’s overall public expenditure priorities
  • how well APHA is achieving its strategic objectives and whether it is delivering value for money
  • the exercise of the ministers’ statutory responsibilities concerning APHA as outlined above

9.5 The PAO via the sponsorship team is also responsible for ensuring arrangements are in place to:

  • monitor APHA’s activities and performance, and understand assurance mechanisms
  • address significant problems in APHA, making such interventions as are judged necessary
  • periodically and at such frequency as is proportionate to the level of risk carry out an assessment of the risks both to the department and APHA’s objectives and activities in line with the wider departmental risk assessment and management processes
  • inform APHA of relevant government policy in a timely manner
  • bring ministerial or departmental concerns about the activities of the APHA to the full APHA board, and, as appropriate to the departmental board requiring explanations and assurances that appropriate action has been taken

The role of the sponsorship team

10.1 The Chief Executive of APHA reports into the Director General for Food, Biosecurity and Trade (FBT), who is the primary contact for APHA. They are the main source of advice to the responsible minister on the discharge of his or her responsibilities in respect of APHA. They also support the PAO on his or her responsibilities toward APHA.

10.2 Officials of the FBT team in the sponsor department will liaise regularly with APHA officials to review performance against plans, achievement against targets and expenditure against its delegated expenditure limit and annually managed expenditure allocations. The FBT team will also take the opportunity to explain wider policy developments that might have an impact on APHA.

10.3 The sponsorship team will advise the PAO when necessary, on matters related to section 9.5.

10.4 Defra applies the best practice standards in the ‘CO Sponsorship Code’. In doing so the department operates a proportionate, risk-based approach whereby accountability and oversight is managed between APHA and the sponsor team collaboratively. This function can be separate or integral to the policy team depending on a number of factors, including the size of APHA. Sponsor teams draw on the central Defra Public Bodies Partnership team and nominated functional experts for support in carrying out their role.

Access to Defra Network Corporate Services

10.5 The Defra group operate an integrated corporate services model that provides Finance, HR, Digital, Data and Technology Services, Communications, Estates, Facilities Management, Procurement and Commercial services. This integration reduces duplication and cost and improves the capability and performance of corporate services in order to better support the wider programme of change across the group.

10.6 Group heads of function roles have been established in Defra with full accountability for delivery of the integrated provision. All corporate services that the APHA takes from the Defra group will be managed by Defra, with group heads of function responsible for the delivery of an effective quality of service. The scope of which is agreed with APHA to ensure that the service adds value to the Agency.

10.6 Partnership working arrangements are in place between APHA and Defra group Corporate Services to ensure that the appropriate information is shared on business requirements. This will enable delivery to be appropriately planned and prioritised, thereby continuing to enable and support the delivery of wider business objectives and of statutory duties.

Resolution of disputes between APHA and the department

11.1 Any disputes between the department and APHA will be resolved in as timely a manner as possible by the FBT Director General. They may then choose to ask the permanent secretary to nominate a non-executive member of the department’s board to review the dispute, mediate with both sides and reach an outcome, in consultation with the Secretary of State.

Freedom of information requests

12.1 Where a request for information is received by either party under the Freedom of Information Act 2000 or Environmental Protection Regulations 2004 or the Data Protection Act 1998 or 2018, the party receiving the request will consult with the other party prior to any disclosure of information that may affect the other party’s responsibilities, including a risk assessment for data protection.

13.1 APHA shall provide a quarterly update, for those areas within its responsibility not covered by Corporate Services, to the sponsor on the existence of any active litigation and any threatened or reasonably anticipated litigation. The parties acknowledge the importance of ensuring that legal risks are communicated appropriately to the sponsor in a timely manner.

13.2 In respect of each substantial piece of litigation involving APHA, the parties will agree a litigation protocol which will include specific provisions to ensure appropriate and timely reporting on the status of the litigation and the protection of legally privileged information transmitted to the sponsor to facilitate this. Until such time as a protocol is agreed, the parties will ensure that:

  • material developments in the litigation are communicated to the sponsor in an appropriate and timely manner
  • legally privileged documents and information are clearly marked as such
  • individual employees handling the legally privileged documents are familiar with principles to which they must adhere to protect legal privilege
  • circulation of privileged information within government occurs only as necessary

The chief executive

Responsibilities of the ALB’s chief executive as accounting officer

14.1 The chief executive as accounting officer is personally responsible for safeguarding the public funds for which they have charge; for ensuring propriety, regularity, value for money and feasibility in the handling of those public funds; and for the day-to-day operations and management of APHA. In addition, they should ensure that APHA as a whole is run on the basis of the standards, in terms of governance, decision-making and financial management, that are set out in Box 3.1 of Managing Public Money. These responsibilities include the below and those that are set in the accounting officer appointment letter (at Annex B) issued by the principal accounting officer of the sponsor department.

Responsibilities for accounting to Parliament and the public

14.2 Responsibilities to Parliament and the public include:

  • signing the accounts and ensuring that proper records are kept relating to the accounts and that the accounts are properly prepared and presented in accordance with any directions issued by the Secretary of State
  • preparing and signing a governance statement covering corporate governance, risk management and oversight of any local responsibilities, for inclusion in the annual report and accounts
  • ensuring that effective procedures for handling complaints about APHA are in accordance with Parliamentary and Health Service Ombudsman’s Principles of Good Complaint Handling are established and made widely known within and published by APHA
  • acting in accordance with the terms of Managing Public Money and other instructions and guidance issued from time to time by the department, the Treasury and the Cabinet Office
  • ensuring that as part of the above compliance they are familiar with and act in accordance with
    • any governing legislation
    • this framework document
    • any delegation letter issued to body
    • any elements of any settlement letter issued to the sponsor department that is relevant to the operation of APHA
    • any separate settlement letter that is issued to APHA from the sponsor department
  • ensuring they have appropriate internal mechanisms for the monitoring, governance and external reporting regarding compliance any conditions arising from the above documents
  • giving evidence, normally with the PAO, when summoned before the PAC on the APHA’s stewardship of public funds

Responsibilities of APHA and Defra

14.3 Responsibilities to Defra include:

  • establishing, in agreement with the department, APHA’s commission aligned with the department’s wider strategic aims and agreed priorities
  • informing the department of progress in helping to achieve the department’s policy objectives and in demonstrating how resources are being used to achieve those objectives
  • ensuring that timely forecasts and monitoring information on performance and finance are provided to the department

Responsibilities to the steering board

14.4 The chief executive is responsible for:

  • advising the agency steering  board on the discharge of its responsibilities as set out in this document, in the founding legislation and in any other relevant instructions and guidance that may be issued from time to time
  • advising the steering board on the APHA’s performance compared with its aims and objectives
  • ensuring that financial considerations are taken fully into account by the steering board at all stages in reaching and executing its decisions, and that financial appraisal techniques are followed

Managing conflicts

14.5 The chief executive should follow the advice of the agency steering board, except in very exceptional circumstances, with a clear cut and transparent rationale for not doing so.

14.6 If the agency steering board or its chairperson advises on a course of action which the chief executive considers would infringe the requirements of propriety or regularity or does not represent prudent or economical administration, efficiency or effectiveness, is of questionable feasibility, or is unethical the chief executive in their role as accounting officer should reject that course of action and ensure that the agency steering board have a full opportunity to discuss the rationale for that rejection.

14.7 Such conflicts should be brought to the attention of the principal accounting officer and the responsible minister as soon as possible.

14.8 Furthermore and if agreed with the responsible minister, the accounting officer must write a letter of justification to the chair of the APHA Steering Board setting out the rationale for not following the advice and recommendation of the board and copy that letter to the treasury officer of accounts.

14.9 If the responsible minister agrees with the proposed course of action of the board it may be appropriate for the minister to direct the principal accounting officer in the manner as set out in Managing Public Money paragraph 3.6 onwards.

The steering board

Composition of the steering board

15.1 APHA will have a steering board in line with good standards of corporate governance and as set out in its establishing statute and in guidance as set out in Annex A. The role of the steering board shall be to advise APHA on its performance and to deliver the objectives, in accordance with the purposes as set out above, their statutory, regulatory, common-law duties and their responsibilities under this framework document. Detailed responsibilities of the steering board shall be set out in its  terms of reference. Remuneration of the board will be disclosed in line with the guidance in the Government Financial Reporting Manual (FReM).

15.2 The steering board will consist of a chairperson, together with the chief executive and 4 executive members that have a balance of skills and experience appropriate to directing APHA’s business. For APHA this will include the chairs of the sub-committees of APHA’s executive board. There should be members who have experience its business, operational delivery, corporate services such as HR, technology, property asset management, estate management, communications and performance management. This will include an appropriately qualified finance director as described in Annex A 4.1 of Managing Public Money. The steering board should include a majority of independent non-executive members to ensure that executive members are supported and constructively challenged in their role.

Steering board committees

15.3 The steering board may set up such committees as necessary for it to fulfil its functions. As is detailed below at a minimum this should include an Audit and Risk Committee chaired by an independent and appropriately qualified non-executive member of the board.

15.4 While the steering board may make use of committees to assist its consideration of appointments, succession, audit, risk and remuneration it retains responsibility for, and endorses, final decisions in all of these areas. The chair should ensure that sufficient time is allowed at the board for committees to report on the nature and content of discussion, on recommendations, and on actions to be taken.

15.5 Where there is disagreement between the relevant committee and the board, adequate time should be made available for discussion of the issue with a view to resolving the disagreement. Where any such disagreement cannot be resolved, the committee concerned should have the right to report the issue to the sponsor team, principal accounting officer and responsible minister. They may also seek to ensure the disagreement or concern is reflected as part of the report on its activities in the annual report.

Duties of the steering board

15.6 The board is specifically responsible for advising the chief executive and executive board on:

  • establishing and taking forward the strategic aims and objectives of the APHA consistent with its overall strategic direction and within the policy and resources framework determined by the Secretary of State
  • providing effective leadership of APHA within a framework of prudent and effective controls which enables risk to be assessed and managed
  • ensuring the financial and human resources are in place for APHA to meet its objectives
  • reviewing the agency’s performance
  • ensuring that the board receives and reviews regular financial and management information concerning the management of APHA
  • ensuring that it is kept informed of any changes which are likely to impact on the strategic direction of APHA or on the attainability of its targets, and determining the steps needed to deal with such changes and where appropriate bringing such matters to the attention of the responsible minister and principal accounting officer via the executive team, sponsorship team or directly
  • ensuring that as part of the above compliance they are familiar with:
    • this framework document
    • any delegation letter issued to body as set out in paragraph 14.3
    • any elements of any settlement letter issued to the sponsor department that is relevant to the operation of APHA
    • any separate settlement letter that is issued to APHA from the sponsor department
    • that they have appropriate internal mechanisms for the monitoring, governance and external reporting regarding any conditions arising from the above documents and ensure that the chief executive and APHA as a whole act in accordance with their obligations under the above documents
  • demonstrating high standards of corporate governance at all times, including by using the independent audit committee to help the board to address key financial and other risks
  • determining all such other things which the board considers ancillary or conducive to the attainment or fulfilment by APHA of its objectives

15.7 The steering board should ensure that effective arrangements are in place to provide assurance on risk management, governance, and internal control.

15.8 The steering board should make a strategic choice about the style, shape and quality of risk management and should lead the assessment and management of opportunity and risk. The steering board should ensure that effective arrangements are in place to provide assurance over the design and operation of risk management, governance, and internal control in line with the Management of Risk – Principles and Concepts (The Orange Book). The steering board must set up an Audit and Risk Assurance Committee chaired by an independent and appropriately qualified non-executive member to provide independent advice and ensure that the department’s Audit and Risk Assurance Committee are provided with routine assurances with escalation of any significant limitations or concerns. The steering board is expected to assure itself of the adequacy and effectiveness of the risk management framework and the operation of internal control.

The steering board chair’s role and responsibilities

16.1 The chair is responsible for leading the steering board in the delivery of its responsibilities in line with strategies and plans agreed with Defra (and relevant OGDs). Such responsibility should be exercised in the light of their duties and responsibilities as set out in the chairperson’s contract of employment, any appointment letter, the statutory authority governing APHA this document and the documents and guidance referred to within this document.

16.2 Communications between the APHA steering board and the responsible minister should normally be through the chair.

16.3 The chair is bound by the Code of Conduct for Board Members of Public Bodies, which covers conduct in the role and includes the Nolan Principles of Public Life.

16.4 In addition, the chair is responsible for:

  • ensuring including by monitoring and engaging with appropriate governance arrangements that APHA’s affairs are conducted with probity

  • ensuring that policies and actions support the responsible minister’s (and where relevant other ministers’) wider strategic policies and where appropriate, these policies and actions should be clearly communicated and disseminated throughout APHA

16.5 The chair has the following leadership responsibilities:

  • ensuring that the steering board, in providing advice, takes proper account of guidance provided by the responsible minister or the department

  • driving collaborative working within the Defra group and other government departments to make best use of available resources and to maximise outcomes and benefits

  • promoting the efficient and effective use of staff and other resources

  • delivering high standards of regularity and propriety

  • representing the views of the steering board as required

16.6 The chair also has an obligation to ensure that:

  • the work of the steering board and its members are reviewed and are working effectively including ongoing assessment of the performance of individual board members with a formal annual evaluation and more in-depth assessments of the performance of individual board members when being considered for re-appointment

  • that in conducting assessments that the view of relevant stakeholders including employees and the sponsorship team are sought and considered

  • that the steering board has a balance of skills appropriate to advising APHA, and that all directors including the chair and chief executive continually update their skills, knowledge and familiarity with APHA to fulfil their role both on the board and committees. This will include but not be limited to skills and training in relation to financial management and reporting requirements, risk management and the requirements of board membership within the public sector

  • steering board members are fully briefed on terms of appointment, duties, rights and responsibilities

  • they, together with the other steering board members, receive appropriate training on financial management and reporting requirements and on any differences that may exist between private and public sector practice

  • the responsible minister is advised of APHA’s needs when steering board vacancies arise

  • there is a steering board protocol in place setting out the role and responsibilities of the Board consistent with the Government Code of Good Practice for Corporate Governance

  • there is a steering board protocol for board members in place, consistent with the Cabinet Office Code of Conduct for Board Members of Public Bodies

Individual board members’ responsibilities

17.1 Individual steering board members should:

  • comply at all times with the Code of Conduct for Board Members of Public Bodies, which covers conduct in the role and includes the Nolan Principles of Public Life as well as rules relating to the use of public funds and to conflicts of interest

  • demonstrate adherence to the 12 Principles of Governance for all Public Body Non-Executive Directors as appropriate

  • not misuse information gained in the course of their public service for personal gain or for political profit, nor seek to use the opportunity of public service to promote their private interests or those of connected persons or organisations

  • comply with the board’s rules on the acceptance of gifts and hospitality, and of business appointments

  • act in good faith and in the best interests of APHA

  • ensure they are familiar with any applicable guidance on the role of Public Sector non-executive directors and boards that may be issued from time to time by the Cabinet Office, HM Treasury or wider government

Management and financial responsibilities and controls

Delegated authorities

18.1 APHA’s delegated authorities are set out in the delegation letter. This delegation letter may be updated and superseded by later versions which may be issued by the sponsor department in agreement with HM Treasury.

18.2 In line with Managing Public Money Annex 2.2 these delegations will be reviewed on an annual basis.

18.3 APHA shall obtain the department’s and where appropriate HM Treasury’s prior written approval before:

  • entering into any undertaking to incur any expenditure that falls outside the delegations or which is not provided for in the ALB’s annual budget as approved by the department

  • incurring expenditure for any purpose that is or might be considered novel or contentious, or which has or could have significant future cost implications

  • making any significant change in the scale of operation or funding of any initiative or scheme previously approved by the department

  • making any change of policy or practice which has wider financial implications that might prove repercussive, or which might significantly affect the future level of resources required

  • carrying out policies that go against the principles, rules, guidance, and advice in Managing Public Money

Spending authority

19.1 Once the budget has been approved by the sponsor department APHA shall have authority to incur expenditure approved in the budget without further reference to the sponsor department, on the following conditions:

  • APHA shall comply with the delegations set out in the delegation letter. These delegations shall not be altered without the prior agreement of the sponsor department and as agreed by HM Treasury and Cabinet Office as appropriate

  • APHA shall comply with Managing Public Money regarding novel, contentious or repercussive proposals

  • inclusion of any planned and approved expenditure in the budget shall not remove the need to seek formal departmental approval where any proposed expenditure is outside the delegated limits or is for new schemes not previously agreed

  • APHA shall provide the sponsor department with such information about its operations, performance, individual projects, or other expenditure as the sponsor department may reasonably require

Banking and managing cash

20.1 APHA must maximise the use of publicly procured banking services (accounts with central government commercial banks managed centrally by Government Banking).

20.2 APHA should only hold money outside Government Banking Service accounts where a good business case can made for doing so and HM Treasury consent is required for each account to be established. Only commercial banks which are members of relevant UK clearing bodies may be considered for this purpose. Commercial accounts where approved should be operated in line with the principles as set out in Managing Public Money.

20.3 The accounting officer is responsible for ensuring APHA has a banking policy as set out in Managing Public Money and ensuring that policy is complied with.

Procurement

21.1 APHA shall ensure that its procurement policies are aligned with and comply with any relevant UK or other international procurement rules and in particular the Public Contracts Regulations 2015. APHA shall establish its procurement policies and document these in a Procurement Policy and Procedures Manual.

21.2 In procurement cases where APHA is likely to exceed its delegated authority limit, procurement strategy approval for the specific planned purchase must be sought from the department’s sponsor team.

21.3 Goods, services, and works should be acquired by competition. Proposals to let single-tender or restricted contracts shall be limited and exceptional, and a quarterly report explaining those exceptions should be sent to the department.

21.4 Procurement by APHA of works, equipment, goods, and services shall be based on, a full option appraisal and value for money (VfM), which means the optimum combination and whole life costs and quality (fitness for purpose).

21.5 APHA shall a) engage fully with department and government wide procurement initiatives that seek to achieve VfM from collaborative projects, b) comply with all relevant procurement policy notes issued by Cabinet Office and c) co-operate fully with initiatives to improve the availability of procurement data to facilitate the achievement of VfM.

21.6 APHA shall comply with the Commercial and Grants Standards. These standards apply to the planning, delivery, and management of government commercial activity, including management of grants in all departments and arm’s length bodies, regardless of commercial approach used and form part of a suite of functional standards that set expectations for management within government.

Risk and issue management

22.1 APHA shall ensure that the risks that it faces are dealt with in an appropriate manner, in accordance with relevant aspects of best practice in corporate governance and develop a risk management strategy consistent with the Defra Group Risk Strategy in accordance with the Treasury guidance Management of Risk: Principles and Concepts.

22.2 APHA’s Chief Executive is responsible for managing APHA risks and issues with oversight from the ALB’s board and within its governance structure. On a quarterly basis APHA should share its strategic risk register with the Defra sponsor team. APHA should inform the sponsor team at an early stage of any risk or issue that may require engagement, or have impact, beyond their own organisation. These risks may be escalated to the relevant director general or to the Defra Executive Committee. When a risk is escalated, ownership of that risk will usually be retained by APHA. However, upon escalation a decision will be made on ownership of the risk, and a feedback mechanism put in place. Changing or emerging risks and issues should form part of the regular discussions between sponsor teams and APHAs, as part of a shared ‘no surprises’ culture.

22.3 APHA’s executive board has a responsibility to ensure that proper internal audit arrangements are established and maintained, and for that purpose should establish an Audit and Risk Committee (ARAC). The committee should be chaired by a non-executive member of APHA and provide regular reports to the chief executive and the steering board on its programme, recommendations, and their implementation.

Counter fraud and theft

23.1 APHA should adopt and implement policies and practices to safeguard itself against fraud, bribery, corruption, and theft.

23.2 APHA should ensure it complies with requirements set out in the Counter Fraud Function and in compliance with the procedure and considerations as set out in in Managing Public Money Annex 4.9 and with the and the Counter Fraud Functional Standard. It should also take all reasonable steps to appraise the financial standing of any firm or other body with which it intends to enter a contract or to provide grant or grant-in-aid.

23.3 APHA should record and report all instances of fraud, bribery, and theft annually to Defra and notify the sponsor department of any unusual or major incidents as soon as possible, in line with Defra guidance. APHA should also report detected loss from fraud, bribery, corruption and error, alongside associated recoveries and prevented losses, to the Counter Fraud Hub in Defra (fraudanderror@defra.gov.uk) in line with the agreed government definitions as set out in Counter Fraud Functional Standard.

APHA staff

Broad responsibilities for staff

24.1 Within the arrangements approved by the responsible minister (and the Treasury) APHA will have responsibility for the recruitment, retention and motivation of its staff. The broad responsibilities toward its staff are to ensure that:

  • the rules for recruitment and management of staff create an inclusive culture in which diversity is fully valued; appointment and advancement is based on merit: there is no discrimination on grounds of gender, marital status, sexual orientation, race, colour, ethnic or national origin, religion, disability, community background or age

  • the level and structure of its staffing, including grading and staff numbers, are appropriate to its functions and the requirements of economy, efficiency and effectiveness

  • the performance of its staff at all levels is satisfactorily appraised and APHA performance measurement systems are reviewed from time to time

  • its staff are encouraged to acquire the appropriate professional, management and other expertise necessary to achieve APHA’s objectives

  • proper consultation with staff takes place on key issues affecting them

  • adequate grievance and disciplinary procedures are in place

  • whistle-blowing procedures consistent with the Public Interest Disclosure Act are in place

Staff costs

24.2 Subject to its delegated authorities, APHA shall ensure that the creation of any additional posts does not incur forward commitments that will exceed its ability to pay for them.

Pay and conditions of service

24.3 APHA’s staff are subject to levels of remuneration and terms and conditions of service (including pensions) within the general pay structure approved by the sponsor department (and the Treasury). APHA has no delegated power to amend these terms and conditions.

24.4 If civil service terms and conditions of service apply to the rates of pay and non-pay allowances paid to the staff and to any other party entitled to payment in respect of travel expenses or other allowances, payment shall be made in accordance with the Civil Service Management Code and the annual Civil Service Pay Remit Guidance, except where prior approval has been given by the department to vary such rates.

24.5 Staff terms and conditions should be set out in an employee handbook, which should be provided to the department together with subsequent amendments.

24.6 APHA shall abide by public sector pay controls, including the relevant approvals process dependent on the organisations classification as detailed in the Senior Pay Guidance and the public sector pay and terms guidance.

24.7 APHA shall operate a performance-related pay scheme that shall form part of the annual aggregate pay budget approved by the department or the general pay structure approved by the department and the Treasury whichever is applicable, where relevant with due regard to the senior pay guidance.

24.8 The travel expenses of board members shall be tied to the rates allowed to senior staff of APHA reasonable actual costs shall be reimbursed.

Pensions, redundancy and compensation

24.9 Compensation scheme rules and pension scheme rules should reflect legislative and HM Treasury guidance requirements regarding exit payments.

24.10 APHA staff shall normally be eligible for a pension provided by PCSPS. Staff may opt out of the occupational pension scheme provided by APHA, but that employers’ contribution to any personal pension arrangement, including stakeholder pension shall normally be limited to the national insurance rebate level.

24.11 Any proposal by APHA move from the existing pension arrangements, or to pay any redundancy or compensation for loss of office, requires the prior approval of the department. Proposals on severance must comply with the rules in chapter 4 of Managing Public Money.

Corporate and business plans

25.1 There is not a requirement from Defra for APHA to submit annually a draft corporate and business plan. Delivery outcomes are agreed via an annual commission between APHA and Defra and are aligned to the Defra outcome delivery plan. The commission shall reflect APHA’s statutory and other duties (or both) and, within those duties, the priorities set from time to time by the responsible minister.

25.2 The outcome delivery plan, which also serves as the Defra group business plan, sets out the priorities, success measures and resource allocations to deliver the strategic objectives. It includes more detailed sections for priority outcomes where delivery bodies and director areas must include their priorities, indicators, risks and outcomes. DGs, directors and CEOs report on delivery of their plans through the performance reporting framework, and report on maintaining forecasted financial positions within budget limits. The plans should be developed as appropriate through joint working between sponsorship teams, policy and delivery teams to ensure coherence. They should reflect allocations and priorities which have been agreed by Defra Executive Committee, the board and approval by ministers.     

25.3 As an executive agency, APHA’s strategy and business plans will be included within the department’s outcome delivery plan with key outcomes and requirements detailed in the annual commission from Defra.

Budgeting procedures

26.1 Each year, in the light of decisions by the department on the updated draft commission, the department will send to APHA by 1 April:

  • a formal statement of the annual budgetary provision allocated by the department in the light of competing priorities across the department and of any forecast income approved by the department

  • a statement of any planned change in policies affecting APHA

26.2 The approved annual commission will take account both of approved funding provision (where this applies) and any forecast receipts and will include a budget of estimated payments and receipts together with a profile of expected expenditure and of draw-down of any departmental funding or other income over the year or both.

26.3 During the financial year APHA will provide financial reporting data to the department in accordance with agreed processes. This will include monthly out-turn data, contributions to periodic reviews on budget risks and opportunities, and other commissions as appropriate.

Annual report and accounts

27.1 APHA must publish an annual report of its activities together with its audited accounts after the end of each financial year. APHA shall provide the department its finalised (audited) accounts by a date agreed each year in order for the accounts to be consolidated within Defra’s. A draft of the report should be submitted to the department two weeks before the proposed publication date. The accounts should be prepared in accordance with the relevant statutes and specific accounts direction issued by the department as well as the Treasury’s Financial Reporting Manual (FReM).

27.2 The annual report must:

  • cover any corporate, subsidiary or joint ventures under its control

  • comply with the FreMand in particular have regard to the illustrative statements for an ALB

  • outline main activities and performance during the previous financial year and set out in summary form forward plans

27.3 Information on performance against key financial targets is included within the annual report and subject to the auditor’s consistency opinion. The report and accounts shall be laid in Parliament and made available on APHA’s website, in accordance with the guidance in the FReM.

Reporting performance to the department

28.1 APHA shall operate management, information and accounting systems that enable it to review in a timely and effective manner its financial and non-financial performance against the budgets and targets set out in its annual commission. The commission will also be shared with the agency’s steering board chair.

28.2 APHA shall inform the sponsor department of any changes that make achievement of objectives difficult. It shall report financial and non-financial performance, including performance in helping to deliver ministers’ policies, and the achievement of key objectives quarterly.

28.3 While responsibility for management of performance lies with the relevant delivery organisation and the sponsor team, APHA performance shall be formally reviewed by the department periodically, at a frequency dependent on the extent of APHA scope of responsibilities and its contributions to the Defra Outcome Delivery Plan. ALBs will be expected to share their corporate performance reports with the department on a quarterly basis.

28.4 The responsible minister will meet the APHA’s steering board chair and chief executive at least once a year.

28.5 The principal accounting officer will meet the chief executive at least once a year.

Information sharing

29.1 The department has the right of access to all APHA records and personnel for any purpose including, for example, sponsorship audits and operational investigations.

29.2 APHA shall provide the sponsor department with such information about its operations, performance, individual projects, or other expenditure as the sponsor department may reasonably require.

29.3 The department and HM Treasury may request the sharing of data held by APHA in such a manner as set out in central guidance except insofar as it is prohibited by law. This may include requiring the appointment of a senior official to be responsible for the data sharing relationship.

29.4 As a minimum, APHA shall provide the department with information monthly that will enable the department to satisfactorily monitor:

  • APHA’s cash management
  • its draw-down of grant-in-aid
  • forecast outturn by resource headings
  • other data required for the Online System for Central Accounting and Reporting (OSCAR)
  • data as required in respect of its compliance with any Cabinet Office Controls pipelines or required in order to meet any condition as set out in any settlement letter

Audit

Internal audit

30.1 APHA shall:

  • establish and maintain arrangements for internal audit
  • ensure that any arrangements for internal audit are in accordance with the Public Sector Internal Audit Standards (PSIAS) as adopted by HM Treasury
  • ensure the sponsor department is satisfied with the competence and qualifications of the Head of Internal Audit and the requirements for approving appointments in accordance with PSIAS
  • set up an audit committee of its board in accordance with the Code of Good Practice for Corporate Governance and the Audit and Risk Assurance Committee Handbook
  • forward the audit strategy, periodic audit plans and annual audit report, including APHA’s Head of Internal Audit opinion on risk management, control and governance as soon as possible to the sponsor department
  • keep records of and prepare and forward to the department an annual report on fraud and theft suffered by APHA and notify the sponsor department of any unusual or major incidents as soon as possible
  • will share with the sponsor department information identified during the audit process and the Annual Audit Opinion Report (together with any other outputs) at the end of the audit, on issues impacting on the Department’s responsibilities in relation to financial systems within APHA

External audit

31.1 The Controller & Auditor General (C&AG) audits APHA’s annual accounts and APHA lay the accounts together with the C&AG’s report before Parliament.

31.2 In the event that APHA has set up and controls subsidiary companies, APHA will (in the light of the provisions in the Companies Act 2006) ensure that the C&AG has the option to be appointed auditor of those company subsidiaries that it controls or whose accounts are consolidated within its own accounts or both. APHA shall discuss with the sponsor department the procedures for appointing the C&AG as auditor of the companies.

31.3 The C&AG:

  • will consult the department and APHA on whom – the NAO or a commercial auditor – shall undertake the audit(s) on his behalf, though the final decision rests with the C&AG
  • has a statutory right of access to relevant documents, including by virtue of section 25(8) of the Government Resources and Accounts Act 2000, held by another party in receipt of payments or grants from APHA
  • will share with the sponsor department information identified during the audit process and the audit report (together with any other outputs) at the end of the audit, in particular on issues impacting on the Department’s responsibilities in relation to financial systems within APHA
  • will consider requests from departments and other relevant bodies to provide Regulatory Compliance Reports and other similar reports at the commencement of the audit. Consistent with the C&AG’s independent status, the provision of such reports is entirely at the C&AG’s discretion

31.4 The C&AG may carry out examinations into the economy, efficiency, and effectiveness with which APHA has used its resources in discharging its functions. For the purpose of these examinations the C&AG has statutory access to documents as provided for under section 8 of the National Audit Act 1983. In addition, the ALB shall provide, in conditions to grants and contracts, for the C&AG to exercise such access to documents held by grant recipients and contractors and sub-contractors as may be required for these examinations; and shall use its best endeavours to secure access for the C&AG to any other documents required by the C&AG which are held by other bodies.

Reviews and winding up arrangements

Review of ALB’s status

32.1 The ALB will be reviewed every 3 years. The date of the next review will be in 2026.

Arrangements in the event that APHA is wound up

33.1    The sponsor department shall put in place arrangements to ensure the orderly winding up of APHA. In particular it should ensure that the assets and liabilities of APHA are passed to any successor organisation and accounted for properly (if there is no successor organisation, the assets and liabilities should revert to the sponsor department.) To this end, the department shall:

  • have regard to Cabinet Office guidance on winding up of ALBs
  • ensure that procedures are in place in APHA to gain independent assurance on key transactions, financial commitments, cash flows and other information needed to handle the wind-up effectively and to maintain the momentum of work inherited by any residuary body; specify the basis for the valuation and accounting treatment of the APHA’s assets and liabilities
  • ensure that arrangements are in place to prepare closing accounts and pass to the C&AG for external audit, and that, for non-Crown bodies funds are in place to pay for such audits. It shall be for the C&AG to lay the final accounts in Parliament, together with his report on the accounts
  • arrange for the most appropriate person to sign the closing accounts. In the event that another ALB takes on the role, responsibilities, assets and liabilities, the succeeding ALB AO should sign the closing accounts. In the event that the department inherits the role, responsibilities, assets and liabilities, the sponsor department’s AO should sign

33.2 APHA shall provide the department with full details of all agreements where APHA or its successors have a right to share in the financial gains of developers. It should also pass to the department details of any other forms of claw-back due to APHA.

Signatures

Signed:  Sally Randall

Date: February 2024 (On behalf of Defra)

Signed: David Holdsworth

Date: February 2024 (On behalf of the APHA)

Annex A

APHA will comply with the following general guidance documents and instructions:

Corporate governance

Financial management and reporting

Management of risk

Commercial management

Public appointments

The following are relevant where public bodies participate in public appointments processes:

Staff and remuneration

General

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