Governance post spending review

Posted: 27th November 2015


The collective sigh of relief for many housing providers, that there wouldn’t be a further immediate raid on housing association incomes, could be heard across the housing sector.

However, the in-depth analysis carried out by the Institute for Fiscal studies suggest that the pain has just been deferred to 2020. What are the implications of this? For non-executive directors and executive directors, trustees and co-optees there are a number of things that you now really should still be thinking about ‘while the sun is still shining’ to quote George Osbourne.

1. Can you survive?
We have all been undertaking a fair degree of stress testing and scenario planning and the spending review hopefully, will not have upset these plans. The bigger question though is whether you remain viable not only in the next 3 to 4 years but thereafter. The critical outcome and discussions that still need to take place are those that address the fundamental viability and resilience question, which should include scenario testing the types of scenarios and risks that may yet manifest themselves at the same time. For most organisations this is a very challenging debate and one where the board needs to be completely honest with itself. What if the spending review had been worse / What if the Housing and Planning Bill has nasty surprises about Right to Buy receipt retention for example.

2. What does your future look like?
For most organisations development programmes will have been cut and/or severely curtailed. The emphasis on shared ownership and owner occupation will challenge the objects and vision of organisations and may give you reason to think again about whether or not you should remain as an independent organisation, if you don’t have capacity to deliver your social purpose over the medium term. Many providers, even if they are not thinking about mergers or acquisitions as an immediate action, are preparing strategies so that they understand the criteria by which they would think about merging and those types of organisations that they would want to merge with or acquire. Organisations should be waiting for the NHF merger code and any guidance, next year. It is about boards and executives being proactive, and is good governance to tackle gritty questions such as this.

3. Are you efficient enough?
Elsewhere in this e-bulletin, Michael Appleby talks about organisational transformation and becoming more efficient. It is the governing body’s responsibility to ensure that the organisation is operating as it should, with margins that are resilient and edging towards or over 30%. This involves a different way of thinking, and in most cases a different way of delivering your business. There are hard decisions still to take, but the board should not shy away from tackling inefficiency and being prepared to think radically.

There are very many more questions that could be posed, but there is also the day-to-day business that needs to be undertaken. One thing for sure is that those whose business plans were sailing close to the wind will need to take considered steps now and will probably be the subject of a very early IDA to test that further resilience and governance thinking. Prepare for it now, before the regulator comes knocking.

Good luck and if you need any help we are always around. Please contact Fiona Underwood on 07788 643 092 | or Steve Douglas on 07810 152 840 |

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