Strategic commercial interventions - initiating companies in public ownership: standard operating procedures - part 1

Annex A

Extract from Public Bodies in Scotland guide

Executive Non-Departmental Public Bodies (NDPBs)

Description:

• NDPBs, unlike Executive Agencies and NMOs, are not part of SG or the Scottish Administration. They conduct administrative, commercial, executive, or regulatory functions on behalf of Government; and operate within a framework of governance and accountability set by Ministers.
• Executive NDPBs conduct administrative, commercial, executive, or regulatory functions on behalf of Government. They are normally established by statute; they employ their own staff, who are not civil servants, and manage their own budgets; and are accountable to a board whose members are normally appointed by Ministers

Functions of NDPBs are such that:

• it is appropriate for Ministers to set the strategic framework for the body and remain ultimately but not directly responsible for the services it provides, as opposed either to bringing it under more immediate Ministerial control or transferring the function or service to a private sector body, contracting it out, or abolishing it
• the functions or services in question require specialist knowledge or expertise which civil servants would be unable to provide
• there is a need for a body to provide independent, expert advice to Ministers
• the services in question should be provided by a body which is responsible for taking its own decisions without political influence or interference

Characteristics:

• operate within a Strategic Framework set by Ministers
• have their own legal identity i.e. are established by statute or set up as companies Ltd by guarantee
• conduct administrative, commercial, executive, or regulatory functions on behalf of SG
• provide specialist advice to Ministers and others
• headed by a Board which is appointed by Ministers
• a body corporate, staff are employed by the body and are not civil servants
• allocated and manage their own budgets

Accountability:

• directly accountable to Ministers, and through Ministers to Parliament
• Chief Executive is designated as the Accountable Officer
• Accountable Officer responsible for the use of resources but Ministers remain accountable to the Parliament for the allocation of public funds
• Board holds the Chief Executive to account
• Ministers accountable to Parliament for the functions and performance of the body and have the power to wind it up (subject to Parliamentary approval (as required))
• the relationship between Ministers, SG and the NDPB is set out in the relevant legislation and the Management Statement/Financial Memorandum
• most NDPBs funded by Grant-in-aid (some are funded through sectoral levies) and receive an annual guidance letter
• subject to relevant guidance issued by Ministers e.g. the Scottish Public Finance Manual
• Ministers agree Corporate and Business plans and appoint (and can remove) Board members
• subject to a general or specific Ministerial power of direction (with appropriate safeguards in certain circumstances)
• prepares its own annual reports and accounts which are presented to Ministers and laid in front of Parliament

Public Corporations

Description:

• Public corporations are industrial or commercial enterprises under Government control which recover more than 50% of their costs through fees charged for services provided to customers.
• They employ their own staff, who are not civil servants, manage their own budgets and report to a Board whose members are appointed by Ministers.
• Bodies are normally established as public corporations if they operate in a commercial environment or work closely with private sector providers.

Characteristics:

• operates within a strategic framework set by Ministers
• are established by statute or under the Companies Act
• are industrial or commercial enterprises, trading bodies, under direct control of Scottish Ministers
• Ministers appoint (and can remove) the Board
• headed by a Board whose members are appointed by Ministers
• a body corporate, staff are employed by the body and are not civil servants
• allocated and manage their own budgets

Accountability

• directly accountable to Ministers, and through Ministers to Parliament
• Chief Executive is designated as the Accountable Officer
• Accountable Officer responsible for the use of resources but Ministers remain accountable to the Parliament for the allocation of public funds
• board holds the Chief Executive to account
• Ministers accountable to Parliament for the functions and performance of the body and have the power to wind it up (subject to Parliamentary approval (as required))
• relationship between Government and the Body set out in an appropriate Framework document
• provided loans from Government
• subject to relevant guidance issued by Ministers e.g. the Scottish Public Finance Manual
• Ministers agree Corporate and Business plans
• subject to a general or specific Ministerial power of direction (with appropriate safeguards in certain circumstances)
• prepares its own annual reports and accounts which are presented to Ministers and laid in front of Parliament