Strategy meeting - 28 June 2022
- In attendance
- 1. Chair's opening remarks
- 2. Apologies for Absence
- 3. Order of business
- 4. Declaration of Interests
- 5. Approval of minutes of meeting held on 22 March 2022
- 6. Matters Arising
- 7. Board Work Programme
- 8. Finance
- 9. Balancing Reform and Delivery - Presentation
- 10. Aquaculture - Transforming Modelling - STRAT 07/22 & Presentation
- 11. Consideration of New Risks
- 12. Action Note
- 13. Any Other Business
- 14. Date and time of next meeting
- 15. Conduct and Culture - verbal
The forty eighth meeting of the Strategy Board took place on Tuesday 28 June 2022 at 1.00pm via Microsoft Teams
- Bob Downes (Chair)
- Philip Matthews
- Fran van Dijk
- Nicola Gordon
- Martin Hill
- Craig Hume
- Julie Hutchison
- Ian Buchanan - Chief Officer, Compliance and Beyond (items 1-14)
- Rosaleen Burke - Deputy Head of Finance (items 8.1;0.2a;8.2b only)
- Nathan Critchlow-Watton - Senior Manager, sub for David Harley (items 1-14)
- Chris Dailly - Head of Environmental Performance (item 9 only)
- Keiron Gallagher - Head of Governance (items 1-14)
- Jo Green - Acting Chief Executive
- Laura Hamilton - Personal Assistant to the Chief Executive (items 1-14)
- Alan Hills - Unit Manager (item 10 only)
- John Kenny - Acting Chief Officer, People and Property
- Bridget Marshall - Acting Chief Officer, Performance and Innovation (items 1-14)
- Stuart McGregor - Chief Officer, Finance (items 1-14)
- Jennifer McWhirter - Clerk to the Board
- David Pirie - Executive Director, Evidence and Flooding (items 1-14)
- Peter Pollard - Head of Ecology (item 10 only)
- Sandra Tough - Head of Permitting (item 9 only)
- Kari Speirs - Corporate Officer (items 1-14)
1. Chair's opening remarks
The Chair welcomed everyone to the meeting including Nathan Critchlow-Watton attending on behalf of David Harley. Kieron Gallagher was in attendance, as were Kari Speirs and Laura Hamilton from AMT & Board Support Team with the Clerk to the Board.
He confirmed that a 10-minute break will take place after item 9.
2. Apologies for Absence
Apologies for absence were received from Nicky Chambers, Harpreet Kohli, Vinay Mulgundmath, David Harley and Martin Grey.
3. Order of business
The order of business was as outlined on the agenda.
4. Declaration of Interests
No declaration of interests were made.
5. Approval of minutes of meeting held on 22 March 2022
The minutes of the meeting held on 22 March 2022 were approved as an accurate record of the meeting.
6. Matters Arising
The Clerk to the Board provided an update. She advised that:
Action 146 (Matters Arising)
Resourcing of the AOP remains a focus for AMT, with a specific Coordination and Resourcing Group being established specifically for this purpose. The Group is actively assessing resources gaps and putting measures in place to ensure projects are resourced. Proposed closed.
Action 147 (Board Buddy Register)
A review of the Board Buddy Register was undertaken, conversations took place and some projects were reallocated including to the two new Board members. Proposed closed.
Action 148 (Annual Operating Plan – STRAT 01/22)
A specific commitment has been included in the Annual Operating Plan to develop a new performance framework. This will include a focus on measures. Proposed closed.
Action 149 (Draft Annual Budget – STRAT 02/22)
The budget is estimated on the data available at a point in time. A full update is in the action note. Proposed closed.
7. Board Work Programme
7.1 Board Engagement Activity
Craig Hume advised that he had attended a panellist event run by Indepen (We’re on the Road to nowhere, come inside, and who gets left on the migration to Net Zero). There were representatives from WISEGroup, Scottish Power, Scottish Water and the Water Industry Commissioner and contained a mixture of views of how carbon is measured. However, one of the key moments to highlight was that during a question to Scottish Enterprise, they highlighted that SEPA’s One Planet Prosperity Strategy is a live strategy that actually works to go beyond compliance and this was agreed by the other panellists, specifically Scottish Water.
The Chair advised that he had met with the Chair and Chief Executive of Scottish Water yesterday, 27 June 2022, and that they had reflected on the good relationships (in compliance, innovation, and collaboration), and also the involvements on blue green infrastructure.
7.2 Board Buddy Register
In response to a question from the Chair on updates on Regulatory Practice and Net Zero, Board members from Regulatory Practice advised there had been more recent meetings than suggested in the register, and members from Net Zero advised that the group had not yet met.
The Clerk to the Board advised that Net Zero was clarifying the purpose of the Board Buddy group and Terms of Reference and would be in touch shortly and that she would add the meeting date for the Regulatory Practice. She will have the register updated again for July and the advised there was a meeting of the Regenerative SEPA Board Buddy group on 8 June 2022.
8.1 Draft Budget 2022/23 - STRAT 05/22
Stuart McGregor introduced the report with Rosaleen Burke in attendance.
The Chair advised that there are a number of interrelated items for future resourcing and the assessment of risks associated with it and asked the Board members to bear that in mind in respect of questions.
He advised that he had, had a call with Stuart McGregor and the Acting Chief Executive on 27 June 2022 regarding his concerns in respect of the budget and service levels and how to manage the impact, as well as ensuring that risks around resourcing are properly calibrated. He requested ideas on how to assist the Senior Management team manage this between now and the beginning of September 2022.
The Acting Chief Executive advised that the budget needs to be considered in context and highlighted that resource constraints will become clearer - along with the delivery of services expected by Scotland, how we deliver reform and set the organisation up
better following the cyber-attack, and how we continue with improvements for our staff. Further clarity will be given at the end of August/beginning of September 2022.
Stuart McGregor advised that Scottish Government are looking for proposals for a 2% reduction in the current financial year from all agencies in our portfolio. This is not reflected in the paper and will equate to approximately £640k.
He advised that the report follows on from the draft interim budget report to the Board in March 2022 and that the purpose of the paper is for Board approval of the Finance income and expenditure budget for 2022-23 and to outline the steps taken to move from the deficit reported in March 2022 to a balanced budget position. He stressed that these steps will continue to be refined as the Agency Management Team continue to review this position and any adjustments to the savings proposals included in the budget set will be highlighted to the Board within future financial performance reports.
In terms of the future financial reports, he highlighted that he had explained at the Audit Committee meeting earlier today, that Finance would traditionally present the Quarter 1 report at the July Board meeting however, due to the impact of high level of sickness (particularly from Covid) and committed annual leave, as well as other priorities including the focus on the forecast, the intension is to present a financial performance report up to the end of May 2022, along with a verbal briefing, or brief summary (time permitting) to June 2022 to the Board on 26 July 2022.
He highlighted key details from the report, including the movements relating to income, staff costs and highlighted the plans to close the budget. Some may be optimistic however there are ongoing recruitments and not all posts will be in place by April 2023. Therefore, the budget has been reduced by £1million to accommodate that, and another £1.8million forecasted from in year staff departures. The Agency Management Team will actively manage recruitment and this may involve a recruitment freeze.
Stuart McGregor also highlighted that in respect of supplies and services each portfolio has been set a 2.5% efficiency target.
With regards to the forward plans, he advised that in May 2022, the Cabinet Secretary set out the resource spending review and a targeted update on the capital review, both covering a four-year period. This is the first multiyear spending settlement since 2011 and does provide a degree of financial certainty which will allow SEPA to focus on
delivering long-term priorities. It’s not a budget but an indication of the settlement and budgets will continue to be reviewed each year. He highlighted that the indication is that this is a flat cash grant and aid settlement across the Scottish Government Environment and Forestry portfolio, of which SEPA is part of. SEPA’s percentage of the settlement is still being determined by Scottish Government however, we expect to be advised of this shortly.
He concluded by advised that SEPA will need to cover the cost of inflation, and that this is not currently reflected in the budget. It is widely expected that there will be challenging pay negations this financial year and this is the same across other public sector organisations. On the high-level plan, staff costs are held at the same level through to 2026-2027, with the assumption that we are absorbing the inflation rate. If inflation rate was at 7%, this would equate to approximately £1.3million per annum.
In response to a question about the opportunities to be more efficient, the Acting Chief Executive advised that we are allocating resource to the reform agenda.
The Board discussed that reduction in the training budget, highlighting that at times of change there is a need for training. In response to a question about whether the vacancy savings were current or required turnover, Stuart McGregor advised that there are no vacancies and that this is reliant on movement of staff. The Acting Chief Executive confirmed that we are recovering the management reporting in respect of finance and that this is being tested across the organisation to get an awareness and a more accurate position for forecasts going forward. In response to a question about SEPA’s freedom in respect of pay negotiations, Stuart McGregor advised that the wage award is based on pay policy guidance and that we can negotiate within the parameters of the guidance but not out with, this is seen as contentious and would require to go to the Scottish Government remuneration Committee. In response to a question about alternatives to direct salary increases, Stuart McGregor advised that Scottish Government are looking at a reduction from 37 hours to 35 hours but that SEPA already have a 35-hour working week. Previously an extra day's annual leave was given. John Kenny advised that Scottish Government are also looking at a four day pilot but that we do not have the capacity to be involved.
In response to a question about procurement being more expensive adopting a regenerative SEPA approach, Stuart McGregor advised that we are assuming that there will be savings but advised that if inflation continues to rise at the 7/9% mark the budget will not balance. Suppliers are already looking for increases due to inflation.
The Board noted that the Budget does not yet balance and that there are things that money needs to be spent on not yet added to the budget, questioning whether efficiencies can be made fast enough. The Acting Chief Executive advised that the current context is unprecedented and that Scottish Government expects longer term efficiencies around digital and the estate.
The Chair asked that a Board group comprising himself, Nicola Gordon as Audit Committee Chair and Martin Hill as People Committee Chair be set up in July/August 2022 to bring matters back to the Board so that decisions can be made quickly. The group needs to look at scenario planning including what we are legally obliged to do and focus on the reform agenda. The Acting Chief Executive advised that there can be a touch point for the group in July 2022 with the focus being in August/September 2022.
Action: Stuart McGregor/Acting Chief Executive
In response to a question about charging, Stuart McGregor advised that we have discretion around RPI or CPI in October based on the year before, there is no in year discretion. Outwith that we would need to consult and get ministerial approval. He highlighted that we can only recover our costs not make a profit from charges.
The Board noted the content of the paper; and approved the 2022/23 budget on the understanding that any adjustments to the savings proposal included in the budget will be highlighted to the Board in the Quarterly Financial Performance Reports.
8.2 Financial Monitoring Report Ending 31 March 2022 - Analysis of Risk - STRAT 04/22
Stuart McGregor introduced the report with Rosaleen Burke in attendance. He advised that the underspend was significant last year with the reasons set out and explained in the paper, highlighting that it had been an exceptional year. He advised that we are hoping that the supply chain issues will ease off.
The Clerk to the Board explained why there were two papers, one marked public and the second marked private.
The Board noted the reports.
9. Balancing Reform and Delivery - Presentation
Jo Green introduced the presentation with Chris Daily and Sandra Tough in attendance. She advised that the purpose of the item was to provide an understanding to the Board members around what the current constraints to operating practice are. Ian Buchanan spoke about permitting, what was planned in October 2019 and where we are now with Sandra Tough providing detail on the Integrated Authorisation Framework and explained both the challenges and opportunities that have occurred over the last two years, highlighting that it is incredible how much we have learnt.
In response to a question about the cost and time taken to process and where we want to get to, Sandra Tough advised that the digital work does show savings. In response to a question about statistics for quarters one and two so that progress can be demonstrated, Ian Buchanan advised that we are still relying on workarounds but have clarity on what needs to be done. Sandra Tough advised that the end of year report shows progress per quarter and provides detail on any delays advising that they are often because an extension is granted as we are working with applicants and that few complaints have been received.
Chris Daily provided detail on compliance verification including the assessment of operator reports and data, inspection and audit of site operations, and monitoring of emissions to the environment. He also provided detail on the pre-covid, pre-cyber attack, and current positions as well as the future direction.
David Pirie provided detail on Environmental Monitoring and Assessment including an overview of reactive and planned monitoring and the various activities for Hydrology, Ecology and Chemistry.
In response to question on whether the teams have the necessary tools required, David Pirie advised that staff have been using whiteboards and SharePoint to help track records and are hoping to establish an off the shelf, cloud version of Labware LiMs (previously SEPA had a bespoke, onsite version of the tool) and are aiming to begin phasing this system in with training being given to staff in October 2022.
In response to a question about the impact this has had on staff morale and how staff (including junior staff that are not part of the strategic decisions) have been involved, David Pirie advised that staff at all levels have been actively involved in the rebuilding and understanding of the future of the service, to ensure they feel part of the future direction and fully understand what it will mean for them and their departments. Ian Buchanan advised that there is more work to do which requires freeing up capacity. The Acting Chief Executive acknowledged that there have been knocks to our delivery of One Planet Prosperity but that the focus is on delivering and involvement.
The Board expressed thanks to the group for the powerful presentation.
10. Aquaculture - Transforming Modelling - STRAT 07/22 & Presentation
David Pirie introduced the item with Peter Pollard and Alan Hills in attendance. He explained how the work links into the organisational characteristics and provided further detail on the modelling, highlighting that it was a tool to stimulate the real world. Peter Pollard advised that it is the next generation of screening models while Alan Hills explained the background to the tool and what it can do. It will be consulted on.
The Acting Chief Executive highlighted the positive reception our modelling work in respect of cleaner air for Scotland received recently highlighting that this was welcomed including by the Chair of the Scottish seaweed industry who at been at a meeting she had attended yesterday.
In response to a question about this model and models created by industry and whether we could agree on one model, David Pirie advised that there will never be one model as they are always improving and getting better. Relationships with those developing other models is good at a technical level. Alan Hills advised that there is a book about to be published on sea life modelling including standards.
The Board noted the report and presentation.
11. Consideration of New Risks
Bridget Marshall introduced the item and drew attention to the new risks being considered highlighting that current updates are provided at the end of the paper.
The Chair of the Audit Committee highlighted the risks discussed that morning and the discussion that is due to take place at the Audit Workshop on 29 July 2022 around how risks are managed in SEPA. She highlighted that it is difficult for the Audit Committee to feed back to the Board on the same day.
The Chair asked that an addition be made to the risks being considered around resource pressures impacting and threatening service delivery and staff arising from item 9. John Kenny advised that the People Committee are due to discuss the risk related to people in more detail at the next meeting. The Chair of the People Committee asked that risk be considered at the end of People Committee agendas too.
The Board discussed the need to think about how some risks can be best articulated. Ian Buchanan agreed to consider this in respect of a specific example.
12. Action Note
The Clerk to the Board provided an update to the action note
Action 99 - The work in 2020 on an organisational Engagement Plan will now be picked up and further worked on as a key input to the 2022-23 AOP. Ongoing.
Action 125 - this has been added to the Board planner to come back to the Board. Ongoing
Action 134 - Questions for Board -So that this can be actioned as
Appropriate there are a few questions for the Board? How regular are updates required and would a report to the Audit Committee be more appropriate? Ongoing.
The Chair of Audit Committee agreed that this was appropriate to go to the Audit Committee.
Action 138 - The approach to this issue will be developed as part of the
Regenerative SEPA work programme at which point an update will be provided to the Board. Ongoing.
Action 144 - We have paused this action due to other competing pressures on the HR function. Ongoing.
In response to a question about the expectations in respect of this risk it was confirmed that it is being looked at as part of the workforce plan which is being considered by the People Committee.
Action 145 - On Agency Board agenda for meeting on 26 July 2022. Ongoing.
Actions: 99; 125; 134; 138; 144 and 145 are ongoing
Actions: 146; 147 148 and 149 are closed
13. Any Other Business
Fran van Dijk provided an update on the work she is undertaking with Board members around the content and delivery of Board meetings.
The Clerk to the Board raised an AOB from Harpreet Kohli in respect of sharing all Board briefings on the Resource Centre in Diligent Board so that all Board members could read them even if not attending an event.
14. Date and time of next meeting
The next meeting will be held on 25 October 2022 at 1.00pm.
15. Conduct and Culture - verbal
Board members only met in private session, with Acting Chief Executive, Acting Chief Officer People and Property and Clerk to the Board in attendance.
The Board noted the update.