Hancock affair highlights opaque world of Whitehall non-execs

When former UK health secretary Matt Hancock was forced to resign after it emerged he was having an affair with a non-executive director in the department, longstanding friend Gina Coladangelo, senior Whitehall figures raised concerns about the appointments process for these roles.

Non-executive directors, known as NEDs, are routinely appointed to provide advice and support to ministers and their departments, but also challenge them and provide oversight and scrutiny.

Over the past year, the Johnson government has installed a series of politically like-minded NEDs to oversee major Whitehall departments to further its efforts to reshape the British state.

Officials are worried that some of the most recent appointments, such as Baroness Gisela Stuart, who chaired the Vote Leave campaign in the run-up to the 2016 Brexit referendum, have landed their roles simply because of their close Downing Street connections. This in turn has prompted questions over their independence and ability to scrutinise and challenge government policy.

“There has been a lot of placement of political cronies,” said one former senior non-executive. “Number 10 has taken a close interest in it for the past year and a half. It has to approve everything.”

“There’s no doubt they’re installing more Conservatives across Whitehall to reshape the culture,” one official said of the process, which is overseen by the Cabinet Office under Michael Gove.

One minister admitted as much. “It makes sense to have NEDs that are aligned with our objectives,” they said. “It helps bash the civil service into shape and stops the Whitehall groupthink from taking hold.”

NEDs were introduced to Whitehall in the 1990s to improve departmental oversight and bring further private sector expertise to the civil service. In 2005, departments were instructed by the civil service code to have at least two such positions on their boards. There are now around 70 across Whitehall.

The well-paid roles offer unique access to the top of Whitehall decision-making, although they are far from being full-time occupations.

According to research by the Constitution Unit at University College London, the average term for these positions is 42 months with the position requiring 20 to 35 days of work per year. The typical salary is £15,000, rising to £20,000 for lead non-executive directors.

NEDs are often enlisted to carry out work that needs to be handled at arm’s length. Lord Jonathan Hill, who serves on the Treasury board, wrote a report on how to improve the UK’s company listing regime, for example. Nigel Boardman, the former Slaughter and May lawyer who sits within the business department, will chair the inquiry into the Greensill lobbying scandal.

Non-executive directors, both past and present, told the Financial Times that securing their roles was heavily dependent on the minister in charge. Applications typically went through an appointments panel, but the final decision normally lay with the minister. “The rules were always there to be got around,” said one former appointee.

One senior civil servant described NEDs as “useful” but admitted that “the appointment process is an utter shambles”. They added: “Nobody’s bothered to take a proper look because they tend to not cause too much trouble.”

The Cabinet Office said that under successive governments “non-executive board members bring important expertise and experience from all sectors to provide advice, scrutiny and challenge to government departments”.

“There are robust policies in place for the governance of departmental boards, as set out in the corporate governance code and code of conduct for non-executive directors,” it added.

Many of the recent appointments to departmental boards share the government’s pro-Brexit views. Stuart was appointed a NED at the Cabinet Office in May 2020. She was joined by Henry de Zoete, another former Vote Leave campaigner who had previously been a special adviser to Gove.

One Cabinet Office insider stressed that the recent non-executive appointments to its board were “advertised openly and publicly, with fair and open competition”.

Nick Timothy, who served as former prime minister Theresa May’s highly influential chief of staff in Downing Street, was appointed as a NED at the Department for Education in April last year. Ben Goldsmith, brother of environment minister Lord Zac Goldsmith, is on the board of the Department for Environment, Food and Rural Affairs.

At the Department for International Trade, former UK Independence party MP Douglas Carswell joined the board in December 2020 along with Dominic Johnson, a former treasurer of the Conservative party and business partner of cabinet minister Jacob Rees-Mogg.

Baroness Helena Morrissey, a prominent City figure and Brexit campaigner, was made the Foreign, Commonwealth and Development Office’s lead non-executive director last year. Eleanor Shawcross-Wolfson, a former aide to Conservative chancellor George Osborne, is a NED at the Department for Work and Pensions.

The government has also attracted a wide range of top City and industry executives over the past decade to non-executive roles. These include Ann Cairns, vice-chair at payments company Mastercard, and former Rothschild banker and GE Capital executive Charles Alexander.

Jill Rutter, a former senior civil servant and now a politics research fellow at King’s College London, argued that non-executive positions could be useful both to departments and ministers but they needed to be better regulated with a formal appointments process.

“There does seem to be quite a lot of odd political appointees recently. The problem is that the process is entirely in the hands of ministers, they’re not regulated public appointments. It’s a very murky area.”

She added that the roles were conceived to introduce more commercial experience to Whitehall. “They were designed to bring more management nous and help mediate relationships between departments and ministers, especially those who don’t have a commercial background. With proper regulation and transparency, they could add real value.”

One concern, however, is whether non-executives can carry out lobbying on behalf of their business or corporate contacts. This problem was highlighted recently by the financier Lex Greensill, who served in an unpaid advisory role within Whitehall and then as a crown representative, rather than a NED.

Some City figures contrast the loose rules on government appointments with the tighter regulations for listed companies. FTSE 350 companies are covered by the UK corporate governance code, while standard principles of an appointment process include a transparent search process led by an independent body and declarations of conflicts.

Tom Gosling, executive fellow of Centre for Corporate Governance at the London Business School, said a FTSE chief executive would not normally have a veto on the appointment in the way a secretary of state often does, and normally would not lead the appointment process. 

“However, it’s standard even on things like pay review bodies for ministers to have the right to veto an appointment.”