Raising the bar: The NHF Code of Governance 2020

Last week, the NHF published its final version of its new Code of Governance and made some important changes from the previously published draft that will impact on those housing associations looking to adopt it.

There is now a range of decisions for housing associations to make between now and the end of March 2021 as you consider strategically which direction to go with your governance. This work will also need to recognise the proposals contained within last week’s big-ticket item, the Social Housing White Paper, and the NHF’s ongoing Together with Tenants programme.

What are the main themes of the Code?
The final version of the Code implements the four principles that were set out in the draft Code and effectively raises the bar for housing associations to move from a position of compliance to one where the board must identify its mission, devise its strategy and deliver its plans. The other main themes we identified in our briefing and webinar on the draft Code also remain broadly the same:

• The needs and safety of current (and now future) residents are to be at the heart of the board’s decision making - with residents to be encouraged and supported to influence and contribute to such strategic decision making. There is a new focus on, and accountability to, residents;   
• A clear and prominent emphasis on equality, diversity and inclusion which goes beyond the usual understanding of inclusion to include the need to have people with direct lived experience of (or particular insight into) the communities served by the association “meaningfully engaged” in governance structures. This is slightly diluted from the draft where it stated they were to be represented on the board or committee structure; and
• Resident and workforce safety in the continued aftermath of the Grenfell Tragedy is recognised as an overriding priority.

What has changed from the draft?
A number of the more far-reaching proposals in the draft have been adapted to take into account consultation responses and we highlight the main ones below.

Reviews: the requirements to review matters either annually or every three years have been watered down so that this can be determined by individual associations rather than being caught by the “comply or explain” provisions. Associations will not need to review annually your mission and values or the use of your subsidiaries but you will need to review annually your participation in joint ventures. The formal independent reviews of board members’ performances and the reviews of all policies, documents and statements will not need to be every three years, as previously proposed, but “regularly”. This will also apply to reviews of the chief executive’s contract.  

Workforce: the draft provisions proposed for the workforce have been tweaked in several places. The stand-alone annual reporting requirement to the workforce has been removed and the draft obligations relating to the learning and development of staff and associated budgets have been deleted. However, there is a clarification that the board is to have access to staff insights such that they influence the board as appropriate, rather than the previous inference in the draft Code that the board was accountable to the workforce as one of its key stakeholders.

Changed obligations: there are new references in the strategy and delivery principle to financial sustainability, value for money and carbon neutrality. However, the draft requirement to regularly review whether collaboration would better deliver your purpose has been diluted to “give consideration to” such collaborations and joint working arrangements.

Board member terms of office: whilst the maximum default term of office is now confirmed as six years (as proposed in the draft Code), associations will still have the option to reappoint a board member for a further three years if it is decided to be in the association’s best interests; the requirement to introduce annual appointments once the six-year limit has been exceeded has been axed.  

What next?
Many of us are still absorbing the final version and associated documentation. In this increasingly information and data-driven age, not only is the NHF 2020 Code 80% longer than the 2015 Code but the additional guidance runs to 47 pages and the associated compliance checklist is more than twice as long as the 2015 checklist. This will all require reviewing in the context of the NHF advocating associations deciding to adopt the new Code for next financial year. This will take quite a bit of work to review the options, assess your own readiness for meeting the requirements of the new Code and understanding what the impact will be on future workloads.

How can Anthony Collins Solicitors help?
In response to a number of enquiries, we have devised a range of ways in which we can support you:

• Forthcoming free-of-charge webinar suited for Company Secretaries and Heads of Governance on the final version of the NHF 2020 Code compared with the draft Code and implementation issues;
• *30-minute pre-recorded webinar or 60-minute "live" webinar aimed at board members, outlining the requirements of the new Code and what we consider the key issues are when moving from the 2015 Code;
• *Template front section of a board report, outlining the NHF 2020 Code and what the main changes are - to be tailored by associations with further sections on readiness and recommendations;
• *A summary paper comparing the NHF 2020 Code with the UK Corporate Governance Code 2018, the Charity Governance Code 2017 (both for larger and smaller charities) and the Code of Governance for Housing Co-ops 2012 so associations can make an informed decision over which Code of Governance to adopt.

*Available for a fixed fee

Please click here or on the relevant links above to express your interest in these services.

For more information

For more information please contact Peter Hubbard, Victoria Jardine, Catherine Simpson or Sarah Patrice.