Governor
the
HQN'S MAGAZINE FOR BOARDS, EXECUTIVES AND LEADERS
MARCH 2010
LIVING IN YOUR
SPOTLIGHT
All eyes on your boArd As the tsA steps bAck
to wAtch the show under co-regulAtion –
stAnding ovAtion or supervision?
The Governor is packed full of essenTial
info To banish firsT-niGhT nerves
Matthew Taylor
The Walker Review
George Caswell
HQN’S MAGAZINE FOR BOARDS, EXECUTIVES AND LEADERS
“Life is what
happens to you
while you’re busy
making other
plans.”
It doesn’t. That’s why
you need HQN’s newly
expanded finance team to help
find the best way to manage
your organisation’s cash through
2010. We know tough choices lie
ahead – prepare for them now.
HQN head-hunted eminent finance experts to lead
our revamped team. Robin Tebbutt was amongst
Tribal’s top housing experts and led the finance function at
high-performing Enfield Homes. Former three-star ALMO and
housing association finance director Steve Wood joins too.
Both have been consultants before – but they’ve plenty of real
world experience too. HRA gurus Tony Huff and Hilary Vaughan are
on hand, together with Dylan Chipp, Colin Small and Denis Thompson.
We think this is the most expert and capable team in the industry.
Put us to the test. We can:
Find practical ways through the HRA Subsidy maze – let others
complicate it; we just want to solve it for you and your tenants
Drive real value for money without the usual
gobbledygook
Help with the interpretation of, and decision about,
the government’s ‘offer’ on HRA Subsidy
Provide indicative commercial tenders for services –
a sharper test than benchmarking against more of the same
Make sure your organisation passes the TSA’s
viability and value for money tests
Run straightforward training on finance/VfM/HRA for boards,
councillors, staff at all levels and tenants
Boost performance and save money through
shared service modelling
Recruit and mentor high calibre finance
professionals for permanent and interim vacancies.
It’s a new year: make a new choice – HQN. We can’t make your money talk, but we’ll make it work hard.
To find out how HQN’s newly expanded team of finance experts can help, contact
Richard Waft, Business Manager, on 0845 4747 004, or [email protected]
Rockingham House St Maurice’s Road
York YO31 7JA
Telephone 0845 4747 004
Fax 0845 4747 006
Internet www.hqnetwork.co.uk
Email [email protected]
CONTENTS
3
Life is what happens...
Comment by HQN Chief Executive
Alistair McIntosh
4
Out of the woods?
New NHF chair Matthew Taylor speaks out
6
Table manners
Key recommendations from The Walker Review
8
Past the sell-by date?
How long should board members serve?
10
The big temptation is to harp on about the past. When the crunch first
hit us, news columnists argued over which crisis this most resembled:
the 1920s, the 1970s or the 1980s. Idiots tried to work out what letter in
the alphabet the recession would look like, as if we were playing Scrabble.
Are we doing any better in housing?
Light fantastic
Bolton at Home’s Chief Executive
George Caswell on retirement
12
The least you can expect from a board is to learn from the past. More
effective boards and executives deal well with the present. They put things
right when they go wrong. Real leaders get the future right more often
than not and plan accordingly.
Asking the right questions:
asset management
HQN’s Wayne Hughes on a fit-for-purpose
asset management strategy
13
Codes of conduct
The NHF’s new Excellence in standards
of conduct
14
Good for everyone
Housing co-ops
That’s what John Lennon said and it still holds true today. We await
the outcome of a general election that no one can predict. Half of the
economists want the national debt paid off now, while the rest say clear it
next year. What are boards and executives to do in these uncertain times?
What are we seeing? The campaign to preserve the KLOEs, shunt tenants
into the scrutiny siding and the obsession with checking services after
delivery (not sorting them out beforehand) are thoroughly depressing.
KLOEs were great and they did boost standards. But we don’t need boards
and executives if the Audit Commission runs a satellite navigation service
for housing. Scrutiny panels just crawl over decisions that have already
been taken. Quality checking systems do verify promises at the point of
delivery, often in what they call real time – but lag behind board decisions
on service standards, IT, procurement and recruitment by years. There’s an
awful lot of huddling together for warmth known as benchmarking. But in
the future no one will ask you how you compare with 500 other landlords.
It is entirely predictable that we will see fewer housing organisations
to cut costs. My hunch is that the survivors will fall into two camps: big
national or regional players that drive efficiencies and keep most tenants
happy, alongside niche players for especially challenging areas or customer
groups. A sort of Primark versus Prada marketplace, if you like.
What should boards and executives do now to put themselves in a winning
position post-election? I think the TSA standards offer a great opportunity.
Most tenants in most places want much the same services – the best
organisations will agree standards quickly, minimise pointless variation
and campaign relentlessly to turn tenants into fans. Tailored services for
particular customer groups will be delivered as effectively as the best
supermarket chains.
Bluntly, it’s the housing outfits with the lowest costs and happiest tenants
that will prosper. It’s a deceptively simple formula that all businesses strive
for. The TSA is interesting. The economy is interesting. The election is
interesting. An awful lot of life could get in the way of your plans. The
winners will be blasting into the future with a clear plan while the losers
cling to the past or debate the present.
Alistair McIntosh
Chief Executive, HQN
From the press
Our regular round-up of the world
press’s view of governance
16
Keep it simple
Streamlining governance structures
18
Never knowingly
Co-production could become
the latest buzzword
19
Quangos to go?
Quangos face an uncertain future
Impacts of devolution
Has devolution helped to tackle
disadvantage?
All articles in The Governor were written by
Kate Murray unless otherwise stated.
Designed by Paul Miller
Prontaprint Scarborough
the Governor MARCH 2010
3
hQn’s magazIne for boards, eXecutIves and leaders
hQn’s magazIne for boards, eXecutIves and leaders
Matthew Taylor has a lot of sympathy with housing
association chairs. For since he took over as chair of the
National Housing Federation last autumn, he’s seen just
what hard work leading a housing organisation can be.
“Whatever the advertised hours of the NHF chair are, the
reality is considerably more,” he laughs. “And I am sure
every single chair of a housing association would say
amen to that.”
challenge, that they take the opportunity and deliver
on it. People will have to step up to the mark. There is
no doubt every housing association is going to have
to look to its governance and the role of board. It can’t
simply rely on doing what the TSA tells it to – that’s not
how it will work any more.”
Once famously the youngest person ever to become
an MP, he’s no stranger to the housing world, having
been commissioned by the government two years ago
to lead a review on rural housing. But his appointment
represents a real departure for the Federation, which
has usually been chaired by a housing association chief
executive. So what new perspectives can this former Lib
Dem frontbencher bring? His number one priority, he
says, is to ensure that the NHF helps associations deliver
for the tenants and communities they serve.
And of course all housing providers will be taking on
these new responsibilities at a time of huge economic
pressure. “The combination of the credit crunch and the
government deficit means money is not going to be
available as it has been in the past for new housing, for
maintaining existing housing, or for supported care,” says
Mr Taylor.“Things are going to have to be done differently.
Government is going to be demanding more for less
and we are going to have to show we offer the best
value for money, experience and knowledge to deliver.
"I have a passIon for housIng and
buIldIng strong communItIes"
“I don’t think there’s a housing association chief executive
or board member who isn’t highly focused on the reality
of the economic circumstances we are in,” he adds. “We
are by no means out of the woods – we have yet to see
the impact of the fall away in public spending.”
“This is a huge opportunity to help boards and housing
associations to innovate and to shape their policies to
suit their own tenants and their situation,” he says.
Boards, he says, will really be empowered by the new
regulatory environment to determine the future of their
organisations. But he adds: “I think this is a moment of
enormous opportunity – but with opportunity comes
huge risk. It is really important that boards rise to the
out of the
New responsibilties
Yet despite the challenges, he sounds optimistic about
associations’ capacity to respond. Since he took over
as chair, he’s been out and about meeting Federation
members, and he’s been impressed with what he’s seen.
“Everywhere I go around the country, I have met
fantastic people running housing associations,” he says.
“They are talking about how they are going to meet
those challenges. I think people are excited – they know
they are going to have more flexibility, they know things
are going to change.”
Diversity is strength
A big question for the Federation will be how it
responds to the differing priorities of its members –
always an issue with such a diverse sector, but
perhaps even more so given the challenges ahead.
But Mr Taylor insists that diversity is strength. “With
1.200 members, they are not all going to agree all
the time and they are not going to have same
needs and pressures,” he says. “We have got to give
people of all sizes and types the circumstances so
they can seize the opportunities to thrive. Members
have to understand that it’s not threatening for
others to do things differently. We will champion
people who come up with new ideas and new ways
of thinking – that doesn’t say other ways of doing
things are wrong.”
At this time of change, the Federation is also
focusing on its own future. His own appointment,
he says, was the result of a ‘radical rethink’ of the
way the Federation is governed, and that overhaul
is still not complete. “We can’t be champions of good
governance if the NHF isn’t an exemplar of that,” he
says. “My ambition is that our governance is of the
highest quality – we can’t afford to be anything else.”
One of his particular aims is to look beyond chief
executives for the Federation’s board.
"We WIll
champIon
people Who
come up
WIth neW
Ideas and
neW Ways of
thInkIng"
spearheading what he says is a ‘very clear offer’
from housing associations to whoever forms the
next government.
“Housing associations have a very simple case to
make. They have been highly effective delivering
new housing at very low cost to tax payer, using
the resources they have built up over the years.
I don’t believe anyone else can offer anything like
the value for money we can.”
He’s still finalising all of what he’ll be doing once
he’s no longer an MP, but we can expect to see
more of him in the housing world. “I have a passion
for housing,” he says. “I have a passion for building
strong communities for all kinds of
backgrounds and all needs.”
“A lot of board members have a lot to offer and
I hope they will apply,” he says.
He will be standing down from his Truro and
St Austell seat at the forthcoming election.
So instead of focusing on his own
campaigning, he’ll be
WOODS?
The new chair of the NHF says boards should now be
centre stage in delivering for their communities
4
the Governor march 2010
the Governor march 2010
5
HQN’S MAGAZINE FOR BOARDS, EXECUTIVES AND LEADERS
“Our experience shows that once a firm
gets its corporate governance right, with
a strong and effective board, everything
else flows from that.”
So said Graeme Ashley-Fenn of the Financial Services
Authority as his organisation launched a consultation
paper on effective governance standards in January.
Governance is of course, as the FSA stresses, now a
major issue both nationally and internationally, as
attempts are made to strengthen standards in the
wake of the financial crisis. The FSA says it is determined
to correct what it now acknowledges was a failure to
‘adequately reflect the importance’ of good governance
and to supervise it intensely enough.
Its consultation papers comes in response to Sir
David Walker’s review for the government, published
late last year, of governance in the financial sector. The
Walker Review is a hugely important one, setting out
recommendations for the skills, input, self-assessment
and time commitment that should be required of board
members. But, given that its recommendations are
directed at banks and other financial institutions,
will it have any impact on the housing sector?
The short answer is yes. Many housing organisations will
already have been looking at Walker’s recommendations
with interest, as part of the process of keeping their own
governance arrangements under review. Places for People
chair Zenna Atkins is also chair of Ofsted, and believes
it’s crucial for the public and voluntary sectors to keep
up to speed with wider developments in governance.
“In the public sector, people have only woken up
to governance issues in the light of some of the
catastrophes. In the housing association sector, we don’t
have shareholders saying ‘how have you lost so much
money?’. Therefore I think it’s even more important
that we think about how we run our businesses.
“It’s not that our sector is without its own governance
failures,” she adds. “But they are far less public – If you
TABLE
6
the Governor MARCH 2010
HQN’S MAGAZINE FOR BOARDS, EXECUTIVES AND LEADERS
really screw up, you are quickly taken over. It may not
be quite so much in the public glare, but you are still
really letting down your customers.”
Some of the individual recommendations in the Walker
Review will already have been considered by housing
providers looking at their own roles and responsibilities
(see box).
Places for People, for example, already has transparent
board recruitment procedures and a rigorous appraisal
and performance review system in place. “Since 2004,
I have asked three people to move on,” says Ms Atkins.
“It’s not easy and not pleasant, but it’s never about the
individual being a bad person, it’s about the fit with what’s
around the table. If we have people who bring similar
skills, we don’t need that, so let’s have that grown-up
conversation, and say ‘it’s time for you to move on’.”
Other issues raised by Walker may not fit so
well with housing boards. Clocking people’s
hours on board business is one such, claims
Ms Atkins. “I’m not going to take on Walker,”
she says. “But I couldn’t give a monkeys
about the input people put in – I’m
interested in the outcomes. What’s
important is the people sitting around
the table understanding the
business and giving their
perspective. I have had some
people not giving lots of time
who have been hugely valuable
and some who have given masses
of time and who have, quite frankly,
been useless.”
It has often been bit too cosy, where people think they
are doing a good thing for society by turning up, and
don’t feel they are running a business. I don’t think that
creates a culture of challenge. ”Governance doesn’t just
set systems, it sets the tone and culture of the
organisation,” she adds. “If that doesn’t come from the
top and permeate the organisation, it doesn’t matter
how good you are on paper, you will make mistakes.”
The Walker Review: some key recommendations
Prospective non-executive directors of FTSE-100 listed
banks should be assessed by senior advisers with
relevant industry experience
The time board members are expected to put in
should be ‘greater than has been normal in the past’
Non-executive directors should be provided with a
personalised approach to induction, training and
development, to be reviewed annually with the chairman
They should be ‘ready, able and encouraged’ to test
strategic proposals put forward by the executive
The chairman is ‘responsible for leadership of the board,
ensuring its effectiveness in all aspects of its role and
setting its agenda so that fully adequate time is
available for substantive discussion on strategic issues’
The board should undertake a formal and rigorous
evaluation of its performance, with external
facilitation of the process every second or third year
A remuneration committee should have a ‘sufficient
understanding’ of the company’s policy on pay and
employment conditions to ensure it adopts a ‘coherent
approach’ to remuneration for all employees.
Ms Atkins believes governance in the
housing and wider public sector is evolving
and improving, but that some still need to
‘grow up and wise up’. “There is a reason
non-executives get paid – and that’s
good governance,” she says. “There
are cultural issues.
MANNERS
the Governor MARCH 2010
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hQn’s magazIne for boards, eXecutIves and leaders
hQn’s magazIne for boards, eXecutIves and leaders
Margaret Thatcher famously once declared she
hoped to ‘go on and on’ as Prime Minister. Ultimately,
the decision about when she should leave office
was taken out of her hands. But how long is long
enough when you’re in a leadership position?
Should you be free to choose when you step down –
or are fixed-term positions the best way of ensuring
the people at the top stay fresh?
These are key questions for housing boards.
The National Housing Federation introduced a
nine-year recommendation for board members back
in 2004 and its revised code of governance, produced
last year, suggested six years, in line with the
combined code of governance for the private sector.
But the time limits are only guidelines. NHF Head of
Governance Stephen Bull says: “It’s about considering
what works best for your organisation. Some
organisations have board members on for much
longer because they bring a certain something that
you can’t find elsewhere and that’s a very positive
certain something. And some smaller organisations
can’t easily get board members, so they are lucky to
have them even if they’ve been on for 20 years.”
The value of experience
There’s no doubt that board experience can be
hugely valuable, particularly during a period of
change. John Pollard has been Chair of Plus Dane
Group since it was formed in 2008 from the merger
of Plus Housing and Dane Housing, which he had
chaired for ten years. His experience helped him as
the merged group got up and running and
positioned itself as a ‘neighbourhood investor’.
“With that experience, you have the knowledge
to challenge the senior executive,” he says. “You
can do it from a position of greater strength.”
Mr Pollard recognises the tension between the benefits
of experience and knowledge and ‘on the other side
becoming stale and not wanting to change’. He says
a succession policy, which helps bring on good new
people, is vital not just for the chair, but also for
board members. “Chairing a big organisation is
a pretty demanding role and takes a considerable
amount of energy,” he adds. “I wouldn’t want to do
a Tony Blair and put a time limit on it, but having
said that I don’t anticipate being there forever.”
At Endeavour Housing, Chair Pat Buckley has been
on the board for more than ten years. But she’s
a novice compared to her former board colleague
Brian Wake, who stepped down last year after 35
years’ service. “Brian himself made the point he
was 26 years past his sell-by date if you go by
the recommendation of nine years,” she says.
“At Endeavour we took the view that, providing
you are not the sort of ‘older father’, saying ‘I’m the
one who knows’, then it is good to have a balance
of newer people and those with more experience.
That experience is actually very valuable. Brian
was a founder member, and there was nothing
that had happened in the housing association
and the housing association movement that
he’d not been involved in.”
Recruiting and refreshing
Endeavour has no shortage of people interested in
joining the board, so it can regularly recruit and refresh,
she says. “It’s important that we keep the right skills mix
and that we always have good people from different
walks of life,” she says.
She says it took her some time to get up to speed with the
housing sector. That’s not uncommon. Supporting and
training people to get up to speed with your organisation,
only to see them leave the board, can be a real issue
for some housing providers. It’s a particular issue for
stock transfers and ALMOs, with their local authority
representatives, and of course, for councils themselves.
Alison Inman, chair of Colchester Borough Homes, says
her ALMO has had about 30 council representatives, who
are appointed for a year at a time, on its board since 2002.
“You might get someone really supportive, but at other
times you get people who find it more difficult and who
don’t necessarily understand the distinct legal role,” she
says. “Sometimes it’s like you are doing an induction all
year round. You get somone to the point of being really
useful and then they’re gone. It makes it difficult to run
things smoothly because you never know who you are
going to have.”
Too-short stints, then, are clearly problematic. But as
for what’s too long, there’s no consensus. The important
thing, whichever side of the fence you come down on,
is to keep the performance and contribution of all
members, old and new, under review.
past the SELL-BY DATE?
How long should
board members stay
on the board? The
Governor looks at the
value of experience
8
the Governor march 2010
“WHAT WE WOULD WANT TO GET AWAY FROM IS
THOSE PEOPLE WHO STAY ON A BOARD BECAUSE
IT GIVES THEM A SOCIAL LIFE. THEY BECOME A BIT
STALE WHEN THEY COULD GO OFF AND BE A
BRAND NEW PERSON ON ANOTHER BOARD.”
Stephen Bull, Head of Governance and Company
Secretary, National Housing Federation
“SOMETIMES YOU INVEST TIME AND MONEY AND EFFORT
IN PEOPLE AND SUDDENLY THEY ARE GOING, ESPECIALLY
IN THE CASE OF TENANTS, WHERE YOU CAN OFTEN LOSE
GOOD PEOPLE AT THE BALLOT BOX. BUT IF PEOPLE STAY TOO
LONG, IT CAN GET TOO COSY AND COMFY, SO SOMETIMES
YOU HAVE GOT TO BE BRAVE AND LET PEOPLE GO.”
Helen Jaggar, Chief Executive, Berneselai Homes
the Governor march 2010
9
hQn’s magazIne for boards, eXecutIves and leaders
George Caswell won’t be sorry when he leaves
Bolton at Home, the three-star ALMO he has led
since it was set up in 2002.
Not because he won’t miss the job: “I couldn’t wish
for a better one,” he says. “Working in housing is
fantastic; it really is a ball.” But because he believes
in looking forward. “For me, the glass is always
half-full and I’m not going to change that now,”
he says. “I’ll be moving on to other opportunities.”
Mr Caswell has spent 26 years at Bolton, first as
Assistant Director of Housing, then Director, before
taking the top job at the ALMO. He’s proud of the
organisation’s achievements, not just its three stars,
but also its strong record of customer involvement
and neighbourhood regeneration, including an
award-winning community art programme.
Much of that success he puts down to a positive
attitude. Firstly, it means investing in staff.
hQn’s magazIne for boards, eXecutIves and leaders
towards self-realisation and you have clear objectives,
you are going to be an excellent organisation.”
Bolton at Home, he says, is a values-based organisation,
where a strong, positive ethos is promoted and where
success is celebrated. Or, in that phrase again: “It’s about
trying to get a lot of people together who believe the
glass is half-full.”
The same positive attitude, he believes, needs to be
carried through into the engagement housing
organisations have with their residents. “One of the
things you have got to do with communities is make
them feel better about themselves,” he says. “People
often have no faith in themselves; they think they are
third class citizens. There’s a real job to be done getting
people off their knees before can get them into training
courses and employment.”
The glass is half-full
In Bolton, a new sense of pride has been fostered
through working with communities on public art
through the ALMO’s Housing Percent for Art project.
“I have a very genuine belief that people can do
wonderful things,” he says. “People have a range of
experience, skills, nous and abilities – some of which
may not be immediately evident. If you can create an
environment where people believe they can move
“We have had a huge degree of support from customers.
They want their neighbourhood to look different and
warm,” says Mr Caswell. “I often say I’m not worried
about the outcome in sense of what it [the art] looks like
or will it win a prize – it’s about getting people involved.”
A spirit of optimism
The spirit of optimism and innovation hasn’t been
matched by everyone, though. Bolton Council didn’t
originally plan on setting up an ALMO. Instead, it
wanted to establish a community regeneration
company, which would lease the Council’s homes –
an idea which was ruled out by the government.
More recently, the ALMO resurrected the leasing idea,
pushing hard to pursue a leasehold transfer which
would have avoided the controversy which still dogs full
stock transfer, while still making the funding available
for regeneration work. Again the government blocked
the plan, leaving Bolton to announce it would need to
go for a conventional stock transfer instead. The
government’s attitude clearly frustrates Mr Caswell.
“Labour has done a brilliant job of funding Decent
Homes: it just seems a shame that they couldn’t come
up with an answer to the further aspirations.”
Had the leasehold transfer option gone ahead,
Mr Caswell would have stayed on for a while to steer
such a novel project through. As it is, he decided it
was time to let his successor head up the transfer.
He will be keeping on his role as chair of Liverpool
First, and perhaps looking for some other
non-executive positions and opportunities
to pass on what’s he’s learnt. But his
priority when he’s retired is a change
of pace. “I’m going to try not to
be hammered by the watch.”
“I despair of the civil service,” he sighs. “They say things
won’t work – and it’s a self-fulfilling prophecy. That’s why
we’re planning to transfer – we just gave up on them.”
He’s disappointed that there aren’t more options
for ALMOs, set up to deliver Decent Homes
improvements works, but already offering much
more to their communities. “Decent homes
are hugely important but that can’t be
the height of people’s aspirations
or we are doomed,” he says.
LIGHT fantastIc
What does it take to lead a top-performing housing organisation?
As he prepares to step down from one of England’s leading
ALMOs, George Caswell shares his views on success
Main picture: the door to door project,
part of bolton at home's housing percent
for art scheme, which works with
communities to improve
neighbourhoods through
arts projects.
10
the Governor march 2010
the Governor march 2010
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hQn’s magazIne for boards, eXecutIves and leaders
With the MPs’ expenses scandal still
rumbling on, probity in public life is at
the centre of debate as never before.
Salaries, redundancy payments and conflicts of interest
can all have a devastating effect on the reputation of an
organisation or even, as politicians and bankers have
found out, of a whole profession. The big losers in the
reputation stakes may have been elsewhere so far, but
the housing sector cannot afford to ignore the issue.
by Wayne Hughes
askIng the
rIght QuestIons:
ASSET MAnAGEMEnT
A fit-for-purpose asset management strategy is
fundamental to the success of any housing organisation.
The strategy sets out how decisions will be made
on investment, divestment and disinvestment and
presents a clear plan for the stock over the short,
medium and long term. Asset management challenges
are outlined and investment needs are made explicit.
There should also be clear links with the business plan
to ensure the strategy is affordable.
What degree of confidence do we have in our stock
condition survey, what are its limitations, and how is
it used to inform investment decisions?
So what questions should board members ask to make
sure that their organisation’s assets continue to meet
the needs and expectations of both existing and new
customers? Try the following:
How confident can we be that the strategy reflects
the needs of existing and new tenants?
Do we have an asset management strategy, and if
so is it periodically reviewed by the governing body?
Does the strategy attempt to reduce our reliance on
the need for responsive repairs and is the balance of
revenue spend directed towards activities that can be
planned and programmed?
Are the links between the business plan and asset
management strategy explicit, and do we have in
place the financial resources required to secure
success?
Does the strategy provide for regular regimes of
maintenance in order to arrest deterioration of the
stock and do they reflect current best practice in
this area?
How much will the strategy cost to deliver, and how
will we measure its success?
What service standards does the strategy assume
and what role have customers played in setting these?
How do they compare with our competitors?
How does the strategy address the key risks including
fluctuations in supply and demand, movements in
rent levels and works procurement costs?
12
Is the strategy in tune with what it is the governing
body wants to achieve and does it detail what our
key asset management challenges are?
the Governor march 2010
Wayne Hughes is HQN’s Executive Director of Asset
Management.
Stephen Bull, the National Housing Federation’s head
of governance and company secretary, says housing
associations will be under the microscope in these
troubled times. “One of the big issues for associations
is going to be the whole issue of reputation. There’s a
constant hum in the background over chief executive
pay, especially in the context of the credit crunch and
bankers,” he says. “I think it’s imperative that our house
is in order around probity, honesty and integrity.”
It’s a good time, then, for the federation to have published
its new code, Excellence in standards of conduct. The new
code is designed, the Federation says, to ‘safeguard the
housing association sector’s long-standing reputation for
integrity and honesty’. Landlords will not be forced to
comply. But the Federation says it offers a framework for
associations to use once the long-established ‘schedule
1’ provisions of the Housing Act are repealed as the TSA’s
new regulatory regime comes into force on 1 April.
Bonuses and severance payments are another tricky area,
the code suggests – and again, boards are recommended
to make them only at a level which will not harm either
the association’s or the sector’s reputation.
The provisions also cover declarations of interest, where
board members are reminded to ensure they declare all
relevant personal interests. New board members need
to be aware, the code says, ‘that they are required at all
times to act in the best interest of the association and
that anything which may jeopardise their ability to do
so would be a conflict of interest’.
Standards of behaviour are crucial too, and the code
reminds board members and the staff of the need to
show respect, impartiality and tolerance. It also includes
provisions of gifts and hospitality and benefits, including
the provision of housing for staff and board members, an
issue which has caused negative headlines in the past.
“It's ImperatIve that our house Is In order
around probIty, honesty and IntegrIty"
Excellence in standards of conduct, National Housing
Federation, £5.95 to members, £6.95 to non-members:
www.housing.org.uk/default.aspx?tabid=913
Perhaps the provision that will spark the most
debate is on pay, given the disquiet big salaries can
cause in the housing sector and beyond. The code
says boards should consider chief executives’ salaries
carefully. “Boards should be mindful of the reputational
risk to the association and the sector of setting a level
that significantly exceeds that paid in other comparable
organisations and/or is disproportionate to the
management costs of the organisation,” it says.
codes of
COnDUCT
the Governor march 2010
13
hQn’s magazIne for boards, eXecutIves and leaders
hQn’s magazIne for boards, eXecutIves and leaders
good for
EVErYOnE
Co-ops have not always had the best record
on governance. Now the only governance
project among the TSA’s local standards
pilots is aiming to change all that
from the
PrESS
Building societies have not been immune from the
governance shortcomings which have hit the financial
sector, according to city minister Lord Myners. Speaking
at the launch of the Building Societies Association’s
governance report, Lord Myners said poor governance
was a significant factor in the failure of Dunfermline
14
the Governor march 2010
Talk to a resident of a housing co-op and the chances
are you’ll find someone who’s incredibly happy with the
way their housing is run. Tenant satisfaction levels for
co-ops are markedly higher than those of other social
housing providers.
Building Society. He said good governance was now
rightly at the forefront. “I have been convinced for
some time that the mechanism for delivering better
decision-making is good governance and stewardship,”
he said. “Good governance provides a check and
balance that ensures that firms are run effectively
and meet the objectives of their owners, whether
they be PLC shareholders or mutual members.”
www.FTadviser.com
The financial crisis offers all organisations the chance
to rethink their values. That was the message from the
Reverend Jim Wallis, chief executive of American social
justice organisation Sojourners in an interview with
McKinsey Quarterly. Revd Wallis said the crisis had been
spiritual as well as structural. “If we don't rethink things,
Yet co-ops have had a bit of an image problem within
the housing sector over the last few years. Rows,
supervision cases and even forced takeovers have often
dominated coverage of the housing co-op movement.
impact on the general governance of the organisation.”
But he is heartened by the recent recognition of co-ops’
strengths – including public praise from TSA chief
executive Peter Marsh.
Now, however, things are changing. Politicians of all
parties are lining up to endorse mutuals, with Cabinet
Office minister Tessa Jowell launching a commission on
extending the co-op model across public services, and
the Conservatives proposing new mutual-style local
housing trusts. And just as this new recognition of the
strengths of co-ops has emerged, the Confederation of
Co-operative Housing has embarked on a project to
create a new accreditation framework for co-ops under
the TSA’s local standards pilots programme.
“The significant majority of housing co-ops perform
very well,” he says. “It’s quite a change for our sector to
have the regulator publicly stating that. We have a
regulator now that is prepared to take an approach
based on what’s the outcome for tenants, rather than
what’s the particular governance model that we
understand, and having less flexibility with those who
move away from that standardised framework.”
Governance guidance for co-ops
The key strength of co-ops – the genuine involvement
of their residents – does of course fit well with the TSA’s
tenant-focused approach. And Mr Lambert says residents
can and do run highly responsive services. “I often say to
people who own their own homes ‘if someone said to
you you weren’t the best person to make decisions
about maintaining your home and how much money to
invest, you would laugh them out of the room’. It’s the
same rationale. As long as the systems are in place, there
is no reason why residents should be less able to
make decisions which affect them than anyone else.”
CCH treasurer Blase Lambert says co-ops have been
keen for some time to have advice specifically drawn up
to meet their needs. “We started having discussions a
couple of years ago that it would be desirable to create
guidance for co-ops on governance,” he explains. “Many
of the difficulties that co-ops were getting themselves
into were based around governance, so we felt it would
be useful to have tailored advice.” Mr Lambert says
co-ops have suffered for some time from ‘negative
stereotypes’ around resident control and governance.
“There are a small number of cases where housing co-ops
have got into difficulties,” he says. “That’s the nature of
people interacting – residents fall out and that has an
all the pain and suffering of this great recession, let's
call it, will have been in vain,” he said. He added that
huge disparities in salary between chief executives and
their staff had undermined 'the sense of fairness, the
sense of a social covenant'.
University governance arrangements are
'ramshackle' and should be replaced with a two-tier
system with separate courts representing staff and
student interests, according to an article in Times
Higher Education. It outlines the call from Roger
Brown, Professor of Higher Education Policy at
Liverpool Hope University, for a new system to
replace the current unaccountable governing bodies
which are 'on the one hand, not small, expert or
time-committed enough to be able to take effective
Responsive services
The project, which includes a sounding board made up
of co-op residents and partner organisations, is aiming
to finalise its accreditation framework for co-ops, and a
separate one for service providers, by March.
decisions but are, on the other hand, not large and
democratic enough to be properly representative
of the institution and its stakeholders'.
If the US were run in the way its companies are run,
it would be a dictatorship rather than a democracy,
argues a comment published by TheStreet.com. In
an article on the Kraft takeover of Cadbury, Odysseas
Papadimitriou, Chief Executive of Evolution Finance,
argues that the British system of corporate
governance, with a stronger role for shareholders,
is more democratic than the American. “It [the
British system] might serve as a model for America
to revamp its own board system, which is run from
the top down against the democratic principles
upon which our nation was founded.”
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hQn’s magazIne for boards, eXecutIves and leaders
Over the past few years, more and more
housing associations have opted to
streamline their governance structures.
One of England’s largest housing groups is
the latest to embark on a radical overhaul
Eight boards, eight committees – and a host of board
members and board papers. That’s the way Home Group
is currently governed. It’s a structure that has caused a
‘lack of clarity’ in lines of responsibility and accountability,
according to Home’s Executive Director for People and
Performance, Peter Stott.
“We have had the group board and a housing
operations board, which has oversight of some aspects
of the housing business, but it has been very difficult in
practice to draw very clear boundaries,” he explains. “If
there is a major financial decision or a major development
project it has to be referred to the Home board. Things
can become quite long-winded and there are too many
layers of scrutiny.”
Now, under proposals to transform its decision-making
process, Home is planning to move to a simplified
structure with one main board, supported by expert
panels and a fresh emphasis on customer involvement.
The shift will not affect Home’s subsidiary in Scotland or
the market rent and outright sale parts of the business.
But it will mean dissolving the boards for housing
operations, for Home’s care and support organisation
Stonham, and for black and minority ethnic association
Nashayman Housing, which merged with Home in 2003.
keep It
SIMPLE
16
the Governor march 2010
Eventually, too, it will mean the end for the Copeland
Homes board, set up to oversee a housing stock transfer
in Cumbria, and the Rayners Lane estate committee,
which looks after a major regeneration project in
Harrow, north London. Home says the overhaul,
proposed after a review led by board member Richard
Raeburn, will allow it to transform itself into the ‘truly
outstanding organisation we want to be’. The changes
will also sit well in economically challenging times,
with estimated annual savings of £120,000.
The Home board will be tasked with focusing on
strategy, performance scrutiny and the implementation
of the business plan. And more responsibility for
day-to-day issues will be delegated to the executive
team, supported by expert panels on issues such as
care and support and equality and diversity.
Mr Stott says a previous governance review in 2004 had
aimed to place the responsibility for strategic, legal and
financial issues with the main board, and for service
delivery and performance with the other boards such
as Stonham and housing operations. “When we’ve gone
back and looked again, actually so much about
operations and delivery depends on strategic decisions
made elsewhere,” he says. “We came to the conclusion
that the previous view taken in 2004 needed to be
revisited. These strategic decisions about investment
had enormous impact on our customers.”
“We Want people Who are able
to make a dIfference to the
QualIty of our decIsIon-makIng”
A key feature of the new governance structure is that,
for the first time, places on the main board will be
reserved for one resident and one Stonham client.
Home has already launched a campaign to find the
right recruits, using an agency to make sure, Mr Stott
says, that ‘people know what they are letting themselves
in for’. A consultation exercise has shown strong support
for the changes, which also include creating a national
customer panel and national client panel. Ninety
percent of the 2,800 people who responded were
in favour, with 3% against.
Clearly, in the new regulatory environment, a stronger
focus on resident involvement in decision-making
is bound to play well with the regulator. But will
residents on the board really make a difference? Peter
says they will. “We are very conscious of the dangers
of tokenism and that is absolutely not what this is
about,” he says. “The customer and client we recruit
will be able people who can take a board view and
bring their experience of how the reality of what we
do impacts on the ground. We do want people who
are able to play a full part and make a difference to
the quality of our decision-making.
‘It’s easy for all housing organisations to lose sight of the
point in terms of delivering a high quality experience,
when we are talking about things like business planning,
risk management and the relationship with the regulator,”
he adds. “The impact I can foresee is that having that
[customer] insight and experience represented in the
discussion will add a dimension.”
the Governor march 2010
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hQn’s magazIne for boards, eXecutIves and leaders
governance rOUnD-UP
never
KnOWInGLY
We’ve all heard of co-regulation. Now it’s co-production
that could become the latest buzzword.
The Conservatives are talking about workers’ co-ops
for the public sector. Labour wants to bring the John
Lewis model to everything from hospitals and
schools to housing. And a new think tank report
suggests that radical reform is required to allow
citizens to become more actively involved in the
design and delivery of services – in a ‘co-production’
between service provider and service user.
“there Is a groWIng polItIcal
consensus that the tradItIonal
model of publIc servIce delIvery, Is
neIther sustaInable or desIrable”
The report, Capable Communities, forms part of
a project by IPPR and PriceWaterhouseCoopers
looking at the shifting relationship between the
citizen and the state. And many of the proposals
in the report will chime with the housing sector,
as landlords move towards involving tenants
more fully in designing services and checking
performance.
“There is a growing political consensus that the
traditional model of public service delivery,
predicated on people passively consuming services
whenever they need them, is neither sustainable or
18
the Governor march 2010
desirable,” the report says. A partnership between
providers and communities, it adds, means better
services, more satisfied and connected citizens,
and better value for money.
But it will require a big cultural shift from service
providers. Professionals will need to ditch a
paternalistic way of working in favour of a more
partnership approach. “It will increasingly involve
building a relationship with the service user, working
together with them to identify how to solve a
problem, managing the relationships between
people and building mutual support systems.”
All of this fits, of course, with the shift in the
housing sector from providing ‘take it or leave
it’ services, to involving, empowering and working
closely with communities. But what barriers might
there be across the public sector to this kind of
approach? Encouraging professionals to become
enablers rather than fixers is a key challenge, the
IPPR says. It also acknowledges the difficulty of
promoting involvement. “Not everywhere has
the same levels of trust, social capital and resources
to contribute.”
Capable Communities – Public Service Reform:
The next chapter, www.ippr.org.uk
QUAnGOS
to go?
Quangos face an uncertain
future, given the Conservatives’
vow to slash their numbers if
they form the next government.
And housing won’t be immune, if comments by
shadow housing minister Grant Shapps are anything
to go by. He’s already said he just doesn’t believe
there’s a place for both the Homes and Communities
Agency and the Tenant Services Authority. The Local
Government Association’s quango report cards,
published at the back end of last year, won’t have
done much to convince him otherwise.
Ironically using a Housing Corporation-style traffic
light rating system, the score cards gave the HCA
a positive green rating for value for money and
openness, but a red – or serious problem – for
accountability and decision-making. The TSA,
which has worried Mr Shapps with the length of
its consultation over the new regulatory framework,
scored amber – or cause for concern – on all
three counts of value for money, openness and
accountability and decision-making. There were
some positive comments about both organisations
in the report – but as many housing associations
can testify, with a traffic light system, it’s the reds
and ambers that get noticed.
So which quangos fared worst under the LGA’s
scoring system? The Equalities and Human Rights
Commission ended up with two red lights, while
Passenger Focus, which exists to represent rail,
coach and bus passengers, got two reds and an
amber. Perhaps then housing won’t be first in line
if and when the quango cull comes to pass.
IMPACTS of devolutIon
Bringing decision-making bodies closer to the
people they serve has been a fundamental of UK
policy for more than a decade. A key example of this
is, of course, devolution. But, according to a new
study for the Joseph Rowntree Foundation, the jury
is still out over whether devolution has had a positive
impact on tackling disadvantage.
The research, commissioned to mark ten years of
devolution, suggests that despite falling poverty
levels and improving employment levels in the
devolved countries, most progress has been due
to the use of reserved UK-wide powers.
The JRF says some devolved policies, in areas
such as social care and regeneration, are having
an impact. But many will need longer to take
effect, while others would need to be applied
on a bigger scale.
Devolution was not specifically designed to
address poverty – although many have argued
that devolved governments should be closer to
their communities and so able to better identify
and target their policies.
Impact of devolution, www.jrf.org.uk
the Governor march 2010
19
Whoever wins the election, governance
has changed forever. The TSA could
survive, disappear or get relocated on political
whims. But its big message will live on. Boards
and executives must regulate themselves.
There won’t be any more tutoring from the
Audit Commission or the TSA. Yet if you fail
the new tests, the penalties will be even
more severe. How can HQN help?
Board briefings: the practical impact of co-regulation explained
to your board in a punchy one-hour session for £200
Co-regulation action planning: an independent audit of your
arrangements for setting and monitoring standards. Board report
and action plan included – for under £1,000
Standard setting: hands-on help with setting national and local standards
at your organisation. When is it right to set your own standards? When
should you fit in with other local providers? How do you run realistic tenant
consultation that makes a difference? Tenants don’t want more talking shops
Standard checking: are you delivering on board promises? HQN
runs the leading inspection and improvement service. Hard-hitting
findings with practical recommendations to get better – no one
comes near our track record for boosting performance
Credit crunch challenge: HQN challenges your costs and
performance against what’s possible through better joint
working, procurement and IT. We compare you to the
market – not the herd.
HQN is working with the TSA local standards pilots
to produce the toolkit on setting local standards.
If you are interested in any of these services please contact
Anna Pattison on 01904 557197, or [email protected]
Please note there is limited availability for our board
briefing and co-regulation action planning services.
Rockingham House St Maurice’s Road
York YO31 7JA
Telephone 0845 4747 004
Fax 0845 4747 006
Internet www.hqnetwork.co.uk
Email [email protected]