11 December 2024 - Minutes of the meeting of the Board of Commissioners

Minutes of the meeting of the Board of Commissioners, Wednesday 11 December 2024.

Location: Victoria Square, Birmingham.

Commissioners:

• Charles Counsell (Acting Chair)
• Lloydette Bai-Morrow
• Helen Dodds
• Sheree Howard
• Claudia Mortimore
• Helen Phillips (until 3:15pm)
• Andrew Rhodes
• David Rossington.

Executive team:

• Helen Child
• Lucy Denton (until 12:30pm)
• Katharine Diamond
• Helen Gibson (from 2:45pm)
• Natasha Harris
• Alistair Quigley
• John Tanner (until 12:30pm).

In attendance:

• REDACTED (Observer)
• REDACTED (Item 7 only)
• REDACTED (Item 6 only)
• REDACTED (Item 6 only)
• REDACTED (Item 9 only)
• REDACTED (Item 7 only)
• REDACTED (Item 9 only)
• REDACTED (Item 6 only)
• REDACTED (Items 10, 11 and 12 only)
• REDACTED (Items 6, 10, 11 and 12 only)
• REDACTED (Items 10, 11 and 12 only)
• REDACTED (Secretariat).

Apologies:

• Marcus Boyle
• Sarah Gardner
• Tim Miller
• Kay Roberts.

Item 1: Welcome, apologies and declarations of interest

1.1 Apologies were noted from Marcus Boyle, Sarah Gardner, Tim Miller and Kay Roberts.

1.2 Charles Counsell declared a conflict of interest as he is currently both Acting Chair and the Senior Independent Director.

1.3 The acting Chair shared an update on recent events. Marcus Boyle has stepped down as Chair of the Gambling Commission (the Commission) and Charles will be the acting chair until 31 January 2025. The Department for Culture, Media and Sport (DCMS) have asked Charles to take the role of interim Chair for 9 months, or until a new Chair is appointed, with effect from 1 February 2025. DCMS intend to advertise the role of Chair early in the new year.

1.4 The acting Chair emphasised the need to move forward and regularise the governance of the Commission as soon as possible. The acting Chair has met with DCMS and has asked for a letter from the Minister setting out her priorities for the Commission. This is likely to cover the implementation of the Gambling Act Review (GAR) and the Fourth National Lottery (4NL), resolution of the litigation, ensuring that effective governance is in place, and that the Commission delivers on time critical projects to decommission Siebel and resolve the issue of future accommodation.

REDACTED

1.6 Commissioners gave their formal approval for Charles Counsell to chair Board meetings in the period between today’s date and 31 January 2025. This is consistent with item 17 of Appendix 2 of the Commission’s Corporate Governance Framework, which states that “If the Chair is not present at a meeting, those Commissioners present will appoint one of their number to chair that meeting.”

ACTION: REDACTED

ACTION: REDACTED

1.2 Governance Update

1.2.1 Board were invited to agree proposed changes to Committee membership. This amends the memberships of the 4NL Programme Board and the Remuneration and Nominations Committee.

1.2.2 Board were advised that REDACTED will take on the role of acting Senior Independent Director until the end of January 2025, and thereafter interim SID until such time as a new Chair is appointed.

ACTION: REDACTED

1.2.3 DECISION: Board agreed the changes to Committee membership set out in the paper.

Item 2: Minutes, actions and forward look

2.1 The minutes of the meeting of 21 November 2024 were reviewed and agreed, subject to minor amendments submitted via email and the following change:

Para 3.4 – missing ‘not’ to be added

2.2 REDACTED

REDACTED

2.3 REDACTED

2.4 The Forward Look was reviewed, and Board noted that further development is required before the next ordinary meeting.

2.5 REDACTED

2.6 REDACTED

2.7 Board noted it is likely that holds for extraordinary meetings in January and February 2025 can be removed from diaries.

Item 3: CEO’s report

3.1 Board received the CEO’s report for information and were invited to note the contents. The paper is as provided to the last Board meeting with minor amends.

3.2 REDACTED

3.3 REDACTED

3.4 REDACTED

3.5 REDACTED

3.6 Board received an update on engagement with the Betting and Gaming Council (BGC) in respect of recent public statements in the Racing Post regarding impacts of the White Paper.

3.7 Board asked the CEO to reflect on the recent speech by the gambling minister. Board noted that the response from industry has been negative, noting that in addition to the statutory levy announcement, employer NI contributions have hit hard, as well as the inheritance tax changes for family-owned businesses. The Minister’s focus on advertising was expected. In addition, prize draws were mentioned and the most recent Gambling Survey for Great Britain (GSGB) data shows that prize draw participation is 4 times higher than bingo.

3.9 REDACTED

3.10 REDACTED

ACTION: REDACTED

ACTION: REDACTED

Item 4: Update on plans for Board Effectiveness Review

4.1 Board received a verbal update on plans for the 2024 to 2025 Board Effectiveness Review (BER). The planned timetable for the BER was suspended in light of recent events, and the approach has been updated. A skills survey for Commissioners will be added to the BER to support future Chair and Commissioner recruitment. Questions are being reviewed for relevance and additional reflective questions will be added, along with reference to the Great Place to Work (GPTW) scores.

4.2 The report on the BER is scheduled for the March 2025 Board and the survey will be issued before Christmas with a good lead time for responses. Board noted the need to reflect on their response to events of last month.

4.3 A joint Board and Executive Team Away Day is being planned and substantive discussion of the BER and the GPTW results will be on the agenda.

4.4 Board noted a plan for 2 Away Days per year, with an autumn date to review progress against the strategy and give a steer for the next year’s business plan and a spring date to look back at the previous year.

Item 5: REDACTED

Item 6: Corporate Strategy: Progress Review

6.1 Board received the Corporate Strategy Progress Review for information and were invited to discuss the report.

6.2 Board were advised that the paper had been provided to facilitate a discussion with Board on progress to date on the Corporate Strategy. This is helpful timing as work is currently underway on business planning for 2025 to 2026.

6.3 Board requested additional information on account management, CMS discovery, financial penalties, and transparency of industry compliance. On the alignment between the corporate strategy and the business planning, Board noted that there are some minor discrepancies due to timing and more recent changes since papers were produced.

6.4 On transparency, the work indicated as complete is the compliance snapshots. This work has shaped the ongoing debate on what transparency should look like. The sequencing to consider how the Commission focuses on demonstrating compliance versus seeking assurance needs to be looked at.

6.5 Board noted that in the context of the 3-year strategy, work is broadly on track and progress has been made across all commitments. There have been no external unforeseen circumstances that would prompt a rethink of the strategy previously agreed. Internally, the question of accommodation was not included in the strategy although it did feature in discussions and the resignation of the Chair may impact on direction.

6.6 On measurement of how work has progressed, Board expressed a need to see how impact metrics and measurements which show progress against the strategy. This needs to be included in the Annual Report and Accounts for 2024 to 2025. Board noted that the Commission is publishing impact metrics quarterly. Because some of the areas of strategic focus do not map to specific metrics, expectations need to be managed as how those link to measures.

6.7 Board noted the CEO’s reflection that there are areas where significant progress has been made. On transparency, there is more work and debate required on who this work is for and to what effect. Transparency means different things to different people – there remains an unresolved debate about publishing information about named operators which is at the heart of this question. Board were advised that they should not underestimate how challenging some of the thinking on this will be. The strategy was written to iterate, test, and learn from findings. It was based on ambition and decisions made at the time and has always been predicated on the need for a fees uplift – it is all presently funded but is linked to a cost trajectory.

ACTION: REDACTED

6.8 There is the measurement of the strategy and the deliverables, and then there are longitudinal measures of impact. The CEO expressed comfort that the strategy is on track, noting the need to manage dependencies and loading across the year.

6.9 Board welcomed the progress made and the scope of work that has been delivered. Noting that metrics and reporting are available, Board reiterated an ask about the specific stewardship of the Board for the strategy – a smaller number of metrics which Board would like to have a shared narrative about.

6.10 Board noted that the Commission performance framework takes a 3-tiered approach - headline regulatory outcomes (based on the licensing objectives through the impact metrics), measures of progress or delivery of the annual business plans, then operational KPIs. Developing specific narratives for the Board would be possible.

ACTION:REDACTED

6.11 On international engagement, Board were keen to understand if the work is sufficiently resourced, and if the balance is correct in the work. Board noted that the Commission currently works in the world’s largest regulated gambling market. Work with international regulators is focused on development and maintenance of common standards as the international environment changes and other markets become increasingly dominant. The time element in respect of this work is more challenging than the people resource. There is a need to balance requests for co-operation and to ensure that our engagement and support is focused where we can have the greatest impact.

6.12 On core operations, the Content Management System (CMS) is noted as delivering value add to core regulatory activities, and Board were advised that the anticipated change is to reduce manual tasks and free up resource for assessments and engagement. The discovery work for the CMS is an opportunity to identify processes which can be streamlined. Examples include focusing resources on demand led work such as applications and illegal gambling. On compliance the aim is to move away from a small number of large assessments to more targeted and focused assessments. The aim is to be more efficient and responsive and to focus on the highest level of risks to mitigate.

Item 7: Business Case: Consumer Voice Project

7.1 Board sought to clarify the ask being made today to confirm that the paper seeks a decision on the business case.

REDACTED

7.2 It is proposed that the team contract a framework of providers to deliver work over 4 years. This is not a request for an increase in budget. The approach is set out in this way to allow for work to be delivered at pace by creating headroom within a framework. Not doing so would result in delays due to the time required to procure and potential loss of budget in year.

7.3 Board noted that setting a contract amount beyond the budget could be seen to be undermining the budgetary process – especially as spend to date has been in the region of £130,000 to £140,000 per year. This is not the first time that the Board has been asked to take this approach. In terms of the framework approach, the logic is understood. However, it was queried as to whether there is an existing framework under the Cabinet Office and whether the contract management role will be fulfilled by someone with the requisite knowledge and skills.

7.4 Board noted the need to understand if they were being asked to approve additional headcount to manage the contract. Board enquired as to the extent of headcount sought in the proposal, and the experience of working with multiple suppliers. How would the governance of the budgeting process work in respect of the actual spend over the 4 years?

7.5 On process, Board were advised that the request is to move ahead with the procurement with the additional headroom. There is no commitment being made to a particular value, rather to create capacity. The budgetary element and questions about how far to go will be considered. Board are asked today to give an overall approval to the approach. Finance have advised that they are comfortable with the approach.

7.6 Board were advised that requests for recruitment and headcount are subject to specific controls. This is not an agreement to allocate additional resource under this procurement. Advice from the Commission’s procurement team is that a framework cannot be procured through the Crown Commercial Service.

7.7 Board noted the need for specificity on the additional pieces of work which might demand greater headroom. Reflecting on the last contract requested, there is a need for greater rigour in the process so that Board can understand what it is the funds will be spent on. Board were advised that if budgets were available, there are projects which are currently outside of scope – such as longitudinal work.

7.8 Board noted the interim fees review paper is clear about the need for the Commission to demonstrate spend and value for money. Publishing a contract for an amount that we are not budgeted to spend does create expectations. Board noted the complexity of contract management and the need for assurance on the support and capacity to be able to deliver appropriate contract management. Board were advised that there is a current internal audit on contract management and there will be further support made available for contract managers.

7.9 Board were advised that the approach to embed headroom in contracts is grounded in the approach encouraged by Board to build in flexibility to replace spend when we are unable to deliver. In this area, the Commission faces criticism from the industry as to the scope of our research with consumers.

7.10 Board were advised that the full paper has not yet been to ExCo although some discussions have been had in the business planning, budgeting, and strategy planning. There is a need to build in some level of review.

7.11 DECISION: Board agreed the approach to procuring a framework. Before any funds are spent against the framework, Board note that a full budgeting process will be followed. The Commission need to have a clear narrative on spending against this work for the purposes of the fees review work.

Item 8: Great Place to Work survey results

8.1 Board noted that the People and Culture survey was signed off earlier this year, and ExCo will be reviewing the alignment between the strategy deliverables and the key themes identified in the annual survey in December 2024. The Commission are pleased to note the positive trajectory on the engagement scores and noted the potential impact of upcoming changes over the next few years.

8.2 Board welcomed the level of engagement and congratulated the Commission on the results. On leadership, the score of 64 percent was noted as low, albeit double what it was in 2021. Board noted that this is common area for lower scores, but ongoing work is focused on having a clearly identifiable, supported, and engaged leadership community. From the New Year, attention will be focusing on engaging that community with the strategy. On the score for the Board, some context and comparison with other organisations would be useful. Reflections were shared on the types of interactions that the organisation might be able to create for Commissioners. There are currently only a small number of colleagues across the Commission who will have had engagement with Commissioners.

8.3 Board noted the contradiction between Great Place to Work scores and high levels of sickness absence. Board were advised that the vast majority of sickness absence cases are related to cases where there are also performance management processes in place. As compared with civil service departments, sickness absence rates are generally moderate.

8.4 Board sought additional detail on benchmarking and more granular detail on results by diversity. The fair treatment results were noted as a positive reflection on culture. Great Place to Work benchmark the Commission against large employers so consideration is being given to alternative providers who can provide additional insights and more relevant comparators. More detail is available on diversity and Board were offered assurance on the additional analysis of data by demographics.

8.5 Noting low scores on reward, Board were advised that a pay business case has been through the full approval process at DCMS, and engagement and feedback has been received from Cabinet Office. On timing, any pay award needs to be made within this financial year, so a response is expected to ensure that the pay award can be implemented within 2024 to 2025.

8.6 REDACTED

ACTION: REDACTED

Item 9: Risk Management

9.1 Board received the Audit and Risk Assurance report, including an update on the recent meeting on 6 December 2024. The Chair of the Audit and Risk Committee (ARC) shared observations on the development of the risk management approach at the Commission, noting the increasing capability in risk management and the quality of the papers produced.

9.2 Audit and Risk Committee were able to give assurance that the risk management work is progressing well and the Chair of ARC gave her thanks to the team for the work completed and their approach to receiving and incorporating feedback.

9.3 The papers note significant work underway on the Digital Roadmap, and further detailed assurance was provided to the December meeting. Board were asked to acknowledge the scope of work and the importance of this work, and to note that ARC will have a dedicated meeting at the end of January 2025.

9.4 Audit and Risk Committee members supported the comments made. On risk the development of a more mature approach has been really welcome.

9.5 Board received the Strategic Risk Register for review, noting changes to risk scores and new and emerging risks.

REDACTED

9.6 On the Data Governance issue, Board noted that there had been a gap in co-ordination of data across the Commission following the disbanding of the data team in 2021. A new sub-committee (Information Management and Data Sub-committee) has now been convened as the first part of co-ordination to work on the issue. It was confirmed that the issue referred to overall data governance within the organisation, not specific to GDPR. The planned data maturity assessment was identified as an opportunity to baseline the Commission's data governance.

9.7 Board received the draft Risk Appetite statement, and noted the work carried out to refine and develop this second iteration of the statement for Board’s consideration. This took into account Board feedback, best practice and learning over the past year of developing and discussing risk management approaches.

9.8 Board discussed the differentiation on appetite between physical and cyber security, noting that there are some organisations who take a very restrictive approach to things like bringing in personal mobile phones. The Commission is not in that space regarding the physical environment, but is in the cyber environment, given the nature of the material we have. The Board agreed it would be useful if future reports could show any changes in appetite and movements in tolerance.

9.9 There was a discussion about the difference between tolerance and appetite. Appetite is the Commission's aspiration, whereas tolerance reflects where we can manage when we are out of appetite. Board were keen to see movements to align tolerance and appetite, and suggested the risk team prioritise certain areas, for instance financial crime and compliance with legal obligations.

9.10 The Board were keen to attend a workshop session to understand risk appetite and current risk profile more fully. Ideally this would be linked to the Board priority metrics, as discussed at item 6 on the agenda.

ACTION: REDACTED

ACTION: REDACTED

9.11 Board received the draft Risk Management Policy, noting that this is the annual review of the policy first agreed by Board last year. The policy was written in an unusual way with goals and activities. In updating the policy, there have been minor changes to content and indicated progress against goals. The intention would be for the Board to review again in a year's time. Whilst the aspiration is to reach a point where an annual review is not required, it was acknowledged that this is not sensible while the function is still developing.

9.12 The Board discussed the frequency at which Board should review risks, noting the frequency is missing from paragraph 8.2. It was agreed this should be 6-monthly, on the basis that ARC review risks quarterly and could raise risk issues arising to Board through routine reporting.

9.13 The Board sought clarification on the outstanding actions 3 and 5 (at paragraph 2.2 of the policy). Action 5 is well underway and likely to be completed within 24 to 25. Action 3 would take longer. A substantive update on the expected timelines would be circulated after the meeting,

ACTION: REDACTED

ACTION: REDACTED

9.14 DECISION: Board approved the Risk Appetite Statement and the Risk Management Policy, subject to the changes noted.

Item 10: Performance report

10.1 Board were advised to focus on the content of the report, and to share any comments on the format on the report via email after the meeting.

10.2 Board noted that the performance reporting has not been on a Board agenda since July 2024, and the format has changed considerably. There has been sustained performance against licensing KPIs.

REDACTED

10.3 Turnover continues to decrease and is down to 9.4 percent. There has been a review of shrinkage due to annual leave and sickness absence which is now being measured.

10.4 REDACTED

10.5 Board noted that on first assessments in compliance, only 14 percent passed. This brings out that this is an area that the Commission needs to focus on – first time failures are high.

REDACTED

10.9 Board received an update on accommodation.

REDACTED

10.10 A decision for Board is likely between early February and mid-March.

REDACTED

ACTION: REDACTED

10.11 Board enquired as to whether the performance reporting prompted any action or change. Board were advised that ExCo looked at licensing in detail, including the speed at which the team are managing throughput and assurance. ExCo does test and question the regular reporting on a monthly basis.

10.12 Board were advised that the Legal team is not included in the performance reporting; there is a litigation update which is submitted to the Audit and Risk Committee. There is a plan to develop sickness absence figures across the organisation. Board were advised that the Legal team has appointed one internal candidate to the senior role and an external candidate declined an offer for a junior role. Further recruitment is going out this week and Legal are working with People Services attracting candidates.

10.13 REDACTED

Item 11: Finance report

11.1 Board received the Finance report and noted that a number of vacancies have been removed. The key message is the Commission is aiming for spend within 1 percent of forecast while drawing down £4.1 million in reserves.

REDACTED

Performance in income for remote renewals has been positive. Board welcomed the positive forecasting for the second year in a row.

11.2 Board received the procurement report and noted that it is consistent with the position previously reported. Board noted that the Commission does not use dedicated contract management software.

11.3 On FTE, Board noted that the slides show a forecast of 427 FTE in September 2024. This has been revised to 407 in the current position. There is not a headcount cap in terms of FTE but modelling is being worked on in respect of the pay remit. The forecast includes fixed term contract roles and there is a need to understand the impact of FTC roles over time. It was noted that the mix of FTEs had also changed and so the overall budget impact was near to neutral.

11.4 REDACTED

Item 12: Business planning 2025 to 2026: current thinking

12.1 REDACTED

12.2 REDACTED

12.2.1 Board noted work on engagement with industry lawyers, through re-launching a forum for industry lawyers to discuss issues with the regulator. Industry lawyers were also included in the CEO briefing this year.

Item 13: Any Other Business

13.1 None notified.

Meeting Closed at 15.41pm