Output Monitoring Group: terms of reference 2015-2021

Output Monitoring Group
Terms of reference for 2015-21 regulatory period
(Quality and Standards 4a)

The high level 'Output Monitoring Group' (OMG) oversees the delivery of the objectives set for Scottish Water by Scottish Ministers.

Ministers expect OMG and its working groups to monitor the progress of the delivery of their objectives including all responsibilities and processes for maintaining an up-to date technical expression. It is the expectation of Ministers that for the purpose of monitoring and reporting on the delivery of their objectives, the processes and practises operate without reference to them except where there is a statutory obligation to do so or where their involvement is indicated in these Terms of Reference (ToR). Ministers expect OMG to focus on the delivery of objectives rather than financial expenditure. All parties are expected to give high priority to the work of the OMG.

Remit of the Group

The Output Monitoring Group (OMG) will ensure that appropriate arrangements are in place to monitor the delivery of Ministers' Objectives for the 2015-21 regulatory period. It will provide Ministers with authoritative, agreed and up-to-date information on the achievement of their Objectives. In addition it will notify Ministers of any issues that may arise, that impact on, or are impacted by, their wider policies or that give rise for a need to revise their Objectives and associated Directions to Scottish Water.

The OMG will operate within the framework and mechanisms set out in the explanatory note attached at Annex A that forms an integral part of this ToR.

The Group will meet four times per year. It will operate at a strategic level and may be supported by one or more working level groups that will provide analysis and reports as directed by OMG. OMG will specify the remit, membership and work programme for each working group and ensure that ToR for any working group are consistent with the current OMG ToR.

Membership and responsibilities of the Group

• Scottish Government (Chair and secretariat)
• Scottish Environment Protection Agency, SEPA
• Drinking Water Quality Regulator, DWQR
• Scottish Water
• Water Industry Commission for Scotland, WICS
• Citizens Advice Scotland, CAS
• Scottish Public Services Ombudsman, SPSO

Specific duties

Programme monitoring

• ensure that appropriate arrangements are in place to monitor the delivery of outputs in terms that are consistent with the requirements of Ministers' Objectives and those of the regulators (DWQR, SEPA and WICS), taking due account of the practical needs of Scottish Water.
• own and maintain the agreed baseline definition of the outputs which meet Ministers' Objectives for the 2015-21 regulatory period (also known as the Technical Expression) and ensure that this definition is kept up to date.
• ensure that a well-defined and agreed change mechanism is operated and maintained to allow changes to outputs while ensuring that Ministerial Objectives are still met and that a linkage is maintained at all times between the Objectives and outputs.
• advise on any issue that may give rise to a need for a change to the Ministers' Objectives and associated Directions on Scottish Water.
• advise on any specific issues of delivery that may arise from time to time.

Reporting

• oversee the monitoring framework capable of reporting to Ministers on the delivery of their Objectives, based upon consistent information, against agreed milestones as approved by Ministers in Scottish Water's Delivery Plan or in any annual updates of that plan.
• provide authoritative, agreed quarterly reports to the Government demonstrating how the delivery of the Objectives is proceeding.
• agree procedures for the sign-off by the appropriate regulators of completed projects.
• provide an end of regulatory period report to set out clearly the extent to which the Objectives have been completed within the relevant regulatory period.

Additional items

• incorporate into the monitoring regime the outputs associated with the previous investment programmes.
• act as a forum of key stakeholders for the early consideration of, and as one source of advice to Ministers on, the setting of Objectives for subsequent regulatory periods.
• provide advice that will allow Ministers to confirm the outputs that are to be confirmed as part of the Investment Review 2018.
• agree a revised Technical Expression each year in time to allow Ministers, if necessary, to issue an amending direction in December each year.
• undertake any other duties with the agreement/by the direction of Ministers.

Review

These terms of reference will be reviewed at the latest at the mid point of the regulatory period (May 2018).

Water Industry Team, Scottish Government
July 2015

OMG TOR Annex A

Monitoring the delivery of Ministerial Objectives for Quality and Standards 4 (Q&S4A) (2015 TO 2021)

Explanatory note

Ministers Objectives

Ministers' draft Objectives for 2015-21 were the subject of a public consultation in 2012. In response to the consultation, stakeholders agreed that the proposed policy framework was broadly correct. They also agreed that the regulatory period should be extended to 6 years (2015-21) to allow better long-term planning, increase confidence in the Scottish construction industry to invest in skills and plant, and provide alignment with the planning timeframes for key investment drivers.

The requirements for the six years are set out in Directions from Scottish Ministers to Scottish Water and may be viewed at: http://www.gov.scot/Resource/0045/00459867.pdf. These Directions are underpinned by a Technical Expresssion which sets out the improvements that must be delivered by 31 March 2021. The technical expression has been agreed by quality regulators as necessary outputs to deliver the Objectives set out in the Directions. The Objectives are designed to:

• achieve the maximum affordable improvements in public health and standards of environmental protection.
• achieve these outcomes while taking prudent steps to ensure that water charges remain stable and Scottish Water's capital programme is of a scale that can be delivered efficiently in the interests of all water customers.
• support housing and economic growth in communities across Scotland through investment in additional drinking water and sewerage/sewage treatment capacity.
• maintain the high standards of service achieved in the 2010-15 regulatory period.

Scottish Water's Delivery Plan 2015-21 , as approved by Ministers sets out how Ministers' Objectives will be delivered over the regulatory period and forms the basis of the monitoring undertaken by OMG.

Delivery

The agreed Technical Expression (TE) represents the outputs, as agreed with regulators, necessary to meet Ministers' objectives as issued on 1 October 2014. For the quality regulators, this is the baseline programme and provides the links between drivers, outputs and outcomes. The TE is a "living" document and will change in the light of new information.

A well defined mechanism for making changes to the TE must be maintained. Scottish Water should seek the agreement of the relevant quality regulator or Scottish Government that any changes proposed would continue to have the capability to meet the Ministerial Objectives as set. This mechanism should provide a transparent and auditable trail for all such changes.

A revised TE should be maintained on a rolling basis and formally agreed once a year to allow Ministers to issue amending directions, if needed, in December each year.

Output Monitoring Group terms of reference 2015-21.doc

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