VCA Framework Agreement

This page was last updated on 2nd March 2023

1.Introduction

This Framework Agreement has been drawn up by the Department for Transport (DfT, ‘the Department’) in consultation with its Executive Agency, the Vehicle Certification Agency (VCA, ‘the Agency’). It sets out the Agency’s governance, its legislative and financial regimes, how it reports to the Department, and the flexibilities it has with regard to staffing.

Copies of the document and any subsequent amendments have been placed in the Libraries of both Houses of Parliament and made available to members of the public on the Agency website.

The Department and the Agency will have an open and honest, trust-based partnership supported by the principles set out in the Cabinet Office ‘Partnerships between Departments and Arms-Length Bodies; Code of Good Practice’ and the Department’s own guide: ‘DfT’s Approach to Delivery Body Partnership’. As such, both parties will ensure that they clearly understand the strategic aims and objectives of their partners. Both partners will also commit to keeping each other informed of any significant issues and concerns.

The Agency’s core aim is to improve vehicle safety and environmental protection by providing vehicle and component testing, certification, information and other related services.

The Department’s Motoring Services Agency Sponsorship team (‘the Sponsorship Team’) is tasked with providing assurance to Ministers and the Permanent Secretary that the Agency is well managed. Demonstration of conformity to this framework is a central piece of evidence for that assurance.

The Sponsorship Team and the Agency Board will jointly review the framework regularly as required. An amended version will be effective on agreement of the relevant DfT Director General and the Agency Chief Executive.

2.The Agency

VCA is an executive agency of the Department. As such it has no separate legal identity.

The Agency exists to improve vehicle safety and environmental protection by providing vehicle, system and component testing, certification, information and other related services.

The Agency is designated by the Secretary of State to discharge their statutory responsibility for operating national, UNECE and European Community type approval schemes. The Agency is also designated to act as the UK authority for the certification of packaging and intermediate bulk containers used for the transport of dangerous goods.

The Agency aims to cover its operating costs from income.

Main Activities

The Agency delivers the Secretary of State’s responsibilities in respect of:

• Vehicle Type Approval:

As the UK Type Approval Authority for new on and off-road vehicles, systems and components, the Agency is responsible for approving that these have been designed and constructed to meet internationally agreed standards of safety, security and environmental protection.

The Agency takes its policy lead from the Department, through the International Vehicle Standards Division (IVS), part of the Energy, Technology and International, Directorate and the Traffic and Dangerous Goods teams. Some environmental policy lead comes from the Environment Strategy team and the Office for Low Emissions Vehicles (OLEV). The Agency Chairs the DfT Vehicle Technology Forum, working with policy colleagues, other DfT agencies and the Chief Scientific Advisors Unit. This group shares knowledge, understanding and experience of emerging technologies with a view to developing a common understanding and approach.

• Conformity of Production (CoP)

This is an integral and essential part of the type approval process and certification cannot be issued without adequate CoP procedures being in place. CoP provides confidence to industry, government and consumers that a given product is manufactured in accordance with the approved specification.

The process involves the evaluation of manufacturing processes to ensure that each product is manufactured in accordance with the approved specification.

Ongoing conformity is assessed throughout the manufacturing life of a product. This will involve site visits and reviewing records. Where evidence of non-compliance is discovered, this will be rigorously investigated and the appropriate steps taken to return the manufacturing process to conformity.

• Certification of Dangerous Goods Packaging

The Agency administers the operation of a scheme for the certification of packaging used in the carriage of dangerous goods in the UK. Each mode of transport has its own set of International Regulations, but all use packaging as defined in the United Nations (UN) recommendations for the transport of dangerous goods. The requirements for approved packaging are put into effect by separate Statutory Instruments.

• Civil Traffic Enforcement

Building on core experience, the Agency provides a certification service to local authorities who wish to operate bus lane and parking enforcement camera systems. This involves the evaluation of Technical Construction Files (TCFs) to assess compliance with the relevant requirements, with the ultimate aim of ensuring the integrity of evidence gathered using such systems. This service has been extended to cover authorities in Wales and Highways England’s Thames Link Crossing at Dartford.

• Data Provision

The Agency collects and publishes fuel consumption and CO2 emissions data for new cars, underpinning the Vehicle Excise Duty and Company Car Tax schemes. Accessed through GOV.UK, the data tools continue to be popular with consumers, with around 2.5 million users accessing data per year. This supports Government’s strategic drive towards reducing CO2 emissions by helping consumers to make low carbon choices.

Review

As required by Cabinet Office’s Tailored Reviews: Guidance on Reviews of Public Bodies, the Department will periodically commission independent reviews of the continuing need for all its agencies, including the VCA, assessing its capacity for delivery, and its control and governance arrangements. Such a review will be conducted once in the lifetime of a Parliament, and be followed by a review of the framework document.

Reviews can conclude that continued delivery by the body is appropriate, or that change is recommended. Potential alternative delivery options as a result of a tailored review include: merge with another body, bring in-house, commercial model, move out of central Government, or abolish. The Agency should be operating in a way that allows any of these options to be implemented in the event of a tailored review concluding that such action is appropriate.

Arrangements in the event that the Agency is wound up

The Department shall put in place arrangements to ensure the orderly winding up of the Agency. In particular it should ensure that the assets and liabilities of the Agency are passed to any successor organisation and accounted for properly. (In the event that there is no successor organisation, the assets and liabilities should revert to the Department.) To this end, the Department shall:

• ensure that procedures are in place in the Agency to gain independent assurance on key transactions, financial commitments, cash flows and other information needed to handle the wind-up effectively and to maintain the momentum of work inherited by any residuary body;
• specify the basis for the valuation and accounting treatment of the Agency’s assets and liabilities;
• ensure that arrangements are in place to prepare closing accounts and pass to the Comptroller and Auditor General (C&AG) for external audit, and that, for non- Crown bodies, funds are in place to pay for such audits. It shall be for the C&AG to lay the final accounts in Parliament, together with his report on the accounts;
• arrange for the most appropriate person to sign the closing In the event that another Agency takes on the role, responsibilities, assets and liabilities, the succeeding Agency Accounting Officer (AO) should sign the closing accounts. In the event that the Department inherits the role, responsibilities, assets and liabilities, the Department’s Accounting Officer should sign.

The Agency shall provide the Department with full details of all agreements where the Agency or its successors have a right to share in the financial gains of developers. It should also pass to the Department details of any other forms of claw-back due to the Agency.

3.Governance and Accountability

Ministers and Parliament

The relevant Minister for the Department gives account to Parliament for the work of the Agency. The Minister is appointed by the Secretary of State and is responsible for setting the policy framework within which the Agency operates, and for determining the criteria against which the Agency ’s performance is measured.

The relevant Minister will approve the Agency’s annual business plan and annual report and accounts before they are published.

The Secretary of State may meet the Chief Executive annually to discuss the Government’s priorities for the Agency and its performance in meeting its objectives. The Chief Executive briefs Ministers at other times when asked.

Parliamentary business

Where a Parliamentary Question is assigned to the Agency for drafting, the Chief Executive, or designated deputy(s) at Board level signs off the draft before it is returned to Parliamentary Branch. The Sponsorship Team should be kept informed where any concerns or issues arise relating to Parliamentary Questions.

Where correspondence from Members of Parliament to Ministers deals with Agency operational matters, the Chief Executive signs off a draft reply for the Minister’s signature, before it is returned to Private Office. The Sponsorship Team should be kept informed where any concerns or issues arise relating to correspondence.

Where Members of Parliament write directly to the Chief Executive, the Chief Executive replies, notifying the Sponsorship Team.

In accordance with the Osmotherly Rules, the Secretary of State decides whether (and which) officials should represent him/her at hearings of Parliamentary committees. He/she will normally ask the Agency Chief Executive to attend and give evidence when operational matters concerning the Agency are discussed.

As the Agency’s Accounting Officer, the Chief Executive has a personal responsibility to account to Parliament (through the Committee of Public Accounts) for the Agency’s compliance with the principles set out in Managing Public Money.

The role of the Department

The Agency is part of the Department for Transport. Within the Department, the Sponsorship Team is the primary liaison with the Agency. The Agency provides monthly financial and operational data to the Sponsorship Team and the Department’s Arms’ Length Body (ALB) finance business partners, to provide assurance on the Agency’s effective operation and to inform regular discussion between the Agency and the Department.

The Department works with the Agency in the development of the Agency’s annual business plan, including setting its detailed objectives and performance metrics.

The plan is signed off by the Agency Board and approved by Ministers. The Sponsorship Team organises quarterly performance reviews of the Agency, to check progress against the annual business plan. The Director responsible for the sponsorship team in the Department chairs these meetings. The Agency’s Chief Executive and Chief Finance Officer attend.

The relevant DfT Director General is line manager to the Chief Executive. This Director General represents the Agency on the Department Board and its sub- groups. The Chief Executive may attend the Group Board for Agency risk and performance items. The Chief Executive also attends the Motoring Services Board (MSB).

The Agency Chair and other non-executive directors attend bi-annual gatherings of motoring agency non-executives.

The Agency cooperates with policy divisions within the Department in developing the practical aspects of policy relating to its statutory activities. The Agency works with the Sponsorship Team and the Department’s policy teams and lawyers in planning and implementing any legislative changes required by policy developments. Where policy divisions commission work from the Agency the Agency acts as the Department’s client.

Department for Transport – Principal Accounting Officer (PAO) Accountabilities and Responsibilities

The Permanent Secretary is the Department’s Principal Accounting Officer (PAO) and is responsible for the management of the Department including its executive agencies. The Department PAO has designated the Chief Executive as the Agency’s accounting officer. (The respective responsibilities of the PAO and accounting officers for Delivery Bodies are set out in Chapter 3 of Managing Public Money which is sent separately to the accounting officer on appointment.)

The PAO is accountable to parliament for the issue of any grant-in-aid to the Agency. The PAO is also responsible for advising the responsible minister:

• on an appropriate framework of objectives and targets for the Agency in the light of the Department’s wider strategic aims and priorities;
• on an appropriate budget for the Agency in the light of the Department’s overall public expenditure priorities; and
• how well the Agency is achieving its strategic objectives and whether it is delivering value for money.

The PAO is also responsible for ensuring arrangements are in place in order to:

• monitor the Agency’s activities;
• address significant problems in the Agency, making such interventions as are judged necessary;
• periodically carry out an assessment of the risks both to the Department and the Agency’s objectives and activities;
• inform the Agency of relevant government policy in a timely manner; and
• bring concerns about the activities of the Agency to the full Agency board, and, as appropriate to the Departmental Board requiring explanations and assurances that appropriate action has been taken.

To provide assurance to the Permanent Secretary that the Agency has adequate financial management and control systems and procedures in place:

• the Agency provides the Department with comprehensive financial and performance data, so that Agency performance can be assessed in the wider context of DfT Group performance;
• the Deputy Director of the Sponsorship Team provides an annual sponsor’s assurance statement to the Permanent Secretary that the Agency has appropriate governance arrangements in place;
• the Chief Executive makes an annual governance statement in the annual report and accounts;
• Group Audit, Risk and Assurance Committee (GARAC) reviews the Agency’s annual management assurance statement.

Submissions to Ministers

The Sponsorship Team will work in partnership with the Agency, to jointly shape and agree the content of any ministerial submission, and to determine the appropriate clearances required.

Chief Executive

General

The Chief Executive is the Agency’s senior official, and is responsible for the leadership, management and operation of the Agency. They are assisted in this by the Agency Board.

The Chief Executive is appointed by the Permanent Secretary. Although normally providing account through the relevant Director General for Agency business, they have direct access to Ministers when necessary.

The Chief Executive as Agency Accounting Officer

The DfT Permanent Secretary appoints the Chief Executive as Accounting Officer for the Agency. As Accounting Officer, they are personally responsible to Parliament for safeguarding the public funds for which they have charge; for ensuring propriety, regularity, value for money and feasibility in the handling of those public funds; and for the day-to-day operations and management of the Agency, including the efficient and effective use of staff and other resources. In addition, they should ensure that the Agency as a whole is run on the basis of the standards, in terms of governance, decision-making and financial management that are set out in Box 3.1 of Managing Public Money.

As Accounting Officer, the Chief Executive commissions preparation of the Agency’s annual report and accounts, and signs them. This includes 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 Her Majesty’s Treasury. As part of this the Chief Executive prepares and signs a Governance Statement, covering corporate governance, risk management and oversight of any local responsibilities, for inclusion in the annual report and accounts. They also ensure that effective procedures for handling complaints about the Agency are established, and made widely known within the Agency.

The Chief Executive acts (and ensures that other Agency officials act) in accordance with Managing Public Money and other instructions and guidance issued by the Department, the Treasury and the Cabinet Office. They also put into effect any relevant recommendations, accepted by Government, from the House of Commons’ Committee of Public Accounts or other Parliamentary Committees.

The Chief Executive is also responsible for giving evidence, normally with the PAO, when summoned before the Public Accounts Committee (PAC) on the Agency’s stewardship of public funds.

Responsibilities to the Department

The Chief Executive ensures that the Agency works effectively with the Department in the discharge of Ministerial and legislative demands. In particular the Chief Executive:

• agrees the Agency’s corporate and business plans in the light of the Department’s wider strategic aims and agreed priorities;
• regularly informs the Department of achievement of the Department’s policy objectives, and demonstrates how resources are being used to achieve those objectives;
• provides timely forecasts and monitoring information on Agency performance and finance to the Department; and
• ensures that the Department is notified promptly if over or under spends 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.

Responsibilities to the Board

The Chief Executive is responsible for:

• advising the board on the discharge of the Agency’s responsibilities as set out in this document, in the founding legislation and in any other relevant instructions and guidance that may be issued from time to time;
• advising the board on the Agency’s performance compared with its aims and objectives;
• ensuring that financial considerations are taken fully into account by the Agency’s Board at all stages in reaching and executing its decisions, and that financial appraisal techniques are followed;

where the decisions of the Agency’s Board conflict with the Chief Executive’s responsibilities as Accounting Officer, they will follow the procedures in Managing Public Money for resolving such conflicts. The Chief Executive is responsible for taking action as set out in paragraph 3.8.6 of Managing Public Money if the board, or its Chair, 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, efficiency or effectiveness, is of questionable feasibility, or is unethical.

4.The Agency Board

The Agency is governed by a Board, which supports the Chief Executive. This meets regularly to discuss strategic issues affecting the Agency. It sets strategic aims, ensures that the necessary financial and human resources are in place for the organisation to meet its objectives, and reviews business performance. It sets values and standards and ensures its obligations to customers and other stakeholders are understood and met. The Board is responsible for providing leadership within a framework of prudent and effective controls, which enables risk to be assessed and managed and allows the Accounting Officer to effectively discharge their role.

The Agency Board should ensure that effective arrangements are in place to provide assurance on risk management, governance and internal control. The Agency Board is expected to assure itself of the effectiveness of the internal control and risk management systems.

The Agency Board is specifically responsible for:

• establishing and taking forward the strategic aims and objectives of the Agency, holding the executive board members to account for the effective and efficient delivery of the business plan, consistent with its overall strategic direction and within the policy and resources framework determined by the Secretary of State;
• ensuring that the responsible Minister is kept informed of any changes which are likely to impact on the strategic direction of the Agency Board or on the attainability of its targets, and determining the steps needed to deal with such changes;
• ensuring that any statutory or administrative requirements for the use of public funds as set out in Managing Public Money are complied with;
• that the Agency Board operates within the limits of its statutory authority and any delegated authority agreed with the Department, and in accordance with any other conditions relating to the use of public funds; and that, in reaching decisions, the Agency Board takes into account guidance issued by the Department;
• ensuring that the Agency Board receives and reviews regular financial information concerning the management of the Agency; is informed in a timely manner about any concerns about the activities of the Agency; and provides positive assurance to the Department that appropriate action has been taken on such concerns;
• demonstrating high standards of corporate governance at all times, including by using the independent audit committee to help the Board to address key financial and other risks.

Composition of the Board

In line with the Government’s Governance Code on Public Appointments; in addition to the Chief Executive and a Chair, the Agency Board will, at the discretion of the Chair, comprise executive and non-executive members that have a balance of skills and experience appropriate to directing the Agency’s business. For the Agency there should be members who have experience of its business, operational delivery, and corporate services such as HR (Human Resources), finance, technology, property asset management, estate management, communications, and performance management. Non-executive members ensure that executive members are supported and constructively challenged in their role. They are not employees of the Agency and are not otherwise affiliated with the Agency.

The senior nominated Sponsor will have a standing invitation to attend all VCA board meetings and other senior department personnel will be invited on a standing basis to observe and where necessary contribute to board meetings.

The Chair’s Personal Responsibilities

The Chair is responsible to the named Minister.

Communications between the Agency Board and the responsible Minister should normally be through the Chair. The Chair is responsible for ensuring that policies and actions of Agency support the responsible Minister’s (and where relevant other ministers’) wider strategic policies and that its affairs are conducted with probity.

Where appropriate, these policies and actions should be clearly communicated and disseminated throughout the Agency.

In addition, the Chair has the following leadership responsibilities:

• supporting the formulation of the VCA board’s strategy
• ensuring that the Agency board, in reaching decisions, takes proper account of guidance provided by the responsible Minister or the Department;
• promoting the efficient and effective use of staff and other resources;
• delivering high standards of regularity and propriety;
• representing the views of the board to the general public; and
• reporting annually on their performance and that of their Board, supported by feedback including peer review, to the Board and the relevant Director General, and sharing this with the Sponsorship team.

The Chair has an obligation to ensure the Agency board effectiveness, including:

• that the work of the Agency Board is reviewed annually and the Board is working effectively;
• providing feedback and evidence of the review of the Agency Board and its members to the Board, the relevant Director General, and the Sponsorship Team;
• that the Agency Board has a balance of skills appropriate to directing the Agency’s business, as set out in the Government Code of Good Practice for Corporate Governance;
• reporting any concerns over the Agency Board effectiveness to the Chief Executive and the Sponsorship Team;
• all the Agency Board members are fully briefed on terms of appointment, duties, rights and responsibilities;
• the responsible Minister is advised of the Agency’s needs (skill, knowledge, strengths, areas for improvement), when board vacancies arise; through the Sponsorship Team who, in conjunction with Governance Public Appointments Team will organise and manage the appointments process;
• assessing the performance of individual non-executive Agency Board members when being considered for re-appointment; providing a formal written performance appraisal to the Sponsorship Team and the Department’s Governance Division – Public Appointments team, bearing in mind re- appointments are not automatic;
• there is an Agency Board Operating Framework in place setting out the roles and responsibilities of the Board consistent with the Government Code of Good Practice for Corporate Governance; and
• there is a code of practice for all Agency Board members in place, consistent with the Cabinet Office Code of Conduct for Board Members of Public Bodies.

Non-Executive Directors

The Non-Executive Directors (including the Chair) challenge and support the Board of Directors to ensure that it operates in the best possible interests of the Agency and its stakeholders. They are not employees of the Agency and are not otherwise affiliated with the Agency.

Meetings of the Board will be chaired by the Non-Executive Chair. They will ensure that the Board works effectively, that its work and effectiveness are regularly reviewed, and that Board members are appropriately trained to discharge their duties.

Individual Non-Executive Board members should:

• comply at all times with the Cabinet Office’s Code of Conduct for Board Members of Public Bodies 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

Board sub-groups

The Agency Board is supported by the following sub-groups:

• Audit and Risk Assurance Committee;
• Health & Safety Committee;
• Project Review Committee
• ICT User Group

The Audit and Risk Assurance Committee is able to raise concerns to the Board and/or through the Department Chairs of the Audit Committee’s forum.

A Non-Executive Director is chair of the Audit Committee. The Health & Safety Committee is chaired by the Chief Finance Officer.

Other membership of these sub-groups is drawn from the Board membership, at the discretion of the Board.

Board effectiveness

The Chair assesses the performance of individual Non-Executive Board members annually. The Chair advises the DfT Public Appointments team, via the Sponsorship Team, on suitability for re-appointment, when occasion arises; or advises on skill needs when new NEDs (Non-Executive Directors) need to be appointed.

The Board Chair ensures that there is annual assessment of the Board’s effectiveness (including the effectiveness of its sub-groups), independently validated if necessary; and provides evidence, annually, of the review of the board and its members to the Board, the relevant Director General, and the Sponsorship Team.

The Chair is also responsible for conducting annual appraisals of the performance of the other Non-Executive Directors.

Annually, the Chair participates in a discussion with the Department’s Permanent Secretary (or nominated deputy), on the Board’s performance.

The Chair is responsible for discussing and agreeing with the CEO any recommended changes to the Board, to address shortcomings in effectiveness. Where necessary, the Chair informs the CEO of recommended changes or of gaps in Board capabilities (including gaps in the range of experience of the NEDs).

Board appointments

The Agency Chair and Non-Executive Board members are appointed for fixed terms by the Secretary of State, following the requirements of the Commissioner for Public Appointments’ Government’s Governance Code on Public Appointments.

The Sponsorship Team is responsible for organising the recruitment and reappointment of the NEDs, and for submitting proposals to the Secretary of State for agreement with approval from the DfT Public Appointments team. In making decisions, the Secretary of State will have regard to the composition of the Board, to ensure that, together, the NEDs bring an appropriate breadth of experience.

The Chief Executive and executive members of the Board are civil servants, and are recruited and appointed in accordance with the appropriate civil service rules.

Relationship with other UK bodies

The Agency’s relationships with the devolved administrations of Scotland, Wales and Northern Ireland follow the principles set out in the Memorandum of Understanding between the Westminster Parliament and those administrations, and relevant Concordats which are in force.

5.Financial Regime

Management and financial responsibilities

The Agency is subject to the requirements of Managing Public Money and other Treasury requirements. The Agency is also subject to any Cabinet Office expenditure controls. A list of guidance and instructions is in Annex B.

The Agency’s Chief Executive is provided with a delegation letter by the Principal Accounting Officer of the Department. Within that delegated authority, the Agency has authority to incur expenditure without further recourse to the Department, on the following conditions:

• inclusion of any planned and approved expenditure in the budget shall not remove the need to seek formal Departmental approval where any proposed expenditure is outside the delegated limits or is for new schemes not previously agreed;
• the Agency shall comply with Managing Public Money regarding novel, contentious or repercussive proposals;
• making any significant change in the scale of operation or funding of any initiative or particular scheme previously approved by the Department;
• making any change of policy or practice which has wider financial implications that might prove repercussive or which might significantly affect the future level of resources required.
• the Agency shall provide the Department with such information about its operations, performance individual projects or other expenditure as the Department may reasonably require;
• the Agency shall work in accordance with the Commercial Operating Standards for Government and appropriate commercial and spending controls referred to in Annex B.

Contractual Delegation

Contractual Delegation is the authority to sign, make or amend contractual commitment on behalf of the Secretary of State for Transport. It is not the same as authority to financially commit the Secretary of State for Transport to making payments from official budgets. There must be a clear separation between the two. This means that the same person cannot exercise both a financial and contractual delegation for the same requirement.

Contractual Authority allows a holder to approve the proposed method of procurement, the issuing of tenders and the award of contracts up to the value of the delegation. Contractual Authority is always subject to the availability of funds and the necessary financial and business case approval controls.

By way of this framework agreement, Contractual Authority is delegated by the DfT Principal Accounting Officer to the Chief Executive of VCA, who has the authority to sub-delegate where there is a business need. The Chief Executive may sub- delegate contractual authority in writing to any named individual staff member in accordance with the terms set out in paragraph 5.3 above.

Delegated authorities within the organisation must be clearly defined in a manual or equivalent instruction and must be consistent with any governance and regulatory requirements set by HM Treasury or the Department. Contractual authority must be in line with the financial limits delegated on an annual basis and should not exceed this.

Business planning

Starting in the autumn each year, the Agency works with the Department to agree a business plan for the following year. This will include the key performance measures and budget against which Agency performance is to be assessed. The business plan will include:

• key objectives and associated key performance targets for the forward year, and the plan for achieving those objectives;
• key non-financial performance targets;
• an estimated outturn for the preceding financial year, together with a forecast for the plan year (broken down by major expenditure and income areas;
• an assessment of the risk factors that may significantly affect delivery of the plan; and
• other matters as agreed between the Department and the

The Agency publishes its strategy and annual business plans on GOV.UK and draws the attention of staff and stakeholders to their content.

Performance Management and Reporting

The Agency shall report financial and non-financial performance, including performance in helping to deliver ministers’ policies, and the achievements of key objectives.

The Agency operates management, information and accounting systems that enable it to review in a timely and effective manner its financial and non-financial performance against the budgets and targets set out in the corporate and business plans.

The Chief Executive and Board are responsible for preparing the Agency’s annual report and accounts, and having them audited, agreed by Ministers and laid before Parliament.

Reporting performance to the Department

The Agency provides the Department with monthly performance/ outturn data and an updated forecast for the remaining months of the year, in a format specified by the Department. The Department may require further performance data during the year.

Quarterly, the Agency meets the Department to review its performance. These meetings are chaired by the Director of the sponsorship team in the Department, and the Agency is represented by the Chief Executive and Director of Finance. Other policy leads in the Department may attend as appropriate, along with the relevant finance business partner.

The Chief Executive may meet the Secretary of State each year to give account of the Agency’s performance. The Chief Executive meets the Permanent Secretary or the relevant Director General each year to give account of the Agency’s governance and Board effectiveness.

Investment/Project spend

All proposed expenditure, should conform to the appropriate financial controls that apply in accordance with HMT Green Book and those issued by the Department. All proposals are to be supported by a robust business case containing all relevant information about the proposed investment in line with the Department’s ‘Business Case Approval Framework’ and the ‘DfT Controls Approvals’ guide, and follow the government Commercial Operating Standards. See Annex B.

All proposed expenditure in which there is a ‘Digital’ element will require approval by the Department’s Digital Services, who in turn will advise and liaise with Cabinet Office – Government Digital Services (GDS) as required. See Annex B.

The Agency shall comply with the specific controls on spending introduced by the Cabinet Office to ensure the efficient and effective use of taxpayers’ money. The main control areas include spending on advertising, marketing and communications, ICT, and consultancy.

All Investment decisions should be made in accordance with the ‘Business Case Approval Framework’, in liaison with the Sponsorship Team and Commercial Services as appropriate.

Tier 1 and Tier 2 Programmes and Projects must seek approval from their investment approvals body for two primary types of activity:

• Major Investment Decisions: Programmes and Projects should seek approval for their Business Cases at the Strategic Outline, Outline, and Full Stages.
• Major Commercial Decisions: Where the Programme or Project involves a procurement led by the Department (including Executive Agencies and Arm’s Length Bodies), further scrutiny and approvals are also required.

The Agency manages investment and spending in excess of £50k through the existing Board structure, ensuring:

• spend decisions are endorsed by the Agency Board; and
• there is adequate internal challenge to the proposals (at the level usually exercised by centres of excellence in the Department).

Tier 1 projects (those with a lifetime cost of £100m and above, or could be considered novel, contentious, or repercussive) will need authorisation from the Department’s Board Investment and Change Committee (BICC) and Procurement Assurance Board (PAB).

The Agency will copy BICC papers to the Sponsorship Team for information (or Committee attendance as appropriate). It will also provide a forward look of Tier 1 and Tier 2 projects to the Sponsorship Team as appropriate.

All expenditure including projects, and programmes, that include a commercial transaction valued at £10 million or more and/or any material change to services affecting an existing contract, with an estimated value of £10 million or more, which results in a contract variation, needs to reference the >£10m commercial control and application of current process and follow the applicable process agreed between the Department and the Government Commercial Function (GCF).

The Infrastructure & Projects Authority (IPA) must be informed of all projects and programmes which meet their criteria, which the Agency should do through the Sponsorship Team, together with the DfT PPM Centre of Excellence (CoE) who maintains the register and details of all the Department’s major projects and monitors progress.

In addition, IPA guidance sets out stages at which projects and programmes should be reviewed before an investment decision should be sought.

The IPA offers guidance and reviews major projects and the outcome of such review is a requirement of the approval process.

Grant-in-aid and Ring-fenced Grants

Any grant-in-aid provided by the Department for the year in question will be voted in the Department’s Supply Estimate and be subject to Parliamentary control.

The grant-in-aid will normally be paid in monthly instalments on the basis of written applications showing evidence of need. The Agency will comply with the general principle, that there is no payment in advance of need. Cash balances accumulated during the course of the year from grant-in-aid or other Exchequer funds shall be kept to a minimum level consistent with the efficient operation of the Agency. Grant- in-aid not drawn down by the end of the financial year shall lapse. Subject to approval by parliament of the relevant Estimates provision, where grant-in-aid is delayed to avoid excess cash balances at the year-end, the Department will make available in the next financial year any such grant-in-aid that is required to meet any liabilities at the year end, such as creditors.

In the event that the Department provides the Agency separate grants for specific (ring-fenced) purposes, it would issue the grant as and when the Agency needed it on the basis of a written request. The Agency would provide evidence that the grant was used for the purposes authorised by the Department. The Agency shall not have uncommitted grant funds in hand, nor carry grant funds over to another financial year.

Risk management

The Chief Executive is responsible for maintaining an effective risk management system for the Agency, and for its implementation. The Agency’s approach and documentation will be compatible with that of the Department and the Treasury Orange Book (Management of Risk: Principles and Concepts). The Chief Executive reviews this system at least annually and reports its effectiveness via the Governance Statement within the Annual Report and Accounts. The risk management system is additionally examined by the Audit Committee.

The Agency Board considers regular assessments of threats to, and opportunities for, the Agency’s business. High risks (those scoring more than 12 on the Department’s scale) are escalated via the Sponsorship Team to the relevant DfT Group Board, who may consider further escalation to the Department’s Executive Committee (ExCo) if necessary. The Agency Board ensures that the risks that the Agency faces are dealt with in an appropriate manner.

The Agency should adopt and implement policies and practices to safeguard itself against fraud and theft, in line with the Treasury’s guidance on tackling fraud. It should also take all reasonable steps to appraise the financial standing of any firm or other body with which it intends to enter into a contract or to give grant or grant- in-aid.

The Agency shall ensure that the risks that it faces are dealt with in an appropriate manner, in accordance with relevant aspects of best practice in corporate governance, and develop a risk management strategy, in accordance with the HM Treasury guidance Orange Book: Management of Risk: Principles and Concepts.

The Agency Board will have regard to the Department for Transport’s Risk Management Policy and Guidance, launched in 2018. This will include working with the Department’s Governance Division Risk Team to implement the Department for Transport’s ‘Delivery Body Risk Escalation Protocol’, as referred to in the policy.

This will also include working with the DfT Governance Division Risk Team regarding the requirement to escalate their top risks as part of implementing the ‘Inform-Warn-Consult’ risk escalation process that is due to be implemented as part of the improvements referred to above.

A Non-Executive Board Director will chair the Audit and Risk Assurance Committee, and all non-executive board directors will be permanent members of it, who will report to the Department’s Group Audit, Risk, & Assurance Committee (GARAC) by virtue of the chair being a member of GARAC. However, any board member may raise concerns to the Department at any time through ministers and/or senior officials.

6.Audit and Accounting

Accounting procedures

As Agency Accounting Officer, the Chief Executive will ensure that proper financial procedures are followed, and that appropriate accounting records are maintained to satisfy internal management reporting and external audit requirements.

Annual Report and Accounts

The Agency Board must publish an annual report of its activities together with its audited accounts after the end of each financial year. The annual report must comply with the Treasury’s Financial Reporting Manual (FreM) and any Accounts Direction set by Treasury. The Agency’s accounts are consolidated into the Department’s accounts.

The annual report must:

• cover any corporate, subsidiary or joint ventures under its control;
• comply with the Treasury’s Financial Reporting Manual (FreM);
• outline main activities and performance during the previous financial year and set out in summary form forward plans.

Information on performance against key financial targets is within the scope of the audit and should be included in the notes to the accounts. The report and accounts shall be laid in parliament and made available on the Agency’s website, in accordance with the guidance in the FReM. A draft of the report should be submitted to the Department [two weeks] before the proposed publication date. The accounts should be prepared in accordance with the relevant statutes and specific accounts direction issued by the Department as well as the FReM.

The accounts are audited by the Comptroller and Auditor General, and signed off by Ministers. They are laid before Parliament, in accordance with the Government Resources and Accounts Act 2000, before the summer recess each year. The Agency publishes them on GOV.UK.

Audit Arrangements

The Agency Board has an Audit and Risk Assurance Committee.

The Department has right of access to all Agency records and personnel for any purpose including, for example, sponsorship audits and operational investigations.

Internal audit

The Government Internal Audit Agency (GIAA) provides an internal audit function for the Agency, governed by a memorandum of understanding between the two bodies. The Board will annually agree an audit programme with the GIAA. The internal audit service has right of access to all Agency documents.

The Agency’s head of Internal Audit shall have direct access to the Chief Executive and the Chair of the Audit and Risk Assurance Committee regarding matters of concern, risk or control, both through open dialogue and in regular meetings.

The Agency will forward the audit strategy, periodic audit plans and annual audit report, including the Agency Head of Internal Audit opinion on risk management, control and governance as soon as possible to the Department. They will also keep records of, and prepare and forward to the Department, an annual report on fraud and theft suffered by the Agency and notify the Department of any unusual or major incidents as soon as possible.

The Department sponsor has a right of access to all documents, including where the internal audit service is contracted out.

External audit

The Comptroller and Auditor General (C and AG) audits the Agency’s annual accounts. The C and AG may also carry out examinations into the economy, efficiency and effectiveness with which the Agency has used its resources in discharging its functions.

The C and AG has a statutory right of access to relevant documents, including by virtue of section 25(8) of the Government Resources and Accounts Act 2000, those held by another party in receipt of payments or grants from the Agency.

The C and AG will report to the Chief Executive and the Department issues identified during the audit process.

The C and AG may carry out examinations into the economy, efficiency and effectiveness with which the Agency has used its resources in discharging its functions. For the purpose of these examinations the C and AG has statutory access to documents as provided for under section 8 of the National Audit Act 1983. In addition, the Agency shall provide, in conditions to grants and contracts, for the C and 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 endeavours to secure access for the C and AG to any other documents required by the C and AG which are held by other bodies.

7.Staff, Pay and Recruitment

General

The Chief Executive is responsible for the human resource management of the Agency’s staff, within the context of civil service and Departmental policies. He/she is responsible for recruiting, retaining and motivating staff, including contingent staff, so that:

• there is an inclusive culture in which diversity is fully valued; where appointment and advancement is based on merit: and where there is no discrimination on grounds of gender, marital status, sexual orientation, race, colour, ethnic or national origin, religion, disability, community background or age;
• the level and structure of staffing, including grading and staff numbers, are appropriate to its functions and the requirements of economy, efficiency and effectiveness;
• the performance of staff at all levels is satisfactorily appraised and the performance measurement systems are reviewed from time to time;
• staff are encouraged to acquire the appropriate professional, management and other expertise necessary to achieve the Agency’s objectives;
• proper consultation with staff and unions takes place on key issues affecting them;
• adequate whistleblowing procedures consistent with the Public Interest Disclosure Act grievance and disciplinary procedures are in place.

The Department negotiates and sets staff terms and conditions, including pay, for the Agency (except for the Senior Civil Service, where terms and conditions are set across the Civil Service).

The Agency maintains an employee handbook, which sets out terms and conditions for the Agency’s staff based on the Cabinet Office’s Model Code for Staff of Executive Non-Departmental Public Bodies. This is provided to the Department together with subsequent amendments.

The Agency Staff Costs

Subject to its delegated authorities, the Agency shall ensure that the creation of any additional posts does not incur forward commitments that will exceed its ability to pay for them, without agreeing with the Sponsorship Team. The broad responsibilities of the Agency toward its staff will be that:

• its rules for the recruitment and management of staff create an inclusive culture in which diversity is fully valued, where appointment and advancement is based on merit, and discrimination is not tolerated;
• the level and structure of its staffing is appropriate to its functions and the requirements of efficiency, effectiveness and economy;
• the performance of its staff at all levels is satisfactorily appraised, employees are clear about what is expected of them and the performance measurement systems are reviewed from time to time;
• its staff are encouraged to acquire the appropriate professional, management and other expertise necessary to achieve the objectives of the Agency;
• proper consultation with staff takes place on key issues affecting them; and
• appropriate grievance and disciplinary procedures are in place, whistleblowing procedures are in place consistent with the Public Interest Disclosure Act are in

The Agency Pay and Conditions of Service

Agency staff are subject to levels of remuneration and terms and conditions of service (including pensions) within the general pay structure approved by the Department and the Treasury. The Agency has no delegated power to amend these terms and conditions.

If civil service terms and conditions of service apply to the rates of pay and non-pay allowances paid to the staff and to any other party entitled to payment in respect of travel expenses or other allowances, payment shall be made in accordance with the Civil Service Management Code, and other relevant guidance, except where prior approval has been given by the Department to vary such rates.

The Agency shall comply with the applicable UK statute on contract workers – the Fixed-Term Employees (Prevention of Less Favourable Treatment) Regulations.

The travel expenses of non-executive board members are tied to the rates allowed to senior staff of Agency, in accordance with departmental rates. Reasonable actual costs are reimbursed.

For the avoidance of doubt, departmental travel and subsistence policy states that for UK rail and air travel all staff must travel standard class irrespective of grade, except under certain circumstances, including;

• temporary or permanent disability;
  • a temporary disability might include things such as a broken leg or arm, or any injury or other condition that affects mobility.
  • a permanent disability is as defined by the Equality Act
• pregnancy related

Reasonable actual costs incurred that follow this guidance, with evidence, are reimbursed.

Recruitment and Promotion

Subject to wider Government and Departmental policies, the Agency may recruit and promote to any post in the Agency, except Senior Civil Service posts, in accordance with Departmental rules and procedures and the Civil Service Management Code. Recruitment and promotion are on merit.

Subject to its delegated authorities, the Agency ensures that the creation of new posts does not incur forward commitments that will exceed its ability to pay for them.

Training and Development

The Agency operates systems and processes for identifying and meeting the training and development needs of all Agency staff.

Pensions, Redundancy and Compensation

The Agency staff shall normally be eligible for a pension provided by the Principal Civil Service Pension Scheme (PCSPS). Staff may opt out of the occupational pension scheme provided.

Any proposal by the Agency to move from the existing pension arrangements, or to pay any redundancy or compensation for loss of office, requires the prior approval of the Department. Proposals on severance must comply with the rules in Chapter 4 of Managing Public Money.

Employee Relations

The Chief Executive is responsible for employee relations within the Agency. The Agency is committed to make full use of the skills and talents of staff and to provide them with an opportunity to contribute to decisions affecting their jobs.

The Agency attaches importance to engagement with staff. It recognises the PCS (Public and Commercial Services Union) and Prospect as representing some of the Agency’s staff, and ensures appropriate consultative arrangements exist with them. In addition, the Agency also communicates and consults with staff who have decided not to join a union.

Annex A: Functions and Statutory Powers

Vehicle Type Approval:

Automotive type approval is the Agency’s primary function, carried out on behalf of the Secretary of State under:

• The United Nations Regulations (“1958 Agreement” – E/ECE/TRANS/505/Rev.3)
• The European Union:
  • Directive 2007/46/EC
  • Regulation EU 167/2013
  • Regulation EU 168/2013
  • Regulation EU 2016/1628
• The Road Vehicles (Approval) Regulations 2009 (SI 2009 No. 717, as amended), which implements the framework EU Directive 2007/46/EC, as amended for cars, trucks, buses, and trailers
• The Motorcycles (Type-Approval) Regulations 2018 (SI 2018 235), which implement certain provisions of the framework regulation EU 168/2013 (as amended) for motorcycles, tricycles, and quadricycles
• The Agricultural and Forestry Vehicles (Type-Approval) Regulations 2018 (SI 2018 No.236), which implement certain provisions of the framework regulation EU 167/2013 (as amended) for agricultural and forestry vehicles
• The Non-Road Mobile Machinery (Type-Approval and Emission of Gaseous and Particulate Pollutants) Regulations 2018 (SI 2018 No. 764), which implement certain provisions of the regulation EU 2016/1628 (as amended) for Non-Road Mobile Machinery

Fees for type approval work are charged in accordance with the Motor Vehicles (Type Approval and Approval Marks) (Fees) Regulations 1999, as amended.

Vehicle Special Orders are issued under Section 44 of the Road Traffic Act 1988.

Civil Traffic Enforcement:

Certification of parking and bus lane civil enforcement camera systems is issued on behalf of the Department under the Civil Enforcement of Parking Contraventions (Approved Devices) (England) Order 2007 and the Bus Lanes (Approved Devices) (England) Order 2005 respectively.

Certification of Packaging used for the Transport of Dangerous Goods:

The VCA Dangerous Goods Office is the UK authority for the certification of packaging and intermediate bulk containers used for the transport of dangerous goods, in accordance with national and international regulations.

The Agency is also the Competent Authority for the appointment of Tank inspection bodies.

Fuel Consumption and CO2:

The Agency is the nominated UK enforcement body in relation to the provision of fuel consumption and CO2 information in promotional literature. The relevant provisions are outlined in the Passenger Car (Fuel Consumption and CO2 Emissions Information) Regulations 2001, as amended.

In addition to this, the Agency provides an annual guide on fuel consumption and CO2 data for new cars on sale in the UK. Again, the relevant provisions are outlined in the above.

Annex B: List of Government-wide Corporate Guidance Instructions

Compliance with government-wide corporate guidance and instructions

The Body shall comply with the following general guidance and instructions within this Framework Agreement and associated documentation:

Appropriate adaptations of sections of Corporate Governance in Central Government Departments: Code of Good Practice; https://www.gov.uk/government/publications/corporate-governance-code-for-central-government-departments-2017

Code of Practice for Ministerial Appointments to Public Bodies; https://www.gov.uk/government/publications/code-of-practice-for-ministerial-appointments-to-public-bodies

Managing Public Money (MPM); https://www.gov.uk/government/publications/managing-public-money

HMT Green Book; https://www.gov.uk/government/publications/the-green-book-appraisal-and-evaluation-in-central-governent

Cabinet Office ‘Partnerships between departments and arms-length bodies: Code of Good Practice; https://www.gov.uk/government/publications/partnerships-with-arms-length-bodies-code-of-good-practice

The ‘DfT Controls Approvals’ guidance on financial controls

The department’s ‘Business Case Approvals Framework’

Details of the departments Centres of Excellence

HM Treasury: Public Sector Internal Audit Standards; https://www.gov.uk/government/publications/public-sector-internal-audit-standards

HMT Orange Book: Management of Risk: Principles and Concepts; https://www.gov.uk/government/publications/orange-book

Government Financial Reporting Manual (FReM); https://www.gov.uk/government/publications/government-financial-reporting-manual-2016-to-2017

Civil Service Management Code; https://www.gov.uk/government/publications/civil- servants-terms-and-conditions

Commercial Operating Standards for Government – they are set to provide for continuous improvement; https://www.gov.uk/government/publications/commercial-operating-standards-for-government

Detailed guidance on specific commercial controls and the processes can be found here; https://www.gov.uk/government/collections/cabinet-office-controls

Cabinet Office – Government Digital Service – spend controls; https://www.gov.uk/service-manual/agile-delivery/spend-controls-check-if-you-need-approval-to-spend-money-on-a-service

The Government Commercial Function and the Commercial Operating Standards; https://www.gov.uk/government/publications/commercial-operating-standards-for-government

Public Sector Procurement Policy; https://www.gov.uk/guidance/public-sector-procurement-policy

The Government Infrastructure and Projects Authority assurance review toolkit; https://www.gov.uk/government/collections/infrastructure-and-projects-authority-assurance-review-toolkit

The DfT Project and Programme Delivery Framework

HM Treasury Guidance on Tackling Fraud; https://webarchive.nationalarchives.gov.uk/ukgwa/20130102173306/http://www.hm-treasury.gov.uk/psr_managing_risk_of_fraud.htm

See also;

Managing Public Money – Chapter 6: Fees and Charges Guide.

Managing Public Money – Departmental Banking: A Manual for Government Departments, annex 5.6

Consolidation Officer Memorandum, and relevant DCO letters;

Relevant Freedom of Information Act guidance and instructions;

Relevant ‘Dear Accounting Officer’ letters; https://www.gov.uk/government/collections/dao-letters

Regularity, Propriety and Value for Money; https://webarchive.nationalarchives.gov.uk/ukgwa/20130102173401/http://www.hm-treasury.gov.uk/psr_governance_valueformoney.htm

The Parliamentary and Health Service Ombudsman’s Principles of Good Administration; https://www.ombudsman.org.uk/about-us/our-principles/principles-good-administration

‘DfT’s Approach to Delivery Body Partnership’:

Other relevant guidance and instructions issued by the Treasury in respect of Whole of Government Accounts;

Other relevant instructions and guidance issued by the Department for Transport;

Recommendations made by the Public Accounts Committee, or by other Parliamentary authority, that have been accepted by the Government and relevant to the DB.