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Board meeting - 27 February 2024

The one hundred and ninetieth meeting of the Agency Board took place at 1.00 pm on Tuesday 27 February 2024 via Microsoft Teams.

Chair’s opening remarks and welcome to new Board members

The Chair welcomed everyone to the public meeting including Gillian McCreadie from Audit Scotland who was in attendance as an observer. 

The Board marked the sad passing of former Board Member Nicky Chambers who served on SEPA’s Agency Board from January 2022 to July 2023.

No members of the public were in attendance.

Matters arising

The Clerk to the Board provided an update on the actions. The following was noted: 

Action 774 – No offline discussion took place, and the Board member has now left the Board however a link is provided in the action note to the Climate Change Committee report referred to at the Board meeting. Proposed Closed.

Action 775 – An update on SEPA’s support to work on antimicrobial resistance is detailed in the action note. Proposed Closed.
Action 776 – A response to the query on responsibility for assessments of wild salmon populations is detailed in the action note. Proposed Closed.

Action 777 - An update will be provided when the Board considers the Quarter 3 Performance Report under item 8.2. Proposed Closed.

Action 778 – This will be considered in the design of the 2024-25 performance reports. The Board is due to receive the Q1 report in the new design in advance of its meeting in September 2024. Ongoing.

Action 779 – Due to the loss of information from the cyber-attack, the information has been replicated from available reports. The financials available show that International Services were cost neutral, covered direct costs and overheads whilst providing international awareness of SEPA. Proposed Closed.

Actions 780, 781 and 164 (Strategy Board) – Updates on these actions relating to the draft Corporate Plan are provided in the action note. All proposed Closed.

Action 165 (Strategy Board) – An update on approval routes for Procurement reports is detailed in the action note. Proposed Closed.

Chair's report - verbal

The Chair acknowledged that this was both her and the six new Board Members first Agency Board meeting. She advised that she had received a very warm welcome from everyone since starting in post, highlighting that she found SEPA staff to be open and passionate about their work. Specific thanks were given to the team for the Board Induction Day on 22 February 2024, which was highly valuable, including input from Scottish Government colleagues. 

The Chair noted that she had not had many external meetings to date, but is looking forward to meeting with key stakeholders and will report back to the Board on these at future Board meetings. 

Management reports

Chief Executive's Report SEPA 01/24

Chief Executive's report (SEPA 01/24)

The Chief Executive extended a warm welcome to new and continuing Board members before introducing her report. She highlighted the key milestone for the Agency with the re-set of the Board and re-set of the Corporate Leadership Team (CLT) and all that entails for the re-set of SEPA.

The Chief Executive advised that her report is intended to give the Board an idea of the delivery across SEPA and that she would welcome any feedback on the report including on style and areas of interest.

The following points were noted:

• The format of the report reflects the five key aims of Avoid, Protect, Adapt, Improve and Warn to show alignment between delivery and the outcomes in the Corporate Plan and Annual Operating Plan (AOP). The report aims to look back at what has been delivered since the last Board meeting.
• Acceptance by Trade Union members of the two-year pay offer for the period from 1 April 2023 to 31 March 2025.
• Implementation of the new regulatory framework to protect wild salmon from 1 February 2024, and sea trout will follow from Spring 2025.
• Investigation of waste offences over a two- and half-year period at a site in Ayrshire which resulted in a Confiscation Order of £215k being imposed on an operator under the Proceeds of Crime Act 2002.

In response to a question on where the £215k received goes, it was advised that it is a Scottish Consolidated Fund, which goes back to central Government and does not go to SEPA.

Following a further query on the strategic implications of this confiscation order, the Acting Chief Officer Compliance advised that the fine imposed sends a strong message to the industry to highlight how seriously SEPA takes such issues. SEPA is working with Scottish Government on risks associated with the waste industry and deploying a range of activities with partners. It is a complicated area that will be covered in more detail in future reports.

More generally, Board members provided positive feedback on the report and commented that it tied in well with the Board Induction Day as there were items within the report that they could identify with after hearing first hand from teams that day. The confident use of language in the report around “refresh” and “change” was noted, reflecting SEPA’s “journey”. Interest was also expressed in what SEPA is doing on shared services, with reference in the report to the survey vessel, the Sir John Murray. It was highlighted that the CLT is in discussion with partners on a number of levels where services and assets can be shared and that SEPA has a great opportunity to show leadership here.

In response to a request to provide more information on the UK Integrated Regulatory Review Service (IRRS) Mission (International Atomic Energy Agency) the Acting Chief Officer Circular Economy advised that he would provide the Board Member expressing an interest with more details offline.

Action: Acting Chief Officer Circular Economy

In response to a query on the provision of evidence to the Scottish Parliament Rural Affairs and Islands Committee on the Agriculture and Rural Communities (Scotland) Bill, the Acting Chief Officer Circular Economy provided positive feedback on the format and content of this roundtable session, referring also to the complexities of the farm payments system. He explained that SEPA’s focus was on soil health, food security, and tailoring advice at river catchment levels, working with Scottish Government on how best to use our expertise going forward.  

The Board noted the report.

Quarter 3 Performance Report SEPA 02/24

Quarter 3 performance report (SEPA 02/24)

The Chief Governance Officer introduced the report, summarising its purpose in measuring performance against the 2023-24 AOP, and drawing attention to the reporting period (October to December 2023). Highlights this quarter included reaching the target to open up 69km of river previously inaccessible to migratory fish, and the target being met to publish updated versions of flood maps.

Two measures in the report were noted as tracking as amber:

• Percentage of Freedom of Information (FOI) requests and Environmental Information requests (EIR) responded to within statutory timescales - it was noted that this had been a challenging time for SEPA due to the level of requests received and constrained resources, but that since December 2023 SEPA has been more than meeting its target. SEPA was also referenced by the Scottish Information Commissioner when he gave evidence to the Standards, Procedures and Public Appointments Committee in the Scottish Parliament on 22 February 2024; comment was made about the commissioner’s intervention with SEPA post-cyberattack, noting SEPA is on track to meet its upcoming target of a 90% on-time response rate by April 2024.
•  Being regenerative by 2030 and net zero in “direct” emissions by 2025 – SEPA is committed to this. The proposal is to reshape the routemap to net zero and regenerative SEPA and to bring that information to the Board through updated plans and performance metrics. This will be done after work is undertaken to get a better understanding of the impact of SEPA’s fleet and estate strategy along with some of the wider connections that need to be made to be confident on delivery.

In response to a query on the potential risk of FOI requests increasing, the Chair advised that many organisations face similar concerns and not to underestimate the amount of resource going into replying to FOIs. The Chief Governance Officer acknowledged that this is something that SEPA is looking at, while also identifying how to help manage the workload effectively whilst continuing to be open and transparent. She highlighted a number of initiatives under consideration to help manage the workload including proactive publication, analysing repeat requests, signposting requests, embedding new systems for FOI tracking and monitoring, and a redaction tool.

In response to a query on regenerative SEPA and net zero and whether the organisation understands its own carbon footprint, the Chief Governance Officer advised that this is a big part of the new corporate plan and that she would be happy to provide more information on this offline, including as part of wider discussions with the Board on performance reporting. She added that she would welcome any comments on future iterations of performance reports, including on outcome focused measures and embedding risk. A suggestion was made that an indicator could be built into the process to identify if a target is on budget, on track and any future predictors. The Chair suggested that this is something that the Board and CLT could work on together.

The Chair advised that the Board and CLT will return to this at a future strategy session and work together on an enhanced performance framework.  A date will be arranged for discussion on performance measures to also look at bigger picture reporting around Risk, Health & Safety, and People etc.

Action: Clerk to the Board

The Board noted report.

Quarter 3 Financial Monitoring Report SEPA 03/24

Quarter 3 financial monitoring report (SEPA 03/24)

The Chief Finance Officer introduced the report and advised that it was a summarised version of the detailed financial report discussed at the Audit and Risk Committee on 13 February 2024. The following key points were highlighted:

• The forecast for the full year is that SEPA will deliver a breakeven budget of just under £96.8M of income and expenditure.
• SEPA has achieved savings as required under the Scottish Public Finance Manual.
• The Capital forecast reported to Scottish Government is £0.3M underspend due to not proceeding with maintenance at one of SEPA’s properties.
• SEPA is different to the Environment Agency England which is allowed to keep the money from Civil Penalties that are raised; this is not the case for Scotland and to date £4.8M has been raised, £2M of that has been received and the money has been paid to Scottish Government. Those funds go to support balancing Scottish Government bottom line budget.

In response to a question on the civil penalties’ residual of £2.8M and who would be liable if it is not paid, the Chief Finance Officer advised that SEPA is not liable, however it would be treated as any other unpaid debt, and we would pursue the debt.

In response to a query on the difference between debtors and creditors between last year and this year, the Chief Finance Officer advised that the Board is looking at an in-year position and it would be better to compare the full balance sheet at the end of the year and then drill down. It was highlighted that there is nothing exceptional in terms of the trends and advised that all the analysis is looked at in preparation for the balance sheets.

The Board approved the report.

SEPA and Board governance (SEPA 04/24)

Report: SEPA and Board governance

The Clerk to the Board introduced the report advising that members will have seen most of these documents before as part of the Board Governance Induction pack. This purpose of the paper is to consolidate the key Board Governance documents with updates as part of the annual review of documents brought to the Board for approval.

In response to queries on the requirements around Risk Management referred to in Annex 1 and whether the Board’s risk appetite would be a consideration, the Chief Governance Officer advised that oversight of the holistic risk process is part of the function of the Audit & Risk Committee. The Chair also advised that this is something that would be discussed at the Board workshop planned for 18 March 2024 and at the proposed CLT/Board Strategy session to ensure a cohesive view on Risk.

The Board noted the paper and, in summary:

• Approved SEPA’s Framework document in principle subject to addressing the minor revisions in Annex 1.
• Agreed delegated authority to the Chief Governance Officer to continue discussions with Scottish Government to finalise the Framework for publication including arrangement for appropriate signatures.
• Approved the revised Standing Orders for Meeting of the Agency Board and the Board Standing Committees to reflect the increase of number of Board Members and quorum arrangements.
• Approved the proposed membership of the Audit & Risk and People & Remuneration Committees.
• Approved the updated internal Whistleblowing Policy presented in Annex 2 and agreed that Lorraine McMillan will act as an additional Board Member nominated whistleblowing contact.

The Clerk to the Board advised that the Framework Document will be removed from Annex 1 before the Board report is published on the website as it is a draft document still to be approved by Scottish Government.

Agency Board planner (SEPA 05/24)

Report: Agency Board Planner

The Clerk to the Board introduced the paper and advised that the Audit & Risk Committee workshop scheduled for 19 March 2024 will be moved to later in the year. The Board also agreed to moving the strategy/planning day from 28 January 2025 to 30 January 2025. The published calendar will be updated accordingly.

The Board noted that due to the announcement of the Cabinet Secretary for Wellbeing Economy, Net Zero and Energy taking maternity leave this summer, the proposed meeting in September 2024 may change as arrangements for covering her responsibilities will be set out closer to her leave. The Board will be kept updated on this.

The Board approved the report.

Board work programme

Report on seminar on 27 February 2024: Standards Commission for Scotland (verbal)

The Clerk to the Board provided a brief summary of the seminar held earlier in the day on the Code of Conduct compliance and standards. She advised that the presentation from Lorna Johnson, Executive Director of the Standards Commission for Scotland, had been very interesting and informative and that the slides will be shared with Board Members on Diligent Boards. Advice on good governance can be sought from the CLT & Board support team at any time.

Board engagement activity (verbal)

It was noted that two Board Members had attended a Cyber Resilience workshop organised by the Scottish Government for public sector Board members. It was highlighted that this was a very useful workshop and other Board Members were encouraged to attend the workshop if offered again.

The Board asked for a briefing for members to understand better the extent of SEPA’s cyber-attack in 2020. Reports that SEPA produced on the cyber-attack will be made available on Diligent Boards and the CEO advised she would consider with the Chief Governance Officer and the Clerk to the Board setting up a related briefing session on work undertaken to date and continuing around this.

Action: CEO, Chief Officer GPE & Clerk to the Board

Board Buddy register

The Clerk to the Board gave an update on the Board Buddy Register and advised that it will be changed from a Board Buddy Register to a Board Champions initiative as this reflects better the role of Board members in adding value and engaging as “critical friends”. 

The Board noted that there are currently five active groups (formerly called Board Buddy groups). These are on: Environmental Performance Assessment; Finfish Aquaculture; Flood Services; Water Scarcity; and a new on set up to support the VIBES Awards.  

The Clerk to the Board advised that work is ongoing with the Executive team on new topics and that more information will follow. The Chair asked for expressions of interest to be raised with her if members wanted to be involved as a Board Champion. 

The Board approved the change from Board Buddies to Champions.

Board committee reports

Audit and Risk Committee minutes of extra meeting held on 11 December 2023 and meeting held on 12 December 2023

Nicola Gordon provided a verbal update on the Audit & Risk Committee meetings held on the 11 and 12 December 2023.

People and Remuneration Committee minute of meeting held on 5 December 2023

December 2023
Harpreet Kohli provided a verbal update on the People & Remuneration Committee (PRC) held on 5 December 2023 and highlighted that he had attended the PRC meeting to “bridge the gap” between the previous Board and the new Board.

A  number of queries were raised relating to SEPA’s People Strategy including on learning plans, career framework, strategic workforce planning, staff engagement, and longer-term strategy for organisational structure. The Chair advised that there will be an opportunity at the March PRC meeting to hear from the Chief People Officer on these and other related areas including where SEPA is aspiring to get to, with the aim of drafting a work plan for the committee to attain oversight.

Carol Evans volunteered as a Board Champion on this work if appropriate. 

The Board noted the Committee reports.

The following items were considered by Board members and officers in private session

Approval of the SEPA Corporate Plan 2024-27 and update on the Annual Operating Plan 2024-25– SEPA 06/24

The Board approved the Corporate Plan.

Draft Annual Budget 2024-25 – SEPA 07/24

The Board approved the draft annual budget 2024-25

Draft Inflationary Cost Increases for Charging Schemes – SEPA 08/24

The Board noted that option which will be implemented from 1 April 2024.