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Board meeting - 26 November 2024

The one hundred and ninety-fifth meeting of the Agency Board took place at 1.00pm on Tuesday 26 November 2024 in the Boardroom, Angus Smith Building, 6 Parklands Avenue, Eurocentral, Holytown, ML1 4WQ.

Clerk to the Board opening statement

The Clerk to the Board gave updates on the commitment of duties spreadsheet, the use of Diligent Messenger to receive notifications alerting when new material is available on Diligent Boards, and to expect further correspondence on iPad usage.

Following feedback, Board Members should cease to use the commitment of duties form to record their commitments. The Board support team will maintain individual records which will be approved by Board Members prior to submission to Scottish Government. 

Chair's opening remarks

The Chair welcomed everyone to the meeting including the Board Apprentice, Aminah Zahid. No members of the public were in attendance.

Decision on taking business in private

The Clerk to the Board informed the Board of the purpose of the items proposed to be taken in private. SEPA makes as much as possible available to the public, however certain items need to be taken in private such as Board discussion on finance and approval of charging schemes prior to submission for ministerial approval and publication.

Chair's report

The Chair introduced the report which included Board Member activity since the last Board Meeting on 26 September 2024, and highlighted key updates:

• The Leven restoration project visit attended by the First Minister where significant public and environmental benefits were discussed. The Chair commented this was one of the best site visits of her career.
• Attendance at the Nature Finance Conference in London which had a focus on natural capital and investment in nature. This was UK-wide conference, but panel events were concentrated on Scotland showing clearly our contribution to the debate.
• The Vision in Business for the Environment of Scotland (VIBES) Awards took place with the Chair having a key role and strong SEPA representation from the Board and leadership team. Board Members who attended will be contacted for feedback as to what learnings SEPA can take from the event and continue to build on this initiative.

Action (820): Clerk to the Board

Board members who attended the site visit to Torness nuclear power station provided feedback on the event, including that it was an impressive and insightful experience. The Board acknowledged that a note of thanks had been sent.

Reference was also made by Board members to the Board Information Session on Satellites, noting that the content was valuable however there was mixed feedback on the style of the session. The format of these sessions will be continue to be considered.

The Chair advised it was the last Board Meeting which Board Apprentice, Aminah Zahid, will attend. The Apprentice was thanked for her participation in the scheme, and it was noted that feedback on the experience would be gratefully received. The Chair stated that as SEPA moves into its transformation programme, resources will be focused on governance and strategy and participation in the Board Apprentice Scheme will be reviewed in twelve months.

Updates were provided by Board Champions on their recent activities relating to Digital Strategy, Procurement, Risk, Sustainability and Climate, Flooding, and Outcome Based Collaborative Regulation (OBCR).

The Board noted the update.

Board Work Programme

Report on seminars and briefing topics on 26 November 2024

The Clerk to the Board provided a summary of the Board seminars that took place in the morning: Net Zero leadership and influencing others (The Leven Project and the Water Environment Fund); Disclosure / CHIS and direct surveillance; Radioactive Substances; Sea lice charging scheme consultation; and Board Values. The Board support team will consider opportunities for Board engagement arising from discussion and the Board planner will be updated as appropriate.

Update on Board Champions

Reference was made to the update provided in the Chair’s report. The Clerk to the Board reported that a new Board Champions Group on Sustainability and Climate has been established which held an initial meeting on 18 November 2024 to review SEPA’s targets and how they are being met. The Sustainability Champion will be asked to join the new People and Resources Committee to give a governance structure to channel SEPA’s work on sustainability; a revised Terms of Reference and change of membership for the People and Resources Committee will be presented to the Board for approval at the Board meeting on 25 February 2025.

The Board approved the Sustainability & Climate Board Champions group.

Other Board engagement activity

The Clerk to the Board advised the Board Strategy date of 28 October 2025 will remain due to Board Member availability. The Board Strategy dates were also confirmed for 29-30 January 2025 to include a site visit to flood defences and a tour of the laboratories in SEPA’s Aberdeen office. More information will be provided in due course and Board Members travel will be booked by the support team. 

A Board Information session has been arranged for 21 January 2025 on Information Governance.

The Board noted the update.

Management reports

Chief Executive's report

Report: Chief Executive's report - SEPA 24-25/029

The Chief Executive introduced the report and drew attention to the following updates:

• SEPA participated in Scotland's Climate Week at the end of September. The First Minister visit to the Leven project, as highlighted in the Chair's report, was undertaken as part of this initiative.
• SEPA's laboratories successfully maintained ISO 17025 accreditation from UKAS, the National Accreditation Body.
• Participation in the 92nd Interpol General Assembly in Glasgow which also showcased SEPA's role a Category One responder under contingencies legislation.

Members asked questions relating to the following sections of the report:

Scottish Pollutant Release Inventory (SPRI) – in response to a question on whether the reductions in greenhouse gas reported for Peterhead Power Station and Grangemouth Refinery site were SEPA measured reductions or self-reported, the Chief Operating Officer Data, Evidence & Innovation (DEI) confirmed these are self-reported. Detail on the standards of measurement and assurance on the accuracy and consistency of reporting will be shared with the Board.

Action (821): Chief Officer DEI

Following a question on how the SPRI inventory is used by others, it was confirmed the data is used by Defra to ensure reporting responsibilities are fulfilled, by the public to find out about national emissions, and it also forms part of the charging model. A detailed answer will also be shared on Diligent Boards.

Action (822): Chief Officer DEI/Clerk to the Board

Variable Monetary Penalty (VMP) issued to Scottish Water – a query was raised as to whether the VMP recently imposed on Scottish Water of £7,800 is enough to act as a deterrent, and whether this covers the cost of cleaning up the environment after an incident. The Chief Operating Officer Regulation, Business and Environment (RBE) advised that SEPA is limited below a certain threshold, but as part of the penalty SEPA recovers its costs. It was highlighted that the scale is different in Scotland versus other parts of the UK due to different legal systems. 

Meeting of the five environment agencies – a question was asked about whether any significant learnings resulted from the meeting of the five environment agencies. The Chief Executive advised that as there has been a change in leadership in four out of five of the agencies within the last two years there is a renewed focus on outcomes and deliverables. 

Submissions received under the Energy Savings Opportunity Scheme (ESOS) – the Chief Officer RBE agreed to provide a briefing on the number of obligated organisations administered under the ESOS.

Action (823): Chief Officer RBE

Shipment of Waste Enforcement Actions Project (SWEAP) – following questions as to whether patterns and trends identified using inspection data influences SEPA activity, the Chief Officer RBE explained that SEPA’s activities are always risk based, and this information feeds into annual planning.

The Board noted the report.

Quarter 2 Corporate Performance report

Report: Q2 Corporate Performance report - SEPA 24-25/037

The Chief Officer Governance, Performance and Engagement (GPE) introduced the report and welcomed feedback on the updated style of report. 

The interventions to tackle environmental crime measure (KPI 7) and the link to risk was discussed; it was agreed that this will be considered further at a future Board session.

Action (824): Chief Officer RBE/Clerk to the Board

Questions were raised around various measures and their performance status. Members of the Corporate Leadership Team (CLT) confirmed that there is a balance to be found between measures vs budget and resource constraints. CLT also noted feedback that language could be clearer for measures. 

Comments were raised around how the Board could better understand the terminology of ‘partially achieved’ as a measure, and whether a colour-coded “RAG” (Red, Amber, Green) system used to indicate the status of the measure could be implemented to aid understanding. The Chair confirmed that the KPI measures are undergoing review, and this would be considered going forward.

The Board approved the report.

Quarter 2 Financial Monitoring report

Report: Financial Monitoring report - SEPA 24-25/030

The Chief Officer Finance, Modernisation and Digital (FMD) introduced the report noting that the abridged version of the paper would be discussed under this item. The more detailed paper will be discussed later in the private Agency Board session. This format will continue for future Board meetings.

The following points were raised during the update:

• SEPA is forecast to deliver a balanced budget, noting £1m was deferred in agreement with Scottish Government bringing capital forecast to £5.4m.
• The KPI for paying invoices within the allocated time has been met for this financial quarter.
• All outstanding Accountable Officer (AO) submission templates from Scottish Government have now been received.
• In response to a question on whether the £1m deferred capital can be used next year, the Chief Officer FMD confirmed that it is unknown at this stage, however SEPA may get an indication before the Budget announcement on 4 December 2024.

There was a request for Graph 3 ‘Expenditure by type’ to display the ‘actual year to date’ number as figures on top of the Budget YTD bars. The Chief Officer FMD agreed to revise this for future reports. 

Discussion took place around the rationale for a larger spend towards the end of the financial year. The Chief Officer FMD advised this is due to a combination of planned tenders, grants for the Water Environment Fund (WEF), and vacancy management.

The Chair noted that this financial position is testament to the work of the Chief Officer FMD and the wider team.

The Board approved the report.

Annual Reports and Accounts 2023/24 (fully audited)

Report: Annual Report and Accounts 2023-2024 - SEPA 24-25/031

The Chair welcomed Liz Maconachie and Gillian McCreadie of Audit Scotland to the meeting. Also welcomed were SEPA observers Rosaleen Burke, Fiona Carlin, and Kelly Leishman. 

The Chief Officer FMD introduced the report before handing over to Audit Scotland. It was noted that Audit Scotland attended the Audit & Risk Committee on 11 November 2024 to provide their full findings which was accepted by the Committee.

Key highlights included:

• Audit Scotland's opinion on the Annual Reports and Accounts is unmodified.
• No significant matters were identified from the work undertaken in relation to key risks.
• No Material adjustments have been made to the Annual Report and Accounts.
• There were no instances of actual, suspected or alleged fraud in relation to the financial statements or non-compliance with laws and regulations that should be brought to their attention. No member of the Board responded with any further information at this time.
• Overall materiality levels valued at £1.9m (£2.1m per annual audit plan).
• The National Fraud Initiative (NFI) returned a 'green' RAG rating which was a vast improvement from the previous 'red' rating. It was recommended that this is reported to senior management.
• An underspend of £0.4m was achieved in 2023-2024, however challenges remain in the short/medium term future.

Discussions resulted in a request for the NFI report to be added to the Audit, Risk & Assurance Committee agenda for a future Committee meeting.

Action (825) Chief Officer FMD/Clerk to the Board

With reference to a recommendation on best value reporting, it was noted that a summary of SEPA's compliance with the duty around best value will be formalised and presented to the CLT and those charged with governance by the end of March 2025.

Action (826) Chief Officer FMD/Clerk to the Board

The Chair extended her thanks on behalf of the Board to the Chief Officer FMD and her team for their hard work, and to colleagues at Audit Scotland for their thorough process.

The Board noted Audit Scotland's Annual Audit Report and approved submission of the Annual Report and Accounts 2023-2024 to Scottish Government for laying at Scottish Parliament.

Annual Procurement report

Report: Annual Procurement report - SEPA 24-25/032

The Chief Officer FMD introduced the report noting SEPA is required to make this report public, and that it follows a set template from Scottish Government. A 22% increase in regulated procurement is reported which covers contracts with a value greater or equal to £50k. 

In response to a question on whether potential cost savings could be made with IS licenses, the Chief Officer FMD confirmed reductions, including licensing, are being reviewed as part of a budget setting process across the organisation.

Further questions were asked around the potential for travel spend being reduced if brought in house, and the reported £90k estimated value for the Cycle to Work scheme and what this cost encompasses. Updates on these topics will be provided offline.

Action (827) Chief Officer FMD

Discussion took place around future reports considering how SEPA procures differently to support Net Zero. It was proposed this would be addressed through the People & Resources Committee (PRC) by the Board Champion for Sustainability & Climate. The Procurement Champions will also sense check reports to ensure alignment with NetZero.

Board Members also commented on the case studies, including from the NetZero WEF seminar session. This will be included for further discussion at PRC as the committee remit is widened to include a focus on sustainability.

Action (828) Chief Officer FMD/Clerk to the Board

The Board approved the report for publication on the SEPA website.

Flooding discussion

Report: Flooding discussion - SEPA 24-25/039

The Chief Operating Officer DEI introduced the item and spoke to the presentation highlighting SEPA’s corporate priorities, roles and responsibilities, and preparedness for the 2024-2025 “flooding season”.

Discussion took place on SEPA’s flood maps, income and charging, SEPA’s role as a statutory consultee in planning, duty rotas, and responsibility for flood defences. 

Further discussions were based on the accuracy of modelling for snow melt and how a programme of work is underway to improve this service, and the reset of roles and responsibilities that has been conducted as well as the continuing reaffirming of SEPA’s advisory role and the shaping of the flood resilience strategy. 

The Chief Executive emphasised this is an area of continuous improvement and an incredibly significant piece of work.

The Board noted SEPA's roles and responsibilities and preparedness for the peak 2024-2025 flooding season.

Board Governance: Committees revised Terms of Reference

Report: Standing Committees revised Terms of Reference - SEPA 24-25/033

The Clerk to the Board introduced the paper highlighting that the proposed ToRs for the two Agency Board Standing Committees, “Audit, Risk and Assurance” and “People and Resources” (PRC), have been approved by the respective Committees.

It was noted, as referred to under item 9.2, that the PRC ToR and membership will be further revised as part of a Board Governance paper for the 25 February 2025 Agency Board meeting.

The Board approved the revised ToRs, including name changes of the Committees.

Board Committee Reports

People and Remuneration Committee (PRC) meeting held on 29 October 2024

The Chair provided a brief verbal update in respect of the PRC meeting held on 29 October 2024 highlighting that the committee looked at aspects of Equality and Diversity, the use of AI, and fleet rationalisation.

The Chair advised it is her intention to pass on the role of PRC Chair and will progress this ahead of the next meeting on 15 April 2025. This will also be reflected in the Board Governance paper for the 25 February 2025 Agency Board meeting for approval.

The Board noted the update.

Audit and Risk Committee (ARC) Finance meeting held on 11 November 2024

The Chair of ARC advised that full scrutiny was given to the Annual Report and Accounts during the November meeting. The Committee will next meet on 10 December 2024.

The Board noted the update.

Action note

The Clerk to the Board referred to the updates in the action note provided to members in advance of the meeting, and summarised that actions 804 to 809 and 811 to 819 are proposed closed, and that action 763 is ongoing (regarding the sharing of portfolio risk registers is due to be closed after the ARAC meeting in December 2024.