Transparency data

SLC Board meeting minutes March 2023

Updated 24 April 2024

1. Attendees

1.1 Present

• Peter Lauener (PL) - Chair

• Chris Larmer (CL) - Chief Executive Officer

• Mary Curnock Cook (MCC) - Non-Executive Director

• Gary Page (GP) - Non-Executive Director

• Charlotte Moar (CM)- Non-Executive Director

• Stephen Tetlow (ST) - Non-Executive Director

• Andrew Wathey (AW) – Non-Executive Director

• David Wallace (DW) - Deputy Chief Executive Officer

• Audrey McColl (AMC) - CFO

• Gary Womersley (GW) - Company Secretary

1.2 Also in attendance

• Ailsa Harris (AH) - DfE (by videoconference)

• Lauren McNamara (LMC) – Scottish Government (by videoconference)

• Chris Williams (CW) - Welsh Government (by videoconference)

• Laura Irvine (LI) – Department for the Economy NI (by videoconference)

• Stephen Campbell (SC) – CIO

• Jackie Currie (JC) – Executive Director, Business Operations

• David Beattie (DB) – Executive Director, Change, Data and Repayments

• Derek Ross (DR) - Executive Director, HE and FE Reform

• Chris Cooke (CC) - Executive Director, People

• Helen Bogan (HB) – Head of Governance and Planning

• Stuart Brydson (SB) - Board Secretary (Secretariat)

• Adam Treslove (AT) - Head of Corporate Affairs (for Item 6.1 only) (by videoconference)

• Nicholas McDermott (NMC) – Chief of Staff (for item 5.1 only)

• Margaret McMullen (MMC) – Director of Finance (for item 5.2 only) (by videoconference)

• Stephen Baker (SBA) – Director of Policy Design and Change (for item 8.1 only) (by videoconference)

• Jon Hopkins (JH) – Head of Technology – DfE Strategy Policy (for item 8.1 only) (by videoconference)

2. Apologies

• Rona Ruthen – (Non-Executive Director)

• Julia Kinniburgh (DfE)

• Anne Spinali (DfE)

• Sinead Gallagher (Welsh Government)

• Catherine Topley (Scottish Government)

3. 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.

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

PL welcomed everyone to the meeting, noting that it was an ‘in person’ meeting in Glasgow but with facilities for Teams connection as well.

There were no declarations of interest.

5. Chair Update

5.1 Update from the Chair on relevant matters

PL explained that those present in Glasgow had taken part in a briefing session with Repayments prior to the Board meeting,

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PL highlighted that following a lengthy recruitment process for a new Non-Executive Director, Natasha (Tash) Toothill would join SLC with effect from 1 April. Tash had agreed to become a member of TEOC and would join the April Board meeting.

PL noted that he was delighted to have been reappointed for a second term as Chair of SLC and that this would take his tenure through to March 2026.

Since the last Board meeting, PL and CL had had their regular meeting Baroness Barran, who remained very interested in the SLC agenda. The intention was to align the ministerial meetings with the Board agenda, and consequently the following meeting would focus on DSA. PL had also presented at the DfE ALB Chairs meeting and the presentation had been published to the Board on ibabs.

PL thanked Board members who had been involved in the ongoing recruitment process for the four permanent Executive Directors. The new CIO, Jason Dunham, had been appointed and would start with SLC on 11 April, taking over fully from SC on 2 May. CL noted that Jason had 25 years of experience in financial services with his most recent role being very similar in scale and complexity to the SLC role. CL was confident that JD would hit the ground running.

6. Strategic items

6.1 CEO Report

AT and NMC joined the meeting.

CL congratulated PL on his reappointment as SLC Chair.

CL introduced the CEO Report, noting that he would focus on the themes of customer, colleague and shareholder.

Customer

Application Cycle

CL highlighted that the SFE application cycle had started well. There had been 230,000 applications so far and this was broadly in line with the previous year. The SFW cycle had launched that week.

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CPD

MCC noted that one of the customer contact reasons was ‘status of application’ but she believed that this should be covered by self-service. CL explained that although there would always be some level of human interaction, this would reduce as there was more digital adoption. There were a range of activities that could progress channel shift, but they would not all be possible due to budget constraints.

MCC highlighted the recent media coverage of generative AI and the connection to potential efficiency gains for SLC.

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ST questioned whether the data in the CPD was conveying how effectively channel shift was being executed. DW explained that the current metrics had featured in the CPD since CX was first stood up and while the level of granularity was useful for management, it was less so for the Board. For FY 2023-24, the CPD would set out digital adoption metrics, which would be introduced at the April Board alongside the CX Report. These metrics would include straight through processing and DW noted that it was important to move from tracking just customer perception to tracking both customer perception and behaviour.

Colleagues

ELT Recruitment

CL noted the new CIO appointment and thanked ST for his part in the recruitment process. CL also thanked MCC, AW, and GP for their assistance in the other ELT recruitments currently ongoing.

MCC welcomed the success in recruiting a new CIO to start so quickly. The recent TEOC meeting was a reminder that, although Evolve had been successful, the technology transformation programme had only just started.

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Shareholder

CL noted that the meeting would focus on the 2022-23 financial year outturn, the corporate business plan, an LLE update, and the cost to serve.

PL highlighted that a strategy day would be arranged to take place in the late autumn and would focus on what SLC might look like in three - five years’ time.

In summary PL noted that the CEO report gave assurance to the Board that SLC was being well managed. There had been a good discussion on the CPD, and it felt like the right time to begin to make changes. The Board had taken assurance on the interim DSA update ahead of the full paper coming in April. The Board also noted the possibility of targeted industrial action and welcomed the contingency planning SLC was undertaking.

AT and NMC left the meeting.

6.2 CFO Report

MMC joined the meeting.

AMC introduced the CFO Report noting that SLC was forecasting a full year, risk adjusted underspend on Capital of £2.6m, an increase of £0.6m from the last reported forecast, an underspend of £0.7m on Admin and an underspend of £1.7m on programme. Capital was outwith the APRA control total tolerances but both Admin and Programme were within tolerance.

AH highlighted her confidence in the forecast process, noting the good relationship that AMC and MMC had with DfE finance. The report was good news and was an improved position from a couple of years ago.

PL noted that it was the second year that the Capital position was out of tolerance, but that DfE may not be concerned due to its own budget position. AH explained that the SLC Capital spend level was high enough to get scrutiny from DfE and that overall, DfE had confidence in SLC’s management of the Capital budget. PL acknowledged the significant amount of work that had gone into reaching the current position.

The Board took assurance from the CFO Report.

MMC left the meeting.

Business Planning

7. Draft Budget

CL introduced the Draft Budget noting that it had been a collaborative process with joint ELT accountability. The next stage was to finalise and balance the budget, with ELT focused on making the right decisions to use the SLC budget which would drive better customer, colleague and shareholder outcomes.

AMC noted that SLC had submitted a case for, and had received, additional Programme funding of c£20m during FY22-23, and confirmed that it had been agreed that this will now form part of the SLC baseline funding for FY23-24.

AMC highlighted key points from the executive summary of the paper which outlined the series of ELT challenge and prioritisation sessions which had reduced the overall pressure to £4.5m, although it was noted that this was still a significant challenge as there was misalignment across funding types where a £3.5m pressure on Admin and a £13.9m pressure on Programme were being offset by a surplus on Capital of £12.9m. It was noted that significant budget reductions had already been made to get to this stage.

Further potential mitigations were described and the rationale for, and the risk from their potential implementation, discussed. These included; reducing the funding allocated to GDPR to £6.7m, c13% of the total change budget; an efficiency target applied to the execution of Policy project delivery (not a reduction in outcomes); a reduction to the budget for Product Management defects and in line with the current year – an Admin savings target applicable across directorates.

AMC noted that even if these were all implemented there would still be a budget deficit to manage in year. In addition, although a provision has been included in the FY23-24 budget for year 1 of the proposed pay case, further savings need to be identified to support the costs for year 2 and 3.

AMC highlighted that SLC had moved to a pipeline model for the prioritisation and commissioning of change projects that, combined with the continuation of deep-dive quarterly reviews, will support the in-year management of the residual budget risk but that this alone would not be enough therefore an operational efficiency programme had been initiated which would systematically identify, prioritise and action cross directorate opportunities to reduce the cost to serve and to help support the delivery of our future pay case.

PL reminded all that the budget was not a matter for Board approval per se, but the Board should satisfy themselves that budget proposals were consistent with the objectives and risks of the organisation as evidenced in the FY 2023-24 Business Plan.

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GP noted the significant pressures that SLC had to absorb and that

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it was critical for SLC to take a longer-term view.

AH noted the challenge to SLC of a flat cash position but explained that DfE had already been required to make an investment case for the additional £20m funding in FY22-23.

AMC explained that nothing was off the table in terms of finding the savings that would need to be found over the next three years. Next steps would include looking at activity line by line and agreeing the basis of allocation of an SLC wide Admin savings target.

PL commended the work of the finance team, including collaboration with DfE. He was grateful for the extra £20m from shareholders which was viewed as an investment for continued change.

PL noted the link between the budget and the pay case. PL concluded by noting that SLC was at the start of big changes and the coming year could not be considered in isolation, and the need for longer-term planning was clear.

Corporate Business Plan

CL introduced the Corporate and Business Plan, noting that it would need to be validated against the final budget. Graphics would be added, and final editing would be undertaken alongside the process of validation. CL noted that the plan focused on delivering for customers and leveraging the foundations SLC had built to drive further improvements.

CL noted the conversation at the February Board meeting on priorities and highlighted that an event was planned for ELT and SMT at the end of April to confirm FY23-24 priorities and convey a simple, engaging narrative on the change SLC would deliver in the coming FY.

The Board provided feedback that would be fed into the final version. PL noted that the document was in very good shape and told the right story.

Subject to the further editing that had been noted, the Board approved the Corporate and Business Plan.

Draft APRA and Chair’s Letter

AH introduced the Draft APRA FY2023-24 noting that the Chair’s Letter would follow in due course, and that a draft APRA had been tabled to give SLC comfort on the overall budget envelope. DA budget splits would need to be determined by SLC, and the draft APRA fully reviewed and agreed by shareholders and SLC before the final version could be sent to SLC.

PL noted the sequencing of finalising the APRA, and that it was for SLC to determine DA splits. DW noted that GDPR spend was a significant part of determining the budget, so the joint risk assessment and agreement discussed at the meeting was essential.

8. Reports from Committees

8.1 RemCo Chair Report

AW introduced the RemCo Chair Report

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The Board took assurance from the RemCo Chair Report.

8.2 ARC Chair Report

CM introduced the ARC Chair Report noting that the most recent meeting had taken place on Tuesday. The Annual Report and Accounts, and the External Audit for 2022-23, were on track for pre-parliamentary recess completion. CM highlighted that the internal audit opinion for the year was expected to be moderate and that the Committee had approved the plan for next year. The Risk Appetite Statement had been approved by the Committee, subject to certain changes, and would come to the April Board meeting for approval.

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PL commended the fraud lessons learned paper to Board colleagues.

The Board took assurance from the ARC Chair Report.

8.3 TEOC Chair Report

ST introduced the TEOC Chair Report noting that the meeting had taken place on 13 March. The overall Evolve risk remained flat at amber. ST noted discussions on risks, benefits and the focus of the next meeting which would be on costs avoided versus cost benefits.

On the technology strategy, ST noted the constrained budget, and the sound assessments made by SLC in terms of scale of the challenge and risks. ST commended the KPIs and dashboard created by SLC which, again, provided a good assessment of the overall strategy.

The Board took assurance from the TEOC Chair Report.

9. Directors’ Reports

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9.2 Economic Analysis

PL welcomed the work that had been done so far and looked forward to FY22-23 figures, with caveats, being reported in the CPD in June.

10. Governance

10.1 Minutes of meeting held on 1 December

The minutes of the SLC Board meeting held on 28 February 2023 were approved as a true and accurate record.

10.2 Matters arising from previous meetings

The matters arising document was approved as accurate.

11. Any other business

PL noted that AS would be moving on to become Strategic Director of Finance at DfE and noted the Board’s thanks for her support for SLC.

11.1 Date of Next Meeting

The next meeting was confirmed as being at 10:00 am on Thursday 27 April 2023 by Teams with Executive hosting from the Glasgow Boardroom.

There being no other business the meeting ended at 1.30 pm.