Corporate Board minutes: March 2023

Attendees and apologies

Members

• John-Paul Marks(Chair), Permanent Secretary
• Roy Brannen, DG Net Zero
• Lesley Fraser, DG Corporate 
• Joe Griffin, DG Education and Justice 
• Ronnie Hinds, Non-Executive Director 
• Gregor Irwin, DG Economy
• Caroline Lamb, DG Health and Social Care
• Louise Macdonald, DG Communities
• Belinda Oldfield, Non-Executive Director
• Jim Robertson, Non-Executive Director
• Jayne Scott, Non-Executive Director
• Alyson Stafford, DG Scottish Exchequer (from 14:50)
• Ken Thomson, DG Strategy and External Affairs

In attendance

• Jennie Barugh, Director of Fiscal Sustainability and Exchequer Development (item 3)
• Alison Cumming, Director for Budget and Public Spending (item 3)
• Jonathon Curry, Deputy Director, People Strategy (item 3)
• Anna Dominiczak, Chief Scientist for Health (item 4)
• Richard Foggo, Director of Population Health (item 4)
• Claire Hughes, Head of Fiscal in-year Management (item 3)
• Jackie McAllister, Chief Financial Officer (from 14:50)
• John Nicholson, Deputy Director, Population Health (item 4)
• Niamh O’Connor, Deputy Director, Population Health (item 4)
• Nicola Richards, Director, People Directorate
• Kirsty Walker, Head of NXD Development 
• Robyn Whitelaw-Grant, Head of Governance and Risk (item 2)
• Pamela Wilkinson, Interim Board Secretary

Secretariat

• Dan Jones, ET Strategic Governance Office (ETSGO) (item 3)
• Owen McMahon, ET Strategic Governance Office (item 1)
• Lesley Patrick, ET Strategic Governance Office

Apologies

• Andrew Bruce, Director of Communications and Ministerial Support
• Ruaraidh MacNiven, Solicitor to the Scottish Government and Director of SGLD

Items and actions

Welcome and introductions

The Chair welcomed members and attendees. Apologies were noted as above. There were no declarations of interest. 
The Chair paid tribute to Elinor Mitchell after her passing and reflected on her contribution to the Board and the organisation.
The Chair noted the resignation of the First Minister and Deputy Minister, and transition planning activity underway.
The Board agreed the minutes of the meeting on 6 December 2022. Updates to actions were noted.

Risk overview

The Chair of the Scottish Government Audit and Assurance Committee (SGAAC) provided an overview of key areas of focus at the last SGAAC meeting on 6 March 2023, including the Medium-Term Financial Sustainability risk, Covid Inquiries, European Structural Investment Funds and Corporate Transformation. The Chair of SGAAC also noted reflections from the outgoing Director of Internal Audit and Assurance. SGAAC considered its forward programme of work for 2023-24 and future items of business may include the Deposit Return Scheme and Ferguson Marine. 
The Head of Governance and Risk highlighted the importance of reviewing risk scores, as well as recalibrating risk appetite, target scores and control confidence to ensure risk target scores are realistic and achievable. 
DG Corporate provided an update on action being taken to mitigate risks on Corporate Transformation and particularly shared services risk with input from Non-Executive Directors. The Business Case for the shared services programme will be refreshed.
In discussion, the board noted:

• a risk appetite workshop for the Executive Team is scheduled for quarter one 2023-24
• progress in responding to the Covid-19 Inquiries, including the development of a support package for those who may be called upon to provide evidence
• independent review of risk management and mitigation by the Governance and Risk Team would enhance current processes
• a need for effective risk calibration and for concurrent risk to be considered in the round.
• the value obtained from recent deep dive sessions at Executive Team on Enterprise, Resource and Planning (ERP) Programme Delivery and Covid-19 Inquiry risk, in providing assurance that risks were being managed and mitigating action being taken

Organisational health

Deputy Director, People Strategy provided an update on the workforce plans for 2023/24. Next steps in workforce planning activity will include maintaining the enhanced recruitment controls process at this time, constraining growth and reviewing long term temporary promotion arrangements and the balance of contingent and permanent workforce. Further work will be undertaken, including through the Strategic Design Authority, with the information provided in relation to 2026/27 organisational design.
In discussion, the board noted:

• a possible framework and path to greater autonomy on recruitment and workforce could include factors such as balancing Total Operating Costs (TOC), diversity and inclusion focus and multi-year workforce plans through deliberate organisational design
• the need for clarity on authority, roles and responsibilities in relation to workforce and recruitment and to consider whether letters of delegation cover this, or if further measures may be required
• further information on the drivers of historic workforce trends would support strategic direction setting as part of organisational design
• Strategic Design Authority is in its infancy, however, greater knowledge sharing of organisational design principles would be beneficial

The Chief Financial Officer provided an update on the projected financial outturn for Financial Year (FY) 2022/23. It was noted that SG is forecast to achieve a balanced budget position, through intensive work in-year. Forecasting accuracy had improved in the main for resource, but further improvements are required on capital. 
Director for Budget and Public Spending provided an update on the budget position for 2023/34, including ongoing path to balance activity. There was residual risk of overprogramming within the budget, with actions underway to identify recurrent savings options. Improved alignment between people, financial and delivery would build on improvements into FY 23/24.
Director of Fiscal Sustainability and Exchequer Development provided an update on fiscal sustainability indicators, noting a sustained gap between the central funding and central spending forecasts over the next 4 years; the importance of sustained reductions to portfolio budgets and wider reforms to address this; and the need to establish organisational risk appetite to establish clear thresholds. The impact of pay and industrial relations on the spending forecast was highlighted as a particular risk to fiscal sustainability.

In discussion, the board noted:

• significant cross-organisational effort, from both finance and policy teams to improve forecasting accuracy and financial reporting, with further improvement required, particularly relating to capital
• further detail on future planned savings options, including options for recurrent savings and areas to deprioritise would be required
• scenario modelling on future projections could improve understanding of forecast sensitivity to key cost drivers. The example of industrial relations and its potential positive linkage to projected inflation rates

Delivery – health strategy

Deputy Director, Population Health provided an overview on the developing Health Strategy and the work within the Care and Wellbeing Portfolio. They highlighted the use of the Marmot principles in its establishment, examples of delivery with the portfolio to date, and the ongoing challenges in the delivery of the health strategy and reform, including the burden of disease and health inequality factors.
In discussion, the board noted:

• the overview of the strategy was welcome, and the examples and case studies provided demonstrated the value of this work but establishing an enabling environment to move into delivery was critical
• a need to better understand how success will be measured, with projections of when capacity will exceed demand as an example, to ensure organisational accountability for delivery
• value in greater clarity around the underpinning data and disaggregation of data by locality, age, gender, for example and to build data and analysis to understand impacts of inequality
• challenge over whether the strategy will be tailored for differing geographical data sets
• ongoing challenges regarding demographics and future impact on tax base
• the need for collaboration with Health Boards and key partners to deliver the strategy, particularly in the current financial operating environment, and a need for cross-SG effort
• ensuring integration with other organisational strategies, including the link into Public Service Reform (PSR)
• the importance of data and digital solutions and wider innovation, with consideration for alternative funding models to support this
• financial modelling will be developed to support and evidence the sustainability of the strategy

Any other business

Permanent Secretary noted the increasing trend in Average Working Days (AWDs) proposing review of the position at June Corporate Board.
Views on Draft ET Shared Objectives were sought from NXD members of the Board. ET considered them at their meeting on 10 January, and a revised version in correspondence thereafter.
Local Government New Deal was flagged as a potential deep dive item for June Corporate Board, building on the PSR and Health Strategy reviews at the December and March Board meetings.
The next Board date was confirmed as 20 June 2023.