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Strong governance adds value to a turbulent world

Ian Skipp, Group Finance & Resources Director
25 January 2022

As our pathway out of the pandemic starts to emerge, at least in the UK, it may be tempting to think that as leaders we can start to relax and revert to our old ways of working. However, even if we choose to ignore the huge social and economic changes that Covid-19 has brought into our lives, it’s abundantly clear that there are plenty of other disruptors to ‘business as usual’ for 2022 and beyond. 

For those of us in the housing world there are some major challenges ahead, including the need to meet stringent environmental and sustainability targets that are going to put strains on even the most carefully managed budgets. We also have a new Social Housing Bill expected in a matter of weeks that, rightly, will further empower our customers and force us to be more accountable. Building safety also remains very high on the agenda for obvious and compelling reasons. All of these bring disruption and carry potentially huge costs over many years in an economic environment that is already challenging. 

These changes are known and to an extent predictable. The lead-in time has given us plenty of opportunity to plan and prepare. In our case we have stringent financial planning, strong margins, low bad debt levels of around 1% together with similarly low arrears levels for the sector. Alongside this we have low net debt per unit of around £20k compared against a sector average of £27k together with interest cover of 194%. This gives us, for example, the strength and security we need to invest the multiple millions of pounds needed to achieve the government target of band C energy performance for our existing homes.  

However, when we step outside the relative comfort zone of our own sector the potential for new global turbulence that could further disrupt our businesses and the lives of each of us as individuals is worryingly high. The situation in the Ukraine right now, for example, has the potential to trigger much wider international conflict. Aside from the humanitarian disaster this might be, the economic shocks could be huge. Even a contained regional conflict involving Russia would inevitably significantly worsen the energy price crisis affecting our customers which in turn could trigger more hardship, arrears and homelessness closer to home.  

Looking west instead of east, the USA is arguably more politically unstable than it has been for generations with the potential for a return to power for Trump and further growth of more extreme right-wing views. Clearly such developments would also have a global impact that inevitably could destabilise our lives and our industries. 

Where do we go with all of this though as organisations with huge responsibilities to our customers and employees?  

My advice is to focus on what you can manage and influence while staying very alert to what you can’t. And managing or adapting to any changes effectively of course means that really strong and effective governance is a must.  

At Futures we actively keep our governance systems under review and work hard to make sure that we have the people, experience, skills, structures and processes we need to run a tight ship. That goes for both our employees – which means having a well-resourced and effective staff team in place – as well as our non-executive members. Ensuring that your customers have a strong place in all of this was always important – but is even more vital now as we move towards even greater accountability and engagement. 

While the pandemic has been both tragic and taxing – it has also forced organisations to put their contingency plans to the test and we should both recognise and embrace the value in that. The social housing sector has done a remarkable job – continuing to provide an essential public service while not always having the advantages available to some other ‘key worker’ sectors. At Futures our governance in a crisis has been put to the test at both the Board and more operational level. It’s provided oversight, control, wisdom, risk-reduction, safeguards, flexibility and so much more. It leaves me in no doubt whatsoever of the value of investing in this essential part of our business and gives me great confidence that we’re well equipped to ride-out any more storms that 2022 and beyond may bring. 

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