The Governor by HQN Limited

Governor the

HQN'S MAGAZINE FOR BOARDS, EXECUTIVES AND LEADERS

JANUARY 2012

Welcome to

2012 The housing hepTaThlon:

HigHer rents/Lower benefits rigHt to buy Cuts seLf-finanCing for CounCiLs tenant sCrutiny fLexibLe tenanCies CommerCiaL LanDLorDs

Are you going for

gold? the governmentâ&#x20AC;&#x2122;s new housing strategy women on boards Changes to the regulatory regime

hf:expert

The future is here The Housing Finance Annual Conference 2012

thursday 26 January 2012

2012 is a significant year for social housing finance. self-financing goes ahead. new right to buy legislation is to be introduced. Public finance will be under even greater scrutiny. with the treasury retaining large chunks of the right to buy receipts and adjusting Hra debt, uncertainty over feed-in tariffs and the green Deal financing, and the spectre of ‘double dip’ recession looming, many challenges lie ahead in the coming year. this conference will help housing finance professionals look forward with confidence.

Conference themes • Shared services, outsourcing and creating eﬃciencies: the balanced views of Public Finance author Andrew Jepp, Director of Public services at Zurich municipal, provide the reality check

London

book now www.hqnetwork.co.uk/forthcoming_events

– Rob Wharton, Director of resources at gloucester City Homes puts forward the ’co-co’ model – NeiI Isaac from Hackney Homes sets out the new thinking for the authority and aLmo relationship • Right to Buy: will reviving the right to buy sector cripple councils with debt? Richard Petty, Director of Jones Lang La salle, examines the issues, risks, and impact of sales on the housing market

Delegate fees start from £184 (plus Vat) for one delegate start from £335 (plus Vat) for two delegates the fee includes refreshments, lunch and delegate pack. Please inform us in advance of any special dietary requirements.

Discounts available • Feed-in Tariﬀs: will the government cuts to fits bite hard? Mark Baskerville, finance Director at Liberty group on how to deal with the green Deal ﬁnancing

• Housing Quality network members • hf:expert members • "early bird" bookings up to 16 December www.hqnetwork.co.uk/forthcoming_events

• Treasury management and bonds: Fenella Edge of tHfC with the key issues.

4.5 CPD hours Who should attend?

• Self-ﬁnancing: Robin Tebbutt of HQn starts the countdown to the new era of selfﬁnancing with the very latest update

this is the essential annual conference for local authority and aLmo housing ﬁnance directors, heads, managers and specialist professionals from:

• Housing Beneﬁt: expert comment from Steve Wilcox of the Centre for Housing Policy

• Hra and specialist devolved ﬁnance

• Future planning models: nfa Policy manager Chloe Fletcher introduces contrasting approaches from experienced practitioners:

• resources

registration start finish

9.30am 10.00am 4.00pm

Contact us this is an HQn hf:expert event. to find out more – please go to www.hqnetwork.co.uk/forthcoming_events or call 0845 4747 004

• Housing ﬁnance

• Housing accountancy.

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HQN’S MAGAZINE FOR BOARDS, EXECUTIVES AND LEADERS

“Not all ministers have the same faith in managers and service users that Shapps has.”

contentS 3

plus ça change Comment by HQn Chief executive alistair mcintosh

getting Britain building the government's new housing strategy

a woman's place? the Pm wants to see more women on boards – but is it feasible?

april fools? april 2012 brings big changes to the regulatory regime – are you ready?

past their sell-by date… an uncertain future for aLmos

here today – in next week tomorrow the place where co-ops were born is set for another first

a problem shared the latest advanced in shared services

plus ça change nothing has changed with the Localism act. good efficient landlords that are popular with their tenants can get on with things. that was always the case – but at least the new arrangements with the Homes and Communities agency make this crystal clear. everywhere i go, tenants are joining scrutiny panels in droves. Plenty of new people are coming on board. this could turn out to be the best thing grant shapps has done. it will be tremendous if enthusiastic, well-informed tenants really do drive improvements. Housing could be the model for regulation elsewhere. when we held the HQn tenant conference in London, the next-door room was playing host to an ofsted training session. they were rolling out ancient slides about inspection. it could have been ten years ago. the irony is that they were following government orders. not all ministers have the same faith in managers and service users that shapps has. but there are still big risks for us all. it is a ceasefire – but the coalition has dictated the terms. they have plenty of ways of finding out whether landlords are using the new freedoms responsibly or whether they are backsliding. Heaven help us if there are any significant cock-ups. you only have to look at the care sector where failures have led to a ratcheting-up of regulation and inspection. we are one tabloid sting or Panorama expose away from a return to intrusive regulation.

From the press recent news from the governance world 18

up to the job? british workplaces are too often unhappy, claims a new report lean machines the latest housing groups to streamline their governance structures pay points the row over senior pay hots up again steering clear the vexed issue of housing association transparency on spending

so has shapps set us free, or given us enough rope? that is up to the readers of The Governor and the actions you take in 2012. Happy new year. alistair Mcintosh Chief executive, HQn

you reaD it Here first In my last Governor editorial I predicted that the government would ask landlords to consider tendering housing management. Now the regulator's proposed VfM standard insists that associations assess 'the potential benefits in alternative service delivery models'.

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

Prontaprint Scarborough

the Governor JANUARY 2012

HQN’S MAGAZINE FOR BOARDS, EXECUTIVES AND LEADERS

The timing was, to say the least, unfortunate. the government’s housing strategy, branded as a package that would ‘get britain building again’, was unveiled just the day before abysmally low affordable housing starts figures were published. the government has dismissed out of hand claims that the poor stats were held back deliberately. but if nothing else, it shows just what a tough job ministers will have in persuading the cynics that the strategy is the bold and ambitious solution they have promised to england’s housing crisis. the national headlines when the strategy was launched were dominated by plans to help first-time buyers onto the property ladder. Here the government is acting quickly, with the first loans under the 95% new build indemnity scheme available in spring this year. the new £400m ‘get britain building’ fund is also being pushed through and we can expect details soon of a competition to encourage the development of a wave of larger-scale development projects. ‘Broken’ social housing there was less to shout about in the strategy for the social housing world. much of the thinking outlined in the document centres on initiatives already enacted via the Localism act, including changes to allocations, tenancies and homelessness. the new elements in the strategy – which include a pledge to stop the allocation of social housing to those ‘who already own a suitable home’, extra priority for would-be tenants who work and a ‘pay to stay scheme’ for households with a six-figure income – reinforce the government’s view of a ‘broken’ social housing system. the details are still awaited on some of these new measures, which also include the enhanced right to buy. but where does the strategy take the social housing sector? Certainly, thanks to it and the Localism act, we now have a much clearer picture of the government’s intentions for social housing. the language used – that ‘broken’ system again, abuse, inefficiency – underline

the view that the sector has failed. in the future, then, a reformed social housing system will provide a safety net, with tighter criteria for entering – and staying in – the sector. Westminster’s ‘green paper’ Perhaps the clearest picture of how this might look is not to be found in the housing strategy, but in the recent ‘green paper’ on public services put out by one of the Conservatives’ flagship London boroughs, westminster. the document takes some of the government’s mantras – fairness, responsibility, citizenship, local engagement – and uses them to create a ‘civic contract’ for those in the borough. for residents, this means an expectation that they will support the delivery of services, help the more vulnerable sections of society and stand up against problems like anti-social behaviour. and specifically in housing, westminster says it will promote an allocation system ‘which encourages work and citizenship’ and that ‘leaves those who play by the rules safe in the knowledge that they will have an advantage over others who do nothing to help themselves, or who wreak havoc in their communities’. westminster, where thousands of households currently in the private rented sector in the borough may have to move out because of new Housing benefit caps, says: “Central London is an expensive place to live and those who work hard to pay bills and raise families expect others to play by the same rules and we support this view.” westminster’s paper has proved controversial. but surely it is the logical extension of much of the government’s thinking outlined in the housing strategy that social housing is there to provide support for people at a time when they need it most. the debate now is no longer about providing enough social housing for those who want it. it’s about defining exactly who deserves it, and for how long. of course, with that redefinition of the tenant will come another job: the redefinition of the role of the social landlord itself.

GETTING BRITAIN The government's new strategy promises to rejuvenate the housing world – but will it deliver?

the Governor JANUARY 2012

HQN’S MAGAZINE FOR BOARDS, EXECUTIVES AND LEADERS

building the Governor JANUARY 2012

HQN’S MAGAZINE FOR BOARDS, EXECUTIVES AND LEADERS

GETTING BRITAIN

building THE big QUESTIONS: How will we get anywhere near the number of new homes, particularly affordable homes, that the country needs? The strategy’s own figures says the number of households in England is projected to grow by 232,000 a year over the next 20 years. Beyond the affordable housing programme, how will the investment for new affordable homes be found? How will the tensions between social housing reform and welfare reform be resolved?

the Governor JANUARY 2012

Will Housing Benefit continue to take the strain – and for how long? How will the faces of our communities change as benefit changes bite? What sort of community mix are we aiming for? With the government keen to encourage more working tenants into the sector – but penalising higher earners and capping benefits for the least well-off households – there are real issues about who will be housed – and for how long. How will the private sector

providers the government wants to encourage ﬁt into the social housing landscape? Will the idea of rent control, which Ken Livingstone is making the centrepiece of his mayoral campaign, deter new entrants? As spending cuts continue to bite, will the right people be in place in local authorities to drive housing strategy at a local level? And will the right people be in place to monitor performance?

HQN’S MAGAZINE FOR BOARDS, EXECUTIVES AND LEADERS

GETTING BRITAIN building

THE big RESPONSE:

What will the strategy means for local authorities, housing associations and the private sector? The Governor canvasses some views Richard Kemp, Deputy leader of the opposition, liverpool City Council Currently leading on producing a Liberal Democrat policy paper on housing “i liked individual bits within what was called the housing strategy – but i don’t think it’s a housing strategy. it’s not big enough and it’s not embracing enough. rather it’s a bag of useful things, some of which are more useful than others, but to see that parcel of good intent and £400m as a housing strategy is nonsense. ”i like the first-time buyers part – i do believe in owneroccupation if people can afford it. but the thing i dislike most is the discounts on the enhanced right to buy. it’s just luring people into the market when, if they haven’t bought before, they probably can’t afford to do so. it doesn’t helps us make stable estates and communities if properties are bought up by landlords who put god knows who in because they don’t care about it.” On the need for a real housing strategy: “for the last 40 years, the big question has been about how many units we provide. but housing is about people, it’s about homes, it’s about neighbourhoods. “How people would like to live is just as important as what they are going to live in. obviously we have to deal with the short-term issues, but if we don’t go beyond that and have those long-term discussions about our housing, we will continue having housing crises and social crises.” Malcolm levi, board member, peabody Trust and Richmond housing partnership “i’m pessimistic at the moment. by nature i’m an optimist, but what we are potentially looking at in the future is awful. the alternative to more investment in housing is that we accept that people who are short of money live quite badly. i hope we are a long way from that, but i can see it on the horizon that the government says ‘look, you are on your own’.”

For associations: “there are a lot of unknowns, a lot of things up in the air. no one quite knows about what will happen to development after 2015 – the balance sheets of associations can take so much battering but then it’s enough, and we also know quite a lot of local authorities of all colours are unhappy about the affordable rent levels. most associations would say what’s come out of the Localism act is good in terms of responding to people’s local needs rather than some master plan on high, but there are questions about whether the resources are there.” On regulation:“one of the things i believe the tsa did well, aided and abetted by the inspectors, was to raise standards, but now, unless we are motivated, we could stick.” ian lawson, executive Director, Kier group plc ”it is good to see the government taking housing and housing need seriously. but we need to see more of the detail in terms of how money is going to be allocated and how in reality it is going to work.” On maintenance: “the market is very buoyant in terms of the opportunities. However, i am concerned that price is playing a much bigger decision-making role than it used to. before we got into these fiscal times, quality was the determining factor in choosing a contractor.” On new build: “the area where i see the most going forward is working with the land that local authorities have got. [Kier is working with a number of local authorities, where the authority doesn’t charge for the land upfront, Kier covers the construction costs and then pays a percentage of the price of the home it sells to the authority, with a proportion also going for affordable housing.] we make less margin, the local authority gets more bang for its buck and they have a little bit more control of the process. it is basically a joint venture. “there are some innovative, creative councils that are prepared to think about doing things differently and we are talking to some of those. but there are others that are politically too afraid to do anything, where the politics keeps getting in the way.”

the Governor JANUARY 2012

HQN’S MAGAZINE FOR BOARDS, EXECUTIVES AND LEADERS

A WomAn’S

PLACE? suZy brain engLanD CHair bernesLai Homes

“There’s always a bit of an interesting dilemma when the tea and cups are put out at a meeting. Do you not pour because you want to make a statement that you are not there to serve the tea? Or do you pour because you’re saying ‘it doesn’t matter to me’?” Suzy Brain England’s personal preference is just to get on with it and pour. But during her time on the boards of many public and private sector organisations, she says she has seen how boardrooms can still harbour some very old-fashioned views. At one organisation, for example, she was the only woman board member and was taken aback when a man writing the organisation’s history addressed her as the ‘note-taker’ and shooed her out of the way. Ms Brain England, whose CV includes stints on the board of a building society and as chair of Ofcom’s Advisory Committee for England, is currently chair of the Department of Work and Pensions Decision-making Standards Committee and of housing association Derwent Living as well as of high-performing arm’slength management organisation Berneslai Homes. She says housing providers, particularly ALMOs, have a good record compared to other sectors when it comes to appointing women to senior exec and non-exec positions. It is important to keep that up, she stresses. “We all as housing organisations subscribe not just to the law in respect of equality and diversity but to the spirit of the law, so we should do it actively and positively,” she says.

the Governor JANUARY 2012

HQN’S MAGAZINE FOR BOARDS, EXECUTIVES AND LEADERS

in the wake of the Davies review of women on boards, Prime minister David Cameron has been stressing the case for improving the gender balance in the boardroom. but are more women on the board good for business – and do women have to work harder to get on? two housing chairs, both with substantial board experience in the public and private sectors, give their views she says a fair and open recruitment policy is key to getting more balanced boards. otherwise predominantly male networks, particularly in professions such as the law and accountancy, can mean predominantly male boards. “it becomes a bit of a self-fulfilling prophecy – you ask an advisor who’s a bloke and he thinks of a bloke and throws that name in the ring,” she says. “there is a bit of a national disease that a chair of an organisation has to be a man with grey hair.” women, she says, can bring a different perspective to the boardroom. “there’s still a risk when you’re talking of high finance, innovation or technology of it all being a bit ‘boys’ toys’ and of issues like human resources being seen as ‘softer’, and in the absence of women not getting enough attention. but it shouldn’t be down to women to remind us all that we have to look after people and about the emotional side of the business. good businesses have policies and processes but great businesses have passion about how to engage people in making a difference.”

rosamunD bLomfieLD-smitH CHAIR MOAT more gender equality on boards is a ‘desirable aspiration’ says rosamund blomfieldsmith – but not at the expense of recruiting the wrong people. “i have the strong view that people should be appointed on merit. it does neither the boards concerned nor the cause of women being treated more equally any favours

to appoint a second best candidate of either sex,” she says. “it is highly desirable to appoint good women but highly undesirable to appoint not terribly good women. it is important that the cause of women is not damaged by people being able to say ‘she was a hopeless appointment’.” ms blomfield-smith worked for 30 years in the City and for the last eight years has devoted herself to non-exec positions with a range of public and private sector organisations including the Dti, wateraid, the wales audit office and thames water. she says women on the board bring a ‘quite subtle’ change in dynamics. “Certainly there are changes in tone and changes in the language used and i think it does result in more balanced discussions,” she says. she insists she has never been held back by gender, and in fact suggests talented women might have more chance of being appointed to a board than similarly talented men, simply because there are fewer women in the running for the places. succeeding, she says, is all about persevering. “if you are going for an executive job and don’t get it, you might ask yourself if you were aiming too high or going for the wrong thing. but with non-executive positions, the reasons can be quite difficult to pinpoint. it can sometimes be a lot more about your face fitting than specific qualities and just as it doesn’t fit in some cases it very much does in others,” she says. “i would say to women: if you think you have something to contribute, then put your name forward, and in fact a good area to start to get experience is in housing.”

the Governor JANUARY 2012

HQNâ&#x20AC;&#x2122;S MAGAZINE FOR BOARDS, EXECUTIVES AND LEADERS

april 2012 brings big changes to the regulatory regime â&#x20AC;&#x201C; are you ready?

APRIL

foolS?

From next april, we will see the new approach to regulation brought about by the Localism act come into force. the Homes and Community agency will take over regulation from the tenant services authority. making sure landlords deliver Vfm will be the top priority. it will be up to local people to check that housing services are up to the mark. the HCa will only intervene in serious cases of service failure. there will be a single Housing ombudsman with new powers for all landlords from april 2013.

3. money gets diverted to the development of new homes rather than to services for existing tenants.

our diagram opposite summarises the new arrangements. although most of the publicity has been about the weakening of regulation, our diagram shows that tenants will still have real clout. boards and councillors need to understand these changes and in particular the roles they will have in managing complaints.

1. Does my organisation have policies in place to deal with the changes?

5. there is a massive cock-up and we end up with the increase in regulation as we have seen in the care sector. Five questions board members and councillors should be asking:

2. Do i understand my role in dealing with complaints? 3. what are the high risk services at my organisation that might trigger intervention?

The five biggest opportunities from the changes to regulation:

4. what are we doing to manage these risks?

1. Problems get solved locally and quickly by landlords working with tenants and local politicians.

5. Do we have strong and effective arrangements in place for tenant scrutiny?

2. the HCa saves money by only acting when it is strictly necessary.

hQn briefings can help you find out more about:

3. the ombudsman achieves more by working collaboratively with landlords rather than waving a big stick. 4. tenants become really effective at driving service improvements. 5. the sector becomes a model of success showing how user involvement with the backstop of external regulation works. The five biggest risks from changes to regulation: 1. tenants see no improvement and get disillusioned. 2. Landlords focus just on the bare minimum to avoid intervention.

4. Politicians grandstand to get votes from tenants and leaseholders rather than solving problems.

the Governor JANUARY 2012

serious detriment in landlord and community services: http://www.hqnetwork.co.uk/document.php?id=7604 the Localism act: http://www.hqnetwork.co.uk/document.php?id=7723 the proposed changes to the complaints system: http://www.hqnetwork.co.uk/document.php?id=7346 the tenant Cashback scheme: http://www.hqnetwork.co.uk/document.php?id=7221 hQn training is available â&#x20AC;&#x201C; please contact: David ganz, executive Director of training and Development services, on 07921 308823 or by emailing training@hqnetwork.co.uk

HQN’S MAGAZINE FOR BOARDS, EXECUTIVES AND LEADERS

ProblemS – WHAT CAN TENANTS DO NOW? Tenant problems

possible solutions

from april 2013

ombudsman route MPs

Solved

and/or Landlord

Services aren’t good enough from april 2012

Not solved

Solved

Councillors and/or Tenant panels

Not solved

Solved

Ombudsman

Not solved

Tenant can go straight to Ombudsman eight weeks from landlord decision

Tenant can try again

serious detriment route Regulator says YES: takes action

Regulator asks: Regulator

I’ve got a serious problem from april 2012

Also listens to, eg, Ombudsman, Health and Safety Executive, fire authorities and Environmental Health

Is there ‘serious detriment’? eg, harm, loss of rights and/or discrimination

Regulator says NO: no action taken

Vfm route (association tenants only)

Landlord My landlord wastes money

Action includes inspection, enforcement notices, VfM and management tender

Tenant panel scrutinises VfM

Regulator says VfM good

Regulator says VfM poor

(possible intervention)

rights route

We can do the job better ourselves

right to challenge

Group of tenants and/or staﬀ can bid to run council services

right to manage

Run a tenant management organisation Applies to councils and some transfer associations

move council homes to an association

Possible if government issues an order

tenant cashback

Council and association tenants can do own minor/non-urgent repairs the Governor JANUARY 2012

HQN’S MAGAZINE FOR BOARDS, EXECUTIVES AND LEADERS

sometimes even a good idea has a limited shelf life. so are arm’s-length management organisations, set up in the main to deliver Decent Homes improvements, the VHs recorder or the fax machine of the housing world? for some local authorities taking, or thinking about taking, their aLmos back in-house, the answer seems to be yes. there might well be politicking behind the scenes at those councils shutting their aLmos down – but the clear message they’re sending to the wider world is that the model was merely a short-term solution to the problem of funding improvement works. but there’s been less attention paid to those organisations which will continue outside the council fold. Do they demonstrate that the aLmo model still has much to offer – and could even offer lessons for others in these challenging times? the national federation of aLmos’ policy director gwyneth taylor says there is now a distinct breed of ‘second generation’ aLmos – organisations which are taking on new responsibilities, and influencing the future of public service delivery, even beyond housing. Diverse agendas “some are going back to the old-fashioned ways of municipalisation, but others are going a long way in the other direction,” she says. “we’ve now had more than 20 councils that have decided to extend their contracts and most of them are looking not just at the contract but at the remit. that’s one of the interesting things – we are seeing some diverse agendas.” one of those second generation aLmos is taking shape in Cornwall, where the unitary authority is planning to bring together its retained stock from two former district council areas with the stock managed by existing aLmo Carrick

PAST THEIR

Sell-by 12

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HQN’S MAGAZINE FOR BOARDS, EXECUTIVES AND LEADERS

Housing. The new ALMO, Cornwall Housing, will also take on some wider responsibilities from the council, including homelessness and housing options. Carrick managing director Pete Jarman said the ‘one-stop’ approach made sense from the council’s point of view, but the challenge for the new organisation would be to make sure it was not distracted from a strong focus on service delivery and tenant involvement. “We will be hoping to bring our experience to bear on the new organisation,” he says.“We have been providing an excellent service and have a very high level of tenant involvement and will be hoping to replicate that.” “There will also be new opportunities,” he adds. “We hope we will be able to develop homes in areas where they haven’t had council housing for some time.” new territory Some of the second generation clearly recognise they are entering new territory. Waltham Forest, for example, has now branded its ALMO, Ascham Homes, a ‘modern ALMO’. The renegotiated deal between the council and ALMO came about after the authority had considered, and rejected, other options including taking the housing service back in-house. The deal will, the council says, ‘deliver a more seamless housing service’ with ‘extended and streamlined housing services’. Significantly, it says the new contract reflects the increasing confidence it has in the ALMO delivering on its strategic vision. Other ALMOs are considering different options, with Durham and Gloucester, for example, already looking at the co-co (community/council ownership) model and Rochdale planning on becoming England’s largest housing co-op. Rochdale Boroughwide Housing’s chief executive, Gareth Swarbrick, interviewed by The Governor overleaf, says the ALMO sector’s focus on high quality services and tenant involvement are very much central to his organisation’s proposals.

But, he adds: “It will be interesting to see how things pan out once HRA reform has happened, whether other authorities and their ALMOs will consider transfer.” new opportunities to deliver

NEW WAYS OF WORKING NEED TO BE DEVELOPED TO ENSURE GOOD OUTCOMES AND FINANCIAL SAVINGS

Gwyneth Taylor at the NFA is confident that the second generation ALMOs will continue to prove an attractive option for many. “There are going to be very tough years to come in the public sector. ALMOs have been able to deliver a lot of innovation and entrepreneurial things,” she says. “I think we will see them getting more like housing associations in terms of looking for new opportunities to deliver. Some authorities are wary of stock transfer as they don’t know if the organisation will continue to deliver on their priorities. We will see a lot building on the strengths of ALMOs, working in a particular area, knowing their communities, knowing their customers and knowing their local authority’s priorities. A big thing about the ALMO structure is the flexibility to do that – you can use an ALMO to do what you like.”

That flexibility is now being picked up beyond housing, with Kingston and Richmond councils, for example, teaming up to create an arm’s-length management organisation to deliver children’s services. As the agreement between the authorities puts it, new ways of working need to be developed ‘which ensure good outcomes as well as financial savings are achieved’. Clearly such a deal, which in Kingston and Richmond is to be run as a social enterprise, chimes not only with the need to make back office savings, but with the national political focus on councils as commissioners rather than direct providers of services. It would not be surprising then to see the ALMO model, in housing and beyond, extend its shelf life for some time yet.

dAte...

Have aLmos outlived their usefulness?

the Governor JANUARY 2012

HQN’S MAGAZINE FOR BOARDS, EXECUTIVES AND LEADERS

main photograph of the rochdale Pioneers museum, 31 toad Lane, courtesy of the national Co-operative archive.

if all goes according to plan, the famous building in Rochdale where the co-operative movement began will next year play host to another landmark moment. Toad Lane museum, where the Rochdale Pioneers began trading more than 160 years ago, has been earmarked as the venue for the first ever board meeting of what’s set to become England’s largest housing co-op.

Here IN NEXT WEEK

Arm’s-length management organisation Rochdale Boroughwide Housing’s proposed stock transfer to a new tenant and employee mutual is a real trailblazer. As the pamphlet outlining the transfer puts it, it offers a vision of a ‘new form of public ownership’, with staff and tenant members and a ‘democratic form of governance’. And, according to RBH Chief Executive Gareth Swarbrick, it’s a model that could bring real benefits in these tough economic times.

todAy

tomorroW

the place where co-ops were born is set for another first 14

the Governor JANUARY 2012

HQN’S MAGAZINE FOR BOARDS, EXECUTIVES AND LEADERS

”we are now operating in a difficult environment and there are huge challenges. the way i see it, the best way of ensuring we are taking the right decisions in terms of prioritising what we do and what we invest in is to find way of engaging our customers and employees to take those decisions,” he says.“it’s a catalyst, a way of saying to people, if you take responsibility by becoming a member, we will work together to meet some of the huge challenges we face.” mr swarbrick, speaking to The Governor as tenants were voting on the proposals, said the plan was for a stock transfer in march, with a period of building up the membership among tenants and employees and then a full transformation into a mutual by the middle of 2013. it’s been a tricky deal to stack up: the stock has been valued at £25.5m, which means that the government will be writing off an additional £93.3m to allow the transfer to go ahead. the 30-year business plan will see the organisation able to maintain Decent Homes standards over that period, with £169m in investment slated for the first five years and plans to build 100 homes in the first three years. positivity in difficult times mr swarbrick says everyone involved with the plans was realistic about the challenges ahead. “there is a lot of positivity but these are difficult times,” he explains. “People realise that this is not a panacea, that this happens and then the world completely changes. we know we are not going to have the money and resources that other transfers that have gone before have had. but we realise there is a choice: to sit back, or to get on the front foot and try and shape our own destiny.” so how is the leadership team handling the change? “the senior officers and the board are all entirely committed to the big idea collectively and recognise that it’s a tremendous opportunity to shape our own destiny and to do something to really paint rochdale in

“WE REALISE THERE IS A CHOICE: TO SIT BACK, OR TO GET ON THE FRONT FOOT AND TRY AND SHAPE OUR OWN DESTINY.” gareth Swarbrick rbH Chief executive a positive light rather than some of negativity that the borough’s had in the last few years,” says mr swarbrick. He adds that the new organisation would be looking to build on the aLmo movement’s strengths of tenant involvement and high quality service delivery. “from day one, aLmos were very focused on the job in hand and were able to be more creative and act quicker, and these are the kind of things we are looking to develop further,” he says. “for us, it is all about being more agile and more creative but also accountable to our tenants, staff and stakeholders.” Mutual encouragement the proposed transfer has clearly struck a chord in rochdale, recently named world Capital of Co-operatives in the run-up to the international year of Co-operatives. but, with mutuals being encouraged by the government, surely what happens in rochdale may have big implications nationally. mr swarbrick says rbH has already had plenty of interest from other housing organisations – as well as support from the co-op movement in making its plans work. bringing tenants and employees together to help run their organisation could, he suggests, really pay off. “with tenants’ experience of living in their communities and employees’ experience of trying to find solutions: together that could be really powerful.”

THE RBH MUTUAL GOVERNANCE MODEL members:

representative body:

board of directors:

There will be two membership constituencies, one for tenants and one for employees. Membership is optional, but gives the right to attend and speak at members’ meetings and to elect reps to and stand for election to the representative body.

This body will be made up of 15 tenant reps, three TMO reps, eight employee reps, four council reps and three reps from external stakeholders. Its responsibilities will include setting the organisation’s policy framework and appointing and removing board directors.

The board will be made up of eight non-exec directors and two execs.

the Governor JANUARY 2012

HQN’S MAGAZINE FOR BOARDS, EXECUTIVES AND LEADERS

A Problem some think there are millions of pounds of savings to be made. others that the potential, in the housing sector at least, is limited by traditional attitudes. The Governor looks at the latest advances in shared services

FROM THE PreSS getting higher pay is often more about who you know than what you know. that’s the suggestion after research into board members’ networks in europe and america. the research, by the toulouse school of economics and reported in The Economist, found that if you were to compare two executive board members, identical in every way except that one had 200 excolleagues sitting on boards and the other 400, the latter would be paid 6% more. for non-execs, the

the Governor JANUARY 2012

difference would be 14%. the research also suggests men may be better at exploiting their networks than women. Chief execs who take the helm of an organisation for a short period and then move on may be better suited to the modern world than the long-serving boss, according to an article in the Financial Times. the article quotes David Pendleton, associate fellow at oxford’s saïd business school, saying: “the notion of a man for all seasons is not right. the idea that i’m propounding is that there should be a man for a particular season.” He

HQN’S MAGAZINE FOR BOARDS, EXECUTIVES AND LEADERS

SHAred could the day ever come where a whole host of services for 30 or 40 housing associations, ranging from a customer service contact centre to back-office services like IT and audit, were run out of one building? Afzal Ismail would like to think so. Mr Ismail, the Managing Director of the Orbit Group’s shared services business Service Matters, has an ambitious vision of a future in which housing providers buy in their expertise from a fellow social landlord like his. From small beginnings, providing audit services to other housing associations, Service Matters now has a seven-figure turnover and sees itself as competing with the private sector to offer services including procurement and data protection to social landlords. “Our unique selling point is that we have got our finger on the pulse of the sector,” says Mr Ismail. “We work in the sector, our values are the same and we are not-for-profit, so surpluses we make go into research and development or directly back to our customers.” The approach is a timely one, at a time when all public and third sector organisations are being urged to consider some form of shared services to deliver better value for money. Mr Ismail says he sometimes runs into a ‘brick wall’ where housing associations are wary of buying services from an organisation they may historically have seen as a competitor. But, with some of his customers now sizeable associations with, in one case, 30,000 homes of their own, that attitude seems to be changing.

adds: “for example, if the organisation needs redirecting, then you need a natural strategist to do that. but if the need changes in the next phase of development to one that is more operational rather than strategic, you probably need to recognise that the organisation’s needs have moved on and so should the leader.” are corporate boards stepping up after the financial crisis? not according to McKinsey Quarterly’s latest survey on governance. according to mcKinsey, boards have not increased the time they spend on company strategy since its last survey in 2008. more than 40% of

“It’s partly the need to be more efficient,” says Mr Ismail. “Associations know that local government is looking at shared services in a big way. And it’s partly the people – we have people who are as good as any in the private sector but who know the housing sector.” Orbit is one of the associations lobbying HMRC for the necessary VAT changes to make shared services a more feasible option. So far, most of the initiatives across the sector have been relatively small scale, whether it’s providers selling a service to one or two neighbouring organisations, or teaming up to run a joint service. The competition which has long been a feature of the housing sector means joint services on a significant scale have been rare, often leaving smaller organisations looking at their long-term future with little option but to consider full-scale merger. But in an interesting development in the West Country, Devon & Cornwall Housing, Tor Homes and West Devon Homes are working on plans for a new shared services partnership, which would see resources pooled to ‘deliver high quality frontline housing services’ to all of the associations’ residents in north west Devon. The arrangement would allow West Devon Homes, which has a stock of around 1,500, to remain independent, but would mean shared services right across housing and asset management, support services and central services. Full details of how the alliance will work are still being developed, but the organisations involved believe the arrangement will help improve standards as well as delivering efficiencies.

those who took part say their board’s simply review and approve management’s proposed strategies, while only a quarter would rate their board’s performance as excellent or very good. one in six managers in London spends at least £500 a month on gambling. or at least that’s the finding from a survey by LondonlovesBusiness of 500 managers in the capital. according to the survey, timed to coincide with the opening of the uK’s largest casino in westfield stratford City last month, one in three managers visits a casino at least every two months.

the Governor JANUARY 2012

HQN’S MAGAZINE FOR BOARDS, EXECUTIVES AND LEADERS

GOVERNANCE round-uP

UP TO THE

‘nice decade’ of high employment before the financial crisis are more likely to adopt a harsher style of management, while even more employees will become either insecure or disengaged,” it says.

British workplaces are too often unhappy places, with high levels of stress and sickness absence and a ‘toxic’ organisational culture.

“at best, austerity threatens to diminish the existing tangible quality of work – pay, conditions and job security – whether in hard pressed private businesses or in the public sector where government spending cuts will lead to job losses, pay freezes and a paring of pension provision. at worst, it could harm prospects for economic growth and efforts to improve the quality of public service provision by stalling progress in organisations attempting to build employee engagement and reinforcing disengagement where this already exists.”

Job? that’s the conclusion of a new report from Demos which claims that despite the focus over the last 20 years on better staff development and support, far too many organisations still only pay lip service to meaningful employee engagement. and things are set to get worse as the squeeze on both the private and public sector continues, the report warns. ”at the very least, organisations that merely ‘talked the people stuff’ to attract and retain staff in the so-called

LEAN

http://www.demos.co.uk/publications/uptothejob

mAcHineS

sovereign and synergy have become the latest housing groups to streamline their governance structures. the four housing associations which made up sovereign have now merged into one. the organisation, which manages some 33,000 homes across the south and south west of england, now has a single board plus seven resident-led regional panels and a new ‘residents’ council’. sovereign Chief executive ann santry said the rationalised structure would allow for ‘leaner, more

the report, Up to the Job, recommends creating ‘productive workplaces’, where staff feel they are working for an organisation with a clear purpose and are listened to. this will need a change in mindset from both senior management and employees, and from human resources professionals, who need to act as ‘internal social entrepreneurs’, building links across their organisations and encouraging transparency.

the Governor JANUARY 2012

efficient’ decision-making and would allow the organisation to be ‘more flexible and responsive in the challenging climate that is currently facing the housing sector’. Poole-based synergy also merged the four separate housing associations in its group into one legal entity. the 9,000-home organisation now has a single board, with three places reserved for tenants, and new ‘neighbourhood and customer scrutiny panels’. its Chief executive graeme stanley said: “our decision-making process is more robust, less bureaucratic and more responsive to the needs of our customers.”

HQN’S MAGAZINE FOR BOARDS, EXECUTIVES AND LEADERS

As the economic news gets grimmer, the row over senior pay is hotting up again. Senior salaries in the public sector have of course been the target for significant flak from politicians and the media for some time now. But, as the latest figures from Hay Group show, the pay gap between the public and private sectors, at the top as well as the bottom, looks set to increase over the next two years. “The data reveals disproportionate senior salary rises in the public sector to be a myth, with senior managers in private firms still earning significantly more than their public sector counterparts,” the organisation says. “With pay restraint taking hold in the public sector and pensions set to become a less valuable benefit, we predict that the salary gap will start to widen at all levels in the next couple of years. The challenge for the public sector will be to contain costs yet still be able to attract and retain key talent.” The Hutton Review of senior public sector pay has already called for more performance-related elements to be introduced into the public sector – but no salary cap and less of a focus on comparisons with salaries of people like the Prime Minister.

PAy POINTS So is the spotlight now shifting to private sector ‘fat cats’? Certainly the language seems to be hardening. The CBI, in particular, has called for pay to be strongly linked to high performance, with ‘no rewards for failure’. Its response to the government’s discussion paper on executive remuneration calls for simple and transparent remuneration schemes. The discussion paper itself, which the government has been consulting on this winter, says generous rewards for senior staff are not in themselves ‘an issue’ – but that high pay may not always be justified by performance. As Business Secretary Vince Cable put it: “The general disconnect between pay and long-term performance suggests that there is something dysfunctional about the market in executive pay or a failure in corporate governance arrangements.” The latest survey by Incomes Data Services revealed that the earning of directors of FTSE 100 companies rose by an average of 4 % over the last year, with a 43% rise for chief execs.

Steering CLEAR The vexed issue of housing association transparency on spending is under the spotlight again, after the housing minister stepped up his campaign to get their books opened up to the public.

dramatically transform transparency throwing open their books and publishing details of what they spend.”

grant shapps claims associations are dragging their feet over his calls for more information on their spending to be made public.

mr shapps’comments, including a claim that associations were looking‘increasingly outdated and out of touch’will not have endeared him to housing associations, which have warned that his campaign not only threatens their independent status but brings added bureaucracy and cost.

“after 18 months of asking, housing associations have still failed to follow our lead and open themselves up to wider public scrutiny. taxpayers and tenants have a right to know how much they spend, from repairs, to rents and expenses,” said mr shapps. “Housing associations are running out of time to come up with plans that will

but the minister cited the example of Home group, which now publishes details of all spending over £500. Home Chief executive mark Henderson, who laid out his group’s approach in the last issues of the governor, says its approach should reassure others that the move need not be costly or difficult, nor does it undermine independence.

the Governor JANUARY 2012

Congratulations to Parkway Green Housing Trust

Left to right: Paul butterworth, assistant Director of Property services, Diane Peters, responsive operational manager, mike richmond, responsive service manager

HQn accredit: repairs and maintenance HQn accredit: gas hQn accredit: Repairs and Maintenance and hQn accredit: gas were the uK’s first accreditation systems specifically designed for repairs, maintenance and gas services. they aim to ensure that outstanding maintenance providers, including DLos and contractors, get the recognition they deserve. “We are proud to be the first in the UK to achieve accreditation for the whole property service at once. It’s a unique achievement: a real credit to the teams that deliver our tenant-focused services. Property services have delivered on value for money, service improvement and getting it right first time, so this award is a real boost for their work. It demonstrates our commitment as a trust to putting the customer at the heart of our business.” nigel wilson, Chief executive, Parkway green HQn accredit: r&m and HQn accredit: gas holders benefit from recognition as maintenance providers that operate safely, efficiently, effectively, economically, and deliver excellence services to tenants and residents. HQn accreditation is proof that maintenance teams deliver real value for money.

“The team at Parkway Green Housing Trust left us with no doubt that it should be awarded with full and unconditional HQN accreditation. To volunteer to undergo such rigorous, independent scrutiny is testament to the conﬁdence that both the Trust and its customers have in its services. We are absolutely delighted to present it with this well-deserved award.” mike Jones, Director of asset management, HQn

an accreditation mark is a visible sign that your organisation not only meets or exceeds good practice standards, but is also proud to oﬀer a best-in-class service to its tenants and residents. Demonstrating that your services have been scrutinised by a reputable and independent organisation and found to meet exacting standards is a measure of conﬁdence that customers, clients and partners will recognise and trust. our HQn accreditation systems provide the tools to do this and have been designed to recognise and reward those organisations which: understand their customers, and communities

operate eﬃciently and make best use of the resources available

Deliver excellent services for tenants

are committed to developing and sustaining strong partnerships

innovate and actively look for opportunities to improve.

Current oPtions inCLuDe: hQn accredit: Repairs and maintenance hQn accredit: Dlo

hQn accredit: Contractor hQn accredit: gas

hQn accredit: income management hQn accredit: estate management

Coming soon – hQn accredit: leasehold services and hQn accredit: Co-regulation

For more information contact Anna Pattison on 01 04 5571 7 or anna.pattison@hqnetwork.co.uk Rockingham House St Maurice’s Road York YO31 7JA

Telephone 0845 4747 004 Fax 0845 4747 006

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