Opinion: Anarchy in the UK?
Published by Max Salsbury for 24dash.com in Housing and also in Central Government, Regulation
The Sex Pistols
By Alistair McIntosh, chief executive, Housing Quality Network
Lie lie lie lie liar you lie lie lie lie
Tell me why tell me why
Why d’you have to lie
Should’ve realised that you
Should’ve told the truth
You know what I’ll do
When the Sex Pistols were angry, they were angry. These are the opening lines to their song called ‘Liar’. I thought of it when I read the latest guide for auditors looking at housing associations*.
It tells the auditors to watch out for “increasing motivations for the management of housing associations to present a biased financial picture”. In other words it is saying that you need to keep a sharp eye out for any lying.
Why are they so suspicious? They list out a huge pile of problems you have to deal with. These include losing money through welfare reform, paying out more in pensions and taking on riskier debts. You might be tempted to keep things from lenders and the HCA. That way you can stave off a rate rise or downgrade.
What will it mean on the ground? I expect auditors will be sharper. No one wants to give you a clean bill of health and see that fall apart. An auditor can face a big fine if that happens. They will look longer and harder for things. This will mean a hike in fees.
Do you sit on a board? You must read this guide very carefully. It tells you about a lot of the things you need to watch out for. I do feel for board members. You give up a lot of time for little or no money. And the headaches keep on coming. The HCA wants to see an end to big payoffs for chiefs. They could well ask a board to stump up out of their own pockets where the payoff is over the top.
The HCA says boards must keep an iron grip on risk. It ain’t easy, is it? We can stay on the straight and narrow if we learn from what went wrong on VfM.
Stop nodding things through. Some of the VfM assessments were really weak. How on earth did the boards allow this? You can see where the HCA is coming from on downgrades can’t you? If a board gets this wrong it would be crazy to trust them to do bonds and mergers, or anything that involves a calculator.
Start using the right people. There will be folk in your outfit that are good at painstaking analysis. If you are lucky you might even have someone that can count. They are a pain in the ass to your innovators. That’s because they spot the holes in things. You are facing more regulation and tougher audits. Do you remember the staff that got you through inspection? You must have put them somewhere. Bring them back. They can fix this.
Use what you have. Landlords took lots of expensive advice on assets and costs. They didn’t use these in the VfM assessments. Why was this? You can see the signatures of accountants, lawyers and surveyors in the visitors’ books. What do you do with all their advice? Don’t ignore it. Ask to see it.
Most associations are well run most of the time. Look at how quickly they got back on their feet after the credit crunch. So why do we get a hard time from the government? I think that we spend so much time talking to each other we don’t quite get what is going on in the outside world. How did we not see that VfM thing coming? Everyone else in the world knows that the coalition is on the warpath on costs.
If we keep on like this we will see a lot more of the coalition. We don’t want them trying to get their greedy mitts on our assets. Then we would be singing another Sex Pistols song. This time it really would be anarchy in the UK.
Look at how well the coalition did on flooding. They ignored expert advice and did nothing till well past the deadline. One minute it was stop all spending on green crap. In the next breath they were saying money was no object to sort things out. What does that remind you of? If the coalition was an association the HCA would mark them down.
*Financial Reporting Council – Practice Note 14 – The Audit of Housing Associations in the UK