Memorandum submitted by HM Customs and Excise
1. This memorandum outlines the Department's governance structure and recent changes.
2. The day to day management of the Department is the statutory responsibility of the Commissioners. There are currently eight Commissioners; the Chairman, six business heads and the Departments Solicitor. The Chairman and the six business heads form the Management Committee who meet frequently and take the executive decisions necessary to run the organisation.
3. The Board of Customs and Excise, which includes non-executive Directors, is not an operational decision making body. It meets regularly but less frequentlycurrently once a quarterand reviews the strategic issues facing the Department and its response to them. It's role is to provide advice, guidance and, particularly in the case of the non-executives, the benefits of their experience and expertise to the executives.
4. The role of the Board has not substantively changed in recent years (although the composition of the agenda has been reshaped to focus it more on its strategic and advisory role). The important new development has been the creation of a Management Committee (in April 2000) which is explicitly and solely charged with developing strategies and identifying and resolving issues in order to deliver performance.
5. As noted above the Board's role is to provide input and advice on the strategic direction and objectives of the Department and review the strategic initiatives taken by management to achieve these objectives.
6. The Board currently numbers 12 people in addition to the Chairmanthe Commissioners, (including the Department's Solicitor) and five non-executives. It's membership is set out in full at Annex A.
7. The Board meets quarterly. At each meeting it receives a full report from the Management Committee on issues and decisions made over the previous quarter; reports from the Audit and Appointment Committees; and will generally debate in depth at least one important strategic issue.
8. While the role of the board has not substantively changed, its composition has. Previously it was made up of 11 executive Directors and two non-executive Directors. Other changes aimed at strengthening the effectiveness of the Board in its designated role include:
the provision of full Management Committee reports covering all key areas of Departmental performance;
the introduction of monthly Management Accounts;
meetings four times a year, as opposed to half-yearly.
9. The Board has three sub-committees. The membership of each Committee is set out at Annex B. The Committees are as follows.
Management Committee. The Management Committee was created in April 2000 and is responsible for devising and implementing strategies and for all the operational and management decisions required to implement them which need collective discussion. Its members are the Chairman and the six Commissioners who are Business heads. It meets weekly, more often if necessary.
Audit Committee. The Audit Committee meets quarterly and is responsible for ensuring that the Department has satisfactory and properly functioning systems of internal control. The Audit Committee has existed for many years but certain changes have been made to the Committee in accordance with the recommendations of the Turnbull report. A key change is that representatives from the National Audit Office (NAO) now attend every meeting. The Committee's terms of reference have been updated. The key elements are:
to ensure that Internal Audit meets the objectives, standards and practices specified in the Government Internal Audit Standards;
to monitor progress of work to support the Statements of Internal Control which are produced each year;
to consider internal and external audit findings.
Appointments Committee. The Appointments Committee meets once a month to consider appointments, succession planning and development issues relating to the Senior Civil Service.
10. This Committee structure was put in place in April 2000. It replaced a large number of formal or ad-hoc Committees (in excess of 20). As noted above, the most important change has been the creation of a single committee (the Management Committee) with unambiguous responsibility for, and authority to decide, the Department's affairs.
RESTRUCTURING THE ORGANISATION
11. The Department was restructured along functional lines in April 2001. The goals of the restructuring were to define and create unambiguous responsibility for the Department's separate activities in order to empower and encourage a strategic approach to the issues and a sharp focus on delivery of objectives. The main features were:
the definition and creation of two core business areas: Law Enforcement and Business Services and Taxes;
the creation of a simplified, functional management structure based on the core functions;
the separation of support services from front-line functions and their centralisation.
12. Each of the core business areas has an Operating Committee to deal with day-to-day operational matters. The Chairman of each Operating Committee sits on the Management Committee.
13. The reorganisation was intended to provide clearer management accountability and a framework for the greater delegation of financial and operational decision-making. The result is an organisation that should be able to respond faster, more decisively and flexibly to changes in the environment. This is not a guarantee that decisions will be correct but it reduces the risk that decisions will be deferred or missed.
14. Minutes produced by the Board and each of the Committees are audited by the NAO, providing additional assurance on the efficacy of the management of the Department. The NAO have commented favourably on the revised process by which we obtain assurance on our internal controls.
ATTITUDES, VALUES AND BEHAVIOURS
15. Governance structures offer safeguards not guarantees. Their effectiveness, and the effectiveness of an organisation generally, is importantly a function of the attitudes, values and behaviours seen to be valued.
16. A central and continuing part of the change programme instituted in early 2000 has been to inculcate values of leadership, team work, decisiveness and personal responsibility in the organisation. The more streamlined governance structure described above is designed to foster but cannot itself create these values. That is the task of management.
HM Customs and Excise
20 June 2002