Minutes of the 166th Board meeting of the Water Industry Commission for Scotland on 25 September 2025

Present:

Ronnie Hinds (Interim Chair)
Morag Sheppard (Member, Chair of OCAG) 
Jo Aston (Member)
Heather Reid (Member)
David Satti, Chief Executive  

Apologies: Robin McGill (Member)

In attendance:    

Colin McNaughton, Director of Pricing – Item 4 
Val Lindsay, Head of HR – Item 3.1 and 3.2
Shona Coan, Head of Finance – Item 3.5
Leo Tymianski, Experienced Analyst – Item 4
Snezha Hristova-McKinlay, Experienced Analyst – Item 5 
David Innes, Retail Senior Manager- Item 6 
Stephanie Capaldi, Secretary to the Commission 
Jo Blewett, Scottish Government– Items 1-3 (Observer)

Chair’s opening remarks

The Chair opened the 166th meeting of the WICS Board and welcomed Members, including newly appointed Members Jo Aston and Heather Reid at their first Board meeting post appointment. The Chair also welcomed Jo Blewett attending as an observer on behalf of the Scottish Government’s Sponsor Team.

1.    Apologies for absence

There were apologies from Robin McGill. 

2.    Minutes of the last meeting and regular updates     

2.1    Declaration of conflicts of interest in relation to the agenda

The following interests were noted and confirmed as having no conflict in relation to the agenda for this meeting:

• Morag Sheppard is a Member of the Environmental Standards Scotland Board.
• Jo Aston is a Member of NI Water’s Board and Chair of ARC for the Executive Office for Northern Ireland.
• Heather Reid holds appointments with Nature Scot and Loch Lomond and the Trossachs National Park.

2.2    Minutes of the 165th meeting

The Board approved the minutes of the 165th Board meeting.

Morag Sheppard requested an action to be recorded which captures our intention to schedule a Cyber Incident Response Exercise for staff and Board Members.

The Chair requested an update on recruitment of priority vacancies agreed at the Board’s August meeting. The CEO advised that the posts have been submitted to the Scottish Government for approval, but progress has been delayed. This delay is likely to result in the need to pursue temporary resource and consultancy support, particularly for SRC27. The Board reiterated concerns about resourcing pressures and value for money, and noted the need to update the Framework Document to clarify the role of the Scottish Government in staff appointments and associated approval processes.

The Chair requested an update on office accommodation beyond March 2026. The CEO confirmed that conditional approval has been secured from the Scottish Government for a two-year lease extension, subject to a reduced rental cost. He noted his intention to provide feedback, based on WICS’ recent experience, to help strengthen the advice and support available to public bodies pursuing reform and shared services.

The Board noted positively WICS’ efforts to share accommodation with two other NDPBs as a practical example of securing best value through shared services in the public sector.

2.3    Summary of action points

The Board reviewed the summary of actions and agreed that material updates would be addressed under other agenda items.

The CEO provided an update on action A188, relating to the preparation of a paper on public sector duties and their application to the SRC process. He noted that the timeframe has been extended to allow for a broader consideration of public sector duties, including those relevant to Scottish Water and those directly applicable to WICS. Jo Blewett suggested collaboration as a similar exercise is also being completed by Scottish Government to map duties to the Ministerial Objectives.

2.4    Members Update

The Chair updated Members on recent engagement with SEPA under WICS’ new Board-level engagement strategy, noting SEPA’s enthusiasm for closer collaboration on Scottish Water’s draft business plan and the broader Strategic Review of Charges process.

Heather Reid highlighted ongoing discussions between NatureScot and SEPA on alignment and reducing regulatory silos, with potential opportunities for WICS engagement. Jo Aston emphasised the importance of close collaboration with quality regulators on investment prioritisation for SRC27.

The CEO will issue a letter to the Public Audit Committee to provide assurance that all actions in response to their recommendations are complete and to demonstrate the significant improvements made. The Chair referenced his recent interview with The Times as part of proactive media engagement to highlight WICS’ improvement journey and statutory role ahead of the Strategic Review of Charges.

Morag Sheppard reported that she will attend the Public Sector Reform Summit next month and will provide feedback on any relevant learning for WICS.

3.    Finance and Corporate Services

3.1   HR matters

The Board noted an update on a confidential HR matter.

3.2   Role review savings

The Board noted a paper outlining savings of approximately £300k achieved through a review of leadership roles and organisational structure. Members also noted that reductions in consultancy expenditure are likely to further contribute to overall savings.

Members welcomed the savings achieved and emphasised the importance of maintaining critical capacity, particularly in engineering and other essential regulatory roles. The CEO confirmed that savings achieved addressed a top-heavy organisational structure which has allowed for redeploying resources into regulatory roles. Members noted that the ongoing financial sustainability review will provide further assurance that the organisation remains resilient and sustainable through the 2027–33 corporate planning period.

Members also highlighted that the work demonstrates the extent of organisational change to date and could be developed into a case study showcasing WICS’ approach to efficiency and resilience. The CEO confirmed that the paper will be kept up to date as WICS progresses through the next phases of organisational change.

3.3   Whistleblowing policy

The Board approved the revised internal Whistleblowing Policy, subject to updating the roles and responsibilities section to include the internal Whistleblowing Champion and People Committee, confirming that a disclosure regarding the Chair would be handled by the Chair of the ARC.

Members also noted that the Terms of Reference for the People Committee will be submitted to the Board for approval in November.

3.4   HSE survey and action plan

The Board noted the key themes from the HSE survey and endorsed the associated action plan, which includes a programme of employee surveys and employee voice forum. Members noted the importance of receiving practical solutions focused feedback from employees and recognition of positive achievements as well as areas for improvement.

Heather Reid raised the importance of staff team building initiatives such as volunteering days.

The Board noted the importance of the People Committee for these initiatives and in providing further assurance to the Board on staff related matters, in line with the revised scheme of delegation.

3.5   Organisational change update

The Board noted the update on organisational change, recognising that most of the key elements of the project are now coming to a close, with remaining aspects to be transitioned into the People Committee’s remit.

The Board supported the application of the organisational change project management model to major projects within WICS, and the OCAG Chair confirmed that a lessons learned exercise will be completed as the project concludes.

The Chair extended thanks on behalf of the Board to the Chair of OCAG for driving these initiatives forward.

Jo Blewett highlighted that a lessons learned exercise would be a useful exercise between WICS and Scottish Government regarding recent property and lease matters and suggested applying project management disciplines to joint projects moving forward.

3.6   Annual work plan

The Board noted the update on annual work plan delivery, including the status of amber items and areas completed since the previous meeting.

Members thanked colleagues for the thorough Board Member induction, which provided a strong knowledge base and enabled new Members to participate fully in today’s meeting.

3.7   Finance update

The Board noted the update on financial results, including that expenditure remains under budget and that future cash balances will be considered as part of the financial sustainability review.

Members noted the underspend on staff training, travel, and subsistence and sought reassurance that staff are supported in pursuing relevant training and attending conferences. The CEO confirmed that staff are encouraged, through six-weekly check-ins, to identify and participate in training and events relevant to their roles, in addition to mandatory organisational-wide training. The Chair highlighted progress in staff training on financial policies, procedures, and risk management.

The Board considered and approved two items of IT expenditure, which will be submitted to the Scottish Government for approval.

4.    Performance and reporting

4.1    Scottish Water's performance: Key messages

The Board discussed the proposed key messages for our report on Scottish Water’s 2024-25 performance.

Members highlighted the £500 million investment shortfall arising from Scottish Water’s charging decisions during the 2021–27 period to date and queried its impact on customer outcomes. While noting that some savings, such as lower interest rates, will partially offset the shortfall, Members observed that these reflected more favourable than anticipated external conditions rather than management action. It was agreed that the performance report should provide greater clarity on the scale of the shortfall, the nature of any savings, and the implications for capital delivery and customer outcomes.

The Board welcomed areas of outperformance but noted that Scottish Water has not met its commitments in relation to sewer flooding and IUDs. Members highlighted the importance of the customer voice in prioritising investment and discussed how this could be more effectively embedded in the prioritisation process moving forward.

The Board also reflected on the link between outcomes and incentives, noting that Scottish Water’s performance related pay could be better aligned to outperformance in the areas that matter most to customers. The Board agreed that this issue should be explored further at the forthcoming joint Board meeting with Scottish Water.

The Board highlighted the importance of Scottish Water’s commitments being supported by detailed, costed delivery plans, particularly in relation to urban water and net zero route maps. Members considered it important that the performance report hold Scottish Water to account for progress in delivering these commitments.

The Board concluded that the proposed messages should be refined to ensure they communicate the following key points:

• Performance and customer service: highlighting the specific areas where Scottish Water is performing well alongside the areas requiring improvement in a way that is meaningful to customers.
• Investment and customer charges: highlighting the consequences of charging decisions for investment delivery and customer outcomes.

Members agreed that the messages should be framed for a wider audience, with publication and active promotion to support broad understanding among stakeholders and customers.

5. Pricing

5.1 SRC27 update

The Board noted an update on the Strategic Review of Charges 2027–33, including the establishment of a WICS-led stakeholder group to consider investment priorities and the trade-offs required to meet Ministerial Objectives. Members agreed to reflect further on whether additional direction from the Scottish Government is needed regarding WICS’ role in facilitating these discussions.

The Board also noted the potential application of a Mutual Investment Model (MIM) as an alternative funding approach for the West Central Bioresources project, alongside the request from the Scottish Government for WICS and SEPA to provide assurance to Ministers. Members agreed it would be helpful to obtain further information on the model, including insights from Wales and Transport Scotland.

5.2 Future Regulation Committee ToR

The Board approved the Terms of Reference and scope of work for the Future Regulation Committee. Members agreed that the first phase should focus on recommendations directly relevant to WICS, while also considering the wider implications of the review, including potential changes to regulatory structures, powers and any legislative requirements. It was noted that certain changes could be implemented more quickly through Statutory Instrument or Ministerial Direction where appropriate.

The Board noted that WICS will establish its position on the implications of the review by mid-2026, with the Committee’s work carefully aligned to the delivery of SRC27.

6. Markets

6.1 Business Stream Governance Code

The Board noted an update on the review of Business Stream’s Governance Code, with a further paper brought forward for approval at the November meeting. Members noted that the revised Code is scheduled for implementation by February 2026.

The CEO offered a dedicated session on this for Members should they find that useful ahead of the November Board meeting.

Meeting close

The Chair closed the meeting by thanking participants for their valuable contributions.