The process of seeking assurance for arm’s length bodies (ALBs) is a journey, and not a process by which we can achieve perfection. 

It’s important to have the basics in place. This includes a code of governance, a clear demonstration of value and a variety of mechanisms to measure performance including public feedback and data. It is then important to have a diverse range of board members, and for ALBs this usually includes having a mix of public and private sector experience.

Formal assurance often comes from detailed risk management processes and a strong audit and risk function. Risk registers work at their best when being lived through the organisations. For board members, it is important to be able to trust what you are being told but also able to triangulate what you hear with other staff members

Risk management of course requires you to accept a certain level of risk, but for ALBs this can be hampered by caution of your department or Minister. An interesting related question is what to do with risks that can’t be significantly reduced. The public’s perception of such an approach to risk may not be positive.

There exists a hierarchy of assurance depending on the nature, and needs, of different stakeholders. For example, there can be a balance between the needs of the public and assurances required by Ministers. NAO reports often provide good analysis of this balance. The recent example of DWP implementing the new payments system at the onset of the global pandemic highlights how this can effectively be managed.

How do you measure value of your work, in particular beyond specific analysis of value for money?

An organisation’s value clearly varies by stakeholders, and evolves, so continuously needs to be analysed. The healthcare sector provides an interesting case where value and performance could be determined by potentially very different measures including clinical outcomes, patient experience or regulatory ratings.

Complaints are a powerful mechanism to hear the public voice and verdict of your performance.

An interesting case study is how small ALBS with large responsibilities, working with much larger, high profile organisations, can add value and assure these stakeholders of their value. To do this it is important to have a strong evidence base to back up sometimes difficult decisions. Such organisations will need to have a high quality, small team, with little space for underperformance. Board effectiveness reviews are vital, and, as with all organisations, it is often helpful to get an external perspective on this.

It is important to benchmark performance, in particular with similar types of ALB but also sometimes those that are very different.

NAO reports provide a wealth of information of how other ALBs operate, including where and how things go wrong. This can prove a valuable way to learn where things have gone wrong before and so avoid similar mistakes.

We can also learn from other sectors and how they are evolving and how boards are responding. In the university sector there is a key focus on defending autonomy. Autonomy leads to innovation, which with the right assurance promotes the value of autonomy. Over the last few years there have been significant changes in the higher education regulatory environment and boards did not know where policy was going. At times there was a sense that autonomy was being eroded. In some cases board members lost confidence in how to seek assurance in the context of the new environment, and there was a sense of loss for what was in place before.

In the healthcare sector, boards work in an environment where the requirement for assurance is critical, being accountable to multiple regulators and at times patients. Working in the context of delivering BAU, the massive Covid response and upcoming policy changes, the nature, shape and accountabilities in healthcare are changing significantly. Autonomy and accountabilities of hospital trusts are now less clear. During the pandemic colleagues have seen greater central control, and at times autonomy has been partially suspended. However, at the same time trusts do not need to seek permission so often and more finance has been released.

The environments in which we operate are continuously changing and it is therefore important that our assurance mechanisms keep up with these changes.

Thank you to Nick Markham, Chair of London Continental Railways and Lead Non-Executive at DWP, Alison Johns, CEO at Advance HE, George Jenkins OBE, Chair of the Single Source Regulation Office and Saffron Cordery, Deputy Chief Executive at NHS Providers for joining our panel.