Going Dutch – self-regulation and the problems of housing associations in the Netherlands

The Conservatives’ plans for social housing will re-open the debate over regulation: if the TSA is abolished, many in housing associations (and certainly the National Housing Federation) will advocate self-regulation on the Dutch model. Meanwhile the housing associations in the Netherlands are having some problems.

Last week it was reported that Dutch housing associations had posted an average loss of €1.2m - the first time the sector has failed to make a profit in well over a decade. This will put under strain the sectors own arrangements to rescue troubled associations. While the financial problems may be largely outside the control of the associations, the self-rescue and the self-regulation arrangements tend to support each other.

Cuts: Labour and further education colleges

Yesterday’s Observer published confidential papers that show plans for £350m of further education cuts in 2010/11.

The paper listed options including:

- Cutting by 10% of the funding of adult apprenticeships.

- Delaying the introduction of "skills accounts".

- Reducing funding for Train to Gain scheme.

I hope FE colleges are preparing for the future whoever wins the election.

Catchup - the Conservatives and regulation of social housing

Life has been busy - mostly working with organisations in the overlap of the public, charitable and education sectors. This month I will try to reserve more time for this blog.

This weekend I have been catching up on last month's issues of Public Finance. It was disappointing to see that the Conservatives appear to be planning to re-arrange the regulatory landscape for English social housing as part of the crusade against quangos. If the Tenants Services Authority is doomed, there will have to be a new regulatory regime otherwise lenders will be wary of lending to housing associations - or, if they do, it will be at higher margins.

Can’t get no satisfaction (statistics): reporting performance

One of the most promising developments in public services in recent years has been the increasing attention to customer satisfaction - whether those customers are students, patients, residents, or whoever. Often regulators require the publication of satisfaction statistics. When the results show improvement, public sector organisations do no need much encouragement.

I was therefore interested in the latest newsletter from my local NHS hospital trust. The headline was "Survey reveals patient satisfaction is on the up":

Significant improvements since 2007 included:

- The hospital room or ward was very clean - up 12%
- Always offered a choice of food - up 12%
- Doctors always washed or cleaned their hands between touching patients - up 10%...

But where did that take the Trust? What were the new percentages? (How many doctors had dirty hands?) How do the new percentages compare with last year's? What were the old percentages? What about the average rates for other comparable hospitals?

There were no charts illustrating any of this. Just words.

Perhaps the article was not intended to report performance - only tell of how the Trust was on "on the up". But accountability is about reporting performance.

Death by Powerpoint

If you’ve ever suffered death by Powerpoint in meetings or training, this may amuse:

(I found the link on Jon Moon's website, which I have recommended before.)

10:10 vision: making a carbon commitment

Last week I was pleased to see that public and third sector organisations making the 10:10 pledge i.e. committing to cut carbon emissions by 10% in 2010. There are ten universities as well as dozens of schools.

While some carbon-reducing measures will have cashflow and budget implications which may preclude speedy implementation at the current time, other measures may save money as well as the planet.

I am actively seeking to reduce my business mileage which is significant albeit driving a low carbon car. Making the 10:10 is consistent with that. I will sign up although I am no sure whether I do that personally or as Deed Consulting.

The Combined Code review – board evaluation and external facilitation

Another issue in the Financial Reporting Council’s Second Consultation on its Review of the Effectiveness of the Combined Code is the suggestion that the Code be amended to recommend that board evaluations should be externally facilitated at least every two or three years for some or all companies.

This proposal follows the Walker Review of the governance of the banks. The Walker Report recommended:

The board should undertake a formal and rigorous evaluation of its performance with external facilitation of the process every second or third year.

I certainly believe this is relevant to the public sector and third sector. (And its not just because I would happily facilitate, support or validate board evaluation.) While many organisations in these sectors have adopted board self-assessment (and in the case of housing associations board member appraisal), these processes can be lacking in rigour. Too many board members are asleep either metaphorically or literally. An outsider can more easily challenge a board member than his or her peers. Moreover, an external facilitator can bring an independent perspective and wider experience when some boards may not realise that they are not performing as well as they could or should.

No limits? Board renewal and good governance

Writing governance codes must seem like painting the Forth Bridge. It only seems like yesterday that the Combined Code was revised – now we have a new revision. In fact this summer saw the Financial Reporting Council issue a Progress Report and Second Consultation on its Review of the Effectiveness of the Combined Code.

I will not try to summarise the ideas kicked around in the Second Consultation. (KPMG’s Audit Committee Institute have published a useful guide in its Quarterly.) A couple of ideas did catch my eye.

In the section on Board Balance and Composition, one of the specific issues for further consideration is the question of:

whether the so-called “nine year rule” has resulted in a loss of continuity and valuable experience.

While the Combined Code applies to listed companies, it sets the pace for governance beyond – not least the public and third sectors.

The nine year rule is definitely an issue in the housing sector. A nine year rule has been recommended by the National Housing Federation for several years. It remains controversial. Several housing associations dodge the issue by starting the clock for the nine years when the rule was introduced rather than when the board member was appointed. Imagine the uproar if banks were so blatant in ducking best practice on board renewal! (I know that many long-standing board members bring commitment, experience and continuity but perhaps those board members could bring even more to other organisations as well as allow fresh blood.)

Sadly, there is barely an issue in the college sector where I have done work on governance since the mid-1990s. The Learning and Skills Council raise the issue in its guidance but in the absence of any code of governance for the sector, the recommendation lacks profile.

I hope that the Financial Reporting Council will keep the nine year rule although it needs to be framed appropriately and applied flexibly so that board renewal - with effective succession strategies – supports “continuity and valuable experience”.

Whatever happens, I’ll be stepping down as a board member in the not-to-distant future when my time is up.

Post-16 education changes: things can only get better?

This week’s Public Finance reports that the Learning and Skills Council’s chief executive has warned of something close to chaos as the quango is dismembered – part becoming the Young Peoples’ Learning Agency and part the Skills Funding Agency.

Geoffrey Russell writes in the LSC’s annual report: ‘As the transition progresses over the next year, there are significant risks that the LSC will not be able to meet its objectives, staff morale will be affected and systems of internal control will break down.’

Those of us who have worked with colleges for several years will remember the dislocation caused when the Further Education Funding Council and forty-plus Training and Enterprise Councils were put together less than a decade ago – pulling organisations apart is even more disruptive than putting them together.

The histories of the FEFC, TECs and LSC suggest that the SFA and YPLA will share the same fate.

If the Conservatives enter government next year, the next upheaval may come even sooner. David Cameron’s rhetoric about a bonfire of quangoes chimes with noises from his party about resurrecting the FEFC – re-creating a funding body with a narrower remit than its successors and removing from local authorities their new funding role in 16-18 education.

We’ll have to watch this space.