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Governor the

HQN'S MAGAZINE FOR BOARDS, EXECUTIVES AND LEADERS

JUNE 2014

THE GOVERNMENT’S GONE ALL

MACHO Will they bash the crocodiles or drain the swamp in housing? Here’s our guide to staying alive Trouble at the Co-op

Steve Stride

Gas safety

The housing battlegrounds


HQN’S maGaziNE for boardS, ExECUTivES aNd lEadErS

MAKE IT JUST SO There must be an election due. Have you noticed all the macho talk coming out of the mouths of mPs? They can’t make up their minds whether to drain the swamps or bash the crocodiles. it all sounds like something out of rudyard Kipling’s Just So stories. i think mr Gove will still let us read that. You wouldn’t want to meet them when they are in this sort of mood. but that is what the HCa will have to do in July.

The Housing Quality Network Annual Conference 2014

How will the HCa get on? They will have to prove they are on top of two issues. The mPs don’t want any more associations to collapse and they want to be sure that we are delivering vfm. How did we get into this situation? once upon a time Cosmo the happy croc frolicked merrily with the kids around Chester zoo. Then it all went wrong. He slipped his leash and ran off to make mischief. before you knew where you were he’d spent all the zoo’s admission money. Thank goodness the brave HCa were there to bash him over the head and put an end to his antics. but they cannot be on hand to sort out every rampaging crocodile; that’s why the HCa wants you to drain the swamp. How do you do this?

Serious detriment: act, organise, avoid

The essential conference for all associations, ALMOs and councils

Tuesday 1 July 2014 The regulator is getting tough over health and safety. Homes, neighbourhoods and services are all in the spotlight. Every landlord needs to get the message: make sure your tenants are safe from serious harm, or face action. Three have fallen foul of the rules already this year. are you confident you will not be next? our annual conference is the prime opportunity to understand serious detriment – from the enforcers. The HCa will explain why and how it is acting to protect tenants. The ombudsman and other regulatory bodies are also making sure services are up to scratch. find out about their sanctions and how to avoid them. HQN is working directly with landlords that have suffered penalties. Hear from sector experts and the experienced practitioners who are putting things right and keeping their own organisations on track.

LONDON the consequences of not dealing with service delivery failures or problems in local communities. This event is your opportunity to get to the heart of what concerns regulators right across the sector. You’ll help ensure your organisation knows how to avoid a serious detriment shock.

Brian Cronin, Chief Executive, Your Housing Group, explains how his organisation grasped the nettle and dealt with their regulatory problems head on. Keith Mack, aSb Performance and information manager, leeds Community Safety Partnership on the consequences of not dealing with serious anti-social behaviour breaches and how responding to ‘community triggers’ will help.

Our line-up of speakers Helena Taylor-Knox, associate, Chaired by Alistair McIntosh, Chief Strategic Excellence Network, looks at Executive of HQN, our full and how to avoid service failure in extra care varied programme includes: services. Bronwen Rapley, deputy director, Dean Underwood, barrister, Hardwicke Homes and Communities agency, on Chambers, explains the legal why the regulator is taking a tough implications of getting it wrong. stance and pulling no punches in its regulatory judgements. Who should attend? Dr Mike Biles, ombudsman, outlines the Housing ombudsman’s robust approach to dealing with serious complaints.

The varied programme will help ensure that you are equipped to deal with potential problems early and spot any systematic failures. We will look at gas and electrical safety, and

book now – http://hqnetwork.co.uk/training/public

Vicki Cutler, lead associate, SafETYnet, details which serious health and safety issues are of concern to the regulator and how to avoid endangering life and damaging your reputation.

Delegate fees This event is free to full Housing Quality Network members. Contact us if you are unsure of your membership level. Non-members delegate fee £275 +vaT. This includes refreshments, lunch and a detailed information pack. Please inform us in advance of any special dietary requirements. http://hqnetwork.co.uk/training/public

Timings registration Start finish

10.00am 10.30am 4.00pm

Everyone working in: • Governance and compliance • Housing management and service delivery • Housing policy and strategy • Neighbourhoods and estates • Customer care • Extra care services • Performance improvement.

The HCa wants boards to practise dealing with every sort of risk under the sun and imagine that they hit you at exactly the same time. They want you to work out what would happen if house prices fell, interest rates went up, people stopped paying their rent and the head of finance ran off with the last of your loot. if it can go wrong, you’d better be ready for it. You have to put yourself in the shoes of the scriptwriters for the soaps and think of everything. So associations in manchester must plan for the aftermath of a tram crash while their friends in Yorkshire should look into the skies for a plane falling into Emmerdale. We are working with lots of boards that are looking at how they would handle a flock of crises. it is a good idea for the HCa to encourage associations to stress-test against what they call ‘multi-variate’ risks. You never know, it could just make a board stop and ponder before it takes a silly decision. So i think the HCa can tell the mPs that they are working hard to stop associations going under. but what can they say on vfm? This time around the HCa has given very clear guidance. if an association follows this then they will meet the vfm standard. Will this keep the mPs happy? i’m not so sure.

COnTenTs 3

Make it just so Comment by HQN Chief Executive alistair mcintosh

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Here for you – for life? The trials and tribulations of the Co-op

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Surfing ahead Can you cope with the new wave of innovation in the housing sector?

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Radical thinking The Governor meets the new president of the CiH, Steve Stride

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Buzz words The regulator is changing its framework for overseeing housing

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Better safe than sorry make sure you don’t fall foul of the regulator on gas safety

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The housing battlegrounds Where will the toughest battles for election 2015 be fought?

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Welfare reform it’s the issue that just won’t go away… From the press our regular round-up from the world press’s view of governance

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You, you and you …for local people Out of touch? Boarding up Impact assessment

i met the folk that run one of the government’s bad banks. They own around 2,000 homes and wanted someone to manage these for them. at first they asked the housing associations to do this. but the fees were off the scale so the bank went with cheaper options. What sort of message does that send around the corridors of power? don’t forget the Cbi is still saying that you could save hundreds of millions of pounds by tendering out housing management.

Who are we? fast, practical guidance on everything to do with housing. HQN provides high-quality advice, tailored support and training to housing associations, councils, almos and other housing providers. find out more about us and our network membership by visiting www.hqnetwork.co.uk or call us on 0845 4747 004.

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as with all our events, our guarantee is that if a delegate attends this event and for any reason does not find it worthwhile, we will refund their delegate fee in full. To take advantage of this guarantee, the delegate fee must be paid in full prior to the date of the event.

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This year’s vfm statement will present a much clearer picture of where we are, but is it a better picture? once the government knows more about what we cost and what we do, they could start asking some awkward questions. They are in the mood for a battle and we must be ready for it. if the HCa doesn’t put the mPs’ minds to rest it could be a rough year. it will be time to bash a few more crocodiles. don’t let yourself be one of them.

Alistair McIntosh Chief Executive, HQN

All articles in The Governor were written by Kate Murray unless otherwise stated. Designed by Paul Miller

Prontaprint Scarborough

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Turnstone Media & PR (www.turnstonemedia.co.uk)

0845 4747 006 hqn@hqnetwork.co.uk the Governor JUNE 2014

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HQN’S maGaziNE for boardS, ExECUTivES aNd lEadErS

HQN’S maGaziNE for boardS, ExECUTivES aNd lEadErS

HeRe foR you –

fOr life? Professionalising your board while retaining your values is a key challenge. What happened at the good old Co-op holds some important pointers for housing

WHaT mYNErS Said. . . The board members were supposed to be discussing an advertising campaign to reposition their customers’ perception of their business. but one person in the boardroom had other important matters on their mind. Never mind the key success factors in a rebranding: would the price of a loaf of bread be the same in all shops?

having to think long and hard about how they hold on to their ethos as they strive to meet the challenges of a tough financial environment. Creating governance structures that are fit for the future and bringing in the right skills for effective oversight have been and will continue to be imperative for success.

it’s an example, according to businessman and exTreasury minister lord myners, of the governance failings at the Co-operative Group, where a ‘manifestly dysfunctional’ group board proved itself unable to oversee the organisation. many board members relied on personal and parochial anecdotes in their discussions of weighty commercial matters, failed to understand the business properly – and then blamed managers when things went wrong.

and while housing providers may feel they’re making a better first of it than the damning events at the Co-op as recounted by myners, there are some issues that will strike a chord with anyone who’s sat in a board meeting. do all your board members have the expertise to keep up with debate? are you assuming training courses will patch over the gaps in skills? is the relationship between board members and executives always a supportive one?

The Co-op, of course, faced a crisis far beyond the scale of anything likely to hit a housing provider. as myners himself puts it in his report into governance at the group, the near collapse of its banking subsidiary had brought the entire organisation to the brink of failure. The group announced a loss of £2.5bn for 2013. but although the scale of the problems the Co-op faced is eyewatering, what went wrong has real relevance for the housing sector. The Co-op is a values-driven business – a movement, rather than a business, in many people’s minds. Housing providers too pride themselves on their deepseated social purpose. and just like the Co-op, they are

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as myners makes clear, it’s possible to bring in strong commercial expertise while still holding to your values. as the pressures on the housing sector continue, will providers manage the balancing act? “The Co-op didn’t have a board, it had a House of Commons. if you got the votes you were in,” says HQN chief executive alistair mcintosh. “but it’s not enough to be popular, you need to know what you are doing. You get echoes of this in housing. The boards that get into trouble often look good on paper. They tick most of the boxes. and then real life comes in to spoil the party. How do you prevent this happening? You do need to get some people onto your board that know their onions, and you need to pay heed to them.”

ON GOVERNANCE FAILURE: The overwhelming majority of [Co-op group] board members have no fundamental commercial competence. There has been a recurrent tendency in boardroom debate to pursue social and ethical agendas without regard to relevant business context and realities.

There is also a history of decisions being taken reluctantly (or not at all) and then, once taken, being reversed or ignored. Some board members describe how a number of strategic decisions were only made with their ‘backs against the wall’.

Lay directors’ lack of understanding, combined with their inability to challenge the executives, means that Group board decision-making can be slow, cumbersome and of poor quality. These directors are not confident making assumptions and using their judgement to take decisions with less than complete data. This can be a severe handicap in fast moving commercial situations where board decisiveness is paramount.

Against this backdrop, it is not difficult to understand how the board pushed ahead with ill-considered acquisitions. They were either unable or unprepared to challenge the dominant view that the steps they were taking were the right ones. With each step the directors destroyed more value, took on more debt, increased financial risk and tarnished the Group’s reputation.

ON EFFECTIVENESS: The hallmark of an effective board is one that, armed with the best available information, and equipped with a wealth of individual skills and experience, is willing to make judgements based on less than complete knowledge. The key task of the board is not, as believed by some on the Group Board and in the wider Co-operative movement, to ‘control’ management. Rather, a good board plays a multiplicity of leadership roles – some highly visible but others quite subtle – from setting strategic direction to overseeing risk management to providing challenge, guidance and support to management.

For chief executives, one of the most valuable – and valued – roles that a board can play is to provide counsel and mentorship. Responsibility for leading a large organisation is, in fact, a lonely job and chief executives often have few people to turn to for candid and thoughtful advice. This suggests not only that the board must possess the experience, perspective and wisdom that would be useful to the chief executive but that the relationship between them needs to be underpinned by trust and mutual respect. A well-functioning group of non-executive directors will strike an effective balance in its interaction with management: there will be tough questioning and sometimes relentless probing to get to the bottom of an issue in a constructive way; but there will also be wise counsel and support. SoUrCE: mYNErS iNdEPENdENT GovErNaNCE rEviEW

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HQN’S maGaziNE for boardS, ExECUTivES aNd lEadErS

SuRfing

AHeAD There’s a new wave of innovation in the housing sector. Will you sink or swim? The housing world has many strengths, but a reputation for dynamism and innovation hasn’t always been one of them. it’s unfair, perhaps, given how well housing providers have responded to the varying challenges thrown at them over the years. Nonetheless, the view of housing as an essentially conservative sector, comfortable with its long-held values but unwilling to shake things up too much, has stuck. Yet now the mood is different. There’s a sense that change is in the air. New networks are being formed and a culture of collaboration is starting to take root. much of this can be seen on social media, where a host of tech-savvy – and less tech-savvy – housing types are sharing ideas and providing mutual support. it’s also in evidence in the approach of a number of housing providers to developing new products and services and fresh ways of working. according to matt leach, chief executive of the charity HaCT, there’s an exciting new atmosphere across the sector: “if you look at social media as opposed to traditional channels you’ll find a huge and growing group of practitioners who are taking very different approaches to thinking about problems. People are constantly sharing ideas and innovative thinking and that’s creating a new culture in the sector which is exciting and healthy.” Under mr leach’s leadership HaCT has reinvented itself, with a mission to share new ways of helping housing providers to deliver more effectively. its work now includes developing products to use data to help with decisionmaking, assess social value and create new community finance models for social tenants.

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and mr leach is also the co-founder of the House Party ‘un-conference’ – a self-styled ‘fun-filled, disruptive, participant-led event’ in manchester this month which exemplifies the new spirit of sharing to innovate in the sector. “This is about sharing ideas and enthusiasm, engaging, having conversations, building networks rather than the more formal things around reading reports, and having formal working groups and structures,” he says. So is this a ‘them and us’ situation, with the fuddy-duddy traditionalists on one side and the young twitterati on the other? Not so, insists mr leach. “i think housing is a bit less conservative than some people accuse it of being,” he says. “at HaCT our board includes some really big hitters from a bunch of the biggest providers. They have given us a brief to be a bit edgy, to find new stuff and innovative stuff and bring it into the sector, but they are not directive about what it is.” “i don’t think there’s a sense of an establishment and an anti-establishment – there are strands running between both,” he adds. “There are some people running organisations who are quite well engaged with this.” What is new, though, is a breaking down of some of the traditional hierarchies: networks that don’t demand a certain level of seniority before you can join in, and a willingness to take a lead. as mr leach puts it: “influence is increasingly not being driven by the size of an organisation. it’s more driven by the extent to which ideas are carried across networks. if you want to make difference, you need to be part of those conversations.” So what’s driving this search for new ideas? in part it’s the ease with which new technology and social media are making new connections possible. in part too it’s about the challenging environment housing providers are now working in. in other words, handling multiple risks in your

business doesn’t have to mean hunkering down and doing what you’ve always done. “in an environment where there’s a high level of risk and a need to be more cautious in terms of the business plan, people may be making more measured decisions about what they build but doesn’t mean there’s less innovation about the way they build,” says mr leach. “and when it comes to services, there’s a pressure to deliver more for less and a sense that you can’t bank on the government being as supportive, or indeed supportive at all, that’s encouraging people to think quite radically about what they do next.” one of those is bromford Housing Group, which takes its belief in the power of new ideas so seriously it’s launched an ‘innovation lab’. That might sound like a concept that’s more suited to university whizzkids and computer geeks than housing professionals, but according to bromford innovation coach Paul Taylor, it is a great way of quickly finding out which ideas will work – and which won’t. “There’s been a growing feeling that the way of developing services and products that has served us pretty well for the past number of years is no longer fit for the future,” he says. “it used to be that, for whatever reason, whether it was competition or something else, people wouldn’t unveil something until it was perfect and had been through the corporate machinery. Now what’s happened is that because of social media people are much more used to talking about things they are working on.” The lab might be looking at 30 to 40 new ideas at any one time – anything from a new health initiative in the community to a recruitment channel. and 75% of them are not expected to make it through the process, but that means that the 25% that do should be really good, says mr Taylor. That sort of approach might make some public sector

organisations nervous, through a fear of negative publicity for spending money on something that doesn’t work or for pulling the plug on an idea that’s somehow become too big to fail. but mr Taylor believes housing associations have the advantage of being able to be a bit brave if the pay-off is worth it. So will this appetite for innovation continue? it certainly looks like what began on a small scale is starting to gather momentum. “There’s been a real change in the last 18 months or so and there are now more and more organisations going this way” says mr Taylor. “The default position should be: if we started completely again, would we do it this way? if we would, fine – we don’t want innovation for innovation’s sake.” and perhaps as some of the young innovators rise up their organisations, we will see an even bigger shift. “There’s new communication that’s developing around the younger generation and that points towards a different culture that will emerge as that generation matures and starts to take on senior roles,” says mr leach. “With this different world of innovation emerging there’s a bit of challenge for organisations about what constitutes a network and how they engage with their stakeholders. Traditional ways like newsletters and more formal engagement and meetings may not be the way in future.”

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HQN’S maGaziNE for boardS, ExECUTivES aNd lEadErS

HQN’S maGaziNE for boardS, ExECUTivES aNd lEadErS

We need to be bolder and more radical, according to the man tasked with speaking out for housing professionals in the run-up to the election

Radical thinking Walking around Poplar in east london with Poplar HARCA chief executive Steve Stride is a bit like stepping out with a celebrity. He is greeted on virtually every street corner by a resident, community worker or local politician: a testament to the presence his organisation has in the area, and his own drive to see the area transformed. Since it was set up back in 1998, the housing association has refurbished thousands of former council homes and set about regenerating the whole area through creating new mixed tenure neighbourhoods, with good community facilities and transport links. For Mr Stride, Poplar Harca’s mission is about far more than homes. He

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but if the housing sector is to win support for this transformation, it might well have to change the way it engages with the rest of the world, he suggests. “Us being slightly obsessed about social housing doesn’t do us any favours,” he says. “Politicians and the public at large have an issue with social housing. We know that’s wrong but we can’t just play into their hands. We need to be positive about who we are. We keep getting hit by media things like Benefits Street and How to Get a Council House. We are constantly on the back foot. We have to say, actually, we are a great sector and we do a lot of great things.” in the run-up to next year’s general election and beyond, mr Stride wants to see housing be positive and bold to engage with politicians and the public. Just calling for more money for social housing or for the bedroom tax to be scrapped, for example, will not cut it with an audience that has so many negative perceptions. “i agree with those things – but if that’s the only thing we’ve got to say we are going to stay marginalised,” he says. “We have to accept the way we are perceived and that there are issues there which need to be addressed. We need to speak in different way, bring positive ideas forward and come up with more radical options.” So what are those ideas the sector needs to be offering up? mr Stride says there are no off-the-shelf solutions. regeneration in his patch, where the second most deprived ward in london sits a stone’s throw from Canary Wharf and its stratospheric land values, is very different from other parts of the country. Nonetheless, there are some constants, he says, in making regeneration work for communities, chiefly easy access to employment opportunities and good transport links.

points to the Docklands Light Railway station the organisation fought to get built and the new crossing across the busy A12 as just as crucial as better homes in improving life chances in the area.

“With market renting, people always talk about how it’s got to be near jobs and transport. Why the hell do people think market renting has got to be near transport and jobs and social housing doesn’t?” he asks.

Now his philosophy that housing organisations can and should be a positive force across their communities – a community anchor as he calls it – is getting a wider airing in his year as president of the Chartered Institute of Housing.

With that in mind, he says, the housing sector should be bold enough to ask itself whether investment should be channelled into the areas where those economic opportunities and transport infrastructure exist. “if you go to the Welsh valleys, the further up you go the more beautiful it gets and the poorer it gets. Why not build the new social housing for the younger generation in Swansea and Cardiff and use the land up in the valleys for owneroccupiers, for people with cars? We need to start those discussions and think outside the box.”

“We are about intervention – we can intervene in the housing crisis and can bring solutions but it’s a transformative approach,” he says. “We are going to change areas – we can offer complete transformation.”

“We keeP geTTing HiT by MeDiA THingS like BENEFITS STREET AnD HOW TO GET A COUNCIL HOUSE. We ARe ConSTAnTly on THe bACk fooT” Steve Stride Chief executive, Poplar HARCA He also points to an area like Southwark as an example where housing organisations have been bold enough to change, because of the positive impact it will have. “Southwark is taking big lumps of social housing like the aylesbury estate and it is prepared to let them go because that’s going to transform the area. it has bitten the bullet,” he says. “Notting Hill Housing Trust [which is to regenerate the aylesbury] will become the key community anchor there. Housing organisations can be the reference point for all state sector organisations. Where some have had to withdraw because of service cuts, we are still there.” in Poplar, mr Stride is determined that residents should have access to the highest quality housing possible and to the best facilities, such as the new Spotlight centre, which is setting out to be ‘the leading creative youth destination in london’. “Part of our job is to get people to believe in the area and themselves,” he says. “They can see we are spending millions and can say that the buildings are as good as Canary Wharf.” He adds: “We have still got big issues but at the same time we know people’s lives are being changed for the better and that we are making a difference.” is that a vision of change he can see appealing to politicians fighting for votes? He is optimistic that if the sector makes a good case for change, for investing in housing infrastructure to bring about positive outcomes across the board, then it can attract widespread support. “i have spoken to right wing Tories and asked them if have a difficult area in their constituency, and they can always name the difficult area. and if you say to them would you like to see it transformed, they say yes,” he says. “if you take the whole intervention, transformation and regeneration agenda we have so much to offer.”

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HQN’S MAGAZINE FOR BOARDS, EXECUTIVES AND LEADERS

HQN’S MAGAZINE FOR BOARDS, EXECUTIVES AND LEADERS

BUZZ

WORDS The way housing is regulated needs to change. And it’s not just the MPs on the DCLG select committee which gave the regulator a savaging last year who think so. The Homes and Communities Agency itself says the operating environment is changing profoundly – and it needs to keep pace. Its consultation on a revised regulatory framework, unveiled last month, places new emphasis on managing risks, having the right skills – and demonstrating compliance: providers will have to certify annually that they meet the standards. And there will also be a new code of practice to expand on the governance and viability standard. When the select committee criticised the HCA, a lack of transparency was a key concern. “As it stands, if a housing association was in serious financial difficulty, nobody would have a clue,” committee chair Clive Betts said at the time, adding: “It is unfair to expect tenants, taxpayers and lenders to understand and decipher the regulator’s coded messages.” So what does the updated framework mean for housing? And is there less code and more clarity? Risks Managing risk is central to the regulator’s approach. It claims more focused risk management will help protect social housing assets, with more specific regulatory requirements helping providers get to grips with the risks they face. “Commercial activities, new and more complex financing arrangements, and new business structures require new skills. Commercial activities mean

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The regulator is changing its framework for overseeing housing. We take a look at the new buzzwords

commercial risks, and registered providers need to ensure that they have the skills to manage these different risks,” the consultation says. The new framework will increase the focus on risk and includes having a clear record of assets and liabilities “to bring the whole sector up to the required standard”. …and multi-variate risks This won’t be code for those familiar with statistical analysis. The regulator is concerned that providers don’t just do the minimum. In stress-testing their plans, they will need to use a range of different scenarios. “The regulator expects that registered providers’ approaches will go beyond simple sensitivity testing and include multi-variate analysis that tests against potential serious downside economic and business risks,” the new code says. “Registered providers should establish the conditions in which the entity will or could fail, even if planned mitigations and controls are successfully invoked.” Stress-testing Stress-testing is already familiar – but the approach to it may need to develop. As the consultation puts it: “As part of their risk management approach, registered providers are required to stress-test their businesses. This should involve testing what would happen to the business under a range of different scenarios and if multiple risks were to crystallise. Registered providers should have a clear understanding of what would cause their business significant financial distress and plan mitigating strategies to deal with any exposures.”

So what will stress-testing need to look like under the new framework? The two scenarios laid out in the new code of practice – the first centred on a developing association with shared ownerships and outright sale schemes, the second on an organisation with a significant presence in supported housing but little new development – are familiar enough but give more detail on the sort of questions the regulator thinks boards need to be asking. Boards will be expected to develop their own ‘plausible’ scenarios. Skills Again, skilling up boards is hardly a new concept for housing providers. But the consultation gives a clear steer on just how central the regulator sees this issue being to the future health of the sector. “As the challenges of operating the business changes, registered providers need to make sure that their boards and executive teams are capable of operating in the changed environment,” the consultation says. The new code gives more details: providers should have a skills strategy in place for their business and should identify and address any skills gaps. They should also consider whether their board is independent enough and has independent board members with ‘the necessary independence of character and judgement’, ‘free of the kind of connections that may lead to conflicts and interest in order’. Reporting While organisations are already expected to provide

returns to the regulator, the new framework goes further, requiring providers to ‘communicate with the regulator in a timely and accurate manner’. They’ll be expected to provide good quality information when it’s requested without the regulator having to chase it and to certify their compliance with the governance and financial viability standard in their annual accounts. All of which must be designed to avoid any more stable doors having to be locked long after the horse has bolted, as the select committee described the downgrading of Cosmopolitan Housing Group. Reasonable “A reasonable response to the significant changes in the social housing sector.” That’s how the HCA’s regulation committee chair Julian Ashby has described the proposals. But doesn’t introducing additional regulatory requirements signal a shift away from the co-regulatory approach we’ve come to know? Not so, claims the HCA. It may be introducing new requirements – but they’re reasonable ones for any well-run provider, it asserts. The code of guidance A code of guidance, but not a Housing Corporationstyle best practice guidance note. A code, but not a set of rules. To ensure providers decipher this one, the HCA explains that the code is there to amplify the regulatory standard and to give examples of how regulatory requirements might be met. Again it stresses that the co-regulatory approach will continue.

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HQN’S maGaziNE for boardS, ExECUTivES aNd lEadErS

beTTeR sAfe THAn sOrrY The first three cases to breach the regulator’s serious detriment threshold all revolved around gas safety. What do boards need to do to avoid joining them?

a few months on, and there have been another couple of serious detriment cases – at Your Housing Group and Guinness – and work by many social landlords to ensure they’re not the next to fall foul of the regulator. but, according to health and safety specialists, not all are yet fully up to speed on what they need to do to ensure their reputations, and more importantly their tenants, are not put at risk. Kevin bentley, lead associate for HQN’s asset management network TEamnet, says the wellpublicised cases may have galvanised some landlords into action. but he fears others may still not be taking it as seriously as they might. “i suspect that from a wider performance point of view and from a wider governance point of view, overall performance is drifting towards mediocrity,” he says. “in the days of inspection, there was always the risk of a dawn raid by the audit Commission. many landlords hated inspection, but it did drive standards up.” many landlords are now hitting high targets for gas safety compliance. but others are still in the 95% to 96% compliant area – a rate which, although it might have been regarded as acceptable a decade ago, is now just not good enough. So why aren’t all providers getting it right?

Are you properly informed about gas servicing and maintenance performance on a regular basis?

Does your organisation have an up-to-date data/asset register, so you know, for example, exactly how many communal areas there are and how many properties with a gas supply there are?

Has a fire risk assessment been undertaken for every communal area, with an action plan developed to rectify fire safety recommendations identified as part of the risk assessment process?

Are passenger lifts and hoists subject to the statutory thorough examinations, in line with the regulations? Is this monitored and action taken where such examinations have not been undertaken promptly by the insurance company?

Is compliance with the regulations monitored and managed, with robust action being taken where it is below the required standards?

Is there a programme in place to ensure that fixed electrical testing is undertaken for properties on a regular basis and in line with guidance?

What auditing arrangements are in place to ensure that ‘gaps’ are identified and addressed to maintain compliance? How often is this undertaken?

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Was this just a case of the Homes and Communities agency showing its teeth in the wake of the grilling given to HCa regulatory chair Julian ashby by mPs? or should it serve as a wake-up call for housing providers? and if so, would they react in time to prevent the regulator stepping in – or worse, a real disaster for their tenants?

for some smaller organisations, it WoulD THey ReACT might be that they’re not geared in TiMe To PRevenT up, for example because they THe RegulAToR don’t have the technology to track STePPing in – oR ‘at risk’ properties consistently enough. for the bigger providers, WoRSe, A ReAl the issue just may not be enough DiSASTeR foR of a priority at board level, THeiR TenAnTS? especially compared with high-powered discussions on strategy or funding. as mr bentley puts it: “There is a risk that some organisations could take their eye off the ball at a governance level.” but even if organisations seem to be compliant on gas safety, there are signs that their processes might not be all they should be. vicki Cutler, lead associate for HQN’s health and safety network SafETYnet, says she is aware of independent audits of gas safety which have shown that as many as half of all checks did not meet the expected standards. “What price getting a certificate that says yes you are compliant if there are still problems?” she says. “if something went wrong that might be a family with three small children in there.” and there are health and safety issues wider than just gas checks. ms Cutler says all providers should ensure they have good systems in place in areas such as fire safety and electrical testing, where the framework is not as clear-cut as on gas safety. organisations need to avoid just doing what they’ve always done, which, warns ms Cutler, ‘might well be nothing’. So what should boards be doing now? making sure you have the right information and can identify any gaps in your system and put in place support, such as extra training, audits or going through an accreditation process are all important. as ms Cutler puts it: “The organisations i have seen have recognised they might have a problem. The ones that are the worry are the ones that are not asking for analysis or support because they just don’t know.”

aNd oN GaS SafETY iN ParTiCUlar…

THE QUESTioNS from HQN’S lEad aSSoCiaTES THaT boardS SHoUld bE aSKiNG

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When Gallions Housing Association was put on the regulator’s watchlist last autumn after breaching the ‘serious detriment’ threshold on gas safety, it sparked much debate across the housing sector.

Is information about properties without a current and valid gas safety certificate reported regularly? Are policies and procedures straightforward, with clear lines of responsibility and accountability, and do they cover how to gain access in the event of non-access? Can you track or identify, on an ongoing basis, properties at risk of passing the anniversary date?

Do you offer flexible arrangements for servicing visits including evenings and weekends? Do you have good historic knowledge about properties where you are likely to experience difficulties in carrying out servicing?

Do you have systems to incorporate newly developed or acquired properties into the gas database? Do you have systems to incorporate properties newly accessing the gas mains system, for example by fuel switching, onto the gas database?

Do you have special arrangements for those difficult to access properties?

Do you keep records of properties with commercial gas boilers, such as group homes, sheltered housing or similar larger housing schemes or keep records of servicing visits to these types of properties?

Does your gas database link with other corporate systems to give your staff customer contact information on at risk properties?

Do you actively promote gas safety including information on your website and at the start of the tenancy, and publish performance information?

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HQN’S maGaziNE for boardS, ExECUTivES aNd lEadErS

HQN’S maGaziNE for boardS, ExECUTivES aNd lEadErS

THe HouSing

Will housing at last be a decisive issue in a general election campaign? and where will the toughest battles for election 2015 be fought?

BATTleg rOunDs If you’ve been around in housing for a few years, you’ll have heard the refrain, come election time, that housing needs to be top of politicians’ agendas. but you’d need to have been around a good deal longer than a few years to have seen housing really register during a general election campaign. recent elections have been a far cry from 1951, when the Conservatives pledged that they would ‘give housing a priority second only to national defence’, or 1979, when margaret Thatcher famously set out her plans for a property-owning democracy.

”All THRee PARTieS SHoulD ConSiDeR THe RiSk of negleCTing PRivATe RenTeRS WHen THey HAve So MuCH To loSe”

The reality since then is that housing hasn’t figured highly when voters are choosing where to place their cross. No surprise, then, that politicians haven’t chosen to make it a key issue, either in their manifestos or on the doorstep.

but that could all be changing. The house price bubble, the private rented sector and the shortage of new homes have made housing a more significant concern for the electorate than it’s been for years. according to a recent ipsos mori poll, 36% of voters in london and 21% per cent in the south cite housing as one of the the most important issues facing britain today. That makes housing the top cited concern in the capital. and while the figure across the country is lower, at 14%, that’s still the highest it’s been for six years. leading politicians are trying to stake out their ground. it’s significant that labour’s local election launch this

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year saw Ed miliband unveil his plans to rein in the private rented sector. rents and house prices, he said, were one of the biggest causes of the cost-of-living crisis. and on the other side, london mayor boris Johnson is reported to have told a private meeting of Tory mPs that the party needed to ‘own housing’ as an electoral issue just like Harold macmillan and margaret Thatcher had once done. Even UKiP, known among most voters for its views on Europe and immigration and little else, looks to be making a claim for housing, promising a ‘gentle revolution’ which will see britain restore its ‘rightful place as world leader in housing and environmental innovation’. So if next year’s election sees housing issues start to figure, where can we expect the parties to turn their fire? a whole raft of issues, from the bedroom tax to homelessness to Help to buy, will most likely figure. but these are the areas where most is at stake. The private rented sector This may well turn out to be one of the big ones for housing. Shelter is among those who have said all parties have been slow to recognise the importance of private renters’ votes. but according to the pressure group Generation rent, it’s this group which could decide the whole outcome of next year’s election. its polling suggests more than a third of private renters tend to change their vote at general elections and it has identified 86 ‘private renter marginals’ right across England where those potential swing voters outnumber the votes by which the sitting mP won back in 2010.

“These seats could easily change hands if private renters unite in support of a particular party, and the number of seats at stake could change the balance of power at Westminster,” Generation rent said. “all three parties should consider the risk of neglecting private renters when they have so much to lose.” So far labour has been the most vocal in its pursuit of the private renter vote, while Conservative voices so far, although ruling out the measures labour has proposed, do suggest we may hear more from them on encouraging private landlords. New supply While the arguments over the numbers – of new starts, completions, backlogs and targets – will continue to rage, there seems to be some degree of consensus in the run-up to the next election about the need to build more to ease the housing shortage. That leaves the big debate to be had about where and how. Sir michael lyons’ review for labour on housing supply will inform one set of proposals. What will the others have to offer? Social housing if housing has struggled to be recognised as an election issue in the last few campaigns, how much more so

for social housing? There’s been a sense that not only is social housing not a vote-winner, but that the demographics of a shrinking and marginalised sector mean it’s not even worth addressing the issue. Yet here too we may be seeing a shift – and one of the most significant local election results give a pointer as to why. Housing, and specifically affordable housing, were at the heart of the campaign which saw the Conservatives lose control of one of their flagship councils, Hammersmith and fulham. The authority had been widely seen as a pioneer on housing, thanks largely to former leader Stephen Greenhalgh’s influential ideas on social housing reform including breaking up the ‘concentrations of welfare housing in our inner cities’. Putting these sorts of ideas into practice, through regeneration schemes widely criticised for not enough affordable and particularly social housing, proved to be a significant factor in the administration’s defeat. The new Conservative leader of the opposition may claim labour is ‘obsessed’ with social housing. but it seems that in areas of acute housing pressure, the lack of truly affordable housing can prove a vote-winner beyond traditional allegiances. We’ve already seen labour talk of a new generation of council housing. Expect that debate to hot up over the next year. Social housing might still be predominantly a ‘housing hotspot’ issue. but in a tight electoral race, that means it could have a crucial role to play.

HoW WE voTEd iN 2010, bY TENUrE Owned: Conservative 45%, Labour 24%, Lib Dem 21% Mortgage: Conservative 36%, Labour 29%, Lib Dem 26%

Source: ipsos mori

Social tenant: Conservative 24%, Labour 47%, Lib Dem 11% Private renter: Conservative 35%, Labour 29%, Lib Dem 27% the Governor JUNE 2014

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HQN’S maGaziNE for boardS, ExECUTivES aNd lEadErS

HQN’S maGaziNE for boardS, ExECUTivES aNd lEadErS

WelfAre RefoRM

On average only 4.6% of tenants affected by the bedroom tax have been able to move to alternative social housing. Some 13% have registered on the transfer list but not yet moved, while the majority have chosen to try to stay on – but many ALMOs and councils say many of them are getting into arrears. And although the numbers affected are falling as people move, the reduction is worryingly slow. As the research puts it: “At this rate, it would take around four years to tackle the issue but when you also factor in that this has included an initial spike of activity, the reality is that it is more likely to take much longer.” This is of course worrying stuff for providers having to deal with the arrears and their residents. The toll it’s taking on communities is also emerging strongly, most recently in another piece of research, this time by the National Housing Federation. Its polling with Ipsos Mori found that nearly a third of people affected by the bedroom tax say they have had to cut back on food and more than a quarter on heating since its introduction, while almost half

it’s the issue that just won’t go away, bringing new challenges to manage We knew it would be bad. Even before the welfare reforms began to be rolled out, the housing sector was warning of the devastating impact they would have. But, as new evidence emerges of rising arrears and increasing hardship, we’re starting to see just what bad looks like.

fRoM THe

Press A good-old fashioned constructive row can be just what a board needs. at least that’s the suggestion in an article by Stefan Stern in the Financial Times, looking at the issues facing marks and Spencer as its profits fell for the third year running. drawing on the book by manuel Hensmans, Gerry Johnson and George Yip, Strategic Transformations, he says intense, but productive, conflict can help organisations to transform themselves to meet the challenges of a

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The latest pointers come in joint research by the Association of Retained Council Housing, the National Federation of ALMOs and the Councils with ALMOs Group on the bedroom tax. Its survey of members, published this month and building on research on the early impact last year, paints a worrying picture. Arrears have been coming down after spiking following the introduction of the bedroom tax. But by the end of December, arrears for those under-occupying were 27% higher than they were before the changes.

changing environment. other lessons? “build on history but select and develop a new generation of leaders. Create structures that encourage tension and allow for dissent. develop an overarching rationale, but expect everyone to get behind decisions once they are made.” Meanwhile, another interesting perspective on boardroom working comes from lucy marcus, writing for Project Syndicate, who says there is a real danger that decisions that seem correct around the board table can ‘end up being tone-deaf in a soundproof room’. in order to avoid being completely disconnected from the outside world, she argues, board members need to use the ‘veil of ignorance’ principle – essentially thinking about the bigger impact of their decisions as if they do not yet know if they will one day directly affect them. of course that can’t mean thinking about a multitude of different

have had to borrow money to help pay their rent. So where should landlords be prioritising their response? Clearly providers were well geared up to provide support and have been working hard to help residents access Discretionary Housing Payments, money advice and unclaimed benefits. But, as a group of Merseyside housing associations stressed when they revealed their experience in their area, that cannot prevent the impact being felt. And of course some providers are now having to take arrears action, with all the negative consequences that entails. The ARCH/NFA/CWAG survey found that by the end of last December two-thirds of respondents had served a possession notice over bedroom tax arrears and 55% had started court action. Pick up a local newspaper and you’ll see examples of how this is now playing out across the country. Stressed, often particularly vulnerable tenants facing losing their homes. Social landlords which have been working hard to alleviate the impact of welfare reform are in the spotlight. No wonder managing this crisis will need to continue to be a priority.

WHaT THE SECTor HaS bEEN SaYiNG: “Housing associations have spent millions of pounds working more closely with their tenants, introducing projects to tackle fuel poverty and working with food banks to help alleviate food poverty. But these services have costs, which leaves less money for building new homes.”

“The government’s hope that people would move to smaller properties hasn’t materialised. While some have been able to downsize, this is impossible for the majority as there remains a severe shortage of smaller homes across Merseyside.”

David Orr, chief executive, national Housing federation

Annmarie flynn, director of resident services, venture Housing Association

“As responsible landlords we have been able to give good advice and offer practical help to ease the hardship for many families, but the fact remains that welfare reforms continue to hurt.” stephanie Harrison, executive director of customer services, the regenda group

perspectives all the time. but she adds: “The point is to step outside of one’s comfort zones, distance oneself from the voices around the table that sound just like one’s own, and remember that board members are responsible for the direct and indirect impact of their decisions.”

concentrated; it will not work nearly so well now that they are dispersed. in future, britain’s local councils – and indeed its neighbourhood charities and associations – will have to be trusted to do more themselves. Those that fail will need to be made more accountable.”

Britain’s next prime minister should give their first speech on social policy ‘from behind a privet hedge’, according to the Economist. in a piece recalling Tony blair’s first major speech on a housing estate (the aylesbury in Southwark), it argues that our inner cities have improved significantly since that time, while social problems have spread in suburban and rural areas and small towns. “Politicians will have to move away from the photo op and grand initiative method of improving society,” it says. “dramatically taking charge from Whitehall worked when problems were

Some two-thirds of large housing associations are now paying the living wage and many in the sector would say that’s because it’s the right thing to do. but there’s also a strong business case for the living wage, as an article in People Management magazine point out. it helps with recruitment and retention, as well as staff productivity. The magazine quotes CiPd figures showing that a fifth of organisations which had already introduced the living wage reported better employee engagement, standards of work, workforce satisfaction, productivity and corporate reputation.

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HQN’S maGaziNE for boardS, ExECUTivES aNd lEadErS

HQN’S maGaziNE for boardS, ExECUTivES aNd lEadErS

goveRnAnCe rOunD-uP

YOu, you AnD you Many housing organisations rightly pride themselves on both their commitment to their communities and to the development of their staff. but are enough of them bringing the two things together?

for smaller organisations, with a volunteering programme costing an average £381 per employee per year, compared with a £1,337 average annual cost of training a manager.

according to think tank demos, more employers should introduce in-house volunteering schemes encouraging their employees to work in the community and improve their own skills at the same time.

more than 70% of fTSE 100 companies have some kind of volunteer programme, but only 20% of medium-sized businesses and 14% of small businesses do the same.

it claims such schemes help with staff retention and are often a more cost-effective way of developing leadership skills than training programmes, especially

demos suggests employers should give their staff extra days off on top of their annual leave for voluntary work and should reward those who volunteer the most with pay rises and promotions.

...foR lOCAl PeoPle ouT of This year’s council and European elections were another reminder of widespread disillusionment among the voting public with mainstream politics. low turnout figures and a rejection, in many areas, of traditional party allegiances, seemed enough to make even the most optimistic political activist despair. What hope for local leaders when voters seem to be a sending them a hearty ‘none of the above’ message? Well perhaps they should take heart in a report published before the elections by the think tank iPPr North, which says that councillors are more trusted than any other type of politician. admittedly only 28% of the English public think they tell the truth always or most of the time – but that’s better than the paltry 14% who can say the same for politicians generally. and nearly two-thirds say they trust their local council, compared with just 36% who have trust in Parliament. There’s another key message for elected members and those who work with them at a local level. Eight in ten people felt a close attachment to their local area, higher than their attachment to England, britain and – not surprisingly – Europe. While trust in political leaders may be fragile, there’s at least potential to build on at a local level. for local authorities and their partners in a community leadership role, that can only be a good thing. www.ippr.org/news-and-media/press-releases/ trustin-local-councils-almost-twice-as-high-as-in-parliament

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TOuCH? regulation is, by its very nature, guaranteed to stir up strong emotions. But the thorny question of how much a regulator can afford to upset those it regulates without losing their confidence is thrown into sharp relief by CIH Scotland’s findings on how housing providers see the Scottish Housing Regulator. According to the findings, which form part of the institute’s 2014 survey of senior staff, three-quarters of senior council and housing association staff are worried about how the regulator is doing its job – with 17% of senior staff having ‘significant concerns’. Perceptions were that there was ‘too much negativity’, and that there was an ‘unjustified’ and ‘untrustworthy’ undertone to the guidance the regulator was putting out. “The SHR is completely out of touch with the realities of running a housing service – as no one on the staff or board has this experience,” said one respondent. “Considerable focus on governance at expense of quality of service delivery,” commented another. As David Bookbinder of CIH Scotland points out, the regulator may well consider that it’s not a bad thing to ruffle a few feathers. But as he adds, it’s worrying to see quite such widespread feelings of negativity and lack of trust.

BOArDing uP fTse 100 chief execs’ spiralling salaries have once again hit the headlines and debate is raging about the role of remuneration committees and who might sit on them. We’re familiar with similar questions being asked in the housing sector over chief executives’ pay. The eye-watering numbers seen in the private sector aren’t there in housing, but nonetheless HA salaries have been enough of an issue to have attracted ministers’ attention.

For board members, there’s been an increase over the same period from £3,000 to £4,000. They are modest increases on average. And for housing associations that pay, the rationale is clear. According to the federation, more than two-thirds felt that payments had made a positive difference to board performance.

Now the focus may shift beyond executive pay to the boardroom, after two surveys shed new light on board pay levels among associations.

But a Social Housing magazine survey of board pay shows upward pressure at the top end. Its research revealed the highest remunerated chair, at Places for People, was now receiving £65,000 a year. The chair of BPHA, who is stepping down this summer, received £50,000. Some of these sums are now much more in line with what’s paid to the chairs of big quangos.

In the first, the National Housing Federation found that associations paying their board members were now in the majority, rising from 35% in 2009 to 52% at the start of this year. According to its survey of 201 HAs, the average median pay for board chairs is now more than £10,700 a year, up from some £8,500 five years ago.

The decisions on board pay are of course a decision for the individual organisation. But as the figures involved get bigger, there’s bound to be a wider focus, just as we’re seeing in the private sector, on setting pay for both executives and non-executives and on accountability for those decisions.

iMPACTASSeSSMenT Measuring the impact of what you do has become increasingly important in housing, particularly in the context of the new value for money requirements.

• Prioritising which impacts they want to measure, because they’re unlikely to have the resources to measure all of them

There are now various approaches to tracking social value and return on spending.

• Choosing the level of evidence they will need to measure these impacts

When housing providers are thinking about this issue, it might be worth looking at what the charity sector is doing to assess impact. Charity think tank NPC has just set out a four-pronged approach which senior staff and trustees can adopt to demonstrate the value of their work. it suggests that organisations need to meet four key requirements: • Having a robust ‘theory of change’, so that they know what they want to achieve and how they might approach the challenge

• Selecting the sources and tools suitable to carry out the measurements. NPC says measuring value does not need to be complicated, but, as it stresses, organisations cannot now just get away with talking about how much good they are doing. “it’s about making some clear decisions, paying careful attention to the results, and then acting on what you’ve learnt,” it says. http://www.thinknpc.org/publications/ npcs-four-pillar-approach/

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ARE YOU READY FOR THE LATEST VERSION OF HQN’S BUSINESS SIMULATION GAME – GET READY FOR THE NEW HCA REGULATORY FRAMEWORK THE HCA WANTS YOUR BOARD TO ‘STRESS-TEST’ FOR ‘MULTI-VARIATE’ RISKS We test you against scenarios that the HCA specify PLUS MORE • Our team visits you – we agree the risks and scenarios to consider • We then run the simulation for you at an away day • Our exclusive financial model lets you see INSTANTLY the impact of your decisions on the business Look at what recent players have to say: “A well-executed exercise that really gave our boards the opportunity to consider potential future challenges and ‘stress-test’ the business plan and their decision-making abilities. A fun yet thoughtprovoking session which was professionally run and really got our board members working together. I would recommend that others take a look at what HQN have to offer in Iron Grip.”

“This is the most relevant and engaging board away day I’ve ever had – more, please!” “One of the best training days I have attended.” “Fun, participative and challenging – just what we wanted. We were engaged and our skills were used – felt like a ‘team’ in our group.” “A focused and developmental day in terms of board learning across the group – helps to develop consistent thinking across the boards.”

“Playing the game was stimulating and enjoyable, and it took little encouragement before everyone became fully absorbed. Seeing how our decisions made the figures change in the financial model has reinforced to everyone the importance of keeping a close eye on the key financials. “Being challenged by a range of risks – external economic factors, internal fraud, developer costs inflation, serious detriment – and all in one day, may thankfully be fictional, but it’s excellent preparation for dealing with the more risky environment we operate in today.”

“Highly engaging, relevant, informative, thought-provoking and entertaining.” Bob Walder, Chief Executive, Longhurst Group

Longhurst Group board members

John Jackson, chair of the board, Trent & Dove Housing

FIND OUT MORE: ANNA PATTISON ON ANNA.PATTISON@HQNETWORK.CO.UK OR 01904 557197 ROCKINGHAM HOUSE ST MAURICE’S ROAD YORK YO31 7JA TELEPHONE 0845 4747 004 FAX 0845 4747 006 INTERNET WWW.HQNETWORK.CO.UK EMAIL HQN@HQNETWORK.CO.UK HQN LIMITED REGISTERED IN ENGLAND REG NO. 3087930


HQN The Governor - June 2014