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Board meeting - 24 September 2024

The one hundred and ninety-fourth meeting of the Agency Board took place at 1.00pm on Tuesday 24 September 2024 via Microsoft Teams.

Clerk to the Board opening statement

The Clerk to the Board provided updates on invitations being sent to all Board members for the VIBES Awards, new IS arrangements to support Board members (the phone number and email address for the IS helpdesk was circulated to board members via email), and a reminder for members to complete their training on Protecting Information and Cyber Security via their Discover accounts. Further information will be provided shortly on Carbon Literacy training.

Chair's opening remarks

The Deputy Chair welcomed everyone to the meeting including the Board Apprentice, and Nicola Rae and Andrew Robertson (items 1-11 only) who were in attendance as members of the public observing the public Agency Board meeting.

Decision on taking business in private

Members agreed to take the two items (Finance update and H&S update) in private session due to the sensitivity of the topics.

Chair's report

The Deputy Chair provided a verbal update on behalf of the Agency Board Chair. It was noted that the Chair had participated in the following:

• On 30 July 2024, a session on “Neurodiversity in an hour: Get conversations started”
• On 1 August 2024, the PA interviews, following which, Nicola Rae (observing the Board meeting today), was successfully appointed and will join SEPA on 26 September 2024
• On 21 August 2024, a Corporate Leadership Team (CLT) Strategy Session
• On 23 August 2024, a session on Digital Strategy
• On 27 August 2024, chaired the People & Remuneration Committee
• On 9 September 2024, the Audit and Risk Committee
• On 10 September 2024, a Salmon Scotland meeting in Oban
• On 11 September 2024, a VIBES meeting

The Chair has also conducted 1:1 meetings with all Board members and the Chief Executive. Routine monthly group catch ups have also been held with the Chief Executive, Deputy Chair, Chief Officer Governance, Performance and Engagement (GPE), and Clerk to the Board. Meetings were also attended with CLT on Transformation, Digital, and a Health and Safety Board Champions meeting.

The Board noted the verbal update

Management reports

Chief Executive's report

Report: Chief Executive's Report - SEPA 24-25/017

The Chief Executive introduced the report, commenting that it had been a busy summer period and drawing attention to the reset of the organisation, support to the transformation journey and progress on delivery across this reporting period. Key packages of work highlighted included the Values roll out, training programmes, Water Environment Fund (WEF) projects, and the continued roll out of the water scarcity reports. It was also advised that the Chief Executive and Chair will be welcoming the First Minister on a Ministerial visit at Leven, Fife, on 25 September 2024.

Positive comment was made on the new style of report, incorporating the previous feedback from Board members. Members asked questions relating to the following sections of the report:

Bathing Waters signage - in response to a question on accessibility of Quick Response (QR) codes and members of the public who may not be able to link to phone applications, the Chief Operating Officer Data, Evidence & Innovation (DEI) highlighted that there are various methods to keep the public informed on Bathing Waters including real time variable messaging signs at every designated site. Electronic devices are not required to advise on the conditions of the water. QR codes are being explored whilst all signage continues to be reviewed to ensure accessibility for all users.

Low Emission Zones (LEZs) – a query was raised on whether there was data available to reflect any potential emission increases due to the impact of diversions taken to avoid LEZs. The Chief Operating Officer DEI advised that he would look into this and respond after the meeting.

Action (804): Chief Operating Officer DEI

Information Notice Served on Drilling Rig Operators - in response to a question raised on lessons learned from these information notices, the Chief Operating Officer Regulation Business & Environment (RBE) advised that this will be established as responses are received to the notices. Appropriate action will then be considered in the context of the Enforcement Policy including whether an authorisation was not sought due to a lack of understanding, or a deliberate flouting of requirements.

Wastewater testing for COVID transferred to National Health Service (NHS) Lothian - following a query on the transition of this service to the NHS, the Chief Operating Officer DEI advised that SEPA had picked this up as a fast response during COVID to help develop methodology and reports to support the NHS. It was advised that this more strategically sits with NHS as a public health issue and that it was the right time to move this across, highlighting that the transition went very smoothly.

Procurement workstream – in response to a question on potential synergies, the Chief Officer Finance, Modernisation & Digital (FMD) advised that whilst SEPA is operating in a similar environment to other agencies in the Environment and Economy Leaders Group (EELG), all have slightly different requirements and are using different sets of suppliers, so synergies were not immediately apparent. SEPA’s Head of Procurement is working with the Scottish Government group currently looking at Procurement as a whole. It was highlighted that a deep dive around the delivery model could be added to a Procurement Board Champions meeting for discussion alongside an update on the Procurement and Commercial Improvement Programme (PCIP) report.

Action (805): Chief Officer FMD

The Chief Executive added that a review of the procurement related information that SEPA has, and the analysis which has already been undertaken, would be welcome to see if there are other actions that can be taken within the current delivery model.

Water Classification results - in response to a question on how SEPA shows progression towards the overall objectives, and whether regulatory improvements can be accelerated, the Chief Operating Officers DEI and RBE drew attention to climate change drivers and presentations the Board has received in recent months on flooding and water infrastructure design (CSOs) and the multiple aspects that contribute to water class improvements. It was highlighted that SEPA does not have control over all the different environmental factors that impact on water quality, however, it does have influence on the investment in activities, including long term improvement programmes, but that expectations need to be managed.

In response to a follow-up question on how SEPA is reacting to heightening environmental challenges and measuring organisational impact, the Chief Executive referred to the culture shift, the reset of the organisation and the focus on improving outcomes to help people deliver better. The Chief Officer Governance, Performance and Engagement (GPE) added that this is an important strategic area for SEPA, referring to key areas of work including the development of a longer-term vision for SEPA. It was highlighted that there is a session planned for Board members and the CLT to work on this together, alongside reviewing and designing SEPA’s wider transformation programme to provide a solid foundation to deliver significant change.

Public Sector Reform - a question was asked in respect of how EELG interacts with Scottish Government, and the roles of the different EELG workstreams, including on Procurement and Environment Futures and how they are linked. The Chief Executive provided an overview of the membership of EELG and the governance structure. The Chief Officer GPE advised on the role of the Sponsor team in Scottish Government and SEPA’s relationship to this and the policy teams. The Clerk to the Board will circulate the Terms of Reference and structure for EELG, including EELG’s Procurement and Environment Futures workstreams.

Action (806): Clerk to the Board

The Chief Operating Officer RBE gave an example of a pilot project by the Environment Futures Group on “Catchment Management”, advising that SEPA’s role here is to establish mutual benefits across the public sector.

More generally on the format and content of the report, the Chief Executive highlighted that the report includes significant areas of business to share with the Board and that further consideration will be given to providing more context to what is reported. It was advised that 1hr information sessions on MS Teams will be tabled for the Board for deeper dives into various topics to help raise awareness of SEPA’s work and further enhance how information is shared.

Action (807): Clerk to the Board

The Board noted the report.

Quarter 1 Performance Report

Report: Quarter 1 Performance Report - SEPA24-25/018

The Chief Officer GPE introduced the report covering the quarter one performance against SEPA’s current Annual Operating Plan (AOP), drawing attention to the 10 areas “achieving” and two areas “partially achieving”. It was highlighted that this report is in interim form as SEPA continues to build its Key Performance Indicators (KPIs), and feedback was requested as the Quarter 2 report is developed.

In response to a question on why the “percentage of invoices paid with 10 days”, was only partially achieving, the Chief Officer FMD outlined the reasons and confirmed that this will form part of the regular financial reporting to the Board. A response was also provided by the Chief Officer FMD to a query on section 3.11 on efficiency savings.

The Chair took over chairing the meeting from this point.

The Board approved the report

Development of SEPA's corporate performance framework and reporting

Report: Development of SEPA’s corporate performance framework and reporting - SEPA24-25/019

The Chief Officer GPE introduced the report highlighting that it is intended as a formal update from the discussion that took place at the Board Strategy session on 3 September 2024. It was noted that positive progress continues to be made and that an interim set of KPIs and Objectives and Key Results (OKRs) for SEPA will be shared with Board members to enhance reporting from Quarter 2 onwards. This will provide greater evidence of the impact that SEPA is having in Scotland with more outcome focussed measures for the coming year. An overview plan of key dates/timeline will be shared with Board members on Diligent Boards.

Action (808): Chief Officer GPE

The Board Champion for Performance provided brief feedback from a recent meeting held with the Chief Officer GPE and the SEPA lead, explaining that work is underway and encouraging other board members to forward any questions, feedback or points for review to be collated and addressed.

A request was made by Board members for the KPIs to be mapped against the key “what we do” pillars and the strategic priorities.

Action (809): Chief Officer GPE

The Board noted the report

Quarter 1 Financial Monitoring report

Report: Quarter 1 Financial Monitoring report - SEPA 24-25/020

The Chief Officer FMD introduced the report informing the Board that the finances were discussed in detail at the 30 July 2024 Special Audit and Risk Committee meeting.

The following points were noted during discussion:

• Scottish Government has issued an amendment to the Scottish Public Finance Manual in relation to expenditure over £100k having to go forward to Scottish Government for approval
• Quarter 1 covers from 1 April 2024 to 30 June 2024, where a balanced set of results is forecast. As a result of the urgent spending review an extra layer of scrutiny has been imposed on all spend with any surplus revenue monies being returned to Scottish Government
• Scottish Government has confirmed that SEPA spend prioritised for Transformation is acceptable
• A deep dive has been undertaken to look at the Capital budget and as a result £1M has been deferred from the 2024-2025 capital programme
• SEPA is still awaiting approval on two Accountable Officer templates; the forecast presented assumes approval of these

In response to questions raised on cash values and the high levels of debtors, the Chief Officer FMD highlighted that cash is deliberately run down at the end of year in accordance with Scottish Government guidance, however, as a result of annual billing being undertaken at the end of April cash balances in June appear high. The high levels of debtors are also a result of charging invoices being issued in April and reflect where requests have been made for prolonged payment plans. These payment plans remain as debtors until all charges have been paid in full.

The Board approved the report

SEPA's risk profile and approach

Report: SEPA’s risk profile and approach - SEPA 24-25/027

The Chief Officer GPE introduced the report highlighting the work undertaken to establish an enhanced risk management framework. Whilst this remains work in progress, it was highlighted that details of strategic risks have been shared, and the report presented incorporates feedback from the Board and Audit and Risk Committee (ARC). Clear consensus had been reached on the majority of the risk appetite statements with the following adjustments made in producing the tabled report to incorporate the range of feedback received: Risk 2 on transformation has moved to “open”; and Risk 4 on Health and Safety is to be considered as “cautious”.

It was advised that work is underway to develop portfolio risk registers. These will be shared via Diligent Boards.

Action (810): Chief Officer GPE/Clerk to the Board

Principle risks will be subject to deep dive reviews at future ARC meetings to enhance scrutiny, and the risk appetite statements will also remain under review.

The Board approved the risk appetite statements set out in the report

People Strategy

Report: Our People Strategy - SEPA 24-25/026

The Chief Officer People, Workspaces and Development (PWD) introduced the strategy, thanking Board members for their input. It was highlighted that the strategy brings together in one place a clear commitment for employees and has taken into consideration feedback received through individual and group discussions with Board and CLT members. Following approval, the team will be able to move forward to the next stage in supporting the final design prior to launching the strategy to the organisation. The launch will be supported by an engagement plan.

The Board approved Our People Strategy 2024-2027

SEPA Values

Report: SEPA Board Values - SEPA 24-25/021

The Chief Officer PWD introduced the paper referring to work carried out in relation to the Board adopting the SEPA Values of Passionate, Professional and Purposeful, including an infographic developed mapping the values to the principles of public life.

The Clerk to the Board confirmed that at its Strategy session on 3 September 2024 the Board had agreed to adopt the values, however as this was not a formal board meeting approval was brought to this meeting for the formal minute.

The Board approved the adoption of the Board Values

Circular Economy regulation developments

Report: Circular Economy regulation developments - SEPA 24-25/022

The Chief Operating Officer RBE introduced this item with the Head of Energy, Industry & Materials in attendance.

The Chief Operating Officer RBE highlighted that this item follows on from questions raised at the Board meeting held on 28 May 2024 on Scotland’s Recycling Targets. It was advised that these are targets that SEPA contributed to in terms of information and context, but that SEPA is not solely responsible for delivery. Circular Economy is a vast area within SEPA’s responsibilities and Board members were requested to provide an indication on where they would benefit from additional input to support their understanding.

The Head of Energy, Industry & Materials spoke to her presentation, emphasising the rapid pace of change and range of activities, opportunities and challenges. It was highlighted that Circular Economy aims to retain the value of materials flowing within the economy for longer, it reduces the reliance on virgin materials, greenhouse gas emissions, pollution and waste. SEPA looks to make sure that waste activities are compliant, ensuring that those who are producing waste take responsibility for what happens to the waste and that materials are managed appropriately to ensure that environmental harm and the impact on communities are reduced.

Board members asked that future deep dives or information sessions are tabled on SEPA’s remit in this area to address questions and comments raised including where SEPA is taking the lead and where it can influence in partnership, and the context and scale of this work. This will help members understand how big the problems are and what SEPA’s involvement is.

Action (811): Chief Operating Officer RBE/Clerk to the Board

A one-pager on the life cycle of waste and the various SEPA interfaces was also requested.

Action (812): Chief Operating Officer RBE

Information is to be shared on Diligent Boards on the new targets, alongside a copy of the presentation.

Action (813): Chief Operating Officer RBE

The Board noted the report and presentation and thanked the Head of Energy, Industry & Materials

SEPA Customer Service Level Complaints Statistics Annual Report

Report: SEPA Customer Service Level Complaints Statistics Annual Report - SEPA 24-25/023

The Chief Officer GPE introduced the report highlighting that complaints reports are considered in full every quarter by ARC. It was highlighted that there has been a range of work underway to enhance how SEPA manages complaints which is reflected in the KPIs. The team have drawn out themes from the complaints and addressed areas of concerns.

It was highlighted that this work has now moved from the Chief Operating Officer RBE portfolio across to the Chief Officer GPE portfolio to connect better with other customer insights and focus on improvements on wider customer experience.

In response to a question on the accessibility of the complaints process, the Chief Operating Officer RBE advised that there are multiple ways in which someone can make a customer service complaint, this is mainly by telephone or email, however accessibility will be reviewed going forward. The Chief Officer GPE highlighted work currently being undertaken on the SEPA website around accessibility and advised that improved signposting and accessibility of the process for raising complaints will be considered as part of this.

Action (814): Chief Officer GPE

In response to a question on lessons learned, it was requested that consideration will be given in future reports to including lessons learnt from both upheld and not upheld complaints.

Action (815): Chief Officer GPE

The Board approved the report

Board Governance - 2025-2026 meeting schedule

Report: Board Governance – 2025-2026 meeting schedule - SEPA24-25/024

The Clerk to the Board introduced the new approach to Board and Committee meetings and the draft planner for 2025-2026. Reference was made to changes made to the meeting schedule to reflect feedback from Board members and discussion with the Committees. The paper also reflects best practice and aims to maximise the value for Board members and the organisation. It was advised that the finalised planner will come back to the Board for approval on 25 February 2025.

It was also highlighted that on 9 September 2024 the ARC had approved a revised Terms of Reference (ToR) including the name change to Audit Risk and Assurance Committee. The People and Remuneration Committee (PRC) had an initial discussion on its ToR on 27 August 2024 and a revised ToR incorporating the feedback from the discussion will come back to the PRC on 29 October 2024 for approval. Both Committee ToRs will then be submitted to the next Agency Board meeting on 26 November 2024 for Board approval.

A request was made to change the Development Day proposed for 28 October 2025 to another date in October. Board members also asked that there are more opportunities for in-person meetings, making efficient use of time, e.g. combining with other meetings that day such as Board Champions. The support team was asked to look at the cheapest options and locations for in-person meetings to save on travel expenses.

The rationale behind having the four Agency Board meetings as virtual to save on travel expenditure and the Strategy and Development sessions in person to allow for better collaboration was explained by the Clerk to the Board. The Chief Officer FMD also informed the Board that this was based on guidance that SEPA had received from Scottish Government to minimise travel.

The Clerk to the Board will identify a new date for the October 2025 Development Day and look at having half of the Agency Board meetings in person, considering the most efficient travel options around this in terms of journeys to offices etc.

Action (816): Clerk to the Board

The Board approved the revised dates and planner for the remainder of 2024-2025

The Board approved the proposed Board and Committee meeting schedule of dates for 2025-2026 with amendments being made to look at in-person options

Board Work Programme

UK Government Board Apprentice scheme

The Board Apprentice provided a presentation on the UK Boardroom Apprentice programme 2024 including information on her personal background, reasons for joining the scheme, and intention to apply for future Board positions. It was highlighted that this is a UK Government led programme aimed at preparing individuals for future Board roles in the public sector. The programme is made up of three components: a 12-month placement with a host board; learning and training events; and a Board Buddy from the host board to guide the apprentice through meetings. Members offered additional assistance to the Board Apprentice and were interested in further information on any evaluation made of the scheme.

The Clerk to the Board informed the Board that this was the first time that SEPA had been involved in this particular initiative, and that a meeting had been arranged in early October with the lead from the scheme to discuss SEPA’s future participation. It has not yet been confirmed whether the scheme is running next year. Discussions are also being held with other EELG bodies to look at similar initiatives to support SEPA’s consideration of options going forward.

The Board noted and thanked the Board Apprentice for the update

Board Champions

Report: Board Champions - SEPA 24-25/025

The Clerk to the Board introduced the report highlighting that this was part of the approval process for the Board Champions approach, asking that the Board collectively approves the full set of Board Champions ToRs. It was highlighted that Board Champions will be a standing item on Agency Board agendas for updates from Board members and CLT leads. An annual report will also be produced (further detail in the draft board planner, item 14).

The Board approved the full set of Board Champions ToRs noting that the Procurement draft ToR is still with the Board Champion for approval

Other Board engagement activity

No updates were given.

Board Committee Reports

Audit and Risk Committee (ARC) meeting held on 9 September 2024 and Special ARC meeting on 30 July 2024

It was highlighted that the Committee approved minute of the Special ARC meeting of 30 July 2024 and the Chair-approved draft minute of the ARC meeting of 9 September 2024 are available for members on Diligent Boards for information and awareness purposes.

An amendment was requested to the ARC approved minute of 30 July 2024 regarding a finance matter. The Chief Officer FMD advised that corrected text would be provided to the Clerk to the Board. It was advised that the minute will then be submitted for re-approval at the 10 December 2024 ARC meeting. The Clerk to the Board will make the Chair of ARC aware of the amendment.

Action (817): Chief Officer FMD/Clerk to the Board

In response to a question on assurance mapping of risk versus planned audits, the Chief Officer GPE advised that this information will be shared with all Board members on Diligent Boards with the ARC papers when available.

The Board noted the verbal updates

People and Remuneration Committee (PRC) meeting held on 27 August 2024

The Chair provided a brief verbal update in respect of the PRC meeting held on 27 August 2024 highlighting that the Deputy Chair attended the meeting as an observer. It was noted that, as covered under item 14, the revised ToR for the Committee will come back to the PRC on 29 October 2024 for approval, prior to Board approval.

The Board noted the update