Agenda Item: 10

Paper No: CM/02/12/09a

ANNEX A

CQC Corporate Governance Framework

Introduction

This document describes CQC’s Corporate Governance Framework: what it is intended to achieve, what the components of the Framework are and how those components are intended to operate together. This is a public document and will be published on the CQC website.

The formal Corporate Governance Framework is attached. It sets out:

  1. The legislative context in which CQC operates
  2. CQC’s accountability
  3. CQC’s purpose and values
  4. The key elements of good governance
  5. The structures which support good governance at Board level and in the Executive
  6. The roles which support good governance at Board level and in the Executive
  7. Board behaviours
  8. The key processes in CQC which deliver good governance
  9. Assurance Framework
  10. External scrutiny and oversight
  11. Disclosures and statements required in support of accountability

When taken together,these elements operate to facilitate the leadership, direction and control of the CQC and to enable its long-term success.

What does CQC mean by Corporate Governance?

Governance in the public service is about how public service bodies ensure that they are doing the right things, in the right way, for the right people, in a timely, inclusive, open, honest and accountable manner. [1]

In short, Corporate Governance is, as stated above, about the way in which the organisation is led, directed and controlled. This short definition is underpinned by the Cabinet Office’s definition: corporate governance “defines relationships and the distribution of rights and responsibilities amongst those who work with and in the organisation, determines the rules and procedures through which the organisation’s objectives are set, and provides the means of attaining those objectives and monitoring performance. Importantly, it defines where accountability lies throughout the organisation.”[2]

Stakeholders increasingly recognise the importance of corporate governance and the part it plays in ensuring that public bodies are run efficiently and economically, meet their objectives, are open and transparent, can be effectively held to account and deliver value for money for the public purse. CQC’s stakeholders,including the public,will expect, rightly, that CQC can demonstrate excellence in corporate governance, not least because as a regulator it holds other organisations to account for the quality of their governance. CQC wishes --and others will expect it -- to lead by example.

CQC also recognises that governance is not just about having the right principles, processes and structures in place[3]. Good governance is about behaviour, particularly the behaviour of the Board, in setting the values for the organisation, setting its strategic direction and providing challenge and support to management in delivering its obligations. The Chair of CQC has a key leadership role in setting the “tone” for the Board and for the whole of CQC.

The purpose of CQC’s Corporate Governance Framework

The aim of the CQC Governance Framework is to add value to the organisation by providing the optimum governance with the lowest overhead and minimal obstruction to the day-to-day running of CQC.

Along with line management structures, the Framework provides a mechanism to allow the CQC to be effectively led and directed. This is especially critical in a large, complex and geographically dispersed workforce. Governance processes are designed to be as user-friendly as possible consistent with their purpose. Nevertheless, one purpose of the Framework is to ensure there is effective control across CQC; in practice this means ensuring that line management at all levels is empowered where it has authority, and constrained where is does not.

CQC also recognises that effective and mature management of risk not just reduces adverse impacts but also enables the organisation to be positive and proactive in the way it delivers its business. A systematic and consistent approach to the management of risk supports and enhances staff’s ability to make decisions, provides management with a clearer understanding of potential risks, their impact, what needs to be done to manage them and the assurance that they are being managed effectively.

A key purpose of the Framework is to provide assurance -- that the right things are being done in the right way and at the right time --up through the line management chain. Operating the requirements of the Framework, providing assurances and evidence as required and using assurance to identify where improvements can or must be made, must form part of the day-to-day responsibilities of line managers. The time and effort required must,therefore,be factored into business plans.

Benefits of effective governance in CQC

The benefits to CQC, and in turn to the public, of effective corporate governance include:

  • adding value to the organisation, underpinning change and modernisation
  • clarity about what CQC’s objectives are via effective strategic and business planning;
  • clarity about levels of authority to make decisions;
  • clarity about what decisions have been made, by whom, when and why;
  • the generation of reliable management information to demonstrate and track progress toward meeting targets and objectives;
  • risks to the delivery of objectives are identified and appropriate controls put in place and maintained;
  • line and audit management assurances that risk to meeting objectives are identified and that that controls for those risks are being applied and are effective;
  • to provide independent assurance via audit that business processes are fit for purpose and are being operated; and that statutory requirements, for example to manage information in accordance with legal requirements, are being met;
  • resources are deployed effectively and efficiently to manage risks and issues as they arise;
  • CQC is not acting outside of its remit and authority.

The Corporate Governance Framework will only be effective if the different elements, described and explained in the attached document, are fully integrated and work together harmoniously and in support of each other.

The scope of the Governance Framework

Often the most readily identifiable elements of a Corporate Governance Framework are the organisation’s formal Boards and Committees, by which the organisation is led.Good governance means having a clear statement of their respective roles and responsibilities and how they relate to each other. These are set out in the accompanying document, as well as the processes and policies which support the Framework.

At various times, formal CQC programmes are set up to deliver specific objectives in the business plan. Where this is the case those programmes will report into one of the established structures above. Details of current formal programmes can be found on the intranet:

There will be other ad hoccommittees and groups operating legitimately within CQC, for example to engage with stakeholders, or set up by line management to help consider issues in detail or deliver specific Directorate tasks or business plan objectives. These groups are not part of the governance framework because they carry out management functions and do not have responsibility for governance or policy decisions which can bind CQC. The Executive Team Subcommittees are included because, while they deal with management issues (eg the re-allocation of resources), they can also take policy decisions which will impact on the whole organisation. Unless a committee or group is specified in this document, it does not form part of the CQC governance structure.

Details of all the governance structures, including their membership, terms of reference, and other associated documents can be found on the CQC website and intranet governance pages.

Responsibility for the Corporate Governance Framework

The Framework exists to support and challenge CQC in its accountability. The CQC Chief Executive is accountable as CQC’s Accounting Officer for the operation of the Governance Framework, which has been mandated by the CQC Board.

Operating within the Framework is therefore not optional for line managers. All CQC line managersare responsible for being familiar with and operating withinthe Framework themselves and ensuring that their staff also understand their responsibilities and obligations. Governance responsibilities should be included within the process for setting and monitoring staff objectives (the Performance and Development Review process).

Supporting the Corporate Governance Framework

The formal structures in the Corporate Governance Framework are supported in their operation by the CQC Secretariat in Corporate and Legal Governance Services.

Monitoring and review of the Corporate Governance Framework

Monitoring the operation of the Framework is the responsibility of the Governance and Legal Services Director. The Directorate will provide reports to the Executive Team and the Board about its effective operation, making recommendations for changes and improvement as required. The day-to-day lead for the Framework as a whole is the Head of Governance to whom queries about the Framework should be directed in the first instance.

The Framework will be reviewed annually to ensure that it remains up-to-date and fit for purpose. As and when CQC’s remit changes – for example when it takes on new or additional functions eg from the National Information Governance Board – then the Framework will be revised to reflect that. It will also be revised to take account of any new requirements from the CQC/DH Framework document which is currently under review.

Internal Audit provides an annual independent assurance on the adequacy, application and effectiveness of governance in CQC. The CHIEF EXECUTIVE is also required as the Accounting Officer to include a Governance Statement in the Annual Report and Accounts laid before Parliament, which is subject to scrutiny by the National Audit Office.

Governance and Legal Services Directorate

May 2012
THE CQC CORPORATE GOVERNANCE FRAMEWORK

1. Legislative Context

The Care Quality Commission (CQC) is an executive non-departmental public body established by legislation to protect and promote the health, safety and welfare of people who use health and social care services and as the regulator of all health and adult social care services. CQC’s statutory functions are set out principally in the Health and Social Care Act 2008 but also in other legislation (a summary of applicable legislation is at Appendix 1).

The CQC comprises a minimum of six and a maximum of ten Commissioners who are appointed by the Secretary of State, and make up the CQC Board. The Commissioners, who are appointed on the basis that they possess a range of skills and experience relevant to CQC’s business, are responsible for setting the strategic direction of CQC but have no executive powers. The executive role in CQC is carried out by the Chief Executive Officer and her Team.

As an Arms Length Body[4], CQC aims to have a good working relationship with its Sponsor Department, the Department of Health, where its responsibilities and accountabilities are clear and delivered through appropriate governance arrangements.DH and CQC agreed a Framework Document in 2010 which sets out CQC’s purpose, its governance and accountability, management and financial responsibilities and reporting procedures. It is currently under review to take account of additional responsibilities being given to CQC and other legislative changes introduced in the Health and Social Care Act 2012.

2. CQC is accountable

At the heart of good governance is accountability. CQC makes itself accountable in a number of ways, including through formal reports, regular engagement with stakeholders and public consultation.

2.1 Accountability to Parliament and the Department of Health

CQC is accountable to Parliament through the Secretary of State for Health. CQC’s formal accountability is through:

  • Its published Framework Document with its Sponsoring Department
  • Laying its report and accounts annually before Parliament
  • The Appointment of the Chief Executive as the Accounting Officer
  • External audit of its accounts by the National Audit Office on behalf of the Comptroller and Auditor General
  • Publishing information about its activities in accordance with its publication scheme
  • A Strategic Plan which is published and forms the basis of regular meetings with DH
  • Widespread consultation on the Strategic Plan to which it responds publicly; and
  • A clear complaints process

The DH/CQC Framework Document sets out how the Department expects CQC to report to the Department, in addition to the AO’s accountability responsibilities to Parliament. Appendix 2 sets out further detail of CQC’s accountability arrangements to DH. Performance reporting to DH includes:

  • Monthly monitoring information on financial performance against budget to be sent to DH sponsorship team,
  • Quarterly accountability meetings between DH officials and CQC senior officers to consider, at a strategic level, how CQC is performing and managing risk, The meetings are attended by the CQC Chief Executive and chaired by the Senior Departmental Sponsor. The minutes will be shared with the CQC Board for consideration at its private meetings.
  • Six monthly meetings between the SofS and the CQC Chair to discuss CQC’s performance and any relevant issues
  • An annual appraisal of the CQC Chair by the DH Permanent Secretary
  • An annual report and Governance Statement which must be sent to DH two weeks in advance of publication in Parliament. In addition to reporting on the accounts and requirements on financial management, the annual report is required to outline CQC’s main activities during the year and how well it has performed; and set out its plans for the coming year. In accordance with good practice in relation to annual reports, it should include an assessment of significant risks and how these have been managed, how the CQC has engaged with stakeholders, and how well the Board has performed in its leadership capacity.
  • Five yearly reviews of CQC’s status: the next quinquennial review is due in 2015.

Finally, in the event of what Secretary of State believes to be a significant failure by CQC to discharge a function properly, the Secretary of State has power to make a direction to CQC.

Key contribution to governance: when the accountability to the Secretary of State is effective, Parliament and the Department of Health can be sure that CQC is discharging its statutory purpose economically, efficiently and effectively.

2.2 Accountability to stakeholders and the public

In addition to its Parliamentary accountability, CQC aims to be open and transparent in reporting on how well it is discharging its responsibilities. The Board meets quarterly in public. CQC publishes an annual ‘state of care’ report which provides details of compliance and enforcement action across all sectors. The CQC website provides information about which health and social care providers are meeting essential standards, to help people in making choices about their care or in raising concerns with CQC.

CQC seeks to involve people in its core activities to ensure that people’s views and experiences are taken into account in decision-making. CQC undertakes a range of surveys; and has set up panels to include a wide range of people from across the services it regulates. People are also involved in consultations eg on its strategic plans, training events, workshops etc.

CQC involves people in its inspections, particularly people from harder to reach service users. These people known as Experts by Experience are trained and authorised to accompany inspectors to assist in talking to service users.

Key contribution to governance:when CQC’s engagement with stakeholders and the public is effective, CQC can demonstrate that its strategic priorities and activities take account of community aspirations and the experience of users and that it is properly accountable.

3. A clear purpose: what is CQC there to do?

Being clear about the organisation’s purpose is the first requirement of good governance. CQC’spurpose, set in legislation, is to protect and promote the health, safety and welfare of people who use health and social care services. It has a role in encouraging wider quality improvement of health and social care services through its reviews and by publishing independent comparative information; and through its regulatory activity.

In delivering its mission, CQC aims to

  • support people to live healthy and independent lives;
  • empower individuals, families and carers in making informed decisions about their care; and
  • be responsive to individual needs and focus on the needs and experiences of those who use health and social care services; and
  • promote the efficient and effective use of resources in the provision of health and social care services.

CQC’s Mission statement and Values are being reviewed as part of the process for setting a new Five Year Strategy. It will be issued for consultation in June and finalised by the end of 2012.

Key contribution to governance: when CQC as a whole is clear about its strategic purposeand the values by which it operates, all parts of the organisation can effectively share in CQC’s vision and ensure that they support the outcomes which CQC seeks to achieve.