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Board meeting - 22 February 2022

The one hundred and seventy eighth meeting of the Agency Board took place on Tuesday 22 February 2022 on 1.00pm via Microsoft Teams.

Safe SEPA @ Board:

The Clerk to the Board advised that a Board Induction area has been created in the Resource Centre on Diligent Board containing useful information about portfolios, and guidance on roles and responsibilities for Board members including the Scottish Government On Board document. She advised that Board members should contact her if there is any information that is missing from the area that they would like added. She also advised that there has been a delay to the 2-factor authentication for Diligent Boards and this will be activated in the coming weeks.

Chair's opening remarks

The Chair welcomed everyone to the meeting and welcomed the two new Board members to their first formal board meeting. He also welcomed Kari Speirs and Laura Hamilton from the AMT and Board Support team in attendance with the Clerk to the Board.

The Chair advised that the plan is for the Board meeting on 22 March 2022 to take place in person at Strathclyde University and discussions are ongoing about how this can be facilitated via a hybrid approach. He confirmed that SEPA is attending the Public Accounts Committee on 17 March 2022.

The Chair confirmed that 10 minute breaks had been scheduled after item 11 and before the private session.

The Chair advised that no member of the public were in attendance and that we have received no approaches in advance of the meeting.

Matters arising

The Clerk to the Board provided an update. She advised that:

Action 686 (Chief Executive’s Report – SEPA 34/21) Early indications from the debt recovery agents are that it may take up to a year to progress this. Based on this it is proposed that this action be closed on the understanding that once the debt recovery action has concluded, an update will be provided to the Board in the CEO report. Proposed closed.

Action 687 (Monthly Performance Report – SEPA 36/21) After the 22 February 2022 meeting performance reports will come to the Board on a quarterly rather than a monthly basis. The next report will be presented to the Agency Board on 26 April 2022. Proposed closed.

Action 688 (Monthly Performance Report – SEPA 36/21) The full response to the question asked is provided in the action note circulated for today’s meeting. Proposed closed.

Action 689 (Flood Risk Management Plans – SEPA 38/21)This advice will be incorporated as appropriate into future work and the Flooding Board Buddies will continue to be engaged. Proposed closed.

Action 690 (Waste Prosecution – SEPA 39/21) Added to the Board planner. Ongoing. 

Action 691 (Audit Committee minute of meeting held on 28 September 2021) This was added to the Audit Committee Minute for the meeting on 28 September 2021 which was approved on 14 December 2021. Proposed closed. 

Action 692 (Any Other Business) A meeting was arranged between relevant Board members with Ian Buchanan and Jo Green on 18 January 2021. Proposed closed.

Action 693 (Corporate Plan – SEPA 42/21) This has been added to the Board planner. Ongoing.

Action 694 (Comprehensive Spending Review Submission 2022-27 – SEPA 41/21) The detailed update is provided in the action note circulated for today’s meeting. This will be added to the Board planner and assigned a date when appropriate. Proposed closed.

Action 695 (Agresso Build Update – SEPA 40/21) This is a complex area of work that requires some time and analysis. We are currently working on the initial short-term step to ensure the Agresso Helpdesk is appropriately resourced for the duration of the three years to handle the needs of the business. We propose closing this action on the understanding that when an options analysis is complete within a three-year period, it will be shared with the Board. This will be added to the Board planner and assigned a date when appropriate. Proposed closed.

The Clerk to the Board advised that a review and refresh of the action note, and Board Buddies Register is underway and will be completed shortly.

Chair's report - verbal

The Chair advised that with Craig Humehe had visited the VIBES winner, Ethical Dairy on 2 December 2021. A visit by him and Nicola Gordon to another VIBES winner, Brewster Brothers on 20 January 2022 is being rescheduled on his part, Nicola Gordon was able to attend. 

With the then Chief Executive he participated in a virtual meeting with the Salmon Scotland Chair and CEO, Atholl Duncan and Tavish Scott on 6 December 2021.

He attended the Audit Committee and Strategy Board on 14 December 2021, the Change Committee on 17 December 2021, and the Informal Induction for the new Board members on 20 December 2021.

On 31 January 2022, the Chair and Katriona Lundberg attended the introductory meeting between SEPA and Scottish National Investment Bank (SNIB).

During January and February 2022, the Chair attended various meetings with the Board, Executive team, senior managers and staff regarding the Chief Executive’s resignation, various meetings regarding the recruitment of a new Chief Executive, and quarterly one to one meetings with the Board members.

The Chair advised that he and the Acting Chief Executive are meeting with the Minister on 2 March 2022 and that we have asked for ministerial attendance at a future Board meeting.

The Board noted the update.

Management reports

Chief Executive Report (SEPA 02/22)

The Acting Chief Executive introduced the report and opened the discussion up for questions from Board members.

In response to congratulations on the amazing progress on Permitting and regarding the Waste Crime BBC Disclosure Scotland programme, Ian Buchanan confirmed that there were lots of positive responses and shock following the programme regarding the significant scale of the issue and it brought to light the substantive criminal activity that impacts both the environment and communities. He also conveyed his gratitude for the dedication of the team involved. Martin Grey advised that it was overwhelmingly positive, with limited negative feedback. He highlighted the internal confidence created from the programme by individuals being able to visibly demonstrate SEPA at work.

In response to a question regarding including waste incineration in Placemaking projects, David Harley advised that he will investigate this and come back to the Board. Ian Buchanan commented that the significance of the focus of heat use and heat recovery was dependent on local areas, such as Grangemouth and Levenmouth.

Action: David Harley

It was noted that a session to reflect on the household waste figures and recycling would be of benefit in the future.

Action: David Harley/ Clerk to the Board

In response to a question regarding the level of responses received for the Voluntary Severance Scheme, John Kenny confirmed that as of 21 February, 72 applications had been received. He advised that the application period for the scheme closes on 25 February 2022 and that this cycle will enable up to a maximum of 50 staff to leave between April and August 2022.

The Board noted the report.

Monthly Performance Report (SEPA 03/22)

The Acting Chief Executive introduced the report and advised that this is the last of the monthly performance reports and that in future the reports will be submitted per quarter. She opened the introduction up to members of the Executive team.

Ian Buchanan provided further clarity on the three amber measures under Regulation and advised that while there has been huge pressures within permitting, he is optimistic regarding measure one. Regarding measure four, he advised that the biggest challenge related to compliance verification is the confidence on tracking and confirmed that the action plans for measure five are almost in place.

Stuart McGregor confirmed that the final outstanding item under measure fifteen has now been completed. Measure fourteen remains at amber and work is ongoing with the debt cycle and cash allocation. He advised that it is hoped that statements can be issued in early March 2022.

David Pirie confirmed that measure seven has changed from green to achieved and that measure nine will remain at amber following the Klisters cyber-attack. Regarding measure ten, he confirmed that we had successfully tendered for the system however, the new telemetry solution will be delivered next financial year.

The Board noted that even with monthly reports, it is difficult to understand trends in regulation and it would be helpful if these could be included in the quarterly reports in the future.

Action: Ian Buchanan

The Board noted that a brief narrative of performance would be helpful within a monthly management report to the Board as the performance will now be quarterly. This will be considered.

In response to a question about whether the 79% (section 2.4) compares with pre-covid numbers, Ian Buchanan advised this is not easy to answer as each regime has its own complexities and way of working, and that pre-covid the numbers were not far away from 100%. However, the numbers in the system now are closer to 100% than the 79% in the report. Therefore, it is not significantly down from pre-covid. Ian Buchanan advised that he is optimistic that there will be an improvement towards the end of 2022.

In response to a question on whether all five long-standing information challenges can be completed by the end of the financial year, Kieron Gallagher confirmed that four of the five are underway and that the fifth is being addressed. He advised that he is confident that the measure will become green.

The Board asked that the AMT lead names are reviewed to ensure that the are accurate when submitting the quarterly report. The Board noted that this was a result of interim AMT lead changes since the December and November 2021 reports were drafted.

The Board noted the report.

Quarter 3 Financial Monitoring Report (SEPA 01/22)

Stuart McGregor introduced the report and advised that the report is to the end of December 2022 (Quarter 3), with normality returning to the reporting functionality. He advised that this month Finance had provided one report to serve both the Board and the Executive. He highlighted that the organisation is generating the required surplus to fund the capital expenditure, that expenditure will be in line with the Scottish Government resource budget, and that there will be a positive cash balance in cashflow terms of £2.5 million.

He confirmed the income for the year is forecast at £94.1 million, which is £40k above the budget for the year and that expenditure is forecast at £87.9 million, which is £40k below budget. He advised that the make-up of the income and expenditure figures are detailed in the report narrative and associated tables, and highlighted in the overall income, that £700k of credits have been raised against the billing charges to reflect the changes to the licences since December 2020, when the cyber-attack occurred.

He advised that in respect of general contingency at the end of December 2020, there was a negative balance of £53k and that savings should be made at the year end to cover this. £640k of grant in aid funding is no longer required to be returned to Scottish Government so we are looking to utilise it.

Regarding the trading accounts, he advised that there is a significant exercise underway to calculate the cost recovery rate and that there is an early indication that SEPA will meet the 98% cost recovery target. Regarding the capital budget, there is an expectation that there will be approximately £500k underspend, largely due to supply chain issues however, work is ongoing to mitigate this as much as possible.

He confirmed that a new risk has been raised regarding the resource level in Finance following a concern previously raised and provided an update regarding the recent Finance recruitment. Resource support is also being provided via the flexibility project and temporary external agency appointments.

In response to a question on external consultancy services, and the report stating that SEPA has successfully won another two bids, and therefore what impact this has to SEPA’s commitment with regards to International Services, Stuart McGregor advised that he will come back to the Board with more information regarding these contracts.

Action: Stuart McGregor

In response to a question on the property costs and why if SEPA is making less use of property there is an increase in utility bills and the rationale for this, Stuart McGregor advised that the properties utility maintenance has continued, and that the general increase in utility costs, as well as the work carried out in the Angus Smith Building
and Aberdeen office to ensure that they are covid safe are the cause of the spend. The Board requested further information regarding the property costs and spend.

Action: Stuart McGregor

In response to a question regarding capital and whether there are any improvements on how we engage with the capital spend with Scottish Government, Stuart McGregor advised that SEPA does prepare its capital submissions in line with Scottish Government process, and that there is a capital spending commission. SEPA will submit its requirements and has a £4.1 million capital allocation for 2022-2023. SEPA has a capital programme prepared for 2022-2023. David Pirie confirmed that flooding and planned replacements of systems is a big driver of the capital programme for 2022-2023.

The Board noted the report.

Annual Review of Official Documents and Procedures Approved by the Board (SEPA 05/22)

The Clerk to the Board introduced the report and advised that an update has been provided in respect of all documents and procedures listed in the report; the Framework document, Standing Orders, Code of Conduct, Terms of Reference of the Audit Committee, Board members’ representation of SEPA at meetings and events, Policy and procedure for Board members claiming expenses, Board members role and procedure in concerns raised by whistleblowing, Procedure for dealing with allegations of failure by Board members to comply with the SEPA Code of Conduct, and the General Scheme of Delegation. A number of these documents are on the agenda for today’s meeting and others are closely linked into the review of the Code of Conduct which requires Board for approval prior to it being submitted for formal approval of the Standards Commission before 10 June 2022.

The Board noted the report.

Standing Orders (SEPA 06/22)

The Clerk to the Board introduced the report and advised it had not been reviewed for a numbers of years and that due to several changes, that took place due to the pandemic and cyber-attack, an administrative review of the practical arrangements put in place in recent years has been undertaken. Proposed changes are highlighted in yellow within the report.

The Board asked that it is clear that the same measures for in person and virtual meetings applies to both the Board and the Committee meetings.

In response to a query that all members of the Executive are present at Board meetings and whether this is necessary, it was agreed that the wording be changed to state they “may attend”.

Action: Clerk to the Board

The Board asked for a future training session on the different ways of declaring a connection and declaring an interest in the revised guidance from the Standards Commission in respect of the Code of Conduct.

Action: Clerk to the Board

In response to a query on the notice of meetings (section 7) and in ensuring transparency it was agreed that the Acting Chief Executive, Clerk to the Board and Head of Communications would investigate options for the notice of meetings as well as youth engagement as part of wider communication work.

Action: Acting Chief Executive/ Clerk to the Board/ Martin Grey

The Board asked that there be a further discussion in private session relating to section 77 and how the Board decides what appointments are reserved for the Board.

In response to a question regarding the linkage between the scheme of delegation on setting authorised spending limits and the Scheme of General Delegation and Delegated Powers sections (72 and 76), the Clerk to the Board advised that the General Scheme of Delegation is from the Board to the Chief Executive, and that there is then the Specifics organisational scheme of delegation that sit below. Both are being reviewed as part of the governance framework work highlighted by the Acting Chief Executive in the seminar session earlier today. The operational delegations which sit below them are called the Standing Financial Instructions (SFI’s) and are all being reviewed to streamline.

Under Notice of Meetings, the Board agreed that a statement be included on inclusive responsibilities in the planning of meetings.

Action: Clerk to the Board

The Board approved the report, subject to the Clerk to the Board making the immediate amendments as agreed. Wider adjustments requested will be addressed as these documents are presented to the Board.

Audit Committee membership and Terms and Reference (SEPA 07/22)

The Clerk to the Board introduced the report and advised that the membership changes are that Nicola Gordon is Chair, with Martin Hill, Harpreet Kohli, and Julie Hutchison as members. The changes in the revised terms of reference relate to the quorum.

The Board approved the proposal for membership of the Audit Committee and approved the revised Terms of Reference.

MSP Research (Presentation)

The Acting Chief Executive introduced the item with Robert Cumming of PA Advocacy and Peter Finnie in attendance. Peter Finnie highlighted that the presentation shows an early snapshot of the new MSP’s that we can track over time. He advised that there is more diversity in Parliament in respect of gender and ethnicity. 

Robert Cummings presented to the Board highlighting that sixty nine MSP’s had been interviewed from a range of parties, that the vast majority know a fair amount of SEPA which is comparable to their knowledge of Scottish Enterprise and Scottish Water, that regardless of the party, area represented or when elected they are likely to feel familiar with SEPA, that the majority think favourably of SEPA, that standing is lower than hoped given levels of awareness but that not many comparable public sector organisation are regarded higher and that half of MSP’s recalled satisfactory contact with SEPA in the past year with Government MSP’s more likely than opposition MSP’s to think this. He concluded by highlighting that awareness appears relatively unaffected by the large intake of new MSP’s, that opinion appears more influenced by politics than by experience, where or what type of community they represent, that it is early days for Committees and that the survey suggests that nearly all public sector organisations have got work to do.

The Chair advised that work was underway to reset engagement for this year.

In response to a question on what could be expected next year, Robert Cummings advised that he did not ask more detailed questions to understand the why but from previous experience dissatisfaction can be due to a local issue in their constituency that has lingered. New MSP’s can have preconceived notions rather than experience.

The Acting Chief Executive highlighted that the baseline message is that we are doing a good job and that we need to communicate that to ensure that there is not a misperception about our role. We need to target our engagement where there are issues that people assume are ours to fix when they are not. Peter Finnie highlighted that the approach alternates every year with a snapshot one year with follow up questions the following year. There was no sense in doing the follow up level of questions on the new Parliament, this will happen next year. MSP’s have seen and heard a lot more about us since the survey was undertaken.

Martin Grey drew attention to the work going on in the background to understand the detailed issues including checking the questions being asked in Parliament, highlighting that we have a system to track engagement. He highlighted that dissatisfaction could be because there is no resolution available but advised that we are not complacent and are working on visibility and accessibility.

In response to a question about those not responding, Robert Cummings advised that it is difficult to get interviews in August/September as new MSP’s did not yet have staff or constituency offices however he still spoke to about half of new MSP’s. It is always
difficult to plan with diaries, but this is the first year in the twenty years he has been doing this that he has not had seventy interviews. He also highlighted that not as many Ministers are included as previously were as they are meant to remain impartial.

The Board thanked Peter Finnie, Robert Cummings and all those involved in the work.

The Board noted the update.

Aquaculture Update (SEPA 04/22)

The Acting Chief Executive introduced the item with Peter Pollard and Mike Montague in attendance.

Peter Pollard advised that the Minister had accepted in principle the recommendations in the Griggs review, highlighting that this leaves the door open for more thinking on the future approach. He drew attention to the main themes in the report and provided detail on the developments since he had last been to the Board including around Marine Scotland taking on a role previously held by Local Authorities.

He drew attention to the gaps in the process and the collaborative opportunities.

The Acting Chief Executive thanked Peter Pollard and Mike Montague for their work and highlighted that the aquaculture sector has been a real focus over the last few years, with a challenging mix of stakeholders. She confirmed that we have good engagement with Scottish Government and can give practical advice.

In response to a question about whether there was anything that applied here that would not apply in other industries, Peter Pollard advised that there was nothing significant. He drew attention to the fact that all seabed is owned by Crown Estates, the landlord and that there are similarities with this and the cluttered regulatory landscape around intensive livestock on land. The Acting Chief Executive confirmed that this is not new to SEPA, we were previously involved in the reform of land use planning.

Mike Montague explained the review undertaken in 2014/15 and Peter Pollard highlighted the recent streamlining giving examples.

In response to a question about our involvement in the report, Peter Pollard advised that Professor Griggs had met with the then Chief Executive and asked for responses in writing which we provided. This approach was similar to that taken by other stakeholders. He highlighted that the amount of engagement with the sector including meetings with trade and industry, the close community groups and NGO’s including the advisory panel and with other regulators formally as a statutory consultee in planning but also collaboratively in other forums.

The Acting Chief Executive confirmed that the paper is primarily for noting by the Board with approval sought around the effort required. In response to a question around resource, Peter Pollard advised that we need to use the right people and be mindful of the day job. The Acting Chief Executive confirmed that Bridget Marshall is helping Peter Pollard with this.

The Board approved the report.

Board Work Programme

Report on Board Seminar 22 February 2022

The Clerk to the Board advised that the AMT had presented the context of the Annual Operating Plan for 2022/23 including at a high level Scottish Government engagement and financial implications around the three areas of Regulation, Flooding and Organisation.

Action: Clerk to the Board/ Stuart McGregor

The Board noted the update.

Board Member Engagement

Nicola Gordon advised that she had visited Brewster Brothers on 20 January 2022, highlighting that half of the waste going to landfill from building and construction is used by them – they recycle it for gravel and sand as a clean input to other activities. It means that new quarries do not need to be dug. She explained that she had enjoyed the visit, that those she met were enthusiastic and that they had won a VIBES award.

Harpreet Kohli advised that he had attended the second day of the NFUS AGM and conference on 11 February 2022. He highlighted that he attended sessions on the future of farm assurance, Delivering financial support to farm business and Scottish Government Cabinet Secretary for Rural Affairs and Islands, Mairi Gougeon MSP. He learnt a lot.

The Board noted the update.

Board Buddy Register

The Clerk to the Board advised that there were some additional updates to what had been circulated, advising that a Regenerative Board Buddy meeting took place on 9 February 2022 and that the Future Design of IT data and information is looking for a new Board Buddy to replace Michelle Francis. She asked that if Nicky Chambers or Vinay Mulgundmath were interested in becoming Board Buddies for the Deposit Return Scheme project to let her know.

The Chair asked that the Board Buddy register be reviewed alongside the action notes.

The Board noted the update.

Board Committee Reports

Audit Committee minute of meeting held on 14 December 2021

The Chair of the Audit Committee advised that the previous Chair had approved the Minutes and highlighted her approach going forward including the conversations had with the Acting Chief Executive and Clerk to the Board. Key themes to pick up are around measures to monitor and hold to account, risk management aligning with how the organisation is run and the role of internal audit a with a key question being how do we know how well things are going.

The Board noted the update.

People Committee Update

Martin Hill as Chair of the People Committee advised that the first meeting had taken place on 11 February 2022. It was a useful discussion with the Acting Chief Executive and John Kenny giving a good background presentation on the culture to deliver strategic outcomes, the focus of the AOP, and the importance of outcome based performance measures, followed by an open discussion on the focus of the committee with key themes including, that SEPA needs to be a brilliant organisation that supports staff to deliver its outcomes, where staff feel safe to speak, with processes that are built to work well, and where confidentiality is protected, that we need to bring people back to SEPA and feel part of the organisation (not just in a physical sense through access to workspaces) and that there is a need to have a continuous understanding of what staff are thinking and mechanisms for engaging staff, with an update on the pulse surveys to date (related to Health & Wellbeing and Future of Work), and the need to improve trust across the organisation. 

He advised that the three key themes for the People Committee to consider are:

• How we take the temperature of the organisation and engage with employees
• To recognise the AOP priorities and focus on people and culture in order to support management and delivery
• Provide advice on workforce implications related to flexibility and training

A report on the pulse survey’s to date with analysis and returns is being presented to the next meeting. The People Committee is meeting every eight weeks to feed outputs into the Board Martin Hill confirmed that two members of the People Committee are also members of the Audit Committee so will refer matters in each direction as appropriate.

The Acting Chief Executive conveyed thanks from herself and John Kenny highlighting that the Committee can help us be on it rather than in it.

The Board noted the update.

Action Note

The Clerk to the Board provided an update to the action note.

Action 572: A review was undertaken and it was decided that including the Equality Mainstreaming Report in this list was not appropriate. The outcome of the review is on the agenda today, item 9. Proposed closed.

Action 649: Regular reporting to the Audit Committee will take place until all actions arising from the cyber attack are complete, with a full report then going to the Board. Ongoing.

Action 657: This has been added to the Board planner. Ongoing.

Action 665: The Aquaculture website has been updated to reflect the Boards suggestion and is now live. Proposed closed.

Action 671: Added to the Board planner. Ongoing.

Action 677: Added to the Board planner. Ongoing.

Action 678: Added to the Board planner. Ongoing.

Action 684: Added to the Board planner. Ongoing.

Actions: 649, 657, 671, 677, 678, 684, 690 and 693 remain open.

Actions: 572, 665, 687, 688, 689,691, 694 and 695 are closed.