Publication - Advice and guidance

Common Housing Register (CHR) - building a register: a practitioner's guide

Published: 16 Oct 2009
Directorate:
Housing and Social Justice Directorate
Part of:
Housing
ISBN:
9780755991112

A practical guide to the development of common housing registers between local authorities and registered social landlords in Scotland. The guide draws on the experience of those areas in Scotland who have successfully implemented a CHR.

237 page PDF

3.0 MB

237 page PDF

3.0 MB

Contents
Common Housing Register (CHR) - building a register: a practitioner's guide
SECTION TWELVE: GOVERNANCE

237 page PDF

3.0 MB

SECTION TWELVE: GOVERNANCE

Governance arrangement for the partnership

Partnerships are strongly recommended to consider governance arrangements at an early stage in the development of the CHR. Governance arrangements should be reviewed periodically and it may be appropriate to create more formalised structures as the CHR develops. Establishing a written partnership agreement brings clarity for partners in terms of obligations and responsibilities and provides reassurances as to where liability rests if things go wrong.

There are three main governance options available for CHR partnerships:

  • continue as an informal partnership;
  • formalise the CHR with a written partnership agreement ( e.g. Service Level Agreement, written constitution); or
  • set up the CHR as a separate organisation/company.

Option One - Partnership without written agreement

The first option is simply to continue with existing partnership arrangements. This means operating without any form of written agreement and continuing to work on the basis of trust and relationships. The main advantage of this option is simply that it is easy. CHR partners would not need to invest time in developing new governance options.

The clear disadvantage is that this option is not a sustainable, long term solution and would offer only a fragile structure. It presents risks in terms of:

  • no clear written agreement of partner roles and responsibilities;
  • no formal decision making structure; and
  • potential over reliance on the largest partner.

As the CHR partnerships develop its activities further, these issues are likely to become more of a problem.

Advantages

Disadvantages

Easy

Not equitable

Builds on the spirit of trust

Not sustainable over long term

Don't need to make decisions

Puts off decision making for future

Option Two - A written agreement

This would involve the CHR partnership operating as an unincorporated association. It means that the CHR partnership has no legal entity or personality, separate from the partner organisations. Because of this, an unincorporated association cannot borrow money, enter into contract in its own name, hold property, or start legal action. This would have important implications for employing staff.

By law, this type of alliance does not need to have a written legal agreement or constitution. But it does make roles and responsibilities much clearer, and provides a written frame of reference. Most unincorporated associations are governed by a constitution or written agreement, which sets out the roles and relationships between partners. This can be very simple and there are standard constitutions available. It would set out areas like the CHR's aims, membership, powers, roles, meetings (including chairing, quorum, voting etc), decision making processes and an exit strategy. Partners may choose to bring in a lawyer to write a formal legal agreement or choose to write their own partnership agreement or constitution.

This option would also allow flexibility to add new members if, for example, other national and regional associations operating in the area wished to become members.

Advantages

Disadvantages

Simple to set up

CHR cannot employ staff

Low costs

Cannot enter into contracts in the CHR partnership's name ( e.g. for website, stationery etc)

Flexible and easy to change constitution/written agreement as desired

One partner could dominate if taking on role of employer/lead contractor

Legally easy to develop an exit strategy from the partnership, if required

Need clear governance arrangements - for example clear about responsibility for complaints/appeals

Scope to become a separate organisation/company in the future, if appropriate

Officers can be personally liable for debts and legal actions

More organic and gradual approach

Need to consider charitable issues (such as the seconding or sharing of staff between charitable and non-charitable organisations)

The main disadvantage of this option would be that the CHR partnership could not directly employ staff. If this was necessary, the partners would need to explore other options, for example one partner acting as the employer. This could create slight complexities relating to sharing or seconding staff between charitable and non-charitable organisations.

If setting up the CHR as a constituted, unincorporated association, the partners may wish to review the current structure of the partnership. For example, it may be appropriate to consider formal representation of partner Committee members or service users within the CHR structure. It may also be useful to consider ways in which the CHR links with other related bodies within the local authority area such as groups responsible for strategic housing decisions.

A written agreement can be very simple and straightforward outlining the main areas for joint working. Partners in Midlothian have produced a simple joint working protocol which can be viewed at Appendix Five.

For more formal legal agreements partners will require legal advice. We have included a list of the core components and schedules that should be included in the agreement at Appendix Six.

Example: An informal joint-working charter

Fife CHR is managed by a Project Board, which involves senior managers from each of the partner organisations. A Project Team and System Development Team sit below the Board, taking forward issues at a practical and operational level.

The partners deliberately decided that they did not want to have a partnership agreement drawn up by lawyers. They felt that this could be too rigid, and provided scope for partners to sue each other. Instead, an informal Partnership Charter was drawn up. Partners all contributed to the development of the Charter, and believe it provides a satisfactory basis to their work.

Example: Working to a written agreement

The Highland Housing Register ( HHR) is underpinned by a Partnership Agreement. It covers two years, this being seen as the minimum initial committment that partners needed to make to give the register a proper chance to work. It sets out how the HHR will be managed, the responsibilities of the partners, how decisions will be made and how information will be shared.

The work is driven forward at a strategic level by a Management Group, made up of Directors of Housing from the partner organisations. The group, chaired by the Head of Housing of the Highland Council, is responsible for:

  • monitoring and managing activity, performance and service delivery;
  • agreeing budgets;
  • making strategic decisions;
  • making recommendations about policy changes;
  • making decisions on procedural change and development;
  • manage dispute resolution if required; and
  • undertaking other functions as may be agreed between the Partners.

There is also a Highland Housing Register Working Group which has been the 'engine room' for development. During the development and implementation of the HHR it was made up of mid level managers from the partner organisations and, until May 2008, a coordinator. Much of its work has focused on developing the detail of how the common policies and procedures would work, the application form and the integrated ICT system. Those involved have worked hard to get to the bottom of issues, asking challenging questions about why each organisation does things a certain way.

Effective project management is seen as having been an important part of the governance and management arrangements, especially as a new set of policies and procedures and a new ICT system for everyone other than Council staff were being introduced at the same time.

"Our biggest strength has been the governance of the project."

Managers, front-line staff and committees have been involved throughout the development of the CHR. The HHR Working Group has had a key responsibility for devolving information to operational staff, alongside the extensive training that has supported the development and implementation of the new approach and the ICT system.

Effective communication is seen by the partners as being a crucial feature of the project both in its development stages, pre and post implementation. Committees have been involved in critical decisions such as agreeing the joint policies and the partnership agreement. They receive regular updates and performance reports.

Partners feel the partnership has been a strong one due to their shared committment to developing the HHR. This has built on previous joint working and existing trust between the organisations. At times this has meant compromising on issues to move things forward.

Option Three: setting up the CHR as a legal entity

The third option is to establish the CHR as a distinct legal entity. This means that the CHR would be an incorporated body with its own legal identity, separate from the individual partners. This has been described as a "special purpose vehicle".

Options include establishing a company limited by either shares or guarantee. The main reason for having a company limited by shares is that profits can be passed to shareholders. In the case of a CHR, it is likely that the shareholders would be the CHR partners. Each partner would pay a nominal fee for shares.

A company limited by guarantee would have members the CHR partners, and would be run by Company Directors. The liability of the Directors for debts or legal actions would be limited to an agreed level, almost always £1. It is not normally possible for a company limited by guarantee to pay profits to its members. This could be an issue for a CHR if the company ceased operating, and it had assets. The assets could not be redistributed to partners.

Normally, the main reason for public or voluntary organisations setting up a separate organisation is if their existing structure, for example charitable status prevents them from undertaking a certain activity. This may not be the case for CHR partners but you may feel there are benefits in setting up a separate organisation on grounds that it gives the CHR a clear, separate legal identity, it could employ staff, and it would offer more protection to people on the governing board.

This option could also offer the potential to expand the range of services that the CHR partnership takes responsibility for. For example, in the longer term there could be potential to include other housing management services within the CHR partnership given the scope of joint working between the organisations.

The disadvantages would be that it would be more complex, time consuming and costly, both to set up and to manage on an ongoing basis. It is also a less flexible option for joint working.

Advantages

Disadvantages

Could limit liability of management committee/ directors for debts/legal actions

Could be legally and financially complex - need legal advice to set up

Could employ staff - no need to share staff between partners which could have charitable and VAT issues

Set up costs would be higher - and work involved could be considerable

Could enter into contract in CHR company name

Changing company structure or membership would be more difficult/costly

Would have clear legal status - for example for appeals and complaints

Legally more difficult to exit partnership

Could formalise financial arrangements - regular partner contributions

Need to produce accounts for the CHR company - small additional running costs

Company could have charitable status if appropriate

Organisation could take on a life of its own

Example: importance of clarity of roles

In Aberdeen partners decided to establish Homechoice as a company limited by guarantee. However, the governance and management of the CHR is seen as being an important factor in the CHR having to stop operating. Although some partners felt the right structures were in place, the relationships were difficult and often strained.

The Homechoice Board provided a strategic direction for the Homechoice Company. Each member had an equal vote. The partners each approved two nominees who were either Committee members or Senior Officers from the partner organisations. From the beginning there was a tension between the roles and responsibilities of the Board members. Each member was responsible for making decisions that would benefit the Homechoice Company as a whole. On the other hand, they were representing the interests of their own organisation. At times the two sets of priorities conflicted. Some partners felt this led to an unwillingness to deal with issues openly as they came up and a lack of flexibility and compromise.

Partners feel that it is essential to have a clear vision, and be clear about the purpose and task of the CHR model. In particular, it is important to be clear about the nature of the partnership, and think carefully about what roles different organisations should have. Otherwise there are issues about equality between organisations and tensions between conflicting roles.

VAT issues

When deciding on the most appropriate governance option partners need to keep in mind issues regarding VAT. Where functions are shared amongst partners rather than provided under contract by a separate organisation VAT will not be applicable. This means that sharing responsibilities across partners rather than establishing a new CHR organisation would result in VAT savings. However, this needs to be considered within a wider assessment of costs.

Example: Weighing up VAT issues

In Scottish Borders partners originally hoped to establish an arm's length/host organisation for the CHR, but this raised issues with VAT. Instead, they drew up a contract between the partners whereby each partner would second a member of staff to the CHR. They remain within their own organisation, and have responsibility for a specific area of the CHR. Administration is shared between partners. For example one deals with priority passes, the other with advertising, and so on. A document management system where documents are scanned and shared on a network has been introduced to support this.

Each partner pays for the costs associated with their area of the CHR. At the end of the year, finance staff will compare what each organisation has spent, and look at a way of rebalancing it the following year.

The original aim was that responsibilities would rotate between partners but in reality this has proved complex logistically.

Although the system was introduced to save VAT, in reality partners believe it has cost as much, if not more, to administer. The partners are now in the early stages of discussions to try to get one organisation to host the CHR and create a more seamless service.