Transparency data

SLC Board Meeting Minutes 30 July 2021

Updated 23 February 2022

1. Attendees

1.1 Present

• Peter Lauener (PL) - Chair (by videoconference)
• Paula Sussex (PS) - Chief Executive Officer
• Mary Curnock Cook (MCC) - Non-Executive Director (by videoconference)
• Simon Devonshire (SD) - Non-Executive Director (by videoconference)
• Charlotte Moar (CM) - Non-Executive Director (by videoconference)
• Gary Page (GP) - Non-Executive Director (by videoconference)
• Rona Ruthen (RR) - Non-Executive Director (by videoconference)
• Stephen Tetlow (ST) - Non-Executive Director (by videoconference)
• Andrew Wathey (AW) - Non-Executive Director (by videoconference)
• David Wallace (DW) - Deputy Chief Executive Officer
• Gary Womersley (GW) - Company Secretary

1.2 Also in attendance

• Paul Kett (PK) - DfE (by videoconference)
• Ailsa Harris (AH) - DfE (by videoconference)
• Jo Parry (JP) - DfE (by videoconference)
• Lauren McNamara (LMC) – Scottish Government (by videoconference)
• Chris Williams (CW) - Welsh Government (by videoconference)
• Stephen Campbell (SC) - CIO (by videoconference)
• Chris Larmer (CL) - Executive Director, Business Operations, Darlington Office (by videoconference)
• Derek Ross (DR) - Executive Director of Operations (by videoconference)
• Bernice McNaught (BMC) - Executive Director of Repayments and Customer Compliance (by videoconference)
• Morven Spalding (MS) - Executive Director, People
• Kevin O’Connor (KO) – Head of Repayment and Customer Service (by videoconference)
• Helen Bogan (HB) – Head of Governance and Planning (by videoconference)
• Stuart Brydson (SB) - Board Secretary (Secretariat)
• Karen Gallagher (KG) – Executive Assistant (by videoconference)
• Adam Treslove (AT) - Head of Corporate Affairs (for Item 5.1 only) (by videoconference)
• Nathan Glancy (NG) - Business Manager to the Office of the CEO (for Item 5.1 only) (by videoconference)
• Angela Donaldson (AD) - Head of Finance (for Item 5.2 and 5.3 only) (by videoconference)
• David Derrick (DD) – Financial Accounting Manager (by videoconference for item 5.3 only)
• Shona MacKay (SMC) – Solicitor (by videoconference for item 5.4 only)
• Alan Balanowski (AB) – Head of Compliance and Risk Management (by videoconference for item 7.1 only)
• David Thomson (DT) – Head of Operations, Darlington (by videoconference for item 7.2 only)
• Chris Binks (CB) – Business Analyst (by videoconference for item 7.2 only)
• Sean Boyle (SB) – Business Analyst (by videoconference for item 7.2 only)
• Marta Kuzak (MK) – PWC (by videoconference for item 7.2 only)
• Sravanthi Nukula (SN) – 3rd Party Resourcer (by videoconference for item 7.2 only)

1.3 Apologies

• Simon Devonshire (Non- Executive Director)
• Sinead Gallagher (Welsh Government)
• Anne Spinali (DfE)
• Ian Getgood (NI Government)

2. FOI Notice

Where asterisks (*) appear, these sections have been excluded from the minutes before placing on the website as the subject under discussion falls within one or more of the exemptions contained in Part II of the Freedom of Information Act 2000 and can be reasonably withheld.

3. Chairman’s Opening Remarks / Directors’ Matters / Declarations of Interest

PL welcomed everyone to the meeting including PK who was attending the meeting in person in Glasgow. KO’C was welcomed as BMC’s deputy, although BMC would join the meeting for the EOC update and the CEM items.

Apologies were noted from SD, AS, IG, and SG.

PL noted that this would be the first meeting since the chat bar protocol had been published and that chat bar comments would be noted in the minute if they had been brought into the oral discussion. He also noted that the protocol would be reviewed for effectiveness.

There were no declarations of interest.

4. Chair Update

4.1 Update from the Chair on relevant matters

PL outlined the agenda for the meeting and noted that there would be two further meetings the following week

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PL noted that the September Board meeting was being planned as a face to face ‘pathfinder’ and would be held over two locations with the Boardrooms in Glasgow and Darlington being used. Non-Executive Directors would be asked for their site preference but may have to be flexible to align to occupancy caps in place within SLC.

PL noted that the new CFO, Audrey McColl was due to start with SLC the following week and noted that he and AW had invited RR to become a RemCo member and that this would be with effect from the September meeting.

5. Strategic items

5.1 CEO Report

AT and NG joined the meeting.

PS introduced the CEO Report, noting her key areas of focus.

COVID-19

PS noted that whilst staff COVID-19 infection rates had risen there remained no cases of known in-office transmission.

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Business continuity procedures were robust and would continue to be reviewed whilst work on the blended working approach was stepping up. PS outlined that SLC was working to create a sustainable solution which would drive long-term organisational cohesion

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Chief Financial Officer and Commercial Director Recruitment

PS noted that the new CFO, Audrey McColl would start with SLC on 2 August. As CFO, Audrey would become a Board Director. The appointments of Audrey and the new Commercial Director, Colette Sherry, would significantly strengthen the CFO Directorate.

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Operations Performance

CL referred to the frontline lens, noting the increase in application volumes and associated processing, which

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had increased customer backlogs and wait times. The response had been threefold; optimising operations resource through prioritisation, overtime and securing additional resource from PCER and RCC;

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and staying true to SLC’s strategy by increasing self-serve to reduce demand, increasing automation and issuing communications and optimising IVR to guide customer interaction. This ‘one team’ response had succeeded in reversing the negative trend and Operations was now processing more applications than it was receiving.

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CL reassured the Board that he was prioritising colleague wellbeing, acknowledging the positive impact of the video message of thanks that had been recorded by the Minister.

MCC noted the increase in number of work items at paragraph 6.1 in the report which seemed disproportionate with the increase in applicants. CL explained that this was linked to the mix of applicants and rising numbers of migrant worker cases which required significantly increased handling.

CM noted that there may be long-term implications of increased application numbers. PS agreed that SLC could not continue to keep absorbing application growth. CL agreed with the point made by CM and that SLC needed to understand future customer demand to ensure appropriate resource, planning and budget alignment. Attrition and Retention

MS explained that

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attrition was now on a par with, or higher than pre-COVID-19 levels. SLC was refocussing activity on the Employer of Choice project, which would include work to enhance the SLC employer brand to address shortcomings and to ensure job adverts were more appealing.

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Repayments and Customer Compliance

MCC noted the figures in the Loan Book segmentation table and that a considerable amount of potential loan recovery was appeared to be delayed due to process issues preventing repayment. KO’C explained that SLC was working with HMRC to resolve these issues and move the RAG status to green.

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Evolve

PK noted that consideration about the recording of what has led to the changes in cashable benefits would be beneficial. PS noted that there had been considerable communication from SLC to DfE and HMT on this matter.

Board took assurance from the CEO Report.

AT and NG left the meeting.

5.2 Head of Finance Update

AD and DD joined the meeting.

AD introduced the Head of Finance Update noting the burn rate, that forecasts were aligned to the budget but that some underspends (which were being absorbed by the central adjustment) were materialising particularly in respect of Programme and Capital spend. AD noted that she believed there is still a degree of optimism in forecasting. Together with the inherent uncertainty for activities that had not progressed beyond ‘discovery’ and ‘inception’, this made accurate forecasting challenging.

Finance was working with the business to identify opportunities to utilise any genuine underspends that might arise.

AD noted a classification risk arising from new technical accounting guidance on the treatment of capitalisation of ‘cloud’ expenditure. It was noted that this was a cross-government issue which all departments would be dealing with.

MCC sought clarification on the budget position for CEM. AD clarified that there had been pressures in CEM and the budget had been reforecast upwards but that this was offset by underspends elsewhere.

PK noted the position in respect of Admin spend position and whether the £0.5m DfE had held back, was driving more accurate forecasting. PK also questioned why there was not an Admin underspend given the context of workforce and resourcing challenges that had been discussed earlier.

CM welcomed the report and was keen to understand the impact the current position might have on next year.

In response to PK’s question, AD explained that there was not a significant amount of Admin spend within Change and Evolve, with most sitting in back office areas such as Finance and HR. A deep dive was scheduled for August where burn rates for all areas and projects would be reviewed and challenged. AD noted that on the overall story, it was too early to tell with resource challenges meaning that SLC were not able to confirm whether all projects would go ahead. PS added that the current year was more volatile than the last with significant resource shortages on the frontline and an accounting change to manage. PS confirmed that SLC’s focus remains on spending public money wisely. ACTION: AD to set out finance process in more detail for CM and PL and propose a date to review the Q2 forecast.

The Board took assurance from the Head of Finance Update.

5.3 Annual Report and Accounts FY 2020-21

AD introduced the Annual Report and Accounts FY 2020-21 (ARA), noting that they had been approved at ARC on 24 June, that the NAO had completed its review resulting in a clean audit, and there were no changes in financial statements. CM noted that the overall ARA process had been very smooth and that ARC was pleased to recommend the ARA to the Board. AD also noted that there would be a joint lessons learned item at the September ARC and that the alongside the recent effectiveness review and new HIA and CFO joining, it was a good opportunity for review.

The Board approved the Annual Report and Accounts FY 2020-21.

AD and DD left the meeting.

5.4 New Framework Document

SMC joined the meeting.

PL outlined that the new Framework Document (FWD) was a DfE ‘owned’ document and was therefore for endorsement rather than approval. PL noted that the new FWD was a significant step forward.

DW noted the shortcomings of current FWD, highlighting the need for change. Importantly, he noted that the new FWD, and in particular the changes to the annexes on approvals and controls, would improve the pace at which SLC could move whilst ensuring compliance with spend controls. It was agreed that the new FWD was an important step in providing SLC the autonomy that had been recommended in the 2018 Tailored Review. While some areas of work were ongoing (AO discretion and project governance), DW recommended that work had reached a suitable stage to agree the revised document and its supporting annexes. DW noted thanks to SMC who had led the drafting of the new document.

As the Framework was a DfE document, PL invited AH to offer comment. AH echoed thanks to SMC and the wider teams at SLC and DfE and noted a shift in the underlying principles of the Framework. Duplication in terms of approvals, had been reduced, Board assurance had been added and low or no value-add activities previously required by DfE had been removed. In line with the Tailored Review recommendation, the new Framework sets SLC more as a partner. AH also noted that it was positive changes within SLC, such as the establishment of the Commercial Committee, that had contributed to the FWD being able to be updated.

The Board was invited to comment with members welcoming the improved Framework Document. Two points were raised in relation to drafting as noted below.
ACTION – section 4.4.1 to be updated to reference SLC’s role ACTION – section 8.1.4 to be updated to replace ‘temporary’ with ‘fixed term’

The Board welcomed and endorsed the new Framework Document. PL also noted ARC’s role in ensuring the new Framework Document was effectively embedded.

SMC left the meeting.

6. Reports from Committees

6.1 RemCo Chair Report

AW introduced the RemCo Chair Report, noting that both GP and RR had joined and that the Committee was operating under the same remit but with a more typical name.

AW outlined that the Committee had considered the pressures in the labour market and the new dynamic of location for non-specific roles, both of which may start to drive wage inflation.

AW noted that RemCo had supported the Pay and Grading case and the Pay Remit

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AW also noted the progress being made on Career Pathways and that the Committee was focused on monitoring the initiative come to life

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In terms of future activities, AW noted that the committee was keen to look at culture and how the ‘new’ SLC agenda was reflected in career pathways. Other areas of focus would be EDI and SLC’s plans for blended working.

The Board took assurance from the RemCo Chair Report.

6.2 Evolve Oversight Committee Report, Annual Report and Terms of Reference

MCC introduced the Evolve Oversight Committee (EOC) Chair Report, draft minutes, Annual Report and Terms of Reference (ToR)

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MCC noted some of the challenges in the programme including resourcing and the reforecasting point that had been raised earlier in the meeting.

In introducing the Annual Report, MCC commented that it was only two years since Evolve got full business case approval and that progress made since then had been significant. MCC also noted that the CEM project had integrated numerous systems and over 100m data points. In summary, Evolve represented complex and transformational work.

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BMC spoke about the challenges in getting projects started and the different mechanisms that were being adopted by SLC’s strategic partners to manage capacity constraints. BMC also offered to provide PL with the profile on benefits.

ACTION – BMC to provide PL with a profile on Evolve benefits

Board took assurance from the EOC update.

7. Directors’ Reports

7.1 Financial Crime

AB joined the meeting.

AB introduced the Financial Crime paper, noting that it built on previous updates on the recent vishing attack and had followed a deep dive into this issue alongside benchmarking of other financial services organisations including Triodos. There were a number of immediate, tactical and strategic recommendations following this work, with the paper focusing on the strategic recommendations.

RR welcomed the changes SLC was implementing, given that financial crime will inevitably increase. RR asked AB to give an indication of the level of risk now and the level of risk to SLC once the recommendations have been implemented.

GP noted that SLC was moving in the right direction and that creating an effective 1st line (of defence) in Operations is critical.

PL asked CL to give his perspective, with CL noting that the work SLC was implementing was reassuringly familiar. CM noted that ARC will review how Financial Crime is captured in the risk register and that the issue will come back to ARC.

ACTION – ARC to review how Financial Crime is captured in the Risk Register and review the effectiveness of how risks are managed.

MCC noted risk 1412 and the movement in timescales for remediation activity. DW noted that as previously discussed, GDPR was one of a number of priorities that were being managed and that a substantive item on GDPR was due to be taken at the September ARC. This would provide an update on the regulations, where SLC currently is, what activities were being undertaken and the position SLC will be once these activities are complete.

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MCC agreed that this would be helpful and that this was an important issue.

PS confirmed that updates on Financial Crime would be included in the CEO Report.

ACTION – Financial Crime updates to be recorded in the CEO Report to Board

Board noted the paper on Financial Crime and took assurance that the proposed way forward would strengthen SLC defences against this risk.

AB left the meeting.

7.2 CEM Update

DT, CB, SBO, MK and SN joined the meeting.

BMC introduced the CEM Update, noting that the team was in the midst of numerous releases and were on track for an important August private beta launch of self-serve functionality. DT and his team presented the slides and provided demos of CEM.

The Board thanked BMC and welcomed the presentation, commending the SLC team for their work here. There were questions on the percentage of queries that will be answered by chatbots, the date range to provide an update to a customer and whether there was confidence that the interval was sufficient to ensure delivery and, finally, postal applications.

DT explained that if customers were using the chatbot the process had already failed. SLC planned to monitor and assess use of the chatbot facility. DT provided reassurance that SLC had set date ranges to allow SLC to meet actions and noted that while 97% of applications are online there remained a small paper customer base and that functionality would remain while there was customer demand for it.

8. Governance

8.1 Minutes of meeting held on 30 June

The minutes of the SLC Board meeting held on 30 June 2021 were approved as a true and accurate record.

8.2 Matters arising from previous meeting

PL noted that there were 11 matters arising with 7 recommended for closure in the paper. An additional action, 512, had been closed since the papers were issued bringing the closed actions to 8.

The matters arising document was approved as accurate.

8.3 Board Schedule forward look

The Board noted the Board Schedule forward look and looked forward to the 2022-23 schedule being tabled at the September meeting. The schedule would set out which meetings would be virtual, and which would be in person.

8.4 Revised Code of Conduct for SLC Board Members and Chair

HB introduced the revised Code noting the importance of remaining aligned with Cabinet Office guidance. The Board approved and adopted the revised Code.

9. Any other business

PL asked the Board to consider the effectiveness of the meeting. MCC raised a point about papers being easier to manage if they were collated as a single document. AW noted that this functionality was already available in ibabs. CM also suggested that the agenda could be circulated on email. HB was asked to take an action to clarify the process for Board members.

ACTION – Governance to clarify the process for bundling papers in ibabs and issue agendas via email for subsequent meetings.

CM welcomed what she saw as a good meeting with accessible papers and a good balance between strategic and operational issues. She noted her enthusiasm for meeting in person in September, a point echoed by the Board.

10. Date of the next meeting

PL reminded the Board that SLC Governance would be emailing to ask for location preferences for the September Board meeting, noting that not all members may get their first choice given capacity constraints. He noted that PS would host in Darlington and DW in Glasgow and that site tours would be arranged for the Board members that were able to attend in person and wished to take a tour.

The next meeting was confirmed as being at 10:00 am on Thursday 30 September 2021.

There being no other business the meeting ended at 13:15 pm.