The accountability debate – can this help?
There has been much discussion around the sector over the last year or two about who actually governs the actions of housing associations (large and small), who they are accountable to and how best both to determine their mission and ensure that they remain loyal to and focussed on it.
This is not a new debate, however, because it has been taking place from time to time over the last 30 years or more, as government policy has pushed the sector in different directions and made changing demands of it. A part of the debate over that period has been how to address the interests of the tenants who are housed and the executives who organise their homes.
The debate has also extended to how best to ensure that staff at the sharp end of the business of the association can, alongside the tenants, have a real voice in both the plans for and delivery of the services which the association provides.
In the context of this debate, it is often said that the traditional housing association constitutional model has two glaring weaknesses:
- a lack of real accountability of the Board to any stakeholders, save for the HCA in a case of regulatory extremis or bankers in the event of financial extremis.
- little "legally enforceable" input for tenants and non-executive level staff into the development of the wider strategic objectives of the association or real ability to hold the Board to account for the delivery of them.
The ownership and governance model of both Rochdale Boroughwide Housing (RBH) and Merthyr Valley Homes (MVH) turns the conventional and potentially polarised, relationships of Landlord/Tenant and Employer/Employee on its head into a truly co-operative approach of co-creation. It simultaneously recognises the divergent and sometimes conflicting interests of its various stakeholders, while bringing them together within a constitutional framework that makes this very diversity one of its strengths.
Traditionally constituted housing association boards are comprised of board members who have appropriate knowledge of and experience both within the sector and in the wider business world together (sometimes) with representatives from tenants, the council and other stakeholders. As board members, however, each of them must act in the best interests of the association rather than in the interest of the group that they represent (if any), on the board.
The tenant/staff mutual model adopted by RBH and MVH identifies the interests of each of the stakeholders and then reorganises them in a framework that might be a useful model for other housing associations to consider. Indeed, a few traditional housing associations have recently raised this possibility with us.
At the very foundation of the model are the shareholding members of the mutual association – tenants and employees, whose key role (beyond being owners of the organisation) is to elect the democratic representative body, which represents their interests within the governance of the association. Apart from direct interests of tenants and employees, this body may also comprise representatives from the council and other desired external stakeholders, thus ensuring that each participant has a voice and an ability to shape the strategic direction of the association and hold it to account.
This democratic body is charged with the responsibility of working with the board in establishing a policy framework, determining service outcomes, scrutinising progress towards achieving these outcomes and crucially, appointing and removing non-executive board members. All these functions establish it as a key player in influencing the overall strategic direction of the association and, one may also say, as the guardian of its social purpose.
The democratic representative body appoints board members (other than executive directors who are appointed by the non-executive directors). The board and the executive directors are charged with the responsibility of running the association within the established policy framework and delivering the outcomes identified by the representative body. The board itself is constructed around the knowledge and experience of its members but is ultimately directly accountable to the representative body.
By carving out the representative function of the board, vesting those functions within a representative body and making the board accountable to that body, RBH and MVH have managed to balance competing interests within the association in a manner which optimises the skills and knowledge that each of the stakeholders can bring and the contributions that each of them can make. Another aspect of the model is its ability to give councils a stronger voice in the post ONS inspired de-regulated world, without breaching the anticipated regulations under Section 93 of the Housing and Planning Act 2016.