Your Homes Newcastle National Housing Federation Code of Governance
Your Homes Newcastle National Housing Federation Code of Governance
TITLE: National Housing Federation Code of Governance
AUTHOR: Jill Davison - Company Secretary
COMPANY: Your Homes Newcastle
ACTION REQUIRED: For Approval
- Confirms self-assessment results of YHN governance standards and activity against the 2015 National Housing Federation Code of Governance;
- Seeks approval of a proposed Code compliance statement for inclusion in the 2020-21 annual financial statements;
- Highlights the changes within the new 2020 Code;
- Seeks Board adoption of the new Code
STRATEGIC OBJECTIVES: Strong business fit for today, ready for tomorrow
STRATEGIC RISK REGISTER:
- NUMBER & TITLE: SR4: Failure to deliver effective governance of the Group
- LIKELIHOOD: 2 (unlikely)
- IMPACT: 3 (moderate)
FINANCIAL / VALUE FOR MONEY IMPLICATIONS: N/A
CUSTOMER IMPACT / VIEWS: N/A
EQUALITY & DIVERSITY CONSIDERATIONS: N/A
1. Purpose of Report
1.1 This report:
• Confirms self-assessment results of YHN governance standards and activity against the 2015 National Housing Federation (NHF) Code of Governance;
• Seeks approval of a proposed Code compliance statement for inclusion in the 2020-21 annual financial statements;
• Highlights the changes within the new 2020 Code;
• Seeks Board adoption of the new Code
2. Background Information
2.1 The Board adopted the NHF 2015 Code in February 2017. By adopting the Code there is a requirement to produce a statement of compliance against the provisions of the Code within the organisation’s annual report and financial statements.
2.2 Those adopting the Code may choose to follow the guidance wholly or in part, depending on their size, type, complexity and existing policies. Using the ‘comply or explain’ approach - widely adopted in UK corporate governance - a reasoned declaration is required within the statement about any areas of non-compliance. The Code does, however, acknowledge that ‘where the formal constitution of an organisation conflicts with this Code, the constitution must take precedence’.
2.3 In late 2020, the NHF announced they had published a new Code. This is explored further in section four.
3. NHF Code of Governance 2020-21 Self-Assessment
3.1 A RAG status self-assessment exercise has been conducted by the Governance Team using a checklist provided by the NHF (appendix one). Upon completion of the exercise, the majority of areas are deemed to be compliant, with only the following single section that will require YHN to ‘explain’:
B4. Board members who are executive staff must be in a minority. Boards should have at least 5 members and no more than 12, including co-optees and any executive board members
3.2 Using the results obtained from the assessment exercise, the following is proposed for inclusion in the annual financial statements, which includes an explanation for non-compliance with section B4 of the Code:
The Board have adopted the National Housing Federation Code of Governance – promoting board excellence for housing associations. An annual assessment is undertaken to review arrangements are clear and effective.
A compliance checklist exercise is conducted, which involves evaluation of the following areas:
• Constitution and composition of the Board
• Essential functions of the Board, including duties and responsibilities
• Board skills, renewal and review
• Conduct of Board and Committee business
• Audit and risk
• The Managing Director; working arrangements with the Board
• Conduct, probity and openness
Having reviewed the checklist, the Board are satisfied that high standards of corporate governance are being upheld and concluded that the YHN Group is mainly compliant with the Code, but draws attention to the following area in which the constitution of the organisation took precedence over the provisions of the Code (permitted by Section A2 of the Code):
The Articles of YHN state the Board membership can comprise a maximum of 8 independent members and 4 council members. The Board approved a co-optee policy in 2019 and has, during 2020-21, had 2 co-optees appointed in addition to the maximum YHN Board membership, totalling 14. Such arrangements were made to maintain a continuity of collective Board skills and experiences to support the organisation in responding to the Covid-19 pandemic, particularly in areas of health, safety and audit, and in response to retirement of independent members across the year.
4. 2020 NHF Code of Governance
4.1 The 2020 Code (appendix two) has been completely rewritten and restructured with the aim of supporting housing organisations to achieve high standards of governance in line with the increasing importance of accountability to residents and protection of community interests, including equality, diversity, inclusion, the environment and organisational culture.
The Code requires those adopting it to ensure that:
• The views and needs of their residents are at the heart of their strategic decision making;
• Measures are in place to ensure that residents, other customers and staff are kept safe;
• Boards have an oversight of risk and thoroughly test the impact of potential risk scenarios on their organisations’ future
4.2 The seven areas of compliance of the 2015 Code (highlighted above in section 3.2) have been reconstituted into four core principles of which organisations will be reviewing themselves against:
• Mission and values
• Strategy and delivery
• Board effectiveness
• Control and assurance
4.3 The NHF acknowledge that some organisations may not be able to demonstrate full compliance immediately and will need to put structures, arrangements and policies in place and integrate reporting of these into the Board meeting schedule as appropriate over a number of months.
4.4 As a next step it is expected that organisations carry out a gap analysis to highlight what work is required in order for compliance to be achieved. An initial ‘first pass’ review of the 2020 Code by the Governance Team has identified some potential areas to address for the 2021-22 financial year, however these are not felt to be onerous, and include:
• A register of declarations of interests by Board and Committee members should be reported annually to Board (public report)
• The organisation should annually publish information about appointment of new board members and about the diversity, skills and attributes of all the board members
• Membership of audit committee should include at least one person with recent and relevant financial experience, proportionate to the size and complexity of the organisation
4.5 When publishing the new Code, the NHF also announced that they had developed a Together with Tenants Plan and Charter to reflect a ‘changing world and emerging issues within the operating environment and the sector’. Whilst the NHF are asking for adoption of both the new Code and Together with Tenants, YHN has been working with other organisations on a more regional version of the latter, led by Gentoo and Bernicia. It is felt that this will be more powerful and meaningful for tenants.
5. Conclusion and recommendations
5.1 Board are recommended to:
a) Receive the report and acknowledge the 2020-21 self-assessment;
b) Approve the proposed NHF Code of Governance compliance statement for inclusion in the 2021-22 annual report and financial statements;
c) Adopt the 2020 NHF Code of Governance
5.2 Board will be kept informed of progress with the new Code in due course, including any potential areas of non-compliance for 2021-22 as new criteria is reviewed.
Background Papers - None
If you have any questions about this report that you would like clarifying before the meeting, you can contact Jill Davison by email: jill.davison