Governance — structure, management and internal control

Our structure

Our constitution

The National Trust was first incorporated in 1894 as an Association Not-for-Profit under the Companies Acts 1862–90. The first National Trust Act was passed by Parliament in 1907. Paragraph 4 (1) of that Act describes the general purpose of the Trust. It states:

‘The National Trust shall be established for the purposes of promoting the permanent preservation for the benefit of the nation of lands and tenements (including buildings) of beauty or historic interest and as regards lands for the preservation (so far as practicable) of their natural aspect features and animal and plant life.’

Further Acts of Parliament followed to clarify further the Trust’s purpose and to develop its governance model. The Charities (National Trust) Order 2005 describes our current governance arrangements.

Charity Governance Code

The Trust has ensured that its governance is broadly aligned with the Charity Governance Code, endorsed by the Charity Commission. It also draws on guidance from other appropriate governance codes reflecting the size and complexity of the organisation.

Board of Trustees

The Board of Trustees is appointed by the Council (see here).

It currently has 13 members, who are listed here. It has ultimate responsibility for what the National Trust does, consistent with section 177 of the Charities Act 2011. This states that charity trustees are ‘the persons having the general control and management of the administration of a Charity’. The Chair and Deputy Chair of the Board also hold these roles on the Council.

Board appraisal

The Chair conducted individual appraisals with all Board members, providing an opportunity for feedback and reflection. An appraisal, led by the Deputy Chair, was also conducted of the Chair’s performance.

Board diversity

The guiding principle ‘for everyone, for ever’ underlies what we do and how we do it. Making that promise a reality depends on building teams that reflect the diversity of the communities we serve and creating an inclusive culture that enables every single person involved with the Trust to thrive. This starts with the Board of Trustees. Our recruitment practices aim to attract individuals who will help lead the National Trust in a way that embraces diversity and fresh thinking and will champion inclusiveness across all communities.

Trustee induction

All Trustees complete a bespoke induction programme designed to inform them about the Trust’s structure, strategy, financial planning arrangements and delegation framework and to ensure that they are fully aware of their responsibilities. The induction is a combination of meetings, site visits and the provision of appropriate reading material.

Statement of the Board’s responsibilities

as Trustees

The Trustees are responsible for preparing the Annual Report and the financial statements in accordance with applicable law in England and Wales and GAAP (United Kingdom Generally Accepted Accounting Practice). The report and statements must give a true and fair view of the Charity/group, of the incoming resources and of the application of resources of the Charity/group for that period.

In preparing these financial statements, the Trustees are required to:

select suitable accounting policies and then apply them consistently;
observe the methods and principles in the Charities Statement of recommended Practice (SORP) in the preparation of Charity accounts in accordance with the applicable Accounting Standards in the UK;
make judgements and estimates that are reasonable and prudent;
state whether applicable accounting standards have been followed, subject to any material departures disclosed and explained in the financial statements; and
prepare the financial statements on the going-concern basis unless it is inappropriate to presume that the Charity will continue in business.

The Trustees are responsible for keeping proper accounting records that disclose with reasonable accuracy at any time the financial position of the Charity and group and enable them to ensure that the financial statements comply with the Charities Act 2011, the Charity (Accounts and Reports) Regulations 2008 and the provisions of the National Trust Act 1971. They are also responsible for safeguarding the assets of the Charity and the group and hence for taking reasonable steps for the prevention and detection of fraud and other irregularities.

The Trustees are responsible for the maintenance and integrity of the Charity and financial information included on the Charity’s website. Legislation in the United Kingdom governing the preparation and dissemination of financial statements may differ from legislation in other jurisdictions.

Council

The Council is the guardian of the spirit of the Trust and of its long-term objectives. It provides a wide range of expertise and a forum for debate about the major issues affecting the Trust. The Council’s report to members on its activities is presented here.

The Council comprises 18 members elected by our members. Elections take place annually to fill vacancies.

The remaining 18 members are nominated by organisations which are elected by our members every six years – these organisations are referred to as Appointing Bodies. The next election will take place in 2024.

The Council convenes Nominations Committees which oversee succession planning arrangements and make recommendations for:

the appointment of members of the Board of Trustees

the election of Council members
the review and election of the Council’s Appointing Bodies.

Procedures for the appointment and election of non-executive volunteers to our various governance groups are consistent, open, fair and robust. External, independent members sit on each Nominations Committee to assist with this.

Appointment terms

Members of the Board of Trustees are normally appointed for two terms of three years, subject to re-appointment.

Members of the Council are normally appointed or elected for up to three terms of three years, subject to re-appointment or re-election.

External members of the Council’s Nominations Committees are appointed for one term of five years.

Independent members of the Board’s Committees are appointed for terms appropriate to individual committees, subject to re-appointment.

Service arrangements

Our non-executive volunteers described in the above groups are unpaid, although expenses are reimbursed.

Code of conduct

Our non-executive volunteers are expected to adhere to our code of conduct which provides clear guidelines on expected standards of behaviour, responsibilities and best practice in fulfilling their obligations to us.

Public benefit

In reviewing our aims and objectives and planning future activities, the Trustees ensure that the activities undertaken are in line with our core purpose of looking after special places for everyone, for ever as demonstrated here of this report.

Modern slavery

The National Trust is committed to ensuring modern slavery is not present in our supply chains. We continue to develop policy and procedures to manage the way we obtain goods and services to ensure the integrity of the supply chains. A full statement can be found here.

Whistleblowing

We acknowledge that however strong our commitment to openness, transparency and accountability, we may not always get matters right. This year we launched ‘Speak Out!’ which has simplified how concerns can be raised and resolved. This included a new whistleblowing hotline and portal, operated confidentially by a third-party supplier.

Members’ Annual General Meeting (AGM)

Members are invited to attend the AGM, at which they receive the Annual Report and Financial Statements, approve the appointment of the external auditor and hear about work carried out during the year. Members are also given the opportunity to submit resolutions in advance of the meeting which are presented and voted on.

In 2022, to increase accessibility and participation, we ran our first hybrid AGM enabling members to vote online. The event was held at the Bath Assembly Rooms on Saturday 5 November.

Committees of the Board of Trustees

The Audit Committee

The Audit Committee is an advisory committee of the Board of Trustees. It comprises at least three Trustees and two independent external members and is responsible for:

overseeing the outcomes of external and internal audits, including financial reporting processes; and
reviewing our processes of internal control and risk management, and overseeing the Trust’s Whistleblowing arrangements.

Audit Committee: Internal Audit

The Internal Audit sits within our risk and assurance function and reports directly to the Audit Committee. The in-house team is assisted by a co-source partner when external expertise is required. Its remit is to provide independent and objective assurance over our risk-prioritised operations and activities.

In doing this, it provides insights to management teams to help the Trust achieve its priorities, identify opportunities and respond to changes across a varied operational environment.

The Internal Audit’s is responsible for:

helping management teams (who are responsible for risk identification, internal control and the prevention and detection of fraud) to assess and mitigate risks; and
delivering the audit plan and reporting on the effectiveness of internal control systems.

During the year, the Audit Committee reviewed and approved the 2022–23 Internal Audit Plan.

The Audit Committee periodically meets with the Head of Risk and Assurance without Executive Directors being present to facilitate open discussions. This ensures the Internal Audit function can operate with sufficient independence.

The Trust’s Internal Audit function is subject to an independent external quality assessment (EQA) every five years to ensure compliance with the Institute of Internal Auditors (IIA) standards. The last review was completed in 2018–19 and the next review is scheduled for 2024.

Audit Committee: Risk management and internal control (including fraud, whistleblowing, theft and anti-money laundering controls)

The Audit Committee monitors and reviews risk management processes, the standards of risk management and internal control, including the processes and procedures for ensuring that material risks are properly identified and managed. Evaluating and managing risks is a vital part of protecting the Trust’s reputation and complying with Charity Commission standards. It is also recognised by management as a key component to achieving the Trust’s objectives. The scope of the Audit Committee is broad and encompasses both active and long-term risks to the Trust.

The Audit Committee reviews the arrangements for employees and volunteers to raise concerns in confidence and consider whether the arrangements allow for a proportionate and independent investigation of possible wrongdoing and appropriate follow-up action. Regular reports from Risk and Assurance are provided to the Audit Committee, reporting any instances of fraud, whistleblowing, theft and developments surrounding anti-money laundering controls. An end-of-year Fraud, Whistleblowing Theft and Anti-Money Laundering Annual Report summarises any activity reported over the year.

During the year, the Audit Committee also carried out the following:

updates on key programmes, including the Support and Revenue Platform, a programme which will improve the way we interact with our members and the website replacement project;

a review of risks and controls relating to key areas of our operations for project and programme delivery and the role of its culture and values within the control framework;
received and considered an annual report on the Trust’s insurance arrangements, levels of cover and renewal of insurance policies for the current policy year;
received and considered updates from the Chief Information Officer in respect of cyber security and cyber risk appetite;
received and considered legal issues and risk updates;
received and considered the quarterly operational risk report; and
monitored the quality of Internal Audit assignments.

The Investment Committee

This Committee is responsible for the oversight of our investments. It recommends to the Board of Trustees an appropriate investment strategy, advises on the selection of investment managers and monitors performance against agreed benchmarks.

Further details on National Trust investments are given in the Financial Review here.

The Investment Committee has proposed, and the Board has approved, a comprehensive Investment Policy Statement, the cornerstone of which is an agreed set of guiding investment beliefs for the portfolio. These beliefs address key investment drivers such as core purpose, risk, diversification, mission, responsible ownership, climate change and investment approach. Again, further details are given in the Financial Review here.

The investment strategy for the portfolio, created in conjunction with the Trust’s investment advisers Cambridge Associates, reflects these investment beliefs. It continues to target a return well ahead of inflation, thereby supporting the Trust’s long-term conservation needs, coupled with a high level of diversification to reduce risk. It also seeks to achieve both an ambitious carbon neutrality target by 2030 and to have sufficient resilience to enable cash to always be distributed back to the Trust whenever required, regardless of prevailing market conditions.

To facilitate efficient operation the Committee has established two working groups as sub-sets of the full Committee:

a Stewardship and Engagement Working Group. This working group meets with the Trust’s fund managers on regular basis to assess current alignment with the Trust’s ESG (Environmental, Social and Governance) goals, with a particular focus on the attitude to climate change, and to encourage improved performance by those funds or support disinvestment by the Trust if appropriate. Under the auspices of this Group the Trust has joined and plays an increasingly active role in the Institutional Investors Group on Climate Change (IIGCC) and ClimateAction 100+;
a Manager Selection and Monitoring Working Group. This working group undertakes more in-depth work in supporting the Committee in the selection, monitoring and, if necessary, termination of investment managers.

Senior Management Remuneration Committee

Our Senior Management Remuneration Committee is appointed by the Board of Trustees to oversee the remuneration and development of the Director-General, the Executive Team and other senior staff. The committee includes three members of the Board of Trustees and two external independent members. All members of the committee have the experience and skill to make appropriate remuneration decisions.

We are committed to a policy of equal pay, and we aim to ensure that senior manager salaries reflect the knowledge, skills, behaviours and capabilities required for satisfactory performance in each role, while also demonstrating appropriate use of supporters’ donations.

Every year the committee reviews senior manager salaries and benchmarks them against the voluntary sector and where appropriate other relevant job markets.

Remuneration may vary depending on the job type and talent pool and is validated objectively using independent market comparators. Guidance is also sought from external professional advisers as appropriate.

We are committed to fairness in our remuneration practices and the committee follows these guiding principles when considering senior manager pay.

Transparency – openness and clear communication about how remuneration is set.
Proportionality – fairness and consistency in line with appropriate internal and external references.
Rewarding performance – ensuring remuneration is proportionate to an individual’s performance and contribution to us.
Effective recruitment and retention – enabling us to attract and retain valued staff. Senior manager salaries are positioned between 90% to 120% of the median of the public and charitable sectors.

In April 2022, the Committee agreed to award the senior management team, including the Director-General, an average pay increase of 2.6%. This was below a 5.5% investment in staff junior staff pay.

Subsidiary companies

The National Trust owns five subsidiary companies, two of which, The Porthdinlleyn Harbour Company and Countryside Commons Ltd, are dormant. Details of the three active subsidiary companies are provided below:

Historic House Hotels Limited

Historic House Hotels Limited is a wholly owned subsidiary of the National Trust and runs three hotels held on leases from the National Trust. One of the hotels, Hartwell House, is leased by the National Trust on a long lease from the Ernest Cook Trust.

The Board of Directors of Historic House Hotels Limited is responsible for the company’s activities.

The performance of Historic House Hotels Limited during 2021–22 and 2022–23 is set out in Note 5 to the financial statements.

The National Trust (Enterprises) Limited

The National Trust (Enterprises) Limited is a company wholly owned by the National Trust. It forms the Trust’s trading arm and is responsible for running its commercial activities such as retail. It transfers its taxable profits to the Trust.

The Board of The National Trust (Enterprises) Limited is responsible for the company’s activities. The Board’s members (appointed by the Board of Trustees) include both non-executives and senior Trust staff. The Board performs the same role as any company board, overseeing the running of the company, reviewing the major risks facing the company, agreeing and monitoring its budget, approving major expenditure and approving its annual report and financial statements.

The performance of The National Trust (Enterprises) Limited during 2021-22 and 2022-23 is set out in Note 5 to the financial statements.

National Trust (Renewable Energy) Limited

National Trust (Renewable Energy) Limited is a company wholly owned by the National Trust. The Trust has a Renewable Energy Investment Programme, part of which involves trading the electricity we generate through renewable energy projects by selling it to the National Grid. It transfers its taxable profits to the Trust.

The Board of National Trust (Renewable Energy) Limited is responsible for the company’s activities. The Board’s members (appointed by the Board of Trustees) include both non-executives and senior Trust staff. The Board performs the same role as any company board, overseeing the running of the company, reviewing the major risks facing the company, agreeing and monitoring its budget, approving major expenditure and approving its annual report and financial statements.

The performance of National Trust (Renewable Energy) Limited during 2021–22 and 2022–23 is set out in Note 5 to the financial statements.

Wider network

We are a founder member of the International National Trusts Organisation (INTO) and we host the INTO Secretariat at our London office, 20 Grosvenor Gardens, London, SW1W 0DH. INTO is a registered charity in the UK (charity number 1128224). INTO exists to promote the conservation and enhancement of the natural and cultural heritage of all nations for the benefit of the people of the world.

Executive Team

The Executive Team comprises the Director-General and senior Trust staff who support her in fulfilling her responsibilities.

The Board of Trustees delegates various functions to the Executive Team and other staff, through the leadership of the Director-General. These functions are summarised in a Scheme of Delegation.

The Executive Team formulates strategy for the Board of Trustees’ consideration and approval, ensures it is carried out and oversees the day-to-day operation of the Trust.

Risk management

Effective risk management is vital for the delivery of our strategy and objectives and supports our priorities for people and places.

The Trustees are ultimately responsible for ensuring effective risk management, which we deliver through our risk framework, that sets out how to identify, evaluate, manage, monitor and report risks.

The Audit Committee oversees and reviews the effectiveness of the risk management framework and considers any changes in the risks we face. The Executive Board is then responsible for the day-to-day management of key risks, ensuring effective mitigation is in place.

We assess the possible impacts of risk whether that be financial, regulatory, operational, reputational or environmental. Those deemed to impact our strategy or sustainability are escalated and the effectiveness of the response to them is reviewed.

Risk registers record the potential consequences of any risk and evaluate the likelihood and impact of its occurrence. The risk and assurance function regularly reviews the risks facing the Trust and works with leaders and teams across the organisation to embed and strengthen risk management arrangements. It also provides regular reporting on the most significant risks to the Board of Trustees, Audit Committee and the Trust’s subsidiary boards.

As at the end of 2022–23, the most significant risks facing the Trust were:

Ref	Risk	Response
1.	Impact of climate change Climate change increases the physical risks to landscapes, habitats, wildlife, buildings and collections and could also lead to the loss of a range of conservation areas. Extreme weather events and increased efforts to reduce carbon emissions may also disrupt memberships and visits, which form the basis of our business model.	We have established a four-point plan to respond to climate change. The plan will deliver low carbon, greener working practices, optimise carbon sequestration and storage, adapt landscapes and places. We will also tell compelling stories about the impact of climate change to get additional support and lobby the Government for changes to policy, which will help us respond to challenges. More information is available in the Climate and Environment section of the report.
2.	Impact of changing profiles on audience engagement We may not be able to meet the demands and expectations of a changing UK population, and our ability to remain relevant may be further challenged. We are aware that consumer and supporter behaviours are changing and ways of engaging with audiences are likely to be different in the next 5–10 years.	We continue to monitor the changes in society and are aware of the need to remain relevant to changing populations and audiences. We review the future trends of UK audiences and their demography, regional variances and needs/wants to continuously adapt our offer to remain relevant to people’s lives and deliver our strategic purpose.
3.	Cyber security resilience We are aware of cyber security risks and the disruption they can cause to our services, data and reputation.	We are mindful of the external risks, including cyber threats and the war in Ukraine, and we continuously monitor them. We continue to invest to ensure that our systems and data are adequately protected against misuse. We also take a proactive approach to identifying and managing the risks associated with the loss of staff, member, volunteer or business data, due to a breach of IT or data security and/or failure to protect the integrity and availability of data.
4.	Recession and cost-of-living crisis The high inflation environment and subsequent recession have given rise to the following risks: increasing prices could affect the spending power and choices of members and visitors depleted reserves and reduced spending on our cause greater risk of supply failures at the companies we work with cost-of-living pressures faced by staff and volunteers. Higher wage requirements also make it more difficult to recruit and retain staff.	Our focus is on delivering our charitable cause and delivering excellent value to supporters who visit the places we care for. One of the best ways of mitigating the impact on inflation and demand is to make sure everyone who visits a place in our care has a positive experience. We will work closely with suppliers to make sure we’re aware of any difficulties as soon as they arise. Our business continuity plans will be refreshed alongside the continuous monitoring of inflation, performance reporting and scenario planning. We will continue to monitor the challenging external environment and the impact it is having on the Trust and its people. The pay review and increased promotion of non-pay benefits have been received positively.

The Board of Trustees has considered these risks and is satisfied that they are being managed appropriately.

Health and safety
We take our health and safety duty of care towards staff, volunteers, visitors and contractors very seriously. We are an active member of the Visitor Safety Group and we apply their guiding principles to proportionately manage risks to visitors. We also have a tripartite agreement with the Health and Safety Executive (HSE) and Swindon Borough Council, which helps ensure that our approaches to health and safety throughout our operations are consistent, proportionate and in line with regulatory requirements. During 2022–23, we were not subject to any enforcement prosecutions brought by the HSE or local authorities in relation to Health and Safety matters.

Membership of the Board of Trustees, Council, Committees and Executive Team

All correct as of 28 February 2023

Board of Trustees

René Olivieri, Chair
Sandy Nairne CBE FSA, Deputy Chair
Tony Hall, CBE, Lord Hall of Birkenhead
Patrick Figgis
Denise Jagger
Caroline Kay
Aideen McGinley
Zarin Patel
Dr Lisbet Rausing
Ade Rawcliffe
Paul Roberts
Nick Stace
Dr Tom Tew DPhil FRSA FRSB MCIEEM

Council

René Olivieri, Chair
Sandy Nairne, Deputy Chair (elected member)
Alex Bird (appointed by the Museums Association)
Harris Bokhari (elected member)
Iain Boyd (appointed by the Society for the Protection of Ancient Buildings)
Austin Brady (appointed by the Woodland Trust)
Ian Brown (appointed by The Wildlife Trusts)
Anne Casement (elected member)
Robert Caudwell (appointed by the NFU)
Heather Clarke (appointed by the Canal & River Trust)
Jane Dean (elected member)
Jim Gardiner (appointed by the Royal Horticultural Society)
Sarah Green (elected member)
Inga Grimsey OBE (elected member)
Min Grimshaw (elected member)
Sarah Hollingdale (elected member)
Doug Hulyer (elected member)
Sally Hunt (elected member)
Robert Hunter (appointed by Historic Houses)

Caroline Kay (elected member)
Deborah Lamb (elected member)
Duncan Mackay (elected member)
Simon Murray (appointed by the Campaign to Protect Rural England)
Martin Nye (appointed by the Soil Association)
Tom Ovenstone (appointed by the Duke of Edinburgh’s Award)
Tom Platt (appointed by the Ramblers)
Andrew Powles (elected member)
Paul Roberts (elected member)
Michael Salter-Church MBE (elected member)
Prof. David Stocker MA (Cantab. & York) DLITT FSA MCIfA (appointed by the Council for British Archaeology)
Tim Stowe (appointed by the RSPB)
Tara-Jane Sutcliffe (appointed by the Open Spaces Society)
Nichola Tasker (appointed by English Heritage)
Guy Trehane (elected member)
Andrew Turner Cross (appointed by TANT)
Will Wilkin (elected member)
Darren York (appointed by the Conservation Volunteers)

Standing Committees of the Board as at 28 February 2023

Audit Committee

Zarin Patel, Chair
Denise Jagger
Caroline Kay
Miriam Staley

Investment Committee

Nicholas Sykes, Chair
Alice Bordini Staden
Tamlyn Nall
Zarin Patel
Victoria Sant
Tom Tew
Richard Williams

Senior Management Remuneration Committee

Sandy Nairne CBE, Chair
Denise Jagger
René Olivieri
Elizabeth Spencer
Daniel Thompson

Committees of the Council
Nominations Committee for elections to the Council

Anne Casement, Chair
Harris Bokhari
Jane Dean
Jas Rai

The Trust’s Secretary

The Board of Trustees, the Council and the Executive are supported by Jan Lasik, General Counsel and Secretary to the National Trust.

Subsidiary Companies as at 28 February 2022

Board of Historic House Hotels Limited

Richard Broyd, Chair
Lionel Chatard
Chris Feeney
Kevin Hughes
Neil Kenyon (and Company Secretary)
Celia Richardson
Elgan Roberts
Sarah Staniforth
Peter Vermeulen

Board of The National Trust (Enterprises) Limited

Paul Roberts, Chair
James Bennett
Aideen McGinley
Lesley Morisetti
Zarin Patel
Sharon Pickford

Jo Cooke FCG (Secretary)

National Trust (Renewable Energy) Limited

Paul Roberts, Chair
James Bennett
Aideen McGinley
Lesley Morisetti
Zarin Patel
Sharon Pickford

Jo Cooke FCG (Secretary)

Countryside Commons Limited

Patrick Gleave
Jan Lasik

Jo Cooke FCG (Secretary)

The Porthdinlleyn Harbour Company Limited

Lhosa Daly
Paul Southall

Jo Cooke FCG (Secretary)

Executive Team

Hilary McGrady, Director-General
Andy Beer, Director of Operations and Consultancy
Harry Bowell, Director of Land and Nature
Jan Lasik, General Counsel and Secretary
Tina Lewis, Director of People
John Orna-Ornstein, Director of Culture and Engagement
Sharon Pickford, Director of Support and Revenue
Celia Richardson, Director of Communication and Audience Insight
Peter Vermeulen, Chief Financial Officer