The National Housing Federation (NHF) has recently revitalised its Code of Governance to reflect the changing values and pressures facing the housing sector today. The Code, which was last revised five years ago, has a new focus on equality, diversity, environmentalism, sustainability and inclusion in governance to keep it relevant. We examine what the Code is for, who benefits from it and what the new changes mean for residents as well as the housing operators it seeks to govern.
What is a Code of Governance for, and why is it needed?
The 2020 Code of Governance is designed to help housing associations achieve the highest standards of governance and operation when dealing with residents. The NHF says that now, more than ever, there is a need to protect the interests of the communities that housing associations serve and make sure those in charge are accountable to residents.
Read the full 2020 Code of Governance.
Does every housing association have to follow it?
Given the diversity of the sector (the different sizes, budgets and socio-economic makeup of every housing association) the NHF has kept the Code of Governance deliberately broad so that organisations can adapt it. While they are calling for its mandatory implementation, it will be up to each housing organisation to determine how it will comply with the requirements under each Principle of the Code.
What does the new Code of Governance say?
The 2020 Code of Governance has been simplified from the eight requirements included in the 2015 Code to four principles:
Principle 1 – Mission and values
This includes a greater resident focus, with boards and organisations being compelled to demonstrate accountability and put more emphasis on understanding and including the views and opinions of residents. There is also a call for diversity amongst board members, with a renewed commitment to integrity, transparency, reputation and trust in an organisation.
Read more on the strategy behind this Principle and its application on the NHF website.
Principle 2 – Strategy and delivery
The updated Code places a greater significance on sustainability and social responsibility. It advises that more attention is paid to safety in the workplace and greater concern taken for the needs and opinions of staff. It seeks to increase the accountability of the CEO to the board, with restrictions placed on tenure, financial remuneration and scope of influence.
Further reading on the commitment to sustainability can be found at ESG Social Housing.
Principle 3 – Board effectiveness
Principle 3 looks at reassessing the skills and requirements for those acting as a chairman of the board and calls for more diverse board composition, with at least some of the members being people with ‘direct lived experience’ of the communities they’re serving. It argues for a requirement for regular review of a board’s conduct and abilities and calls for each member to receive induction training as to how best to serve.
More information on the thought process behind the Code for this can be found in Guidance on Board Effectiveness and The Foundations of Good Governance: a Compendium of Best Practice.
Principle 4 – Control and assurance
This Principle focuses on risk management, with a requirement for the independence of any auditors. It states that safeguards should be put in place to ensure there are no conflicts of interest for auditors and that the selection procedure is transparent and regularly reviewed. It also says new processes should be put in place to facilitate any staff expressing concerns without fear of reprisal.
When will it come into effect?
The Code of Governance was revised in November 2020, and the National Housing Federation is calling for its universal adoption by 31 March 2021. It is hoped that its universal implementation in some form or another will allow staff to feel recognised and residents to feel considered and represented at every level of governance.