The Governor - June 2011

Governorthe

HQN'S MAGAZINE FOR BOARDS, EXECUTIVES AND LEADERS JUNE 2011

Board strategies for the future The Housing Ombudsman's view Serious detriment - what does it mean?

Is freedomjust anotherword for nothIngleft to lose - or a hugeopportunIty for leaders?

RegulationRecedesinspection gonecouncils letloose

HQN The Governor June 2011 13/6/11 16:35 Page 1

HQN: Accreditation – providing a visible sign that organisationsnot only meet or exceed good practice standards, but are alsoproud to offer a best-in-class service to their residents.

“We constantly look at ways to improve our services throughinnovative working; this was a great way for us to be vigorously andindependently tested. It was challenging and made us look at ourprocesses and how we interact with customers and partners.Customers were at the heart and were impressed by our work.”

Bob Newton, Manager of Helena’s Rents Team

“We’re committed to providing excellent services for our residents;it’s one of our core promises and this award endorses that. It providesmotivation for our employees and our residents. The process wasboth challenging and constructive and has identified a number ofbest practice recommendations that we’ll adopt. It demonstrateshow we have progressed as a specialist income team.”

Tracie Lovelock, Income Services Manager,Greenfields Community Housing

“I've seen a much improved service that's professional andresponsive. Neighbourhood managers are more visible and betterable to respond to local problems.”

John Galvin, Resident, Family Mosaic

“It was incredibly thorough: it wasn’t all about having the rightpolicies and processes, it was about outcomes – what our estateslook and feel like, and what is it like for the residents who livethere, and that’s what’s really important."

Yvonne Arrowsmith, Group Director, Family Mosaic

HQN AccreditIncome Managementand Estate Services"we're all delighted!"

Congratulations to helena partnerships and greenfields Community housing(income accreditation) and family mosaic (estate services accreditation),the first in the country to achieve our award.

To find out more, contact Anna Pattison ([email protected])or Russell Helms ([email protected]) on 0845 4747004.

Current accredit options include:HQN Accredit: DLO

HQN Accredit: Contractor

HQN Accredit: Income Management

HQN Accredit: Estate Management

HQN Accredit: Responsive Repairs

HQN Accredit: Gas

Rockingham House St Maurice’s RoadYork YO31 7JA

HQN Limited Registered in England Reg No. 3087930

Telephone 0845 4747 004Fax 0845 4747 006

Internet www.hqnetwork.co.ukEmail [email protected]

support services

Residents and colleagues watch asYvonne Arrowsmith, Group Operations Director,

Family Mosaic, receives the award from Lydia Dlaboha

Lydia Dlaboha, Deputy Chief Executive,HQN, presents the Accredit award to Greenfields

Income Services Manager Tracie Lovelock, watched by David Hall,Director of Finance and Resources (left) and Phil Adams, Chief Executive

The Helena Rents Team withBob Newton, Rents Team Manager, second from left


HQN’S MAGAZINE FOR BOARDS, EXECUTIVES AND LEADERS

well done grant shapps. Thanks for getting those pesky housing inspectorsoff our backs – freedom at last. Housing regulators won’t move a muscleunless there is, in the lingo, serious detriment to tenants. Broadly thatmeans if you didn’t deliberately try to kill off the tenants you escape scot-free.Now that housing management and maintenance no longer matter, howshall we pass our time? Roll out those lazy, hazy, crazy days of summer…

Except it never really happens like that, does it? After a year we knowwhere the coalition is going on development, rents, benefits and tenure.But there has been no progress on housing management. No sign of JohnLewis mutual organisations springing up. The guns of the private sector aresilent. Is there nothing to worry about? Or is it just the lull before the stormthat Sartre depicted in The Reprieve? Paris loved and partied in the daysbefore the Germans kicked off. Is the last-ever CIH conference in Harrogatejust a reprieve? Will pressure grow as the temperature drops in autumn?

Recently the TSA published a lacerating analysis of association costs.Unexplained variations and inflation-busting hikes were the highlights.As far as I can tell, no one read it, perhaps because previous versions gota bad press. It still has flaws; there is no attempt to link cost and quality.But what information could the TSA have used? Satisfaction surveys tellyou more about who the tenants are than they do about the quality of theservice. The only way to really sort this out is for someone to visit landlordsand get behind the reasons for cost variations. That was one of the aims ofinspection – but it no longer happens. Tenant scrutiny panels are doingwell at recruiting fresh blood. But they will fail without freely availableobjective information on costs.

While the TSA analysis was fresh in nobody’s mind, Westminster announcedthe result of its housing management tender. Pinnacle won at around £450per home per year. That’s around half the management costs from the TSAanalysis – which included associations in areas where labour is cheaperthan London. There will be an element of apples and pears in this, buthow can Shapps ignore such a gap? Don’t forget that Westminster is anexperienced client and Pinnacle has shone at inspection. This is unlikelyto be a Southern Cross, Rok or Connaught-style fiasco.

What will Shapps and Pickles do? My bet is they will demand thatassociations and councils think about the benefits of tendering. Whatshould you do as leaders?

Stop drawing comfort from benchmarking against other landlords thathaven’t tendered either

Ask for an explanation of how you fare on the TSA cost model (braceyourself for fair and unfair reasons)

Act as if there is a war on when dealing with costs – scrutiny panelswill spot waste, don’t fob them off by saying we’re the same as everyoneelse (in an industry that until recently was protected)

Make sure you have quality management systems like accreditation in place

Make sure you have access to people that can run housing managementprocurement well – they are rare

Take decisions on whether you tender out or retain services based onfacts not prejudice.

The TSA told me that not one board or scrutiny panel member asked themhow their organisation did on the cost model. What a sad indictment ofgovernance in our sector.

alistair mcIntoshChief Executive, HQN

the Governor JUNE 2011 3

3 well done, grant shapps…Comment by HQN Chief ExecutiveAlistair McIntosh

4 fight – or flight?Rabbit in the headlights – or excited by thechance to do new things?

6 the dispute resolversIs the government on the wrong track withthe Housing Ombudsman?

9 to intervene or not to interveneGetting to grips with ‘serious detriment’

10 a change of gearWhat are the implications for asset managementof the new council housing funding regime?

12 fresh blood or vintage stock?Is it best to promote to the top job fromwithin, or from outside?

14 greening the sectorAre social landlords ready to take the lead onthe Green Deal?

16 the new transparencyThe first association to publish its spendingexplains why

from the pressOur regular round-up of the world press’s viewof governance

18 share alikeMinisters love the idea of shared services

simplesMore and more housing associations arestreamlining their governance structures

women on boardDiverse boards are good for business

school’s out...Ofsted's new report will strike a chord withhousing governors

contents

All articles in The Governor were written byKate Murray unless otherwise stated.

Designed by Paul Miller Prontaprint Scarborough



the Governor JUNE 20114

“as Billy Connolly said, there is no such thing as badweather – just inappropriate clothing.” That’s howOrigin Housing chair Colin Sherriff sums up his approachto steering his organisation through the challengingtimes ahead. It’s a useful philosophy to bear in mind, ashousing providers gear up to deal with not only thesqueeze on public funding for housing, but the fall-outfrom welfare reform. There’s been much debate in thesector about whether it’s time to retrench or to innovate.While the urge to hunker down and wait for the crisis topass may be strong, housing need doesn’t simply goaway. So, as our chairs suggest, organisations will needto find new ways of doing more for less to help thecommunities they serve.

Bob Brady, fabrick housing group

“Although we were not predicting the credit crunch, wedid start to put things in place around makingefficiencies and being more effective in how we workthrough the creation of Fabrick Housing Group, so whenthe financial downturn did hit we were already in a goodposition. However these are challenging times and werecognise that we have to do more and continue toinnovate to come through these times even stronger.

“We are certainly not retrenching. We want to continueto develop and we have put in a strong bid. We are alsolooking at what other services and support we can bringto our partners and communities.

“We recognise that housing associations have amassive role to play in supporting communities,especially as vital services are being cut, so we willcontinue to invest in initiatives such as financialinclusion and jobs and training, alongside our workin supported housing and neighbourhood management.”

alison Inman, Colchester Borough homes

“We are facing a cut in our management fee but weare approaching it by taking the opportunity to do afundamental service review with the support of thecouncil. We are going to have less money but arelooking to totally reorganise how we work and weare quite confident we will have a better offer for thecustomer as a result of this and will save quite a lotof money.

“It is hard – we are going to have some redundanciesas a result. But overall there’s quite a positive feelingthat we are going to be providing a better service. Thealternative was to sit and have things imposed on us.One reaction [to having less money] is just to salamislice and take a bit off each department, but doing theway we are we feel a bit more in control.

“Our board, and tenant board members in particular,felt a responsibility to all our customers not just to sitand whinge but to do as much as possible. There willbe some things we are not able to do – for our partof the sector, development is going to be very verydifficult, but we need to say: ‘Actually, let’s see whatelse we can do instead’. We want to take a look at thereally positive parts of the organisation and try andalmost get people to ‘catch’ that. We have got pocketsof amazing positivity.”

sinead mcQuillan, Innisfree housing association

“There are possible opportunities that we don’t wantto just say an absolute ‘no’ to, but we are not going tochange to do things that don’t fit with our values orfinancially are too risky. We are trying to keep as open aview as possible as to what opportunities are available.

Do you feel a bit like a rabbitin the headlights? Or areyou excited by the chanceto do new things? With thehousing sector facing a periodof tremendous change, wetalked to a cross-section ofboard chairs about theirstrategy for the future

FigHtOR FLIGHT?




“I am confident we have a very skilled set of boardmembers and committed staff who will rise to thechallenges but I am not naïve and I do recognise thereare huge wider issues. But there are opportunities aswell and we are making sure we can be fleet-footedenough if there’s a chance, for example, for associationsto become more community-based.

“If the whole financial model for housing associationscrumbles, we are going to struggle like everyone else.But I don’t see it as ‘woe is me’ – we have been prudentand will take sensible decisions. Good governancestructures do help.”

Colin sherriff, origin housing

“I have a sense there’s a lot more to come.The affordable rent regime is only the start offairly dramatic set of changes, not all of whichwe can anticipate yet. There are opportunitiesyou can take, but it is important to think aboutwhat type of organisation you want to be. Thereis no point in just hunkering down and waitingfor things to go away. My experience in housingover last 35 years is that once the tide has comein, and then goes out again, things are entirelydifferent. You don’t get to go back to the previousenvironment.

“Housing associations are wealthy organisations –rich both financially and in terms of the peopleskills and knowledge within the organisation.We have a responsibility to put that wealthof finance and experience at the disposalof the community.

“We won’t necessarily be doingwhat we’ve always done but ourfocus will stay – it’s part of thefabric of the organisation andnot just part of our heritage,it’s part of our present.

“We are being imaginative interms of way look at propertydevelopment as we have tocontinue to look for new waysto develop new housing. It’sobviously not going to be easyor anything like it has been before,but it’s my firm belief if you setout a clear set of objectives and adetermination to achieve them,

then you can. If you stand on the sidelines saying‘it’s all terrible’, then inevitably you will fail.”

sue roberts, wolverhampton homes

“We are setting ourselves challenging targets. Eventhough we are high performers, obviously now thatthe Audit Commission is gone you’ve got to makesure your organisation doesn’t say: ‘Well we’ve gotthree stars, we will just leave that’ – you’ve got tocontinue to improve.

“A key issue will be continuing to provide value formoney in more challenging financial circumstances.We have already done a lot of VfM exercises withinthe organisation and there comes a point where youcan’t trim any more.”

“IF THE WHOLEFINANCIAL MODELFOR HOUSINGASSOCIATIONSCRUMBLES, WEARE GOING TOSTRUGGLE LIKEEVERYONE ELSE”



If there’s one job that calls for a measured tone and acareful choice of words, it’s that of an ombudsman. So when

Housing Ombudsman Mike Biles suggests the governmentis on the wrong track, you can bet things are serious




“I think people will look back and think that theombudsman service as it was, was quite a good thing,”he says of plans to overhaul the Independent HousingOmbudsman’s oversight of housing.

But why the concern? After all, the changes beingintroduced in the Localism Bill mean a big step-up forDr Biles’service. In one sense, the bill is an endorsement ofthe progress the ombudsman has made in building goodrelationships with housing associations and their tenantsalike. Thanks no doubt in part to the good reputation it

commands in the social housing sector, the IHO willnow take on responsibility for complaints made

by council and ALMO tenants.

plenty of work to do

There will also be plenty more work to do.Not only because there will be more landlords

and tenants under its remit from April 2013, butalso because complaints are likely to become a more

important way of judging a landlord’s performanceonce the more consumer-focused aspects of theTSA and Audit Commission’s work are swept away.

But the real worry for Dr Biles and his teamcomes in the way the new system will be setup. Instead of, as now, being able to take theircomplaint directly to the ombudsman once alandlord’s complaints procedures have beenexhausted, tenants will have to go to acouncillor, MP or tenants’ panel, who willneed to try to resolve their complaintlocally before it can then be referred on.

That so-called ‘democratic filter’ goesagainst a key principle of a good

ombudsman, says Dr Biles.

“Direct access to the ombudsman is one of the crucialpillars [of the service],” he says. “The Cabinet Officeguidance itself says that an ombudsman service shouldbe independent, accessible, efficient and effective andaccountable. For an ombudsman to be an ombudsman,citizen should have direct access.”

a dual track approach

Last year’s proposals from the Law Commission onimproving the public’s access to public services ombudsmenrecommended that the only‘filter’in existence so far – forthe Parliamentary Commissioner – should be replaced by a‘dual track’approach, where people could approach thecommissioner directly as well as just through their MP. Asthe Localism Bill progresses through Parliament, ministershave been urged to adopt the same dual track approach forhousing. But so far, they have stood firm. As junior housingminister Andrew Stunell put it:“The government’s view isthat the filter that we have established is the best way toensure that disputes are resolved locally and that theombudsman focuses on addressing cases where effectivelocal resolution is not possible. Intervention from the centre,whether by the government or the ombudsman, should bethe last resort and not the first port of call.”

That approach though leaves many unansweredquestions. How should the tenants’ panels be set up,given that they will need to be independent fromlandlords? How will their members be trained? What ifnot enough tenants come forward? And if complaintsgo to councillors, will there be political points-scoring?How will local findings be enforced? Will tenants askdifferent councillors or MPs to look at their case if theyare not satisfied with how another one has consideredit? All of which leads to a sense that the government isasking tenants and landlords to take a step into theunknown – with potentially damaging results.

“I am looking forward to going to [the CIH conference in]Harrogate and seeing what boards and chief executivesthink of the propriety of mending the democratic deficitthrough the medium of social tenants,”says Dr Biles. “Whynot experiment on middle class people going to the Local

Government Ombudsman complaining about planning,education or refuse collection? Why social tenants?”


RESOLVERSHQN The Governor June 2011 13/6/11 16:35 Page 7



a turbulent period

The ombudsman service is already preparing for thechanges and some landlords too are starting to thinkabout what it might mean for them. But Dr Biles sayswith so much else going on in the housing sector, theissue has not been at the top of everyone’s agenda.“Landlords are starting to gear up but the many unknownsare making it difficult for them. There’s quite a big tailthat hasn’t yet caught up with what’s going on and theramifications for risks, resources and training. A handfulof tenant activists know what’s going on but my sense isthe vast majority don’t know.”

Once the new system comes in, there is likely to be whatDr Biles calls ‘a very turbulent period for customers’. “Wewill try everything within the terms of our jurisdictionand powers to help,” he says. “We will have a huge influxof inquiries in first 18 months to two years and we willbe managing expectations.”

One of the key problems in planning ahead is whetherthe new system will, as ministers hope, drastically cutthe number of cases the ombudsman needs to resolve.No one yet knows for sure. But it would hardly be a goodthing if complaints dropped simply because tenantswere put off by the ‘democratic filter’ drawing out thecomplaints process. Pushing himself towards redundancywould, says Dr Biles, only be a good thing if it was as aresult of progress in the sector. “I wouldn’t disagree withthe ultimate objective of making the ombudsmanredundant if what we have done with our processes andphilosophy is get providers to a place where they candeal with complaints successfully locally.”

Important lessons

Ministers stress local solutions when they talk about thenew filter arrangements. But the changes also riskundermining the ombudsman’s role in spreading the

word about what to learn from complaints, so thatproviders are not constantly reinventing the wheelwhen it comes to best practice. “There are importantlessons – who is going to be the collator of thoselessons?” Dr Biles asks.

The service prides itself on its proactive approach tosupporting the relationship between providers andtenants. Staff believe that over the last few years muchprogress had been made.

“Attitudes have shifted. It takes landlords a while to trustthat feedback and to recognise that complaints andcompliments are good for business. But that has seepedmuch more into the culture,” says Deputy OmbudsmanRafael Runco. He hopes the changes do not mean thatlandlords slip back into being overly-defensive aboutcomplaints, or retreating from the positive and promptway increasing numbers have been handling them.

The ombudsman service has to take credit for helping toshift attitudes. Dr Biles puts the shift down to peopleknowing that ‘we have no agenda other than a fairresolution and supporting the sector’. That positiveresponse to the service’s work is one that theombudsman team hopes local authorities will come toshare. “For local authorities, it will be different becausewe are different. Whether they like that difference or notremains to be seen,” Dr Biles says. “We are hoping whatwe have to offer is positive, flexible and proactive andwe hope they will embrace it.”

He hopes too that his service will be able to put itsexperience to good use as landlords and tenants get togrips with the new system, in whatever form it finallyemerges once the bill is enacted. “We will work withlandlords, tenants, councillors and MPs so we can helpthem with our expertise if they want it,” says Dr Biles. “Weare not just going to sit and wait for stuff to come to us;we are going to be proactive.”

The Localism Bill sets out plans for a single mandatoryombudsman for all social landlords from April 2013.The Housing Ombudsman and the Local GovernmentOmbudsman will be expected to collaborate on caseswhich overlap their remits.

Tenants will no longer have direct right of access tothe ombudsman. They will have to ask for their casesto be referred by an MP, councillor or panel.

Ministers hope the new system will mean many morecases are resolved locally.

In the past few years, the Independent HousingOmbudsman’s caseload has been rising steadily.In 2009/10 its dispute resolution team dealt withmore than 4,800 complaints – a 25% increase onthe previous year.

The Local Government Ombudsman serviceestimates that around 20% of its 18,000 complaintsand inquiries in 2009/10 were housing-related(although some concerned non-social-housingareas like grants for private housing).

THEdisputeRESOLVERS

THE TASk AHEAD FOR THE HOUSING OMBUDSMAN




WHAT IF...?

this is a time of dramatic change for the social housingsector. The Localism Bill introduces various practical andregulatory changes, one of which is the concept of‘serious detriment’. It will mean that the threshold forthe regulator to become involved will be much higher.But its precise definition and extent is, as yet, unknown.

The Localism Bill does not provide any statutorydefinition of ‘serious detriment’. Although the conceptexists in other legislation and is considered in case law,it primarily relates to land and pollution issues, familylaw cases and employment claims. Serious detrimentin those areas cannot directly translate into socialhousing – but it is essentially where a person is putat a disadvantage and that disadvantage is serious.

DCLG’s paper Review of social housing regulation,published in the run-up to the Localism Bill, providessome helpful guidance.

It says the regulator should have regard to the severityand the extent of the impact in deciding whether itshould intervene. Failures which resulted in a severeimpact on a large number of tenants would representstrong grounds for intervention, DCLG says.

It expects that information about serious failures willcome from a variety of sources, including:

Complaints made to the Housing Ombudsman,tenant panels, MPs or councillors

Performance information

Intelligence from councils which become aware ofevidence of serious failures

Evidence from other expert bodies such as auditorsor health and safety enforcing authorities

Whistle-blowing employees or whistle-blowingbodies working closely with social landlords.

Anyone will be able to submit evidence of a failure byproviders to the regulator. However, only evidence fromspecific bodies such as the ombudsman, councils, MPs,tenant bodies, the Health and Safety Executive and theSecretary of State must be taken into account by theregulator. Any other information, for example fromperformance information or whistle-blowing staff, maybe taken into account.

DCLG says the regulator will have to consider two things.First, whether any breach of standards might have takenplace, and secondly whether that breach is – or could be –sufficiently serious to warrant regulatory intervention. It isfor the regulator to determine what is serious: this couldobviously vary substantially between differentorganisations and circumstances.

The TSA is now working to define what ‘serious detriment’means, reviewing examples of serious detriment andassessing the role of the regulator in investigating issuesthat could be serious enough for enforcement action.We will have to await this guidance before we can fullyunderstand the way that providers will be regulated.

As with much of the Localism Bill, the actual effect of thechanges will not be known until the provisions are in force,cases arise and reality strikes.

Emma Duke is an associate at Anthony Collins Solicitors LLP

I’m really worried about having to showserious detriment to tenants before theregulator acts. Today I’ve been with thetenants of a large housing association.There’shuge enthusiasm for resident inspectionand empowerment. But what if the businessplan crumbled? What if the board andexecutive team weakened and screwedup? Can the regulator really do anything?

It will be tough to prove that failure toinvolve tenants leads directly to serious

detriment. Where do you draw the lineon repairs and Decent Homes? Of coursethe home must be watertight and safe.But if someone cannot afford to keeptheir home warm in winter because theirlandlord hasn’t carried out Decent Homesyet, does that cross the serious detrimentline and trigger action?

It will be up to tenants to hold their landlordto account. Will tenants do this or will badly-run and financially stretched landlords be

able to avoid their responsibilities? In theabsence of detailed regulation, it may allcome down to choices. There is, it could beargued, even an incentive to cut standardsto the bone. The more cash you save, themore new homes you can build. We havepromised tenants that standards wouldimprove. But will standards now fall? AsEmma Duke says, the guidance will havefar-reaching consequences.

Alistair McIntosh is Chief Executive of HQN

TO

The new regulator will only step in if a problem risks ‘serious detriment’ to tenants.But what will this ‘serious detriment’ mean? Emma Duke and Alistair McIntosh take a look

inteRVeneinteRVeneOR NOT TO



the new self-financing regime represents a huge shiftin the way council housing services are funded.

The government says the reforms will ‘give localauthorities the resources, incentives and flexibility theyneed to manage their stock’. So what are the key issuesfor local authorities and ALMOs as they considermanaging their homes under the new regime?

the basis of the stock valuation

Each authority's stock will be valued in a 'one-off'exercise, based on assumptions about rental income,and expenditure on managing and maintaining thestock over 30 years.

Local authority rents will rise until rent convergenceoccurs in 2015-16, after which rent increases will belimited to RPI + 0.5% pa

Expenditure assumptions will be based on researchcommissioned by DCLG from BRE and HQN, and willbe based on:

– A major repairs allowance of £956 pa

– Management and maintenance allowances of£2,061 pa

– An allowance of £60 per unit pa for disabledadaptations.

These allowances represent a typical increase in allowableexpenditure of 14% (it will be less for some authorities).All authorities will have more cash to spend on theirproperties over the life of their business plan, althoughsome business plans will remain under severe pressure.

the implications for asset management

On the face of it, a 14% increase in allowableexpenditure is not bad! However, the safety net ofgovernment support will have been removed, and thesettlement can only be re-opened if there are majorchanges to rental or environmental policies that have a‘substantial, material impact on the landlord’s business’.

Clearly the government sees this as a once-and-for-allsettlement, and has no plans to bail anyone out or tolisten to pleas for more cash in the future.

The expectation is that authorities will develop andimplement a 30-year investment plan, and will deliverthe repairs and maintenance services that customersrequire and confirm to all statutory and landlordresponsibilities withint the constraints of the businessplan. Overspending will not be an option, and neitherwill any unplanned or unaccounted for expenditure, but100% of any savings can be retained for use within theHRA. The effective planning, monitoring and controllingof costs and programmes of work will be essential, andauthorities will need to ensure that they have the rightsystems, information and controls in place.

THE ASSET MANAGEMENT ISSUESARE LIKELY TO BE:stock data

Authorities must be satisfied that their housing stockcondition information is accurate, reliable, and generally‘fit for purpose’ to inform key business decisions. Theinformation should be up to date, and ideally there willbe a rolling programme of data-gathering, rather thanusing stock condition surveys as a series of ‘snapshots’ ofasset condition.

Best practice is that the data is held in a purpose-designed database, where investment scenarios can betested and modelled. The investment plans producedthrough the database should be agreed with customers,and should be fully funded by the business plan.

asset management strategy

Best practice requires the authority to have an assetmanagement strategy that describes the stock,identifies the asset management issues that theauthority faces, and describes how those issues will beaddressed through planned programmes of investment,improvement, repair, renewal, regeneration andrationalisation. The asset management strategy willgenerally cover a period of five years, but will be placed

Now that the council housing funding regime is being transformed,what are the implications for the way assets are managed? Mike Jones,HQN’s Director of Asset Management, gives some pointers


A CHANGEOF



within the context of a 30-year investment plan.

A key issue in the asset management strategy will be todemonstrate a clear understanding of how the authoritywill structure itself to procure, manage and deliver theplanned programmes.

Value for money

The guidance is very clear that value for moneyimprovements are expected, and that the improvementmust be demonstrable.

DCLG’s evaluation of the self-financing pilot between2006 and 2008, which included six authorities,highlighted savings of 10% in stock investment costs,brought about by:

Better contract rates through longer-term partnering

Client-side efficiencies, based around long-termplanning and the use of larger, longer-running contracts

Avoiding unnecessary repair and patch-up works priorto elemental renewals

Better packaging of works

Better planning of environmental works.

The government has applied the results of this study toall stock-holding authorities over a period of 30 years,and anticipates savings with a net present value of £6.49bn.Clearly authorities should be examining their costs, andshould be developing cost reduction strategies. Perhapsgiven the recent advances in IT and developments inmobile working and dynamic work planning, thesesavings are more easily achievable than they first appear.

receipts

In addition to the 25% of Right to Buy receipts that canbe retained, the guidance includes two areas where100% of sales receipts can be retained:

The sales of unwanted vacant stock

The sale of vacant land.

The conditions attached are that the receipts are retainedfor affordable housing, regeneration or paying off HRAdebt, but this offers the opportunity to sell unwantedand underperforming assets. It will be important thatauthorities have the systems in place to enable them toidentify and carry out options appraisals on this asset type.

new build

New build remains an aspiration for many authorities,although DCLG has noted that most authorities’ambitionsare modest in this area – typically five to 30 units pa.

It will be possible for authorities to build, although theymust do so with savings generated elsewhere in thebusiness plan and within an overall borrowing cap(the council house borrowing limit). If authorities areconsidering new build, they should consider that it can bea cutthroat market, and that it is not an area where manyauthorities have up-to-date skills. Perhaps it would bebetter to buy in the required skills from housingassociations, or to work with associations that oftenhave considerable experience in this complex area.

The new self-financing regime offers significantopportunities for authorities to improve and enhancetheir services, to take advantage of savings andefficiencies, and to engage with residents on the shapeof future services and investment plans. However, to besuccessful, they will need:

The right structure and systems for long-termplanning and service delivery

Accurate and up-to-date information on both the housingstock condition and the cost drivers of the business

A well-planned asset management strategy which detailshow the authority will manage and invest in its stock

An option appraisal system for failing orunderperforming assets

A strategy to drive improved efficiencies and value formoney enhancements across the asset managementservice.


geaR




FResH

Is it best to promote one of yourown to the top job? Or shouldyou bring in fresh blood?As a new report finds more ofthe world’s top companiesare recruiting from within,housing chief execs fromboth camps givetheir views




OR VINTAGESTOCK?Blood

when times are tough, the planet’s biggest firms lookwithin for the steady hand they need. According to thelatest study by Booz and Company of chief executiveturnover worldwide, 81% of the CEO appointments madeamong the world’s 2,500 largest public companies last yearwere to insiders. This ‘Japanese tradition’, the globalmanagement consultancy says, is now becoming aworldwide phenomenon. It may be widespread in Japanesebusinesses, but it’s long been common practice too in socialhousing in this country, where an understanding of theethos of the sector is highly valued. But does the riskierenvironment for social landlords mean appointing frominside is likely to become even more entrenched?

That’s certainly one possible reaction from wary boards tothe pressures the sector is facing. As Brian Cronin, ChiefExecutive of Arena Housing Group puts it:“When things aregoing well and there’s a lot of growth around and a lot ofmoney, boards start to think they need to bring in freshblood and new ideas. That’s a good thing – new approachesare always useful. But in times like now when the sector isunder pressure, and with something like affordable rentspotentially changing the ethos of organisations, one of themain roles of boards is to protect that ethos. When facedwith difficult decisions you go back to your values.”

Mr Cronin stepped up from Deputy Chief Executiveto the top job at Arena in 2007 after a long career inhousing. He says there are pros and cons to bothexternal and internal appointments at a senior level, butthat one of the key advantages of an internal candidateis experience of the organisation’s fundamental values.

pros and cons

“That’s not to say that you don’t do things differently,but you do things within that value set,” he says.“Housing associations are very emotional organisationsand people put in lot of effort above and beyond what isrequired. They may understand the need for change butthey want to see it carried out within our values.”

Mike Hinch, another chief exec appointed from within,says when he was appointed as Chief Executive of NewlonHousing Trust in 1999 after joining six years earlier asFinance Director, the organisation was in the middle oftwo stock transfers which he went on to steer through.

“There were a lot of things I understood. The boardprobably saw it as a low risk appointment because theyreally wanted those stock transfers to work,” he says. “Itsounds a bit drab in terms of continuity and being safe, but

it is also important that when you appoint you go forsomeone who has a vision of where they want to take theorganisation. An internal candidate has to have that visionwhich is different from where the organisation is now.”

Of course every organisation has to have the right balance.“There’s a range of more commercial and entrepreunerialskills required in these times that doesn’t necessarilyneed to be at chief executive level,” says Mr Hinch.

juggling

Brian Johnson, now Chief Executive of Moat HousingGroup, is a more recent recruit to the housing sector. Helanded his first job in housing in 2004 when he becamechief exec of the arm’s length management organisationCityWest Homes after working in the chemical industryand more recently for the not-for-profit organisationRemploy. He knew little about the housing sector whenhe joined – but says the detail he has picked up since isnot as important as other skills.

“I spend my time leading the organisation, influencingpeople externally and figuring out how to make theorganisation stronger and better so we can deliver moreto our customers,” he says. “I would argue that once youget to a reasonably senior level, your functional skills aremuch less important than your leadership andorganisational management skills.”

What is crucial, he says, is the ability to juggle commercialimperatives and social purpose. “Some people don’t havethe mindset where they can juggle those two things –but it is one of things I really enjoy about it.” Of the otherthree members of Moat’s executive team, two are fromoutside the sector, but other senior managers have stronghousing-specific skills – and it’s a mix which works well.

skills from both sectors

Mr Johnson argues that while the temptation for housingproviders in this challenging environment might be to stickwith what they know, it is actually a good time to bring innew talent. “One of the opportunities we have now is tolook around for good people who might be available fromboth the private and public sectors who have the skills theycan bring to organisations to complement the housingskills we already have,”he says.“The opportunity right nowis to create teams with a variety of strengths. After allwhat’s true is that housing in ten years’ time won’t be likehousing is now. We’ve all got to learn from each other andit would be arrogant to say the private sector has got all theskills, and equally arrogant to say the housing sector has.”




gReening

For salix Homes, becoming a trailblazer for thegovernment’s green revolution makes sense.For the arm’s-length management organisation hasthis year secured £51.8m in Decent Homes funding,and is embarking on a major programme to bringcouncil homes in Salford up to scratch. The work givesSalix a golden opportunity to pioneer the Green Deal –a scheme which, ministers hope, will transformhousing in both the public and private sectors.

“The whole fuel efficiency and fuel poverty issue isas important as Decent Homes. We want to use theopportunity while doing Decent Homes work toaddress that,” said Matt Roberts, Salix’s Head ofInvestment and Maintenance.

“Fuel prices are rising and welfare reform will bekicking in and these will have a real impact on ourtenants. We need to use the opportunity we have.”

Much work to do

As a pilot for the Green Deal, Salix will be helping todevelop a model to be rolled out nationally next year.And there is much work to do. The government’s aims for

the programme are high. It calls the Green Deal the‘mostambitious energy-saving plan ever put forward’andhopes it will create up to a quarter of a million jobs, aswell as slashing carbon emissions. But much still needs tobe resolved. How exactly will this transformation of thenation’s housing stock be financed? Who will train up thenew workforce needed to carry out the work? How willhouseholds be encouraged to take part – and to changetheir lifestyle to make the most of the work once it’s done?

One thing is for sure, social landlords need to bethinking now about their role.

John Swinney, Strategy Director at Carillion EnergyServices, says the government is likely to want sociallandlords to take a lead.

“Getting individual [households] to commit is going tobe challenging,” he said. “But the government can sortof influence landlords and local authorities. I thinkthere will be quite a push on social landlords as weget closer and closer to the start date. I would say it isgoing to be very slow starting up and social housingcan kickstart things. Organisations should be thinkingnow about the opportunities.”




The Green Deal has been dubbed the most ambitious energy-saving plan ever. But are social landlords ready to take the lead?

THE SECTOR

what’s the plan?

key issues for social housing providers, added MrSwinney, include financing and potential partnershipdeals. “Social landlords, whether housing associationsor local authorities, need to be thinking: ‘What’s ourplan, what’s our strategy going to be – are we going topartner with another council or housing association?Do we become an agent for the private homes aroundour stock? Will we need a beauty contest to team upwith someone?’”

But he warned: “Local authorities and housingassociations can be so risk-averse that if they are notstarting to look seriously at what their options are,they will miss the start of the Green Deal.”

payback time

In Salford, some of the most crucial issues alreadybeing looked at include how to encourage behaviouralchange among residents, the accreditation and trainingrequired for suppliers and the funding needed to bringex-Right to Buy properties up to scratch. Then there’sthe issue of payback.

“We are very mindful of ourvulnerable customers – we don’twant to move people into fuelpoverty by them having loans,” saidMr Roberts. “Doing some modellingaround this is critical.”

But he is clear that, although thereare a lot of issues still to be workedout, there is huge potential for the social housing sector.

“We certainly see it as business opportunity,” he said.“There are a lot of organisations which have alreadygone through their Decent Homes programmes andhave still got staff in place who are ideally placed to dothis work. Organisations could be Green Deal advisorsto the private sector. It’s a funding source – and ifit’s the only funding for this level of retrofit then youhave to go for it.”

John Swinney agrees. “It is a fantastic opportunity,” hesaid. “The Green Deal could blur the margins betweensocial housing, the private rented sector and owner-occupation – it makes sense to do all of them when youare making a blitz on a community.”

The Green Deal is being launched to encouragehouseholders to insulate their homes with no upfrontcosts. The work will be paid back in instalmentsvia fuel bills. The work will need to meet the ‘goldenrule’ – that expected savings must be equal to orgreater than the cost of the work.

For the social housing sector, there may beopportunities for social landlords to become GreenDeal providers – offering finance to residents,potentially in the private sector too, and carrying

out improvements to homes. Using renewables andthe Feed-in Tariff could help subsidise retrofit work.

Secondary legislation is expected next spring, withthe first Green Deals due to appear in autumn 2012.

According to climate change secretary Chris Huhne,‘were all 26 million households to take up the GreenDeal over the next 20 years, employment in the sectorwould rise from its current level of 27,000 tosomething approaching 250,000’.

WHAT IS THE GREEN DEAL?

“GETTINGINDIVIDUALHOUSEHOLDSTO COMMIT ISGOING TO BECHALLENGING”




Communities secretary eric pickles calls it a‘transformation in transparency’ which will root outwaste and over-spending. But his move to order councilsto publish all spending over £500 has been controversial.Council critics complained of the time, money and effortinvolved in processing and publishing the data – and someauthorities were slow to meet the January deadline.

But where councils – and DCLG itself – have had to go,the rest of the sector is now being encouraged to follow.Housing associations haven’t so far been forced topublish, but the signs are that the government couldmake public funding dependent on them doing so.According to housing minister Grant Shapps,associations should welcome the move as the start of anew ‘spirit of openness’: “I'm calling on organisationsthat deliver and manage social housing to throw opentheir books and show the people they serve where themoney is going.”

Many housing associations fiercely oppose the idea,warning that it undermines their independent statusand risks pushing their borrowing onto the publicsector balance sheet. On top of that, setting up thesystems involved and deploying staff to do the workwould waste money at a time when resources are tight,they claim. But one association has blazed a trail forpublication. home group Chief executive markhenderson explains why his organisation has no regrets.

THEneWtRanspaRencYMinisters are now extending their drive to encourage more transparencyover spending to housing associations. The first association to take upthe challenge gives an insight into the experience

FROMTHEpRessMore and more charities are facing problems withtheir governance, according to the Association ofChief Executives of Voluntary Organisations. Peterkyle, acting Chief Executive of Acevo, said hisorganisation’s ‘chief executive in crisis’ helpline tookseven calls in one week last month – compared withnine in the whole of 2009. “The root cause of most ofthose calls was ultimately an issue with governance,”he told a charity law conference reported by

civilsociety.co.uk. “In some cases if the chair and chiefexecutive relationship is good, some misery can beavoided. This is something we need to be talking about.”

The Barcelona way may be the key to more thanjust success on the football field. An article inThe Economist highlights the Catalan football club’svalues-driven management – including its focus ondeveloping home-grown talent and putting downdeep roots in its community. It is owned by itsmembers, with management answerable to anassembly of members. Nobody, the magazine says,



“The coalition agreement made a firm commitment toenhance transparency. Ministers believed that puttingall types of data into the hands of people who actuallyuse services – the ‘armchair auditors’ – would be a keydriver for delivering enhanced value for money in publicservices. These are still early days but the signs so far arethat it has brought renewed focus on value for money.

In practice, this means publishing reports, financialrecords, minutes, contracts and other data. It shouldmean making available data that helps people assessthe effectiveness of an organisation and be able tobenchmark performance against both private andpublic sectors.

Details of all Home Group’s expenditure over £500 arenow published on a monthly basis. It’s a small step but areal start and we are actively working with customersand clients to see how we can take this agenda forward.The decision reflects Home’s policy to embracetransparency, openness and above all accountability tothe people whose lives we work passionately toimprove. We are not a public body and we cherish ourindependence – but that does not distract from whatwe are trying to achieve.

We know from listening to our customers and clientsthat demonstrating value for money matters a greatdeal. At a time when many of them are feeling theeffects of a difficult economic environment, we mustplay our part in delivering more for less. It’s not the onlyfactor – but certainly one important way they judge ouroverall effectiveness.

We live in an information age. Leading products belovedof the tech community – including iPads and iPhones –rely on open source programming. For many, there’sinevitability about much of the transparency agenda.Ultimately, open data can help products and servicesmore accurately reflect the needs of customers ratherthan providers.

Our objective is to understand what information ourcommunities want and then to release it in a user-friendly format. We accept that our data will be of mostuse in its raw format and should therefore be publishedas quickly as possible after it is produced. This is anagenda which is‘demand-led’in response to our customers.

We also believe information should be made readilyaccessible to the public for use and re-use – wherepossible, published in open and machine-readableformats. It’s not new exactly, but it’s not something whichhas been embraced by others within the housing sector.

From the outset our financial and procurement teambought into the idea behind it and wanted to make itwork. Out of courtesy, we wrote to all our suppliers toinform them we were going to publish the information.Only a dozen partner organisations got back to us withqueries or concerns.

When people did have an issue, it was usually becausethey misunderstood our intentions and were concernedwe were going to disclose commercially sensitiveinformation. This was never going to be the case.Perhaps the biggest challenge was to ensure that all ourclassifications were correct and in meaningful categorieswhich would be easily understood. It involved a one-offtime commitment, but this wasn’t rocket science. Withthat done we were able to run the reports and publish itwithout major hassle on our website. It’s now a part ofour ordinary workstream.

Four months on we believe that colleagues are evenmore mindful about their expenditure. With tight budgetsto manage, that’s something we welcome. Our experienceshould be a reassuring one for others. It wasn’t difficultor costly, nor did it lead to a rush of press calls ornegative publicity. So our message is simple – why not?”

mark henderson, Chief executive, home group


‘has gone as far as Barça in giving customers a directsay in big decisions’.

Executive salaries in the private sector are rocketing outof control – with Britain’s top bosses set to earn 215times the average wage by 2020. A report published lastmonth by the High Pay Commission found that the topone-thousandth of the working population nowreceives 5% of national earnings. If current trendscontinue, the highest paid will receive 14% of totalearnings by 2030 – the same proportion as in 1900.Commission chairman Deborah Hargreaves told

The Independent: “This is the clearest evidence so far thatthe gap between the pay of the general public and thecorporate elite is widening rapidly and is out of control.”

Senior executives may have a strong track record –but they can’t always sell it. According to HRmagazine, too many bosses are letting themselvesdown when they go for a job with a poor CV. Themagazine reported on a survey of 100 headhunterswhich found that senior CVs were often too long, filledwith jargon or irrelevant information, and duties-rather than accomplishments-driven.


GOVERNANCE Round-upHQN’S MAGAZINE FOR BOARDS, EXECUTIVES AND LEADERS


ministers love the idea of shared services.Communities secretary Eric Pickles claims councilsclubbing together and spending more wisely should bea key part of their approach at a time of tough cuts.

“A renewed and concerted focus on better procurement,greater transparency and shared services that puts theemphasis on productivity above processes will endduplication, wasteful spending and wasteful working,”he has said.

Plenty of councils are exploring – or have already gonedown – the shared services road, pooling everythingfrom chief execs to procurement, payroll and IT. Backoffice services are perhaps the first, and easiest, to beconsidered. But Westminster, kensington and Chelseaand Hammersmith and Fulham’s ‘super council’ initiative– which will cover a number of services includinglibraries, children’s services and adult social care – hasshown that more wide-ranging programmes may wellnow be implemented.

So are shared services really a panacea? The NewLocal Government Network’s report on the issue saysorganisations must ‘boldly go beyond the back office’

if sharing is to deliver significant efficiencies whileprotecting frontline services. Back office savings, itsays, will only yield a small proportion of the savingscouncils now need to make. Its survey of localauthorities found a number were already sharing inareas such as legal, IT and financial services – but sawbig untapped potential in areas such as revenues andbenefits and refuse.

The NLGN says the ‘market’ for shared services isunderdeveloped, recommending the development of amarket place for councils looking to trade and share services.

“Those councils that boldly go beyond the back officewhen considering shared service agreements willemerge in time as leaner and sharper organisationsbetter able to deliver the services people need,” saidTom Symons, at NLGN.

In housing too shared services are not new. But thedevelopment of the new east kent ‘super ALMO’suggests there may be more potential in the sector.Will it be enough for Mr Pickles? He famously accusedsome councils of having ‘a supermarket-sized budgetbut a cornershop mentality’. Will social landlords clubtogether to become new Tesco?

http://www.nlgn.org.uk/public/2011/shared-necessities-the-next-generation-of-shared-services/

sHaReALIKE

siMplesmore housing associations have embraced the trend tostreamline their governance arrangements.

The latest wave to restructure includes Genesis and Regenda.Genesis has merged its subsidiaries PCHA, Pathmeads andSpringboard, creating Genesis Housing Association. Genesissaid the new structure, which went live last month, would‘cut down on duplication and bureaucracy’and allow it torespond more quickly to the changing environment. ChiefExecutive Neil Hadden said:“The creation of GenesisHousing Association will allow us to make quicker decisionsthat will see us deliver better services. This new structureputs us in a positive place for the future and I’m greatlyoptimistic that these changes will help Genesis thrive.”

Regenda’s restructure, which also switched to its newstructure in May, has similarly reduced the numberof subsidiaries in the group. Regenda Limited, a charitableorganisation, now owns and manages the group’s generalneeds and sheltered housing while the non-charitableRegenda Homes takes on the leasehold properties. Formersubsidiaries Templar, West Pennine and Wyre housingassociations have all been amalgamated within the groupparent Regenda Limited. Maritime Housing Association hastransferred a large majority of its stock to Regenda Limited.Another subsidiary M & Y, provides Regenda’s repairs service.

Group Chief Executive Bernard Gallagher said the restructureshould allow the organisation to reduce its tax bill, as well asto move budgets from one subsidiary to another.

Meanwhile Lincolnshire-based Acis Group has adoptedcharitable status.




diverse boards are good for business – but how canorganisations get their gender balance right?

In the private sector, targets – rather than firm quotas –look to be the way forward. A government-commissionedreview, led by Lord Davies, has recommended that FTSE350 companies should set out the percentage of womenthey aim to have on their boards by 2013 and 2015. FTSE100 boards should aim for a minimum of 25% womenby 2015 – double the 12.5% sitting on boards in 2010.Companies should also be required to disclose theproportion of women on their board and the number ofwomen in senior jobs and in their workforce as a whole.

“There is a strong business case for balanced boards,” thereview said. “Inclusive and diverse boards are more likelyto be effective boards, better able to understand theircustomers and stakeholders and to benefit from freshperspectives, new ideas, vigorous challenge and broadexperience. This in turn leads to better decision-making.”

Without action, the review says, it will take more than70 years to achieve gender-balanced boardrooms inthe Uk. Yet research cited in the review suggests astrong link between women’s participation in decision-

making and strong business performance, with a LeedsUniversity Business School study showing that having atleast one female director appeared to cut a company’schance of going bust by 20%.

Quotas are in force in a number of other EU countries. InNorway, they have helped drive the proportion of womenon boards above 40%. But Lord Davies said he had decidednot to recommend quotas, because appointments shouldbe made ‘on the basis of business needs, skills and ability’.

In social housing, the picture is somewhat brighter thanin the private sector – with women making up around30% to 40% of board members, depending on the typeof organisation – and some social landlords doing muchbetter still. But, after years of effort to promote morewomen in senior executive roles in housing resulted injust a tiny increase in the proportion of female chiefexecutives, there is still work to be done on genderbalance in the sector. And what better place to continuethe drive than on the board?

Women on boards reviewhttp://www.bis.gov.uk/assets/biscore/business-law/docs/w/11-745-women-on-boards.pdf

WoMen ONBOARD

scHool’sOUT...running a housing organisation has its own particularchallenges. But good governance in housing has muchin common too with best practice in other sectors. Sothere will be much in Ofsted’s new report on excellentgovernance in schools which strikes a chord with housingboard members keeping their own practice under review.

The report, published in May, aims to identify keycharacteristics of 14 school governing bodies wheregovernance has been judged as outstanding atinspection. Among the most important factors were:

Trust, openness and transparency between governorsand school leaders

High-quality, focused information provided to governors

Governors who are able to take hard decisions in theinterests of their school – including replacing staff orthe headteacher where necessary

Honest and insightful self-evaluation

Absolute clarity about the roles and responsibilitiesof the governors and headteacher

Effective leadership from the chair and committee chairs

Integrity and mutual support

An efficient use of time, with good systems in placefor delegating tasks and reporting back

Effectively-organised meetings, allowing governors tocome well-prepared

Clear induction procedures.

School governance, learning from the best, Ofsted: www.ofsted.gov.uk/ofsted-home/publications-and-research/ Browse-all-by/documents-by-type/thematic-reports/school-governance


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