Homes England Annual Report 2021 to 2022: Accountability Report, accessible version

Question 1

1. Corporate governance report

Accepted Answer

Our Board and committees have continued to demonstrate organisational resilience in responding to the challenges of COVID-19 this year and are on the way to establishing a new effective governance structure post-COVID.

1.1 Board and committee performance

We are committed to ensuring that our Board and its committees are continually improving.

During 2021,the Board underwent its triennial external review of Board effectiveness, which recognised the significant growth in the complexity of the Agency’s remit and the size of its balance sheet. The report made recommendations to ensure the Agency’s governance arrangements are able to support effective delivery of the proposed changes to the Strategic Plan and provide strong leadership over the forthcoming years.

These recommendations included changes to Board committees, including the setting up of three new committees to support the Strategic Plan objectives, which were accepted by the Board. The review also compiled a skills matrix across the current membership, which was updated when four new members were appointed in February 2022, to support the mapping of skills across the committees. The Board considered that a number of independent technical experts should be appointed as advisers to some of the new committees to support the skills and experience available to Homes England.

1.2 COVID-19 response

The Board and its committees met virtually from April 2021 to August 2021, having adjusted to this new way of working in 2020, and maintained effective decision making throughout the lockdown period. Board meetings in person resumed in September 2021, with some members attending virtually where necessary.

This governance report explains the composition and organisation of our governance structures and how they support the achievement of our mission and strategic objectives.

It comprises a:

Board Members’ report;
Statement of Accounting Officer’s responsibilities; and
Governance statement

1.3 Board Members’ report

1.4 Meet the board

The role of our Board is to provide strategic leadership and to promote our long-term, sustainable success. Our Board has statutory responsibility for exercising our functions while working closely with Department for Levelling Up, Housing and Communities (DLUHC) to ensure the delivery of our strategic objectives.

1.5 Peter Freeman CBE, Board Chair

After qualifying as a lawyer, Peter formed the Argent Group of property companies with his brother in 1981. Argent is particularly known for major mixed-use projects like Brindley place in Birmingham, and King’s Cross and Brent Cross Town in London.

1.6 Peter Denton, Chief Executive Officer

Peter joined Homes England in August 2021. Prior to this, he was Chief Executive Officer of housing association The Hyde Group.

He has worked in a broad range of strategic leadership roles, amassing 27 years of pan-European real estate experience. Before joining the housing sector, Peter spent his early career in investment banking and then moved to global real estate investment management firm Starwood Capital. During his investment career, Peter deployed over €25 billion of capital and had significant exposure to investors and fundraising on a global scale, working as a ‘bridge’ between the public, private and third sector.

In addition, Peter has held senior EMEA real estate investment banking roles at BNP Paribas, Barclays, Deutsche Bank, Eurohypo and WestImmo. He is also a non-executive Real Estate Investment Committee member at global investment company Eurazeo and Council member and Chair of the Finance Committee at Marlborough College

1.7 Andy Hobart, Shareholder Representative

Andy Hobart is Commercial Director at DLUHC. He joined the Department in September 2018.

During his career, Andy has held Divisional Chief Executive level roles in the B2B services, construction and housing sectors with firms such as Wates Group, Balfour Beatty, Rentokil Initial and RAC. Most recently before joining DLUHC, Andy was a Non- Executive Director in the housing sector, and advised private equity firms on investments in the business services sector.

Andy holds a M.A. in Engineering Science from Oxford and an MBA from Harvard Business School.

1.8 Teresa O’Neill OBE

Councillor Teresa O’Neill OBE has been the Leader of the London Borough of Bexley since 2008 and a Bexley Councillor since 1998. She is also a Vice-Chair (Leader of the Conservative Group) on London Councils and a Conservative Peer for the Local Government Association.

Previously she’s been a member of the London Finance Commission, under the last two London Mayors, the London Health Commission and was Boris Johnson’s advisor for Outer London relations. Her career was previously in the finance sector and she was awarded the Order of the British Empire (Officer) in the Queen’s Birthday Honours 2015 for service to the community and local government in London

1.9 Duncan Sutherland

A practitioner with over 35 years’ experience in property, housing, investment, regeneration and development with particular emphasis on public/private delivery partnerships involving government, local government, local communities and private investment.

He was involved in setting up and operating a £1 billion PRS fund investing in the UK and the UK’s first successful PRS housing REIT.

Duncan has worked closely with the Government promoting innovative and long-term investment approaches to achieving sustainable regeneration. He served as a Non-Executive Director of the British Waterways Board and Scottish Canals and has recently completed a six year term on the board of HS2 Ltd, the new high speed railway to be built between London and the North. He also serves on the Capital Investment Advisory Board in the Government’s Department of International Trade (DIT).

1.10 Stephen Bell

Stephen has substantial experience in banking and financial services. He has been involved in property, consumer and asset finance across numerous jurisdictions and has held many senior roles leading risk management, restructuring and transformation. He has held the role of Group Chief Risk Officer and Board Director for a number of institutions over the last decade, including high street banks and in the specialist finance sector. He has served on several Boards, has qualified as a Certified Director and is a Fellow of the Institute of Directors.

1.11 Pat Ritchie CBE

Pat is an experienced senior leader in economic development, housing, and property.

She was Chief Executive of Newcastle City Council for over eight years, where she notably secured the multi-million-pound investment deal to bring Legal & General to Newcastle’s flagship ‘Helix’ development and led on negotiations to secure a devolution deal for the North of Tyne Mayoral Combined Authority where she was the first head of paid service. Pat led the city’s response to the pandemic and oversaw the Newcastle COVID-19 Recovery Plan including an ambitious £50m plan to transform the city centre.

Pat was appointed to Chair of the Government Property Agency in January 2020. She is a member of the Advisory Board of the National Leadership Centre and a member of Newcastle University Council.

She is a former Chief Executive of the Homes and Communities Agency (Homes England) and former Deputy Chief Executive of the One North East Regional Development Agency.

Pat was awarded her CBE in January 2021 for services to local government and public service reform.

1.12 Sadie Morgan OBE

Sadie is a founding director of leading architectural practice dRMM. Over her 25-year career she has advocated exemplary design and architecture. She is a Commissioner and Design Group Chair of the National Infrastructure Commission and is the London Mayor’s Design Advocate.

1.13 Vanessa Murden

Vanessa has extensive senior executive expertise within the financial services industry, including Travelex, Western Union and Lloyds. She is currently the Chief Operating Officer for Lloyds Banking Group’s retail division.

1.14 Mark Rennison

Mark is the former Finance Director for Nationwide Building Society. He also chaired the subsidiary company at Nationwide which managed the Oakfield project to build a new housing community in Swindon. Prior to joining Nationwide he worked for PwC for 25 years including spending time as an audit partner in their banking practice in London.

1.15 Lesley-Ann Nash, MBA, FCMA

Lesley-Ann spent two decades in investment banking, building and leading structured interbank businesses. She was a Managing Director of Morgan Stanley but left to offer her financial skills to government. She spent seven years in the Cabinet Office leading a range of commercial programmes which positively impacted both public and private sectors as well as citizens nationally

On leaving government, Lesley- Ann has embarked on a non- executive director career. She has been appointed to the boards of St James’s Place plc (FTSE 100) and Workspace Group plc (FTSE 250). She also sits on the board of the business campaigning group, London First.

Lesley-Ann is a fellow of the Chartered Institute of Management Accountants and holds an MBA from CASS business school.

1.16 Mark Henderson

Mark is Chief Executive of Home Group, with 55,000 homes under management across Scotland and England and one of the largest providers of supported housing, working with 26,000 vulnerable people in nearly 500 services. Home Group is also one of the largest developers of housing in the UK with a turnover of some £430 million per annum. It was voted the UK’s best Landlord and best Housing Association in 2014 and 2016.

Mark is currently a director and trustee of Whiteley Village Trust. He previously ran his own business before joining Home Group, before that had worked with the RDA as Operations Director and a variety of regeneration and economic development jobs across the country in local government, most recently as Chief Executive of one of the largest County Councils in the country. He was also a former Board Member for the National Housing Federation and former Chair of Homes for the North.

1.17 Lord Austin of Dudley

Lord Austin has spent a large part of his career working to meet housing needs by tackling homelessness, improving the provision of housing and addressing problems of affordability. Lord Austin spent a significant time of his career serving his local area of Dudley where he served on Dudley Council before becoming the MP for Dudley North in 2005. During this time, Lord Austin served as the Minister for Housing and Planning and Minister for the West Midlands. In 2020, he was appointed to the House of Lords as Lord Austin of Dudley. Lord Austin also serves as a member of the Corporation of Dudley College.

1.18 Olivia Scanlon

Olivia has a background in financial services, where she has almost 20 years of experience in general finance and investment as well as real estate development finance. She is the Chief Operating Officer at Orchard Global Asset Management LLP. Olivia left the Board on 31 March 2022.

Our Board is specifically responsible for:

overall governance, including preservation of the reputation of the Agency, and relationships with DLUHC and other key stakeholders
recommending to DLUHC the Agency’s overall strategic direction, within the policy and resources framework agreed and set out in the Framework Document
approving the Agency’s draft Corporate Plans, including output targets, for submission to Ministers for approval
agreeing the Agency’s Annual Budget set by the Department, set out in the Business Plan, for approval by DLUHC
agreeing the Annual Report and Accounts for submission to Parliament. Approving overall governance arrangements including setting the Agency’s values and standards to ensure that the Agency’s affairs are conducted with probity, and that high standards of corporate governance are observed at all times
ensuring that the necessary financial and human resources, including key appointments, are in place to enable the Agency to safeguard its assets and meet its objectives. Approving overall arrangements for the delivery of Homes England’s strategic objectives.
receiving reports from Board Committees and Advisory Groups and considering any key issues that they raise
approving any Compulsory Purchase Orders recommended by the Investment Committee
ensuring that the Agency’s Health and Safety processes are effective and fulfil Homes England’s obligations under Health and Safety legislation
challenging and reviewing monthly performance information in regard to the corporate targets
approving Homes England’s Risk Appetite Statement and Risk Management Framework, assessing the periodic risk evaluations, and overseeing mitigation strategies on the recommendation of the Audit & Risk Committee
Considering property, litigation, legal and other corporate issues
ensuring that there are appropriate legal, financial and administrative arrangements covering the provision of the Agency’s pension schemes

1.19 Board and Committee composition

The Board is comprised of Non-Executive members and the Chief Executive, Peter Denton, who also serves as the Accounting Officer. The Board is led by the Chair, Peter Freeman.

Membership of the Board and its Committees has changed throughout the year as set out in the Board and Committee Attendance section later in the report. A full list of current Board Members, including the four new members who joined us in February 2022, and members who served throughout the year is detailed in our Board Members’ report.

1.20 How the Board spent its time

The Board receives and reviews monthly performance information, scored against corporate targets and relating to the management and performance of the Agency, and directs Executives regarding any required performance improvements. This data is produced and published on a bi-annual basis in accordance with the ONS Code of Practice for Official Statistics.

The Board has been overseeing the Agency’s response to the COVID-19 pandemic, as it supported partners in challenging times, as well as the return to normal. In the final quarter of the year, and beyond, it oversaw the Agency’s response to the emerging Ukraine crisis, including, ensuring compliance with the UK Sanctions List, and monitoring and assessing emerging risks. It started the year formulating its response to the three reviews of the Agency that took place in 2020 to 2021 and it undertook its 3 yearly review of Board Effectiveness in parallel.

The Board has also been overseeing a Transformation programme – ‘Evolve’, which is modernising the Agency’s digital operating systems. Board has considered Modern Methods of Construction (MMC), Design, Productivity and Sustainability aspirations, and started to determine how to operationalise the freedoms and flexibilities in programme budget spend achieved through Spending Review 21, and the Government’s Levelling Up aspirations. It also embarked on a programme of deep dives into individual programmes, to improve oversight, and learn lessons for the future.

1.21 Board forward look

The Levelling Up White Paper places levelling up and social justice at the heart of government’s housing and regeneration policy and, while supply remains important, there will be a renewed focus on placemaking. These policy directions mean a renewed focus on the Agency’s regeneration objectives and in 2022 to 2023 the Board will be focused on overseeing and directing the changes needed to deliver this, both through internal operational changes and by re-focussing its broad suite of different programmes. This process is already underway, supported by proposals to revise the Strategic Plan for 2022 to 2025 by the late summer.

1.22 Homes England committees

Our Board, in accordance with good practices of governance, has established a number of committees to which it delegates appropriate responsibilities.

The Board agreed establishment of a new Committee for oversight of Home Ownership programmes (primarily Help to Buy), and two time-limited committees to oversee the embedding of Cross Cutting objectives and delivery of the Agency’s Change programme.

1.23 Board and Committees at 31 March 2022

Board:

Investments
Nominations and Remuneration
Audit Assurance and Enterprise Risk
Cross Cutting
Change
Home Ownership

1.24 Board and Committees at 1 April 2021

Board:

Investment
Nominations and Remuneration
Audit and Risk
Safety Health and Environment

1.25 Investment Committee (IC)

The Investment Committee considers new development and investment proposals and reviews business cases in support of new development projects or equity investment or programmes for inclusion within the Agency’s remit. It also monitors portfolio performance and progress on major schemes and approves certain aspects of the Agency’s procurement arrangements.

During the year, in addition to project approvals, the committee approved a development and management monitoring framework and a Dynamic Purchasing System. It also approved full business cases in support of new initiatives including First Homes, Help to Build and the Housing Delivery and Diversification fund (now Levelling Up Home Build Fund).

The committee’s portfolio monitoring activities included regular reviews of the equity portfolio, the Government guarantees portfolio on behalf of the Secretary of State and actions taken in response to the pandemic, including waivers and flexibilities afforded to construction partners and developers due to delays in both completions and sales.

The members of the Investment Committee as of 31 March 2022 were Mark Rennison (Chair); Peter Freeman; Duncan Sutherland; Sadie Morgan; Olivia Scanlon; Pat Ritchie; Andy Hobart (Shareholder Representative); Peter Denton, Chief Executive Officer (or nominated deputy); Harry Swales, Chief Investments Officer (or nominated deputy); and Barry Cummins, interim Chief Land and Development Officer (or nominated deputy).

1.26 Nominations and Remuneration Committee (NRC)

This Committee is responsible for advising on overall pay and rewards; the remuneration, contractual and pension arrangements ofstaff at Director level and above; senior succession planning; key HR policies; and setting and agreeing the annual performance objectives, remuneration terms and other terms and conditions of employment of the Chief Executive.

Notable business this year included:

overseeing the finalisation of the Pay and Grading Review and its implementation; and
agreeing a Future of Work strategy for the Agency, following the easing of Pandemic lockdown.

The members of the Nominations and Remuneration Committee as of 31 March 2022 were Vanessa Murden (Chair); Stephen Bell; Duncan Sutherland; Lesley-Ann Nash, Andy Hobart (Shareholder Representative), and Peter Freeman.

1.27 Board and Committee attendance 2021 to 2022

Board

Andy Hobart 10 (10)
Duncan Sutherland 10 (10)
Gordon More (Int CEO) 4 (4)
Ian Austin 1 (1)
Lesley-Ann Nash 1 (1)
Mark Henderson 1 (1)
Mark Rennison 10 (10)
Olivia Scanlon 6 (10)
Pat Ritchie 1 (1)
Peter Denton (CEO) 6 (6)
Peter Freeman 10 (10)
Sadie Morgan 9 (10)
Simon Dudley 5 (5)
Stephen Bell 10 (10)
TeresaO’Neill 10 (10)
Vanessa Murden 7 (10)

The Board also held a further 5 special meetings and 21 catch-up phone calls during the pandemic.

Investment Committee

Duncan Sutherland 11 (12)
Mark Rennison 10 (12)
Peter Freeman 10 (12)
Sadie Morgan 7 (12)
Simon Dudley 6 (7)

The Investment Committee also held a further 6 special meetings.

Nominations and Remuneration Committee

Andy Hobart 4 (4)
Duncan Sutherland 4 (4)
Peter Freeman 1 (3)
Simon Dudley 3 (3)
Stephen Bell 4 (4)
Vanessa Murden 3 (4)

The Nominations and Remuneration Committee (NRC) also held a further 6 Special meetings.

1.28 Audit, Assurance and Enterprise Risk Committee (AAERC)

This Committee supports the Accounting Officer and Board in their responsibilities for risk control, governance, financial stewardship and financial and statutory reporting. It reviews the comprehensiveness of assurance and reporting processes, consistent with the Accounting Officer’s assurance needs. During the year, the Committee’s Terms of Reference were revised to reflect the evolving Mission and Objectives of the Agency and the Committee was reconstituted as the Audit, Assurance and Enterprise Risk Committee in November 2021.

A significant part of the Committee’s work this year has been on the overarching Control Environment Improvement Programme. The key areas in this regard were (1) Risk management, (2) Data & MI, (3) Transformation (which was renamed the “Evolve” programme), (4) Help to Buy, (5) Corporate Health and (6) Capacity, Culture, Silos and Decision Making & (7) DLUHC Alignment/ Sponsorship. The purpose of these programmes was to strengthen the Agency’s control environment and give confidence to the Board in this regard. The executive defined their approach as being to achieve “competence” by this year end and aspire to “excellence” thereafter.

The Committee believes that by March 2022 it will be realistic to expect that the Agency’s control environment can be described as competent. By the end of 2023, the Executive aspires to achieve maturity in its risk management capabilities, with a risk culture embedded.

The members of Audit, Assurance and Enterprise Risk Committee as of 31 March 2022 were Stephen Bell (Chair); Teresa O’Neill, Mark Rennison, Mark Henderson, Lesley-Ann Nash and Vanessa Murden.

1.29 Safety Health and Environmental Committee (SHE)

This Committee was set up so that the Board was able to provide strong leadership in the development of a positive safety, health and environmental culture. The Committee also has oversight of the Agency’s leadership role in influencing the wider housing and construction industry, as a master developer and major construction client. The Committee also took a role in giving assurance to the Board that the Agency was responding appropriately to the COVID-19 pandemic and ensuring the safety and well-being of its staff.

The Board is satisfied that a positive safety, health and environmental culture is now in place, and that further oversight can properly rest with the Board, AAERC and ELT, to ensure appropriate oversight and assurance of health and safety matters, and the last meeting of the committee was held in January 2022

The members of Safety Health & Environmental Committee as of 19 January 2022 were Duncan Sutherland (Chair); Olivia Scanlon; Andy Hobart (Shareholder Representative); Barry Cummins, Interim Chief Land and Development Officer (or nominated deputy) and Lynda McMullan, Chief Financial Officer (or nominated deputy).

1.30 Change Committee

The Change Committee supports the Board in fulfilling its responsibility for reviewing the assurance from the Executive and making decisions in respect of change programmes and projects. This includes monitoring delivery of the Evolve programme and oversight of corporate change and culture initiatives. The Change Committee held its first meeting on 24 March 2022.

the members of Change Committee as of 31 March 2022 were Vanessa Murden (Chair); Duncan Sutherland; Mark Rennison; Andy Hobart (Shareholder Representative) and Pat Ritchie.

1.31 Cross cutting Committee

The Cross cutting Committee supports the Board in fulfilling its responsibility for a greater focus on the cross cutting objectives detailed in its Strategic Plan: Safe, Sustainable, Well-designed and built including modular construction, design, sustainability. The Cross cutting Committee held its first meeting on 14 April 2022.

The members of Cross cutting Committee as of 31 March 2022 were Sadie Morgan (Chair), Mark Henderson and Ian Austin.

1.32 Committee attendance 2021 to 2022

Transformation AAERC

Mark Rennison 6 (7)
Stephen Bell 7 (7)
Teresa O’Neill 3 (7)
Vanessa Murden 6 (7)

Audit, Assurance and Enterprise Risk Committee

Mark Rennison 6 (6)
Stephen Bell 5 (6)
Teresa O’Neill 6 (6)
Vanessa Murden 5 (6)

Safety Health and Environmental Committee

Stephen Bell attended Safety Health and Environmental Committee (SHE) on 2 occasions to ensure quorum.

Stephen Bell 2 (2)
Duncan Sutherland 4 (4)
Simon Dudley 1 (1)
Olivia Scanlon 3 (4)
Andy Hobart 4 (4)

Change Committee

Mark Rennison 1 (1)
Vanessa Murden 1 (1)
Duncan Sutherland 1 (1)
Andy Horbart 1 (1)

1.33 The Executive

The Executive is our principal operational decision-making group for implementing the corporate strategy, operational policies and procedures. The Executive directors work with the Chief Executive to ensure that the deployment of resources is sufficient to maintain delivery and that our corporate services provide effective service support.

As at 31 March 2022 the Executive comprised of:

Peter Denton, Chief Executive and Accounting Officer (from 1 August 2021)
Barry Cummins, Interim Chief Land and Development Officer (from 8 November 2021)
Lynda McMullan, Chief Finance Officer
Mike Palin, Interim Executive Director of Markets, Partners & Places (from 1 January 2022)
Harry Swales, Chief Investments Officer

1.34 Peter Denton, Chief Executive Officer

Peter joined Homes England in August 2021. Prior to this, he was Chief Executive Officer of housing association The Hyde Group.

He has worked in a broad range of strategic leadership roles, amassing 27 years of pan-European real estate experience. Before joining the housing sector, Peter spent his early career in investment banking and then moved to global real estate investment management firm Starwood Capital. During his investment career, Peter deployed over €25 billion of capital and had significant exposure to investors and fundraising on a global scale, working as a ‘bridge’ between the public, private and third sector.

In addition, Peter has held senior EMEA real estate investment banking roles at BNP Paribas, Barclays, Deutsche Bank, Eurohypo and WestImmo. He is also a non-executive Real Estate Investment Committee member at global investment company Eurazeo and Council member and Chair of the Finance Committee at Marlborough College.

1.35 Lynda McMullan, Chief Finance Officer and Executive Director, Corporate Resources

Lynda has been with Homes England since July 2019. As well as being the CFO, she manages the Corporate Resources Directorate which consists of: Finance, HR, Legal, Internal Audit, Business Planning and Performance, as well as the Building Remediation Team. Prior to this, Lynda worked for 5 years with the Metropolitan Police Service helping deliver significant change and financial savings as Director of Commercial and Finance, having already spent a year overseeing the service from the GLA. This built on two years working as an Executive lead at the National Audit Office, responsible for the Education, Health and the (then) Communities and Local Government departments. Before this Lynda spent some 20 years in local government, mainly in senior financial roles, latterly with Kent County Council as the Director of Finance and Procurement.

1.36 Harry Swales, Chief Investment Officer

Harry has been with Homes England since 2015 and is the Chief Investment Officer. Harry has over 18 years’ experience in housing and the built environment as a developer, investor and funder. He is a chartered surveyor with a background delivering strategic investment programmes across both the public and private sector.

1.37 Mike Palin, Interim Executive Director of Markets, Partners and Places (MPP)

Mike Palin is the Interim Executive Director of MPP. He joined Homes England in February 2021 as Interim Director of the Cities and Major Conurbations Team. He is a successful deliverer of economic growth strategies as well as being a leading thinker on how economic growth implementation can fit with broader policy initiatives. His focus is on implementation of strategies to deliver results.

He is a former LA Chief Executive, LEP Executive Director, as Chief Executive of St Helens Council he delivered a new economic approach that saw the Borough have the second highest per capita jobs growth in the entire North of England (resulting in an unemployment rate as low as 3.2% in 2019, from being at 10.3% in 2015), the attraction of over £1/2 billion of private sector inward investment (with an increase in business rate income of over £10 million per annum), as well as securing government industrial strategy investment and a major Town Centre.

1.38 Barry Cummins, Interim Chief Land and Development Officer

Barry joined Homes England in 2017. He is the Interim Chief Land and Development Officer, having previously held the role of National Development Director. Barry has over 30 years of experience in the private sector having worked in senior director roles for a number of housebuilders including Bryant, Countryside Properties and Bovis Homes. He also has practical knowledge of land acquisition and sales having created 2 new regional operating companies.

Barry is a Chartered Town Planner and has been a member of the Royal Town Planning Institute since 1986. He held the Role of Regional Chairman for The Home Builders Federation for over 7 years.

1.39 Other members

In addition to the above, the following served on the leadership team throughout the year; Gordon More served as Interim Chief Executive and Accounting Officer until 1 August 2021, Amy Casterton served a Chief of Staff until 27 August 2021, Stephen Kinsella Served as Chief Land and Development Officer until 17 December 2021, Paul Kitson served as Executive Director of Markets, Partners & Places until 9 December 2021.

The Chief Executive has revised the Executive decision-making structure to support the revised Board and Committee structure outlined above and provide Executive oversight and assurance of Homes England’s overall performance, both in terms of programme delivery and corporate operations, as well as its broader strategic development.

3 new Executive groups are mapped to the Board Committees: People Executive to Nominations and Remuneration Committee; Change Executive to Change Committee; and Delivery Oversight provides assurance on programmes and portfolio delivery to the Investment Committee and assurance on policy matters to the Cross Cutting Committee. The Executive Leadership team meeting retains responsibility for delivery and assurance to Board of the Strategic Plan objectives, risk, budget and performance reporting.

1.40 New ELT structure

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The Chief Executive has also introduced a framework of five new Delivery Boards that support the policy delivery partnership model agreed with DLUHC, replacing existing DLUHC led programme boards. Active Delivery Boards cover Market Diversification, Affordable Housing, Home Ownership and Building Safety, whilst interim arrangements are in place to oversee the Agency’s land, infrastructure and regeneration activity until that Delivery Board is formally stood up (expected during 2022 to 2023). The Boards provide oversight and assurance to the Stakeholders (DLUHC and the Agency) on delivery of the programmes/funds and inform strategic/policy decision making for the Agency and relevant DLUHC Programme Boards. The Delivery Boards also include representatives from the Infrastructure and Projects Authority and Treasury, to give them the opportunity to oversee performance and input into key decisions. Management Information and performance reporting and forecasts form part of the Agency performance reporting to the Executive Leadership Team and Board.

1.41 Delivery Board structure

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1.42 Declarations of Interest

The Agency has reviewed its detailed policy and guidance on declarations of interest for all staff, which complies with the requirements of the Civil Service Management Code and includes the requirement to make an annual declaration of interests as well as record any changes. We review all recorded interest returns to ensure that they are permitted, and they are managed as part of our assurance to board.

We also have a policy in place for Board Members, which is contained in their Code of conduct, and based on Cabinet Office guidelines. The section setting out the handling of conflicts confirms that members must declare interests at any meeting and withdraw from a meeting before discussion of any matter in which they have an interest.

Following the appointment of four new members in February 2022, training for the Board on declaration of interests took place on 28 April 2022.

As part of our additional assurance we now hold a Register of all Board and officer interests centrally to allow Secretariat and project officers to review member and officer interests more readily when they are bringing reports to committees.

1.43 Register of Members’ interests

The Register of Members’ interests is a public record published on the website in which members list all direct or indirect financial interests and non-financial interests where they have a direct bearing on the business of the Agency. Our Executive Directors’ Register of Interests is published alongside the Board Member declarations.

The Register of member’s Financial Interest is open for public inspection and can be found at ‘Homes England register of interests’.

Since 25 May 2018, under the UK General Data Protection Regulation and the Data Protection Act 2018, there has been a mandatory requirement to report any personal data breach if there is a risk to the rights and freedoms of the data subjects whose data has been breached. In the financial year 2021 to 2022, there were no personal data breaches that met the threshold for mandatory reporting however, Homes England voluntarily reported one breach to the Information Commissioner’s Office as there was some uncertainty at the time, given the limited information initially available, whether the incident met the threshold for mandatory reporting. The breach was not committed by Homes England but by one of its third party processors. The third party’s Robotic Process Automation team had been given production access to some customer accounts to populate a secure test environment. This data included some of our account data in error and a copy was provided without the proper authorisations in place. As soon as our processor was notified of this breach, they immediately revoked access to the data.

1.45 External Auditors

The Comptroller and Auditor General is the statutorily appointed auditor under the provisions of the Housing and Regeneration Act 2008. The cost of work performed by the auditors for 2021 to 2022 was £435,000 (2020 to 2021: £400,000).

As part of the annual audit of Homes England, the National Audit Office (NAO) may issue recommendations to strengthen governance and accountability. Such recommendations are considered by senior management, reviewed by the Audit, Assurance and Enterprise Risk Committee and solutions are implemented where appropriate. In addition to the annual audit, Homes England’s work was the subject of an NAO report during the year as summarised below.

1.46 NAO Value for Money Study into the Affordable Homes Programme

The NAO began a study in September 2021 into the Affordable Homes Programme (AHP). The Study is assessing the value the AHP provides for the public purse. The NAO have liaised with the AHP team at Homes England, conducting interviews and gathering data on the Agency’s role in delivery. DLUHC, the Greater London Authority and market partners have also fed information into the process. The NAO will publish its final report in September 2022, following the summer Parliamentary recess. Homes England also contributed to the work of two Select committees during the year:

Levelling Up, Housing and Communities Select Committee oral evidence session: ‘Work of Homes England’

On 15 November 2021, the Levelling Up, Housing and Communities Select Committee held a one-off session on the work of Homes England, attended by the Chair, Peter Freeman, and the Chief Executive, Peter Denton.

This was a wide-ranging session, which discussed a broad range of the Agency’s funding programmes and workstreams, as well as the Agency’s delivery record and work with the Department. The committee also explored broader issues such as the Agency’s governance structures plus our commitment to design, sustainability and net zero, and opportunities to increase productivity in the delivery of housing through MMC. The session also included a discussion of Homes England’s role, capacity and capability.

Following the session, the Chair and Chief Executive wrote to the committee with additional information which had been discussed at the evidence session. This included an outline of how Homes England disposes of its land, an outline of the range of funds and programmes administered by the Agency and setting out further information of the Home Building Fund: Short Term Fund and the Agency’s work to support SMEs.

Public Accounts Committee (PAC)

Homes England has continued to write to the Public Accounts Committee on a six-monthly basis setting out the number of affordable units created, and the type and tenure, following the 2020 PAC session on Starter Homes. The Agency most recently wrote to the PAC in December 2021 with the latest information.

1.47 Statement of Accounting Officer’s responsibilities

Under the Housing and Regeneration Act 2008, the Secretary of State (with the consent of HM Treasury) has directed Homes England to prepare for each financial year a statement of accounts in the form and on the basis set out in the Accounts Direction. The accounts are prepared on an accruals basis and must give a true and fair view of the state of affairs of Homes England and of its income and expenditure, Statement of Financial Position and cash flows for the financial year.

In preparing the accounts, the Accounting Officer is required to comply with the requirements of the Government Financial Reporting Manual and to:

observe the Accounts Direction issued by the Secretary of State including the relevant accounting and disclosure requirements, and apply suitable accounting policies on a consistent basis;
make judgments and estimates on a reasonable basis;
state whether applicable accounting standards as set out in the Government Financial Reporting Manual have been followed, and disclose and explain any material departures in the Financial Statements;
prepare the Financial Statements on a going concern basis; and confirm that the Annual Report and Accounts as a whole are fair, balanced and understandable and take personal responsibility for the Annual Report and Accounts and the judgements required for determining that it is fair, balanced and understandable.

The Secretary of State has delegated Accounting Officer responsibilities to the Chief Executive Officer of Homes England. The responsibilities of an Accounting Officer, including responsibility for the propriety and regularity of the public finances for which the Accounting Officer is answerable, for keeping proper records and for safeguarding Homes England’s assets, are set out in Managing Public Money published by HM Treasury.

As the Accounting Officer, I have taken all the steps that I ought to have taken to make myself aware of any relevant audit information and to establish that Homes England’s auditors are aware of that information. So far as I am aware, there is no relevant audit information of which the auditors are unaware. I confirm that the Annual Report and Accounts as a whole are fair, balanced and understandable and I take responsibility for the Annual Report and Accounts and the judgements required for determining that is fair, balanced and understandable.

1.48 Governance statement

We are a Non-Departmental Public Body sponsored by DLUHC. Our relationship with DLUHC, including how we interact, the parameters within which we operate and the obligations we comply with are formally governed by a Framework Document which:

recognises our functional and day-to-day operational independence;
sets out our governance and decision-making arrangements; and
sets out the financial and management processes that govern our operation.

The Framework Document is the key document governing the Agency’s relationship with DLUHC. The current Framework document was published in November 2018, and there have been no fundamental changes in the period covered by this report. The Framework document is in the process of being refreshed to reflect changes in the governance structures and the future changes of the Strategic Plan.

Homes England has complied with the Corporate Governance in central government departments: Code of Good Practice.

1.49 Risk Management Framework and 3 Lines of Defence Model

Our approach to risk management is informed by HM Treasury’s Orange Book and sets out a principles-based approach that provides flexibility and judgement in the implementation and operation of risk management, which is informed by relevant policies, processes and best practice. It is designed so anyone, regardless of their level of knowledge, can understand their role and responsibilities and be signposted to more detailed guidance where needed. Within the Agency the risk management processes are structured to include:

a) Risk identification and assessment to determine and prioritise how the risks should be managed.

b) The selection, design and implementation of risk treatment options that support achievement of intended outcomes and manage risks to an acceptable level.

c) The design and operation of integrated, insightful and informative risk monitoring.

d) Timely, accurate and useful risk reporting to enhance the quality of decision-making and to support management and oversight bodies in meeting their responsibilities.

The 3 Lines of Defence Model provides a mechanism for the governance of risk management. With a 3 Lines of Defence model:

The First Line (1LOD) refers to all staff responsible for identifying, assessing, managing and owning the risks in their respective business areas and support functions.
The Second Line (2LOD) refers primarily to the Risk team but includes other functions and activities that monitor the implementation of effective risk management practices and facilitate the reporting of risk related information up and down the organisation.
The Third Line (3LOD) refers to Internal Audit, who provide assurance to the Accounting Officer and Board on the whole organisation via an independent objective evaluation of the adequacy and effectiveness of the framework of governance, risk management and control.

The systems and processes described herein have been in place for the full financial year and remain in place at the date of the accounts, unless otherwise indicated.

1.50 Risk culture

Ambitious: We are not afraid of risk. We actively seek innovative approaches while knowingly taking appropriate risks to achieve our objectives.

Collaborative: By collaborating we learn. We encourage all employees to share ideas, discuss risks and develop joint solutions to manage those risks openly so we can promote a ‘continuous learning culture’.

Commercial: We develop and improve our interventions while safeguarding public funds and delivering value for money.

Creative: We disrupt the status quo by balancing risk with reward to find creative solutions to continuously improve outcomes.

Diverse: We actively seek wide involvement and a diverse set of views through our risk identification, risk treatment and decision-making processes.

Learning: We can always do better, share what we know and admit our mistakes. We have a ‘no blame culture’ so when risks materialise, we have an open and honest conversation about what happened, the lessons we learnt and how we can improve in future.

Our risk culture aligns to the Homes England Way to reflect our shared values and focus on our collective behaviour. Every employee has a responsibility to manage risk in their respective role. Whilst the nature of the risk will vary depending on the role the universal principles which underpin this are set out in detail in our Risk Management Framework.

1.51 Risk Taxonomy and Risk Appetite

Our Risk Taxonomy is a categorisation structure to support the analysis and assessment of risk exposure across the organisation. The seven primary risk categories detailed in the following table are further segmented into secondary risk categories for detailed business management purposes.

Our Risk Appetite identifies our overall willingness to assume, or be exposed to, a level of risk for each of our 7 primary risk categories.

Taxonomy: Policy Risk

Category Definition: Changes in policy priorities leading to a change of Homes England’s expected deliverables, resulting in an inability to adapt to amended strategic priorities.

Risk Appetite, OPEN: Homes England is in place to support policy and therefore needs to be able to react to a change in government or policy and support any policy / government transitions.

Taxonomy: Economic Risk

Category Definition: Changes in the macro-economic environment leading to volatility in the UK housing market, resulting in unsustainable levels of strategic change.

Risk Appetite, OPEN: Homes England’s mission is “to intervene in the market to ensure more homes are built in areas of greatest need, to improve affordability. We will make this sustainable by creating a more resilient and diverse housing market”. Homes England is open to taking counter cyclical decisions to support the housing market, investing money and introducing ng products if needed even in difficult economic conditions.

Taxonomy: Strategic Delivery Risk

Category Definition: Pursuing objectives which turn out to be defective and/ or risk of sub- optimal delivery of change initiatives or interventions related to strategic objectives.

Risk Appetite, OPEN: Homes England recognises that there is a large amount of strategic change to deliver, and that change is inherently risky, with the need to balance costs, speed, and the risk of ineffective change. In order to achieve this balance, Homes England will identify which changes require full project management and which will be delivered as part of BAU activity, recognising that the latter may cause issues that will need rectifying post implementation.

Taxonomy: Financial Risk

Category Definition: Risk of Homes England’s credit / investment decisions leading to a financial loss or sub-optimal recovery outside agreed tolerance, resulting in an inability to achieve planned recovery rates.

Risk Appetite, NEUTRAL: Homes England is in place to support schemes that would not be delivered through the private sector. It manages this risk by setting planned recovery rates for each programme and aims to achieve these recovery rates.

Taxonomy: Operational Risk

Category Definition: Risk of Homes England processes, resources or systems being ineffective, leading to operational failures.

Risk Appetite, AVERSE: Homes England is averse to operational risks and expects there to be a resilient control environment for key systems and processes.

Taxonomy: Fiduciary Risk

Category Definition: Risk of failing to comply with regulation or prevent financial crime or misconduct with the customers, leading to losses or censure.

Risk Appetite, AVERSE: Homes England has ‘zero-tolerance’ to all types of non-compliance and subsequent breach of statutes and associated statutory requirements, regulations, codes of practice, common law, professional standards, high- level directive documents and financial crime compliance framework.

Taxonomy: Reputational Risk

Category Definition: Risk of reputational damage due to adverse public or stakeholder perception of activities that are fully aligned to Homes England’s strategic objectives and policy requirements; insufficient mitigation through communication/ public perception management.

Risk Appetite, NEUTRAL: Homes England will ensure it understands the reputational risk of its activities and any known other risks (especially operational and fiduciary), but there will be times when achieving its mission leads to a negative public perception. Where there is negative media and/ or public attention, Homes England will proactively seek to address this.

1.52 Risks outside the Agency’s Risk Appetite

We measure our Risk Appetite for each of our seven primary taxonomy risks to determine whether we are within or outside appetite. The Chief Risk Officer’s report to our Board includes a Risk Appetite Position Statement. During the last 12 months we were within appetite for all primary taxonomy risks except for the following specific areas of Operational and Fiduciary Risk.

Operational Risk – At the beginning of this year we were outside our operational risk appetite in three areas: legacy digital systems; data quality, integrity, availability and reporting; and workforce planning.

Whilst risks associated with these areas were managed throughout the year within operational tolerance, Executives now confirm that risks associated with the above three areas are currently being managed within risk appetite. These areas of risk are linked to two of the Principal Risks reported below, Business Continuity and Capacity & Capability.

Our mitigation strategy to support the management of the above Primary risks during these challenging times includes two common elements: improving our risk management culture and system transformation through our Evolve programme.

Over the next 2 years, our Risk Training Manager will focus on implementing a risk education and awareness programme to strengthen and improve our risk management culture. In tandem, Homes England plans to replace core legacy systems with resilient modern platforms. Evolve projects relevant to the risk mitigation strategy include: replacing our document management platform; introducing new systems to manage workforce and enterprise resource planning; and embedding an automated risk management system.

1.53 Fiduciary Risk

Fiduciary risk in relation to Anti Money Laundering (AML), fraud and sanctions and our approach to its mitigation is summarised below.

We remain outside risk appetite for fiduciary risk due to issues that remain in respect of the Help to Buy programme, primarily in respect of possible scheme abuse.

During 2021 to 2022, Homes England has undertaken a significant amount of work to mitigate risks previously identified, including the implementation of an investigative and detective tool to screen the pre-existing and new participants on a risk-based approach that ensures compliance, in accordance with UK AML (including Politically Exposed Persons) and sanction legislation.

Greater insight has led to the identification of potential scheme abuse following an examination of the Help to Buy consumer portfolio. Given that Homes England maintains an equity loan for a built property there is unlikely to be any permanent loss where scheme abuse is identified. Work is ongoing with stakeholders in order to improve the quality of the data and conduct in-depth data analysis to aid detection and mitigation strategies, as a result we anticipate being within risk appetite in 2022 to 2023

Dedicated processes have been implemented to screen new developers and consumers who join the scheme, in respect of AML, fraud and sanctions which did not exist in the previous fiscal year.

Sanctions

UK financial sanctions apply to all persons within the UK territory and to all UK persons, wherever they are in the world. This means that:

Homes England is obliged to comply with financial sanctions and has appropriate systems and controls operating;
The sanctions landscape is constantly evolving due to geo-political events. Homes England applies the Office of Financial Sanctions Implementation’s consolidated list to our consumers and developers across all programmes; and
Complex ownerships are investigated to ensure that Homes England is not contracting with organisations owned or controlled by sanctioned entities or individuals.

Homes England commissioned an external subject matter expert (SME) to review its AML and sanctions approach, systems and controls. The SME’s opinion was:

our exposure was assessed to be low risk, based on the programmes we make available and the nature of our customer and developer base and the entities with whom we do business;
sanction risk exposure would be due to consumers and/or developers with a non- UK nexus within our portfolio. The risk is considered minimal and appropriately risk mitigated, with no exposure to sanctioned parties being identified to date, although risk assessment and review continues for Help to Buy developers; and
our AML and sanction processes were proportionate and appropriate to the level of fiduciary risk faced by the Homes England.

For Help to Buy, 58% of developers and their beneficial ownership, have been successfully screened with no sanction exposure identified. The remaining 42% are being assessed, via a risk- based approach, concentrating on 210 developers with non-UK ownership. This work is progressing and will be completed in Quarter 3, 2022.

1.54 Control Environment Improvement Programme for 2020 to 2021

Internal Audit provided the Agency with a Limited Assurance opinion. This was driven by a range of factors and reflected the audit view that we were “an organisation under strain, and we have been hampered by instability at senior level, and inefficiencies resulting from legacy systems, with limited data quality, which expose us to undue risk.”

Risk has been actively involved in the ongoing work to improve the Agency’s Control Environment to address these audit concerns and has focussed on four key areas of risk-based activity in this regard:

Principal Risks (top-down view)
Risk and Control Self-Assessment (bottom-up view)
Risk Events and Near Misses(reporting and awareness)
Risk Escalation (transparency)

1.55 Principal Risks

The Executive Leadership Team owns and is collectively responsible for the identification and management of Principal Risks, which is the key “top down” risk identification process across the Agency. A series of workshops and meetings have been held between Risk and the members of the Executive Leadership Team as part of the Control Environment Improvement Plan. These have identified the risks facing the Agency which are so significant that they could materially impact the achievement of our strategic objectives.

The Agency has instituted quarterly CEO/ CRO Challenge Sessions as part of its Control Environment and to provide a regular forum where the Principal Risks are discussed at a senior level across the Agency.

1.56 Risk and Control Self-Assessment

The Agency uses a combination of Risk Registers and Risk and Control Self-Assessment (RACAs) as a “bottom up” risk identification process. Risk Registers are used for more simple programmes and business areas with RACAs used by the more complex business lines and directorates across the Agency. In September 2021 the guidance and templates used for these were refreshed and relaunched to provide greater consistency of reporting across different business lines.

The review of RACAs and Risk Registers was also changed to a monthly process (previously quarterly), to further embed it in the business rhythms of the Agency. As part of this process, the Operational Risk team and Risk Business Partners are engaging with the business to provide guidance and challenge on the output. This output is helping to inform the regular CEO/CRO Challenge sessions which are taking place.

Risk Events and Near Misses

During the course of the year, the Risk Directorate has refreshed the Risk Event and Near Miss Reporting Policy and Risk Business Partners have engaged across the various business lines to re-emphasise the importance of appropriate reporting. The purpose of this Policy and reporting procedure is to ensure that all risk events and near misses are promptly reported, recorded and reviewed to ensure outcomes, control and process improvements and learning opportunities are cascaded accordingly.

The process is helping to create greater awareness of risk and risk ownership across the Agency, as well as informing the top down and bottom-up risk identification processes described above.

The Agency has identified potential contract management weaknesses in respect of a project agreement with a developer entered into over 10 years ago. An investigation has been commissioned to identify the extent of any historic failures in the control environment and confirm that these are no longer present in the current control environment for the project. On conclusion of the investigation, the Agency will take advice on the options open to it to address the issues both in respect of the project itself and the wider control environment to minimise loss to the public purse. The Agency is also undertaking a review of its legacy land projects to ascertain whether similar issues exist in relation to other projects in the portfolio.

1.57 Risk Escalation

During the year, the Agency has approved and implemented a Risk Escalation Process as part of the work to improve the Control Environment. This process supports the operationalisation of the Homes England’s Risk Appetite Statement, ensuring that all stakeholders engage, understand and are part of managing risks at Homes England. It ensures that where risks are outside appetite, proportionate and timely risk responses are agreed and implemented with the aim to bring the risk back within appetite.

Where there is a requirement to tolerate higher levels of risk, especially those outside of appetite, it ensures that appropriate governance, challenge, reporting and approvals are in place. It also identifies where mitigating the risk is outside of Homes England’s control, for example: government, policy, economic related risks and controls.

It identifies risks that cut across, or might have an impact on, multiple strategic objectives or business areas and ensures that all dependencies are understood and considered when controls and mitigations are agreed. This helps to increase ownership and empowerment, enabling the Agency leadership to take appropriate risks in line with our approved Risk Appetite. It also ensures that there is a consistent approach to risk management across different business lines.

Main risks we face as an agency

The main risks facing the Agency are kept under review via a combination of a “top-down” and a “bottom-up” process; the top-down process being the Principal Risks process via the Executive Leadership and the bottom-up process being the monthly Risk and Control Assessment and Risk Register review process. During the year, the Executive Leadership Team conducted the annual refresh of the key strategic risks which could impact on the strategic objectives of our organisation. Eight principal risks were identified for further assessment and discussion with our Audit, Assurance and Enterprise Risk Committee.

Two Principal risks from the 2020 to 2021 Risk Register have been de-escalated, however they will continue to be monitored to see if they need to be re-escalated as a standalone risk.

The 8 principal risks at 31 March 2022 were as follows:

Macro-economic Conditions

Risk description: Risk that the Agency has not monitored or is insufficiently prepared and empowered to respond to changing macro-economic conditions, which affects our ability to achieve strategic objectives, recovery expectations and to prevent customer detriment.

Primary risk alignment: Economic

Risk Appetite: Open