Local Government & Councils Non-Executive Director Recruitment

Board Member Recruitment for Local Government

Councils deliver far more through companies and arm’s-length bodies than many people realise. Housing companies build and let homes, trading companies sell services to other public bodies and the private sector, energy companies develop heat networks and solar schemes, and leisure and cultural trusts run facilities on the council’s behalf. Each of these organisations has a board, and the quality of that board decides whether the council’s investment is well governed.

Councils themselves also need independent people. Audit committees increasingly include independent members alongside councillors, bringing financial and risk expertise and a view that is separate from party politics.

NED Capital recruits independent non-executive directors, chairs and independent committee members for local authority companies, arm’s-length organisations and councils across the UK. For regulators, ombudsman schemes and other public bodies outside local government, see our page on regulatory bodies and ombudsman services NED recruitment.

Searches are run by our senior search team under founder Adrian Lawrence FCA, a Fellow of the ICAEW and former listed-company finance director.

Why Councils Set Up Companies

Councils in England can trade through companies using powers such as the general power of competence in the Localism Act 2011 and the trading power in section 95 of the Local Government Act 2003, which requires commercial trading to be carried out through a company. The common types include:

• Local authority trading companies: companies that sell services, such as facilities management, care, building control or environmental services, to the council and to other customers.
• Housing companies: wholly owned companies that develop homes for market rent, sale or affordable tenures, often alongside the council’s own housing revenue account.
• Energy companies: vehicles for heat networks, solar farms, battery storage and other low-carbon schemes.
• Regeneration and property companies: joint ventures and wholly owned companies that hold property and deliver regeneration.
• Leisure, cultural and community trusts: independent charitable trusts and community interest companies running services under contract.
• Arm’s-length management organisations: companies set up to manage council housing stock.

Each type has a different balance between commercial activity and public purpose, and the board needs to reflect that balance.

Governing a Council-Owned Company

A council-owned company is a company in law. Its directors owe the duties set out in the Companies Act 2006 to the company itself, not to the council, even when the council is the only shareholder. That creates the central governance challenge: directors have to act in the company’s interests while the council, as owner, sets the company’s purpose and holds it to account.

Well-run councils manage this through a clear shareholder framework. Typically there is a shareholder committee or nominated officer that exercises the council’s rights, a shareholder agreement or reserved matters list that sets out what needs council approval, and a business plan agreed each year. Within that framework, the board runs the company.

Independent non-executive directors are valuable in this structure because they have no conflict between their council role and their company role. Councillors and officers who sit on company boards can find themselves on both sides of a decision, for example when the council is negotiating a contract with its own company. An independent chair or non-executive can lead the board on those decisions and bring commercial challenge that elected members and officers may not be able to provide. Our guide to handling conflicts of interest as a NED covers the principles.

The skills a council company board usually needs include commercial and sector experience relevant to the company’s market, finance and audit expertise, an understanding of public sector accountability and procurement, and, for housing and property companies, development and asset management experience. For housing companies, our pages on social housing NED recruitment and housing association board member search describe the housing skills in more detail. For energy companies, see energy and utilities NED recruitment.

Independent Members of Council Audit Committees

Audit committees are a central part of a council’s governance. They oversee internal control, risk management, internal and external audit, and the authority’s financial reporting. Their effectiveness depends heavily on having members with the right skills, and many councils now appoint independent members to sit alongside councillors.

CIPFA’s 2022 position statement on audit committees in local authorities and police sets out good practice for these committees, including the inclusion of independent members with relevant expertise. CIPFA recommends at least two co-opted independent members where the committee does not already have them. In England, the government has taken forward local audit reform proposals that include strengthening audit committees and the role of independent members; councils should check the current statutory position, which has been changing.

Wales already has a statutory model. Under the Local Government and Elections (Wales) Act 2021, principal councils’ governance and audit committees must have one-third lay members, and the committee chair must be a lay person.

The local audit system itself is governed by the Local Audit and Accountability Act 2014, with external auditors for most English councils appointed through Public Sector Audit Appointments. The National Audit Office sets the code of audit practice. Delays in local audit in recent years have made strong audit committees more important, not less.

An effective independent member usually brings a professional accountancy or audit background, experience of risk management, and the confidence to challenge officers and external auditors constructively. Many come from finance director, internal audit or audit partner careers. Our page on audit committee chair recruitment covers the skills in more detail, and our guide what does an audit committee actually do? explains the role.

Leisure, Cultural and Community Trusts

Many councils have transferred leisure centres, libraries, museums and cultural venues to independent trusts, often charities. These organisations have trustee boards rather than company boards in the commercial sense, and they need trustees who combine commercial management with an understanding of public funding, community benefit and charity governance.

We recruit chairs and trustees for these organisations as well. See our pages on sport and recreation bodies, arts and culture and charity board recruitment.

What Makes a Strong Local Government Board Member

Across these organisation types, the strongest candidates share a set of qualities:

• Comfort with dual accountability: they understand that the company or trust must perform commercially while answering to a democratically elected owner.
• Political awareness without partisanship: they can work with councillors of any party and understand the pressures of public scrutiny, freedom of information and audit.
• Relevant expertise: commercial, financial, property, energy, housing or service delivery experience that matches the organisation’s needs.
• Clear independence: no relationships with the council, its suppliers or its political groups that would compromise their judgement. Our page on independent NED recruitment explains how we assess this.
• Public service values: a commitment to the standards expected of anyone overseeing public money.

For an introduction to these roles from the candidate’s side, see our guide driving change locally: NED roles in local government, and for public sector appointments more widely, appointing NEDs in the public sector.

How We Run a Local Government Board Search

Public bodies need a search process that is open, fair and defensible as well as effective. We work with the council’s officers, shareholder representatives or the company’s existing board to agree the brief, the skills required and the governance framework the appointee will work within, including any shareholder agreement and reserved matters.

We combine direct approaches to strong candidates with the open advertising that many public bodies require, so the field is both wide and well targeted. Candidates are assessed against published criteria, with conflicts of interest and political connections checked carefully, and we document the process so that the appointment can be explained to councillors and auditors. We work in line with the voluntary code of conduct for executive search firms. NED Capital is part of FD Capital Group, five specialist firms with a shared network of finance leaders, board directors and senior executives.

For our wider governance guidance, visit the board governance and recruitment hub.

Frequently Asked Questions

Who do directors of a council-owned company owe their duties to?
To the company. Under the Companies Act 2006, directors must act in the company’s interests, even where the council is the sole shareholder. The council’s influence comes through its shareholder rights, the shareholder agreement and reserved matters.

Should councillors sit on the boards of council companies?
Some councils appoint councillors or officers as directors and others keep them off the board to avoid conflicts. Many combine a small number of council-appointed directors with independent non-executives, and use a separate shareholder committee to exercise the council’s ownership rights.

Are independent members of audit committees paid?
Practice varies. Many councils pay independent members an allowance set through their members’ allowances scheme or a separate decision, and others offer expenses only.

Do you recruit outside England?
Yes. We recruit across the UK, including lay members for Welsh governance and audit committees, from our London and West Midlands offices.