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Money, strategy and leadership are linked. In English social housing, the Regulator of Social Housing sets standards that spell out what boards must do with the capital they hold and borrow. This article summarises the Governance and Financial Viability Standard in general terms. Read the current text on gov.uk before relying on any detail, as the regulator updates its standards.
What the standard is about
The standard asks registered providers to adhere to their own governance arrangements, to manage risk, and to stay financially viable while delivering their social purpose. It places responsibility on the board, not on a regulator or a lender.
Themes that matter for capital
- Risk framework: boards approve a risk framework and review it regularly, based on sound information.
- Stress testing: plans are tested against downside scenarios, such as higher interest rates or cost inflation.
- Liquidity: providers need enough cash and committed facilities to meet obligations when they fall due.
- Covenants: boards need to understand lender conditions and how close the organisation is to them.
- Assurance: the board certifies compliance each year.
Why this belongs in a capital story
When the Liverpool City Region pipeline talks about around £2bn of funding need, or when national programmes talk about grant, debt and guarantees, the money still arrives at an organisation with a board. How that board sets strategy, tests its plans and holds management to account decides whether capital turns into homes.
Leadership questions worth asking
- Is the strategy tied to a realistic funding plan?
- Has the board seen the downside case?
- Do directors have the skills to challenge a development programme?
- Is information reaching the board early enough to act?
These are the questions that venture-style investors also ask of leadership teams, which is covered in a companion article on how venture capital works.