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OFFICIAL-SENSITIVE UKGI-BP-753
Eso Company No. 9774296
UK Government
Investments
UK Government Investments Limited
(the “Company”)
27-28 Eastcastle Street, London W1W 8DH
Paper for the Board of Directors
Topic: Progress update on implementing preliminary lessons learnt
from UKGI’s internal lessons learnt into Post Office and the
Horizon IT system
Date: 7 November 2023
Author: Annie Carpenter
Email:
Endorsed by: Jamie Carter, Lucie Lambert
Ref: UKGI-BP-753
Category: Paper circulated, for discussion
Executive Summary
Since November 2021, the UKGI Inquiry and Corporate Governance teams have worked
closely to implement a suite of thematic lessons learnt that were identified in the
preliminary internal review into POL and the Horizon IT system drafted by UKGI Legal!
and endorsed by the UKGI Board. Enhancements have been made to our Portfolio
management through a combination of training and updated Portfolio practices.
The Board are asked to provide any reflections on the progress made to date and
next steps.
Overview
Board members are encouraged to re-familiarise themselves with the internal review
reminder circulated in the reading room on 21 September 2023, which includes UKGI’s
POHIT Inquiry Opening Statement from October 2022, and the internal review from
November 2021. The Board may recall that UKGI’s POHIT Inquiry Opening Statement
1 4 The internal review is legally privileged and confidential.
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contained 5 thematic lessons learnt. The preliminary internal review contained
approximately 15 thematic lessons learnt exploring issues in a more granular manner,
which UKGI has not shared externally given these are initial reflections.
The UKGI Inquiry and Corporate Governance teams have consciously sought to ensure
that the Board’s approved preliminary lessons learned contained within the internal
review should not stay static whilst UKGI waits for the outcome of the final report from
the Inquiry, particularly given our commitment to continuous improvement in the
performance of our shareholder representative role.
Notwithstanding the sensitivities of the internal review, which means that we have not
been able to widely disseminate internally, we have or will have (a) disseminated the
lessons learned to our Shareholder NEDs and (b) embedded the lessons in our working
practices across our Portfolio management focused on two core inter-related areas:
1. Updated Portfolio practices which are reflected in our refreshed Portfolio
Operating Principles (POPs)®. The updated POPs are due to be published
internally in November 2023 with changes disseminated in a mandatory training
session for all shareholder teams and Shareholder NEDs on 21 November 2023.
Amongst other updates, the POPs now contains guidance on the range of ways
in which Shareholder NEDs and Shareholder Teams can be more interventionist
where governance red flags are appearing in Assets as well as the forums for
enhanced discussion of these issues.
2. Targeted enhanced training and know how has been developed and rolled out
to improve colleagues’ know-how in particular areas and to disseminate the
updated Portfolio practices, for example on whistleblowing and handling of
material litigation.
To date we have delivered 12 bespoke training sessions on the lessons learned topic
areas for our Shareholder NEDs and teams, with a further one to be completed by the
end of 2023 and two more by the end of this financial year. In addition to this, the
Shareholder NED development programme continues to provide professional
development throughout the year on a range of topics as required, including those
identified in the Internal Review.
Further detail on the progress to date and planned next steps against each of the
thematic lessons can be found in the Annex.
Next steps
We will continue to reflect on the enhancements that can be made to our Portfolio
practices and internal training, development and know-how as the Inquiry progresses
and our understanding of Horizon issues develops. UKGI will also have the opportunity
to supplement the reflections and lessons learnt offered to the Inquiry in a Closing
Statement.
Key question: Do the Board have reflections on the progress made to date and
next steps?
2 In particular, they concern matters which are live and subject to the POHIT Inquiry.
3 The UKGI Portfolio Operating Principles are an internal document that sets out UKGI's target
shareholder model.
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Annex: Preliminary lessons learned - progress to date and next steps
Lesson
LESSONS LEAR'
Whistleblowing
Targeted enhanced training
delivered
NED IN RELATION TO GOVERNANCE
Focused whistleblowing training
for shareholder teams in
December 2021 and December
2023.
Targeted Shareholder NED
development sessions held in
November 2021 and June 2023.
Enhanced Shareholder NED
induction introduced, including
options for further escalation and
intervention.
Annual mandatory whistleblowing
training to be provided.
All staff POPs training session on
21 November 2023 to include
references to this lesson.
Updates to Portfolio practices
— BROAD OBSERVATIONS
POPs updated to include
whistleblowing as a core policy
Asset Boards should be reviewing.
High level guidance and best
practice provided on how to
examine the sufficiency of an
Asset's whistleblowing policies
and procedures in the
Whistleblowing Guidance Note
published in July 2020 and
updated in May 2023.
Culture of our
Assets
Organisational culture and
purpose training for shareholder
teams provided by McKinsey in
September 2021.
Further training on culture
delivered by Slaughter & May in
November 2021.
Shareholder NED Chatham house
rules session held on 24
November 2021 to share
experiences and lessons learned,
led by Andy Duff. A second
session held on 2 February 2022
focused on the softer Shareholder
NED skills.
All staff POPs training session on
21 November 2023 to include
references to this lesson.
POPs updated to include
promoting and challenging Asset’s
effective corporate culture.
Organisational culture and
purpose Guidance Note published
in September 2021 providing high
level guidance to shareholder
teams and NEDs on how to
promote and challenge Asset
culture.
Cultural
Attitude toward
Horizon and
Postmasters
All staff POPs training session on
21 November 2023 to include
references to this lesson.
Future Shareholder NED session
to be organised in 2023/24 to
share the Internal Review,
Opening Statement, and enable a
thematic discussion on this lesson
and others identified.
This more specific lesson is not
suitable to be included in the
target shareholder model and
does not require an update to
Portfolio practices.
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between Policy
and
Shareholder
Roles
Legal Privilege
references to UKGI’s role in
sponsorship and the importance of
the clear delineation between
policy and shareholder roles.
UKGI Legal ran training on the
importance of legal privilege in
2019. Further training provided by
Eversheds in mid-2022.
Lesson Targeted enhanced trai Updates to Portfolio practices
delivered
Assets and e Enhanced Shareholder NED « POPs updated to include a section
operational induction introduced, including on how to manage issues that may
independence options for further escalation and require further escalation or
intervention. intervention.
e This more specific lesson will be e We have introduced ‘Peer Support
built into the Future Shareholder Sessions’: which are effectively
NED Session and a separate all- ad-hoc portfolio reviews focussed
staff training when appropriate. on a specific area where a
Shareholder team warrants
additional support.
Clear e All staff POPs training sessionon Ie Externally communicated
Delineation 21 November 2023 to include documents provide best practice
on the importance of delineation
between the policy and
shareholder role. This includes the
paper on Arm’s Length Bodies: the
case for them and how to optimise
their use.
« POPs updated to include that
UKGI should seek clarity on the
delineation between the
shareholder role and departmental
counterparts.
« A Guidance Note on the role of
UKGI in ALB sponsorship provides
further detail including a diagram
of suggested activities across all
government sponsor roles.
LESSONS LEARNED IN RELATION TO GOVERNANCE — PRACTICAL SUGGESTIONS
e Shareholder NED appointment
letters updated to include the
sharing of information with UKGI.
e The template for Asset Framework
Documents has been updated to.
include the requirement for Assets
enter into information sharing
protocol in instances of material
litigation.
Independent
Investigation
and Mediation
This more specific lesson will be
built into the Future Shareholder
NED Session and a separate all-
staff training when appropriate.
e This more specific lesson is not
suitable to be included in the
target shareholder model and
does not require an update to
Portfolio practices.
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Lesson Targeted enhanced trai Updates to Portfolio practices
delivered
Support for ¢ Corporate Governance Portfolio Review process enables
Shareholder Development Framework Shareholder NEDs and teams to
NEDs and launched providing mandatory and raise challenging issues to a peer
Teams additional L&D opportunities for forum. The process now includes
colleagues.
Shareholder NED specific
Development Framework
launched including peer learning
sessions and professional
development days.
Internal forums have dedicated
sessions to discuss learnings and
share know-how including at NED
forums and the Corporate
Governance Group.
Enhanced Shareholder NED
induction introduced, including
options for further escalation and
intervention.
Portfolio Review Peer Support
sessions which can be convened
as required to tackle particular
issues.
POPs updated to include a section
on how to manage issues that may
require further escalation or
intervention.
Board Access
to Key Advice
— Legal and
Non-legal
This lesson was promoted in the
Magnox lessons learned
presentation to UKGI in late 2019.
UKGI Legal re-ran Magnox
lessons learnt with the NDA team
and some reflections on updated
findings in Dec 2022.
This lesson also included in new
guidance on material litigation
handling.
This more specific lesson will be
built into the Future Shareholder
NED Session and a separate all-
staff training when appropriate.
This more specific lesson is not
suitable to be included in the
target shareholder model and
does not require an update to
Portfolio practices.
Skill set of
Asset’s Boards
All staff POPs training session on
21 November 2023 to include
references to this lesson.
POPs updated to include that
UKGI may encourage an Asset
Board to make further
appointments where additional or
specialist skills are required, or to
appoint a Board Adviser. Each
Asset has an extended Portfolio
Review once a year to focus on
the calibre and skillset of the
Board.
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Lesson
LESSONS RE-LEARNED IN RELATION
Targeted enhanced trai
delivered
LITIGATION
Updates to Portfolio practices
Oversight of ¢ This lesson was included in the e POPs updated to include that
the litigation Magnox lessons learned UKGI should encourage Assets to
presentation to UKGI in late 2019. report material litigation in a
UKGI Legal re-ran Magnc transparent and regular manner.
lessons learnt with the; « The HMT MPM Framework
and some reflections on up Document templates have been
findings in December 2022. updated to include UKGI Legal
e This more specific lesson will be template language to facilitate
built into the Future Shareholder enhanced reporting on material
NED Session and a separate all- litigation as well as information
staff training when appropriate. sharing arrangements.
e Guidance Note on how to manage
material and strategic litigation
was published in 2020 and
updated in August 2023.
Asset’s legal e As above. e POPs updated to include that
capability UKGI should have a constructive
relationship with the Asset General
Counsel. Also, that UKGI may
encourage an Asset Board to
make further appointments where
legal capacity is identified as an
additional or specialist skill
required.
Litigation e As above. e As above.
Strategy and
Mitigation of
Legal Risk
The e Asabove. e As above.
Importance of
Multiple Legal
Opinions
Challenging an I * As above. e As above.
Asset on its
Choice of
Legal Adviser