Higher Education and Research Bill

Lord Mendelsohn Excerpts

Report: 4th sitting (Hansard): House of Lords
Wednesday 15th March 2017 Lords Chamber

[Lord Broers (CB)]

My Lords, I compliment the noble Viscount, Lord Younger, and the noble Lord, Lord Prior, on their willingness to talk about these issues and on the changes that have been brought about in the Bill. In the end, it has been a very positive experience. I too would like to support Amendments 164A and 166A, tabled by the noble Lords, Lord Mendelsohn and Lord Prior, as they resonate with the opinion that I expressed on Report. Those points have reached a satisfactory conclusion.

[Lord Mendelsohn (Lab)]

My Lords, in Committee certain clear governance gaps were identified which the Government have addressed in some measure, and we thank them for their positive response. Indeed, we have signed the government amendments and we are pleased that such a positive response has been forthcoming. We would like again to associate ourselves with Amendment 165A tabled in the name of the noble Lord, Lord Sharkey, which addresses the important point about the valuable contribution which can be made by lay members.

Amendments 164A and 166A tabled in my name propose that each council should comprise a senior independent member alongside an executive chair and the other council members. This would ensure an element of independence and balance in the governance of the council, complementing the role of ministerial appointees. We believe that there is still a weakness in the governance of the research councils with the establishment of executive chairs and the UKRI governance structure. We also feel that without a proper governance role, the membership of research council boards will be denuded of talent if they believe that they are not part of an effective operating board. In Committee we discussed whether appointing chairs to research councils might address this weakness, and Amendments 164A and 166A, as the noble Lord, Lord Broers, has just pointed out, mark an evolution in the debate.

We believe that this is a sympathetic and effective change which is consistent with the Government’s objectives and is likely to benefit the governance of research councils. The senior independent member is modelled on the practice in public companies of having a senior independent director. The title in this case is “member” specifically to ensure that the role is not confused with the duties of a director, which would raise structural issues that are not appropriate to the Bill. In the private sector, appreciation of the important role played by the senior independent director has grown in recent years. It was introduced in 2003 at the time of the Higgs review of the combined code, and the idea was that the senior independent director should be available to shareholders if they had reasons for concern that contact through the normal channels of the chairman and the chief executive had failed to resolve. Over time that remit has changed and the senior independent director is seen as a versatile intermediary who is in part ambassador, conciliator, counsellor, senior prefect and kingmaker. Most importantly, it establishes an address that stakeholders are able to go to and takes away the sometimes divisive politics of trying to find an appropriate address.

It is in this area that the role would be most useful in the context of UKRI. The senior independent member would ensure that there is a recognised channel to use from the level of the board of the research council to the board of UKRI to make sure that matters can be solved and conflicts and issues resolved. It is about not establishing new lines of management but creating a governance structure which is flexible enough to resolve issues as they arise. We have not set out a detailed role or job description, and certainly the latter is not appropriate for legislation, but there is flexible scope to ensure that such an individual can play a useful role in many different circumstances, from deputising in situations to leading aspects of succession processes to reviews of board effectiveness and other such matters. I hope that the Minister will see this amendment as a useful and flexible suggestion.

[Lord Prior of Brampton]

My Lords, first, I thank the noble Lord, Lord Mendelsohn, for not pressing his amendment requiring a shared OfS and UKRI board member with at least observer status. While I do not think that such arrangements need to be put on the face of the Bill, I recognise absolutely the value of establishing such a link between the OfS and UKRI boards. As such, I am pleased to be able to confirm that the chairs of both the OfS and UKRI would welcome an observer of each other’s organisations at their respective board meetings.

I turn now to Amendment 165A. The noble Lord, Lord Mendelsohn, and the noble Lord, Lord Willis, drawing on his experience as a member of the Natural Environment Research Council, have previously outlined the value of lay members, and they have been supported today by the noble Lords, Lord Sharkey and Lord Krebs. Although in the future appointments to councils will be a matter for UKRI, I should like to take this opportunity to make it clear that the Government have the full expectation that the current practice regarding lay member representation will continue and we will commit to reflecting this in guidance to UKRI. Perhaps I should add in passing that the number of 12—the Goldilocks solution—reflects best practice advice from the Cabinet Office. I cannot recall what the code says on numbers, but 12 is a manageable figure. If a board is much larger than 12 members, it becomes much more difficult for it to be effective.

The idea of a senior independent member was raised in Committee by the noble Lord, Lord Broers, and described just now by the noble Lord, Lord Mendelsohn. I really cannot add to his description of the sometimes critical role in acting as a very important channel, in this case to UKRI from council members. That could be extremely important. I have some words here about the senior independent council member, but given the way the noble Lord has set out the role, I feel that I no longer have to do so; I will simply agree with what he said.

Having discussed the issue with the chair and chief executive of the future UKRI, I am pleased to be able to confirm that a member of each council will be appointed as the senior independent council member. This does not need to be set out in the legislation, not least because the amendment would result in an additional member of each council beyond what I believe to be a reasonable and workable number. Instead, I can commit to making this a permanent feature of the organisation through setting the role out clearly in the governance documentation for UKRI. I therefore ask the noble Lord not to press his amendment.