Guidance

​​Requirements for Reviews of Public Bodies

Updated 20 February 2024

1. Introduction

The Public Bodies Reviews Programme is underpinned by a set of quadrants which outline the expectations for departments and their Arm’s Length Bodies (ALBs) and some indicators of good practice. These requirements can also be used to inform the focus and scope of a review of an ALB. They can also be used for public bodies that are not classified as ALBs. 

The requirements have been developed as part of a suite of tools and guidance for conducting these reviews. It is expected that, when referring to these requirements for the purpose of an ALB, review teams and lead reviewers will do so with reference to Public Bodies Reviews Programme Guidance.

These requirements are a baseline, and some indicators of good practice, that outline the fundamental expectations of ALBs and their sponsor departments. These provide a benchmark for performance to ensure that ALBs/public bodies are operating in accordance with the existing government standards, guidance and legal requirements that are set out in various codes, guidance and laws.

How to use

This document is primarily intended for lead reviewers to use during an in-depth review. It is recognised that lead reviewers will want to use the whole or parts of this document based on the elements they wish to explore during their in-depth review and the type of body they are reviewing.

This document does not replace the standards, requirements and guidance from which much of its content is drawn. Readers should refer to the source documents for full context and information. Nor do any of the expectations set out in this document overwrite the need for public bodies and departments to follow the law.

There is no ‘one size fits all’ for these requirements. The ‘comply or explain’ principle applies here.

There will be circumstances where some requirements will not apply to an ALB/public body and/or its board or sponsor department, these might include proportionality, cost effectiveness or the specific legal status and/or functions of the ALB.

The sponsoring department and its ALB/public body should be confident in ‘explaining’ where it believes it, or its ALB/public body, does not need to ‘comply’.

The Cabinet Office will continue to evolve this document in the coming years to ensure we learn lessons from what is, and is not working.

Supporting guidance

These requirements are drawn from the following sources:

• Managing Public Money
• The Green Book
• Treasury approvals process for programmes and projects
• Public Value Framework (PDF, 766KB)
• The Orange Book: Management of Risk
• Classification guidance (PDF, 888KB)
• Approvals Process for Creating New ALBs (PDf, 843KB
• Introduction to Sponsorship (PDF, 250KB)
• Sponsorship Specialism Competency Framework (PDF, 133KB)
• Executive Agencies: A guide for departments (PDF, 1,010KB)
• Non-Executive Director (NED) principles
• Code of Conduct for Board Members of Public Bodies (PDF, 437KB)
• Charity Commission guidance for Charities
• Financial Reporting Council’s UK Corporate Governance Code (PDF, 269KB)
• Corporate governance in central government departments: code of good practice
• Arm’s length body sponsorship code of good practice
• UK Government Functional Standards
• Government Shared Services (PDF, 1,632KB)
• Arm’s Length Body Boards: Guidance on Reviews and Appraisals

Terminology

Principle: The state that the ALB should achieve if requirements and best practice is met.

Theme: The specific areas that should be addressed to meet each requirement’s principle. This also makes clear the minimum expectation that the ALB and department should achieve in each area.

Indicators: The reference points used in the review to indicate whether the expectations, and ultimately the principles are being reached. These indicators are expressed using the following terminology:

• Shall: denotes a requirement: a mandatory element.
• Should: denotes a recommendation: an advisory element, or outline good practice.

2: Efficacy

Efficacy requirements

These requirements will set out expectations to ensure the ALB meets the conditions to be an ALB, with a clear purpose, in the correct delivery model and the expectations that the ALB performs effectively and delivers services that meet the needs of citizens.

The  requirements can be used for the following purposes:

• to assure that the ALB has a clear mandate and remains relevant;
• to consider the current delivery model of the ALB and its effectiveness; and
• to ensure that the ALB is aligned with the strategic priorities of the department and wider government objectives.

Structure

The  requirements have been organised under four key thematic areas (and sub-themes) and numbered. These are as follows:

1. Function
2. Form
3. Outcome for citizens
4. Performance

The ALB has a clear purpose and appropriate delivery model to deliver effective outcomes for citizens.

Theme 1: function of ALB

The sponsor department is assured that the ALB has a clear mandate, is up to date and remains relevant.

Indicators

The ALB has been/is intended/expected to be classified as a central government organisation by the ONS/HM Treasury Classifications team.

All ALBs shall continue to meet one of the government’s ‘Three Tests’:

i. Is this a technical function, which needs external expertise to deliver?

ii. Is this a function which needs to be, and be seen to be, delivered with political impartiality?

iii. Is this a function that needs to be delivered independently of ministers to establish facts and/or figures with integrity?

Furthermore:

• The department can evidence that they have considered the Three Tests.
• At least one of the three tests is met.
• No changes have been made to its classification (Office for National Statistics).

The sponsor department shall demonstrate that there is a clear rationale as to why the function of the ALB needs to continue:

• The ALB has a clear purpose, strategy and values and these should be set out in the Framework Document, Corporate and Business Plans and other strategy documents.
• The impact of COVID-19 and EU exit has been considered and where any changes to the ALBs mandate/purpose is clearly articulated.
• There is a legal requirement for the ALB to deliver the function (if applicable).
• The function of the ALB contributes to economic growth (if applicable).
• The function of the ALB is a justifiable use of taxpayers’ money.
• The ALB contributes to the core business of the sponsor department:
  • There is a clear link between the ALBs objectives and the sponsor department. objectives. These are accessible and clear.
• The ALB contributes to wider government policy objectives:
  • Aligned with the Prime Minister’s priorities, manifesto commitments or other priorities, including the government’s commitment to net zero by 2050.
  • Aligned to departmental priority outcomes.
  • Aligned to Outcome Delivery Plans.

Public Sector Research Establishments (PSREs)

For ALBs which are also PSREs^{[footnote 1]} additional information for consideration of the function of the ALB can be found in the PSRE value framework^{[footnote 2]}.

Theme 2: form

The sponsor department is assured that the delivery model is correct to deliver effective outcomes for citizens.

Indicators

All sponsor departments shall evidence/demonstrate that the delivery model is still appropriate.

• Consideration should be given to the alternative delivery models (Annex A) when considering how functions may be delivered with a view to efficiency and accountability.

• Commercial models

  • Consideration should be given to the questions outlined in Annex A when considering the delivery model of the ALB.
  • For ALBs which already have a commercial arm, consideration should be given to whether there may be scope to enhance its commercial capability.

PSREs

For ALBs which are also PSREs – additional information for consideration around the delivery model can be found in the PSRE value framework^{[footnote 3]}.

Theme 3: outcomes for citizens

The ALB should ensure that it has the correct systems and knowledge in place to deliver effective outcomes for citizens.

Indicators

All ALBs shall adhere to the requirements of the Public Sector Equality Duty (PSED).^{[footnote 4]} Consideration is to be given to the correspondence sent to departments from the Minister for Levelling Up Communities and Equalities:

• The ALB has a legal obligation to have due regard to the objectives set out - in the Public Sector Equality Duty.
• The ALB publishes its equality objectives at least once every four years.
• The ALB publishes information to demonstrate their compliance with the public sector equality duty.

All ALBs should have clear plans for its engagement with stakeholders.

• The ALB has followed the Government Communication Service (GCS) best practice guidance and  the communication functional standard  for engaging stakeholders when developing policy and legislation. Consultation should be proportionate to the size and resources available to the ALB.
• The ALB has given consideration to Pillar 3 and 4 of the Public Value Framework (PDF, 766KB)
• The ALB should ensure any campaigns are aligned to government priorities and consideration should be given to joining up messages across ALBs and departments to ensure the government speaks with one voice (whilst recognising independence).
• The ALB should engage with the GCS function to ensure the appropriate campaign and spending controls are adhered to.

All ALBs shall have a complaints procedure.

• The ALB has a clear and accessible complaints policy and guidance. It records all complaints for monitoring and learning for improvements for service delivery in line with data protection policies.
• The procedures for handling complaints about the ALB in accordance with the Parliamentary and Health Service Ombudsman’s Principles of Good Complaint Handling.

All ALBs shall publish how the public can make a Freedom of Information Request unless exempt (also, please refer to transparency theme within the governance quadrant).

All ALBs should:

• Use the products Government Digital Service runs on behalf of the government.
• Ensure digital services align with government policy, and meet clearly identified user needs.
• Ensure digital services are designed as end-to-end services, from a citizen’s or user’s viewpoint.
• Ensure all data is collected, stored, used and deleted in the appropriate and ethical way.
• Follow the digital, data and technology functional standard.

All ALBs with public facing transactional services shall:

• Meet the digital service standards.
• Follow the accessibility regulations (2018) requirements for public sector bodies, unless exempt, and publish an accessibility statement setting out the accessibility of its website and mobile app.

All ALBs with an existing London presence shall:

Places for Growth and location: undertake a scoping exercise to identify which roles are business-critical to remain in London and which are eligible for relocation to other locations in the United Kingdom.

The sponsor department shall ensure:

• Places for Growth and location: that ALB relocation plans are incorporated into their departmental future location plans and shared with the Places for Growth Portfolio in the Cabinet Office to review their London future workforce requirements.

The sponsor department should:

• Devolution and Union: ensure that it continually assesses departmental devolution capability, performance and strategy to ensure that they are aligned to the UK government’s Union priorities.

The ALB should:

• Union: if it has a UK-wide remit, ensure that decisions are taken with an appropriate understanding of the needs of citizens and communities in all parts of the UK, underpinned by UK-wide data and evidence.

Union: if the territorial scope of an ALB does not cover the whole of the United Kingdom, it should consider opportunities to collaborate and share learning with relevant public bodies in other parts of the UK.

Theme 4: performance

The ALB has clear, measurable KPIs which are aligned to the strategic departmental priorities through its delivery plan and to government objectives.

Indicators

All ALBs shall ensure:

• The ALB’s performance metrics are clear, accurate and accessible to all stakeholders.
• It follows the digital, data and technology functional standards.
• The ALB provides quality data to enable tracking against its objectives.^{[footnote 5]}
• The ALB, in agreement with its sponsor department, should establish corporate and business plans in the light of the department’s wider strategic aims and agreed priorities.

The ALB shall ensure:

• The ALB’s policies, projects and programmes are developed in accordance with the Green Book and associated business case guidance.
• Its risks are managed in an appropriate manner, in accordance with relevant aspects of best practice in corporate governance, and the UK Government guidance: The Orange Book Management of Risk: Principles and Concepts (The Orange Book and Finance Functional Standard).
• It follows the functional standards around counter-fraud, debt and grants.^{[footnote 6]}
• That any significant problems and any corrective action taken are notified to the sponsor department in a timely manner.

The sponsor department shall ensure:

• That it has arrangements in place to carry out assessments of the risks to both the sponsor department and ALB’s objectives and activities.
• That it formally reviews the ALB’s performance twice a year.^{[footnote 7]}
• Its (departmental) board considers its risk profile including its ALBs.
• Recommendations from previous reviews which have considered the effectiveness of an ALB have been actioned, tracked and measured to assess outcomes.^{[footnote 8]}

The ALB should ensure:

• Lessons learned are captured, shared and used to raise future performance.
• Benchmarking of similar organisations is used to assess good practice against the ALB.^{[footnote 9]}

Sponsor departments shall:

• Ensure delivery of the Greening Government Commitments by incorporating them into their formal governance arrangements with Arm’s Length Bodies.
• Net zero: ensure that the ALB are aware of and can support the government’s commitment to net zero (PDF, 36.3MB).

The ALB shall:

• Report against, unless exempt from, the Greening Government Commitment
• If appropriate, the ALB is aware of, and its strategy supports, the government’s commitment to net zero (PDF, 36.3MB).

3. Governance

Governance requirements

These requirements set out the expectations of governance for Arm’s-Length Bodies (ALBs) boards, chairs and non-executives. These requirements apply to the boards of ALBs, their chair and non-executive members (NEDs). We have tried to differentiate where they apply to the board as a whole, the chair and/or the NEDs individually.

The requirements can be used for the following purposes:^{[footnote 10]}

• To support a governance review of an ALB, either as a formal or informal review.
• To support a board effectiveness review.
• To identify areas where the ALB’s governance can be improved as part of a ‘health check’.
• A reference document setting out key requirements for ALB boards and non-executives.

Structure

The requirements have been organised under six key thematic areas (and sub-themes) and numbered. These are as follows:

1. Delivering wider government objectives;
2. Purpose, leadership and effectiveness;
3. Appointments, skills and training;
4. Conduct and behaviour;
5. Effective financial and risk management systems for internal control; and
6. Transparency.

Theme 1: delivering wider government objectives

ALB boards should drive efficiency and effectiveness and support the delivery of the government’s wider objectives. To this end, ALB boards should consider and embed the following principles across all of their activities and interactions.

Indicators

Overarching strategy and business plans

All ALBs should consider the UK government’s wider objectives (in particular, Levelling Up; Net Zero; Education, Jobs and Skills; Health and Social Care; and, Crime and Justice) within their overarching strategy and business plans.

Union capability

All ALB boards should ensure they strive to deliver for citizens in every part of the United Kingdom. They should ensure that all board activities, including but not limited to, their purpose, strategy, board composition and appointments strive to:

• reflect the full diversity of the United Kingdom;
• diversify the UK government’s presence across the United Kingdom; and
• ensure that decisions are taken with an appropriate understanding of the needs of citizens and communities in all parts of the UK, underpinned by UK-wide data and evidence.

Inclusive working practises

All ALB boards should facilitate, where appropriate, participation in board activities remotely for disabled board members, if the board member would like to do so.

Theme 2: purpose, leadership and effectiveness

The ALB board must have a clearly articulated purpose and the correct balance of skills and experience appropriate to fulfilling its responsibilities.

The membership of the board must be balanced, diverse and manageable in size and compliant with the requirements for the type of ALB.

Indicators

Purpose

All ALB boards shall assure themselves the ALB has in place

• A clear purpose, strategy and set of values for the organisation set out in its Framework Document (or equivalent), Corporate and Business Plans and other strategy documents. These should be agreed with the responsible minister in their sponsoring department.
• Appropriate delegation of responsibilities for board members, particularly setting out their fiduciary, statutory and/or other legal duties and obligations, relevant to the particular Board and its remit.

Leadership, composition and membership

All ALB boards shall have in place

• A Framework Document that sets out the accountabilities (under Managing Public Money) of the ALB chief executive as AO^{[footnote 11]} and the sponsor department Permanent Secretary as PAO to Parliament.
• Annual and multi-year business plans that are published and accessible, against which executives are held to account by the board. Departments may wish to comply or explain against this requirement when they believe it is not proportionate, necessary and/or there is a journey required to achieve this requirement.
• Appropriate independent non-executive representation^{[footnote 12]}, through non-executive members (NEDs), to provide support and challenge.
• Clearly defined the roles and responsibilities of the board, chair and non-executives; the terms of office and remuneration of NEDs must be clearly set out and formally defined in writing in a terms of reference (ToR) and/or a board operating code.
• An understanding of the breadth of legal responsibility of the Board and the ALB, including how such legal responsibilities also affect and relate to the Accounting Officer’s direct responsibility to Parliament for the ALB.
• A balance of diversity in regards to different experiences, skills mix and background, gender, ethnicity, age, disability, sexual orientation, faith perspectives, as laid out in the 2019 Diversity Action Plan (PDF, 920KB).

In addition, all Executive Non-Departmental Public Bodies (NDPBs) shall also:

• Be led by a non-executive chair.
• Have a majority of independent NEDs on the board.
• Have a professional Finance Director or equivalent as a permanent board member qualified in line with the requirements in Managing Public Money and who holds board status equivalent to other board members.
• Have the following board committees chaired by independent NEDs:
• Audit and Risk Committee (ARC);
• Remuneration Committee (RemCo); and
• Nominations Committee.

Effectiveness

All ALB boards shall have in place

• Board terms of reference (ToR) (including for all board committees), that are reviewed and updated regularly (at least every two years) and a schedule of delegation for all board committees.
• ToR that are sufficiently granular that there is clarity about specific subject matters that must be approved/endorsed or discussed by the boards; or provided as information to the board. The ToR of the ALB’s committees (including the ARC where relevant) should be made publicly available.
• A board secretariat with the right skills and experience, who ensures board decisions are recorded and communicated accordingly and board members receive information in a timely manner to support collective decision-making.
• A schedule of regular^{[footnote 13]} board meetings and the attendance record of individual members disclosed in the ‘Governance Statement’ in the organisation’s Annual Report and Accounts (ARA).
• The chair must lead an annual board effectiveness review, undertaken with appropriate input from the ALB’s sponsor department, chief executive, ministers and other board members as required.
• Ensure an externally facilitated review of the effectiveness of the board is conducted (at least every three years) and/or if significant governance issues are raised as a result of a review, or equivalent.

ALBs may wish to bring these components together as a single ‘governance framework’ and publish it.

Theme 3: appointments, skills and training

The ALB board and sponsor department must have the appropriate processes in place to ensure the fair appointment of members to the board, including supporting diversity.

The ALB board must provide suitable training and development opportunities for all board members, including induction.

Indicators

Appointments and Appraisals

All ALB boards shall have in place:

• At least annual appraisals of the chairs with appraisals undertaken by a Senior Civil Servant, of the appropriate seniority, or Senior Independent Director. (At least annual board appraisals of all non-executives conducted by the chair and reports shared with the sponsor department (and ministers where relevant) in a timely manner. Appraisals must be undertaken in line with Effective Boards Guidance on board effectiveness reviews and appraisals.
• a process in place for assessing/appraising the performance of individual board members when being considered for re-appointment. This should align with the annual appraisal process.

Skills and training

All ALB boards shall have in place:

• A balance of skills and experience appropriate to fulfilling its responsibilities and the operations of the organisation.
• Appropriate succession planning so the board has the appropriate skills and experience it requires in the future, this must be led by the chair. The chair should work with their departmental ‘Senior Sponsor’^{[footnote 14]} to consider the skills and diversity needs of the board now, and in the future, to ensure there is a clear strategy and pipeline around appointments.
• Board skills and experience are covered as part of the annual board effectiveness review, to ensure they remain appropriate.
• An induction for all new board members covering key information and documentation, including roles/responsibilities and expectations.

Regular training and development opportunities. Specifically, all board members should receive appropriate training on financial management and reporting requirements.

Theme 4: conduct and behaviour

The ALB’s board members must work to the highest personal and professional standards. Board members must promote the values of the organisation and of good governance through their conduct and behaviour.

Indicators

All ALB boards shall have in place:

• Conduct: a Code of Conduct setting out the standards of personal and professional behaviour expected of all non-executive board members; this should incorporate the Cabinet Office’s Code of Conduct. The Code of Conduct must form part of the terms of engagement of all non-executive board members and be provided upon appointment. All non-executive members are bound by the requirements of the Code.
• Conflicts of interest: clear rules and procedures are in place for the declaration and consideration of interests that are appropriate to the organisation in question. These rules should be published. There must be a publicly available register of interests for all board members and this must be regularly reviewed and updated by the chair.
• Political activity: clear rules and guidelines in place on political activity for board members. There must be effective systems in place to ensure compliance with any restrictions, in line with the Code of Conduct for Board Members of Public Bodies (PDF, 437KB).
• Post employment rules: rules and processes in place for board members on the acceptance of appointments or employment after resignation or retirement; these must be effectively monitored and considered by the chair and/or sponsoring department.
• Lobbying: clear policies of political impartiality and the proper use of public money in regards to advertising, public relations and marketing, and attendance at political party conferences in line with the Rules for Lobbying (Annex B). These rules must be reflected in Framework Documents, and must be compliant with the Code of Conduct for Board Members of Public Bodies (PDF, 437KB).
• Whistleblowing: whistleblowing procedures and policies consistent with the Public Interest Disclosure Act.
• Data handling: clear rules and procedures for the handling of data and cyber security responsibilities, in accordance with the Data Protection Act 2018.

Theme 5: effective financial and risk management and internal control

The ALB must have effective arrangements in place for governance,including a robust risk management system for internal control.

The ALB board must take the appropriate steps to ensure that effective systems of financial and risk management are in place to ensure that it meets all of its obligations as set out in Managing Public Money and the Orange Book:

Management of Risk: Principles and Concepts.

Indicators

Effective financial management

(see GovS 006, Finance)

All ALB boards shall assure themselves that the following expectations are met:

• There is a clear process, agreed by the sponsoring department and the Accounting Officer (AO), to ensure appropriate engagement in the budgeting process.
• They publish on a timely basis an objective, balanced and understandable Annual Report and Accounts (ARA) and Corporate and Business Plans; the ALB’s Annual Accounts must be laid before Parliament;^{[footnote 15]} these must be made available on the ALB’s website, or equivalent.
• A ‘Governance Statement’ is prepared covering corporate governance, risk management and oversight of any local responsibilities, for inclusion in the ARA.
• Compliance with the delegations set out in the ALB’s 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.
• Ensuring that timely forecasts and monitoring information on performance and finance are provided to the sponsor department; that the department is notified promptly if over or under spends are likely and that corrective action is taken.
• That any significant problems whether financial or otherwise, and whether detected by internal audit or by other means, are notified to the sponsor department^{[footnote 16]} in a timely fashion.
• The AO will ​​ensure that adequate internal and external audit arrangements are in place that meet required standards as part of this framework.
• Ensure there are clear and agreed arrangements for the ALB to report management information (MI) to the sponsor department, including the minimum MI that the department requires and a regular cycle of meetings to discuss the MI.

Risk management System for internal control

All ALB boards shall assure themselves that the following expectations are met:

• Section A (Governance and Leadership) of the Orange Book is followed. Risk management shall be an essential part of governance and leadership, and fundamental to how the organisation is directed, managed and controlled at all levels.
• Functional Standards are followed, in particular those for Internal Audit, Finance, Commercial and Counter Fraud.
• An Audit (or audit and risk) Committee (ARC) with responsibility for the independent review of the systems of internal control and of the external audit process. The committee should operate in line with the Audit and Risk Assurance Committee Handbook. (PDF, 724KB)
• An internal audit service in place operating to the Public Sector Internal Audit Standards.
• An external audit service is in place and the Comptroller and Auditor General should be the external auditor for the ALB.
• Documented policies in place to deal with fraud and corruption and modern slavery where appropriate.
• Clear rules in place governing the claiming of expenses; these should be published. Effective systems should be in place to ensure compliance with these rules and the ALB should proactively publish information on expenses claimed by board members and senior staff.
• Comply with Managing Public Money regarding novel, contentious or repercussive proposals.

Theme 6: transparency

The ALB board must be open, transparent, accountable and responsive in its communications with the public and other key stakeholders

Indicators

The ALB board shall assure themselves that the ALB:

• Complies with central government requirements on transparency, specifically those set out in those set out in the guidance How to Publish Central Government Transparency Data.
• Proactively publishes data, including performance data, in a timely manner, in an open and accessible format that is consistent with cross-government guidance and is easy to find on both the body’s website and Find Open Data: data.gov.uk.
• Has effective procedures for handling complaints about the ALB in place and operates in accordance with the Parliamentary and Health Service Ombudsman’s Principles of Good Complaint Handling.

The ALB board should:

• Hold at least one accessible and open board meeting per year that follows the guidance and exemptions as set out in Public Bodies: A Guide for Departments, Chapter 8: Policy - Openness and Accountability (PDF, 66.8KB).
• Consider holding other meetings in public where it is felt that these would be a useful means of consultation or would help the public have a greater understanding of the work of the body.

Where practicable and appropriate, release summary reports of meetings and/or publicly available minutes as set out in Public Bodies: A Guide for Departments, Chapter 8: Policy – Openness and Accountability (PDF, 66.8KB).

4. Accountability

Accountability requirements

These requirements will set out expectations on accountability, relationships between departments and ALBs, and the support and challenge offered to ALBs via the critical ‘sponsoring’ relationship departments have with their ALB. 

The requirements can be used for the following purposes:

• To support a review on the accountability requirements of an ALB, either as a formal or informal review.
• To identify areas where the ALB’s relationship and accountabilities with its sponsor department can be improved.
• A reference document setting out key requirements and indicators for accountability.

Structure

The requirements have been organised under four key thematic areas (and sub-themes) and numbered, these are as follows:

1. Effective sponsorship;
2. Accountability of ALB to the department;
3. Accountability of ALB to Parliament; and
4. Accountability of ALB to other governmental functions.

Theme 1: effective sponsorship

Sponsor team demonstrates appropriate links to the ALB that can facilitate the delivery of the government’s objectives.

Indicators

The relationship between the sponsor department and ALB shall be conducted in line with the sponsorship code of practice and meets the requirements of Managing Public Money. Please see the Governance requirements which provide the governance structures and processes that ensure the sponsored body maintains high standards of probity in the management of public funds.

While the Principal Accounting Officer (PAO) retains accountability for the use of public funds, they will be supported by a ‘sponsor team’, led by a ‘senior sponsor’ who is usually a Senior Civil Servant (SCS).

The departmental sponsor team shall:

• Establish clear accountabilities and clarity of expectation for both individuals and organisations, in terms of roles and responsibilities and in how they will deal with each other that is open, honest, supportive and challenging.
• Set clear, appropriate and proportionate sponsoring arrangements through their Framework Document, which is adhered to by both parties, and updated regularly (at least every three years and when there is a significant change).
• Ensure that there is a clear statement of the ALB’s purpose and objectives (likely set out within the Framework Document), that is agreed by the ALB, as well as HMT where needed.
• Have a senior sponsor who is responsible for managing the relationship with an ALB on behalf of the minister and the AO.
• Ensure there is a clear articulation of financial and operational freedoms and delegations to the ALB.
• Ensure that day-to-day management is delegated to a supporting sponsor, sponsor team or equivalent (that is, secretariat).
• Evidence that regular and formal accountability meetings are in place between the department and the ALB which are attended by the ALB’s CEO and senior sponsor and which allow adequate discussion of progress, risks, and financial performance.
• Write an annual letter to the ALB chair (‘a chair’s letter’), setting out the department’s shorter-term priorities and expectations for the ALB chair and their organisation in regard to good governance and strategic objectives. Departments may wish to comply or explain against this requirement if they believe it is not proportionate or appropriate.
• Ensure that where the department has separated its sponsorship functions (that is, client and corporate/stakeholder) there is clarity as to what each of the sponsorship functions are for, and how they work together.

The department sponsor team should:

• Share best practice and encourage collaborative working between the department and their sponsored body, and with other ALBs.
• Evidence ability to exercise constructive and proportionate challenge, for example, evidenced in meeting minutes.
• Act as an intermediary between the department and the sponsored ALB, facilitating contact between the ALB and others within the department and across Whitehall.
• Ensure that the right balance is struck between ensuring clear accountability arrangements are in place and enabling the ALB the freedom to deliver and innovate as per the sponsorship code.

The ALB shall:

• Evidence clarity in the relationship, and accountabilities, between the executive and non-executive.

The ALB should:

• Ensure a policy of ‘no surprises’ underpins the relationship between itself and the sponsoring department.
• Evidence of regular and proactive engagement between the sponsor team and ALB.
• Invest time and energy in their relationship with the senior sponsor and the sponsor team.

Financial:

On behalf of the PAO, the department sponsor team shall:

• Ensure that the ALB meets the requirements of Managing Public Money.
• Through its departmental Accounting Officer (AO),^{[footnote 17]} ensure that the ALB AO is satisfactorily discharging their responsibility for the use of public money.
• Ensure that appropriate governance structures, financial controls and accounting arrangements are in place and clearly set out in key documentation.
• If appropriate, review annual reports and accounts, to assess whether propriety, regularity and value for money have been achieved and seek explanations for unusual trends or figures.
• Ensure that the framework document (or equivalent) agreed between the ALB and the department provides for the sponsor department to exercise meaningful oversight of the ALB’s strategy and performance, pay arrangements and/or major financial transactions.
• For pay decisions, prior to a request for approval of Civil Service Human Resources/HM Treasury ensure the following individuals are consulted: i) the lead of the profession ii) the PAO and iii) Remuneration Committee.
• Be aware of which Cabinet Office Controls apply to the ALB and the specific ways in which they are applied.

It is recognised that non-ministerial departments may have different arrangements for which the ‘comply or explain’ principle applies.

Performance and reporting:

The department sponsor team shall:

• Facilitate the setting of annual objectives which are specific and include ‘what’ needs to be achieved and by when – ensuring that these objectives flow through into the relevant ALB corporate and business plans.
• Set clear frameworks around government and/or departmental policy, from which ALBs can align their objectives, and set appropriate and effective Key Performance Indicators (KPIs).
• Monitor performance against these agreed measures. Monitoring may take place through a programme of regular, recorded accountability meetings with the ALB, proportionate to its size and complexity.
• Appraise ministers and the Accounting Officer on the performance of the ALB, at an appropriate frequency.
• If appropriate, ensure the ALB is aware of, and actively supporting, the department’s Outcome Delivery Plan.

The department sponsor team should:

• As appropriate, act as an advocate for their ALB.

Help feed insight from their ALB into relevant departmental policy teams, ensuring that policy development is informed from a delivery perspective.

Theme 2: accountability of ALB to the Department

There is an effective and appropriate relationship between the department and ALB.

Indicators

Policy and Priorities

The department shall:

• Engage with the ALB when policies are being developed which would be delivered by the ALB, or where their expertise would contribute to a policy’s success, except where conflicts of interests would arise.
• Communicate new policy developments, ministerial priorities to the ALB, and ensure that the sponsored body is aware of information held in the department which is relevant to its operational effectiveness.
• Ensure there are clear and agreed arrangements for the ALB to report management information (MI) to the department, including the minimum MI that the department requires and a regular cycle of meetings to discuss the MI.

The ALB shall:

• Involve the department in setting budgets and monitoring performance against those budgets, ensuring any forecast overspends are identified early and action is taken to mitigate. The process may involve sponsors reviewing an ALB’s planned delivery programme to ensure it is affordable and also require an understanding of the ALB’s key priorities and costs.
• Advise the Secretary of State of any changes which may impact on the strategic direction of the body or the attainability of its objectives via its board.
• Be open and transparent with its data (whilst acting in accordance with the Data Protection Act 2018).

The department and ALB shall:

• Work together to ensure a timely and non-duplicative process for managing approvals in line with the Treasury Approvals Process guidance (PDF, 3.2MB). This will include early engagement on the scope and objectives for ‘major projects and programmes’ (i.e., projects and programmes that sit outside Delegated Authority Limits (DAL) set by HMT).

Risk Management:

The department shall:

• Act appropriately on risks and issues that have been escalated by the ALB, following the guidance set out in the Orange Book.
• Ensure that their ALB has an effective and proportionate internal risk control process in place, and that there is an effective process for escalating risks to the department.
• Ensure that there is a common understanding between the department and the ALB of each party’s risk appetite and approach to risk; demonstrated through agreed risk appetite statements, processes, and reporting.
• Attend internal risk meetings (e.g. audit and risk committees) if appropriate.
• Ensure that there are clear mechanisms for non-fiduciary boards to escalate and publicise up to the PAO disagreements with the executives.
• Ensure there are robust and compliant processes for escalating risks to the Cabinet Office and Government Finance Function,
• Ensure that the ALB’s AO has adequate internal and external audit arrangements in place that meet required standards as part of risk management frameworks.
• Exercise meaningful oversight, including having transparency over risk assessments and audit findings.

The department should:

• Be able to review audit reports and risk assessments and may attend the ALB’s audit committees and/or management boards, where appropriate.

The ALB shall:

• Have appropriate risk management frameworks in place, following the guidance set out in the Orange Book, and manage risks in partnership with the department and escalate where appropriate.
• Ensure accountability within the ALB particularly where responsibility has been delegated for particular tasks or decisions to staff and/or volunteers.

Information:

The department shall:

• Ensure that the ALB has effective policies/arrangements in place in relation to managing information assets, security, business continuity and sustainability, ensuring that relevant management. information is supplied when requested by the department.

The ALB should:

• Carefully and expediently manage requests for information from the department on its business, using agreed service level agreements where applicable and necessary.

The department (where relevant and necessary) shall:

• Have established Service Level Agreements with the ALB, so that ALB can expect information and other processes (that the sponsor team can control) completed within an agreed timeframe.
• Articulate clearly its rationale when it requests information and vice versa, ensuring an appropriate audit trail is established.

ALB boards:

The department shall:

• Ensure that ALB chairs are appraised annually with appraisals undertaken by an SCS of the appropriate seniority, or a Senior Independent Director where appropriate.  Appoint the permanent heads of executive agencies, as agency accounting officers for their agencies; and of other ALBs (including all NDPBs).
• Appraisals must be undertaken in line with Effective Boards Guidance on board effectiveness reviews and appraisals which is due to be published in 2022.
• Designate an Accounting Officer (AO) appointed for the ALB with the roles and responsibilities set out in Chapter 3 of Managing Public Money.
• Ensure that the ALB has rules and policy, where applicable, in place for board members on the acceptance of appointments or employment after resignation (Business Appointment Rules) or retirement; these must be effectively monitored and considered by the chair and/or sponsoring department^{[footnote 18]}.
• Ensure that all new non-executive board members of their ALBs are provided with an appropriate induction covering the role of government documentation (for example, Managing Public Money), including roles/responsibilities and expectations, and support induction efforts within ALBs.
• Ensure that the process to escalate disagreements and/or disputes between a Board and AO and/or Executive to the PAO (and minister if applicable) are understood by all actors and set out in the Framework Document.

The ALB shall:

• Ensure that non-executive directors have sufficient time and opportunity to meet their board responsibilities. They should provide constructive challenge, strategic guidance, offer specialist advice and hold ALB management to account.
• Have rules and policy, where applicable, in place for board members on the acceptance of appointments or employment after resignation (Business Appointment Rules) or retirement; these must be effectively monitored and enforced by the chair and/or sponsoring department.
• Hold to account the performance of management and individual executive directors against agreed performance objectives.
• Capture and publish interests of all board members.
• Ensure the chair undertakes annual appraisal of the board’s non-executives and annual board effectiveness reviews, which should inform the board’s skill and recruitment needs. These should be discussed with the department.
• Ensure that the process to escalate disagreements and/or disputes between a Board and AO to the PAO are understood by all actors and captured in the Framework Document.

The department should:

Encourage all new non-executives to attend the Cabinet Office’s public body non-executive induction events.

Theme 3: accountability of ALB to the Parliament

Government departments are accountable, through their Accounting Officer (AO), Secretaries of State and ministers, directly to Parliament for the overall effectiveness and efficiency of each ALB.

Indicators

Relationship:

The ‘minister’ shall:

• Account for the ALB on all matters concerning the ALB in Parliament (unless the body is a non-ministerial department with a direct relationship with Parliament).
• Hold a power of appointment/approval in relation to the appointment of the [ALB] chair in line with the Governance Code on Public Appointments (PDF, 132KB);
• Hold a power of appointment/approval in relation to non-executives; [in line with the Governance Code on Public Appointments];
• Hold a power of appointment/approval in relation to the appointment of the ALB chief executive for Executive Agencies, and non-ministerial departments, where applicable; and
• Be sighted on the appointment of the ALB chief executive for NDPBs.

The ‘minister’ should:

• Be responsible for the policy framework within which the ALB operates.
• Provide guidance and direction to ensure the strategic aims and objectives of [ALB] are consistent with those of the department and government.
• Approve the [ALB] corporate plan and business plan.
• Be responsible for the relationship with the chair of the ALB (or delegate to a junior minister where applicable).
• Meet with the chair of the ALB at least once per annum to discuss amongst other things:
  • Objectives;
  • Performance;
  • Rsks; and
  • ALB board talent and recruitment needs.

The department shall:

• Ensure that the ALB’s AO acts within the authority of the minister and can assure Parliament and the public of high standards of probity in the management of public funds.
• Support the ALB, as appropriate, with parliamentary questions (PQs), correspondence and FOI requests.

The ALB, specifically the AO, shall:

• Explain in the annual report their responsibility for preparing the annual report and accounts, and state that they consider the annual report and accounts, taken as a whole, is fair, balanced and understandable, and provides the information necessary for shareholders to assess the company’s position, performance, business model and strategy.

The ALB should:

• Ensure ministers and senior officials are kept well informed and engaged as required, and develop and maintain constructive relationships with key personnel in the ALB.

Work with the department to make best efforts to inform Parliament of its performance, finance, and other considerations. This should include considering how to best keep the relevant Parliamentary committee appraised.

Theme 4: accountability of ALB to other governmental functions

The department and the ALB engage with relevant government functions which are facilitated in line with requirements.

Indicators

The department should:

• Where applicable and suitable, establish Service Level Agreements between supporting functions (such HR, Finance, Commercial) and the ALB sponsor team should be established to support both routine items (such as annual accounts) as well as novel or complex (such as spend controls).
• Ensure that functional leads are brought in appropriately, for example contributing before or during ALB and department accountability meetings.
• Ensure that the ALB adopts the relevant function’s standard, and that its strategy and plans take account of cross-government functional strategies and plans, as per government functional standards 4.6.6 (PDF, 658KB).
• Provide accurate and timely data on the ALB as required by the Centre (The Prime Minister’s Office  HM Treasury and Cabinet Office)

The ALB should:

• Engage with relevant government function(s) where required, such as HR, Finance.

Provide evidence that it has reported to and/or engaged with additional government functions at agreed and defined periods (for example, when producing yearly budget).

5. Efficiency

Efficiency requirements

These requirements set out expectations for financial management processes in line with current guidance, and the expectations for the identification of cashable efficiency gains made through change in practices, for example, digitisation and the workforce.  

The requirements can be used for the following purposes:

• To measure whether ALBs adhere to existing financial guidance
• To consider improvements in efficiency through benchmarking and shifts to digital channels
• To consider how to improve productivity and efficiency of its workforce

Structure

The requirements have been organised under four key thematic areas (and sub-themes) and numbered, these are as follows:

1. Financial Management;
2. Benchmarking Cost;
3. Digitisation; and
4. Workforce.

The ALB maximises value for money, whilst maintaining a focus on delivering a high-quality user experience.

Theme 1: financial management

The ALB shall adhere to all existing financial guidance that is in place and should have processes in place which, in conjunction with available data, allow for tracking progress towards clearly set goals.

Indicators

All ALBs shall:

• Follow Managing Public Money- (PDF, 1,289KB) and Functional Standards (see in particular GovS 006, Finance)
• Have an accounting officer, who ensures finances are managed in line with principles set out in chapter 3 of Managing Public Money (PDF, 1,289KB).
• Pay due regard to the purpose and principles of government financial reporting, preparing an annual report and account following the requirements set-out in the Financial Reporting Manual (FReM) – except where the ALB is obligated to prepare an alternative report by statute (for example, incorporated companies under the Companies Act 2006, charities under the Charities SORP). The FReM requires ALBs to:
  • Prepare a performance report which is fair, balanced, and understandable.
  • Prepare an accountability report covering corporate governance, remuneration, staff, the audit opinion and other specific requirements set out by Parliament.
  • Prepare the accounts, including:
    • a statement of comprehensive net expenditure;
    • a statement of financial position;
    • a statement of changes in taxpayer’s equity;
    • a statement of cash flows; and,
    • relevant notes to understand the statements.

Annual reports and accounts are laid in Parliament to ensure accountability and Parliamentary control over government spending.

• Comply with the budgeting framework for expenditure control as detailed in the Consolidated Budgeting Guidance, with specific reference to Chapter 9 on ALBs. While ALBs do not have their own Supply Estimate, their respective income and expenditure is included in the parent department’s budgets and Supply Estimates. Accordingly, the respective parent department sets budgets for its ALBs which are then monitored.
• Adhere to each of the Cabinet Office Spend Controls, engaging with the relevant teams as needed.
• Have a debt management strategy in line with the Debt Functional Standard (PDF, 310KB).
• Take steps to mitigate the risk of fraud, following the Counter Fraud Functional Standard (PDF, 266KB).
• Conduct commercial activities in line with the Commercial Functional Standard (PDF, 929KB), and follow the 11 policies outlined in the Sourcing Playbook (PDF, 3.1MB).
• ALBs should also use the continuous improvement framework8 (PDF, 508KB) to improve the value for money and  outcomes of their commercial activities.
• Follow public procurement policy, ensuring that all procurement achieves value for money.
• ALBs should use the Crown Commercial Service to purchase common goods and services.
• Follow the Project Delivery functional standard and ensure any projects meeting the criteria for inclusion on the Government Major Projects Portfolio (GMPP) follow the processes and data requirements set out by the Infrastructure and Projects Agency.
• Assess, procure and deliver public projects in line with the 14 principles set out in the Construction Playbook (PDF, 6.9MB).

For ALBs that make grants using Exchequer funding, they shall:

• Follow the Grants Functional Standard (PDF, 341KB), including the 10 principles set out in the Cabinet Office General Grants Guidance (PDF, 695KB), if the ALB makes general grants.

All ALBs should:

• Assess whether any efficiency targets from previous reviews have been met.
• Use internal and external audits to improve internal controls and performance.
• Have set organisational objectives, and conduct financial planning and monitoring to ensure that these objectives are met within the allocated budget, as outlined in pillars 1 and 2 of the Public Value Framework (PDF, 766KB).
• Have a communications strategy in line with the Communications functional standard, the overarching GCS strategy and the Government Communications Strategy.

Theme 2: benchmarking cost

The ALB should consider how it can make efficiency improvements through the use of benchmarking against similar organisations.

Indicators

All ALBs should seek to:

• Understand how its costs compare to other similar organisations in improving its efficiency performance,  as outlined in pillar 2 (area 6) of the Public Value Framework (PDF, 766KB).
• Assess how well they are meeting functional standards, using continuous improvement assessment frameworks where available, and plan how to improve
• Set out how they are using benchmarking data to improve policy or drive efficiencies.
• Undertake internal and external (including international) comparisons.
• Have a clear understanding of best practice, both domestically and internationally and a plan for implementation.

Where clear cost comparisons are difficult to establish, work with other similar organisations to build common understandings around cost to support future benchmarking efforts.

Theme 3: digitisation

The ALB should consider whether making shifts to digital channels will generate efficiency.

Indicators

All ALBs should seek to:

• Analyse the success of any previous adaptations made to service delivery, such as throughout the COVID-19 pandemic, through digitisation or automation.
  • Learning should also be taken from other agencies that have undergone similar shifts.
  • Considerations should include the output, in terms of number of transactions, and the impact on user experience.
• Consider the possible savings that would be made by expanding use of digital channels.
  • This should include the expected average cost reduction per transaction for each service that is digitised.
  • ALBs should also consider resultant longer term cost reductions, for example the reduced costs associated with property, and the impact on staffing spend.
• Highlight efficiency gains from digitising internal processes.
  • ALBs should use the Government Workplace Design Guide to develop smarter working within workspaces, or embrace a hybrid working model, whilst continuing to adhere to the guidance and space utilisation target set out within the Property Functional Standard (PDF, 725kB).
  • ALBs shall streamline back-office functions through alignment with the Shared Services Strategy, and shall join their sponsoring department’s Shared Service Centre as set out in the Shared Services Strategy, and Guidance.
  • Follow the principles for managing legacy technology.
  • ALBs should consider possibilities to migrate legacy technology to more cost effective options.
• Follow the security functional standard (PDF, 308KB) on cyber security measures, including taking steps to detect cyber attacks and have a defined, planned and tested response to such incidents, especially when they impact sensitive information or key operational services.

All digital services, and any future services shifted to digital platforms, shall ensure:

• Services adhere to the Digital, Data and Technology Functional Standard.
• Technology projects meet the mandatory elements set out in the Technology Code of Practice.
• Services are focussed on user needs and overall outcomes, running services in line with the Service Standard. If electing to expand digital service delivery, the ALB shall ensure this does not negatively impact the user experience.
• Investment in technology infrastructure to expand digital capability is in line with the guidance set out by the CO Digital and Technology Spend Control.
• Digital communications are in line with the GCS digital communication guidance.

All ALBs shall ensure that all services:

Are accessible for all users, with the ability to make reasonable adjustments as required, as per the accessibility requirements for public bodies. ALBs should ensure communications are accessible and inclusive, in line with the GCS Accessible Communications guidance.

Theme 4: workforce

The ALB should consider possibilities to both improve the productivity of, and ensure efficient spending on, its workforce. Where appropriate, workforce levels should be reducing.

Indicators

All ALBs should:

• Consider whether efficiency and efficacy gains can be made by improving the skills and productivity of the workforce and the processes they follow, by ensuring, if applicable, that employees have access to training and opportunities to develop.
  • ALBs should consider if training will allow for greater employee progression and staff retention.
  • ALBs should have due regard to the priority on people set out in the declaration on government reform.
  • Those ALBs shall consider the benefits of moving roles out of London, such as the acquisition of new skills or reducing property spend.
• Review spending on staff in each functional area, and highlight any areas this spending can be reduced, with considerations including:
  • Possible workforce reductions if efficiency gains have been identified through digitisation.
  • The impact of increased use of shared services on the workforce.
  • Ensure their staff are measured/developed against the various profession/function capability requirements.
  • The current levels of spending on consultancy and contingent labour, and whether this spending can be reduced through upskilling the workforce of the ALB.
    • ALBs should avoid over reliance on external support, ensuring that consultancy engagements follow the Consultancy Playbook.
    • All consultancy spending shall be in line with the CO Consultancy Spend Control.

All ALBs shall ensure that the workforce is managed in line with the Human Resources Functional Standard.

The ALB shall:

• Post-employment rules: Similar to the ALB’s board, ensure that it has post employment rules and processes, and procedures for declaration and consideration of interests in place for employees.
• Conflicts of interest: If appropriate and proportionate, have a suitable conflicts of interest policy in place for senior staff.

All ALBs shall, in the management of its workforce: :

• Meet its legal obligations as a public sector employer.
• Follow the Public Sector Pay Policy.
• Report their gender pay gap, if meeting the reporting threshold.
• Adhere to diversity action plans in place.

6: Annex A: Delivery models options

Option	Questions
Abolish	Why does the function need to continue? How does it contribute to the core business of the sponsor department? How does this contribute to wider government policy objectives? What if the function did not need to continue? Is there a legal requirement for the function? Is providing the function a justifiable use of taxpayers’ money? What would be the cost and effects of not delivering the function? Does the function contribute to economic growth?
Move out of central government	Why does central government need to deliver this function? Can this function be delivered by local government, by the voluntary, or by the private sector? Is there an existing service provider, or providers, in the local government or voluntary sectors that could deliver this function? What are the risks and benefits of moving the function out of central government? Could efficiencies be made by delivering the function through a different model?
Commercial models	Can the function be better delivered by the private sector, or delivered under contract by the voluntary or private sector? Can the function be delivered by a mutual or social enterprise? Is there an existing service provider, or providers, in the private sector that could deliver this function? Could the public body increase its private sector revenues? What are the risks and benefits of moving to a more commercial model? Could efficiencies be made by delivery through a more commercial model? Is the delivery of this service by the government having a negative impact on the market / has a market impact test been considered?
Bring in-house	Why does the function need to be delivered at arm’s length from ministers? Can the function be delivered more efficiently or effectively by the sponsoring department or by an existing executive agency of the sponsoring department, or by another department? What would be the costs and benefits of bringing the function inhouse? Could efficiencies be made by bringing the functions in-house?
Merge with another body	Are there any other areas of central government delivering similar or complementary functions? Does the function duplicate work undertaken elsewhere? Could the function be merged with those of another public body, or vice versa? What would be the costs and benefits of a merger? Could efficiencies be made by merging the body, or some of its functions, with another body or bodies?
Less formal structure	Why does the function need to be delivered through a formal structure? Could the function be delivered by an informal stakeholder group? Could the function be delivered by an expert committee? What would be the costs and benefits of moving to a less formal structure? Could efficiency be made by moving to a less formal structure?

7: Annex B: Public bodies - Rules on lobbying, attendance at conference, advertising, marketing and PR for public bodies

The rules set out below reflect the long standing principles that public bodies must be politically impartial and must at all times ensure the proper use of public money. All Public bodies^{[footnote 19]} must comply with these restrictions. Departments should ensure that these rules are reflected in individual bodies’ Framework Documents.

Lobbying

• Public bodies must never employ external firms or consultants to influence or attempt to influence Parliament, the Government or political parties^{[footnote 20]}. This includes attempting to influence the awarding or renewal of contracts and grants and attempting to influence legislative or regulatory action. To do so would be a clear misuse of public money.
• Public Bodies that award grants should in turn ensure the conditions for such grant awards include the lobbying restrictions captured within the Grants Functional Standards (GovS15)^{[footnote 21]}.

Attendance at Party Conference

• Public bodies must abide by Cabinet Office rules on attendance at Party Conferences. It should be exceptional for board members or staff of Public bodies to attend Party Conferences in an official capacity. Any requests to attend must be approved by both the sponsoring department and the Cabinet Office.

Advertising

• Public bodies must comply with Government conventions on publicity and advertising. They should ensure that any publicity or advertising is;
  • Relevant to their responsibilities;
  • Objective and explanatory;
  • Not party political and not liable to misrepresentation as being part political; and
  • Produced and distributed in an economic and relevant way, having regard to the need to justify the costs as proper expenditure of public funds
• Public bodies must seek advice from their sponsoring department in all cases where the use of publicity and advertising might be regarded as novel or contentious.

PR and Marketing

• It should be exceptional for Public bodies to use public relations (PR) or marketing consultants. Any requests to use PR or marketing consultants must be agreed by both the sponsoring department and the Cabinet Office.

8: Annex C: Using the requirements in ALB reviews

The following can be used by review teams when undertaking an in-depth ALB review against the requirements in this document. This guidance has been provided to support these teams by providing a set of questions or areas that can be looked into as part of a full-scale review of an ALB.

a: Efficacy

Review teams should use the efficacy quadrant to identify areas where improvements can be made to make sure that the ALB is operating as effectively as possible. A proportionate approach should be taken, as some of the efficacy requirements may not apply to all ALBs – for example, due to classification or size.

The following areas should be considered when considering the efficacy quadrant:

Function

This theme sets out the requirement for ALBs to have a clear mandate, which is up to date and remains relevant. The body in question must continue to meet one of the government’s ‘Three Tests’ for an ALB, and there must be a clear rationale that the function/service needs to continue.

The ‘Three Tests’

• Is this a technical function, which needs external expertise to deliver?
• Is this a function which needs to be, and be seen to be, delivered with political impartiality?
• Is this a function that needs to be delivered independently of ministers to establish facts and/or figures with integrity?

If, following consideration, the body no longer meets one of the of the three tests then the review team should speak to the Public Bodies Team in Cabinet Office about the process that would need to be followed. This should clearly be set out in the recommendations and include consideration of what form, if any, the public body should take. The Cabinet Office must also be consulted over any proposals to reclassify or declassify ALBs. Cabinet Office and/or Treasury approval is required for mergers, restructures and closures of ALBs – for non-ministerial departments the approval of the Prime Minister’s Office is also required given this represents a Machinery of Government change. Where the merger of two bodies creates a new ALB, the process for the creation of a new ALB should be followed in the Approvals Guidance (PDF, 843KB)

Form

This theme sets out the requirement for ALBs to be the correct and appropriate delivery model. Reviews should fully examine the alternative delivery models and not assume that the status quo is the most suitable. Annex A sets out alternative delivery models that should be considered.

Outcomes for citizens

This theme sets out the requirements for the ALB and its sponsoring department to ensure that it has the correct systems and knowledge in place to deliver effective outcomes for all citizens.

The review team should consider the following:

1. Is the ALB clear about the requirements it must meet as set out in the Public Sector Equality Duty (PSED) and correspondence from the Minister Levelling Up Communities and Equalities from December 2021?
2. How does the ALB ensure that its staff are fully aware of and able to implement these requirements?
3. How many judicial reviews has the ALB lost, on what grounds, and the rationale for this number.
4. Does the ALB have a clear plan for engagement with stakeholders/citizens, following best practice guidance, the communication functional standard and Pillar 3 and 4 of the Public Value Framework- (PDF, 766KB)?
5. Does the ALB have a clear and accessible complaints policy?
6. Does the ALB have a process in place to effectively use the data from complaints to improve its service delivery?
7. Are there any consistent themes raised in the complaints?
8. Does the ALB have a clear, published process for the public around making an FoI request?
9. Does the ALB meet its deadlines for FoI requests?
10. Is there a link between FoIs and complaints?
11. Has the ALB had any decisions or enforcement notices from the ICO due to non compliance with the FoI Act?
12. Does the ALB utilise the products that GDS provide on behalf of government?
13. How does the ALB ensure that its digital services are designed as end-to-end services, from a citizen’s or users’ viewpoint?.
14. How could the ALB improve its digital services to meet the needs of citizens and users?
15. Does the ALB have a data management strategy?
16. Is the ALB clear about its requirements under the accessibility regulations (2018)?
17. Does the ALB have a location strategy, aligned with the Places for Growth strategy which have been included in the sponsor department plans?
18. Devolution and Union:

• If the ALB has a UK-wide remit,  How does it ensure that through the use of data and evidence, its decisions are taken with an appropriate understanding of the needs of citizens and communities around the UK? or
• If the ALB does not have a UK-wide remit, How does the ALB ensure that it has considered opportunities to collaborate and share learning with relevant public bodies in other parts of the UK?

Performance

This theme sets out the requirements for the ALB and its sponsoring department to have clear, measurable key performance indicators (KPIs). The KPIs should be aligned to the departmental strategic objectives through its outcome delivery plan and should also be aligned to wider government objectives.

The review team should consider the following:

1. Does the ALB have clear objectives which are measurable?
2. Does the department and the ALB agree on the level of ambition for the objectives?
3. Are they outcome rather than output focused?
4. Does the ALB follow the digital, data and technology functional standards?
5. Are the objectives and KPIs clear to all within the organisation?
6. Are the objectives aligned to the department’s and government’s objectives?
7. Are the objectives regularly reviewed to assess progress against them? Is the department involved in this process as appropriate?
8. Are the objectives accessible and understood by all stakeholders and citizens?
9. Is there a clear process for the development of the ALBs business and corporate plans with its sponsor department?
10. The public value framework pillar one (PDF, 766KB).
11. Is there a formal process in place for the sponsor department to formally review the performance of the ALB at least twice a year?^{[footnote 22]}
12. Where recommendations have been made on the effectiveness of the ALB from previous reviews, have these been implemented, tracked and measured to assess outcomes?
13. Does the ALB ensure that lessons learned are captured, shared and used to raise future performance?
14. Does the ALB use benchmarking to similar organisations to inform improvements to its performance?^{[footnote 23]}
15. Is the ALB clear about the requirements under the Greening Government Commitment?
16. If appropriate, is the ALB aware of, and does its strategy support, the government’s commitment to net zero?

Risks:

1. Does the ALB have a risk management strategy in accordance with the UK Government Orange Book Management of Risk: Principles and Concepts (Orange book and Finance Functional Standard )?
2. Does the ALB have a clear governance structure and process in place to notify its sponsor department, in a timely manner, of any corrective action or significant problems when it comes to risks?
3. Does the sponsor department have a clear governance structure and process in place to assess the risks to both the sponsor department and ALBs objectives and activities?
4. Does the ALB stress test? If so, has stress testing prompted a change in the system being tested?

b: Governance

Good corporate governance is central to the effective operation of all organisations, including public sector bodies. It provides a robust, effective and accountable framework within which our public services can excel.

Review teams should use the governance quadrant to assess how far the corporate governance of the ALB is compliant with the relevant requirements and expectations. These requirements draw on best practice from the private sector (2018 FRC Code) and public sector requirements (Managing Public Money, 2017 Corporate Governance Code of Good Practice).

This should include an assessment of the ALB board, chair and non-executives, and might also consider the relationship with the sponsor department, ministers and the Principal Accounting Officer (PAO). This element is further elaborated by the Accountability Requirements & Guidance – a review should take this into consideration.

In line with the governance requirements, the following could be considered when making an assessment of the corporate governance of the ALB during a review:

Comply or explain

The ‘comply or explain’ approach is the standard approach to corporate governance in the UK. In keeping with this approach, the sponsoring department and ALB board should identify any areas of non-compliance and explain why an alternative approach has been adopted, and how this approach contributes to good corporate governance.

Delivering on wider government objectives

This theme outlines the expectation that an ALB should deliver on broader government objectives, for example in its business planning or strategy to ensure it reflects:

1. Levelling Up;
2. Net Zero;
3. Education, Jobs and Skills;
4. Health and Social Care; and/or
5. Crime and Justice.

Reviews teams should also consider:

• Where the ALB is responsible for policy that is devolved, is there evidence of collaboration with counterparts in the devolved administrations?
• Does the ALB have a strategy for engaging with counterparts in devolved administrations?
• Has the board undertaken any other work to ensure that the Union is upheld within the work of the ALB?
• Is there a commitment to inclusive working practices in the business/ strategic planning of the board, and are there examples of this working in practice?
• Does the board seek advice or guidance from other organisations to improve its approach to delivering wider government objectives?

Purpose, leadership and effectiveness

This theme outlines the requirements for the board to ensure the board is fit for purpose and effective.

• Purpose: An organisation’s purpose underpins everything it does. It is the responsibility of a board to set an ALB’s purpose, and ensure that its values and culture align and filter down through all levels of the organisation.
  • Has the board established a clear purpose and set of values for the ALB?
  • Does the board assess and monitor the culture? If it is not satisfied that policy, practices and behaviour throughout the ALB are aligned with its purpose, values and strategy, does the board seek assurance that management has taken corrective action?
  • Has the board ensured that the purpose and values are reflected in all relevant frameworks, including the Framework Document, Corporate and Business Plans, and other strategy documents?
• Leadership, composition and membership
  • Are the accountabilities of the board, the chief executive as AO, and sponsor department Permanent Secretary and PAO to Parliament clear?
  • Are the roles and responsibilities of the chair, the board, and non-executives clearly set out in writing?
  • Does the board have sufficient independence? Are there appropriate independent non-executive directors to provide support and challenge?
  • Is the board representative? Is there a balance of diversity in regards to different experiences, skills mix and background, gender, ethnicity, age, disability, sexual orientation, faith perspectives, and place as laid out in the 2019 Diversity Action Plan (PDF, 920KB)?
  • Do the boards of NDPBs meet all additional requirements in regards to composition, and committees, as laid out in Managing Public Money?
• Effectiveness
  • Are the board’s and committees’ terms of reference maintained? When were they last updated? Are they publicly available?
  • Does the board have a schedule of delegation for all board committees?
  • Are these documents sufficiently granular; are they clear about which specific subject matters must be approved/endorsed or discussed by the board?
  • Does the ‘Governance Statement’ in the Annual Reports and Accounts include a schedule of regular board meetings, and the attendance record of individual members?
  • When was the last internal board effectiveness review conducted?
  • When was the last external board effectiveness review conducted?
  • Who led these reviews? Did they have appropriate input from the sponsor department, the chief executive, ministers, and other board members? Were any significant governance issues raised?

Appointments, skills and training

This theme outlines the requirements for the board to ensure that it is balanced and diverse, and to ensure the fair appointment of members. It also outlines the requirements of the board to provide suitable training and development for its members.

• Appointments and appraisals
  • When did the chair last conduct appraisals of all non-executives? Did they share reports with the sponsor department?
  • Is there a process for assessing the performance of individual board members when they are being considered for re-appointment?
• Skills and training
  • Is there an appropriate balance of skills and experience on the board? Has this been discussed in the annual reports, and board effectiveness reviews?
  • Has the chair carried out appropriate succession planning; working with the departmental senior sponsor to consider the skills and diversity needs of the board now and in the future? Is the pipeline and strategy around appointments clear?
  • What kind of induction do new board members receive from the ALB? Are key areas of information and documentation, as well as responsibilities and expectations, included?
  • What regular training and development opportunities are available for non-executives? Has appropriate training on financial management and reporting requirements been arranged?

Conduct and behaviour

This theme outlines the requirements for the board to ensure that its members work at the highest personal and professional standards, promoting the values of the organisation and good governance.

• Where appropriate, does the board have a Code of Conduct that sets out the standards of personal and professional behaviour expected of all non-executive board members? Does this Code of Conduct:
  • refer to the Seven Principles of Public Life;
  • incorporate the Cabinet Office’s Code of Conduct;and
  • form part of the terms of engagement for all non-executive board members, provided upon appointment.
• Does the board have clear rules and procedures for the declaration of conflicts of interest? Are these rules published? Is the register of interest for all board members publicly available, and regularly reviewed and updated?
• Are there clear rules and guidance in place on the political activity of board members?
• Does the board have clear rules and processes in place for board members on the acceptance of appointments or employment after resignation or retirement? How are these monitored by the chair and/or sponsoring department?
• What are the whistleblowing procedures and policies? Are they consistent with the Public Interest Disclosure Act?
• What are the rules and procedures for the handling of data and cyber security responsibilities? Are they clear? Are they in accordance with the Data Protection Act 2018?

Effective financial and risk management

This theme outlines the requirements that an ALB must have in place to ensure effective governance, financial management and a risk management system for internal control. The ALB must ensure that effective systems of financial and risk management are in place to ensure that it meets all of its obligations as set out in Managing Public Money and the Orange Book

• Effective financial management
  • Is there a clear process to ensure appropriate engagement in the budgeting process? Has this been agreed by the sponsoring department and the AO?
  • Have Annual Reports and Accounts (ARA) and Corporate and Business Plans been published? Are they objective, balanced, and understandable?
  • Have the Annual Accounts been laid before Parliament? Have they been made available on the ALB’s website?
  • Does the ARA include a ‘Governance Statement’? Does this statement cover corporate governance, risk management, and oversight of any local responsibilities?
  • Has the ALB board been compliant with the delegations set out in the delegation letter?
  • Have timely forecasts and monitoring on performance and finance been provided to the sponsor department? Has the department been notified promptly of any overspends or underspends that are likely? Has corrective action been taken?
  • Has the sponsor department been notified of any significant problems, financial or otherwise?
  • Has the AO ensured that adequate internal and external audit arrangements are in place?
  • Are there clear and agreed arrangements for the ALB to report management information to the sponsor department? Does this include the minimum management information that the department requires? Does it include a regular cycle of meetings to discuss the management information?
  • Is the ALB registered as a company under the Companies Act 2006? Does it adhere to the additional requirements and legal provisions of the Act where appropriate?
• Risk management including internal control
  • The Governance Requirements set out a number of mandatory requirements from Managing Public Money for boards to assure themselves against. Further guidance is also available within the Orange Book Part II – the Risk Control Framework. Further questions to consider here:
    • Are there any improvements that can be made to the way in which the ALB and the sponsor department communicate issues or opportunities relating to management information?
    • Are there current barriers to undertaking these improvements? If so, what are they and how could the ALB and the sponsor department address them?
    • Is there anything further that the board can do within its remit to assure itself, the ALB and the sponsor department that the management of information is following good or best practice where possible?

Transparency

This theme outlines the requirements for the ALB board to be open, transparent, accountable, and responsive in its communications with the public and other key stakeholders. 

• Is there evidence that the board proactively publishes data in an open and accessible format in line with guidance (How to Publish Central Government Transparency Data)?
• Is there evidence that the board has considered holding open meetings, that these are accessible in a way that is reasonable and in line with the remit of the ALB?
• Could more be done to ensure that meetings are accessible, or that the outputs from the meetings (for example, minutes of board meetings) are made accessible after the fact?
• Are there any barriers that have previously prevented a transparent approach to board and annual meetings that could be addressed going forward?
• Is the board satisfied that the ALB offers transparent communication with the public, if providing services to them?
• Is the board satisfied that there are clear and effective procedures for handling complaints about the ALB? This can be addressed in line with the Efficacy requirements that address compliance with relevant complaint frameworks  (Page 9 of the Efficacy requirements). This could include asking the board whether they are satisfied as to the following:
  • Is there evidence of effective handling of complaints in line with the framework presented in the requirements?
  • Are there examples where this has not happened that have raised concern? If so, What are the reasons for this?
  • Does the ALB communicate its performance and delivery clearly to the public?
  • Does it have clear and easily accessible objectives that the public can address?

C: Accountability

Arm’s length bodies (ALBs) are accountable to their sponsoring department, the Principal Accounting Officer (PAO) and the Secretary of State. It is the role of sponsors to support sponsored bodies in being accountable, high-performing organisations, delivering value for money services as outlined in their business plan and supporting the department in achieving its objectives.

Effective relationships between sponsoring departments and arm’s length bodies are critical to the delivery of high-quality public services; all sponsors must strike a balance between control and allowing the sponsored body to operate independently day-to-day. Sponsors must establish good governance structures and processes, and maintain good relationships in order to attain this balance.

In practice, Senior sponsors within departments are responsible for managing the relationship with an ALB on behalf of the minister and the AO. Day-to-day management will usually be delegated to a supporting sponsor or sponsor team.

When making recommendations that can address accountability between the sponsor department and ALB, a review should consider the following factors;

• the classification of the ALB, for example, executive agency, non-ministerial department, non-departmental public body;
• the size of, and resource within, the ALB;
• the sponsorship model operating within the department, including the size and resource of the sponsorship team;
• the wider accountabilities of the ALB to other bodies beyond the department, for example, Parliament, the Charity Commission, the Financial Reporting Council;
• Service Level Agreements, or Memorandums of Understanding, that are in place between the sponsor department and the ALB, in addition to the framework document; and
• the overall departmental objectives, and to what extent the ALB can achieve or contribute to these.

In line with the Accountability requirements, the following areas should be considered when addressing Accountability in an ALB review:

Effective sponsorship

The relationship between the sponsor department and ALB shall be conducted in line with the sponsorship code of practice and meet the requirements of Managing Public Money.

• Are the roles and responsibilities of both the ALB and sponsor department clear to both parties and do they facilitate the delivery of government objectives? The following should be considered:
  • How does the department make sure that the sponsoring relationship is conducted in line with the partnership code of practice?
  • What evidence is there of clear accountabilities and expectations in terms of roles and responsibilities for both individuals and organisations?
  • Does the framework document set out the appropriate, proportionate, clear sponsoring arrangements?
  • What arrangements are in place for the day to day management of the sponsoring relationship?
  • Is there evidence that the framework document is adhered to by both the department and ALB?
  • Are roles and responsibilities for risk management clear, to support effective governance and decision-making at both ALB and sponsor department level with appropriate escalation, aggregation and delegation processes in place?
  • Is a senior sponsor in place to manage the relationship between the minister and AO?
  • Has the department separated out its sponsorship function? If yes, what evidence is there that the department ensures clarity on what each of the sponsorship functions are for and how they work together?
• What evidence is there of the sponsor team supporting the relationship between the ALB, ministers and the PAO? The following could be considered:
  • How does the department demonstrate that it is appraising ministers and the PAO on the performance of the ALB? At what frequency does this take place?
  • Has a departmental NED been given responsibility for the ALB and/or has direct links with the ALB board?
  • Does the department send out an annual chair’s letter? If so, is there evidence that this is an effective line of communication between the department and the ALB?
• What evidence is there of the sponsor team fostering a relationship with the ALB that can facilitate the delivery of government’s objectives? The following could be considered:
  • Are regular, formal accountability meetings in place between the department and ALB? How often do these meetings occur? Who attends?
  • How are the financial, operational freedoms and delegations articulated to the ALB?
  • How does the department share good practice and encourage collaborative working with other ALBs?
  • What arrangements are in place to effectively manage the performance of the ALB? Is there evidence of how this has worked in practice?
  • What mechanisms are in place for sponsor teams to feed insight from their ALB into policy teams, ensuring that policy development is informed from a delivery perspective?
  • What evidence is available to demonstrate constructive and proportionate challenge?
• How does the department ensure that the right balance is struck between clear accountability arrangements are in place and enabling the ALB the freedom to deliver and innovate (in line with the partnership code)?
  • Is there evidence of good or best practice for striking this balance?
• What evidence is there of clear remits within the ALB that ensure the ALB is aware of its accountability processes?
  • Can the ALB clearly evidence clarity in the relationship and accountabilities of its executive and non-executive directors?

Accountability of ALB to the department

• What processes are in place for the ALB to report management information (MI) to the department?
• Has the department clearly articulated the minimum MI reporting requirements expected from the ALB?
• Do the department and ALB meet to discuss MI reporting? How regularly are meetings held?
• Where there are new policy developments or ministerial priorities for the ALB, how are these communicated from the department to the ALB?
• How does the ALB ensure that its sponsoring department is involved in setting budgets and the monitoring of performance against the budget?
• How does the sponsor team ensure that it has the required knowledge of the ALBs key priorities and costs?
• What processes are in place to ensure that the ALB board can advise the Secretary of State of any changes which may impact on the strategic direction of the body or where it may not meet its objectives?
• What policies does the ALB have in regard to being transparent with its data?
• What mechanisms does the department have in place to make sure that non-fiduciary boards can escalate and publicise to the PAO disagreements with the executives?
• Does the department ensure that a representative attends the ALB management boards and/or audit committee meetings when invited?
• How does the ALB ensure accountability where responsibility has been delegated to staff and/or volunteers?
• How does the department ensure that the ALB has policies/arrangements in place in  relation to  management information assets, security, business continuity and sustainability?
• If appropriate and necessary, what service level agreements does the department have in place with the ALB?

Accountability of ALB to Parliament

• Does the minister meet with the chair at least once a year with clear agenda items for discussion?
• What processes are in place to ensure that the AO acts within the authority of the minister and can provide assurance to Parliament?.
• What procedures are in place to support the ALB, as appropriate, with PQs, correspondence and FOI requests?
• How does the ALB ensure that it maintains constructive relationships with key personnel in the department?
• How does the ALB ensure that it informs Parliament of its performance, finance, and other considerations?

Accountability of ALB to other governmental functions

• Where applicable, what service level agreements are in place between supporting functions and the ALB sponsor team to support both routine items (such as annual accounts) as well as novel or complex items (such as Spend Controls)?
• How does the department ensure that functional leads contributions are included within accountability meetings?
• What processes are in place within the department to ensure that ALBs adopt the relevant functional standards, including taking into account cross-government functional strategies and plans?
• Does the ALB have a clear process to engage with relevant functional standard(s) where required?
• How does the ALB evidence that it has reported to and/or engaged with additional government functions at agreed and defined periods?

d: Efficiency

This government wants ALBs that are accountable, efficient and effective, as such the review must be used to carefully consider the efficiency of the ALB. When conducting a review, lead reviewers are required to identify where savings to Resource Departmental Expenditure Limits (RDEL) of at least 5% can be made for an average review. The review team should use the efficiency requirements to identify where efficiency gains, both cashable^{[footnote 24]} and non-cashable, can be made within the ALB. For clarity:

• cashable benefits refer to benefits that will lead to immediate reductions in overall budgets; and
• non-cashable benefits will increase efficiency and productivity, but not necessarily be reflected by a short-term budget reduction.

Where a review is unable to identify immediate cashable benefits, it should be recognised that improvements in the efficiency of processes and systems within the ALB could generate cashable savings in the medium-to long-term.

All types of expenditure (CDEL, RDEL and AME) should be considered within this review. A proportionate approach should be undertaken when reviewing ALBs using the efficiency  requirements – recognising that not all requirements and possible efficiency gains outlined will apply to all ALBs.

When making recommendations on areas to achieve efficiency gains, reviews should consider the barriers to implementation. Actions to meet the efficiency target must be reflected in the review recommendations and recorded and quantified in the published review report. Reviews should consider the ease of implementation and the possible investment that may be required to achieve certain benefits. A judgement should be made as to whether the cost of implementation will be exceeded by the efficiencies that will be generated, recognising that not all benefits will be represented by short-term and cashable gains.

The following areas should be considered alongside the efficiency requirements:

Financial management

The financial management theme outlines the procedures that all ALBs are expected to have in place. Reviews should look for evidence of an ongoing process used effectively by the ALB, and ensure that the process is in line with the guidance outlined within the requirements. The review team should also consider any opportunities to strengthen financial management processes, and consider the benefits that this may bring. For each functional area, the review team should consider the questions outlined in the overall functional standards section, as well as any specific considerations outlined below. All processes should adhere to the requirements set out in the functional standard, and any other guidance linked.

• Debt (PDF, 310KB)
  • What is the debt management strategy of the ALB?
  • What is the current level of overdue debt?
  • How has the level of debt changed in recent years?
  • How much debt was written off or remitted in the last financial year?
  • How much debt has been collected, both internally and through external debt collection agencies, in the last financial year?
  • What savings could be delivered through preventing overdue debt arising upstream and using more effective and efficient routes for debt collection?
• Grants (PDF, 341KB)
  • How much does the ALB award in grants each year?
  • Do these grants still achieve value for money?
  • How does the ALB review its grants, to ensure that they continue to achieve the desired outcomes?
  • Does the ALB annually report the status of their grants?
  • Do the grants still fulfil the set goals of the grants?
• Counter Fraud (PDF, 266KB)
  • How does the ALB seek to mitigate the risk of fraud?
  • Does the organisation have a culture that embraces finding fraud?
  • Has the level of loss from fraud been increasing or decreasing in recent years?
  • Could the level of loss be reduced through increased prevention or detection?
• Commercial (PDF, 929KB)
  • Does the ALB have an updated commercial pipeline (PDF, 348KB)?
  • What commercial contracts does the ALB currently have?
  • Are these services still required?
  • Is there a possibility to reduce the cost of commercial contracts through renegotiation?
  • Does the ALB engage with the commercial function to improve commercial capabilities?
  • Does the ALB implement the principles in the sourcing (PDF, 3.1MB), consultancy and construction (PDF, 6.9MB) playbooks when planning and delivering projects and services?
  • How much does the ALB spend on common goods and services?
  • Are all common goods and services procured through the Crown Commercial Service (CCS)? A list of examples of goods and services which should be procured through the CCS.
  • If not, which goods are not procured through this method? Where else does the ALB procure goods from? What is the reason behind not using the CCS for these goods?
  • Does the ALB seek opportunities to commercialise its services / generate revenue, as appropriate and in discussion with its sponsoring department?
• Communications
  • How much does the ALB spend on communications (broken down by resource, campaigns, contracting etc.)?
  • How much of this relates to statutory requirements?
  • Does this spend still achieve value for money and how is that measured?
  • How does the ALB review its campaigns, to ensure that they continue to achieve the desired outcomes and how is this measured?
  • Does the organisation join up any communications activity with the department or other ALBs?
  • Does the ALB have access to and use a shared service – if so, what is this and how is it funded?

Reviews into financial management should also look at the quality of the overall processes. Pillar 2 (area 4 and 5) of the public value framework (PDF, 766KB) highlights the processes that should be in place for an ALB to effectively and regularly review its spending, ensuring that this continues to achieve value for money, and is focussed to help meet the overall set goals of the ALB. To facilitate regular reviews of spending, ALBs must ensure that sufficient quality data is available throughout the delivery chain to do so.

Benchmarking costs

In the benchmarking costs theme, reviews should look at how the ALB can make efficiency improvements through the use of benchmarking against similar organisations. Review teams should consider the following:

• Does the ALB use benchmarking data to improve policy or drive efficiencies? If yes, how does the ALB use this data?
• If the ALB does not benchmark its costs, why? Are all elements of the ALB’s work and costs without comparison, or are there some aspects which could be benchmarked?
• Against which organisations does the ALB benchmark its costs against (both international and domestic comparisons)? Are these effective comparisons?
• Does the ALB understand how its costs compare to other similar organisations in improving its efficiency performance, as outlined in pillar 2 (area 6) of the Public Value Framework (PDF, 766KB)?
• What action has the ALB taken following benchmarking exercises to increase efficiency?

Digitisation

In the digitisation theme, reviews should look at the efficiency gains that can be achieved by shifting services to digital platforms. For all ALBs, even those that cannot make efficiency gains in this area, it should be ensured that current digital services are in line with the existing guidance set out in the efficiency requirements, and that these services are accessible for all users.

The review team should consider the following:

1. The feasibility and benefits of shifting services to digital channels

• How are services currently delivered?
• What is the completion rate for each channel (examples include online, via telephone or face-to-face)?
• What proportion of completed transactions are from digital channels? Has this been increasing or decreasing in recent years?
• What is the number of FTEs per channel?
• What is the cost per transaction for each channel?
• What is the user satisfaction for each channel?
• What user needs need to be met by the service?
• Will a shift to digital continue to meet these needs, or improve the service for the user?
• What will the cost of the shift be? Will investment be required to expand digital capability? Will benefits outweigh costs?
• Will a shift to digital reduce the cost per transaction?
• Would the ALB be able to scale down it’s physical property spending if services were shifted to digital platforms?
• Will fewer FTEs be required with further shifts to digital?
• How will the ALB ensure that services remain accessible for all users?
• How does the ALB encourage users to shift to online services?
• The review team should follow the Digital, Data and Technology functional standard, and ensure services adhere to the guidance set out.
• For income generating ALBs:
  • What income is generated from each channel?
  • What impact would further shifts to digital channels have on income?

2. Digitising internal processes and managing technology

• Is the ALB part of the shared services strategy?
• Is there potential for its use of shared services to be increased?
• Is there a plan for managing legacy technology that follows the set principles?
• Is this plan effective?
• Does the ALB have an excess of end-of-life technology?
• How much does the ALB spend on technology maintenance?
• Are there any technology contracts that are expiring soon?
• Question 25 of the public value framework (PDF, 766KB) – exploring the processes undertaken to develop and deploy new technologies.

Workforce

In the workforce theme, reviews should seek to identify any ways in which an ALB can improve the productivity of, or reduce spending on, staff. With the drive to become a more modern civil service, ALBs should seek to develop the skills and expertise of their own staff, reducing reliance on external support where possible.

The review team should consider the following:

• Is there a plan to reduce the workforce in line with the civil service headcount reduction target? If not, why?
• Do staff have access to regular training?
• Do staff feel sufficient training is provided? Do staff believe they have skills they need to undertake their roles?
• Is there an opportunity for staff to progress upwards within the ALB?
• What is the level of staff turnover? How does this compare with other comparable organisations?
• What is the current level of spending on staff, and how has this changed in recent years?
• Has the ALB previously breached public sector pay policy?
• How much does the ALB spend on consulting?
  • Does the ALB have any known skill gaps?
  • Are these consulting services crucial to the functioning of the ALB?
  • What services does the ALB require consultation services for?
  • Could this spending be reduced by upskilling existing staff?
  • Does the ALB have a plan in place to reduce reliance on consultancy services?
  • Does the ALB maximise value for money when sourcing consultancy services, following the guidance in the consultancy playbook?
  • Has the ALB used the services provided by the Government Consultancy Hub?
  • Does the ALB benchmark its expenditure on consultancy?
• Can spending on staff be reduced as a result of changes to services provision found in the digitisation section, such as a shift of services to digital channels or the shared services strategy?
• In what locations does the ALB have FTEs, and how many are in each location?
• How much is spent on property in each location?
• What savings could be made by moving roles out of London? What plans are in place to move roles out of London?
• Where could co-location with other ALBs help create skills clusters and/or drive efficiencies?
• Does the ALB manage and organise the workforce in line with the HR functional standard (PDF, 364KB)?
• Area 11 of the public value framework (PDF, 766KB) – exploring the monitoring and planning processes the ALB has in place, to allow the workforce to continue to deliver and adapt to future changes, and ensuring that these processes are underpinned by quality and accurate workforce data.

1. Public sector research establishments (PSREs) are a diverse collection of public bodies carrying out research ↩

2. Public sector research establishment value framework ↩

3. Public sector research establishment value framework ↩

4. Equality Act 2010 ↩

5. The Public Value Framework: with supplementary guidance (PDF, 766KB) ↩

6. Functional standards ↩

7. In line with the requirements in Managing Public Money (MPM) ↩

8. Where a recommendation has been deemed no longer relevant an explanation should be provided. ↩

9.   Public value framework and supplementary guidance ↩

10. This is not an exhaustive list, the requirements may be useful for other purposes and should be considered as a tool to support these exercises, rather than the only means of arriving at a judgement on the quality of governance in the ALB. ↩

11. This may differ in the case of an NMD. ↩

12. This is normally defined as a majority of independent NEDs (minus the chair) ↩

13.   The required minimum number of Board meetings is 4 per year or at least quarterly, as detailed in the Government Lead Non Executive’s Annual Report (PDF, 1,142KB) and set out in MPM and the Corporate Governance Code (2.4 ) ↩

14. Or other organisations like UKGI where they perform this function for the sponsor department. ↩

15. This excludes Executive Agencies as annual reports and accounts are consolidated with the home department as per  Executive Agencies: A guide for departments Executive Agencies: A Guide for Departments (PDF, 1,010KB) ↩

16. Or other organisations like UKGI where they perform this function for the sponsor department. ↩

17. The Departmental Accounting Officer will sometimes delegate some of their responsibilities to an Accounting Officer within an ALB. An ALB will only have an Accounting Officer if it has its own budget or grant-in-aid ↩

18. Section 17  of the Specimen FD (docx, 580KB)  “comply with the Board’s rules on the acceptance of gifts and hospitality, and of business appointments” and 3.17 in the Code of Conduct for Board Members of Public Bodies ↩

19. Public Bodies are formally established bodies that are in scope of ‘Managing Public Money’ and, at least in part, in receipt of public funds to deliver a public or government service, separate to that of a ministerial department. These include, but are not limited to, Executive Agencies, Non Ministerial Departments and Non-Departmental Public Bodies. For the purposes of this guidance unless required to comply with the principles of Managing Public Money, Public Corporations remain out of scope. ↩

20. This includes firms and consultants engaged in “political consultancy”, “stakeholder management”, “strategic communications”, “public affairs”, “policy tracking”, “advocacy”, “strategic counsel” and “engagement with public policy makers and opinion formers”. ↩

21. [Government Functional - GovS 015: Grants Standard (PDF, 341KB)] (https://assets.publishing.service.gov.uk/government/uploads/system/uploads/attachment_data/file/1004659/Final-CO_Govt_Functional_Std_GovS015_WEB.pdf) ↩

22. In line with the requirements in Managing Public Money (MPM) ↩

23. Public value framework and supplementary guidance ↩

24. When conducting a full-scale review, lead reviewers are required, in line with HM Treasury expectations, to make an assessment of whether monetised savings can be made or not. If no savings can be made, a rationale must be provided. The monetised savings, or the rationale for why none could be achieved, should be recorded in the published review report. ↩