Brexit – What does it mean for Governance and HR in Housing? By Zoe Wortley, director of governance and strategy consultancy for EMA Business & Management Consultancy Limited.
Whilst the Brexit decision remains a surprise to many and will undoubtedly bring significant long-term change to our political, economic and cultural landscape, a month on since the vote and some of the implications for housing governance and HR are already becoming a little clearer.
So what are the main HR and governance challenges, and how should we approach these to ensure minimal disruption to the existing status quo?
Our employment rights are one key area for consideration, particularly where EU legislation and directives have been a major driver for changes in UK employment law. There has been no indication yet from our politicians that they will make any changes, and it is perhaps reassuring that many of the measures put in place by the UK to protect workers exceed the minimum EU requirements. But without the protection of Europe, we should be prepared for the potential watering down of workers’ rights and a renewed effort to reduce the power of the trade unions.
Freedom of movement may also become an issue as we start to negotiate a new trade deal with Europe. Impacting upon key areas of public service, alongside a broad range of other sectors including housing, which depend upon foreign workers to help meet current high demand for new homes, there will still be a stark need to access skilled European workers. In the short term HR will have a role in reassuring and supporting employees that may feel threatened by the Brexit decision, while longer term we hope that the proposed points system may go some way to facilitating this provision.
Housing providers also need to ensure that their boards fully understand the potential impact of Brexit upon their organisations and seek reassurances that risk across the business is being appropriately managed. With the regulator having issued over 65 rulings following downgrades to housing associations over the last 40 months, having downgraded 22 housing associations in the week following the Brexit vote (as a direct result of the ratings agency’s decision to take the UK sovereign rating down by two notches), and Moody changing the outlook on 42 housing associations as a direct result, now more than ever boards of registered housing providers need to be in control and able to prove it.
The HCA have in the past taken reassurance from the fact that an organisation holds a good credit rating, but with an almost blanket downgrade is the regulator likely to get more ‘twitchy’ about an organisations stability and whether they really are a ‘safe pair of hands’?
Any guidance on ‘Good Governance’ will tell you that boards need to be clear about regulatory requirements and remain compliant, producing all necessary reports and statements ticking all of the boxes (incl. VFM) and taking account of consumer standards (including the health and safety of their tenants). Good governance principles also dictate that you ensure risk is well covered across the business and that you have effective internal controls in place to manage risk and for me this point has never been
Organisations and boards who aren’t confident that they have these bases covered, especially the management of risk and appropriate internal controls that consider and respond to the potential impact of Brexit, should seriously be considering how they will identify these gaps and what they plan to do to fill them.
So whilst the full impact of Brexit on key areas of housing, including HR and governance, are still becoming clear, what’s already apparent is that this decision certainly won’t pass us by unscathed.
As a sector we are already facing significant pressures from rent reductions and austerity measures, and to successfully ride the changing tide of Brexit alongside this, associations will need to be on the top of their game, be prepared for all scenarios and be flexible enough to quickly adapt to the unpredictable landscape ahead.