Act as shareholder for, and lead establishment of, UK government arm’s length bodies
UKGI paper on the use of ALBs in government: a view from practitioners
A key part of UKGI’s mission is to support departments across Whitehall to be most effective in their role as shareholders of arm’s length bodies. In this paper, published in 2020, we have drawn on our expertise across both the public and private sectors to identify how, where and why arm’s length bodies are used by government, and to define seven critical success factors for setting up and managing them. The paper is intended to help inform debate across Whitehall and beyond on the effective use of arm’s length bodies for specialised delivery, as well as to share practical know-how and expertise in this area.
Case Studies
British Business Bank
The British Business Bank is a government-owned economic development bank that makes finance markets for smaller businesses work more effectively, allowing those businesses to prosper, grow and build UK economic activity. The Bank manages the UK government’s access to finance programmes for smaller businesses within a single commercially-minded institution.
UKGI was instrumental in the establishment of the British Business Bank. The role included advising ministers on the rationale and options for creating a single business development bank dedicated to making finance markets work better for Small and Medium Enterprises (SMEs). The new Bank combined existing teams and new teams recruited to provide expertise in innovative areas such as wholesale solutions. UKGI also led on state aid approval for the Bank and its programmes and on the appointment of initial Board members for the Bank.
While the Secretary of State for the Department for Business, Energy and Industrial Strategy (BEIS) is the sole shareholder of the British Business Bank, UKGI has a specific team made up of colleagues with both private sector and civil service backgrounds which leads on the British Business Bank’s governance and the shareholder relationship on behalf of BEIS. UK Government Investments also leads on advising ministers on the establishment and monitoring of the British Business Bank’s targets and performance against its strategic objectives, in collaboration with the Department for Business, Energy and Industrial Strategy.
Following the onset of the COVID-19 pandemic in 2020, BBB’s role and reach has grown significantly as it moved at pace to deliver four HMG Covid business support schemes. As a result of these schemes BBB supported over 1.6 million businesses with more than £75 billion of finance. We took a robust but flexible approach to this scale-up and the associated implications for corporate governance, ensuring that insofar as was reasonable BBB had challenging but achievable performance metrics and that BEIS and HMT Ministers were fully sighted on BBB’s activities and understood the associated risks.
The Royal Mint
UK Government Investments acts as shareholder on behalf of HMT Ministers in relation to Government’s 100% shareholdings in The Royal Mint. The Royal Mint’s primary purpose is to manufacture and distribute coins for the UK, as well as to supply blanks and official medals. Since 2010, They have operated on a fully commercial basis providing goods and services to HMT via the UK Coin contract.
We discharge our role primarily through membership of the Board and certain of its committees, working with HMT and The Royal Mint to better align the governance structure with the government’s objectives for the Mint as well as further developing the medium-term strategy to remain a profitable business despite the long-term decline in cash usage.
With regards to COVID-19, the UKGI team supported The Royal Mint in its options to keep the business open and provided steers on Government support packages that are available. We are pleased to note that The Royal Mint used its engineering expertise to create and manufacture medical visors to help protect frontline care workers in the NHS.
UK Export Finance
UK Export Finance (UKEF) is the UK’s export credit agency and a government department. It is the world’s oldest export credit agency and has a track record of providing world-class support for UK businesses, leading the way in the field of export credits for the last 100 years. UKEF’s mission is to ensure that no viable UK export fails for lack of finance or insurance from the private sector, while operating at no net cost to the taxpayer. UKEF achieves this by providing insurance, guarantees and loans, where the private sector will not, backed by the strength of the UK government’s balance sheet.
In 2020/21, working together with UKEF and HMT, UKGI co-developed a temporary framework in order for UKEF to provide targeted support to UK businesses through the pandemic. This Temporary Covid Risk Framework (TCRF) has been a key pillar in HMG’s support to large UK corporates during the pandemic with UKEF over the year extending £7.3bn of support through this facility. This includes to names such as Rolls Royce, British Airways and easyJet. The TCRF facility has led UKEF to have a record year with more than £12bn of new business written, nearly triple the results in 2019-20.
The public sector and state owned enterprises, wholly or partially owned, which UKGI works with are:
The British Business Bank is a government owned business development bank dedicated to making financial markets work better for small businesses.
Channel 4 is a commercially funded public sector broadcaster it operates a portfolio of channels including channel 4.
HM Land Registry registers the ownership of land and property in England and Wales and is a non-ministerial department.
Nuclear Decommissioning Authority (NDA) ensures the safe and efficient clean-up of the UK’s nuclear legacy. NDA is an executive non-departmental public body, sponsored by the Department for Business, Energy & Industrial Strategy, supported by 5 agencies and public bodies.
National Nuclear Laboratory ‘s purpose is to serve the national interest and create value for customers by pushing the boundaries of science, technology and innovation.
The Post office is the UK’s largest retail network and the largest financial services chain in the UK with more branches than all of the UK’s banks and building societies put together.
Ordnance Survey’s aim is to provide mapping that informs, guides and inspires. Its vision is to reveal our ever-changing landscape in extraordinary detail, giving the most comprehensive view of Britain.
Natwest Group is a UK-based financial services company, head-quartered in Edinburgh. NatWest Group provides a wide range of products and services to personal, commercial and large corporate and institutional customers through its two main subsidiaries, NatWest and The Royal Bank of Scotland, as well as through a number of other well-known brands including Ulster Bank and Coutts.
The Royal Mint is the world’s leading export mint, making coins and medals for an average of 60 countries every year. However, its first responsibility is to make and distribute United Kingdom coins as well as to supply blanks and official medals.
UK Export Finance is the UK’s export credit agency and a government department . It works with 70 private credit insurers and lenders to help UK companies access export finance.
UK Asset Resolution (UKAR) was established on 1 October 2010 to facilitate the orderly management of the closed mortgage books of both Bradford & Bingley and NRAM.
URENCO is an international supplier of enrichment services and fuel cycle products with its head office based close to London, UK. With plants in Germany, the Netherlands, the UK and in the USA, it operates in a pivotal area of the nuclear fuel supply chain which enables the sustainable generation of electricity for consumers around the world. Using centrifuge technology designed and developed by URENCO, the URENCO Group provides safe, cost effective and reliable uranium enrichment services for civil power generation within a framework of high environmental, social and corporate responsibility standards.
OneWeb is a global communications network, acquired by the UK Government and the Bharti Group in November 2020. Its goal is to provide an affordable, fast, high bandwidth, low-latency global communications service, powered by a constellation of 650 Low Earth Orbit satellites.
Reclaim Fund Ltd (RFL) is the UK’s operator of the Dormant Assets Scheme. Working with the financial services industry, RFL facilitates the transfer of dormant asset monies into the Scheme ensuring the original owner’s right to reclaim and distributing the surplus funds (amounts in excess of what is required to meet future reclaims), to social and environmental initiatives across the UK.
AWE plays a crucial role in nuclear defence, providing the warheads for the UK’s nuclear deterrent.
The UK Infrastructure Bank (UKIB) is the new, government-owned policy bank, focused on increasing infrastructure investment across the United Kingdom. It will partner with the private sector and local government to finance a green industrial revolution and drive growth across the country.