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Government-owned businesses make an important contribution to the UK. They help to deliver essential public services, provide advice and support to other parts of government and the public, and generate value that can be invested in other public services.
The challenges these businesses face now are greater than ever. Some are finding that their traditional customer base and markets are dwindling or becoming less certain. Some are facing increasing competition. Others need to seek new markets for their products and services.
The role of the Shareholder Executive (ShEx) is to work with government departments and management teams to help these businesses perform better. Its aim is to create a climate of ownership that, while challenging, is genuinely supportive and provides the framework for them to be successful. To achieve this ShEx works with the boards and management teams of the Government-owned businesses to create long-term shareholder value.
ShEx’s remit covers 28 commercial businesses wholly or partly owned by central Government, from large,business well known companies such as the Royal Mail to smaller trading funds like the UK Hydrographic Office. These businesses have a combined turnover of over £24bn, equivalent to about 1.8 per cent of UK GDP. In addition, ShEx advises Ministers and officials on a wide range of shareholder issues including objectives, governance, strategy, performance monitoring, board appointments and remuneration.
This portfolio of businesses is forever evolving to reflect new circumstances and challenges. For example, ShEx recently took on an advisory role to HM Treasury on Northern Rock and Bradford & Bingley and, following recent successful sales of HMG shares in QinetiQ and British Energy, ShEx’s role in both businesses has diminished.
ShEx also provides corporate finance advice to BERR and other government departments. For BERR, it appraises and negotiates grants awarded to non-government owned businesses and, where appropriate, launches investment and rescue aid.
Recent activities affecting the role of the Shareholder Executive include the Hooper Review, an independent review of the UK postal services sector; and the Operational Efficiency Programme (OEP). The Hooper Review “Modernise or Decline” was published on 16 December. There were a number of recommendations for the Government [Shareholder Executive] to follow through, including introducing new legislation.
The Operational Efficiency Programme was launched by the Chief Secretary to the Treasury on 3rd July 2008. It builds on the Spending Review 2004 Efficiency Programme which delivered over £23 billion in savings, and on existing plans to deliver another £30 billion in savings as part of the CSR07 value for money programme.
In the PBR in November 2008, the Government announced more detail on the OEP. With respect to the asset strand, it announced a programme of work on a number of assets, many of which are in the Shareholder Executive portfolio.
Shareholder Executive will lead each review, with the review team made up of ShEx staff, departmental officials, and HMT and other representatives where appropriate. Reviews will be expected to report progress at Budget 2009
ShEx aims to: