SHR Board Minutes Minutes - 26 March 2024

Present

Welcome

GW welcomed all present, especially the staff observers and guest speakers from the Scottish Federation of Housing Associations (SFHA).

Meeting with SFHA

The Board met with ST, SFHA Chief Executive and DM, SFHA Chair.  ST and DM provided some background on the SFHA’s work, explaining how it represents and connects the majority of registered social landlords.  They highlighted the SFHA’s three strategic priorities, detailing what this means for members and their work covering:

• delivery and management of homes;
• Net Zero; and
• reducing poverty and inequality.

ST and DT also set out the importance of a strong constructive relationship with SHR especially in relation to ensuring tenants’ health and safety in good and affordable homes. 

The Board, ST and DM discussed:

• the importance of a constructive relationship and the many areas of joint interest and opportunities;
• affordability, noting the complexity each landlord faces in setting rents, taking account of house type, size and customers and the SFHA toolkit. It also noted Scottish Government’s work on this and ongoing debates around rent costs versus whole house costs.
• challenges RSL staff face at work when seeking to support tenants and residents, noting the reduction SHR has reported on wider action activities in the analysis of five-year financial projections;
• risks of unintended consequences if changes are made to the social housing funding model and how changes could have longer term implications;
• SFHA’s participation in Housing Europe, the potential for lessons to be learned, but also noting that some things do not replicate well across different countries and cultures; and
• the importance of demonstrating the links between housing and health to inform future investment and policy.

The Board, ST and DM discussed the importance of a constructive relationship between SHR and SFHA, noting forthcoming working group opportunities around the Charter review.  DM reported that for some RSLs the financial challenges are becoming quite acute, the Board noted this and that financial stress will be reflected in SHR’s forthcoming engagement plans following completion of the regulatory risk assessment.  

The Board thanked ST and DM for making time to meet with it.  They welcomed the opportunity and agreed that SFHA would like to reciprocate.

Apologies and Declarations

The Board noted that SW is joining via Teams audio. Assistant Director Shaun Keenan submitted apologies for item 11 and the Board noted IM will present on this. There were no other apologies.

LP reported that in her new post she is an employee of the Scottish Government. The Board noted her declaration and agreed that it did not represent a conflict for the discussions on the Framework Agreement with Scottish Ministers.

There were no other declarations of interest.

Consent Agenda

The Board noted and approved the consent agenda including:

• the Chair and Member activity report;
• Board minutes from February 2024;
• the matters arising report; and
• draft minutes from the ARAC meeting in March 2024.

The Board noted that future agenda time will be sought to consider monitoring of the delivery of commitments made to tenants during transfers of engagements. 

Chief Executive’s Report

MC presented on issues and developments that impact regulated bodies, the wider housing environment and SHR.

MC updated the Board on SHR’s data collection around RAAC. He reported that currently:

• 13 landlords have now identified the presence of RAAC in some of the homes they provide to tenants;
• 1,994 homes are affected;
• 125 landlords have confirmed that there is no RAAC present in their tenants’ homes;
• 27 landlords continue to investigate 8,311 homes, with the number confirmed as not having RAAC expected to grow as investigations conclude; and
• SHR is continuing to engage with landlords.

MC also highlighted SHR’s work ongoing to prepare as an employer for the forthcoming change to the working week, which will reduce to 35 hours as part of the Scottish Government main pay settlement from October 2024.

MC explained that the forthcoming risk assessment outcome is likely to say that up to an additional eight more local authorities are at a heightened risk of systemic failure. The Board noted that agenda time did not allow for an update at this meeting and that it will spend time in May considering the outcome. The Board noted that SHR will publish the outcome summary and new engagement plans on 2 April 2024. It noted the media and political attention that some authorities had attracted around RAAC and that there could be more as other landlords conclude investigations.

The Board considered the report and discussed:

• the potential budget impact of the change to the working week, noting it is mandated by Scottish Government, and that individuals who work part-time and identify a detriment can request a review to the automatic pro-rata reduction in their hours. It also noted that staff can currently request a change in working pattern separately from the 35 hour work week change;
• reference to SHR’s assessment of systemic failure in some local authorities at the recent CIH Housing festival, stakeholder including tenant reaction and noting that that this tone will be reflected in the outcome of the risk assessment;
• housing building statistics, noting that these are down by over 1000 compared to the previous year and this trend is expected to continue as the data is historical. It noted that Scottish Government has convened an “innovative finance taskforce” to explore private finance options. The Board reflected on the loss of trade skills associated with downturns in new builds;
• human capacity within the social housing sector to continue to respond to the emerging standards and requirements that Scottish Government is introducing, noting that some recruitment challenges are emerging and that people are leaving the sector;
• SHR’s independence from Scottish Government;
• potential drivers for a systemic response to homelessness from Scottish Government; and
• reporting of child deaths while living in temporary accommodation in England.

The Board noted the Chief Executive’s report.

SHR Office Accommodation

IM presented an assessment review of options for SHR’s new long-term office and Management Team’s recommendation to move to Social Security Scotland’s (SSS) office at High Street, Glasgow.  The Board considered the recommendation and discussed:

• if the space proposals would adequately meet SHR’s future needs. It noted desk use in the current temporary space at George House and the availability of other spaces.  It also noted that many meetings with landlords take place in their offices.  The Board agreed it will be important to ensure that the level of space provision and set-up available do not act as a disincentive to staff working from the new office. It asked IM to test staff’s views and experiences once settled into the new office;
• if there are opportunities for joint working with SSS or Registers of Scotland, noting that the remits of the two organisations are quite different;
• lease extensions, noting that SSS is awaiting final approval by the Deputy First Minister;
• the location of the SSS office agreeing this would work well; and
• any future expansion in space would have cost implications;.

The Board approved the recommendation, noting the need to explore staff views on the space and ensuring  SHR’s future needs are met as staff embed in the new office.  It also thanked IM for all his work around SHR’s office over a number of years, noting the challenges in securing permanent space. 

Actions:  IM to test staff’s views and experiences once settled into the new office to ensure the space available is not a disincentive to office working and to proceed with plans to move SHR there. 

SHR Framework Agreement with Scottish Ministers

IM presented a revised Framework Agreement with Scottish Ministers.  He explained that this sets out the relationship between Scottish Ministers and SHR and is reviewed periodically.  IM highlighted that a new model agreement is now being implemented by Scottish Government, so the format is significantly different from previous agreements.  IM explained that SHR’s Sponsor Team in Scottish Government have agreed to retain relevant elements of the previous agreement.   The Board considered the Framework and discussed:

• language around resource requirements, noting that this is unlikely to change the annual budget process and that Scottish Government relies on SHR to bring forward information to input to discussions;
• the limited control that SHR has around the document given it is a newly implemented model; and
• proposals for potentially charging for internal audit despite SHR being established to receive these at no cost, noting that provision was also included in the previous Framework, and an emerging trend of charging.

The Board agreed that is uncomfortable with elements of the new model that Scottish Government has introduced with minimum consultation, but approved the Framework Agreement for signing.  It welcomed the good working relationship that SHR has with the Sponsor Team and their colleagues in Scottish Government.  

2023/24 Annual Report Narrative

RH presented the first draft of the narrative for SHR’s 2023/24 annual report.  She highlighted the process for preparation ahead of audit in April 2024.   The Board considered the draft and discussed:

• the importance of highlighting the wider benefits of social housing;
• the impact of the operating context for social landlords especially on areas like development and wider role activities;
• work of the Regional Network SHR Liaison Group, noting a name change is forthcoming;
• potential use of quotes, agreeing to insert one from HTT; and
• the order of key themes in the welcome statement, agreeing to prioritise homelessness and noting that despite some systemic failure, SHR still expects local authorities to try to meet statutory duties around homelessness and that this will be reflected in engagement plans.

The Board asked RH to take account of its feedback and noted that members will have another opportunity to comment on a further final version prior to audit in late April 2024. 

Action: RH to take Board feedback into account and provide a further draft of the annual report narrative for final Board feedback ahead of audit in late April 2024.  

SHR Strategy 2024-27

AW update the Board on the work he had done with MC to develop a draft strategy, taking account of Board feedback on how SHR’s priorities are shaped and how this directs the content and shape of the annual operating plans as demonstrated in the draft 2024/25 operating plan proposals. 

MC presented a draft Strategy 2024 – 27 to the Board.  He also highlighted the priorities and how these have been shaped to reflect feedback from the Board in January.  He explained that actions are detailed under each priority in the Strategy and then provided for in further detail in the annual operating plan as tasks that SHR can report on progress against.   

The Board thanked AW for his work with MC.  It considered the draft Strategy and discussed:

• the importance of being explicit around listening to stakeholders, noting that SHR works with a wide range of tenants and that the Strategy also clearly sets out listening to tenants as a priority. It noted that while SHR often works in collaboration or partnership with some stakeholders, this description  does not capture the relationship with  the bodies it regulates;
• the outcome of SHR’s work, agreeing it is important to describe the output whenever possible;
• timescales for the work set out in the Strategy, agreeing it would be useful to demonstrate this more clearly;
• the importance of meaningful language, especially around effectiveness;
• SHR’s annual reporting, noting this is the key vehicle for reporting on progress towards meeting its objective and that should be further highlighted in the Strategy;
• relationship with how SHR manages risk, noting that a summary of the operating plan for 2024/25 will be published alongside the Strategy and the operating plan sets out the relationship with risk management in more detail; and
• how SHR’s work connects into the Scottish Government’s National Outcomes, noting that SHR makes a contribution to some of these as referenced in the Strategy, but that it will frame performance reporting against its own strategic priorities rather than the National Outcomes.

The Board thanked MC.  It asked him to take account of the Board’s feedback and to circulate a further draft for approval by email during April 2024. 

Action: MC to take account of the Board’s feedback and circulate a draft for approval by email during April 2024. 

Risk Management Strategy & Register

IM presented a draft updated risk management strategy and register to the Board.  He explained the development work with the Board and ARAC, reporting that ARAC considered the proposals earlier in March and it was supportive. He highlighted visibility of mitigating actions, staff involvement, links to the operating plan, separation of some risks and score calibration work.   The Board considered the strategy and register and discussed:

• the importance of referencing SHR’s strategic priorities in the section on responding to risk;
• how sector strains could impact SHR’s resources;
• risks relating systemic failing and SHR’s reputation and resources, reflecting on the impact of the homelessness thematic and noting that SHR is limited in terms of addressing systemic failure; and
• scoring of the risk in relation to SHR’s resources, noting that SHR currently has a full staff complement and is not carrying any vacancies, but that increased demand could trend scores upwards.

The Board approved the refreshed Strategy and register.  It welcomed that the operating plan now maps work tasks by risk.   It agreed it would welcome a further discussion on the risk register when it next considers the quarterly corporate performance report, noting that the register is provided alongside this report.  

Actions:

• IM to implement the new risk management strategy and risk register.
• RH to provide agenda time for a further discussion on the risk register in May when the Board considers the quarter four corporate performance report.

SHR Budget 2024/25

IM presented the draft budget for 2024/25. He explained that Sean Keenan has prepared the budget and worked on it with Clare Nicholson who has recently returned and will be resuming management of the budget.  IM highlighted the challenging context in terms of a reduced budget and requirement to self-fund increases in staff costs.   IM also highlighted:

• that Scottish Government has agreed to transfer the external audit fee to non-cash;
• a vacancy rate of 3.5% has been proposed, which will be challenging given the current full staff complement;
• that no contingency budget heading is proposed for 2024/25; and
• further changes are expected a mid-year to reflect accountancy treatments for leases when SHR moves office and SHR has discussed these with Scottish Government.

The Board considered the draft budget and discussed:

• previous vacancy rates, noting that these tended to be higher, noting comparison is difficult as based on staffing circumstances at a point in time, noting the proposal is challenging, but could be reduced if lease treatment adjustments are incorporated by mid-year;
• impact of the change to a 35-hour working week;
• contingency funding, noting any unexpected costs will need to be accommodated within existing budget headings, but that there cannot be a transfer of capital to revenue; and
• proposed costs for legal advice, noting this was demand-led and that SHR as well as obtaining new advice, can draw on the bank of existing advice it retains where relevant.

The Board approved the budget and noted the underpinning assumptions. 

SHR Operating plan 2024/25

MC presented the draft operating plan for 2024/25. The Board considered the plan, noting reference in discussions around the Strategy and risk management. The Board thanked everyone involved for their work. It welcomed the new format and approved the operating plan for 2024/25.  

AOB, agenda planner, effectiveness of meeting & papers and DONM

The Board discussed the Regional Network Liaison Group.  It welcomed that planning is ongoing to facilitate an in-person meeting and agreed it was important tenants are supported to attend. 

HS confirmed she will provide CS with an update on the ongoing thematic on Gypsy/Travellers and tenant participation. 

The Board noted progress on Scottish Ministers’ campaign to appoint a member to SHR Board from August 2024 and further succession planning work planned around forthcoming retirements, which will facilitate a further member and new Chair appointments during 2025.  

The Board considered and noted the agenda planner.  It noted that a joint workshop with all staff and the Board is being explored for June 2024.   The Board also noted that RH will explore if there is an alternative date for the meeting in October. 

The Board noted and thanked the staff observers for their feedback. 

The Board will meet on 28 May 2024.

Private session

The Board met in private with the Chief Executive.

Briefings

Between the 26 March and 28 May 2024, the Board received briefings covering:

• Annual Assurance Statement visits
• Standards Commission March update
• Board recruitment
• Annual report preparation
• Outcome of SHR’s regulatory risk assessment
• Meeting with advice agencies
• SHR publications and media update