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Demystifying the role of NEDs in the public sector

Author: ICAEW Insights

Published: 21 May 2024

Chartered accountants possess many of the skills required to be an effective NED in the public sector. We explain what the role entails, how interested members can find vacancies and why they are so desperately needed.

With a UK general election looming, the ICAEW manifesto calls for the next government to make it mandatory for a local authority audit committee to have an independent chartered accountant on board. But across the public sector more broadly, chartered accountants have much to contribute to the governance of public bodies.

Being able to act with integrity and objectivity, possessing intellectual curiosity and professional scepticism, and having levels of financial expertise that enable effective decision making – these common attributes of chartered accountants make them the perfect candidates to sit on boards as independent non-executive directors (NEDs).

At the same time, strengthening good governance in the public sector has never been more important, against a backdrop of many high-profile failures in governance, particularly across local authorities, over the last couple of years. Analysis has revealed that a lack of effective scrutiny and challenge were common features across many of the failures.

What is the role of a NED in the public sector?

In the public sector, a non-executive director (or a non-executive board member) sits on the board of central government departments, their arms-length bodies, and local authorities.

According to the code of good practice for Corporate Governance in central government departments (the Code), a board should “operate collectively, concentrating on advising on strategic and operational issues affecting the department’s performance, as well as scrutinising and challenging departmental policies and performance, with a view to the long-term health and success of the department”.

The Code specifies that the role of a non-executive board member is to provide influence and offer advice to both support and challenge the executive. Typically the remit will cover issues including:

  • support, guidance and challenge on the progress and implementation of the single departmental plan;
  • performance (including agreeing key performance indicators);
  • operational issues (including the operational and delivery implications of policy proposals);
  • adherence to relevant standards (eg, commercial, digital);
  • effective management of the department; and
  • the recruitment, appraisal and suitable succession planning of senior executives within the principles set out by the Civil Service Commission.

In central government, a board should meet a minimum of four times a year. NEDs may also sit on other committees, such as an audit and risk committee or a nominations committee, or take part in independent capability reviews as part of their role.

While the Code specifically applies to central government bodies, the NED role is broadly similar in a local government context; essentially it is an independent person being expected to exert influence, provide advice on key matters, and offer appropriate challenge to the board where required.

What skills are required?

While the Code does not provide a specific list of skills or qualities for a NED, it does specify that non-executive board members will be experts from outside government, and that they “will come primarily from the commercial private sector, with experience of managing large and complex organisations”.

This is not to say that all appointments will be made from the private sector, as the Code also suggests that a department should aim to ensure “that there is at least one non-executive board member with substantial experience in the public and/or not-for-profit sectors”.

However, a recent report by the Public Administration and Constitutional Affairs Committee on The Role of Non-Executive Directors in Government highlighted a standard set of required skills or qualities, which recent advertisements for NEDs in government have included. These are:

  • proven leadership in large and complex organisations, with main board-level experience;
  • experience of risk, performance, and financial management;
  • experience of leading major projects;
  • an understanding of the key challenges faced by the public sector, particularly around the efficiency agenda;
  • the ability to inspire confidence with a wide range of internal and external partners;
  • sound judgement and a high level of integrity; and
  • genuine interest in contributing to the effective running of the department.

Our members will possess many of the above skills and qualities, making them ideally placed to contribute as NEDs on the boards of public bodies.

How to become a NED in the public sector

Interested in becoming a non-executive director? Roles in central government are advertised on the public appointments website, which highlights a variety of roles across the UK in a range of different departments and arms-length bodies. Applications are encouraged from individuals of all backgrounds, with boards being most effective when the board membership brings a diverse set of skills. Our NED series outlines the appointments process relevant to central government entities.

Meanwhile, although there is no central repository for local government, vacancies can be found on the individual websites of local authorities, as well as on various jobs boards and throughout social media.

Further information

Supporting public finances

In its Manifesto, ICAEW sets out its vision for the next UK government, including the need for a long-term fiscal strategy for the public sector.

Manifesto 2024: ICAEW's vision for a renewed and resilient UK

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Learn more and register your interest in ICAEW's Student Mentoring Programme.

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