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19 March 2024 — Minutes of the meeting of the Board of Commissioners

Minutes of the meeting of the Board of Commissioners, Tuesday 19 March 2024.

Location: Victoria Square, Birmingham.

Commissioners:

  • Marcus Boyle (Chair)
  • John Baillie
  • Stephen Cohen (to 2pm)
  • Charles Counsell
  • Helen Dodds
  • Sheree Howard
  • Claudia Mortimore
  • Helen Phillips
  • Andrew Rhodes
  • David Rossington
  • Catharine Seddon.

Executive team:

  • Helen Child
  • Lucy Denton
  • Katharine Diamond
  • Sarah Gardner
  • Helen Gibson
  • Natasha Harris
  • Tim Miller
  • Alistair Quigley
  • Kay Roberts
  • John Tanner.

Other participants: REDACTED

External attendees: REDACTED

Observing: REDACTED

Apologies: REDACTED

1. Welcome, apologies, introductions and declarations of interest

The Chair welcomed attendees to the meeting.

Apologies were noted.

There were no new declarations of interest.

2. Minutes, Actions, Forward Look and Board Effectiveness Review (BER) action plan

The minutes of the following meetings were approved as a true record, subject to minor amendments sent to Governance post today’s meeting: 29 January 2024 extraordinary Board meeting on the Gambling Act Review, and 8 February 2024 Board meeting.

The Board noted the actions log with no comments.

The Board noted the forward look, noting that the digital road map will be brought to Board at its September meeting.

3. CEO’s report

The Board noted the report for information.

The CEO drew the Board’s attention to some specific points:

  • on the Gambling Commission’s financial outlook, it is running with a financial forecasting accuracy of 0.4 percent which is substantially lower than previously and closes out something the Commission has been working on for the last few years, which is a real achievement
  • the Commission has received a letter from GambleAware concerning the impact of the statutory levy on current services.

The Board asked questions and made comments. The Board commented on how positive it is to see such progress on forecasting and can take assurance from this result, which is credit to the finance team.

The Board noted the paper on the interim measure, for decision.

The CEO highlighted the following points in the paper:

  • the Commission previously agreed the principles with the Betting and Gaming Council (BGC), who are currently finalising the drafting
  • the industry can set its own code, whether the Commission recognises it or not, but the Commission is trying to support the industry to set some minimum standards that would accelerate progress towards the aims of the Gambling Act Review
  • operators would remain able to apply lower thresholds than stated
  • the Commission intends to ask the Advisory Board for Safer Gambling and the Lived Experience Advisory Panel for advice on any research on implementation and monitoring of industry codes and consumer reactions to a code of consistency.

The Board asked questions and made comments:

  • if it is too late to ask for more stratified limits for 18 to 25 year olds, based on the recent press coverage of undergraduates, it would be extremely useful for the Commission to be armed with research evidence for greater stratification in that age bracket and to ask the Lived Experience Advisory Panel to flag likely consumer and press reaction if there was no stratification
  • although not part of the LCCP, if an operator has signed up to the Code, our Compliance team can test their policies and procedures against it.

The Board approved:

  • the delegation of the final approval of the interim measure code of practice to the CEO, subject to the proposal aligning with pre-agreed principles.

4. Chair’s report:

The Board noted the paper for information.

The Chair highlighted the recently held Chairs’ roundtable. The latest operator Chairs’ roundtable was held yesterday. It was generally routine, but the Chair was pleased to hear the Chairs agree that the Commission cannot be the flagbearer of industry growth. The Chairs were pressed on anything that the Commission is doing to inhibit their compliant growth and there was nothing other than on illegal gambling and having clear, regulation and rules to allow operators to invest earlier. The Chairs also received the latest compliance statistics.

The Board asked questions and made comments:

  • it is surprising that there was no pushback from Chairs on the fair and open work
  • the Industry Forum’s (IF) first meeting will be held this week. Engagement with the Chair of the Forum has been very positive to date.

5. Corporate Strategy (CS)

The Board noted the CS paper for decision.

The Board received a brief update on the progress of the CS:

  • the plan is to publish the CS in early April, subject to the Board approving the final version submitted today
  • Commission officials spoke with Department for Culture, Media and Sport (DCMS) officials yesterday and the CS is in line with expectations and policy agenda
  • the measurement part of the document has been set out in the CS as a graphic in the paper, essentially clarifying our regulatory objectives, duties, commitments and outcomes.

The Board asked questions and made comments:

  • an excellent document, with real clarity around what the Commission will deliver, why and how the Commission will measure itself
  • on tone, there are 2 points where we are open to regulatory capture (on consumer choice and as a result the industry has moved) and rather than ‘nudging’ operators into recognising the need for action, the Commission should ‘encourage’ them
  • the measurements graphic will be published via the metrics impact, with the main document and a summary to go alongside it can also be published
  • on the data section, the language could be inverted to highlight the Commission’s message on proactivity that it sees the opportunities in terms of the regulator better protecting consumers (who want less harm and breaches not 'less non-compliance').

The Board approved the 2024 to 2027 CS, having taken into account all previous feedback form the Board, Expert Groups and DCMS.

The Chair thanked the Executive and individual team members for all of their impressive and hard work on the CS that has been carried out over the last months.

6. Budget

The Board noted the paper for decision.

The Board received an update:

  • at the Board meeting on 8 February 2024, the Board agreed in principle to spend the Commission’s reserves to the tune of £3 million to £4 million
  • since that date, the Executive team have had further discussions and the proposed reserves spend is now £4.1 million
  • on deliverables, the Commission finance team have mapped back from the business plan into the budget
  • the Commission finance team is working up plans for both a short-term and long-term increase on fees, and is having discussions with DCMS and also with Treasury. DCMS is in the process of writing to the Treasury regarding the Commission’s proposal to draw down reserves.

The Board asked questions and made comments:

  • this is a rigorous piece of work and although the proposals to increase expenditure are substantial (22 percent) they are realistic given that a lot of that is already baked in as salary costs
  • with reference to efficiencies, it would be helpful for the Board to hear about progress as it develops.

ACTION: item on progress of efficiency programme to be tabled at a future Board meeting

  • on the point of the drawing down of the reserve, if fees do not change for the Commission in 3 years’ time, then there will be a real cashflow issue. It was suggested that the REDACTED might write now to the DCMS Minister to set out that we propose to draw down reserves, and have therefore set a course that requires action on fees in the near future
  • regarding approvals for the draw down of reserves, DCMS support is expected. The Commission finance team will be writing to the Treasury after today’s Board meeting, having already submitted the draft budget to DCMS. It would be counter intuitive for DCMS to support the activity in the strategy, but not provide the financial cover to deliver it
  • it would be useful in future to see an allocation of gambling regulation expenditure by activity (licensing, enforcement and so on). That is currently difficult to break down however, that will be easier to do once the new finance system is in place
  • if the Commission hits any roadblocks, it is difficult to see what is relating to run rate and what is additional spend. Run rate is the baseline, the committed spend, which runs slightly above forecast level - the reserves level of £7 million is too high – this was set previously and some things have reduced in scale. It is hoped that as the Commission progress this year there will be a better understanding of the risks relating to the Gambling Act Review changes and the Commission would be looking at more of a figure of £5 million in reserves.

The Board approved the 2024 to 2025 Budget, including the utilisation of £4.1 million from the reserve.

7. Business plan

The Board noted the business plan for decision.

The Board received a brief update:

  • the business plan focuses on delivering the first year of the CS
  • subject to Board approval today, the business plan will be published a week after the CS
  • feedback has been incorporated from comments made at the last Board meeting, and the updated layout of the document now includes a diagram illustrating the pinch points over the year
  • the business plan does not capture ongoing BAU activity.

The Board asked questions and made comments:

  • the business plan aligns really well with the CS
  • on language and tone, within the results an often-used phrase is ‘we will increase our understanding’ – whereas the language would be better framed to reflect the positive actions that the Commission will be able to take as part of its increased understanding
  • it is pleasing to see the data pilot project included in the deliverables.

The Board approved the business plan for 2024 to 2025 for publication on 15 April 2024 and delegated approval for any minor changes post DCMS’ final review to the Commission CEO to sign off.

8. Financial report

The Board noted the report for information.

REDACTED highlighted key points as set out in the paper.

The Board asked questions and made comments:

  • on vacancies and the length of time it is taking to recruit people, People Services have tried to reduce bottlenecks by bringing in talent acquisition and have also been looking at improving the Commission’s employee value proposition and to enable the Commission to be in a better position in the employment market
  • on ops change applications there are a number of undeclared change of controls however, none of these are big cases that need to be taken forward. Commission ops are sending out very clear correspondence to operators as to what is required and some cases are system errors. None of the cases involve large operators and the smaller operators, to whom these cases refer, have now paid the outstanding amounts. It is more about overcoming the challenges with some of the smaller operators in terms of them understanding the requirements. The Commission also has a compliance policy which lays out the approach the Commission takes from compliance to enforcement in these cases, to ensure the Commission is following the correct process.

9. Review of Expert Groups 2023 to 2024

The Board noted the paper for information.

The Board received a brief update:

  • at a high level, there appears to be more disparity between the Advisory Board for Safer Gambling (ABSG) and the other Expert Groups in terms of its direction and purpose
  • there is a new round of recruitment coming up for ABSG which needs careful consideration in terms of Value for Money (VFM) and its Terms of Reference. In addition, the Commission cannot employ anyone to ABSG who is in receipt of Research and Education Treatment (RET) funding
  • we need to be able to show that all of the Commission’s Expert Groups are VFM and that their engagement with the Commission is consistently good.

The Board asked questions and made comments:

  • on the VFM point, it might be helpful to do a cost benefit analysis of what it would cost if Expert Groups did not carry out the work that they do, in order to get a good distillation of what is required. A route to assess that could be an assurance process that has been done by the research and statistics team
  • in terms of membership, under the current Terms of Reference some potentially really good candidates could not apply if they were in receipt of RET money, which does seem to be overly restrictive
  • attention needs to be paid to proper membership and governance around all of the Expert Groups
  • the primary evidence gap we detect is very much around fair and open rather than the protection of harms, which is a new challenge for ABSG which could perhaps lead to a renaming of ABSG as well as a change in membership
  • it would be helpful if the Board were to commission a review of Expert Groups and their aims, by way of a governance review to give assurance that the Commission has given the Expert Groups every chance to succeed.

Action: REDACTED to carry out a review of the aims and purpose of the Expert Groups.

10. Update on Fair and Open engagement

The Board noted the paper for decision.

The Board received a brief update:

  • following on from discussion at the 8 February 2024 Board meeting, the team have refined the proposal on the gambling consumer panel appraisal, brought to Board today for decision
  • at the February Board meeting, a suggestion was to recruit a commissioner from the hospitality industry however, it is unlikely that DCMS can recruit before 2025
  • there are challenges around each option proposed, as laid out in the table in the paper, mainly around funding and team resources.

The Board asked questions and made comments:

  • there is the option of doing nothing new and getting what is required from our existing consumer research programme. The Commission needs to ensure it understands as much as it can about the consumer and the Commission still has a year to go with research consultancy Yonder, which will present opportunities as well as in terms of filling any gaps of evidence
  • it was recognised that one panel can never represent a complete view of any position
  • there is still a lack of clarity about the issue to be resolved – is it one of external appearances, or an actual evidence gap?
  • it would be beneficial to recruit a Commissioner with expertise in AI and digital in the next round of Commissioner recruitment
  • it would be sensible and pragmatic to see the output of the current work and what that demonstrates and to revisit a few months’ down the line.

The Board agreed this item would come back to Board in 6 months’ time (at the 19 September 2024 board meeting) for further discussion, once the work has played out, to review what it is the Commission is looking to resolve in terms of the need for a Gambling Consumer Panel.

11. 4NLC plan to Fully Implemented Commencement (FIC) (REDACTED did not attend for this item)

The Board noted the item for decision.

The Board received an update.

REDACTED

12. REDACTED

13. Board engagement with organisational culture

The Board noted the paper for decision.

The Board received a brief introduction:

  • the plan is to create a new cultural dashboard, in order that the Board can gain meaningful insight into the Commission’s organisational discussion, following on from discussion at the last Board meeting on the Commission’s speak up policy
  • the responsibility for the organisational culture is reserved to the Board however, to date, it has been challenging for Commissioners to understand the culture as they have had limited opportunities to experience it firsthand
  • there will be a continuing focus on experiences for different demographics of the Commission and People Services will listen to different networks across the organisation as well.

The Board asked questions and made comments:

  • the source of data for this work has been the people data the Commission already has and using its networks and trade union’s gathering of intel and metrics on the level of complaints around the organisation and supporting managers
  • it would be helpful to have not only the quantification but also the qualification of voices across the organisation which truly paints the picture of what is going on
  • it is very important to hear about any grievances that are not reported other than to line managers and how this can be escalated so that the Board is aware
  • thinking back to a few years ago when the Commission commissioned a cultural review, there were a lot of surprises for Commissioners as they had not been effectively tapped into the organisational culture
  • all Commissioners should be speak up champions, there should not necessarily be one Commissioner only to carry out that function. The SID could, however, be a point of co-ordination
  • it would be useful to have more detail on the number and nature of grievances and cases going forward to employment tribunals and if any same individual is cited across a number of occasions. It would also be helpful to see trends of grievances chartered over time from previous years
  • it would be beneficial for Commissioners to meet the teams across the organisation from time to time, to get to know colleagues and to gain a better understanding of areas of the organisation.

The Board approved the creation of a culture dashboard (Annexe A to the paper) to assist Commissioners in discharging their responsibility in understanding and monitoring organisational culture, by giving them relevant information to ask meaningful questions.

14. Gambling Act Review (GAR) update

The Board noted the paper for decision.

The Board received a brief update:

  • the Board should be very clear that once the pilot has concluded on financial risk checks it will be asked to make a decision as to whether those checks are included in the LCCP
  • the Board previously delegated decision making powers on the consultations to REDACTED. As of today, REDACTED has not exercised any of those powers
  • the consultations planned for Spring 2024 are much smaller than others to date
  • normally the Commission would hold back on smaller consultations however these are things that DCMS want to do address now, as set out in the paper.

The Board approved the recommendations for the approach to the Spring 2024 consultation that focuses on the Commission’s review of the Gaming Machine Technical Standards (GMTS) and Testing Strategy, and delegates authority to the CEO in respect of the final proposals for consultation, the consultation content and the timetable for consultation. (Delegation to the CEO is in accordance with paragraph 3.18 of the Corporate Governance Framework. The CEO intends to subdelegate in accordance with 3.19 to the relevant Executive member. The relevant Executive member is the REDACTED. In the event he is unavailable, the REDACTED will be the relevant Executive member).

15. National Lottery governance structures

The Board noted the paper for decision and were advised that this paper is a shortened version of the paper circulated in the Board reading room and discussed at the last meetings of the National Lottery Committee (NLC) and National Lottery Competition Committee (NLCC).

The Board asked questions and made comments:

  • the NLC and NLCC were very supportive of the recommendations as set out to Board today
  • the NLCC asked to build out the risks more and the regulatory risk capture is now reflected in the paper.

The Board approved:

  • immediate closure of the NLCC, to be replaced by a 4NL Programme Board for the duration of the 4NL programme (estimated May 2025)
  • closure of the NLC after the final substantive NL3 work is completed (estimated September 2024)
  • significant decisions in relation to the running of 4NL to be reserved to the Board (for instance, final decisions on Recoverable Implementation Costs (RICs), licence extension, termination of licence and so on)
  • scrutiny of the performance, risk management and enforcement action of 4NL to follow existing governance structures (performance reporting via Executive Team meeting and Board, any escalated enforcement action via Regulatory Panel of equivalent process).

16. Committee assurance reports

The Board noted the NLC assurance report.

REDACTED

The Board received a verbal update on the extraordinary Audit and Risk Committee (ARC) meeting that took place this morning:

  • topics discussed at the meeting were: Strategic Risk Register refresh, internal audit plan for 2024 to 2025 and ARC’s annual report to the Board
  • ARC gave broad approval for the direction of travel of the internal audit plan but are reserving judgment until it sees the next iteration of the Strategic Risk Register, which the risk team will bring to the next ARC meeting on 23 April 2024
  • the ARC will need to hold further discussions on resources and fees
  • the outgoing Chair of ARC confirmed he had submitted a draft ARC annual report to the incoming Chair, which will be on the 16 May 2024 Board meeting agenda.

17. Any other business

REDACTED

18. Farewell to REDACTED and REDACTED

On behalf of the Board, the Chair thanked REDACTED and REDACTED for their unwavering support and service as Commissioners over the past 8 years, with both of their terms as Commissioners ending on 10 April 2024. The CEO and REDACTED also expressed their gratitude and both REDACTED and REDACTED reciprocated the sentiments and thanked the Board, Executive and Governance teams for all of their work and dedication over the years.

19. SID session with Commissioners only – not minuted

20. Below the line items – there were no comments on these items.

  • REDACTED

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