IPSE's governance changes: a contractor speaks up

For all the hoo-ha of late about governance goings-on at IPSE -- the issue has generated more than 200 posts on the ContractorUK Forum, it’s worth remembering that day-to-day operations at the UK’s contractor trade body will not change, nor will its member services, writes Alan Watts, a member of The Association of Independent Professionals and the Self-Employed.

How we got here

But as many have asked, what’s happened at IPSE? The starting point is that a routine review of the association’s internal governance processes was commissioned by IPSE chair Caroline Morgan. The review was designed to look into how IPSE’s Articles of Association (AoA) and related processes were aligned to best practice in other similar bodies.

As part of the review, members of IPSE’s Board of Directors (BoD), management team and Consultative Council (CC) were interviewed to understand how these elements of IPSE were working together. Or weren’t.

Produced in November 2018, the review’s results included the finding that IPSE’s governance structures were unaligned with best practice governance codes for an organisation of IPSE’s size, scope and influence. Another finding was that some provisions of the AoA undermined good governance and breached the Companies Act 2006. 

Removal (of the CC)

A careful review of the report by the board -- which commissioned the review -- led to the decision, among other things, to move to remove the CC. This is a significant decision.

The CC has been in existence since IPSE (or PCG as it was) was created. Originally it was heavily involved in day-to-day issues, acted as a point of contact for the wider membership and was the source from which the BoD was chosen. It had the power to call for an EGM (Extraordinary General Meeting), and acted as an electoral college. Getting rid of the CC, its members argued on hearing the decision, would remove ‘checks and balances’ that the CC felt it exercised over the board.

However, the board argued they were replacing the CC not getting rid of it – a new ‘Members Forum’ drawn from the whole membership (as per the CC) was proposed, in place of the CC. And, the board also argued, directors no longer needed to be drawn from the CC anyway, this requirement having been removed in an earlier governance change to allow for a wider range of candidates.

Divisive

Late last year the board decided to adopt the changes, and make them -- at IPSE’s 2019 Annual General Meeting on January 26th. Chair Caroline Morgan stated on behalf of the board that the changes were designed to:

1. Give members greater control over IPSE’s future;
2. Bring IPSE’S governance in line with industry best-practice;
3. Make IPSE more democratic

Point three (and point one because it is related) has proved the most divisive. In line with the claim of boosting IPSE’s democratic credentials, directors will be put to the vote of the whole membership, just like most major organisations. In addition, the power of IPSE’s Nominations Committee -- the body charged with vetting the suitability of candidates for director-- will now include a veto to ensure that all candidates are fully qualified for the role.

But tabled in opposition to the chair’s claim to be bettering IPSE’s democratic credentials, is the argument that the board’s move to replace the electoral college by a committee effectively defined by the board – albeit with an external chairman – allows the board too much control over who is capable of joining it. Similarly, it has been said that there is a potential for any future BoD to be a lot more selective about who gets on the list as a candidate for an elected director.

Removal (of the chair, attempted)

To register their disapproval, the CC mounted a campaign to raise a vote against the revised AoA. They also raised a request for an EGM with the motion specifically to remove Caroline Morgan from her position as chair, in protest at the move to replace the CC.

But before her fate was decided, the vote against the CC at IPSE’s subsequent AGM saw a much higher turnout than recent years and crucially, an 80-plus per cent vote in support of the board’s proposed changes, including the removal of the CC. The changes were enacted and the CC was disbanded. The new Members Forum will be created in the first half of 2019. Former CC members will be able to apply.

Meanwhile the EGM remained in place. Yet the meeting and vote on January 4th saw almost as convincing a result – 73 per cent against removing Ms Morgan, with 27 per cent in favour.

Where we are today, and why it could be a lot worse

The chair therefore remains in post. And while it remains to be seen how the BoD’s changes will pan out, I am pleased Ms Morgan is still our chair. Removing the head of the UK’s contractor trade body at this seminal moment for contracting would be massively disruptive. At a time when the whole basis of the freelance contractor model is under threat by an ill-informed and politically motivated HMRC, handicapping our own side so seriously would be hugely counterproductive. So while the jury is of course out on the impact, practically, of what’s been actioned at IPSE, there can be no doubt that leaving the organisation ‘leader-less’ would have been a grave mistake. For now, I say it’s time to move on.