Governance and resilience in the Scottish housing sector

James McMorrow | 01 Apr 2021

INSIGHTS

The 19th edition of Harper Macleod’s National Housing Conference played an important part in setting out the role of social housing in the country’s transition from the social and economic impacts of the pandemic.

Over 5 days, our legal specialists were joined by a selection of industry and academic speakers. If you missed any sessions or would like to revisit what happened on particular days all the content is now available on-demand.

Day 2 of our National Housing Conference 2021 featured discussion from our panel on the challenges of the past 12 months from a governance perspective and the resulting resilience that the sector has shown. Key priorities over the next 12 months were also discussed.

Chaired by James McMorrow, a Partner in the housing team at Harper Macleod, the session also welcomed Ian Brennan (Director of Regulation, Scottish Housing Regulator), Andrew Roskell (Managing Director, DTP UK), and Hugh Carr (Senior Consultant, DTP UK), as well as Harper Macleod’s head of housing Derek Hogg.

Overview

Despite the challenges the sector faced over the past 12 months, there has been some remarkable activity in the housing sector. Some of the initial stumbling blocks that the sector faced began to dissipate as the year went on. Consideration had to be given to business plans to ensure these reflected the current position and the majority of the sector that could work from home switched to this method of working. These changes tested the resilience of the sector and also raised some questions on the governance of these organisations and how they could operate throughout a pandemic to their usual standard.

Andrew and Hugh, of leading consultancy DTP UK, explained some of the positives that had arisen from the new ‘normal’ and also set out some of the struggles experienced over the past 12 months. Some of the key themes discussed included:

Home working

Many in the sector seeing the advantages of a change in working environment.
Some form of home working is likely here to stay within the sector.
Housing associations and other housing providers are now starting to evaluate the requirement for office space and whether the same size of space will be required moving forward.

Employee welfare

The importance of ensuring that all staff working throughout the pandemic were looked after by their employers.
Some staff members are likely to have suffered more throughout the period than others.

Funding

Majority of funding is still available to the sector.
Comparisons drawn from previous financial crisis when the position was much different to what it is now.
Funders have taken a pragmatic approach throughout the period.
Likelihood that now is a good time to speak to funders about future funding requirements.

Virtual board meetings

Benefits of holding board meeting virtually over the past 12 months.
Some have had concerns and made complaints about the switch to virtual meetings due to a perceived lack of ability to engage.
Boards have taken an active approach to try and ensure that there is as much engagement at virtual board meetings, if not more.
Attendance at board meetings has in fact increased over the period.
If virtual meetings are going to continue, it is likely that a wider pool of potential board members will be available due to traveling not being a restriction, and as such could lead to more diversity on boards.
Ensuring boards remain vigilant and carrying out the correct processes to ensure decision making processes are maintained is crucial. This then ensures that the board is carrying out its full function that it is required to do.

Scenario testing

Important for further and future scenario testing to be carried out throughout the sector.
Doing so will ensure the sector is prepared for any further changes in the future.
Ensuring that there is still an environment for growth and innovation is crucial to ensure that the sector continues to grow and improve.

Approach of Scottish Housing Regulator (SHR)

Ian Brennan explained that, like funders, the SHR has too taken a pragmatic approach over the past 12 months and continued throughout the pandemic with the work it has always done ensuring that the correct balance was struck given the circumstances. Andrew and Hugh both noted that funders had taken great comfort in the approach that SHR had taken and further highlighted the importance of SHR maintaining its role in the sector.

There has been much more engagement between the SHR and stakeholders. Ian commented that this has been a great advantage of the past 12 months and also praised RSLs for the work they have carried out over the past 12 months in ensuring that tenants have had the support they required. He also noted that there has been much more willing between organisations and people to help each other out and housing associations have been less guarded over the information which is shared, which can only be seen as a benefit to the sector.

A possible development point for the sector to work on over the next 12 months would be better scenario planning, which Hugh and Andrew both mentioned.

Looking forward to the next 12 months, Ian explained that the SHR is looking to publish its engagement plans at the end of March, in which some of the priorities set out in the November publication will also continue to be a focus. Some of these priorities which are likely to continue include:

Homelessness and the work RSLs are doing to reduce this now and possible new pressures for the future.
Tenant and resident safety.
Governance and holding board meetings virtually and the challenges that may arise as a result of this.
Financial health – important to have up to date business plan that reflects current situation.

Ian has also compiled a to-do list of areas, which chief executives may want to focus on going forward. Of course, this list is not exhaustive but the main points are as follows:

Business planning;
Rent affordability;
Arrears management and tenancy sustainment;
Homelessness;
Development;
Maintenance of existing properties;
Supply chain issues;
Employee welfare;
Cyber security;
Tenant and resident safety;
Scenario planning and sensitivity analysis; and

Reflecting on the last year, Ian concluded by noting that, given the circumstances, the sector is in a good place and it is likely that the hardest time is yet to come as more changes are expected.