Scottish Canals Framework Document

Management responsibilities

Corporate and business plans

42. SC must ensure that a corporate plan, agreed with the Scottish Ministers, is in place and published on SC's website. SC shall agree with the SG the issues to be addressed in the plan and the timetable for its preparation and review. The finalised plan shall reflect SC's strategic aims and objectives as agreed by the Scottish Ministers, indicative budgets and any priorities set by the Scottish Ministers. It shall demonstrate how SC contributes to the achievement of the SG's primary purpose of increasing sustainable economic growth and alignment with the SG's National Performance Framework (NPF). The corporate plan for SC should include: :

  • the purpose and principal aims of SC;
  • an analysis of the environment within which SC operates;
  • key objectives and associated key performance targets for the period of the plan, the strategy for achieving those objectives and how these will contribute towards the achievement of the SG's primary purpose and alignment with the NPF;
  • indicators against which performance can be judged;
  • details of planned efficiencies, describing how SC proposes to achieve better value for money, including through collaboration and shared services;
  • other matters as agreed between the SG and SC.

43. The corporate plan should inform the development of a separate business plan for each financial year. The business plan for SC should include key targets and milestones for the year immediately ahead, aligned to the NPF, and be linked to budgeting information so that, where possible, resources allocated to achieve specific objectives can be identified. A copy of SC's business plan should be provided to the sponsor branch prior to the start of the relevant financial year.

Budget management

44. Each year, in the light of decisions by the Scottish Ministers on the allocation of budgets for the forthcoming financial year, Transport Scotland will send to SC by March a formal statement of the budget allocated to SC, a note of any related matters and details of the budget monitoring information required by the SG.

45. If the trading and other resource income - or the net book value of disposals of non-current assets - realised is less than that included in the most up to date forecast SC shall, unless otherwise agreed with the SG, ensure a corresponding reduction in its gross expenditure.

46. SC is required (under section 41(2) of the Transport Act 1968) to break even each year and budgets will reflect this for each year of the business plan. SC will produce quarterly forecasts and adapt expenditure to achieve break even throughout the financial year.

Cash management

47. Any grant in aid provided to SC by the SG for the year in question must be authorised by the Scottish Parliament in the annual Budget Act. Grant in aid will normally be paid in monthly instalments on the basis of updated profiles and information on unrestricted cash reserves. Payment will not be made in advance of need. Unrestricted cash reserves held during the course of the year should be kept to the minimum level consistent with the efficient operation of SC - and the level of funds required to meet any relevant liabilities at the year-end. Grant in aid not drawn down by the end of the financial year shall lapse. Grant in aid shall not be paid into any restricted reserve held by SC.

48. The banking arrangements adopted by SC must comply with the Banking section of the SPFM where applicable. These would not apply to funds from commercial activities not financed by grant in aid which SC manage in commercial bank accounts such as their capital investment account used to generate additional revenue returns, achieve capital growth and retain a minimum of £1m for emergency expenditure on canal infrastructure.

Risk management

49. SC shall ensure that the risks that it faces are dealt with in an appropriate manner, in accordance with relevant aspects of generally recognised best practice in corporate governance, and develop a risk management strategy, in accordance with the Risk Management section of the SPFM. Reporting arrangements should ensure that the sponsor unit is made aware of relevant risks and how they are being managed. The SC Risk and Audit committee is also required, at the earliest opportunity, to notify the TS Audit and Risk Committee if it considers that it has identified a significant problem which may have wider implications.

50. In accordance with its duty to act as if it "were a company engaged in a commercial enterprise" in its non-navigation commercial activities, SC shall work to secure an adequate rate of return in the context of an acceptable level of risk and with due regard to the economic, social and environmental impacts for the benefit of Scotland. Its Investments Strategy, agreed by the board of SC and the sponsor unit, establishes the overall risk/return balance of its activities portfolio, and is therefore a key element in articulating the level of exposure which is considered tolerable and justifiable and how much is actively put at risk for the benefits of the opportunity.

Fraud management

51. SC should adopt and implement policies and practices to safeguard itself against fraud and theft, in accordance with the Fraud section of the SPFM. Application of these processes must be monitored actively, supported by a fraud response plan and robust reporting arrangements. This includes the establishment of avenues to report any suspicions of fraud. In addition SC should take risk-based and proportionate steps to appraise the financial standing of any supplier or other body with which it intends to enter into a contract or to provide funding.

Performance management

52. SC shall operate management information and accounting systems that enable it to review, in a timely and effective manner, its financial and non-financial performance against the strategic aims, objectives, targets and milestones set out in the corporate and business plans. The results of such reviews should be reported on a regular basis to the board of SC and copied to the SG. The SG shall assess SC's performance on a continuous basis and undertake a formal internal review at least twice a year. The responsible Cabinet Secretary / Scottish Minister shall meet the SC Chair at least once a year.

Scottish Canals' staff management

Broad responsibilities for Scottish Canals staff

53. Application of agreed terms and conditions for staff which were unchanged from existing BW arrangements following the approval of the BW Order.

54. SC will have responsibility for the recruitment, retention and motivation of its staff. The broad responsibilities toward its staff are to ensure that:

  • personnel policies, practices and systems comply with employment and equalities legislation, and best practice standards expected of public sector employers;
  • the level and structure of its staffing, including grading and staff numbers, are appropriate to its functions and the requirements of economy, efficiency and effectiveness (subject to the SG Pay Policy for Staff Pay Remits);
  • the performance of its staff at all levels is satisfactorily appraised and SC's performance measurement systems are reviewed from time to time;
  • its staff are encouraged to acquire the appropriate professional, management and other expertise necessary to achieve SC's objectives;
  • proper consultation with staff takes place on key issues affecting them;
  • adequate grievance and disciplinary procedures are in place;
  • whistle-blowing procedures consistent with the Public Interest Disclosure Act 1998 are in place; and
  • a code of conduct for staff is in place based on the Model Code for Staff of Executive NDPBs - see chapter 5 of Public Bodies: A Guide for Departments.

Pay and conditions of service

55. SC shall submit to the SG for approval (normally annually unless a multi-year deal has been agreed) a pay remit in line with the SG Pay Policy for Staff Pay Remits and negotiate a pay settlement within the terms of the approved remit. Proposals on non-salary rewards must comply with the guidance in the Non-Salary Rewards section of the SPFM. SC shall comply with employment and equalities legislation. The terms and conditions of the Chief Executive are subject to a separate approval exercise in line with the SG Pay Policy for Senior Appointments.

Pensions, redundancy and compensation

56. SC pension arrangements:

  • SC participate in The Waterways Pension Fund, a defined benefit scheme which was closed to new members in April 2011 and was changed from a final salary scheme to a career average revalued earnings (CARE) pension scheme. The principal sponsoring employer of the scheme is the Canal & River Trust (CRT);
  • CRT absorbed all pension deficit liabilities for the whole scheme as at 1st July 2012 and SC will be responsible for any increase in deficit applicable to its proportion with effect from 2nd July 2012. The scheme rules and pension law result in a 'last man standing' scenario where the last remaining participating employer is responsible for the fund and any residual liabilities. This risk has been managed by the implementation of an asset back property fund of £125m and a UK Government guarantee of £125m;
  • in addition SC operates a defined contribution pension fund, currently with Standard Life, for new employees who started after 1 April 2011- the employee contributes 3%-5% and the employer 6%-8% , with the employer currently capping the contribution from the employer at 8%. Employees can choose to contribute more than 5%

57. Any proposal by the board of SC to move from the above pension arrangements, or to pay any redundancy or compensation for loss of office, requires the prior approval of the SG. Proposals on compensation payments must comply with the Severance, Early Retirement and Redundancy Terms section of the SPFM. This includes referral to the SG of any proposed compensation payment being considered for any individual outwith any existing approved scheme and before the individual is approached and any offer made either orally or in writing.

Asset and property management

58. SC shall maintain an accurate and up-to-date record of its current and non-current assets in accordance with the Management of Assets section of the SPFM. "Fixed" assets should be disposed of in accordance with the Disposal of Property, Plant & Equipment section of the SPFM.

59. SC is responsible for the management of its estate in accordance with its objectives to achieve agreed policy aims and plan targets. Any proposal to acquire land, buildings or other rights in property for any purpose should comply with the Acquisition of Property section of the SPFM and approved delegated arrangements.

Joint Ventures

60. Before negotiating a joint venture SC should ensure:

  • the choice of participant is subject to open competition in accordance with EU procurement rules (however in Joint Ventures involving owners of neighbouring property with marriage value, no choice may be available);
  • in respect of any SC assets provided to the venture, the option of outright disposal is kept open to be considered alongside partnership bid;
  • the nature and purposes of the venture are consistent with SC's powers and objectives;
  • all reasonable alternative options have been considered, including doing nothing, and full financial analysis has been undertaken;
  • a robust sensitivity and risk analysis has been undertaken and adequate safeguards for SC are available, such as SC's ability to sell or assign its interest; and
  • the express approval of the SG has been obtained.