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Putting good governance into practice

Posted by Jennie Ferrigno, Chairman, on 09 Dec 2015

It’s important to put some context around the huge decision we are being asked to make. As a Board, myself and my colleagues are open to change and we thrive on being adaptable and innovative. We are acutely aware that home ownership is moving beyond the reach of an ever increasing section of our community and that there are many different shades of housing need. Meeting this new housing need will require different solutions and for us to widen our range of solutions to help those that the sector hasn’t traditionally housed before. This is important not only to address the needs of individuals, but to acknowledge that housing has a vital role in ensuring the economic prosperity of our communities and the nation. Businesses across the country need to be more vocal and willing to support our own sector to ensure the housing needs of their workforce are met. Understanding and being open to a wider range of people we seek to help with housing, does not and must not mean moving away from our core area of housing, which is truly affordable housing at rents that low income households can afford. Our future relationship and partnership with Government, therefore, needs to respect this core objective. 

In reviewing such a hugely significant matter as the voluntary ‘offer’, we are committed to strong governance and ensuring we make the best possible decision, on the basis that we have enough of the right information and advice to support us.

Despite the NHF and Government being in talks since the election in May, the full extent of these discussions was not released until the voluntary ‘offer’ was published at conference, alongside a requirement to respond formally with a yes or no vote within 6 working days. This has been proposed by our trade body that produces our model code of governance! At any other time, it would be suggested that such a timescale would surely be seen as unsound decision making without the legal, financial and risk considerations. We are committed to the highest governance standards and is the first reason for our decision.

The second is around the detail of the offer itself. Leading up to conference there has been limited discussion with member bodies (at least with us), from the NHF concerning how a voluntary Right to Buy (RTB) deal might look. There was no mention of the elements that are included in chapter 3 of the offer, which has an equally significant impact and surely needs to be fully considered. This appears to have introduced another wave of Government policy into a voluntary deal, which has not been subjected to a democratic process. It is expressed in vague terms that are impossible to review properly and to receive relevant advice on, and on which to gauge the implications and risks. Much depends of course on the new standards, flexibilities and freedoms to be introduced by the regulator. A more open and transparent approach would have provided the opportunity to work through the draft regulation, so we could properly see the full extent of the deal. Likewise it would have been helpful to have been provided with the terms of the draft legislation, which we were told was in place, in order to compare the benefits of the ‘offer’.

From our observations at the conference, we are deeply concerned that the NHF appears to have stage managed the process with one outcome in mind, rather than acting as an honest broker, to allow the whole sector to come to a timely and balanced view in respect of this incredibly important decision. The speed at which some organisations signed up to the deal suggests they had prior knowledge of its make-up, and the voting process in terms of how votes are weighted contradicts the current NHF AGM rules, and stated requirement that a sufficient proportion of HAs must be in favour, to convince Government. This is not what we expect from a representative trade body and we will therefore be reviewing our membership of the NHF.

In terms of the voluntary RTB offer, we made comments on the proposals that were shared with the NHF, with very little concessions following through from these consultations. In particular for our organisation with a high percentage of sheltered housing, it is inconceivable that such tenants should receive a portable RTB discount. The concept of extending RTB is about meeting the aspirations of those who want to buy - how then will retired sheltered tenants get a mortgage? Or can aspiration be using cash in the bank or from family members, so they have an asset to pass on, rather than aspiring to own a home? What alternative one bed homes do most organisations have? Is this another bedroom tax moment in the making?! We are also disappointed that there is also no absolute commitment to address the RTB receipts sharing agreements that most LSVTs are subject to in their Transfer Agreements with their local Council, to ensure HAs keep all receipts from voluntary RTB. Without this we could not agree the deal as we would be financially unable to replace all lost homes, which is a key element of this ‘offer’.

In making such important decisions, we need to consider the long term and broader impacts, particularly the views of our stakeholders and partners. The time allowed here for decision making, makes this virtually impossible.

Working with Government should be in the form of a true partnership, yet agreeing to a deal as a result of a threat does not bode well for the future. We have a legislative process where unfair or contentious proposals can be debated and challenged and some sections of our democratic process have expressed the desire to do just this. We must think carefully on these broader issues, or we risk damaging the reputation of our sector.

For these reasons, we are voting ‘no’ to the proposal. 

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Red Kite Community Housing, Windsor Court, Kingsmead Business Park, High Wycombe, HP11 1JU

Red Kite Community Housing is a charitable registered society which operates for the benefit of the community under the Cooperative and Community Benefit Societies Act 2014. VAT registration number 123147939.