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The UK government deserves a G3 rating for its handling of Brexit

If the UK government were to receive a judgement under the standards applied by the Regulator of Social Housing, it is hard to see how it could pass, writes Boris Worrall

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The UK government deserves a G3 rating for its handling of Brexit, writes Boris Worrall #ukhousing

If the UK government were to receive a judgement under the standards applied by the Regulator of Social Housing, it is hard to see how it could pass, writes Boris Worrall #ukhousing

Brexit. These six letters have generated millions of hours of debate and deep division across the country. But what if we step back and consider what we in housing might learn from the referendum and seismic fallout since then?

Whatever the rights and wrongs of Brexit itself, it is clear that from a decision-making perspective, there is a strong argument that the process represents a catastrophic failure of governance.

Our own regulatory framework sets out two complaint standards for governance (G1 and G2) and two non-compliant standards.

A G3 rating reflects ‘serious’ issues of concern and G4 is the trigger for intervention or enforcement. Right now, I think many of us would argue that the UK would be graded G3 or G4 on this issue.


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So, let’s unpick how we got here. First, few housing associations would embark on such a fundamental change of policy or strategy without a fully detailed business case, probably supported by some external validation. In contrast, the referendum relied on slogans on buses and asked the question without any options appraisal.

Maybe a Royal Commission or similar could have set out the options and implications before asking for a decision? The referendum is a stark reminder that making decisions ‘on the hoof’, with too much reliance on gut feeling and without proper evidence or validation, is a risky road.

“Mostly, however, colleagues have helped me see sense when as a chief executive I have occasionally been distracted by a flight of fantasy or pushing ahead too fast”

Second, following the 52-48 vote, the government chose to drive relentlessly towards a goal representing just over half of those who voted, rather than building consensus.

In my experience, difficult decisions deliver the best outcomes when chief executives, executives and boards can reach broad agreement.

Collective decision-making is a bulwark against bad decision-making. Of course, there are times to be bold, brave and decisive. Mostly, however, colleagues have helped me see sense when as a chief executive I have occasionally been distracted by a flight of fantasy or pushing ahead too fast.

Third, the old saying goes that leaders need followers; it’s not purely a function of rank.

We can all set out a great strategy, an ambitious plan or a shiny new business case.

But if we don’t take our people with us, it’s unlikely to land.

Politics is by its nature riven by rivalry and defined by tribalism – but the government set its course in splendid isolation and then hit the buffers, having failed to take parliament on the journey.

I suspect most of us in leadership have made a similar mistake within our own organisations at one time or another.

“The worst decisions I have taken have often been partly for the ‘wrong’ reasons, usually later to be regretted”

Finally, and again it is clearly much harder for political leaders than us, where we are able to put the purpose and needs of our organisations above our own desires and opinions, I think we are on safer ground in making tough choices.

I’d argue that for our political leaders this means national interest before party.

The worst decisions I have taken have often been partly for the ‘wrong’ reasons, usually later to be regretted.

Whatever the outcome of Brexit, it is imperative that both sides focus on getting a divided UK back to G1 status. And that could be as challenging as delivering Brexit itself.

Boris Worrall, chief executive, Rooftop Housing Group

Read more about Brexit

 

Brexit and the social housing sector: the key risks As the tortuous process of exiting the European Union approaches its denouement, the country remains in a state of uncertainty about what exactly is going to happen. Peter Apps recaps the key risks to the social housing sector

Downturn: why is L&Q cutting its surplus in half and what does it mean for the sector After L&Q revealed it is likely to cut its surplus by £158m this year, Peter Apps asks what this means for the financial model which has defined the housing association sector since 2010

What housing associations are doing to stress-test for Brexit With the UK’s departure from the EU looming, Luke Barratt looks at what housing associations have been doing to prepare

Regulator writes to housing associations with no-deal Brexit warning The regulator has issued a warning to housing associations over the threat of a no-deal Brexit, outlining key risk areas including shortages of crucial materials, a housing market crash and difficulties accessing ‘business-critical’ data

Sector draws up contingency plans for no-deal Brexit The country’s largest housing associations are putting in place contingency plans to protect the future of their organisations

How would the sector cope with a no-deal Brexit? As uncertainty around Brexit mounts and a no-deal looms, Inside Housing asks what it could mean for the housing sector

Current grant system won’t work in a falling market The government needs to think again about grant to prevent housing association development from collapsing in a falling market, writes Matthew Bailes.

S&P would downgrade half its rated housing associations after no-deal Brexit The credit ratings agency Standard & Poor’s (S&P) has said it will downgrade associations it rates if the UK leaves the European Union without a deal

 

Click here for all our Brexit news to date

 

Regulatory judgements in England explained

The Regulator of Social Housing publishes regulatory judgements for all providers owning 1,000 or more social housing homes.

These judgements set out whether the provider is complying with the regulator’s governance and financial viability standards.

The regulator carries out an assessment either through a scheduled in-depth assessment, or reactive engagement (in which the regulator acts following information about a provider).

It then awards the provider a rating from one to four for financial viability (V) and a separate rating from one to four for governance (G).

Providers must score two or higher in both categories to be judged as complying with the standards.

As providers have increasingly taken on more risk to cross-subsidise social and affordable housing delivery through market-facing activity, the regulator has changed a number of associations’ viability ratings from V1 to V2.

The regulator often categorises this kind of regulatory action as ‘regrades’ rather than downgrades. Click here to read more.

 

Key to ratings:

V1/G1: Compliant

V2/G2: Compliant

V3/G3: Non-compliant and intensive regulatory engagement needed

V4/G4: Non-complaint, serious failures, leading to either intensive regulatory engagement or the use of enforcement powers

 

Rating straplines in full:

Governance ratings:

G1: The provider meets our governance requirements.

G2: The provider meets our governance requirements but needs to improve some aspects of its governance arrangements to support continued compliance.

G3: The provider does not meet our governance requirements. There are issues of serious regulatory concern and in agreement with us the provider is working to improve its position.

G4: The provider does not meet our governance requirements. There are issues of serious regulatory concern and the provider is subject to regulatory intervention or enforcement action.

 

Financial viability ratings:

V1: The provider meets our viability requirements and has the financial capacity to deal with a wide range of adverse scenarios.

V2: The provider meets our viability requirements. It has the financial capacity to deal with a reasonable range of adverse scenarios but needs to manage material risks to ensure continued compliance.

V3: The provider does not meet our viability requirements. There are issues of serious regulatory concern and, in agreement with us, the provider is working to improve its position.

V4: The provider does not meet our viability requirements. There are issues of serious regulatory concern and the provider is subject to regulatory intervention or enforcement action.

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