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SEPA and Board Governance

Summary

Agency board report number: SEPA 04/24 - February 2024

The Agency Board has an annual review of all official documents and procedures that come to the Board for review/or approval on a regular basis.

The purpose of the annual review is to ease the process of governance through the Board seeing all documents at one meeting, as far as possible, rather than at individual meetings.

This report provides the Board with an update on official documents and procedures and seeks approval where necessary.

This report intends to mitigate any risk of governance by the Board being undermined or challenged, by keeping all official documents and procedures up to date.

Introduction

To ease the process of governance and ensure good practice, the Agency Board established in 2010 an annual review of all official documents and procedures formerly approved by the Board on an irregular basis:

• Framework document (2.1)
• Standing Orders (2.2)
• Code of Conduct (2.3)
• Terms of Reference of the Audit and Risk Committee (2.4)
• Terms of reference of the People and Remuneration Committee (2.5)
• Board members’ representation of SEPA at meetings and events (2.6)
• Guidance on Gifts and hospitality for Board members (2.7)
• Policy and procedure for Board members claiming expenses (2.8)
• Internal whistleblowing policy (2.9)
• Procedure for dealing with allegations of failure by Board members to comply with the SEPA Code of Conduct (2.10)
• Scheme of Delegation (2.11)

This report provides the review for 2024. An indication of the status of each document is given, together with the details of any review, if necessary. If any substantial changes are to made to the documents outwith this annual review period, this will be brought to the attention of the Board for approval as soon as required.

The report presents a list of all pertinent official documents and procedures together with an explanation of the purpose and status of each document. Some of the documents are formal and, indeed, statutory in nature and others have been developed following a request from the Board or Chair.

As part of putting continued development at the heart of SEPA’s work, the Board is asked to note that the Governance, Performance & Engagement portfolio will be considering wider support for openness and transparency in terms of agenda styles, reporting, and presentation of Board information on the SEPA website, along with consideration of future live streaming of public Board meetings.

Official documents and procedures

Framework Document - this document summarises how SEPA and Scottish Government (SG) work together, defining key roles and responsibilities which underpin the relationship between SEPA and SG. While this document does not confer any legal powers or responsibilities, it is intended as a “live” document and a key part of SEPA’s accountability and governance framework. It is agreed between SEPA and Scottish Ministers and reviewed at least every 2-3 years. The current Framework Document was approved in 2021 and now requires to be updated in line with the new model Framework document for Executive NDPBs. The draft included in Appendix 1 has been drawn up with the SG Sponsorship Team and sets out the broad framework within which SEPA will operate based on the Model Framework. It presents in detail SEPA’s purpose, governance and accountability, responsibilities of individuals and the Board, as well as key areas of business including corporate planning, audit, staff management, budget management, and risk management.

In terms of differences between the current and new framework, the intent is similar, but the revised template sets out better what the document is for, with Governance referred to more overtly. Greater clarity is provided on roles and responsibilities and definition of “sponsorship”. There is also greater emphasis on the need for cooperation and good communication between SG and NDPBs. Other points to note include:

• a new responsibility of the Board under paragraph 9 to “promote the wellbeing, learning and development of staff”, reflected also in new text under the responsibilities of the Chief Executive under paragraph 14;
• a new paragraph (paragraph 53) referring to compliance with the requirements of Freedom of Information, Environmental Information Regulations, Data Protection and GDPR;
• the Chair and Board members may be required to give evidence to Parliamentary Committees. Text previously referred to the Chair “may be held account by the Scottish Parliament”.

To complete this work, the Board is asked to approve SEPA’s Framework Document in principle subject to addressing minor comments that require clarification with SG including paragraph 30 on pensions, as indicated in Annex 1. The Board is also asked to agree delegated authority to the Chief Officer Governance, Performance & Engagement, to continue approval discussion with SG and finalise the Framework accordingly for publication, including arranging for the appropriate signature(s).

Standing Orders - the purpose of the Standing Orders is to provide rules for the way in which the Board should operate. Following a review in 2016 the Standing Orders were revised and approved by the Agency Board on 22 February 2022. An interim update to the Standing Orders was approved on 26 September 2023 following a review of the quorum of meetings and reflect the change to the Terms of Reference for the People Committee with the extension in remit to the People & Remuneration Committee; see our board standard orders. Due to the increase in the number of Board members following recent recruitment, it is proposed that the quorum within the Standing Orders is increased from four to five. It is also proposed that the number of Board members required to suspend the Standing Orders at a meeting is increased from six to seven. The Board is asked to approve the revised Standing Orders for Meetings of the Agency Board and Board Standing Committees.

Code of Conduct - the Code is a requirement of the Standards Commission for Scotland (“Standards Commission”) and sets out rules of conduct for members of the Board. The Code was first introduced in 2002 and was most recently revised in 2021 following consultation. SEPA’s current Code of Conduct was produced following a request from SG to review and update our Code to bring it in line with the newly revised Model Code for Members of Devolved Public Bodies provided by the Standards Commission. This was submitted to the Board for the 26 April 2022 Agency Board meeting and approved for publication on our website by SG prior to the 10 June 2022 deadline date. SG has also passed a copy of the approved Code to the Standards Commission and the Ethical Standards Commission for their records. No further review is proposed at this time.

Terms of Reference of the Audit and Risk Committee - the terms of reference (ToR) and remit of the Audit and Risk Committee (ARC) were last revised and approved on 22 February 2022. Meeting dates are published on the Board calendar on the website and updates to the Agency Board are reflected in the minutes of Board meetings. No material changes are proposed at this time to the ToR, however given the change of Board membership in 2024 and the ToR stipulates that the committee membership should be reviewed every two years, and this was last done in February 2022, new members are being appointed to the Committee and the membership is to be increased to five (from four) non-executive members of the Agency Board (including the committee chair) (paragraph 3.1 in the ToR). Paragraph 6.1 is also to be amended to increase the Quorum of the Committee to three (from two).

The proposed membership of the ARC is as follows:

• Nicola Gordon (Chair)
• Carol Evans
• Julie Hutchison
• Harpreet Kohli
• Lindsay MacDonald.

To reflect attendance at the Committee, paragraph 4.2 of the ToR is also to be amended to clarify that as well as the Chief Executive and the Chief Finance Officer, the Chief Officer Governance, Performance & Engagement will normally attend meetings of the committee.

The Board is asked to approve the proposal for the new membership of the Audit & Risk Committee (including adding explicit reference to the Chief Officer Governance, Performance & Engagement post) and changes to the ToR paragraphs 3.1 and 6.1 as indicated above. A full review of the ARC ToR will be carried out for approval at the Board meeting on 24 September 2024, ensuring the committee has the opportunity to discuss and approve this in advance.

Terms of Reference of the People and Remuneration Committee - the terms of reference (ToR) of the People & Remuneration Committee (PRC) were approved by the Board on 25 July 2023. Meeting dates are published on the Board calendar on the website and updates to the Agency Board are reflected in the minutes of Board meetings. No further review is proposed at this time to the ToR, however given the change of Board membership in 2024, three new members are to be appointed to the Committee and the membership is to be increased to five (from four) non-executive members of the Agency Board (including the committee chair) (paragraph 5.1 in the ToR). Paragraph 5.4 is also to be amended to increase the Quorum of the Committee to three (from two). A new Chair is also to be appointed.

The proposed membership of the PRC is as follows:

• Lisa Tennant (Chair)
• Craig Hume
• David Hunter
• Lorraine McMillan
• Keith Rosser.

The Board is asked to approve the proposal for membership of the People & Remuneration Committee and changes to the ToR paragraphs 5.1 and 5.4 as indicated above.

Board members’ representation of SEPA at meetings and events - this guidance is provided for Agency Board members when representing SEPA at external meetings and events, in the capacity as a speaker and/or a delegate. Guidance is also provided for Board members attending conferences on a personal basis, or representing other organisations, where matters come up that have implications for SEPA. The latest version of this guidance was approved by the Board on 25 April 2023 and is in line with the revised Code of Conduct and Standards Commission of Scotland Advice Notes. No further review is proposed at this time.

Guidance on Gifts and hospitality for Board members - This is new guidance, approved by the Board on 28 November 2023 based on the Standards Commission for Scotland Advice Note on Gifts and Hospitality. It should be read in conjunction with the Board Code of Conduct. No further review is proposed at this time.

Policy and procedure for Board members claiming expenses - the procedure was last revised in January 2015 following a desk top exercise into SEPA’s application of its expenses policies and their interaction with PAYE. Board members were informed of amendments to the procedure, by email, and provided with a copy of the updated procedure dated 14 January 2015. The procedure remains unchanged since that date; a review is currently being undertaken and will come back to the Board later this year. Board members are also reminded that it is good practice to return expense claims in a timely manner. A form will also be provided for Board members to help with travel bookings for SEPA related business.

Internal whistleblowing policy - this document refers to the role of the Board in dealing with concerns raised through the whistleblowing policy and the procedure the Board will follow where a member is designated as a “prescribed person”. It was updated and approved by the Board on 22 February 2022. A further update is now required due to the change in contacts in CLT and the Board. Appendix 2 presents the revised policy statement which the Board is asked to approve. The Board is also asked to agree Lorraine McMillan as the additional Board member to act as a nominate whistleblowing contact with Harpreet Kohli and Craig Hume. Training will be provided later this year. Note also that the Audit and Risk Committee has responsibility for whistleblowing and receives an annual report of incidents.

Procedure for dealing with allegations of failure by Board members to comply with the SEPA Code of Conduct - SEPA Board members are subject to the SEPA Code of Conduct and SEPA Standing Orders in matters of conduct and discharge of their SEPA duties. This document presents the procedures for dealing with allegations of failure by Board members to comply with the SEPA Code of Conduct or failure to carry out their SEPA duties. The latest version of the procedure was approved by the Board on 21 February 2023. The Agency Board has delegated responsibility for overseeing matters of standards to the Audit and Risk Committee. Standards are a standing agenda item at every Audit and Risk Committee meeting. No further review is proposed at this time.

Scheme of Delegation - The Scheme of Delegated Powers was approved by the Board on 28 November 2023 and sets out the powers or duties retained and reserved to the Agency Board and/or delegated to the Chief Executive. The Scheme incorporates two schedules:
Schedule A specifies SEPA duties and powers which have been retained and reserved to the Board. A list of those express matters which also need to be reported to the Board is included. Schedule B lists the specific powers delegated to SEPA’s Chief Executive by the Board.

Note that this is an interim document which will be reviewed again for Board approval in 2024 following publication of SEPA’s new Framework document with SG. Further work is also required, particularly in respect of Schedule B, following the CLT restructure to incorporate the next level down from the Chief Executive and reflect SEPA’s financial approval systems.

Recommendations

The Board is invited to note the report.

The Board is also asked to:

• Approve SEPA’s Framework Document, in principle, subject to addressing minor comments that require further discussion with SG, as indicated in Appendix 1.
• Agree delegated authority to the Chief Officer Governance, Performance & Engagement to continue discussion with SG and finalise the Framework accordingly for publication, including arranging for the appropriate signatures.
• Approve the revised Standing Orders for Meetings of the Agency Board and Board Standing Committees to reflect the increase in the number of Board members and quorum arrangements.
• Approve the proposal for membership of the Audit & Risk and People & Remuneration Committees.
• Approve the updated internal whistleblowing policy presented in Appendix 2.
• Agree Lorraine McMillan as the additional Board member to act as a nominate whistleblowing contact.