Understanding Boardroom Capital and its Impact on Governance

1. The importance of boardroom capital on perceived expertise Dave Griffiths University of Stirling

2. Structure What are quangocrats? How do they govern? What do they govern? How do they gain positions?

3. What are quangos? “the large range of bodies of appointed, non-elected, non-civil service people running things, overseeing things, or advising about things, and usually spending or controlling public money” (Andrew Marr, Ruling Britannia, 1995) or: governmental bodies which provide a civil service independent of the Civil Service

4. Conservative’s use of quangos http://www.conservatives.com/News/Speeches/2009/07/David_Cameron_People_Power_-_Reforming_Quangos.aspx • “But it would be naïve to think that every state action can be undertaken by democratically accountable ministers acting through government departments. The political process has its limitations, and there are circumstances where it makes sense for ministers to delegate power to an independent body. The overriding test for this should be clear: it is whether the execution of policy should be subject to political influence. Where it is not, it is right to keep execution at arm's length.  And there are three particular areas where the public would want reassurance that actions, decisions, or the provision of services are insulated from political influence.”

5. What Cameron believes should be controlled by quangos “The first is when a precise technical operation needs to be performed to fulfil a ministerial mandate. In these circumstances the public needs to know that people with the right training, professional knowledge and specialist skills are carrying out the work.” “The second area where it may be right to delegate power to an independent body is when there is a need for politically impartial decisions to be made about the distribution of taxpayers' money. In areas like the arts and science, the public expects funding on merit, not favouritism.” “The third area where there is likely to be a need for independent action is when facts need to be transparently determined. We have seen how information, once in a politician's hands, can be distorted to score a political point. A freeze becomes a zero percent rise. Cuts in capital expenditure become increases. Of course this has not been the preserve of any particular government, at any particular time.” http://www.conservatives.com/News/Speeches/2009/07/David_Cameron_People_Power_-_Reforming_Quangos.aspx

6. Boardroom decisions • Quango distracters have long argued decisions are more commonly made in theatres (Jenkins 1996) and tennis clubs (Sampson 2001) than boardrooms • Stevenson and Radin(2009) – board meetings are places to formalise decisions made elsewhere, often highly influenced by those with connections to other institutions and networks of directors • Well-established literature on benefits of sitting in Inner Circle (Useem 1985), for directors (Scott 1982) and corporations (Carroll 2009)

7. Bourdieu and capitals • Four principal capitals are: economic; social; cultural; and symbolic. • Symbolic can be adapted towards any framework • Cultural capital can refer to the cultures and trends of certain situations • Social capital can refer to knowing the right sort of people • Therefore, we can create the notion of boardroom capital, encompassing all these things

8. Boardroom capital Knowledge of how boardrooms operate Knowledge of practices and trends moving throughout boardrooms Ties to networks of other directors – peer support opportunities Operating as a member of the ‘governing classes’

9. Research question • Are quangos governed by the public, by experts, or by members of the governing classes? • By experts = Cameron’s vision of effective governance • By the public = Fulfilment of their democratic function and non-partisan ethos • By governing classes = delegation of power and resources to higher strata groups, at expense of wider public involvement

10. Quangos covered Ombudsmen = independent authorities holding sectors to account on behalf of general public Regulators = independent authorities holding sectors to account on behalf of practitioners

11. List of quangos and number of board members Ombudsmen Regulators Architects Registration Board 14 British Hallmarking Council 23 Civil Aviation Authority 7 Consumer Council for Water 12 Energywatch 9 Gambling Commission 8 Gangmasters Licensing Authority25 General Teaching Council 63 Horseracing Betting Levy Board 8 National Consumer Council 11 Ofcom 7 Passenger Focus 14 Pension Protection Fund 6 Postwatch 13

12. Data collected Data collected as at 1st January 2007 Taken from quango’s websites, annual reports and registers of members’ interests Biographical directories (such as Who’s Who) also used Details of any institutions governed, regardless of their type, coded

13. Data in sample 217 individuals Only 3 sitting on multiple boards 144 govern other organisations 37 currently share additional positions on other boards 159 have previously governed organisations 67 have served on the same boards previously

14. Multiple outside ties Air Travel Trust Civil Air Authority (2 members) Association of Consultant Architects Architects Registration Board (2 members) Association of Teachers and Lecturers General Teaching Council (2 members) Birmingham Assay Office British Hallmarking Council (3 members) British Transport Police Passenger Focus (2 members) Edinburgh Assay Office British Hallmarking Council (3 members) Food Standards Agency National Consumer Council (2 members) NASUWT General Teaching Council (4 members) Norfolk, Cambridgeshire and Suffolk Strategic Health Authority Passenger Focus (two members) Office of the Deputy Prime Minister National Consumer Council (2 members) Responsibility in Gambling Gambling Commission (2 members) Sheffield Assay Office British Hallmarking Council (2 members) Trading Standards Institute British Hallmarking Council (2 members) Trefoil House British Hallmarking Council (2 members)

15. Other links between quangos DTI Civil Aviation Authority & Gangmasters Licensing Authority Financial Services Authority British Hallmarking Council & Ofcom GMB Gangmasters Licensing Authority & National Consumer Council General Medical Council Consumer Council for Water & Postwatch ICSTIS National Consumer Council & Ofcom Local Government Association Gangmasters Licensing Authority, General Teaching Council, National Consumer Council & Passenger Focus National College for School Leadership General Teaching Council & Postwatch NSPCC Horseracing Betting Levy Board, National Consumer Council & Passenger Focus

16. Current roles Bonded connections within institutions Stakeholder influence appears to be strong in terms of multiple positions Little evidence of quangocrats currently sitting on same boards No signs of nepotism or ability for directors to share information between themselves Very weak connections between directors – largest component only 5

17. Network analysis 159 directors have previously governed organisations 37 connected in largest component of mutual ties

19. Previous roles Experience of governing one board appears important for gathering new positions No signs of centres to the network, nor cliques, just that governing is important Absence of voluntary and arts organisations demonstrates power and influence does not come from those positions Relatively small size of component (37 of 217 individuals) suggests these are largely individuals who do not know each other and hold few ties

20. Statistical Approach Graphs for number of ties for each organisation Graph for relevant subject ties Graph for relevant ombudsman ties Overall levels of capital Overall levels of relevance Connections which occur

21. Levels of Social Capital by Board

22. Social capital and quango ties

23. Positions on related quangos

24. Connections to types of organisation Types: quangos; companies; charities; educational bodies; professional institutions.

25. Levels of capital These directors are well-versed in governance capital They have much depth to their capitals, covering voluntary and arts organisations as well as public bodies As a general rule, their connections to quangos are on different issues to their current role, but their connections to outside agencies are similar Does this suggest quangos are a way for experts to access an inner circle of the governing classes?

26. Ofcom directors with relevant ties Millie Banjeree: board member for Postwatch and Commission for Judicial Appointments; trustee of Carnegie UK Trust; board member of Tanaka Business School at Imperial College; previously sat on the boards of Channel 4, Prisons Board, Sector Skills Development Agency and Strategic Rail Authority; formerly CEO of ICO Global Communications and a director at British Telecom.

27. Ofcom directors with relevant ties Sara Nathan: board member of Criminal Injuries Compensation Appeals Appeal, Human Fertilisation and Embryology Authority, ICSTIS, Judicial Appointments Committee and Marshall Scholarships; advises Animal Procedures Committee and Financial Services Authority; formerly Children First’s Commissioner for Lambeth, and board member of Criminal Injuries Compensation Appeal Tribunal and Gambling Review Body; board member of the Jewish Museum; former producer of The Commission for BBC Radio 4, editor of Channel 4 News and programme editor for BBC Radio 5 Live.

28. Industrial standards boards Only unconnected tie for Gangmasters Licensing Authority is a directorship of a local tennis club Only one member of Architects Registration Board holds positions outside of the industry

29. Nature of social capital For consumer protection agencies, governance capital is essential Ombudsmen have diverse social capital, even if representing stakeholders (representatives of the sector within the elite) For industrial protection agencies, governance capital from within the sector is essential Governing other organisations an hinderence for such positions

30. Conclusion • Quangos are ruled by members of the governing classes – but differences between types of body • For consumer protection, representatives of the governing elite govern. For agency protection, the sector elite govern • This questions the degree to which these quangos are independent, and the extent to which they are merely controlling things themselves. • But, quangos should not be viewed as all being the same.