Governor the
HQN's magaziNE for boards, ExEcUtivEs aNd lEadErs
JUNE 2015
Is the DaIly MaIl
rIght? should we sell off high value homes? Post-election special
a tonic for the troops
the adventures of captain Housing
deep diving
The Housing Quality Network Annual Conference 2015 Shaping the future Wednesday 1 July 2015 the new government is in place. one thing’s for sure – the next five years won't be the same.
London
Keynote sessions Alistair McIntosh, chief Executive, HQN, looks at bigger picture for social landlords.
Post-election it looks like a case of one guv’nor, two futures. We could have… Universal credit smoothly and fairly implemented, stable rents, right to buy fully compensated, 200,000 new affordable homes a year built and homelessness finally conquered.
Matthew Bailes, Executive director of regulation, Homes and communities agency, gives a steer on the regulatory environment ahead, with the new framework and ‘deep diving’ already in place.
on the other hand, we might find ourselves in a very different future. .. Universal credit roll-out falters, rent arrears soar, interest rates climb, the financial viability of many landlords is severely tested, the Hca issues lots of downgrades, production of affordable housing stalls, and private house building continues to ignore market signals. the affordability crisis may worsen and housing need and homelessness rise remorselessly. are you ready for the very real challenges that await? our annual conference will help you to respond to whatever the future holds – fast.
book now – www.hqnetwork.co.uk/events Roger Jarman, associate, strategic Excellence Network, takes a look at the future for housing supply and what landlords can realistically do.
Who should attend? this flagship event will appeal to everyone within: • senior management teams • Executive management teams
Delegate fees conference price: £279 Housing Quality Network members: frEE places available *please check your entitlement* HQN specialist network members: £199 this includes refreshments, lunch and a detailed information pack. Please inform us in advance of any special dietary requirements.
Ken Lee, chair, ciPfa Housing Panel, on what the financial climate will bring for housing providers over the first 12 months.
• boards
Paul Dimoldenberg, leader of the opposition at Westminster council and managing director, Quatro Pr, brings commentary on how the new political landscape will impact on housing providers.
• operations
Timings
• service delivery
registration start finish
• governance
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• Policy and strategy
• Neighbourhoods and communities
10.00am 10.30am 4.00pm
• finance Elspeth Mackenzie, chief Executive, thrive Homes, looks at what landlords • resources must do to prepare for the extension • asset management of right to buy. • Performance management Emma Wilson, director of • service improvement communities, New charter, sets out
fast, practical guidance on everything to do with housing. HQN provides high-quality advice, tailored support and training to councils, almos, housing associations and other housing providers.
the short- and longer-term challenges • corporate services to managing and delivering services • legal and democratic services. for customers and communities.
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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HQN’s magaziNE for boards, ExEcUtivEs aNd lEadErs
LET’S STICK TOGETHER… is it time to buy a green mini? after all, running a housing provider is starting to feel more and more like being an estate agent. We now need to make sure that we have the right paperwork for every single home, plus there’s all that stress testing. When you sell a home you sort out the legals and a surveyor pokes around a bit. so is this what we are doing? are we getting ready to flog off housing associations? if you want to sell a home, you do everything you can to boost the price. so are the tories telling you to put on the coffee, bake some bread and boot out the smelly mutt? No. they are doing the opposite. it’s as if they have got a bodgit builder in to wreck the value. the cuts to the benefit cap and the unleashing of right to buy mark ii are not great news. Your director of finance is looking on aghast as the screen turns red. most of the big stresses we are testing for are those that the tories have dreamed up. and like a lot of homebuyers we are stuck in a chain. it seems that housing associations won’t be able to pay for any new homes until the local council sells its empty homes. No one will ever die in a council flat. don’t forget that it is the council’s jobs to register deaths. You know how it is with computer glitches. at long last Windows 8 will come into its own! Where will it end? can tenants still afford to rent your homes? do you need to look for other folk that can pay their own way? cash is king is all that we ever hear these days. does this mean that you should just sit on your cash, and do as little as possible? that’s the big risk. if you sit on the money, then as sure as eggs is eggs the tories will take it off you. they will give it to someone who does want to build. on any terms. and what is this ‘right’ to buy all about anyway? i am old enough to remember one of the reasons why the original policy came in. it was because tenants in the 1970s had more than paid for their homes through the rent. You could say that this was unfair on them. but that’s not how it is today. Now having a tenancy you can turn into a home of your own is just a lottery. and like the National lottery it is quite simply a tax on the poor. Why are we going to pay loads of money to the lucky rtb winners when most people can’t even buy a ticket? all in all this is the perfect time for the ciH conference. Now we know the size of the problem, we need to work out how to solve it. there will be a way through. the tories think they have pulled a fast one by setting up a fight between councils and associations. don’t fall for it. let’s stick together, the two us over a glass of champagne (banned due to austerity). Alistair McIntosh chief Executive, HQN
CONteNts 3
Let’s stick together... comment by HQN chief Executive alistair mcintosh
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The new landscape the dust has settled after the general election
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North and south What will the UK look like at the next election?
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Iron Grip: one year on around 50 housing providers have already undergone our stress test simulation
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A tonic for the troops raven’s chief exec Jonathan Higgs promises innovation
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The adventures of Captain Housing Will our hero get stressed out at conference in manchester?
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Dive in How to prepare for the Hca’s deep divers
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Care in the community making care and support work is a risky business
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Gamekeeper turned... Nick atkin, of Halton Housing trust, assesses the new regulatory landscape From the press our regular round-up from the world press’s view of governance
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Governance round-up: The simple things Generation Y Lip service Culture change
All articles in The Governor were written by Kate Murray unless otherwise stated. Designed by Paul Miller
Prontaprint Scarborough
Print management
Turnstone Media & PR (www.turnstonemedia.co.uk)
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HQN’s magaziNE for boards, ExEcUtivEs aNd lEadErs
Now that the dust has settled after the general election result, it’s time to gear up for the challenges of the next five years. If the pre-election period for housing was dominated by grand coalitions talking optimistically of hundreds of thousands of new homes for Britain, the aftermath is considerably less upbeat. Despite the positive rhetoric during the campaign that politicians of all persuasions had finally grasped the scale of the challenge, the post-election priority is not to solve the housing crisis within a generation – but to work out how to head off the immediate social and financial crises ahead. For the housing world, the issues are two-fold: not only are their residents and communities at risk from the changes in the pipeline, most notably to welfare, but their own plans to develop more homes, to continue to provide added value services, or indeed, in the worst case scenario, to do much of either could be threatened. How do they counter those risks? Will the sector’s proven resilience see providers through? And are all providers even in the same camp when it comes to the risks to them?
The Right to Buy: the only game in town? We don’t yet know how the Right to Buy extension will be rolled out: whether it will be a full-blown RTB for all housing association homes, with potential legal challenges to overcome first, or an extended version of the Right to Acquire. Whichever it is, the arguments about the impact it will have are already coming thick and fast. ‘Wrong in principle and wrong in practice’ is how Lord Kerslake described it in his maiden speech in the Lords. “It is wrong in principle because these are not the government’s assets to sell,” he said. “The plans are wrong in practice because they will not advance the government’s stated aims; indeed, I fear that they will move them backwards.” And the problems don’t just focus on the logic, or otherwise, of selling off housing association homes which will then need to be replaced at a time of acute housing shortage: there are real issues, too, with funding the discounts through the sale of council homes. As another peer, Baroness Hollis, chair of Broadland Housing Group, put it: “Will local authorities still owning
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council housing be subsidising those without any or, instead, will the stock-transfer housing associations have to sell off their own more valuable property, thus losing two of their homes to fund the discount on one of them?” Setting aside the principle – just for one second – housing associations are going to have to get involved in some shape or form. Clearly, replacing lost stock is likely to be a difficult and lengthy process, with all the associated knock-on effects on providers’ rental streams as well as the impact on addressing housing need in their communities. But if as many tenants take up the RTB as some suggest, then RTB may well, given the capacity of the construction sector, be pretty much the only development game in town. Boards will have to position themselves on how they respond. For most, that will mean a swift reappraisal of their asset management and development programmes and a gearing up to replace what’s lost. But it may be that the keenest developers will see a chance for growth in replacing not only the homes they lose, but those of others too? Benefit cap: spreading the pain The lowering of the benefit cap to £23,000 a year will affect thousands more tenants – 90,000 of them including 37,000 housing association tenants, according to National Housing Federation chief executive David Orr.
CHALLENGES IN THE SPOTLIGHT On the Right to Buy extension “This policy is not a genuine solution to our housing crisis. An extension to the Right to Buy would mean that housing associations are working to keep pace with replacements rather than building homes for the millions stuck on waiting lists. At a time when we need to be increasing the overall amount of social housing, it is like trying to fill a bathtub with the plug taken out.” National Housing Federation “I wouldn’t want to see councils in London deprived at a rapid rate of their housing stock which is one of their fundamental assets. Nor would I want to see housing associations deprived too rapidly of their homes which are fundamental to their credit worthiness and their ability to borrow and to build more homes.” Boris Johnson, Mayor of London
Many of these will be in areas previously relatively untouched by the cap. And because of the way the cap works, it’s rents – and providers’ income streams – which will take the hit. The impact, of course, will be felt in a number of areas, not least in development capacity. Efforts will need to be focused, then, both on supporting tenants and on working out how to continue to house and build to house those in need. Expect there to be little political pressure – acting Labour leader Harriet Harman has said the opposition is ‘sympathetic’ to the reduction – until the change really starts to be felt. Further welfare reform We already know the government wants to remove Housing Benefit from 18-to-21-year-olds. But as the Institute of Fiscal Studies has pointed out, there could well be further deep cuts to Housing Benefit. It points out that the biggest areas of unprotected welfare spending are tax credits (£30bn) and Housing Benefit (£26bn), followed by disability and incapacity benefits and child benefit. “Some combination of those benefits are virtually certain to be cut if £12bn of cuts by 2017-18 are to be delivered,” the IFS says. Possible cuts to Housing Benefit, it goes on, could include reducing Local Housing Allowance rates further; making all claimants pay a proportion of their rent; or withdrawing Housing Benefit from the under-25s.
On the benefit cap “A cap of £23,000 is too low for the rent currently being charged by housing providers. To a great extent, this is true for social rent as much as for affordable rent. This presents us with a difficult choice: continue to charge rent at existing levels and tolerate higher debt levels among our residents, or reduce rents and take a substantial hit on development capacity.” Moat Housing, Rent Levels and the Benefit Cap “By undermining the ability of their tenants to pay the rent, the government is kicking away another leg of housing associations’ business model... associations may be forced to cater only for those tenants unaffected by the cap, and to build fewer social and affordable rented properties in future. This can only worsen homelessness across the country.” Shelter
Housing Benefit “Housing Benefit is a lifeline, not a lifestyle, for thousands of vulnerable people and the cuts could lead to an increase in youth homelessness.” Centrepoint
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NOrth AND sOUth
With regional devolution on the agenda, the housing sector could look very different by the time the next general election comes along For George Osborne, getting the Northern Powerhouse concept taken up in Manchester was crucial, not just for the city itself but for other parts of the country. speaking in the city just after the election the chancellor said: “getting manchester through the Whitehall machinery and overcoming the political divide was difficult enough. but i always thought this: if i could work with you to achieve this new model of civic leadership and local power here in greater manchester, i could hold it up to the rest of the country as the example of what was possible.” for those in English housing who’ve long cast envious glances at the devolved powers for housing in scotland and Wales, there’s been a hope that things might change in England too. so far, much of the debate around the ‘powerhouse model’, in public spending terms at least, has been around the soon to be devolved health and social care budget, which will put around £6bn combined spending in regional hands. but manchester’s vision is ultimately to have control over all public spending, or as manchester city council’s chief exec sir Howard bernstein has put it, to have place-based budgets in place of ineffective one-size-fits-all models. and for the chancellor too, at least on the strength of his public pronouncements, housing is a key part of the economic jigsaw. so what might this devolved world look like? We all know that it’s far too simplistic to resort to the old line that the south, in housing terms, is all about sky-high housing prices and huge waiting lists and the north about regeneration and low demand. the housing landscape in different parts of the country is far more complex than that. so anything that encourages local and regional solutions to distinctly local and regional problems is likely to be well received. New housing powers are already on the agenda for city and regional devolution – so there’s all to play for.
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agenda is just a ruse for the government to devolve responsibility for difficult decisions and cuts. “most people would see it as an opportunity and we have to make a good go of it. it will continue regardless of who’s in government and here in sheffield we have quite deliberately placed ourselves in the centre of the negotiations. there are big opportunities for organisations like ours to position ourselves centre stage.” the sector looks set to organise itself in fresh ways too to reflect the new reality. some of the biggest players have already made a move, with 18 chief executives from some of the north’s largest associations coming together to make the case for the work they do – a kind of g15 grouping for the non-london-centric. there’s a logic to the move. Housing providers are well placed to take the lead at a regional level, building on their connections and making the case for integrated investment in their communities. if george osborne’s devolution movement really takes off, housing providers will want to be in pole position to make the case for housing as a key driver in economic development. and the arguments for a stronger regional lead on housing delivery are being made ever louder. a new report by resPublica, with support from Places for People and Peabody, calls for a ‘double devolution’ approach – putting people and places in charge through new bodies called local Place Partnerships.
as tony stacey, chief executive of south Yorkshire Housing association, puts it: “the big questions are how do we build more homes, and how do we solve the housing crisis. but there are very different answers in different areas.”
“local Place Partnerships can dramatically accelerate home building by bringing together all the interested parties – private developers, housing associations, residents, civil society and local business – and addressing their concerns and wishes through one decision point,” the think tank says. “With power to instigate local Place Partnerships devolved to residents, people will be able to take real control of housebuilding and shape the future of their neighbourhoods, building more to a higher quality in a shorter time frame.”
that’s why, he adds, most housing providers are prepared to put aside the more cynical view that the devolution
devolution to solve the housing crisis? Watch those regional spaces...
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IRON
grIP ONe year ON Representatives from around 50 housing providers – including around 15% of all associations with more than 1,000 homes – have already been put through their paces with Iron Grip, or have signed up. Iron Grip, HQN’s stress test simulation, has also been used by the Institute of Directors for their chartered directors. It’s the ideal way to get your board ready to meet the requirement to stress-test set out in the HCA Regulatory Code: • we use your size and scale of operation • we base it on your business plan You pick the stresses including: the benefit cap, low CPI-based rents, right to buy, third party failure, cuts to Supporting People, spiralling maintenance costs, development problems, house price crashes, escalating costs of finance and reputational risk You decide on the mitigations including: selling land, lean working, channel shift, closing operations, new types of funding, re-profiling planned maintenance, diversification and merger.
stOP Press: the hQN teaM Is NOw DOINg stress testINg fOr real at rPs If you want to book our Iron Grip simulation or ask us to stress test your business plan contact Anna Pattison on 01904 557197, or anna.pattison@hqnetwork.co.uk
WHAT THEY’VE SAID: “It was the best board strategy day ever. The scenarios were carefully selected to test how the board would respond to plausible real life challenges.” Poplar harCa ”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.” trent & Dove housing “Fun, participative and challenging – just what we wanted. We were engaged and our skills were used.” longhurst group "It was a great day; the board members really enjoyed it. The pace of the event and the content of the scenarios worked well. It raised a lot of important questions and dilemmas for us to think about and discuss." Vale of aylesbury ht “We used HQN to deliver an Iron Grip session for our board and exec team. This worked well for us, and has certainly taken forward our approach to multi-variate testing. I anticipate we will refer back to some of the learning for some time to come – particularly the way in which the prospect of an extension to the RTB shot right to the top of our risk map!” south yorkshire housing association the Governor JUNE 2015
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If you’re feeling downbeat with post-election talk of welfare caps, austerity and the right to buy, then a chat with Jonathan Higgs is just the tonic. it’s not that mr Higgs, chief executive of raven Housing trust, downplays the scale of the challenges ahead. it’s just that he has an engaging confidence that housing providers will once again prove their worth. “the future does look uncertain, but when has it ever been different?” he asks. “i’ve been in housing for about 25 years and it’s always felt like that. the great thing about the housing sector is that it’s resilient – and it certainly needs to be going forward.” High prices, high demand in east surrey, the area of high property prices and high demand where raven is based, the immediate priority is building new homes. “our plan is to free up as much capacity as we can and to find as many innovative ways as we can to build more homes,” mr Higgs says. “but the issue for us and for many in the sector as a whole is the capacity to deliver those new homes. for us in the south east, i don't mean the financial capacity. organisations like mine have quite significant capacity and our boards are committed to using it. but the restraining factors are the availability of land and the capacity of the construction industry to deliver.” Part of the way that capacity could be grown, he believes, is in a long-term housing plan. that would give certainty both to those working with housing providers whether they be timber frame suppliers, construction companies or
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brick suppliers and to those people who could gain the skills to make development happen. “The market can respond, but it needs the right environment to do that,” he says.
“THE FUTURE DOES LOOK UNCERTAIN, BUT WHEN HAS IT EVER BEEN DIFFERENT?”
And development over the next few years has to be sustainable, he adds. “If I went out tomorrow and tried to spend all of our money buying plots in east Surrey I could do it. I could spend all our money but my board, and I'm sure the Homes and Communities Agency, wouldn’t think that’s very good value for money,” he says. “Nationally we need 240,000 homes a year but being sustainable in the long term is the goal. It’s not about spending it all in one bonanza, it’s about a sustainable programme delivering 240,000 homes a year, year on year.”
Jonathan Higgs Chief executive, Raven Housing Trust view is that we do need to concern ourselves with building more homes but we also hold the strong view that we want to see people progress and do better whether they are in social homes, shared ownership or owner occupation,” he says.
A complex picture But as vice-chair of the Placeshapers group of community-focused housing associations, Mr Higgs is clear that the picture for housing providers across the country is a complex one. “People need homes right now where I work – but in the longer term the country needs a better planned approach to where housing is going to be provided,” he says. “I don't necessarily think the country’s long-term housing problem will be solved by shoehorning more and more homes into the south east. Getting jobs, opportunities and demand for housing in other parts of country are as important as getting homes to meet the demand in the south east.” As for the big challenges on the horizon, for Raven, as for many other providers, welfare reform and the Right to Buy are currently top of the agenda. There’s a lot of soul-searching going on across the sector, says Mr Higgs, on the impact of changes not just on businesses but, more importantly on their communities. “We have been talking to our local authority partners about welfare reform and they are concerned as we are that some of the houses we are being encouraged to build at the rents we are being encouraged to build at may not allow us to house people we strongly feel we are here to house,” he says. Finding a balance So just how do you balance that mission with political realities? That, says Mr Higgs, will be a key issue for boards and executives in the months and years to come. “I think Placeshapers organisations are committed to positively responding to whatever comes our way – our
“We recognise that there are a number of different housing markets that we seek to meet the needs of, but if we are not here to meet the needs of those in the greatest need then who is? We need the right balance and boards right across country will be different in their approach and will change the balance over time. It’s not a static thing – boards are constantly keeping the balance under review.” Local partnerships But, insists Mr Higgs, the strength of what he is happy still to call a housing ‘movement’ lies in its diversity – and there will continue to be a big role for communityfocused organisations and the partnerships they can forge at a local level. “In an era of austerity and challenge you can retrench into your own little world and protect what you’ve got but our view is you should be opening up far more and working more collaboratively for communities.” For his own part, Mr Higgs is well placed to judge the difference in approach at a smaller provider, having moved to 6,000-home Raven from national big player Home Group, where he was managing director of Home South. Clout in the community “I love it here - we know our communities and we know them well and we know the organisations we work with and they know us,” he says. “As smaller organisations we have got clout in our communities but nationally and regionally getting our agenda heard is sometimes more difficult than it might be for organisations of national significance. That’s why we came together – we are a community of common interest.”
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How should you prepare to ensure you don’t get a severe case of the bends when the Hca’s deep divers come calling?
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They will, the Homes and Communities Agency says, demonstrate a new relationship between regulator and regulated. the new in-depth assessments – or deep-dive visits – are all about engagement which is less frequent, but more focused, strategic, efficient and effective. so how should providers gear up? the Hca makes it clear that its new approach is underpinned by a stronger focus on risk management. boards, it stresses, will be expected to provide ‘effective oversight of the risks in their business’ and to ensure that appropriate risk management assurance and controls are in place. “Even more so than before, the burden of proof of compliance with the standards rests with the registered provider,” the regulator’s New Approach to Regulation paper says. the regulator’s monitoring of financial indicators will continue, providing its ‘early warning system’, particularly for short-term viability problems. all providers with more than 1,000 homes will have an annual ‘stability check’ and all will face the in-depth assessment at least once every four years, with more regular ‘deep diving’ for those seen to be more at risk. the concept of the ‘deep dive’ is a familiar one in internal audit, but it’s a new approach for the housing regulator and one which will allow it to concentrate resources where they are perceived to be most needed. Each assessment will by its very nature have its own focus. Nonetheless, there will be common themes, with providers expected to demonstrate a clear strategic direction, financial robustness and effective governance. to make sure the process works well for them too, there are some important elements that providers need to ensure are in place from the off. HQN has split these into three key questions for boards: Where is the driver’s manual? Providers will be expected to keep an assets and liabilities register. they will need to be on top of their business, making sure the regulator can get a clear picture of the organisation, including its funding arrangements, contracts and deals in the pipeline.
Where is the survival plan? a clear and far-sighted assessment of risk needs to be central to all providers’ planning. they will need to have identified the ‘fault lines’ that could have an impact on their business – everything from welfare reform to low demand and from interest rates to shifts in house prices. Policy changes, including in welfare, health and social care, which could have an impact on the business should all be factored into organisations’ stress testing. and there are other issues too beyond purely financial risk, including breaches of the consumer standards or the way severance deals are handled, which could have an impact on the reputation of an organisation or the sector as a whole. as the Hca said in its last risk profile: “social media has increased the likelihood that an issue within an organisation has the potential to escalate more rapidly, and spread more widely, than has been the case in the past. many boards are already taking an increased interest in managing reputational risk through the identification of particular risks that could impact on their strategy, the markets they operate in or the services they offer. boards need to ensure they consider risk in the round and are able to monitor risks in combination so that they can act in time to head off an issue before it can impact on their reputation or that of the sector.” Providers will need to show not only that they recognise the risks for their businesses, but that they are set up to deal with them promptly. Who has the X factor? Providers need to have the right team in place – and to show that not only do board members and senior staff have the right skills, but that those skills are being monitored and updated to meet the changing demands of the business. the way risk is managed in an organisation is ultimately down to a culture set by those at the top. the best organisations are able to demonstrate that they are alive to risk and have the right people to manage it. as the regulator has said: “Poor governance within an organisation is often a forward indicator of future problems. if a board does not fully understand the implications of, and risks associated with, the decisions it makes it is often unable to act quickly to resolve issues when they arise in the future.”
tHE NEW sEt-UP
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Annual stability checks will allow the regulator to see whether there has been ‘significant change’ in a provider’s financial position or in its business strategy. The checks will be based on the returns providers already make and on an assessment of their business plans and annual accounts
Development: market changes, sales, Right to Buy
In-depth assessments will occur at least every four years – and more often for higher risk providers. They will involve the regulator taking a deeper look at the organisation’s underlying financial strength, including its covenant compliance, liquidity and security. Providers’ response to the stress testing they are now required to carry out will be a key element here.
Rental income, including formula changes and volatility of affordable rents
Diversification Planning for long-term maintenance Existing and new debt Supported housing: loss of contracts Pensions Contractor failure. the Governor JUNE 2015
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Care IN THE COMMUNIty making care and support work in a tough financial climate is a risky business – but some organisations are committed to growing and innovating in the field
declining funding, support workers laid off, services cut, or organisations pulling out of the market altogether. that’s been the depressing landscape for housing providers working in care and support over the last few years. if you listen to some of those who’ve retrenched, you might think it’s an inevitability: a race to the bottom on costs and contracts subsidised through tenants’ rents. Yet some housing associations have chosen to grow their care and support businesses in these tough times. What’s behind their strategy? and does it have a wider message for the housing sector about long-term vision, values and quality services? Fast-moving, dynamic and evolving at accord Housing group, acting director of health, care and support sara Naylor-Wild says housing providers with a care business need to be much more fast-moving than ever before.
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HQN’s magaziNE for boards, ExEcUtivEs aNd lEadErs
“In the present world, what you thought a year ago isn’t necessarily how things are this year or indeed how they will be next year,” she says. “Being dynamic and evolving your thinking is really important.” Accord spent two years developing its strategy for growing its care business. It was prompted to do so both by the need to protect services and jobs – it is a major local employer – but also by the desire to continue providing high quality services for some of the most vulnerable sections of the communities where it works. A change of emphasis One of the biggest changes for housing providers with a care specialism, says Ms Naylor-Wild, is that where once they had a building and then care added on, whether for older people, women escaping domestic violence, or young people, now the emphasis is much more on providing support in the community. “We no longer have the thinking that if you require support for a particular issue you need to move into a building that handles that,” she says. “The fundamental change is that you have to respond to the individual need, the contract is not based in a building.” Accord, she adds, is ambitious about growing its care arm, which currently has a turnover of some £100 million. As part of its new approach, it’s developing a range of dementia support initiatives in the community alongside two ‘centres of excellence’ for dementia in Staffordshire and has also taken a domiciliary care business into its group. “It’s not been without its pains – it’s a quite different way of working, with different expectations, but what is really important to us is to retain the values we have always had,” says Ms Naylor-Wild. “ We have had to think innovatively about our services and about what customers want and develop our skills in marketing them so people know what we do.” “Everything we are doing is about trying to build resilience into our operations so we can work with the ebb and flow of changes in things like demography, technology and commissioning.” Real challenges But it’s that values thing that sometimes poses real challenges. Paying care workers fully – in particular for their travel time between visits – has been a source of controversy in the wider care sector, but Accord is one of those committed to doing so. At South Yorkshire Housing Association, there are similar pressures of wanting to deliver a high quality service in the face of ever squeezed budgets. “We have a relatively
high cost base – we are not bottom-feeding,” says the association’s chief executive Tony Stacey. “So in order to win contracts we have to be the best.” The association has gone through what Mr Stacey calls a ‘revolution’ in its approach to co-design and co-delivery of services, and its work was recently recognised with a national award for personalisation. It has also invested in research and development and in marketing its care business so it can hold its own against big competitors. Care and support represents 60 per cent of South Yorkshire’s turnover, so as Mr Stacey says, it’s ‘absolutely mission critical’ to get it right. He says tightening budgets in the NHS, on top of local government cuts and the tougher commissioning landscape, mean the environment is challenging. “Before the Right to Buy proposals came along, care and support was the number one issue on our risk map,” he says. But he and his board believe ‘opting out is not an option’, when housing providers are uniquely placed to develop the solutions the health and social care system needs. South Yorkshire’s strategy, then, is one of growth and innovation, which includes a pilot ‘social prescribing’ project to help people live better at home. New skills Investment in innovation – bringing in new skills and strengthening IT for example – can clearly pay off, with South Yorkshire now reporting an 80 per cent success rate in tendering for new business and significant new investment in a range of new projects, including its Over 2 You project with Gentoo and St Vincent’s allowing users to audit the quality of the service they receive. For South Yorkshire, as for Accord, housing providers have the knowledge and relationships to make integration with the health and social care systems a reality. But as Ms Naylor-Wild stresses, there’s still a big job to do in getting the message out there – particularly when it comes to the balance that needs to be struck between making the most of stretched resources, while providing the joined-up services the Care Act now expects. “Something commissioners are yet to grasp fully is that they are market shapers. Is it the budget leading or is it the quality?” she says. “As a social landlord we have at our core the social value of what we do. Of course we understand the pressures local government is under in terms of budgets but there has to be some balancing. “It is challenging. We are not sitting in a not-for-profit bubble. Where we can’t do it well, we won’t do it. But the reality is the need in the population is not going away and it’s all about who can produce the best offer.”
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HQN’s magaziNE for boards, ExEcUtivEs aNd lEadErs
gaMekeePer TURNED...
as the Hca’s director of regulation prepares to head up a housing association, we talk to another ‘gamekeeper turned poacher’ about the new regulatory landscape As the former lead housing inspector in the north and now chief executive of Halton Housing Trust, Nick Atkin has been on both sides of the regulatory fence. His is an interesting perspective, for he now heads up a housing association which has made a name for itself forging its own path, on the face of it a contrast with the Audit Commission and its reputation for ‘tick box’ inspection. Mr Atkin says that reputation is a bit unfair, not least because those housing organisations that his former organisation inspected were supposed to apply the requirements in their local context – but
FROM THE
Press Traditional government department structures are becoming less relevant in the digital age, some civil servants feel – but they’re still outweighed by officials who believe departments are still necessary. that’s the finding of a survey by Civil Service World, which asked more than 900 government officials whether they felt structures should change as more services move online. some thought they should, suggesting departmental structures no longer made as much sense, but others argued that it was important that separate departments were able to ensure the correct level of expertise.
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Sports Direct’s 18-month delay before it appointed a new finance director is proof that organisations don’t actually need one to function (operationally at least), Management Today tells us. the publication says the sports gear company’s founder mike ashley finally brought a finance chief in not because he was lonely on the board, but because ‘investors expect and good corporate governance demands that finance has a voice at the top table. it’s a voice of caution, to counsel against reckless risks and to protect the bottom line’. Some 4.2 million employees now work from home – and another 1.8 million want to join them, according to People Management magazine. the publication reports on tUc labour market analysis which shows that 13.7 per cent of the workforce now regularly work from home. and the higher up the chain you go, the more likely you are to be able to do so, with one in five managers working at home.
HQN’s magaziNE for boards, ExEcUtivEs aNd lEadErs
that local context bit was often forgotten. He’s clear that regulation now is right to focus on risk, although he warns that shouldn’t mean providers should neglect service delivery. Nor should it mean that risk should be taken out altogether. “i wouldn’t want the regulatory process to give the message that we shouldn’t be taking risks – managed risks are acceptable and increasingly needed if we are to continue to thrive as organisations in an increasingly hostile environment,” he says. but stress-testing and properly managing risk will demand that providers are well prepared for the challenges ahead. “i am not sure that all boards have got the right skills to work in what is a very, very different environment from 20 or 30 years ago – they need to be alive to the fact that they are going to be directly and personally held to account,” mr atkin says. audit too will be crucial. “audit and risk committees have gone from zero to hero,” he adds. “Housing associations need to consider whether they have got the right skills on those committees and whether they have got the right person chairing them. that’s the safety net to let organisations know whether they are they making right decisions and whether they have got the right assurances coming to them.” at his own organisation, he says thinking is constantly evolving about what might be on the horizon. “the biggest risk of all is complacency,” he says. “the risk map and the risk register are living documents. things change so those elements need to change with them.”
We sometimes see spirited attempts by senior figures in housing to spend a day ‘back on the shop floor’. but how about the Us company which made all of its board members work a restaurant shift? business insider reports how all of the board of directors at darden restaurants spent time greeting guests and serving food in order to get a better insight into how their olive garden outlets could improve. “Every single board member took a night and worked inside the restaurant,” said Jeff smith, chairman of the hedge fund starboard value, which is now in charge of turning the company around. “i was waiting on tables, greeting guests, serving some food, [spending time] in the kitchen – all of us did. How are we going to be able to make good decisions in the boardroom without really knowing what's happening in the restaurants?” Chief executives of the world’s biggest companies are going online in increasing numbers – but the proportion which are on social media remains relatively
that will be particularly the case if the housing sector moves, as mr atkin believes it should, towards a more pro-active way of working, for example in areas like maintenance, where using data to plan ahead could save on crisis spending. “We have to think very differently about how we deliver our core service offer,” he says. “as a sector, we are very reactive. We have a whole team of people waiting for something to go wrong or for somebody to call in and then they all spring into action to sort it out. that means working in the least cost-effective way because it’s very reactive and unplanned.” that fits in with his view that the current challenging environment does at least offer the chance for innovative thinking. “life is going to be increasingly more challenging for housing associations and also for the people who live in our homes,” he says. “there are some opportunities – some of the best innovation comes in those times when organisations are put under the most pressure. it offers us the opportunity to think quite differently about some of the longstanding issues we have had as a housing sector.” and however hard the prospect of the next few years may appear, housing providers need to work alongside the government in the interest of their communities – while keeping their own organisations on track. “our job is to smooth off some of the sharp edges and help government understand how we can help them deliver what they want to deliver while also not derailing our own business plans,” he says.
low at just 28 per cent. so says Forbes, reporting on the latest Weber shandwick audit of chief exec online engagement. overall, 80 per cent of bosses say they are engaged online – many through their company web pages. twenty-two per cent use linkedin, just 10 per cent are on twitter – and none said they used facebook or google+. Would FIFA have had less corruption and better governance had it been less institutionally sexist? an article in The Guardian in the wake of the bribery scandal at the world football organisation suggests so. the piece claims women have been ‘deliberately excluded’ from top positions, pointing to research showing a link between decreased corruption and women in senior leadership roles. meanwhile the calls for more oversight of fifa continue, with the University of colorado’s roger Pielke characterising the organisation in an article for Vox as a ‘netherworld of governance’.
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HQN’s magaziNE for boards, ExEcUtivEs aNd lEadErs
GOVERNANCE rOUND-UP
THE sIMPle THINGS Most organisations know by now the theory of engaging their workforce. but are they doing enough in practice to encourage their employees? the answer, at least according to the latest employee engagement survey, is probably not. it found that only 36 per cent of employees are highly engaged with their jobs, while 48 per cent reported being moderately engaged. the proportion of highly engaged staff was only slightly higher in government and public services jobs at 38 per cent, perhaps testament to the pressures caused by spending cuts on the frontline. so what really motivates staff? common among the most highly engaged is a sense of autonomy – 90 per
cent have a manager who lets them get on with their job – and a sense of personal progress – 98 per cent, for example, had had an opportunity to learn at work and 79 per cent worked for an organisation which helped them to develop skills outside their workplace. also important is a sense of purpose, with 98 per cent of highly engaged employees saying the mission of their organisation makes their job important. but the survey, by incentives firm red letter days, suggests some simple things are being left undone. many staff had not had a single verbal thank you for a job well done over the course of a whole year, let alone the chance to discuss progress or career development. http://assets.redletterdays.co.uk/pdfs/ employee-engagement-report-2015.pdf
GENERATION y Planning for the needs of the next generation is something we’re all supposed to do. but have we really got to grips with the scale of challenge? if the housing crisis and the care and support gap look bad now, how much worse can things get? those are questions brought into sharp focus by a new paper from the free-market think tank, the centre for Policy studies, on the tough times which will face the younger generation in the decades to come. according to the report, so-called generation Y – those currently aged 15 to 35 – are likely to be the first generation to experience a quality of life below that of their parents. already, generation Y ‘is faced with unaffordable housing, college debts, fragmented careers, earnings and productivity stagnation, zero hours contracts, relatively thin occupational pension provision (including a db desert for the private sector), a rapidlyretreating state pension age and, perhaps most challenging of all, having to support an ageing population’.
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and while some may benefit substantially through inheritance, they are likely to face a world of growing inequality. in sum, the post-war baby boomers have become ‘masters at perpetrating intergenerational injustice, by making vast unfunded promises to themselves, notably in respect of pensions’, the report says. so what’s the way forward? some might argue for higher taxes, or a rethink on issues like the pensions triple-lock, free travel or the winter fuel allowance. but, as the report points out, with politicians ‘fawning’ over baby boomers and pensioners, that’s out of the question, at least in the short term. instead, it proposes a number of measures including promoting greater transparency on future liabilities and reviewing tax reliefs. for the decisionmakers of today, the debate can’t be ducked any longer. as catherine Howarth, chief executive of shareaction says in the introduction to the report, ‘the truth is now out’. Who Will Care for Generation Y?, Centre for Policy Studies, cps.org.uk
HQN’s magaziNE for boards, ExEcUtivEs aNd lEadErs
lIP SERVICE With high-profile failings in public services, notably in the NHS at Mid-Staffordshire and child protection in Rotherham, effective scrutiny is in the spotlight as perhaps never before. But across the board, the concern is that too often the arrangements in place are too cosy, insufficiently robust or prevented from doing much at all. Lord Kerslake, former head of the Civil Service and previously at the Homes and Communities Agency, is set to make this one of his priorities, having just taken on the chair’s role at the Centre for Public Scrutiny. He takes over from former housing minister Nick Raynsford as head of the charity, which has some interesting things to say about the need to boost scrutiny of publicly-funded organisations. Its recent small-scale survey of councils’ scrutiny effectiveness, for example, suggests that too often requests for information are being ignored and that some executive teams were never robustly challenged at all. Comments from survey respondents included: “The problem seems to come from the culture, and the culture very much depends on senior officers/senior
members.” And: “Scrutiny is not universally valued or well understood at a senior management level. It is currently perceived and used as a tick-box exercise to try to keep backbench members quiet.” The charity has called on all councils to review their member scrutiny and governance arrangements and for awareness to be raised of the importance of independent, properly resourced and effective scrutiny and challenge. “We know that the best, most confident leaders accept and welcome challenge as helping them and their organisations improve what they do, but too many see it as something to be limited, obstructed and paid lip service to at best. This must change,” the charity said. Lord Kerslake went on the record this month to say scrutiny across the public sector needs to be transformed. “As the world gets increasingly complex we must close the gap between the governed and those governing,” he said. “Every leader and decision-maker must believe that where there is clear accountability and involvement, decisions will be better.” http://www.cfps.org.uk
CUltUre CHANGE Accurately monitoring data should be a way of improving service quality, not just a tick-box process. and while in England, the Homes and communities agency has warned housing associations over the quality of the data they supply, in scotland social landlords are moving in the right direction, according to their regulator.
regulator says all reported accurately on gas safety although there were minor errors on rents and repairs. “all had a strong commitment to reporting their performance accurately. the landlords collated most of the data straightforwardly and with few errors,” the regulator said. it added that landlords showed a ‘high level of commitment to delivering the charter’.
the scottish Housing regulator says landlords have responded positively to the challenges of measuring and reporting their performance against the standards and outcomes in the scottish social Housing charter in the first reporting year.
“many told of a change of culture within the organisation as a result of the charter, and had moved away from viewing data collection and reporting as a year-end process to using it to drive service improvements,” it reported.
in its assessment of a sample group of landlords on rents, repairs and gas safety published this month, the
https://www.scottishhousingregulator.gov.uk/publications/ performance-matters-edition-3-arc-accuracy-visits the Governor JUNE 2015
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