Policy paper

Framework agreement between DHSC and the Health Research Authority

Published 31 March 2025

Applies to England

© Crown copyright 2025

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Introduction and background

Purpose of document

This framework document (the ‘framework document’) has been agreed between the Department of Health and Social Care (DHSC) and the Health Research Authority (HRA) in accordance with HM Treasury’s handbook Managing public money (MPM) (as updated from time to time) and has been approved by HM Treasury.

The framework document sets out the broad governance framework within which HRA and DHSC operate. It:

  • sets out HRA’s core responsibilities
  • describes the governance and accountability framework that applies between the roles of DHSC and HRA
  • sets out how the day-to-day relationship works in practice, including in relation to governance and financial matters 

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

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

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 on the HRA website and GOV.UK.

This framework document should be reviewed and updated at least every 3 years, unless there are exceptional reasons that render this inappropriate that have been agreed with HM Treasury and the principal accounting officer (PAO) of DHSC. The latest date for review and updating of this document is 31 December 2027.

Objectives

DHSC and HRA share the common objective of delivering high-quality health and social care research that improves people’s health and wellbeing.

To achieve this, HRA and DHSC will work together in recognition of each other’s roles and areas of expertise, providing an effective environment for HRA to achieve its objectives through the promotion of partnership and trust, and ensuring that HRA also supports the strategic aims and objectives of DHSC and wider government as a whole. 

Classification

HRA has been classified as a central government organisation by the Office for National Statistics and HM Treasury Classifications Team.

It has been administratively classified by the Cabinet Office as a non-departmental public body (NDPB).

Purposes, powers, duties and aims

Purposes

HRA has been established under the Care Act 2014. Its purposes are set out in chapter 2 of the act. 

Powers and duties

HRA’s powers and duties stem from sections 109 to 117 and schedule 7 of the Care Act 2014.

HRA’s statutory duties and functions are to: 

  • protect and promote the interests of actual and potential participants in health and social care research and the general public by facilitating and promoting high-quality research that is safe and ethical
  • establish and recognise research ethics committees to assess the ethics of health and social care research
  • promote the co-ordination and standardisation of practice by removing duplication and streamlining the regulation of health and social care research across the regulatory system
  • publish guidance on principles of good practice in the conduct and management of health and social care research
  • promote transparency in research - for example, by promoting the publication and dissemination of research findings and conclusions
  • provide independent recommendations on the processing of identifiable patient information, where it is not always practical to obtain consent, for research and non-research projects

Aims

HRA’s vision is to facilitate high-quality health and social care research today that improves everyone’s health and wellbeing tomorrow. HRA helps realise this by making it easy to do research that people can trust. HRA’s strategy, published on its website, focuses on 2 key principles: 

1. Health and social care research is done with and for everyone

HRA will achieve this by:

  • meaningfully involving people in all stages of research and sharing the findings of research to earn people’s trust
  • championing issues which are important to people to ensure research addresses the issues that matter to the public
  • involving patients and the public in the work of HRA to better support decision making

2. Research findings improve care faster because the UK is the easiest place in the world to do research that people can trust

HRA will achieve this by:

  • saving money and time to allow researchers to focus on doing good research
  • creating a new online system to help make research happen
  • supporting new ways to do research

Governance and accountability

The arm’s length body (ALB) 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.

In particular (but without limitation), HRA should:

  • comply with the principles and provisions of the Corporate governance in central government departments: code of good practice  (as amended and updated from time to time) to the extent appropriate and in line with its statutory duties or specify and explain any non-compliance in its annual report
  • comply with Managing public money (MPM)    
  • in line with MPM, have regard to the relevant functional standards as appropriate and in particular those concerning finance, commercial and counter fraud
  • take into account the codes of good practice and guidance set out in Annex A of this framework document, as they apply to ALBs

In line with MPM Annex 3.1, HRA 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 HRA does intend to materially depart from the code, DHSC should be notified in advance. 

Role of DHSC

The responsible minister

The Secretary of State for Health and Social Care is accountable to Parliament for all matters concerning HRA. 

The Secretary of State’s statutory powers in respect of HRA are set out in the Care Act 2014.

These are to: 

  • determine the funding and resourcing of HRA
  • hold HRA to account
  • appoint the non-executive members of the authority, including the chair
  • if the Secretary of State considers that HRA is failing or has failed to exercise any of its functions, and that the failure is significant, direct HRA to exercise such of its functions, in such manner and within such period, as the direction specifies
  • if HRA fails to comply with a direction, exercise the functions specified in the direction, or make arrangements for some other person to exercise those functions on the Secretary of State’s behalf
  • remove or suspend non-executive members from office on the grounds of incapacity, misbehaviour or failure to carry out their duties as a non-executive member
  • appoint a non-executive member as interim chair where the chair is suspended
  • determine the level of payments to the HRA chair and non-executive members

Appointments to the board

The chief executive of HRA is appointed by the board non-executive members with the consent of the Secretary of State. 

The HRA chairperson and non-executive members of the board are appointed by the Secretary of State. These appointments are subject to the Public Appointments Order in Council and as such must comply with the Governance Code on Public Appointments.

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 that include a balance of skills and backgrounds. 

Other ministerial powers and responsibilities

The Secretary of State is also responsible for: 

  • the policy framework within which HRA operates
  • providing guidance and direction to ensure the strategic aims and objectives of HRA are consistent with those of DHSC and government
  • the power of appointment of the HRA chair, in line with the Governance Code on Public Appointments
  • the power of appointment in relation to non-executives, in line with the Governance Code on for Public Appointments
  • the power of approval in relation to the appointment of HRA’s chief executive
  • matters regarding spending approvals, acquisitions, disposals and joint ventures in line with delegations as set out in the delegation letter
  • such other matters as may be appropriate and proportionate

The PAO is the Permanent Secretary of DHSC.

The PAO’s specific accountabilities and responsibilities

The PAO of DHSC designates the chief executive as HRA’s accounting officer (AO) and ensures that they are fully aware of their responsibilities. The PAO issues a letter appointing the AO, setting out their responsibilities and delegated authorities. 

The respective responsibilities of the PAO and AO for ALBs are set out in Chapter 3 of MPM.  

The PAO is accountable to Parliament for the issue of any grant-in-aid to HRA.

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

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

The PAO, through the sponsorship team, is also responsible for ensuring arrangements are in place in order to: 

  • monitor HRA’s activities and performance
  • address significant problems in HRA, 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 DHSC’s and HRA’s objectives and activities, in line with the wider departmental risk assessment process
  • inform HRA of relevant government policy in a timely manner
  • bring ministerial or departmental concerns about the activities of HRA to the full HRA board, and, as appropriate to the departmental board, require explanations and assurances that appropriate action has been taken

The role of the sponsorship team

The HRA sponsor team in DHSC supports the senior departmental sponsor in the department as the primary contact for HRA. The responsible senior civil servant for this relationship is the director of the directorate that the sponsor team is part of. They are the main source of advice to the Secretary of State on the discharge of their responsibilities in respect of HRA. They also support the PAO on their responsibilities toward HRA.

The sponsor team will liaise regularly with HRA officials to review performance against plans, achievement against targets and expenditure against its departmental expenditure limit (DEL) and annual managed expenditure (AME) allocations.

The process in place to enable DHSC and HRA to review performance is as follows (not an exhaustive list):

  • quarterly accountability meetings will be held between HRA and the DHSC sponsor team with HRA representatives, including HRA’s chief executive officer, the finance director and other relevant executive directors, depending on the meeting content. The focus of the meetings will be on strategic issues, opportunities and any issues of delivery that the sponsor team believes it is appropriate to bring to this meeting. These meetings will be structured to promote openness, constructive challenge, the identification of strategic opportunities and the resolution of strategic issues, and will also provide an opportunity for DHSC to communicate government priorities and wider policy developments that might have an impact on HRA
  • a representative of the DHSC sponsor team is invited to attend the HRA board, as an observer, and the HRA Audit and Risk Committee
  • the sponsor team reviews HRA’s business plan and annual budget as part of DHSC’s annual planning process
  • annual agreement of key performance indicators covering the main business areas of HRA

Information will be provided to DHSC by HRA, including (not an exhaustive list):

  • quarterly business scorecards that show performance against agreed key performance indicators
  • quarterly finance report
  • quarterly updates on HRA’s strategic risk register

HRA will also prepare annual accounts and an annual report for the 12 months ending on 31 March of each financial year, which will set out:

  • the authority’s actions
  • how it has discharged its statutory functions
  • the progress made towards its objectives

Resolution of disputes between HRA and DHSC

Any disputes between DHSC and HRA will be resolved in as timely a manner as possible.

DHSC and HRA will seek to resolve any disputes through an informal process in the first instance.

If this is not possible, then a formal process, overseen by the senior sponsor, will be used to resolve the issue.

Failing this, the senior sponsor will ask the relevant policy director general to oversee the dispute. They may then choose to ask the Permanent Secretary to nominate a non-executive member of DHSC’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

Where a request for information is received by either party under the Freedom of Information Act 2000 or the Data Protection Act 1998 or Data Protection Act 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.

HRA shall provide a quarterly update to DHSC 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 in a timely manner.

In respect of each substantial piece of litigation involving HRA, 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 DHSC to facilitate this.

Until such time as a protocol is agreed, the parties will ensure that:

  • material developments in the litigation are communicated to DHSC in an appropriate and timely manner
  • legally privileged documents and information are clearly marked as such
  • individual employees handling 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

HRA’s governance structure

The chief executive

Responsibilities as accounting officer 

HRA’s chief executive, as AO, is personally responsible for:

  • safeguarding the public funds for which they have charge
  • ensuring propriety, regularity, value for money and feasibility in the handling of those public funds
  • the day-to-day operations and management of HRA

In addition, they should ensure that HRA 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 MPM. These responsibilities include the below and those that are set in the AO appointment letter issued by the PAO of DHSC. 

Responsibilities for accounting to Parliament and the public

The HRA chief executive’s 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 HRA, in accordance with the Parliamentary and Health Service Ombudsman’s Principles of Good Complaint Handling, are established and made widely known within HRA and published on HRA’s website
  • acting in accordance with the terms of MPM and other instructions and guidance issued from time to time by DHSC, HM 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 elements of any settlement letter issued to DHSC that is relevant to the operation of HRA
    • any separate settlement letter that is issued to HRA from DHSC
  • ensuring they have appropriate internal mechanisms for monitoring, governance and external reporting regarding non-compliance with any conditions arising from the above documents
  • giving evidence, normally with the PAO, when summoned before the Public Accounts Committee on HRA’s stewardship of public funds

Responsibilities to DHSC

The HRA chief executive’s responsibilities to DHSC include: 

  • establishing, in agreement with DHSC, HRA’s corporate and business plans in light of DHSC’s wider strategic aims and agreed priorities
  • informing DHSC of progress in helping to achieve DHSC’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 DHSC
    • DHSC is notified promptly if over or under spends are likely and that corrective action is taken
    • any significant problems, whether financial or otherwise and whether detected by internal audit or by other means, are notified to DHSC in a timely fashion

Responsibilities to the board

HRA’s chief executive is responsible for: 

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

Managing conflicts

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

The chief executive, in their role as AO, should step in if they consider that the board, or its chairperson, is contemplating a course of action involving a transaction that:

  • would infringe the requirements of propriety or regularity
  • does not represent prudent or economical administration, efficiency or effectiveness
  • is of questionable feasibility
  • is unethical

The chief executive should also ensure that the board has a full opportunity to discuss the rationale for that rejection.

Such conflicts should be brought to the attention of the PAO and the responsible minister as soon as possible.  

Furthermore, if agreed with the responsible minister, the AO must write a letter of justification to the chair of the board setting out the rationale for not following the advice and recommendation of the board, and copy that letter to HM Treasury’s Treasury Officer of Accounts team. 

If the responsible minister agrees with the proposed course of action of the board, it may be appropriate for the minister to direct the AO in the manner as set out in MPM paragraph 3.6.6 onwards.

HRA board

Composition of the board

HRA will have a board in line with good standards of corporate governance, and as set out in its establishing statute and guidance as set out in Annex A.

The role of the board shall be to run HRA, and to deliver the objectives in accordance with the purposes as set out above, its statutory, regulatory and common-law duties, and responsibilities under this framework document. Detailed responsibilities of the board shall be set out in the board terms of reference.

Remuneration of the board will be disclosed in line with the guidance in the Government Financial Reporting Manual (FReM).

The board will consist of:

  • a chairperson
  • at least 3 but no more than 4 non-executive members together with the chief executive
  • at least 2 but no more than 3 executive members who have a balance of skills and experience appropriate to directing HRA’s business

The chair and chief executive decide the balance of skills across the authority, which may include members who have experience of its business, operational delivery or corporate services, such as HR, technology, communications and performance management. This will include, as an executive and voting board member, an appropriately qualified finance director as described in Annex 4.1 of MPM.

The board should include a majority of independent non-executive members to ensure that executive members are supported and constructively challenged in their role.

Board committees

The 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.  

While the 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
  • recommendations
  • actions to be taken

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 DHSC sponsor team, PAO and responsible minister. The committee may also seek to ensure the disagreement or concern is reflected as part of the report on its activities in the annual report.

The chair should ensure board committees are properly structured with appropriate terms of reference. The terms of each committee should set out its responsibilities and the authority delegated to it by the board. The chair should ensure that committee membership is periodically refreshed and that individual independent non-executive directors are not over-burdened when deciding the chairs and membership of committees.

Duties of the board

The board is specifically responsible for:  

  • establishing and taking forward the strategic aims and objectives of HRA, consistent with its overall strategic direction and within the policy and resources framework determined by the Secretary of State
  • providing effective leadership of HRA within a framework of prudent and effective controls that enables risk to be assessed and managed
  • ensuring the financial and human resources are in place for HRA to meet its objectives
  • reviewing management performance
  • ensuring that the board receives and reviews regular financial and management information concerning the management of HRA
  • ensuring that it is kept informed of any changes that are likely to impact on the strategic direction of the HRA board or the attainability of its targets, determining the steps needed to deal with such changes and, where appropriate, bringing such matters to the attention of the responsible minister and PAO through the executive team, DHSC or directly
  • ensuring that any statutory or administrative requirements for the use of public funds are complied with - the board must operate within the limits of its statutory authority and any delegated authority agreed with DHSC, and in accordance with any other conditions relating to the use of public funds
  • ensuring that, in reaching decisions, the board takes into account guidance issued by DHSC
  • any elements of any settlement letter issued to DHSC that are relevant to the operation of HRA, ensuring that, as part of the above compliance, it is familiar with:
    • this framework document
    • any delegation letter issued to the body
    • any elements of any settlement letter issued to DHSC that are relevant to the operation of HRA
    • any separate settlement letter that is issued to HRA from DHSC
  • making sure that there are appropriate internal mechanisms for the monitoring, governance and external reporting of any conditions arising from the above documents, and that the chief executive and HRA 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 financial and other risks
  • appointing, with the Secretary of State for Health and Social Care’s approval, a chief executive and, in consultation with DHSC, setting performance objectives and remuneration terms linked to these objectives for the chief executive, which give due weight to the proper management and use of public resources
  • putting in place mechanisms for independent appraisal and annual evaluation of the performance of the chairperson by the independent non-executives, taking into account the views of relevant stakeholders 
  • determining all such other things that the board considers ancillary or conducive to the attainment or fulfilment by HRA of its objectives

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

The board should make a strategic choice about the style, shape and quality of risk management, and lead on the assessment and management of opportunity and risk. The 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 Orange Book: Management of Risk - Principles and Concepts
  • 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 DHSC’s audit and risk assurance committee are provided with routine assurances with escalation of any significant limitations or concerns
  • assure itself of the adequacy and effectiveness of the risk management framework and the operation of internal control

The chair’s role and responsibilities

The chair is responsible for leading the board in the delivery of its responsibilities.

Such responsibility should be exercised in light of their duties and responsibilities as set out in their contract of employment or appointment letter, and the priorities in the chair’s letter issued to them by DHSC, the statutory authority governing HRA, this document, and the documents and guidance referred to within this document.

Communications between HRA’s board and the responsible minister should normally be through the chair.  

The chair is bound by the Code of conduct for board members of public bodies, which covers conduct in the role and includes the Seven Principles of Public Life (the Nolan Principles).

In addition, the chair is responsible for ensuring that: 

  • by monitoring and engaging with appropriate governance arrangements, HRA’s affairs are conducted with probity
  • 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 HRA

The chair has the following leadership responsibilities: 

  • formulating the board’s strategy
  • ensuring that the board, in reaching decisions, takes proper account of guidance provided by the responsible minister or DHSC
  • promoting the efficient and effective use of staff and other resources
  • delivering high standards of regularity and propriety
  • representing the views of the board to the general public

The chair also has an obligation to ensure that: 

  • the work of the board and its members is reviewed and they 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 reappointment
  • in conducting assessments, that the view of relevant stakeholders, including employees and DHSC, are sought and considered 
  • the board has a balance of skills appropriate to directing HRA’s business and that all directors, including the chair and chief executive, continually update their skills, knowledge and familiarity with HRA to fulfil their role both on the board and on 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
  • board members are fully briefed on terms of appointment, duties, rights and responsibilities
  • they, together with the other 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 HRA’s needs when board vacancies arise
  • there is a board operating framework in place setting out the role and responsibilities of the board, which is consistent with the Corporate governance in central government departments: code of good practice
  • there is a code of practice for board members in place, which is consistent with the Code of conduct for board members of public bodies (linked previously)

Individual board members’ responsibilities

Individual board members should: 

  • comply at all times with the code of conduct for board members of public bodies (linked previously), which covers conduct in the role and includes the Seven Principles of Public Life (also linked previously) as well as rules relating to the use of public funds and conflicts of interest
  • 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 the best interests of HRA
  • 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 

HRA’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 DHSC in agreement with HM Treasury.

In line with MPM Annex 2.2, these delegations will be reviewed on an annual basis.

HRA shall obtain DHSC’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 HRA’s annual budget as approved by DHSC
  • 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 particular scheme previously approved by DHSC
  • making any change of policy or practice that:
    • has wider financial implications, which might prove repercussive
    • might significantly affect the future level of resources required
  • carrying out policies that go against the principles, rules, guidance and advice in MPM

Spending authority 

Once the budget has been allocated by HM Treasury settlement, HRA shall have authority to incur expenditure approved in the budget without further reference to DHSC, on the following conditions:

  • HRA shall comply with the delegations set out in the delegation letter. These delegations shall not be altered without the prior agreement of DHSC and as agreed by HM Treasury and Cabinet Office as appropriate
  • HRA shall comply with MPM regarding novel, contentious or repercussive proposals
  • inclusion of any planned and approved expenditure in the budget shall not remove the need to seek formal DHSC approval where any proposed expenditure is outside the delegated limits or is for new schemes not previously agreed
  • HRA shall provide DHSC with such information about its operations, performance, individual projects or other expenditure as it may reasonably require

Banking and managing cash 

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

HRA 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 that 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 MPM. 

The AO is responsible for ensuring that HRA has a banking policy, as set out in MPM, and policy is complied with.    

Procurement

HRA 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 and the Procurement Act 2023, as applicable.

HRA shall establish its procurement policies and document these in a procurement policy and procedures manual.  

In procurement cases where HRA is likely to exceed its delegated authority limit, procurement strategy approval for the specific planned purchase must be sought from DHSC.

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 DHSC. 

Procurement by HRA of works, equipment, goods and services shall be based on a full option appraisal and value for money - that is, an analysis of the optimum combination and whole-life costs and quality (fitness for purpose).  

HRA shall:

  • engage fully with DHSC and government-wide procurement initiatives that seek to achieve value for money from collaborative projects
  • comply with all relevant procurement policy notes issued by Cabinet Office
  • co-operate fully with initiatives to improve the availability of procurement data to facilitate the achievement of value for money

HRA shall comply with the Government Functional Standard GovS 008: Commercial and Commercial Continuous Improvement Assessment Framework and Government Functional Standard GovS 015: Grants. These standards apply to the planning, delivery and management of government commercial activity, including management of grants in all departments and ALBs, regardless of commercial approach used, and form part of a suite of functional standards that set expectations for management within government.

Risk management 

HRA shall:

Counter fraud and theft

HRA should adopt and implement policies and practices to safeguard itself against fraud and theft.

HRA should act in line with guidance as issued by the Counter Fraud Function, and in compliance with the procedures and considerations as out in MPM Annex 4.9 and the Government Functional Standard GovS 013: Counter Fraud.

It should also take all reasonable steps to appraise the financial standing of any firm or other body with which it intends to enter into a contract or provide a grant or grant-in-aid.

HRA should keep records of and prepare and forward to DHSC an annual report on fraud and theft suffered by HRA, and notify it of any unusual or major incidents as soon as possible. HRA should also report detected loss from fraud, bribery, corruption and error, alongside associated recoveries and prevented losses, to the Cabinet Office’s Counter Fraud Centre of Expertise in line with the agreed government definitions as set out in Government Functional Standard GovS 013: Counter Fraud (linked above).

Staff

Broad responsibilities for staff 

Within the arrangements approved by the responsible minister, HRA 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 against employees with protected characteristics under the Equality Act 2010
  • 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 HRA 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 HRA’s objectives
  • proper consultation with staff takes place on issues affecting them
  • adequate grievance and disciplinary procedures are in place
  • whistle-blowing procedures consistent with the Public Interest Disclosure Act 1998 are in place
  • a code of conduct for staff is in place based on the Cabinet Office’s Code of conduct for board members of public bodies (linked previously)

Staff costs 

Subject to its delegated authorities, HRA 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 

HRA operates NHS terms and conditions of service, which ensure that pay across the organisation is consistent with the requirements of equal pay law. The terms and conditions of service for the majority of staff are set out in the NHS Terms and Conditions of Service Handbook and in accordance with NHS Agenda for Change pay grades. HRA has no delegated power to amend these terms and conditions.

The framework for the remuneration of senior managers and directors is set by DHSC through the executive and senior managers pay framework for ALBs.

Pay decisions affecting those on the executive senior management pay framework are made by HRA’s pay and remuneration committee.

The travel expenses of board members shall be tied to the rates allowed to HRA staff. Reasonable actual costs shall be reimbursed. 

Pensions, redundancy and compensation 

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

HRA staff shall normally be eligible for a pension provided by the NHS Pension Scheme, which is administered by the NHS Business Services Authority and has rules set down in legislation.

HRA staff may opt out of the NHS Pension Scheme - however, HRA, as required by law, must re-enrol staff not enrolled into its workplace pension scheme once every 3 years.

Any proposal by HRA to move from the existing pension arrangements, or to pay any redundancy or compensation for loss of office, requires the prior approval of DHSC. Proposals on severance must comply with the rules in chapter 4 of MPM. 

Business plans, financial reporting and management information 

Corporate and business plans 

HRA shall submit annually to DHSC a draft of the corporate plan (known as the HRA strategy), covering 3 years ahead. The draft should be submitted in line with the agreed annual timetable established by DHSC. HRA shall agree with DHSC the issues to be addressed in the plan and the timetable for its preparation.

The plan shall reflect HRA’s statutory and/or other duties and, within those duties, the priorities set from time to time by the responsible minister (including decisions taken on policy and resources in the light of wider public expenditure decisions). The plan shall demonstrate how HRA contributes to the achievement of DHSC’s medium-term plan and priorities, and aligned performance metrics and milestones.  

The first year of the HRA strategy, amplified as necessary, shall form the business plan. The business plan shall be updated to include targets and milestones for the year immediately ahead and linked to budgeting information so that resources allocated to achieve specific objectives can readily be identified by DHSC. Subject to any commercial considerations, the HRA strategy corporate and business plans should be published by HRA on its website and separately be made available to staff.   

The following matters should be included in the plans: 

  • objectives and associated key performance indicators for the forward years, and the strategy for achieving those objectives
  • non-financial performance targets
  • a review of performance in the preceding financial year, together with comparable outturns for the previous 2 to 5 years and an estimate of performance in the current year
  • alternative scenarios and an assessment of the risk factors that may significantly affect the execution of the plan that cannot be accurately forecast
  • other matters agreed between DHSC and HRA

Budgeting procedures 

Each year, in light of decisions by DHSC on the updated draft of the HRA strategy, DHSC will send to HRA by an agreed date: 

  • a formal statement of the annual budgetary provision allocated by DHSC in light of competing priorities across the department and any forecast income approved by the department
  • a statement of any planned change in policies affecting HRA   

The approved annual business plan will take account both of approved funding provision and any forecast receipts. It will include a budget of estimated payments and receipts together with a profile of expected expenditure and of draw-down of any DHSC funding and/or other income over the year. These elements form part of the approved business plan for the year in question. 

Grant-in-aid and any ring-fenced grants 

Any grant-in-aid provided by DHSC for the year in question will be voted in DHSC’s supply estimate and be subject to Parliamentary control.

The grant-in-aid will normally be paid in monthly instalments on the basis of written applications showing evidence of need. HRA will comply with the general principle that there is no payment in advance of need. Cash balances accumulated during the course of the year from grant-in-aid or other Exchequer funds shall be kept to a minimum level consistent with the efficient operation of HRA. Grant-in-aid not drawn down by the end of the financial year shall lapse.

Subject to approval by Parliament of the relevant estimates provision, where grant-in-aid is delayed to avoid excess cash balances at the year-end, DHSC will make available in the next financial year any such grant-in-aid that is required to meet any liabilities at the year end, such as creditors. 

In the event that DHSC provides HRA with separate grants for specific (ring-fenced) purposes, it would issue the grant as and when HRA needed it on the basis of a written request. HRA would provide evidence that the grant was used for the purposes authorised by DHSC.

HRA shall not have uncommitted grant funds in hand, nor carry grant funds over to another financial year.

Annual report and accounts 

The HRA board must publish an annual report of its activities together with its audited accounts after the end of each financial year.

HRA shall provide DHSC with its finalised (audited) accounts in line with the agreed annual timetable established by the department in order for the accounts to be consolidated within DHSC’s accounts. A draft of the report should be submitted to DHSC 2 weeks before the proposed publication date.

The accounts should be prepared in accordance with the relevant statutes and specific accounts direction issued by DHSC as well as HM Treasury’s FReM. 

The annual report must: 

  • cover any corporate, subsidiary or joint ventures under its control   
  • comply with the FreM and in particular have regard to the illustrative statements for an NDPB
  • outline main activities and performance during the previous financial year and set out, in summary form, forward plans

Information on performance against 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 the HRA website, in accordance with the guidance in the FReM. 

Reporting performance to DHSC 

HRA 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 the corporate and business plans.

HRA shall inform DHSC of any changes that make achievement of objectives more or less difficult. It shall report financial and non-financial performance, including performance in helping to deliver ministers’ policies and the achievement of objectives regularly. 

HRA’s performance shall be formally reviewed by DHSC 4 times a year.  

The responsible minister will meet the chair or chief executive once a year.

The PAO will meet the chief executive at least once a year. 

Information sharing  

DHSC has the right of access to all HRA records and personnel for any purpose including, for example, sponsorship audits and operational investigations in so far as is prohibited by law. For access to any personally identifiable information the relevant lawful basis for processing must be provided under UK General Data Protection Regulation (GDPR) or the Data Protection Act 2018.

HRA shall provide DHSC with such information about its operations, performance, individual projects or other expenditure as it may reasonably require. 

DHSC and HM Treasury may request the sharing of data held by HRA in such a manner as set out in central guidance except in so far as it is prohibited by law. This may include requiring the appointment of a senior official to be responsible for the data-sharing relationship. 

As a minimum, HRA shall provide DHSC with information on a monthly basis that will enable DHSC satisfactorily to monitor HRA’s: 

Audit 

Internal audit 

HRA 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 as adopted by HM Treasury
  • set up an audit committee of its board in accordance with the Corporate governance in central government departments: code of good practice (linked previously) and the Audit and Risk Assurance Committee Handbook
  • forward the audit strategy, periodic audit plans and annual audit report, including HRA Head of Internal Audit opinion on risk management, control and governance as soon as possible to DHSC  
  • keep records of and prepare and forward to DHSC an annual report on fraud and theft suffered by HRA, and notify it of any unusual or major incidents as soon as possible   
  • share with DHSC information identified during the audit process and the annual audit opinion report (together with any other outputs) at the end of the audit, in particular on issues impacting DHSC’s responsibilities in relation to financial systems within HRA

External audit 

The Comptroller and Auditor General (C&AG) audits HRA’s annual accounts and HRA lays them before Parliament, together with its annual report.

In the event that HRA has set up and controls subsidiary companies, HRA will, in 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 and/or whose accounts are consolidated within its own accounts. HRA shall discuss with DHSC the procedures for appointing the C&AG as auditor of the companies. 

The C&AG:

  • will consult DHSC and HRA on whom - the National Audit Office or a commercial auditor - shall undertake the audits on their 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, those held by another party in receipt of payments or grants from HRA  
  • will share with DHSC 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 DHSC’s responsibilities in relation to financial systems within HRA  
  • will consider requests from government 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 

The C&AG may carry out examinations into the economy, efficiency and effectiveness with which HRA 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, HRA 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
  • use its best endeavours to secure access for the C&AG to any other documents required by the C&AG that are held by other bodies   

Reviews and winding up arrangements 

Review of ALB’s status 

HRA will be reviewed, as part of the wider Public Bodies Review Programme, at a time determined by DHSC ministers and their PAO.

Arrangements in the event that the ALB is wound up 

DHSC shall put in place arrangements to ensure the orderly winding up of HRA. In particular, it should ensure that the assets and liabilities of HRA are passed to any successor organisation and accounted for properly. (In the event that there is no successor organisation, the assets and liabilities should revert to DHSC.)

To this end, DHSC shall: 

  • have regard to Cabinet Office guidance on winding up of ALBs
  • ensure that procedures are in place in HRA to gain independent assurance on key transactions, financial commitments, cash flows, and other information needed to handle the wind-up effectively and maintain the momentum of work inherited by any residuary body    
  • specify the basis for the valuation and accounting treatment of HRA’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 their 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 DHSC inherits the role, responsibilities, assets and liabilities, DHSC’s AO should sign the closing accounts

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

Annex A: guidance

HRA shall comply with the following guidance, documents and instructions.

Corporate governance 

This includes:

Financial management and reporting

This includes:

Management of risk

This includes:

Commercial management

This includes:

Public appointments

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

Staff and remuneration

This includes:

General

This includes:

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