Board minutes Nov 2023

Approved Minutes of 153rd Commission Board meeting November 2023


Minutes of the 153rd Board meeting of the Water Industry Commission for Scotland on 2 November 2023


Donald MacRae (Chair) 
Alan Sutherland (Chief Executive) 
Jo Armstrong (Member)   
Ann Allen (Member) (Remote) – for items 1 to 3 only 
Robin McGill (Member) (Remote) – for items 1 to 4 only
In attendance:

David Satti, Director of Strategy and Governance
Donna Very, Director of Corporate and International Affairs
Colin McNaughton, Director of Analysis
Andrea Mancini, Director of Price Review

Chair’s opening remarks

The Chair opened the 153rd meeting of the WICS Board and welcomed Board Members.

1.    Apologies for absence

There were no apologies.

2.    Minutes of the last meeting and regular updates     

2.1    Declaration of conflicts of interest in relation to the agenda

No members declared any conflict of interest in relation to the agenda.

2.2    Minutes of the 152nd meeting

The Board approved the minutes of the 152nd meeting.

2.3    Summary of action points

The Board noted the summary of actions. The following points were arising:

  • Action 1: This action is ongoing. The IPPG has changed to IPPDG. The Chair has signalled his intention to attend the next IPPDG and has requested that the office help facilitate this.  
  • Action 2: This action is ongoing and on target. 
  • Action 3: This action is ongoing. The office will provide an overview of the financial projections next year to synchronise with other work in this area, such as the work relating to staff development and recovering staff costs through international projects. An update can be provided in December, but this work will continue into next year. 
    Board Members asked that tax position arising from international consulting continues to be reviewed carefully and based on full cost recovery.  Members also noted that Grant Thornton has provided a formal written statement on our tax position for this year. 
  • Action 5:  This action is to be amended. WICS will propose a draft methodology in December which will provide a timeline.
  • Action 6:  This action will be revised to cover the methodology discussion for the next price review for December.
  • Action 7: This will be covered in the methodology overview in December. 
2.4    Non-Executive Members Update

There were no updates from the Non-Executive Members. 

3.    SRC27 Development  

3.1    SRC21 Lessons learned review

The Board discussed a paper on the lessons learned from the SRC21 price review. Key areas considered included the approach to regulation, timing, industry needs, accountability for delivery and governance arrangements.

There was an acknowledgement of the foundational EBR approach, which highlighted challenges faced in the sector. There was a recognition of the need to improve the process, considering new challenges like net-zero requirements. There was emphasis on maintaining frank conversations with stakeholders and the regulator's role in industry protection.

The Board also placed an emphasis on the importance of well-timed evidence in justifying any approach. Members also signalled that maintaining a hard budget constraint whilst ensuring progress can be made towards longer-term challenges will be key.  It was agreed that the overarching principles of EBR will be an ongoing influence for the SRC27 methodology.

The discussion concluded with the Board emphasising the importance of clear expectations from WICS and a high level of engagement and responsiveness from Scottish Water throughout the Strategic Review process.

A draft methodology document will be brought to the Board at its December meeting for discussion. This paper will outline the timeline and project arrangements for SRC27.

4.    Business update

4.1    CEO update

The CEO provided an update on the activities of the office.

The Board noted an update on a developer dispute which Scottish Water has been involved in. We do not believe that WICS has a role to play in this dispute. The issue is now with the court of session and the outcome will be communicated in due course.

The Board also noted that the recruitment process of the Head of Corporate Services role has begun with interviews scheduled to take place during November. The office will soon launch a new occupation health portal, Optima Health, which will be made available to WICS staff shortly. It will provide support to both line managers and staff directly. The new Head of Corporate Services will adopt the administration of this into their role.

Directors confirmed that there is nothing of concern to raise in the financial reports. The Audit and Risk committee meeting will take place on the 21 November and the Internal Audit for the year is near completion.

The Board thanked Directors for their updates. 

5.    Risk Workshop

The Director of Strategy and Governance introduced a workshop on risk management, focussing on risk strategy and risk appetite.

The Board agreed some changes to its risk strategy – shifting from one principal risk and three strategic risks to six strategic risks. The existing principle risk will become two separate strategic risks and existing risk one will be split into two separate risks.  This change will alter the risk balance, spreading risks across strategic, project and operational areas.  In relation to the risk documentation, the following key changes were agreed:

  • Reframe the document as a ‘Risk Management Framework’
  • Clarify distinctions between risk areas
  • Specify time-bound and measurable controls
  • Focus internal controls to mitigate controllable risks.

The Board discussed the categories of risk types and agreed to revisit categories once risks are finalised. Members also proposed some wording amendments to strategic risk 2. 

The Board discussed the approach to risk appetite and the scores for each for risk and suggested shifting from ‘averse’ to ‘careful’ in relation to strategic risk 3. There was a discussion on the controls around risk 4 with the approach deemed as ‘careful’.  Strategic Risk 5 was agreed to be ‘averse’ with a recommendation for regular review. 

The Board were satisfied with the other risk scores and appetite statements and agreed with the overall approach.  We will bring proposed changes to a decision paper at a future Board meeting. 

The Board thanked the team for the discussion. 

Meeting close 

The Chair closed the formal meeting and thanked Board Members and the office for their contributions.

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