This is part of a financial shake-up being demanded by a prominent committee of MPs.
The Audit Commission, regional development agencies, housing action trusts and the regional investment bodies mooted by deputy prime minister John Prescott could also be affected.
The proposals, from the influential House of Commons public accounts committee, would result in boards facing more scrutiny over their accounts, and board members could be required to undergo financial training. But the government is unlikely to bow to calls from other MPs for board members to be held personally liable for any losses.
The recommendations were published last week in a damning report on the Teesside Development Corporation.
The quango, wound up in 1998, could have lost as much as £40m, the committee found. It criticised the organisation for a lack of transparency in decision making.
Some deals made by the TDC have yet to be tracked down fully.
The Office of the Deputy Prime Minister, whose predecessor departments were responsible for the TDC, said it is considering what action to take.
The department was criticised by the accounts committee for failing to step in, despite knowing there were financial problems.
An ODPM spokesperson said: "We will look carefully at the recommendations and respond in due course.
"Since 1998 there have been considerable changes in the way we sponsor [quangos]. We have already taken action on many of the recommendations and are considering what more needs to be done."
Dr Ashok Kumar, Labour MP for Middlesbrough South and East Cleveland, led attempts to expose the TDC's failings.
He said it had "rooked the public purse" and insisted that quango board members must be held financially accountable.
"The humblest local councillor is liable to surcharge if the council misbehaves. Yet it seems people responsible for mishandling up to £40m are not similarly liable. That is utterly wrong," he said.
But Angus Kennedy, chief executive of Castle Vale Housing Action Trust, warned that making board members liable risked damaging the number of people willing to stand.
The trust has won a string of open government awards.
All its board meetings and most minutes are public. Local people are involved in developing programmes and in scrutiny.
"Board members are already taking on huge responsibilities," Kennedy said. "The key thing is to ensure a close relationship between the quango and its minister, then incidents like the TDC will remain a rarity."
What the public accounts committee wants
The public accounts committee report says the ODPM should:- take a close interest in governance of sponsored bodies, and satisfy itself that the boards represent an effective check on chief executives
- cut the bonuses of chief officers where they have failed in their responsibilities
- ensure boards receive and regularly review financial information, and act to manage risks through an independent audit committee
- write to all board members with any concerns, require explanations, and ensure action is taken, by intervention if necessary
- seek independent advice on key transactions, financial commitments and cash flows before limited-life quangos, such as housing action trusts, are wound up
- ensure regeneration quangos and other fixed-life organisations can demonstrate that public funds are protected and the momentum of work will be maintained after wind-up
- delegate a senior officer to oversee each quango’s activities
Source
Housing Today
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