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Developing governance by building on good practice: a green paper issued by the University Council

Summary

1. This is a green, consultative, paper issued by the Council for widespread informal comment. It is not a Report to the University. If proposals for development emerge, they will be the subject of Report to the University, Discussion, and if necessary legislation, in the ordinary way. The Council decided to issue such a green paper at its strategic meeting in September 2006 and has considered the draft at meetings in the Lent Term 2007. In the paper the Council sets out the foundations on which it believes our governance as a University should rest (paragraphs 2 to 5); an account of present governance arrangements and changes recently made and in course (paragraphs 6 and 7); an indication of further changes which the Council believes should be considered (paragraphs 8 to 12); and a brief comment on other, longer term, issues which have arisen in the course of discussions (paragraph 13). Background information is referenced at paragraphs 14 and 15. The Council seeks comments on the matters raised in this paper and on the specific questions at paragraph 16.

The Council's approach

2. Our governance arrangements are not an end in themselves but, rather, support the successful pursuit of the University's mission 'to contribute to society through the pursuit of education, learning, and research at the highest international levels of excellence'. The essence of our governance is academic self-government, with proper arrangements for clear internal and external accountability, timeliness of decision-making, and the inclusion of a healthy diversity of experience, expertise, and roles among those individuals in the 'governing committees' and in the Regent House.

3. A good background to the approach is provided by the introduction to the report of the working party (see box) convened by the Master of Emmanuel (2006) (the Wilson report: for full text see reference at paragraph 15).

THE GOOD GOVERNANCE OF CAMBRIDGE UNIVERSITY: WILSON REPORT

Introduction

1. The objective of good governance in Cambridge is the long-term prosperity of the University as a world-class institution on the basis of excellent research, outstanding teaching and academic freedom. We have been asked to consider whether the present institutions and processes of the University serve this objective well. What follows has not been the subject of wider consultation and is offered on a personal and informal basis.

2. We have approached the task with the following points in mind.

3. First, the University is not an island. It cannot be careless of outside opinion and pressures. Benefactors need to be satisfied that their gifts are used well. Research sponsors must know that grants are used efficiently for the purpose intended. Governments and the public have an interest in the contribution of higher education to national life. The University needs the support of all of them. The University's pre-eminence sets it up for scrutiny and any failings in governance could damage its reputation.

4. But second, the University's governance should be tailored to its needs. The University is not a multinational corporation but a self-governing body of scholars who, though employees, have the independence of academic freedom. The University should learn from the experience of others but should also remain true to its own enduring values and culture which have been remarkably successful. Part of this success can be attributed to the way in which the University liberates the energies of those who do research and teaching without over-burdening them with a centralised hierarchy. The result is a degree of commitment and motivation which most organisations would envy.

5. Third, we have been selective and have considered only some aspects of the University governance. We have not duplicated the work of such exercises as the Sutherland Committee on the arrangements for voting in University elections or the review of the roles and responsibilities of Chairs and Councils of the Schools. Nor have we trespassed on management matters although governance and management are often intertwined. More generally, we are conscious that 'governance' means different things in different contexts as the Higgs and other reports show. We believe the right approach is to aim at continued steady progress which builds on what Cambridge has already achieved recently, for instance by introducing external members on its Council, increasing the number of Pro-Vice-Chancellors and raising the number of academics required to call a ballot of Regent House. A systematic overhaul of institutions and processes from time to time may be helpful, but box-ticking for its own sake would be a waste of time.

6. Finally, we have borne it in mind that adherence to good governance is no guarantee of good decisions. It may support them and increase the chances of their happening, and it can reduce reputational risk. But governance is at most the handmaiden of success and the two should not be confused.

4. The seven principles identified by the Committee on Standards in Public Life (selflessness, integrity, objectivity, accountability, openness, honesty, and leadership) provide a proper basis for University government, the conduct of our academic affairs and our business (see Annex 1). These principles are shared by many organizations. The way in which they are embodied in structures of governance varies considerably, however. The Council believes it is important for the University to be open to ideas drawn from the range of models of governance available. Indeed, there are models of governance in other sectors (e.g. professional partnerships, public companies, charitable trusts) from which we may draw useful lessons.

5. The primary criteria by which the Council believes a change in governance should be accepted are that it enhances our ability, through academic self-government, to maintain, improve, and develop the University's capabilities in education, learning, research, and the custody of resources, and to honour the Nolan principles. The five major functions that our governance arrangements must deliver are seen by the Council to be:

Clear internal accountability

Clear external accountability

Avoidance or management of conflicts of interest

Timeliness of decision-making

A diversity of views informing decisions

Changes already made

6. Adopted changes arising from the work of the Wass Syndicate enabled the University to appoint a full-time Vice-Chancellor for seven years separate from any other University or College office; to develop the responsibilities of the Council as the principal executive and policy-making body of the University; and to establish the Board of Scrutiny. Since then, a number of further significant changes have been made:

(i) The number of Pro-Vice-Chancellors - academic leaders at the centre of the University - has been increased to form a team of five, and more structured arrangements have been introduced for co-ordinating their work with that of the central bodies and their policy-making committees.
(ii) The proceedings of the central bodies, beginning with the Council and followed by the General Board and the Finance Committee, have become more strategic and focused. In part, this has been achieved by the Council and the Board having periodic meetings separate from the regular business meetings. In the Council's case these focus on strategy for major questions facing the University, and in the Board's particularly on the long-term academic and financial plans of the Schools and other institutions. The Business Committee of the Council and the increased use of circulation for the approval of routine business (or the preparation of other business) have increased the Council's efficiency, without removing the opportunity for individual members of the Council to participate in this work, or to take particular business to a full meeting.
(iii) The structure of Council Committees has been made more flexible, by removing the previous statutory obligation to appoint an Executive Committee and a Consultative Committee, and improved by giving a necessary statutory basis to the Council's Audit Committee. (The Executive Committee has been retained as a non-statutory Committee dealing mostly with legal and ethical matters.)
(iv) Two places for external, independent members on the Council have been established by Statute, one of whom must chair the Audit Committee. The first members appointed have now been in office for two years of a four-year term. The University benefits greatly from this voluntary service and the comparable service of independent members of the Finance Committee, the Audit Committee, the Buildings Committee, and the new Investment Board. The University has good reason to be grateful to these members and to appreciate their significant commitment of time.
(v) The management of conflict of interest, actual or perceived, has been made more explicit by the introduction of a Register of Interests (available for consultation through the Registrary) for the members and senior officers of the Council, the General Board, and their principal committees including the Audit Committee, the Finance Committee, the Investment Board, the Planning and Resources Committee, and the Buildings Committee. The Register complements the requirement in the University Financial Regulations for individuals to declare interests relevant to specific items of business.

Current changes

7. A number of other changes have been proposed recently and are at various stages of consideration or implementation:

(i) The Council and the General Board, after extensive consultation, have reported to the University about the role and responsibilities of the Councils of the Schools and their chairs, proposing codification and modernization of the relevant Statutes and Ordinances and, in particular, proposing arrangements which would permit the chairs as Heads of the Schools to devote more time to this important work, while maintaining some presence in University teaching and research. (The Report was discussed on 23 January 2007 and a Notice in reply will be submitted in due course.)
(ii) A statutory amendment has been made, following a Report, to clarify provision for delegation by confirming that a body may explicitly delegate duties to an individual as well as to a committee; the Report also proposed updating of some review procedures (Statutes K, 2 and K, 5). This amendment is before the Privy Council.
(iii) Arrangements for voting in the University, especially in the Regent House, have been revised and in some respects simplified and modernized; the introduction of electronic voting is under consideration.
(iv) The Council is also introducing other working changes. A code of practice for members of the Council, in addition to existing procedural Standing Orders, has been approved and will soon be published. It will also serve as a guide for other bodies in the University. A guide to University procedures, and to University Committees, is in preparation and will be published and kept under review. Publication will be in the Reporter and on the web. A University business website is in development to make it easier to locate material, and to supplement existing consultative and participatory arrangements.

Possible further changes

8. The Council has been considering other matters about which it would welcome comments from within the University. The first is to strengthen the external membership of the Council. Another is to better manage the Vice-Chancellor's role as de facto chair of the Council and her accountability to the Council for her performance as Vice-Chancellor. The Chancellor of the University has the historic right of attendance and, if present, may chair the meeting: this is not affected by the possibilities referred to below. Recent Chancellors have not exercised this right.

9. The Council believes that substantial benefit to the University would be obtained by increasing the number of external members to four (but not more). This would enable a greater diversity of experience, expertise, and judgement to be present at the Council table than at the present, to the benefit of the Council's work. The Council believes that to go beyond four would be a mistake, for it would unbalance the Council (a relatively small body) in its role in conducting much of our academic self-government. The present two external members of the Council, Mr Nigel Brown and Lord Simon, indeed proposed to the Council that this judgement should be set out in the present paper.

10. The Council believes that the present accountability arrangements for the Vice-Chancellor, put in place by the present Vice-Chancellor, are sound, but they are ad hoc. At the beginning of each academic year, the Vice-Chancellor presents her goals for the year to the Council. At the end of the academic year, in the absence of other officers, the Vice-Chancellor reports on progress toward those goals and members of the Council question the Vice-Chancellor. She then withdraws, and members of the Council discuss the Vice-Chancellor's performance. Thereafter, a Council member designated by the Vice-Chancellor conveys the substance of the discussion to her. It is desirable that these ad hoc arrangements be provided for more formally. The Council further notes that the Vice-Chancellor's twin responsibilities, as Chair of the Council for the proper and efficient conduct of its business and as the University's principal officer leading the business of the University, may sometimes give rise to a further, different tension.

11. The Council has therefore considered two possible sets of arrangements for chairmanship of the Council, on which it seeks views:

(i) One would be for an external, independent member of the Council to chair the Council; this could be viewed as instituting a part-time chairmanship on the lines of arrangements adopted in some public and charitable organizations and companies.
(ii) The other would be for the Vice-Chancellor to remain as chairman but for one of the external members to be nominated as deputy chairman, taking the chair for identified business, particularly the 'accountability' meeting for the Vice-Chancellor, consideration of remuneration matters concerning the Vice-Chancellor and possibly some other senior officers, and procedures at meetings of the Council in selecting a new Vice-Chancellor (though this person would not necessarily chair the search or advisory committee).

12. The present statutory composition of the Council is set out in Annex 2. One of the two present external members is statutorily required to act as Chair of the Audit Committee and that person could not also act in either of the roles suggested at paragraph 11. If the other present external member were to take on the additional role, both could be committed to these chairman-type roles, to the detriment of other important activity as an external member of the Council. But if there were four external members this problem would be addressed.

13. Two other matters have been raised in the course of the Council's discussions, but they are simply noted here for the record as possible matters for future consultation:

(i) The progressive implementation of the new pay and grading structure, in which the titles of some posts may diverge from those specifically recognized for eligibility for membership of the Regent House, may require amendments of the Statutes and regulations. Questions have also been raised as to whether to take the opportunity to make substantive changes to eligibility.
(ii) Eligibility for class (c) of the Council (currently, but only since the changes arising from Wass Syndicate, restricted to members of the Regent House who are not Heads of House or Professors or Readers) could be reconsidered, as there are now more Professors and Readers in the University. There may be an argument for amalgamating class (b) (Professors and Readers) and class (c) (other members of the Regent House).

Background information

14. The following documents are annexed to this paper as background and for information:

The statement of the Seven Principles of Public Life prepared by the Committee on Standards in Public Life chaired by Lord Nolan (Annex 1);

The present composition of the Council (Statute A, IV, 2) (Annex 2);

The voluntary code on governance prepared by the Committee of University Chairmen and commended by HEFCE (Annex 3);

The statement of Cambridge corporate governance published by the Council with the Annual Accounts of the University, December 2006 (Annex 4).

15. In addition, the Council's recent discussions of governance and the preparation of this paper have been informed by the work of an advisory group set up by the Vice-Chancellor, consisting of Lord Wilson of Dinton (Master of Emmanuel and member of the Council), who convened it, Professor Badger (Master of Clare and member of the Council), Professor Bell (member of the General Board), and Lord Simon (an external, independent member of the Council), with the Registrary and the Administrative Secretary. A descriptive and discussion paper produced by Lord Wilson after various discussions by the group has formed the basis for discussion by the Council at the strategic meeting in September 2006 and at several subsequent meetings. (The introduction is set out on page 595 of this paper.) The Council believes that the paper (although in some detailed respects already out of date) may be of interest more generally. It is available on the web at http://www.admin.cam.ac.uk/committee/council/. The Council emphasizes that the conclusions or proposals set out in the paper are not necessarily endorsed by the Council itself and that it is the propositions in the present green paper on which comments are invited.

Questions for comment

16. The Council seeks comments on the paper generally and these specific questions:

Question 1. Are you in general agreement with the Council's approach to governance matters for the University?

Question 2. Do you favour a limited increase in the number of external, independent members of the Council?

Question 3. If so, should there be four such members, or some other number?

Question 4. Do you agree with the establishment of an external chairmanship of the Council?

Question 5. If not, do you prefer the appointment of an external deputy chairman or are there other models that might be considered?

17. General comments, and responses to the specific questions above are invited from individual members of the University and from University institutions and authorities. They should be sent to the Registrary at the University Offices, The Old Schools (e-mail registrary@admin.cam.ac.uk) so as to reach him by 22 June 2007. All comments received will be published unless a specific request otherwise is made by the author. This paper is also available at http://www.admin.cam.ac.uk/reporter/2006-07/weekly/6071/.

18. The Council will consider all comments and responses received and expects to comment further, probably publishing proposals later in 2007, either as a further green paper or papers or as a Report or Reports to the University for Discussion in the normal way of University business, and if necessary legislation.

Annex 1

Committee on Standards in Public Life: the Seven Principles of Public Life

The Committee has set out 'Seven Principles of Public Life' which it believes should apply to all in the public service. These are:

Selflessness

Holders of public office should act solely in terms of the public interest. They should not do so in order to gain financial or other benefits for themselves, their family or their friends.

Integrity

Holders of public office should not place themselves under any financial or other obligation to outside individuals or organisations that might seek to influence them in the performance of their official duties.

Objectivity

In carrying out public business, including making public appointments, awarding contracts, or recommending individuals for rewards and benefits, holders of public office should make choices on merit.

Accountability

Holders of public office are accountable for their decisions and actions to the public and must submit themselves to whatever scrutiny is appropriate to their office.

Openness

Holders of public office should be as open as possible about all the decisions and actions that they take. They should give reasons for their decisions and restrict information only when the wider public interest clearly demands.

Honesty

Holders of public office have a duty to declare any private interests relating to their public duties and to take steps to resolve any conflicts arising in a way that protects the public interest.

Leadership

Holders of public office should promote and support these principles by leadership and example.

Annex 2

The present composition of the Council (Statute A, IV, 2)

2. The Council shall consist of the Chancellor, the Vice-Chancellor, nineteen elected members, and two appointed members in the following classes:

(a) four from among the Heads of Colleges;
(b) four from among the Professors and Readers;
(c) eight from among the other members of the Regent House;
(d) three from among the students in the University, of whom at least one shall be from among those certified by the Registrary to be graduate students;
(e) two persons appointed by Grace of the Regent House who at the time of appointment are not qualified to be members of the Regent House except under Statute A, III, 7(a)(ii), nor are employees of the University or a College, one of whom shall be designated by the Council to chair the Audit Committee of the Council.

Members in each of classes (a), (b), and (c) shall be elected by the Regent House in accordance with section 4(a) of this Statute and in a manner determined by Ordinance. Members in class (d) shall be elected by the students in the University in accordance with section 4(b) of this Statute and in a manner determined by Ordinance. Members in class (e) shall be appointed by Grace of the Regent House on the nomination of the Council; the arrangements for nomination shall be prescribed by Ordinance. For the purpose of this Statute the terms student in the University and graduate student shall be defined by or under Ordinance.

Annex 3

Voluntary code on governance prepared by the Committee of University Chairmen and commended by HEFCE

Guide for Members of Higher Education Governing Bodies in the UK

November 2004/40a

Part I Governance Code of Practice

Role of the Governing Body

This Code is voluntary and is intended to reflect good practice in a sector which comprises a large number of very diverse institutions. Institutions should state that they have had regard to the Code, and where an institution's practices are not consistent with particular provisions of this Code an explanation shall be published in the corporate governance statement of the annual audited financial statements.

1. Every higher education institution shall be headed by an effective governing body, which is unambiguously and collectively responsible for overseeing the institution's activities, determining its future direction and fostering an environment in which the institutional mission is achieved and the potential of all learners is maximised. The governing body shall ensure compliance with the statutes, ordinances and provisions regulating the institution and its framework of governance and, subject to these, it shall take all final decisions on matters of fundamental concern to the institution.

2. Individual members and governing bodies themselves should at all times conduct themselves in accordance with accepted standards of behaviour in public life which embrace selflessness, integrity, objectivity, accountability, openness, honesty and leadership.

3. The governing body shall meet sufficiently regularly, and normally not less than four times a year, in order to discharge its duties effectively. Members of the governing body shall attend regularly and actively participate.

4. The institution's governing body shall adopt a Statement of Primary Responsibilities which should include provisions relating to:

5. This Statement shall be published widely, including on the internet and in the annual report, along with identification of key individuals (that is, chair, deputy chair, head of the institution, and chairs of key committees) and a broad summary of the responsibilities that the governing body delegates to management or those which are derived directly from the instruments of governance.

6. All members should exercise their responsibilities in the interests of the institution as a whole rather than as a representative of any constituency. The institution shall maintain and publicly disclose a register of interests of members of the governing body.

7. The chair shall be responsible for the leadership of the governing body, and be ultimately responsible for its effectiveness. The chair shall ensure the institution is well connected with its stakeholders.

8. The head of the institution shall be responsible for advice on strategic direction and for the management of the institution, and shall be the accounting officer in respect of the use of Funding Council funds. The head of the institution shall be accountable to the governing body which shall make clear, and regularly review, the authority delegated to him/her as chief executive, having regard also to that conferred directly by the instruments of governance.

Structure and Processes

9. There should be a balance of skills and experience among members sufficient to enable the governing body to meet its primary responsibilities and to ensure stakeholder confidence. A governing body of no more than 25 members represents a benchmark of good practice.

10. The governing body shall have a majority of independent members, defined as both external and independent of the institution.

11. Appointments shall be managed by a nominations committee, normally chaired by the chair of the governing body. To ensure rigorous and transparent procedures, the nominations committee shall prepare written descriptions of the role and the capabilities desirable in a new member, based on a full evaluation of the balance of skills and experience of the governing body. When vacancies arise they should be widely publicised both within and outside the institution. When selecting a new chair, a full job specification should be produced, including an assessment of the time commitment expected, recognising the need for availability at unexpected times.

12. The chair shall ensure that new members receive a full induction on joining the governing body, that opportunities for further development for all members of the governing body are provided regularly in accordance with their individual needs, and that appropriate financial provision is made for support.

13. The secretary to the governing body shall be responsible for ensuring compliance with all procedures and ensuring that papers are supplied in a timely manner with information in a form and of a quality appropriate to enable the governing body to discharge its duties. All members shall have access to the advice and services of the secretary to the governing body, and the appointment and removal of the secretary shall be a decision of the governing body as a whole.

14. The proceedings of the governing body shall be conducted in as open a manner as possible, and information and papers restricted only when the wider interest of the institution or the public interest demands, including the observance of contractual obligations.

Effectiveness and Performance Reviews

15. The governing body shall keep its effectiveness under regular review. Not less than every five years it shall undertake a formal and rigorous evaluation of its own effectiveness, and that of its committees, and ensure that a parallel review is undertaken of the senate/academic board and its committees. Effectiveness shall be measured both against the Statement of Primary Responsibilities and compliance with this Code. The governing body shall revise its structure or processes accordingly.

16. In reviewing its performance, the governing body shall reflect on the performance of the institution as a whole in meeting long-term strategic objectives and short-term KPIs. Where possible, the governing body shall benchmark institutional performance against the KPIs of other comparable institutions.

17. The results of effectiveness reviews, as well as of the institution's annual performance against KPIs, shall be published widely, including on the internet and in its annual report.

Annex 4

STATEMENT OF CAMBRIDGE CORPORATE GOVERNMENT (Reporter, 2006-07, p. 267 )

CORPORATE GOVERNANCE

1. The following statement is provided by the Council to enable readers of the financial statements to obtain a better understanding of the arrangements in the University for the management of its resources and for audit.

2. The University endeavours to conduct its business in accordance with the seven principles identified by the Committee on Standards in Public Life (selflessness, integrity, objectivity, accountability, openness, honesty and leadership) and within the general principles of the Guidance to Universities which has been provided by the Committee of University Chairmen and its 'Guide for Members of Governing Bodies of Universities and Colleges in England, Wales and Northern Ireland'. Further information is given at paragraph 9 below.

3. Under the Statutes the Governing Body of the University is the Regent House which comprises the resident senior members of the University and the Colleges, together with the Chancellor, the High Steward, the Deputy High Steward, and the Commissary. Subject to the Regent House, the Council of the University is the principal executive and policy-making body of the University, with general responsibility for the administration of the University, for the planning of its work, and for the management of its resources. The membership of the Council includes two external members, one of whom chairs the Audit Committee (see paragraph 7 below). The General Board of the Faculties is responsible, subject to the Regent House and to the responsibilities of the Council, for the academic and educational policy of the University.

4. The Council is advised in carrying out its duties by a number of Committees, including the Planning and Resources Committee, the Finance Committee, the Audit Committee and the Risk Steering Committee. The Planning and Resources Committee is a joint committee of the Council and the General Board. Its responsibilities include the development and oversight of the University's Strategic Plan, and the preparation of the University's budget. The Finance Committee is chaired by the Vice-Chancellor and advises the Council on the management of the University's assets, including real property, monies and securities, and on the care and maintenance of all University sites and buildings. The Audit Committee governs the work of the Internal and External Auditors, reporting on these matters directly to the Council. The Risk Steering Committee is responsible to the Council for the identification of the major corporate risks and their management.

5. The Vice-Chancellor is, de facto, the principal academic and administrative officer of the University. Under the terms of the Financial Memorandum between the University and the Higher Education Funding Council for England the Vice-Chancellor is the Designated Officer of the University.

6. Under the Statutes, it is the duty of the Council to exercise general supervision over the finances of all institutions in the University other than the University Press; to keep under review the University's financial position and to make a report thereon to the University at least once in each year; to recommend bankers for appointment by the Regent House; to prepare and publish the annual accounts of the University in accordance with UK applicable accounting standards such that the accounts give a true and fair view of the state of affairs of the University.

7. It is the duty of the Audit Committee to keep under review the effectiveness of the University's internal systems of financial and other controls; to advise the Council on the appointment of external and internal auditors; to consider reports submitted by the auditors, both external and internal; to monitor the implementation of recommendations made by the internal auditors; to satisfy themselves that satisfactory arrangements are adopted throughout the University for promoting economy, efficiency and effectiveness; to establish appropriate performance measures and to monitor the effectiveness of external and internal audit; to make an annual report to the Council, the Vice-Chancellor and the Higher Education Funding Council for England; to receive reports from the National Audit Office and the Higher Education Funding Council for England. The Registrary is Secretary to the Audit Committee. Membership of the Audit Committee includes five external members (including the chair of the Committee), appointed by the Council with regard to their professional expertise and experience in comparable roles in corporate life.

8. The University maintains a Register of Interests of Members of the Council, the General Board, the Finance Committee and the Audit Committee, and of the Senior Administrative Officers, which may be consulted by arrangement with the Registrary.

9. The University is a self-governing community whose members act in accordance with the seven principles of public life (see paragraph 2 above) and in pursuit of the objectives and purposes of the University as set out in its Statutes. The University complies with most but not all of the voluntary Governance Code of Practice published in November 2004 by the Committee of University Chairmen. In particular the Vice-Chancellor is chair of the Council, which does not have a majority of external members, and the Council is subject to the statutory authority of the Regent House. The University has no immediate plans to change these arrangements, which have proved reliable over many years in enabling the University to achieve its academic objectives.


T. J. MEAD, Registrary

END OF THE OFFICIAL PART OF THE 'REPORTER'


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Cambridge University Reporter 25 April 2007
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