Board minutes

Board Meeting 22 September 2011

Open session

1. Apologies for Absence

   Apologies were received from Andrew Mortimer.

2. Members’ Interests

   The Board noted the declarations of interest as stated in the Board’s Register of Interests.  It was agreed that there were no conflicts of interest arising from the declarations.

   STANDING ITEMS

3. Minutes

   It was recommended that the Minutes of the Open Session held on 21 July 2011 be approved.

   Proposer:  Myra Kinghorn
   Seconder:  Colin Brock

   The recommendation was agreed unanimously.

4. Matters arising

   There were no matters arising.

5. Chair’s Report

   The Chair reported that, along with the Registrar, she had met with Bob Ledsome, the Deputy Director with responsibility for Department of Communities and Local Government (DCLG) sponsorship of arm’s-length bodies.  It was reported that the Framework Agreement between ARB and the CLG had been discussed, and that some adjustments may need to be made to the Framework Agreement in due course.  It was noted that the Framework Agreement had been due to be reviewed in 2010, and that some of the current CLG expectations did not fit within the Agreement as it stood.

   The Chair reported that the processes for replacing Board members whose terms of office were due to expire had also been discussed with the CLG. It was stated that the CLG had agreed that a shortlist of candidates to replace an outgoing member would be in place by 29 November 2011.  The CLG had also agreed that they would be seeking to shortlist candidates with a legal background, and that advertisements for the post would highlight that experience in construction law would be helpful.

   It was also reported by the Chair that both she and the Registrar had met with Angela Brady, the new RIBA President, and had attended her inauguration.

6. Registrar’s Report

   The Registrar reported that a response had been submitted to the European Commission’s Green Paper on the Review of the Qualifications Directive.  It was noted that the response had been discussed with some of ARB’s stakeholders, and that the response was available to Board members via the Board’s Intranet. It was also highlighted to Board members that ARB had contributed to the responses provided by the Architects Council of Europe (ACE) and the European Network of Architectural Competent Authorities (ENACA).

   The Registrar noted that potential developments within the Directive could mean changes to requirements in relation to the duration of study and practical experience.  It was highlighted that such changes may cause difficulties in respect of the administration of the ‘general systems’ route to registration.

   The Registrar had recently attended an ACE Co-ordination meeting.  It was reported that ACE was recruiting a new Chief Executive.  It was anticipated that this would place ACE on a firm footing for the future.

   One Board member asked what the membership fee for ACE was expected to be.  The Board was informed that for 2012, it was expected that the fee would rise by about 5%.  The Registrar suggested that this was a reasonable increase, particularly in light of the fact that ACE was seeking to consolidate rather than expand its position. 

   A query was also raised with regard to the timescales over which any changes to the Directive would take place.  The Board was informed that the European Commission would initially hold a high level conference in early November 2011 to present the outcomes of the Green Paper and consultation, and it was expected that any changes would be put to the European Parliament for approval by the end of 2011.  It was suggested that it may take up to a year to go through Parliament, and that a period of transposition time would follow.

7. 2011 Management Accounts

   It was reported that the Management Accounts annual forecast for 2011 showed a surplus of £134,000.  It was noted that this surplus was largely due to a £185,000 profit achieved from the sale of investments and other savings as set out in the paper.  It was reported that £64,000 revenue on the Prescribed Examination had not been met due to fewer numbers of applicants seeking to take the exam.  A lower level of expenditure was also noted in this area.  It was also noted that the £50,000 variance in regulation costs was largely due to a 40% increase in Professional Conduct Committee (PCC) hearing days.  It was reported that the work of the PCC was demand led, making accurate forecasting very difficult.

   The Registrar provided further explanation for the variance in PCC costs. It was highlighted that there had been an increase in complaints towards the end of 2010, and that this had created a backlog for the Investigations Committee (IC).  It was also noted that in complex PCC cases, where such cases are stretched over several days, costs escalate accordingly.

   In response to comments from Board members in respect of the IC, the Chair suggested that a separate discussion about the mechanics of IC and PCC decision making processes be held at a later date.

   Another Board member asked whether income from investments was likely to decrease in the coming year.  In response, the view was expressed that whilst some income was likely to remain, as ARB’s reserves were depleted so the return on investments would fall.

   One Board member asked whether there were any records of what most complaints were about.  It was advised that the five most prevalent complaints were listed within the Annual Report, and that the causes of complaints were also tracked.  It was further suggested that there were two layers to complaints; those complaints which are put forward to the IC/PCC, and the initial causes of complaints. The view was expressed that the Board should consider what it could do to help prevent future complaints.

   A query was raised in respect of IT costs, and where ARB’s IT costs stood in relation to other organisations.  The Board was advised that ARB’s IT costs were at a very low percentage of turnover compared to organisations delivering similar activities.  The Board was also informed there had been quite a heavy level of investment into developing on-line services.

   In considering the relatively small amount spent on exhibitions, and the reduction in expenditure in this area, it was asked whether ARB was losing out through this reduction.  The Board was advised that one additional exhibition had been proposed for 2012, subject to agreement by the Board as part of the Business Plan 2012.

   MATTERS FOR DECISION

8. Business Plan 2012

   The Registrar introduced this item.

   In response to a query as to whether areas of the Business Plan were expansionist, it was explained that areas of the Business Plan which had been marked as ‘developmental’ were areas that any organisation would need to incorporate into its activities in order to keep abreast of developments.  It was therefore suggested that areas such as cyclical reviews should be considered as standard business items rather than developmental work and, in future, the structure of the Plan could be altered to reflect this.

   In response to a query over the amount being spent on protection of title, the Registrar noted that the Board’s policy towards protection of title had not changed, but that a reduction in costs had been achieved because it had become easier to achieve compliance without the need for prosecution. 

   The Registrar clarified that where a criminal offence was being committed, and it looked like this offence would continue, ARB would continue to seek to prosecute in these cases.

   Another Board member felt that it was necessary to make the benefits of being registered with ARB clear to architects.  In order to achieve this, it was felt that those areas of the Business Plan which focused on communication were particularly important.

   It was queried whether there was provision within the Business Plan for any development work that may need to be carried out in response to changes that needed to be made to the way that ARB conducted its business.  It was also suggested that consideration should be given to the pre-emptive action that could be taken in advance of any such changes.  In response, it was noted that such work would not be prevented, and that the Board could reassess the Plan to accommodate this.

   The Board would need to consider resourcing very carefully before making any significant changes to the Business Plan.

   The Registrar reported to the Board that, in respect of the internal ‘Reporting to the Board’ project, some of the mechanisms for reporting were not as accurate as they could be and some adjustments would need to be made.  The Registrar noted that the Business Plan had sufficient flexibility to allow for such adjustments.

   The Board agreed the 2012 Business Plan, subject to the following minor amendment to the introduction.

   ‘The Architects Registration Board (ARB) has identified three strategic aims to deliver its work: protecting the consumer, supporting architects through regulation and delivery the Architects Act.’

   Should be amended to:

   ‘The Architects Registration Board (ARB) has identified three strategic aims to deliver its work: protecting the consumer, supporting architects through regulation and delivering the Architects Act.’

   Proposer:  Colin Brock
   Seconder:  Alex Galloway.

   The recommendation was agreed unanimously.

9. 2012 Budget and Retention Fee

   The Budget and Retention Fee paper was presented to the Board by ARB’s Finance Manager.  It was pointed out to the Board that a budget increase of £57,000 to PCC costs was reflected within the budget.  It was also highlighted that the graphs in Annex E showed the retention fee in relation to the reserves, and that this analysis was based on the assumptions set out within the paper.

   It was reported that to date, ARB had been fortunate with its investments, but that this would be unlikely to continue, especially if reserves are depleted.  It was also noted that a rent review would be due in December 2015.  In respect of the overall costs of running ARB, it was noted that costs in 2009 totalled £3.2 million, and it was not expected to reach that figure again until 2013.

   The Board was presented with a number of options.  The Registrar’s recommended option would be option 5, whereby the retention fee would not be increased for 2012, but that the Board would need to acknowledge that the fee would need to rise from 2013 in order for the Board to comply with its reserves policy.   It was also noted that option 3 would mean an increase in the fee for 2012, but that with a smoother increase the overall amount that an architect would pay between 2012 and 2015 would be the same.

   Another Board member commented that they believed the current reserves to be at an acceptable level, and that the paper was rational and evidence-based.  The Board member also noted that it was thanks to the efficiencies achieved by staff that savings had been made and the budget met.

   One Board member felt that a reserves level of four months was too low, and that each of the scenarios presented resulted in a shortfall.  Concern was expressed by the Board member that more inexperienced Board members may find dealing with such a scenario problematic, and that the retention fee should be increased by £4 starting from 2012.

   It was also queried whether, with the weight of savings already made, there was any room to increase efficiency savings further.  The Registrar noted that staff were continuing to look for further ways in which savings could be made, and that the benefits of current savings would become apparent in 2012.

   Concern was expressed over the level of increase for 2013, 2014 and 2015 set out in option 5, and how these compared to previous increases.  It was noted that the Board could only agree the fee level for 2012 and not for 2013 onwards.  It was further suggested that the Board could only comment on any future position and not bind any future Boards to this.

   One Board member expressed the view that it was imprudent for ARB not to cover its costs in any given year.  It was also suggested that it was wrong to move an increase on to next year knowing that it needed to be done at some point.  To this end, they felt that option 3 should be taken.  However, it was also highlighted that any lack of support for option 5 was not a criticism of the paper itself.

   Finally, a request was made to minute that the Board acknowledged that this would be the last year that the retention fee could be held without impacting on ARB’s statutory duties.

   1. The Board agreed the operational budget for 2012.

      Proposer:  George Oldham
      Seconder:  Agnes Grunwald-Spier

      The recommendation was agreed unanimously.

   2. The Board agreed that the “one-off” costs for 2012 totalling £42,000 be financed from reserves.

      Proposer:  Alex Galloway
      Seconder:  Colin Brock

      12 Board members voted for the recommendation while two Board members, David Jones and Sarah Lupton, abstained.

   3.  The Board agreed the capital expenditure budget for 2012.

      Proposer:  George Oldham
      Seconder:  Ruth Brennan

      The recommendation was agreed unanimously.

   4. The Board agreed that the retention fee for 2012 should remain the same.  As part of the decision, it was also agreed by the Board that the sentence in recommendation (iv) which stated ‘However, the Board acknowledges that an increase is likely to be needed to the fee in 2013 and beyond’, should be removed and recorded as comment.

      Proposer:  George Oldham
      Seconder:  Bernard Wyld

      Eight Board members voted for the recommendation; four Board members, David Jones, Alan Jago, Sarah Lupton and Agnes Grunwald-Spier, voted against the recommendation; two Board members, Peter Coe and Myra Kinghorn, abstained.

10. Fees 2012

    It was reported to the Board that, as well as the retention fee, the Act required that other fees be charged for specific ARB functions.  It was recommended that the current fee structure be retained, with the exception of the PDF version of the Register, the cost of which should be reduced from £65 to £50 for 2012.  The Board also noted that, currently, only four copies of the register had been sold in this format this year.

    It was queried whether ‘penalty charges’ in relation to those removed for non-payment was the correct terminology to use.  It was noted that this was not the terminology used by ARB in its day-to-day activities.

    1. The Board agreed to retain the current fee structure for 2012, along with the current application and penalty charges.
    2. The Board agreed to decrease the purchase cost of the PDF Register from £65 to £50 for 2012
    3. The Board agreed to keep the cost of a certificate of Architectural Education at £25 for 2012.

    Proposer:  Neil Watts
    Seconder:  Agnes Grunwald-Spier

    The recommendation was agreed unanimously.>/

11. Changes to Bank Mandate

    The Board was advised that changes to the Bank Mandate were required based upon recommendations made following an Internal Audit. 

    It was suggested that the wording of the recommendation be amended so that it covered payments of between £9,999 and £10,000. 

    Some concern was expressed that the Registrar would be required to authorise all payments over £10,000, and that this may not be appropriate if the Registrar were the beneficiary of such a payment.  In response, the Board was informed that no such payments had been made to date, and that it was extremely unlikely that a case would arise in the future where such a payment would need to be made.

    The Board agreed the structure of the bank mandate should be amended as follows.

    1. Any two authorised signatures for payments up to £9,999.99.  It was agreed that this should be amended from the figure in the original recommendation of £9,999 for the reasons set out above.
    2. Two authorised signatures, one of which must be the Registrar, for all payments of £10,000 and above.

    Proposer:  George Oldham
    Seconder:  Myra Kinghorn

    The recommendation was agreed unanimously.

12. The Reserves Policy

    It was recommended to the Board that the wording of the reserves policy should be amended to reflect the change in accounting practices required by the Financial Reporting Manual.

    The Board agreed that the reserves policy wording be changed to state:

    “The Board’s reserves policy is to hold a minimum of four months’ budgeted expenditure.  When calculating the reserves held, any unrealised profit on investments will be excluded from the calculations.”

    Proposer:  Peter Coe
    Seconder:  Myra Kinghorn

    The recommendation was agreed unanimously.

13. Reappointment of the Board’s External Auditors

    It was recommended that the Board should agree to extend the appointment of its external auditors, Crowe Clark Whitehill LLP, by one year.

    The Board agreed that Crowe Clark Whitehill LLP’s appointment as the Board’s external auditors should be extended for a further year.

    Proposer:  Myra Kinghorn
    Seconder:  Alan Jago

    The recommendation was agreed unanimously.

    MATTERS FOR NOTE

14. Annual Report to the Board on the activities of the Remuneration Committee

    The Board noted the Annual Report from the Remuneration Committee.

15. Minutes

    The Board noted the minutes of:

    1. The Audit Committee meeting of 14 July 2011 (draft)
    2. The Investigations Committee meeting of 5 August 2011

16. Any Other Business

    The Board was updated on the progress of the remaining Distinguished Achievement Route applicants, and asked to agree that the deadline for outstanding applications be extended until December 2011.

    1. The Board agreed that the deadline for outstanding applications under the Distinguished Achievements Route be extended until its meeting of December 2011.
    2. The Board agreed to ask staff to notify candidates that application materials must be submitted to the Distinguished Achievements Group for consideration before the revised deadline.

    Proposer:  Myra Kinghorn
    Seconder:  Neil Watts

    The recommendation was agreed unanimously.

17. Dates of Meetings

    The Board agreed the dates of its next meetings as follows:

    2011

    15 December: Board Meeting

    2012

    Friday 24 February: Board Meeting
    Tuesday 17 April: Board induction for new Board members
    Thursday 10 May: Board development and strategic planning day
    Friday 11 May: Board Meeting
    Friday 20 July: Board Meeting
    Thursday 20 September: Board Meeting
    Thursday 22 November: Board Meeting