Management statement

1 Introduction

1.1 This document

1.1.1 This management statement and its associated financial memorandum have been drawn up by the DTI and DCMS in consultation with the Design Council; an executive NDPB based at 34 Bow Street, London WC2E 7DL. The document is based on a model prepared by the Treasury.

1.1.2 Subject to the legislation noted below, the management statement sets out the broad framework within which the Design Council will operate, in particular:

• The Design Council's overall aims, objectives and targets;
• The rules and guidelines relevant to the exercise of the Design Council functions, duties and powers;
• The conditions under which any public funds are paid to the Design Council;
• How the Design Council is to be held to account for its performance.

However, the management statement and financial memorandum do not convey any legal powers or responsibilities.

1.1.3 The associated financial memorandum sets out in greater detail certain aspects of the financial provisions which the Design Council shall observe.

1.1.4 The document shall be periodically reviewed by the Departments in accordance with the timetable referred to in Section 7 below.

1.1.5 The Design Council, or the Secretaries of State, may propose amendments to this document at any time. Any such proposals by the Design Council shall be considered in the light of evolving departmental policy aims, operational factors and the track record of the Design Council itself. The guiding principle shall be that the extent of flexibility and freedom given to the Design Council shall reflect both the quality of its internal controls and its operational needs. The Secretaries of State shall determine what changes, if any, are to be incorporated in the document. Legislative provisions shall take precedence over any part of the document. Significant variations to the document shall be cleared with the Treasury or Cabinet Office as appropriate. (The definition of `significant' will be determined by the DTI and DCMS in consultation with the Treasury/Cabinet Office.)

1.1.6 The combined document is signed and dated by the DTI, DCMS and the Design Council.

1.1.7 Any question regarding the interpretation of the document shall be resolved by the Departments after consultation with the Design Council and, as necessary, with the Treasury and/or the Cabinet Office.

1.1.8 Copies of this document and any subsequent substantive amendments shall be placed in the Libraries of both Houses of Parliament. Copies shall also be made available to members of the public on the Design Council's website.

1.2 Founding legislation; status

1.2.1 The Design Council is established under Royal Charter dated 19 May 1976. The Design Council does not carry out its functions on behalf of the Crown.

1.3 The functions, duties and powers of the Design Council

1.3.1 The Royal Charter gives the Design Council the following objective:

‘The advancement of British industry and society by the improvement of design in the products and services thereof’

And the following powers:

• To establish centers for the display of well designed products and for the provision of information on design to industry and to the general public;
• To provide national and local displays of industrial products and in particular to hold or participate in exhibitions of such products both in Our United Kingdom and overseas;
• To encourage the general and technical education of persons training or wishing to train as designers;
• To provide information and advice for industry and for the general public on all matters connected with design;
• To encourage and support campaigns for the improvement of design and for increasing knowledge and educating opinions amongst the public in matters of design;
• To do all such things as shall raise and maintain the standards of design at all levels throughout British industry and society.

1.4 Classification

1.4.1  For policy/administrative purposes the Design Council is classified as an executive non-departmental public body.

1.4.2  For national accounts purposes the Design Council is classified to the central government sector.

1.4.3 References to the Design Council include all its subsidiaries and joint ventures that are classified to the public sector for national accounts purposes. If such a subsidiary or joint venture is created, there shall be a document setting out the arrangements between it and the Design Council (paragraphs 62-63 of the financial memorandum).

2 Aim, Objectives and Targets

2.1 Overall aim

2.1.1. Within the founding legislation the overall aim for the Design Council is as follows:

‘To improve prosperity and well-being in the UK by inspiring and enabling the best use of design’

2.2 Objectives and key targets

In business, the Design Council will:

• demonstrate design's strategic role within business processes and the commercialisation of new science with robust and inspiring first-hand evidence
• develop, support and influence national programs which support UK managers seeking to use design to transform their businesses
• connect business advisors, front-line managers, and educators with international best practice in design

In public services, the Design Council will:

• create new models of public procurement in which the value of design is a key element
• demonstrate, through practical interventions, the role of design in modernising public services
• influence opinion-formers in key Government departments and agencies to encourage strategic design thinking and applications

In the design sector, the Design Council will:

• help to strengthen design sector infrastructure in relation to training, representation and education
• facilitate stronger educational links between design and other business and organisational disciplines
• initiate a public engagement program which promotes the practical power of design

2.2.1 The sponsor Departments agree the Design Council's Corporate Plan in the light of the Departments' wider strategic aims and current PSAs. The Design Council's objectives and key targets shall be agreed within the Design Council's corporate and business planning process (Section 4 below).

3 Responsibilities and Accountability

3.1 The Secretaries of State

3.1.1 The DTI Secretary of State is accountable to Parliament for the activities and performance of the Design Council. The DCMS Secretary of State will be a "co-lead" Minister. The DTI and DCMS Secretary of States' joint responsibilities include:

• Approving the Design Council's Corporate Plan and agreeing the Business Plan and the performance framework within which the Design Council will operate (as set out in this management statement and financial memorandum and associated documents);
• Carrying out responsibilities specified in the Royal Charter including making appointments to the Board and approving the appointment of the Chief Executive.

The DTI Secretary of State's responsibilities include:

• Keeping Parliament informed about the Design Council's performance;
• Approving the amount of grant-in-aid to be paid to the Design Council, and securing Parliamentary approval;

3.2 The Accounting Officers of the sponsor Departments

3.2.1 The Permanent Secretaries, as the Departments' Principal Accounting Officers, are responsible for the overall organisation, management and staffing of the sponsor Departments and for ensuring that there is a high standard of financial management in the Department as a whole. The Principal Accounting Officer of the DTI is accountable to Parliament for the issue of any grant-in-aid to the Design Council. The Principal Accounting Officer of the DTI designates the Chief Executive of the Design Council as the Design Council's Accounting Officer, and may withdraw the accounting officer designation if he/she believes that the incumbent is no longer suitable for the role.

3.2.2 In particular the Principal Accounting Officer of the DTI shall ensure that:

• The Design Council's strategic aim and objectives are aligned with the Departments' wider strategic aims and current PSAs;
• The financial and other management controls applied by the Department to the Design Council are appropriate and sufficient to safeguard public funds and for ensuring that the Design Council's compliance with those controls is effectively monitored ('public funds' include not only any funds granted to the Design Council by Parliament but also any other funds generated by approved activities or falling within the stewardship of the Design Council).
• The internal controls applied by the Design Council conform to the requirements of regularity, propriety and good financial management
• Any grant-in-aid to the Design Council is within the ambit and the amount of the Request for Resources and that Parliamentary authority has been sought and given;

The responsibilities of a departmental Accounting Officer are set out in more detail in the annex to Chapter 4 of Government Accounting.

3.3 The sponsoring teams in the Departments

3.3.1 Within the DTI, the Materials, Engineering and Manufacturing Policy Team is the sponsoring team for the Design Council. Within the DCMS, the Creative Industries team is the sponsoring team. The Teams, in consultation as necessary with the relevant departmental Accounting Officer, are the primary source of advice to the Secretaries of State on the discharge of their responsibilities in respect of the Design Council, and the primary point of contact for the Design Council in dealing with the Departments. Each sponsoring team shall carry out its duties under a senior officer who shall have primary responsibility for overseeing the activities of the Design Council.

3.3.2 The sponsoring teams shall advise the Secretaries of State on:

• Whether the objectives and targets of the Design Council are aligned with the Departments' wider strategic aims and current PSAs;
• An appropriate budget for the Design Council in the light of the Departments' overall public expenditure priorities;
• How well the Design Council is achieving its strategic objectives and whether it is delivering value for money.

3.3.3 In support of the departmental Accounting Officers, the sponsoring teams shall:

On performance and risk management:

• Monitor the Design Council's activities on a continuing basis through an adequate and timely flow of information from the Design Council on performance, budgeting, control and risk management, including early sight of the Design Council's Statement on Internal Control;
• Address in a timely manner any significant problems arising in the Design Council, whether financial or otherwise, making such interventions in the affairs of the Design Council as the Departments judge necessary;
• Periodically carry out a risk assessment of the Design Council's activities to inform the Departments' oversight of the Design Council; strengthen these arrangements if necessary; and amend the management statement accordingly.
• The risk assessment shall take into account the nature of the Design Council's activities; the public monies at stake; the body's corporate governance arrangements; its financial performance; internal and external auditors' reports, the openness of communications between the body and the Departments; and any other relevant matters;

On communication with the Design Council:

• Inform the Design Council of relevant Government policy in a timely manner; advise on the interpretation of that policy; and issue specific guidance to the Design Council as necessary;
• Bring concerns about the activities of the Design Council to the attention of the full Board, and require explanations and assurances from the Board that appropriate action has been taken.

3.4 The Chairman of the Design Council

3.4.1 The Chairman is appointed by the Secretaries of State. The appointment procedures will accord with guidance issued by the Commissioner for Public Appointments.

3.4.2 The Chairman is responsible to the Secretaries of State. The Chairman shall aim to ensure that the Design Council's policies and actions support the wider strategic policies of the Secretaries of State; and that the Design Council's affairs are conducted with probity. The Chairman shares with other Board members the corporate responsibilities set out in paragraph 3.5.2.

3.4.3 The Chairman has a particular leadership responsibility on the following matters:

• Formulating the Board's strategy;
• Ensuring that the Board, in reaching decisions,takes proper account of guidance provided by the department;
• Promoting the efficient and effective use of staff and other resources;
• Encouraging high standards of propriety;
• Representing the views of the Board to the general public.

3.4.4 The Chairman shall also:

• Ensure that all members of the Board, when taking up office, are fully briefed on the terms of their appointment and on their duties, rights and responsibilities, and receive appropriate induction training, including on the financial management and reporting requirements of public sector bodies and on any differences which may exist between private and public sector practice;
• Advise the Secretaries of State of the needs of the Design Council when Board vacancies arise, with a view to ensuring a proper balance of professional and financial expertise;
• On request, assess the performance of individual Board members when they are being considered for re-appointment to the Board.

3.4.5 The Chairman shall also ensure that a Code of Practice for Board Members is in place, based on the Cabinet Office's model Code of Practice for Board Members of Public Bodies. The Code shall commit the Chairman and other Board Members to the Nolan seven principles of public life, and shall include a requirement for a comprehensive and  publicly available register of Board Members' interests.

3.4.6 Communications between the Board and the Secretaries of State shall normally be through the Chairman. The Chairman shall ensure that the other Board members are kept informed of such communications.

3.5 The Design Council's Board

3.5.1 The Board Members are appointed by the Secretaries of State.

3.5.2 The Board has corporate responsibility for setting and ensuring that the Design Council fulfils its aim and objectives and for promoting the efficient and effective use of staff and other resources by the Design Council. To this end, and in pursuit of its wider corporate responsibilities, the Board shall:

• Establish the overall strategic direction of the Design Council within the policy and resources framework determined by the Secretaries of State;
• Ensure that the Secretaries of State are kept informed of any changes which are likely to impact on the strategic direction of the Design Council or on the attainability of its targets, and determine the steps needed to deal with such changes;
• Ensure that any statutory or administrative requirements for the use of public funds are complied with; that the Board operates within the limits of its statutory authority and any delegated authority agreed with the sponsor Departments, and in accordance with any other conditions relating to the use of public funds; and that, in reaching decisions, the Board takes into account guidance issued by the sponsor Departments;
• Ensure that the Board receives and reviews regular financial information concerning the management of the Design Council; is informed in a timely manner about any concerns about the activities of the Design Council; and provides positive assurance to the Departments that appropriate action has been taken on such concerns;
• Demonstrate high standards of corporate governance at all times, including by using the independent audit committee (paragraph 4.6.2) to help the Board to address the key financial and other risks facing the Design Council;
• Appoint with the approval of the Secretaries of State a Chief Executive to the Design Council and, in consultation with the Departments, set performance objectives and remuneration terms linked to these objectives for the Chief Executive which give due weight to the proper management and use of public monies.

3.5.3 Individual Board members shall act in accordance with their wider responsibility as Members of the Board - namely to:

• Comply at all times with the Code of Practice (paragraph 3.4.5 above) that is adopted by the Design Council and with the rules relating to the use of public funds and to conflicts of interest;
• Not misuse information gained in the course of their public service for personal gain or for political profit, nor seek to use the opportunity of public service to promote their private interests or those of connected persons or organisations;
• Comply with the Board's rules on the acceptance of gifts and hospitality, and of business appointments;
• Act in good faith and in the best interests of the Design Council.

3.6 The Chief Executive's role as Accounting Officer

3.6.1 The Chief Executive of the Design Council is designated as the Design Council's Accounting Officer by the Accounting Officer of the DTI.

3.6.2 The Accounting Officer of the Design Council is personally responsible for safeguarding the public funds for which he/she has charge; for ensuring propriety and regularity in the handling of those public funds; and for the day-to-day operations and management of the Design Council.

3.6.3 As Accounting Officer the Chief Executive shall exercise the following responsibilities in particular:

On planning and monitoring:

• Establish, in agreement with the Departments, the Design Council's corporate and business plans;
• Inform the Departments of the Design Council's progress in achieving its objectives and in demonstrating how resources are being used to achieve those objectives;
• Ensure that timely forecasts and monitoring information on performance and finance are provided to the Departments; that the Departments are notified promptly if overspends or underspends are likely and that corrective action is taken; and that any significant problems, whether financial or otherwise, and whether detected by internal audit or by other means, are notified to the department in a timely fashion.

On advising the Board:

• Advise the Board on the discharge of its responsibilities as set out in this document, the Royal Charter and in any other relevant instructions and guidance that may be issued from time to time;
• Advise the Board on the Design Council's performance compared with its aims and objectives;
• Ensure that financial considerations are taken fully into account by the Board at all stages in reaching and executing its decisions, and that standard financial appraisal techniques are followed as far as this is practical;
• Take action as set out in paragraphs 14 to 18 of the Design Council Accounting Officer Memorandum if the Board, or its Chairman, is contemplating a course of action involving a transaction which the Chief Executive considers would infringe the requirements of propriety or regularity or does not represent prudent or economical administration or efficiency or effectiveness.

On managing risk and resources:

• Ensure that a system of risk management is maintained to inform decisions on financial and operational planning and to assist in achieving objectives and targets;
• Ensure that an effective system of program and project management and contract management is maintained;
• Ensure that all public funds made available to the Design Council are used for the purpose intended by Parliament, and that such moneys, together with the Design Council's assets, equipment and staff, are used economically, efficiently and effectively;
• Ensure that adequate internal management and financial controls are maintained by the Design Council, including effective measures against fraud and theft;
• Maintain a comprehensive system of internal delegated authorities which are notified to all staff, together with a system for regularly reviewing compliance with these delegations;
• Ensure that effective personnel management policies are maintained.

On accounting for the Design Council's activities:

• Sign the accounts and be responsible for ensuring that proper records are kept relating to the accounts and that the accounts are properly prepared and presented in accordance with any directions issued by the DTI Secretary of State;
• Sign a Statement of Accounting Officer's responsibilities, for inclusion in the annual report and accounts;
• Sign a Statement on Internal Control regarding the Design Council's system of internal control, for inclusion in the annual report and accounts;
• Ensure that effective procedures for handling complaints about the Design Council are established and made widely known within the Design Council;
• Act in accordance with the terms of this document and with the instructions and guidance in Government Accounting and other instructions and guidance issued from time to time by the DTI, the Treasury and the Cabinet Office - in particular, the Treasury documents The Responsibilities of an NDPB Accounting Officer and Regularity and Propriety, both of which the Chief Executive shall receive on appointment. Section IX of the attached financial memorandum refers to other key guidance;
• Give evidence, normally with the Accounting Officer of the sponsor Departments, when summoned before the Committee of Public Accounts on the use and stewardship of public funds by the Design Council.

3.7 The Chief Executive's role as Consolidation Officer

3.7.1 For the purposes of Whole of Government Accounts the Chief Executive of the Design Council is normally appointed by the Treasury as the Design Council's Consolidation Officer.

3.7.2 As the Design Council's Consolidation Officer the Chief Executive shall be personally responsible for preparing the consolidation information that sets out the financial results and position of the Design Council, for arranging for its audit and for sending the information and the audit report to the Principal Consolidation Officer nominated by the Treasury.

3.7.3 As Consolidation Officer the Chief Executive shall comply with the requirements of the Consolidation Officer Memorandum and shall, in particular:

• Ensure that the Design Council has in place and maintains sets of accounting records that will provide the necessary information for the consolidation process;
• Prepare the consolidation information (including the relevant accounting and disclosure requirements and all relevant consolidation adjustments) in accordance with the consolidation instructions and directions issued by the Treasury on the form, manner and timetable for the delivery of such information.

3.8 Delegation of duties

3.8.1 The Chief Executive may delegate the day-to-day administration of his/her Accounting Officer and Consolidation Officer responsibilities to other employees in the Design Council. However, he/she shall not assign absolutely to any other person any of the responsibilities set out in this document.

3.9 The Chief Executive's role as Principal Officer for Ombudsman cases

3.9.1 The Chief Executive is the Principal Officer for handling cases involving the Parliamentary Commissioner for Administration. As Principal Officer he/she shall inform the Permanent Secretaries of the sponsor Departments of any complaints about the Design Council accepted by the Ombudsman for investigation, and about the Design Council's proposed response to any subsequent recommendations from the Parliamentary Ombudsman.

4 Planning, Budgeting and Control

4.1 The Corporate Plan

4.1.1 Consistent with the timetable for public spending reviews the Design Council shall submit to the Departments a draft of the Design Council's corporate plan.

4.1.2 The plan shall reflect the Design Council's statutory duties.

4.1.3 The corporate plan shall set out:

• The Design Council's key objectives and associated key performance targets for the forward years, and its strategy for achieving those objectives;
• Alternative scenarios to take account of factors which may significantly affect the execution of the plan but which cannot be accurately forecast;
• Other matters as agreed between the Departments and the Design Council.

4.1.4 In reaching decisions on the Design Council's annual Business Plan and in monitoring progress, the Departments shall aim to give the Design Council greater planning certainty by observing the principles set out in paragraph 15 of PES (2000)25 concerning three year planning and end year flexibility (EYF). These principles are summarised in paragraph 21 of the financial memorandum.

4.2 The Business Plan

4.2.1 The annual Business Plan shall reflect the key objectives and performance targets    of the Corporate Plan and shall be linked to budgeting information so that resources allocated to achieve specific objectives can readily be identified.

4.3 Publication of plans

4.3.1 Subject to any commercial considerations the corporate plans shall be made available on the internet and to all staff.

4.4 Reporting performance to the Departments

4.4.1 The Design Council shall operate management information and accounting systems which enable it to review in a timely and effective manner its financial and non-financial performance against the budgets and targets set out in its corporate and business plans.

4.4.2 The Design Council shall take the initiative in informing the Departments of changes in external conditions which make the achievement of objectives more or less difficult, or which may require a change to the budget or objectives set out in the corporate or business plans.

4.4.3 The Design Council's performance in the achievement of key objectives shall be reported to the Departments on a three-monthly basis. Performance will be formally reviewed twice yearly by officials of the Departments. The Secretaries of State shall meet the Board formally each year to discuss the Design Council's performance, its current and future activities and any policy developments relevant to those activities.

4.4.4 The Design Council's performance against key targets shall be reported in the Design Council's annual report and accounts [see Section 5.1 below].

4.5 Budgeting procedures

4.5.1 The Design Council's budgeting procedures are set out in the financial memorandum.

4.6 Internal audit

4.6.1 The Design Council shall establish and maintain arrangements for internal audit in accordance with the Treasury's Government Internal Audit Standards. The Design Council shall consult the Departments to ensure that the latter is satisfied with the competence and qualifications of the Head of Internal Audit and the requirements for approving appointment in accordance with Government Internal Audit Standards (GIAS) 5.2.

4.6.2 The Design Council shall set up an independent audit committee as a committee of its Board in accordance with the Cabinet Office’s Guidance on Codes of Practice for Public Bodies and the Tresaury’s Audit Committee Guidance.

4.6.3 The Design Council shall arrange for periodic quality reviews of its internal audit in accordance with the GIAS. The Departments shall consider whether it can rely on these reviews to provide assurance on the quality of internal audit. However, the Departments reserve a right of access to carry out independent reviews of internal audit in the Design Council.

4.6.4 The Departments' Internal Audit Service shall also have a right of access to all documents prepared by the Design Council's internal auditor, including where the service is contracted out. The audit strategy, periodic audit plans and annual audit report, including the Design Council's Head of Internal Audit's opinion on risk management, control and governance shall be forwarded as soon as possible to the sponsoring team who shall consult the Head of Internal Audit as appropriate.

4.6.5 In addition, the Design Council shall forward to the Departments an annual report on fraud and theft suffered by the Design Council; notify any unusual or major incidents as soon as possible; and notify any changes to internal audit's terms of reference, the audit committee's terms of reference or the Design Council's Fraud Policy and Fraud Response Plan.

4.7 Additional Departmental access to the Design Council

4.7.1 In addition to the right of access referred to in paragraph 4.6.3 above, the Departments shall have a right of access to all the Design Council's records and personnel for purposes such as sponsorship audits or operational investigations. 

5 External Accountability

5.1 The annual report and accounts

5.1.1 The report and accounts shall comply with the Treasury document Executive Non-Departmental Public Bodies: Annual Reports and Accounts Guidance. The accounts shall be prepared in accordance with the relevant statutes and the specific Accounts Direction issued by the DTI.

5.1.2 The report and accounts shall comply with the Treasury document Executive Non Departmental Public Bodies: Annual Reports and Accounts Guidance. The accounts shall be prepared in accordance with the relevant statutes and the specific Accounts Direction issued by the DTI.

5.1.3 The report and accounts shall outline the Design Council's main activities and performance during the previous financial year and set out in summary form the Design Council's forward plans. Information on performance against key financial targets shall be included in the notes to the accounts, and shall therefore be within the scope of the audit.

5.1.4 The report and accounts shall be placed in the House of Commons library by the DTI in accordance with the guidance on the procedures for presenting and laying the combined annual report and accounts as prescribed in Chapter 13 of the NDPB Annual Reports and Accounts Guidance.

5.2 External audit

5.2.1 The Comptroller and Auditor General (C&AG) audits the Design Council's annual accounts and passes the accounts to the DTI who shall place them in the House of Commons library. For the purpose of audit the C&AG has a statutory right of access to relevant documents as provided for in the Government Resources and Accounts Act 2000, including by virtue of any Order made under section 25(8) of that Act.

5.2.2 The C&AG has agreed to consult the DTI and the Design Council on who - the NAO or a commercial auditor - shall undertake the actual audit on his behalf. The final decision rests with the C&AG.

5.2.3 The C&AG has agreed to share with sponsor Departments information identified during the audit process and the audit report (together with any other outputs) at the end of the audit. This shall apply, in particular, to issues which impact on the Department's responsibilities in relation to financial systems within the Design Council. The C&AG has also agreed, where asked, to provide Departments and other relevant bodies with Regulatory Compliance Reports and other similar reports which Departments may request at the commencement of the audit and which are compatible with the independent auditor's role.

5.3 VFM examinations

5.3.1 The C&AG may carry out examinations into the economy, efficiency and effectiveness with which the Design Council has used its resources in discharging its functions. For the purpose of these examinations the C&AG has statutory access to documents as provided for under section 8 of the National Audit Act 1983. In addition, the Design Council shall provide, in conditions to grants and contracts, for the C&AG to exercise such access to documents held by grant recipients and contractors and sub-contractors as may be required for these examinations; and shall use its best endeavors to secure access for the C&AG to any other documents required by the C&AG which are held by other bodies.