Overview

Introduction

The Secretary of State for the Department for Communities and Local Government (DCLG) is seeking to appoint up to 2 new non-executive members to the Homes and Communities Agency Regulation Committee.

Those who serve on the boards of public bodies play a vital role in the life of this country, whether by improving the delivery of public services or providing independent advice to Government. Many people from a wide range of backgrounds across the whole of the UK participate in public life by being members of the boards of public bodies. They are involved in making decisions that develop, shape or deliver government policy and public services.

Person Specification

Essential Criteria

  • An ability to operate strategically at a national level within a complex environment;
  • A proven ability to identify and tackle financial and other risks, acting independently as appropriate;
  • (One member) with senior level knowledge and experience of the capital markets and structured products and a demonstrable understanding of the risks involved.
  • (One member) with senior level experience of bank finance and related products and a demonstrable understanding of the risks involved.
  • Experience of working with diverse groups

Desirable Criteria

  • Knowledge of the social housing sector and the potential impacts of economic and policy changes
  • Knowledge of statutory regulation;
  • The ability to advise and challenge the executive on re-structuring.
  • The Chair would like to strengthen the Committee’s experience of northern housing markets and maintain a reasonable gender balance on the Committee.

Tagged as: business, communities, finance & skills, regulation

About Homes and Communities Agency (HCA) Regulation Committee

 

Background

The Regulator of Social Housing (the Regulator) is currently constituted as the Regulation Committee within the Homes and Communities Agency. In its current location within the HCA, the Regulation Committee operates with statutory independence from the HCA board. The government has determined that the Regulator should become an independent stand-alone legal entity so as to avoid the potential for conflicts of interest with the HCA’s growing investment role.  The transition to stand alone status is intended to be implemented through a Legislative Reform Order.

The Regulator has two distinct roles set out in statute – these are in relation to (i) economic and (ii) consumer regulation.

The Regulator’s statutory economic regulation objective applies to Private Registered Providers and is the main activity of the Regulator. The objective, in summary, is to ensure that those providers meet standards set by the Regulator in relation to matters such as their financial viability, governance and value for money.

The Regulator’s statutory consumer regulation objective extends to all registered providers, both Private Registered Providers and stock owning local authorities. The Regulator’s main activity in this area is to set standards related to consumer regulation matters, which are principally in relation to the services that registered providers make available to their tenants.  While the Regulator sets consumer standards, the primary responsibility for resolving issues with these is between landlords, tenants and their representatives at a local level – with ultimate recourse to resolve individual complaints, to the Housing Ombudsman. The Regulator can only intervene if a consumer standard has been breached and as a result, there is serious detriment or potential serious detriment to tenants.

The Economic and Consumer regulation standards are reflected in the current regulatory framework for social housing, which came into effect on 1 April 2015 and is regularly updated. The regulatory framework sets out the requirements that providers must meet (in particular, seven outcome-focused regulatory standards) and the way in which the Regulator carries out its functions.

The Regulator’s primary regulatory principle is co-regulation. This approach recognises that boards are responsible for their organisation’s performance, compliance with regulatory standards and adherence to their own selected code of governance.  The Regulator also has a statutory duty to exercise its functions in a way that is proportionate and minimises interference.

The Committee’s members are appointed directly by the Secretary of State. There are currently five committee members: Julian Ashby (Chair and ex officio member of HCA’s Board), Simon Dow, Richard Moriarty, Ceri Richards and Elizabeth Butler.

The Sector

There are some 1,500 stock owning private registered providers. They are very disparate in size and focus. A large majority own fewer than 250 homes each while the largest have over 100,000 homes. There are 240 groups and standalone associations that own and manage over 1,000 homes – i.e. 95% of the sector’s stock of 2.8 million social housing dwellings. In 2015/16 the sector made a surplus of £3.2 billion on a turnover of £18 billion.   The book value of the sector’s stock was some £140 billion funded by £45 billion of government grant and private debt finance of £63 billion. The open market value with vacant possession is estimated to be over £400 billion.

The pace of change in the social housing sector in recent years has been unprecedented. The sector was re-classified as ‘Public’ by ONS in October 2015.  The government has introduced de-regulation measures which came into force on 6 April 2017, with secondary legislation to be brought forward, with a view to the classification of the sector being reversed.  There are on-going changes in the previous stability of the income of registered providers:  Social housing rents are subject to reductions of 1% flat per year for a four year period ending in 2020.  Various changes to welfare benefits have introduced a range of income uncertainties.  The sector is currently seeking to maintain margins through greater efficiency.  It is responding positively to government plans to boost housing supply across a range of tenures and is consequently taking on substantially increased commercial and market exposure risks.

In addition, a number of registered providers will need to respond to any essential works required to affected properties following the Grenfell Tower fire, once there is clarity about the type of technical specification which may be applied in cases where, for example, cladding on tower blocks needs to be replaced. In addition, the boards of registered providers will want to, and are, seeking assurance that their organisation meets the full range of health and safety requirements applicable to their stock, as well as considering what steps they can take to optimise tenant protections.

The sector is becoming increasingly complex through the diversification of business models, structures and financing arrangements.  Providers now predominantly look to the capital markets for long-term finance and are undertaking a wider range of activities through partnerships and joint ventures. The Regulator needs to ensure that the sector is regulated effectively as it adapts to these new economic circumstances, prepares for its new independent status and develops regulatory strategy for dealing with any potential future events.

The role of the HCA Regulation Committee:

The Regulation Committee is responsible for:

  • Supporting the Chair in establishing the Committee’s overall strategic direction in line with its statutory objectives and functions;
  • Helping to ensure that the strategic direction and operation of the Regulation Committee secures and maintains wide confidence in the viability and stability of the social housing sector both within Government, and with the sector’s funders;
  • Operating and exercising the Committee’s functions in accordance with the highest standards of conduct and probity, and established good practice in decision making; and
  • Promoting the most effective and efficient use of resources.

The Committee takes decisions on matters such as:

  • Maintaining and developing the regulatory framework – to keep pace with changing sector risks and ensure an approach that can withstand emerging challenges
  • Regulatory standards
  • Strategy on the use of registration powers for both non-profit and profit-making organisations
  • Strategy on enforcement and intervention
  • Strategy on proactive economic regulation
  • The use of financial and economic analysis, for example on the risk profile of the sector
  • Delegation of regulatory functions.