FOR THE ATTENTION OF THE CHAIRMAN --------- Mr David Orr
Thank you for your letter of 30 August 2019 inviting my feedback on the Interim Report of the Presidential Commission into ICE Governance.
I must first compliment the Commission for the extensive research and work undertaken to meet their Terms of Reference.
Having read the report I must also say I am still left asking myself the same question that I, and many other members, asked in 2018 when we were confronted with the dramatic proposal to reverse the sound principles developed over 200 years, of our then governance model. In short: why change ?
The start point for the Commission's ToRs seems to be the adoption of the new arrangements which when proposed led to the SGM, the acceptance of 3 resolutions and the formation of the Commission.
I am confident that had the Commission been set a ToR along the lines of " examine the Institution's governance model, identify weaknesses and propose remedies ", my question would have been answered and perhaps some different findings would have emerged in the Interim Report. Indeed, I find the ToR in 3.2.2 bizarre ! I thought that would be an essential ToR ?!
We have instead a first principles approach which although ambitious is regrettable in my opinion. Annex D does give some governance background but it does not appear to have been referenced or referred to anywhere in the Interim Findings. I also found it less than helpful when identifying key benchmarks in our history. I have relied on two sources : the 1988 Garth Watson book , ' The Civils', and the 2011 Ferguson /Chrimes book, 'The Civil Engineers'.
I am not constrained by the Commission's ToRs . My comments are based on trying to understand how we got to the governance we had rather than the ' clean sheet of paper' approach of the Commission.
My views on the Focus Areas, as requested in the Consultation pack follow.
Focus Area 1
I disagree with Interim Finding 1.
If the Commission had simply suggested that we should revise the name of our 200 year old Council to Trustee Board, perhaps to better explain one of it's functions, I might have agreed.
If the Commission had led compelling evidence that a smaller Top-Level Governing Body supported by another larger Advisory Committee would improve the Institution's growth and achievements I would have given a great deal of study to such evidence. I did not find this in the Interim Report.
The Institution is a very successful learned society membership organisation with a Royal Charter defining the object. The growth from a London based group of about 150 members when the Royal Charter was awarded to a global entity of 90,000 members was enabled by the evolution of the governance arrangements to meet the needs of representation by members of different grades and those residing in other UK regions and other countries . From the very earliest days Council has been the controlling body increasing in size to meet needs. In 1896 with 6,000 members the Charter was amended to give Council the power at a General Meeting to fix the number of Council, 'provided it was never less than 22'. It has of course increased many times since . However, it took until 2018 for the top-level governing body to be reduced to 12. Why ?
It seems to me that the most significant reason was the Commission's decision, and that of Council in 2017, to adhere very strictly to the Charity Governance Code.
The Institution's position as a membership body with obvious benefit to members but yet enjoying Charitable status is interesting. The first exemption was from local rates and given in an 1843 Act of Parliament. However this was challenged in 1878 but settled following preliminary Court hearings. In 1885 the Inland Revenue imposed an annual duty. The Institution claimed exemption but this time the issue went all the way to the House of Lords for a decision in our favour. Garth Watson : the principle involved was one of great importance, not only to the Institution, but to many similar societies , then and since.
Then for the 5 years , 1926-1931, the Institution had Tax deducted at source on the grounds that a previous exemption had been modified by a 1918 Tax Act. Once again this went to the Court of Appeal and the House of Lords before judgement granted, once again, in the Institution's favour. Garth Watson : The Council hoped that the matter was now concluded and litigation at an end.
A further exemption was granted in 1955 from Rates and Income tax without the need for Court Action.
Once again I quote from Garth Watson : Nevertheless, in 1963 the Institution was advised to apply for registration by the Charity Commissioners under the Charities Act 1960, as registration would confirm the Institution's status as a charity for legal purposes and would reaffirm its exemption from Income and Corporation Tax.
It should be noted in the above quote that registration was for legal purposes and tax exemption, NOT because we were considered a "Charity".
This raises several questions :
* Must we follow the Charity Governance Code when we have demonstrated over 150 very successful years that we know the best governance structure for us ?
* In framing the Code was the governance structure of large membership organisations with Charitable Status given any consideration?
* If we decided that our 2018 governance structure with a larger than 12 governing body was right for us, would the Charity Commissioners consider deleting our registration ?
* If they so decided, would we be prepared, as before , to take Court action to prove our legal Charitable Status ? One might think that legal precedence was on our side ?
On the same topic I think paras 2.1.4 & 2.1.5 in the Full Report ( 2.2 & 2.3 in the Summary Report which confusingly are slightly different ) are misleading without more explanation or qualification. My research tells me that The Institution is a membership organisation with a charitable purpose in the advancement of education which results in a public benefit, all as required by Charities Act 2011. I do not feel it is correct to say we are a charity existing for the public good and no benefit to members. We have qualified for charitable status since 1828 with a very similar Royal Charter object and at least two House of Lords decisions as confirmation.
As a general point I would suggest that the ICE should adopt at all times a consistent definition and wording when describing it's charity role. All too often I see a creeping tendency in ICE papers to describe us as a "Charity". I offer the following:
The Institution is registered under the 2011 Charities Act because of it's charitable purpose of providing public benefit by the advancement of education.
The key words are : 'charitable purpose', 'public benefit', 'advancement of education'. All taken from the Act. Other words should be avoided to prevent misrepresentation.
Also, my understanding is that the reduced number of Trustees arose from Council discussions following presentations from Charity 'experts ' including specialist legal advice. If that is correct and the Council were influenced accordingly , I would urge the Commission to seek further legal advice, perhaps with a different, or even an opposing point of view. This is , of course, always good practice at any time when taking legal counsel.
As noted above I favour a much larger Board as previously suggested in my joint evidence statement and by Quentin Leiper in his.
The Commission were obviously much influenced in their compact Trustee Board recommendation by Dr Andrew Purkis during his open evidence session. I have read his paper carefully but cannot find anything quite as definitive as in his quoted replies to questions in paras 5.2.8 & 5.4.3 In 5.2.8 , following some general very well known statements about bigger boards being more unwieldy he says : There would need to be pressing and justifiable reasons to go above the recommended maximum of 12.’ Again in 5.4.3 he is quoted as saying : non-compliance would be taken into consideration in the event of a Charity Commission enquiry and it would look for a compelling rationale and persuasive reasons for a charity that has significantly exceeded the recommended board size of at least 5 and no more than 12.
My view is that if we maintained a bigger board of whatever size we could easily provide justifiable, persuasive reasons and a compelling rationale for the Charity Commission, or anyone. We have been governing ourselves successfully, providing ever increasing benefits to society, with a large governing body for over 120 years ! In short, as the evidence shows, we know best ! I just cannot see a problem.
Focus Area 2
I agree that a majority the Trustee Board, of whatever size , should be elected directly by by the ICE membership. This practice has existed throughout our governance history although until 1948 the candidates were chosen by Council. However following several years of growing discontent and several SGMs the by-laws were changed to allow any group of 10 members to nominate a member for the Council ballot. Representation on Council was also increased that year to include 10 from the Dominions & Colonies, 10 from UK local associations and 3 from Associate Members.
Focus Area 3
I agree totally with the sentiment in 7.3.3 about intuitive democracy. However I have much less concern about the other points raised. I do not see that the Charity Governance Code recommendation should prevail over our own established good practice. The election process may well be 'susceptible' to single issue candidates or candidates from large firms (or even Government/Local Council departments ? ) but has this ever been encountered and recognised as a problem that needs to be dealt with ? Not in my experience of 61 years on the ICE Roll or 35 years on committees.
I am against pre-selection of candidates for our top-level governing body. This would turn the clock back to pre-1948. The Trustee Board composition should not comprise a selection of skills, experience and diversity chosen by anyone other than members in open election. We get who we get within specified grade and geographic positions. A much larger TB would ensure a more varied composition of board members.
I disagree with Interim Finding 5 and prefer Option A
Other Focus Areas
I may add my views later on some other Focus Areas. However many of the Interim Findings which follow are contingent on agreement with Finding 1. Appropriate comment is therefore less likely.
I should also advise that this Interim Response Feedback letter will be lodged on the web site www.CivilsMatters.org