Annual report 2020/21: Accountability report, accessible version
Updated 3 February 2022
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The Accountability report is included to meet key accountability requirements to Parliament.
Corporate Governance report
Our Board and committees have responded to the biggest challenge to our organisational resilience in the form of COVID-19 this year.
We have been meeting virtually since 16 March 2020, and have adjusted to this new way of working and maintained effective decision making, to enable the Agency to continue to deliver our mission and objectives.
This 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
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 MHCLG to ensure the delivery of our strategic objectives. Some of the Board’s statutory functions are delegated to its members, committees, sub-committees and staff.
Our Board is specifically responsible for:
- Overall governance, including preservation of the reputation of the Agency, and relationships with MHCLG and other key stakeholders.
- Recommending to MHCLG the Agency’s overall strategic direction, within the policy and resources framework agreed and set out in the Framework Document.
- Approving the Agency’s periodic draft Corporate Plans, including output targets, for submission to Ministers for approval.
- Agreeing the Agency’s Annual Budget, consistent with the Corporate Plan, for approval by MHCLG.
- 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.
- Appointing or dismissing the Chief Executive, subject to MHCLG approval.
- 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.
- Considering any matters that the Board Committees wish to refer up to the Board, particularly where issues of principle are involved.
- 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.
- Ensuring that the Agency’s strategic objectives and obligations to its stakeholders are understood outside and throughout the organisation.
- Receiving and reviewing monthly performance information, scored against corporate targets and relating to the management and performance of the Agency, and direct executives regarding any required performance improvements.
- 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.
- Considering the annual Money Laundering Reporting Officer (MLRO) Report.
- Ensuring that there are appropriate legal, financial and administrative arrangements covering the provision of the Agency’s pension schemes in respect of benefits and contributions, the administration of the schemes and the safeguarding and management of the pension fund(s) assets.
Board and Committee composition
The Board is comprised of Non-Executive members and the Chief Executive who also serves as the Accounting Officer. The Board is led by the Chair. In 2020/21, Simon Dudley was the interim Chair, until he was replaced by Peter Freeman as permanent Chair on 23 October 2020. Membership of the Board and its Committees has changed throughout the year as is confirmed in the Board and Committee Attendance section later in the report. A full list of current Board Members and members who served throughout the year is detailed in our Board Members’ report.
Our Board
Peter Freeman, 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 Brindleyplace in Birmingham, and King’s Cross and Brent Cross Town in London. Peter has also been a Non-Executive Director on several other property companies and a trustee of a number of charities connected with education, combatting intolerance, and public performance art.
Simon Dudley, Senior Independent Director
Independent Director of Homes England and the Chair of the Ebbsfleet Development Corporation. Simon is a former Leader of the Royal Borough of Windsor and Maidenhead. He also has a strong commercial background having previously worked as Executive Director of Global Capital Markets at Arcapita Ltd and Managing Director at Citigroup Global Markets Limited. Simon also has a keen interest in education having founded two free schools.
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.
Teresa O’Neill OBE
Councillor Teresa O’Neill OBE has been the Leader of the London Borough of Bexley since 2008 & a Bexley Councillor since 1998. She is also a Vice-Chair (Leader of the Conservative Group) on London Councils & 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 & was Boris Johnson’s advisor for Outer London relations. Her career was previously in the finance sector & 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.
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.
Involved in setting up and operating a £1 billion Private Rented Sector (PRS) fund investing in the UK and the UK’s first successful PRS housing Real Estate Investment Trust (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).
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 currently the Chief Operating Officer at Orchard Global Asset Management LLP.
Sadie Morgan
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.
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.
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.
Conflicts of Interest
We have a detailed policy and guidance on conflicts of interest in place 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 carried out an online annual refresh of the policy guidance in autumn 2020 for all staff. We review all recorded interest returns to ensure that they are permitted and they are managed as part of our assurance. We carried out a further refresh of Executive and Corporate Director declarations on 24 April 2021, and our officer returns have also been recently reviewed.
We also have a policy in place for Board Members, which is contained in their Code of Practice, 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.
It has come to our attention this year that our former Chair made a declaration at the Investment Committee meeting in May 2019 that he had acted as a consultant for Delancey and did not make clear that this was still ongoing. It was also not made clear in the former Chair’s declaration in regard to Dream Ltd that this was a connection to Delancey Real Estate Management Ltd. The former Chair has issued a statement confirming that he should have left the meeting. Delancey are a shareholder in two Joint Ventures in receipt of funding, both funding arrangements were agreed prior to the former Chair joining the Agency, however, a guarantee in regard to the Government private sector rental loan scheme was recommended by the Agency at the 2019 meeting in respect of one of the sites.
We intend to review the guidance for Board Members, conduct any necessary training and improve our diligence on the interests recorded.
Register of members’ interests
The Register of Member’s Financial 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. Board Members are reminded regularly to keep the Register of Interests up to date and the current register has been recently published. Our Executive Directors’ Register of Interests is published alongside the Board Member declarations. As part of our additional assurance we will be recording interests in a way that allows Secretariat and project officers to review member and officer interests more readily when they are bringing reports to committees.
The Register of Member’s Financial Interest is open for public inspection and can be found at www.gov.uk by searching for ‘Homes England register of interests’.
Personal data related incidents
Since 25 May 2018, under the 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 2020/21, there were no personal data breaches that met the threshold for mandatory reporting.
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 2020/21 was £400,000 (2019/20: £350,000), with some of the increase reflecting additional work in response to the COVID-19 pandemic (see disclosure note 2 in the Financial Statements). 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 and Risk Committee and solutions 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.
Starter homes
Homes England attended the rescheduled Public Accounts Committee (PAC) session that looked at the Government’s Starter Homes programme. This session had been due to take place in March 2020, but was cancelled due to COVID-19. The Agency’s Chief Executive, Nick Walkley, represented Homes England alongside colleagues from MHCLG at an oral evidence session of the PAC in October 2020.
The PAC published their report in December 2020. Their report recommended that Homes England should write to the Public Accounts Committee every 6 months to update them on the number of affordable units created, and of what type and tenure. The report made several recommendations to MHCLG, including that the Department should set out a clear definition of ‘affordable housing’, as well as outlining how the Government’s various housing schemes will help the Government achieve their ambition of building 300,000 new homes per year by the mid2020s.
ALB study
The National Audit Office (NAO) began a study in early 2021 which looks at the Government’s delivery through Arm’s-Length Bodies (ALBs). This report builds on the work of a previous NAO study in 2016 which studied Government Department’s oversight of ALBs. Homes England was asked to form one of the ten case studies which made up the final report. As such, colleagues from Homes England met with the NAO in an interview format to discuss the study and the key areas that the NAO are examining. The NAO published their final report in June 2021.
Homes England committees
Our Board, in accordance with good practices of governance, has established a number of committees to which it delegates appropriate responsibilities.
Investment Committee (IC)
The Investment Committee considers new development and investment proposals and reviews business cases in support of new investment policies or expanded funding 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 directly related to site or programme delivery.
During the year, in addition to transaction approvals, the committee approved an updated equity investment strategy and procurement framework covering project delivery, site security, site management and monitoring, and economic research and analysis. It also reviewed a number of business cases in support of new initiatives including First Homes, Help to Build and the Housing Delivery and Diversification fund.
The committee has overseen the re-procurement of administration services that support the Help to Buy portfolio.
Significant transactional approvals included land acquisitions and infrastructure investment in South Oxfordshire, Medway, Norfolk, and Surrey, as well as further land and enabling infrastructure investments in two ongoing major developments of new housing stock in Northstowe in Cambridgeshire and Burgess Hill in Surrey. Development finance approvals for major home construction sites in Upton near Northampton and Harker near Carlisle were also granted. Finally, the committee approved a number of equity investments primarily designed to support and encourage private sector investment into residential construction and the private rented sector.
The committee’s portfolio monitoring activities included regular reviews of the equity portfolio, the guarantees portfolio 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 2021 were Mark Rennison (Chair); Peter Freeman (joined 26 November 2020); Simon Dudley; Duncan Sutherland; Sadie Morgan; Olivia Scanlon (4 March 2021); Gordon More, interim Chief Executive Officer (or nominated deputy); Harry Swales, Chief Investments Officer (or nominated deputy); and Stephen Kinsella, Chief Land and Development Officer (or nominated deputy).
Nominations and Remuneration Committee (NRC)
This Committee is responsible for advising on overall pay and rewards; the remuneration, contractual and pension arrangements of staff 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:
- approving a Pay and Grading review; and
- advancing our succession planning analysis.
The members of the Nominations and Remuneration Committee as of 31 March 2021 were Simon Dudley (Chair); Stephen Bell; Duncan Sutherland; Andy Hobart (MHCLG representative), Peter Freeman (joined 26 November 2020) and Vanessa Murden.
Board and Committee attendance 2020/21
| Board [7] | NRC [8] | IC [9] |
|---|---|---|
| Peter Freeman 4 (4) | Peter Freeman 1 (1) | Peter Freeman 3 (4) |
| Duncan Sutherland 9 (9) | Duncan Sutherland 4 (4) | Duncan Sutherland 10 (10) |
| Keith House 5 (5) | Keith House 5 (5) | |
| Mark Rennison 9 (9) | Mark Rennison 9 (10) | |
| Olivia Scanlon 7 (9) | Olivia Scanlon 1 (1) | |
| Andy Hobart 9 (9) | Andy Hobart 4 (4) | |
| Sadie Morgan 9 (9) | Sadie Morgan 8 (10) | |
| Simon Dudley 9 (9) | Simon Dudley 4 (4) | Simon Dudley 10 (10) |
| Stephen Bell 9 (9) | Stephen Bell 4 (4) | |
| Teresa O’Neill 9 (9) | ||
| Vanessa Murden 8 (9) | Vanessa Murden 3 (4) | |
| Nick Walkley 7 (7) | Nick Walkley 8 (9) | |
| Gordon More 2 (2) | Gordon More 1 (1) |
7 The Board also held a further 5 Special meetings, and 21 catch-up phone calls during the pandemic.
8 The NRC also held a further 6 Special meetings.
9 The Investment Committee also held a further 6 Special meetings.
Audit and Risk Committee (ARC)
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. Notable business this year included:
- Developing and beginning to use the “Three Lines of Defence” papers. ARC has completed deep dives on all the main risk-taking areas and, combined with risk reviews, the maturity of conversations about the control environment is improving.
- ARC has been asked to take on a similar role in relation to Transformation as it did for Help to Buy. We have agreed to run a series of additional meetings over the first half of the calendar year 2021 which will focus on Benefit Realisation, Resourcing and Change Readiness, and Forward Planning.
- At the same time, the Committee has identified four other areas where it wants to focus its discretionary time – these being a refresh of Risk Appetite; ongoing focus on the closure of actions related to improvements in the Control Environment; specific focus on Help to Buy given the significance of activity facing the team; and further development of appropriate management information.
The members of Audit and Risk Committee as of 31 March 2021 were Stephen Bell (Chair); Teresa O’Neill, Mark Rennison (joined 23 June 2020) and Vanessa Murden.
Safety Health and Environmental Committee (SHE)
This Committee ensures that the Board were 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 has also taken a role in giving assurance to the Board that the Agency was responding appropriately to the COVID-19 pandemic and ensuring the safety and wellbeing of its staff, and increased its frequency over the past year to ensure proper oversight. Other notable business this year included:
- Reviewing our approach to Health and Safety and implementing proposals from external and independent advisors.
- Evaluating the Hackitt Report into Building Safety, discussing this with stakeholders and producing a strategy for Homes England to take a leadership role in the housing sector to assist the implementation of Hackitt recommendations and subsequent legislation.
- Implementing a Health and Safety training regime through all levels of the organisation including Board and Senior Managers.
The members of Safety Health & Environmental Committee as of 31 March 2021 were Duncan Sutherland (Chair); Olivia Scanlon; Simon Dudley (joined 30 April 2020); Andy Hobart (MHCLG representative, joined 30 April 2020); Stephen Kinsella, Chief Land and Development Officer (or nominated deputy) and Lynda McMullan, Chief Financial Officer (or nominated deputy).
Committee attendance 2020/21
| Transformation ARC [10] | ARC [11] | SHE [12] |
|---|---|---|
| Stephen Bell 2 (2) | Stephen Bell 6 (6) | Duncan Sutherland 4 (4) |
| Teresa O’Neill 2 (2) | Teresa O’Neill 6 (6) | Simon Dudley 4 (4) |
| Mark Rennison 2 (2) | Mark Rennison 4 (5) | Olivia Scanlon 4 (4) |
| Vanessa Murden 1 (2) | Vanessa Murden 5 (6) | Andy Hobart 4 (4) |
10 ARC also agreed to run a series of 6 additional meetings to consider Transformation. Non-ARC members have an open invite to attend.
11 ARC also held a further 2 Special meetings.
12 SHE Committee held additional monthly catch-up meetings during the pandemic to consider staff safety and welfare.
The Executive
The Executive is our principal executive decision-making group for implementing strategies, operational policies and procedures. As at 31 March 2021 the Executive comprised of:
- Gordon More, interim Chief Executive and Accounting Officer (from 1 March 2021)
- Amy Casterton, Chief of Staff
- Stephen Kinsella, Chief Land and Development Officer
- Harry Swales, Chief Investments Officer (from 08 March 2021)
- Lynda McMullan, Chief Finance Officer
- Paul Kitson, Executive Director of Markets, Partners & Places (from 08 March 2021)
Gordon More, Interim Chief Executive
Gordon has spent over 30 years in the banking sector with Lloyds Bank, HBOS and Bank of Scotland in a number of roles with a focus on the real estate and general corporate sectors.
In May 2014 Gordon joined the HCA (now Homes England) as Head of Investments (on secondment from Lloyds Banking Group). Gordon took on the permanent role of Chief Investment Officer in 2017, a position held until March 2021 when he took on the role of interim Chief Executive.
Gordon is a Fellow of the Chartered Institute of Bankers and a Fellow of the Royal Institution of Chartered Surveyors. Prior to joining Bank of Scotland he worked as a graduate engineer with Balfour Beatty after studying for a degree in Civil Engineering at the University of Strathclyde.
Harry Swales, Chief Investments Officer
Harry has been with Homes England since 2015 and is the Chief Investment Officer. Prior to this role, Harry was Executive Director of Markets, Partners and Places at Homes England having previously held roles in the Investment directorate.
Harry has over 18 years’ experience in housing and the building 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.
Lynda McMullan, Chief Financial Officer
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, Digital, Risk, Business Planning and Performance, as well 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.
Lynda is a member of CIPFA and sits on their Board.
Stephen Kinsella, Chief Land and Development Officer
Stephen is Chief Land and Development Officer for Homes England. Stephen has strong commercial and professional skills built up over nearly thirty years in housing across a variety of roles in the public, private and voluntary sectors. He joined the Homes and Communities Agency in 2017 from Barratt Developments where he was Growth and Partnerships Director for 11 years. Stephen also spent twelve years in the housing association sector, most latterly in senior regeneration and business development roles.
Amy Casterton, Chief of Staff
As Chief of Staff at Homes England, Amy leads the Executive Office responsible for Government relations, governance and communications. Working closely with the CEO, she is part of the leadership team building a new approach to the delivery of new homes with our partners.
In 2017 Amy led a Government review into UK Anti-Doping (UKAD), and before that spent six years in Brazil leading PR and trade campaigns for the FCO and then establishing a successful business, winning temporary infrastructure contracts for the Rio 2016 Games. She also has run Ministerial offices, was the first Head of Public Policy at the Premier League and worked in Local Government.
Paul Kitson, Interim Executive Director of Markets, Partners and Places
Paul is the Executive Director of Markets, Partners and Places at Homes England having previously held the role of Director of High Growth and New Settlements in MPP and before that General Manager responsible for projects and investment across the South East.
Prior to this Paul was responsible for the Agency’s work at Northstowe in Cambridgeshire, securing planning permission for the first 3,500 homes. Before joining Homes England, Paul held delivery roles with Thurrock Thames Gateway Development Corporation and with Moat Homes in Kent and Essex, and first started working in development and regeneration on SRB funded programmes in West London and Hertfordshire.
In addition to the above, the following served on the leadership team throughout the year; Nick Walkley served as CEO until 28 February 2021, Gordon More served as Chief Investments Officer until 01 March 2021, and Harry Swales served as Executive Director, MPP until 07 March 2021.
On 09 June 2021 we announced that Peter Denton will be joining Homes England as CEO and Accounting Officer later on in the year.
The Executive also works to ensure that the deployment of resources is sufficient to maintain delivery and that our corporate services provide effective service support.
The Executive is supported by a number of corporate groups and specialist boards, which monitor our programmes, help provide strategic direction and deliver standalone projects.
Board and Committee performance
We are committed to ensuring that our Board and its Committees are continually improving. To assist with this, the Board undertook an annual Board effectiveness evaluation in July 2020.
A report detailing findings and suggested improvements was accepted by our Board and an action plan was established for implementing key recommendations during 2020/21. These included an enhanced role for Committee Chairs in determining forward plans, improved reporting from Committees to Board, increasing the membership of key Committees, and a progressive reigning back of operational updates to Board, which had intensified during the Agency’s COVID response.
The remaining actions were considered by the incoming Chair, and have been rolled forward into the action plan arising from his 2021 Chair’s Review. This was an extensive piece of work carried out at the request of the Secretary of State, and his recommendations for further actions to improve Board oversight of key Agency decision making will be reflected in the Board Effectiveness Action Plan for 2021/22.
Board information
All Board Members are provided with timely and appropriate updates on corporate governance developments, legislative and regulatory changes, resource effectiveness and relevant industry related information.
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 is 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 it is fair, balanced and understandable.
Governance statement
We are a Non-Departmental Public Body sponsored by MHCLG. Our relationship with MHCLG, 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 decisionmaking arrangements; and
- sets out the financial and management processes that govern our operation.
There have been no fundamental changes to this Framework document in the period.
Homes England has complied with the Corporate Governance in central Government Departments: code of good practice.
Risk management and internal control
Homes England is frequently active in areas of the residential market which are considered unattractive by commercial organisations. A substantial portion of our activity within our Strategic Delivery Plan is therefore exposed to inherently higher risk than the broader market.
Our risk management is underpinned by the need to transparently and openly discuss and acknowledge the risks we take, while ensuring we have an appropriately approved risk appetite in place against which to measure these risks. Our risk management systems have been in place for the year under review and up to the date of approval of the Annual Report and accounts.
Our governance structure provides points of escalation for risks and issues from the operational layers of the business and duly empowered forums and individuals, with the required delegated authority to make and be held accountable for risk management decisions.
Our Executive Team is responsible for managing risk in the organisation, overseen by Homes England’s Board and its specialist Audit and Risk Committee. The Risk and Assurance Corporate Group provide an additional level of risk oversight for the Executive team.
Homes England is aware of the huge responsibility it has to support housing delivery in areas of greatest need and is transforming itself as an organisation in order to achieve this.
Risk culture
As stated in our new Risk Management Framework, a robust organisational risk culture is demonstrated through the tone from the top. All colleagues are encouraged to actively engage in risk management.
Acting as role models, our Board and Executive lead by example to encourage and motivate others to do the same. Risk is incorporated into decision making at all levels and is not an afterthought.
As a public sector organisation that exists to accelerate the delivery of housing across England, we have the capacity, capability and relationships needed to disrupt and rebalance the housing market.
Although a substantial portion of our activity is inherently higher risk than the broader market, we are committed to our ethos of being innovative, brave and using effective mitigation to offset risks to achieve our mission and objectives. This is reflected in our Risk Appetite Statement.
We believe that a positive risk culture exists when everyone understands our approach to risk, takes personal responsibility to manage risk in everything they do and encourages others to follow their example.
There is a no blame culture which recognises the need to learn and evolve through experience and practice, using risk management as one of the tools to help us achieve our strategic objectives.
In their annual opinion, our internal auditors highlighted issues in relation to the operation of risk management processes across the organisation, the lack of infrastructure and systems to support effective risk management, limitations in the use of risk data, visibility and consideration of the most significant risks by the Board. Assurance activities and consensus around roles and responsibilities and the application of the three lines of defence model were also identified as areas for improvement.
Actions to address these issues are crossAgency and reflect the priority areas identified as the focus for 2021/22 by our Audit and Risk Committee. Progress in strengthening these areas will be reported in next year’s Annual Report and accounts.
More widely, risk culture remains a focus of continuous improvement. A new Risk Management Framework has recently been introduced and features risk culture in far more detail than previous versions. The Risk education plan also includes training and education tools to support a shift in culture; and our Risk Events and Near Miss Policy is specific on the Agency operating a ‘no blame’ culture to support risk maturity.
Working with our sponsor department
There is a comprehensive range of interaction between Homes England and MHCLG from a risk perspective.
The chair of the Homes England Audit & Risk Committee attends the MHCLG Audit, Risk & Assurance Committee and provides that committee with his independent update of risk matters within the Agency. There is also regular discussion between the Chief Risk Officers of the respective organisations, both scheduled and unscheduled. This facilitates an exchange of risk information and views independent of the delivery teams.
Detailed risk information is provided on a regular basis to MHCLG as part of the Agency’s comprehensive management information package. This is the same level of risk information as shared with the Agency’s Executive and Board. In addition, senior MHCLG officials attend all Homes England Audit & Risk Committee meetings and have full access to all committee papers submitted and the discussions held therein.
At a working level, the two Risk teams liaise closely with each other wherever MHCLG approval is required for Homes England transactions. They have direct line of sight on various questions and clarifications sought by officials; and work closely to address these.
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 segmented into secondary risk categories for analytical purposes.
Our Risk Appetite identifies our overall willingness to assume, or be exposed to, a level of risk for each of our seven primary risk categories.
Our ‘risk level’ is informed by and aligned to the overarching principles of the Board’s Risk Appetite Statement. This, combined with the use of Risk and Control Assessment (RACA) tools across the business, provide the organisation with an industry-standard method of assessing, controlling and monitoring risks on an ongoing basis.
Following a comprehensive review, in May 2021 our Board approved a revised Risk Taxonomy and Risk Appetite Statement for implementation over the coming Financial Year.
Policy Risk
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.
Economic Risk
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 countercyclical decisions to support the housing market, investing money and introducing products if needed even in difficult economic conditions.
Strategic Delivery Risk
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.
Operational Risk
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.
Fiduciary Risk
Risk of failing to comply with regulation or prevent financial crime or misconduct with the customers, leading to losses / 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.
Reputational Risk
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.
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 – the two main areas of Operational Risk currently outside risk appetite are longstanding issues in relation to legacy digital systems and data quality, integrity, availability and reporting.
We have a Service Transformation Programme (STP) underway which will address system deficiencies which contribute to these core operational risk issues. However, this is a longterm programme of improvement, with a four to five-year delivery timetable. Furthermore, for these system improvements to materially impact the underlying operational risks we need to see a stronger level of business grip across a range of day to day activities. This is particularly the case within the Help to Buy programme where increased executive and board focus is being applied to improving the controls within their operating environment.
During this year, STP prioritised digital improvements for our Help to Buy programme. Elsewhere process and structure improvements have been completed across a wide range of digital services; and system resilience has been strengthened. The parallel work required to improve operational grip is taking place with enhanced oversight from the executive introduced during the year. However, we remain outside appetite.
Fiduciary Risk – we remained outside appetite for Fiduciary Risk at the commencement of the year due to specific issues identified within the Help to Buy programme. This included risks associated with financial promotions, customer due diligence (for new and existing consumers and developers), the screening of politically exposed persons, sanction compliance and wider financial crime due diligence for developers. Last year the Executive agreed funding that will support the Agency to reduce our risk exposure to within our fiduciary risk appetite. Progress is underway to improve our current investigative and detective control environment using external suppliers to address these issues; however, timescales for project completion have slipped due to procurement delays. We anticipate this risk will be within risk appetite in early 2021/22.
Principal Risks
During the year key issues which could impact on the strategic objectives of our organisation were discussed and agreed by our Executives. Nine strategic risks were identified for further assessment and discussion with our Audit and Risk Committee. It was agreed that whilst some overlap was identified, the following risks would be recorded as our current ‘principal risks’. These risks will be reviewed by our Board in July 2021.
| Principal Risk | Theme | Details | Primary risk alignment | Risk Appetite |
|---|---|---|---|---|
| 1 Mission & Objectives | Strategic intent | Risk that Government policy decisions could reverse Homes England’s direction of travel from a ‘mission led’ to a ‘programme focused’ Agency | Policy | Open |
| 2 Relationship with Sponsor department | Strategic intent | Risk of failing to maintain a productive and effective relationship with the Sponsor department | Policy | Open |
| 3 Stakeholder relationships - Government | Strategic intent | Risk that Homes England is unable to maintain a productive relationship across Government. | Policy | Open |
| 4 Funding | Resources | Risk that there is a misalignment between Homes England’s budget settlement and Government policy. | Policy | Open |
| 5 Capacity & Capability | Resources | Risk that the Agency does not have sufficient resources to deliver strategic objectives. | Operational | Averse |
| 6 Value for Money | Resources | Risk that we are unable to demonstrate Value for Money. | Strategic Delivery | Open |
| 7 Macro-economic Conditions | Economy | Risk that the Agency is not prepared to respond agilely to market needs by taking countercyclical decisions to support the housing market | Economic | Open |
| 8 Stakeholder Relationships - Commercial Partners | Commercial | Risk of ineffective management of commercial stakeholders. | Strategic Delivery | Open |
| 9 Change management | Transformation | Risk that the Agency is not prepared and unable to execute organisational change. | Strategic Delivery | Open |
Two Principal Risks currently fall outside our stated appetite.
Change Management – this is outside our appetite due to the interdependencies between key strategic change projects and the requirement to manage these within clear strategic objectives.
Capacity and Capability – this is the risk that we have insufficient capacity and/or skills, or are not utilising them effectively. This is due to gaps in skills and capability along with limited flexibility in the resourcing model to prioritise and allocate resources in areas of business need.
In May 2021 our Executives appointed control improvement owners to specifically deliver a series of cross-organisation mitigation plans to return these risks to appetite. Progress will be reported each quarter as each Principal Risk is reviewed.
Significant organisational design change has continued over the last 12 months to support a new operating model and ensure we are an efficient and effective team. This change is ongoing and we have developed and are implementing a Service Transformation Plan to address those areas where we are outside our operational risk appetite.
The potential impact of COVID-19 on our workforce and on the delivery of our strategic objectives has been continually assessed over the last 12 months across the following key areas:
- The health, safety and wellbeing of our colleagues and delivery partners.
- Disruption to our corporate services (including digital resilience).
- Short to medium-term strategic delivery risks.
- Medium to long-term strategic delivery risks.
At the onset of the pandemic, early and effective changes to the way we work helped to significantly mitigate disruption to our corporate services and maintain wellbeing across our workforce.
At the beginning of this financial year, nearly all residential construction activity in England had halted; however, within weeks of the initial lockdown the Government encouraged builders and developers to resume operations where effective social distancing could be maintained on site.
A number of unprecedented Government interventions were also introduced to stimulate economic growth, including reduced rates of Stamp Duty Land Tax for residential properties for part of the year.
Our risk management strategy during this unprecedented period has been to maintain continuous engagement with our partners to understand their ongoing delivery risks and to discuss whether targeted support was required.
Risks associated with the UK’s transition period from the EU and the new trade agreement were also closely monitored for potential impact on our delivery partners; and especially issues which could affect the smaller builders and developers with whom we engage.
Although we noted there were transition issues reported by trade bodies in relation to labour shortages, material delays and increased construction costs, the impact on our delivery partners was minimal during this period.
In addition to COVID-19 and transition risks our ‘business as usual’ risks have not been ignored. This includes risks associated with:
- The overall arrangements for governance, oversight and assurance in relation to Help to Buy (the Agency’s key equity loan product).
- Operational practices within the service chain for Help to Buy.
- Improving the resilience and security of the organisation’s data and information.
- Operational processes to ensure that the organisation will comply with key regulatory requirements.
- Arrangements to support the change ambitions of the organisation and its growth to meet its expanding remit.
- Effective processes to confirm the delivery of outputs and demonstrate our achievements.
- Progressing the organisation’s monitoring, management and reporting of risks against its stated risk appetite.
Risk Management Framework
In line with the principles set out in HMT’s Orange Book guide to risk management Homes England has a Three Lines of Defence risk management model across the organisation, enabled by an expansion of Homes England’s Risk Directorate. This has continued to be iterated during the course of the current year and further work is required to fully embed these practices across the Agency. This work will continue as part of the ongoing Risk Enhancement Plan, referred to earlier, which looks at business engagement, risk processes, education and training within its multiple workstreams.
Within the Three Lines of Defence model, the First Line refers to all staff; everyone is responsible for identifying, assessing, managing and owning the risks in their individual business areas. The Second Line refers to the Risk Directorate, and other areas which identify, monitor, measure and report on risks across the organisation as well as provide assurance on and establish standards for the effectiveness of systems and controls relative to the Board’s Risk Appetite. The Third Line refers to internal audit, which provide assurance on the wider organisation.
The Risk Management Framework is an umbrella document below which other business and activity specific frameworks sit. The Framework is part of a suite of documents which includes our Risk Taxonomy, Risk Appetite Statement and directoratespecific guidance and policy that specifies how risk is monitored and escalated across the organisation. Homes England has tailored its approach to developing activity-specific frameworks for the business to concentrate on more relevant risk management policies whilst the organisation goes through continued change.
We reviewed the Framework during 2020/21 to ensure it meets the organisation’s strategic and operational risk management needs and aligns with current best practice. This revised Framework was approved by our Executive and Board in May 2021.
Integrated Assurance Framework
In 2020/21 Homes England developed and is implementing an Integrated Assurance Framework to organise, plan, deliver and report on assurance activities.
Internal Audit opinion
Internal Audit is required to provide an annual opinion to the Accounting Officer, on the overall framework of governance, risk and control. It delivers a plan of work agreed with myself as the Accounting Officer to provide this overall assurance opinion.
The overall assurance provided for 2020/21 was a “Limited” opinion. This means that there are significant weaknesses in the frameworks of governance, risk management and control such that it could be or could become inadequate and ineffective.
The drivers of this opinion were the output of Internal Audit’s assurance work; their assessment of the operation and effectiveness of Risk Management processes; current key influencing factors (i.e. continued lockdown, environmental factors, operational constraints and the current pace of internal and external change); and the effectiveness of the organisation in remediating key issues over the year.
This opinion level is informed through formal Internal Audit reviews as well as ongoing activity, observations and the regular review and validation of control improvement activity and intelligence monitored in relation to risk exposure. Internal audit completed 28 assignments for the workplan period ended May 2021 which have raised recommendations for control improvements in key areas. Internal Audit have also highlighted a number of underlying key themes for the organisation to address to improve the control environment. These include areas such as management of the service chain for the Help to Buy loan book, effective prioritisation and targeting of the organisations transformation programme, improvements to risk management processes and culture, more effective data and decision making processes as well as effective use of organisational capacity and resource.
We have reflected upon this Limited opinion, which shows the cumulative effect of the many changes and pressures affecting the Agency this year. Our annual performance has remained sturdy in comparison to the year on year falls in starts and completions seen in the market, even as the world has changed. We have also managed to grow our workforce by 30% in one year, to meet the expanded remit given to us by the Government, and have launched new programmes and expanded the scope for others. However, as these audit findings made clear, we are 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.
So, this opinion is not surprising. We are determined that, now we have been able to fill our senior vacancies and re-focus our transformation programme upon system and data improvements, and have benefited from the perspectives of our new Chair, we can address them, and will improve in all these areas in 2021/22.
The Chair joined us in October 2020 and spent his initial months at the Agency getting to know what drives our work, how we go about it and the valuable things we achieve. He wrote a Review for the Secretary of State which gave a positive view of the Agency, but with recommendations covering what more the Agency can do to work with partners and deliver more homes; and how the Agency’s internal performance and operations can be improved.
We also know that the Government has yet more significant ambitions for us, which we will need to take on in future, and more work will be needed to meet those expectations.
Whistleblowing
Homes England’s ‘Whistleblowing Policy’ includes contact details for our colleagues. The Nominated Board Champion and external bodies (e.g. Prescribed Persons such as the NAO and the independent whistleblowing charity Public Concern, Protect) can be contacted by a colleague who wishes to make a disclosure under our Policy. Colleagues are encouraged to raise concerns informally to their line managers first (if they wish). As an organisation that has been through significant change, we continue to ensure that colleagues are able to escalate risks and concerns as they are identified. A review of our Policy is currently underway, including benchmarking to assess effective engagement and communication of our Policy. Protect, the UK’s whistleblowing charity, has been contacted as part of this assessment. There was 1 case reported in relation to whistleblowing. This case was received, investigated, and sent to an Executive Director for review. There was no evidence to substantiate the allegations made and the case was closed.
Conclusion
Based on assurances received from senior management and from reporting covering the three lines of defence, we believe that we have complied appropriately with governance requirements, such as the Governance code as set out by HM Treasury. The Board recognises the Limited Assurance opinion, which reflects weaknesses in some of the arrangements for risk management and the system of internal control across the Agency. These areas for necessary improvement are subject to approved improvement plans for 2021/22, as set out elsewhere in this statement.
The Corporate Governance report is signed on 14 July 2021 by Gordon More, Interim Chief Executive and Accounting Officer.
Remuneration and staff report
Nominations and Governance Committee
The Nominations and Governance Committee has the following responsibilities:
- Advise the Chair, the Board, and the Accounting Officer on overall pay and rewards, the remuneration, contractual and pension arrangements of staff at Director level and above, and any related matters.
- Recommend the appointment or dismissal of the Chief Executive to the Board.
- Set and agree annual performance objectives, remuneration terms and other terms and conditions of employment of the Chief Executive, subject to MHCLG approval.
- Consider and approve the incentive structure, including any bonus payment, for the Chief Executive and other Senior Officers on an annual basis, subject to MHCLG approval.
- Annually review the structure, size and composition (including the skills, knowledge, experience and diversity) of the Board and make recommendations to the Board with regard to any changes.
- Keep under review the leadership needs of the organisation, both executive and non-executive. Ensuring the systems of succession planning are in place to support the continued ability of the organisation to deliver the outcomes in corporate strategy.
- Consider and advise the Board on broader staffing issues, such as recruitment and retention, overall pay levels and performance awards, and any other staffing matters that are referred to the Committee by the Executive.
- Monitor and approve the Agency’s staffing situation against the organisational structure and revenue budget agreed by the Board, and in relation to any directions laid down by MHCLG.
- Ensure Policies and Procedures are in place consistent with the Cabinet Offices Model Code for Staff of Executive NonDepartmental Public bodies.
Remuneration policy
We determine remuneration levels in order to attract and retain key management personnel with appropriate experience and skills to meet our objectives. The performance of Homes England’s key management team is measured through both financial and non-financial indicators. In line with our performance policy, employees agree annual performance objectives which are reviewed mid-year and provide the basis for a formal annual appraisal which is linked to the payment of performance bonuses.
Key managers and employees are entitled to a contribution by Homes England to a defined benefit pension scheme.
Homes England implements an annual pay remit which is approved by the Secretary of State.
Service contracts
Our Accounting Officer and Key Managers have open-ended service contracts with three-month notice periods that do not contain any pre-determined compensation on termination of office. The exception to this is Christopher Kinsella, who was contracted through an employment Agency. Christopher left the Agency on 3 April 2020.
Appointment of Board Members
Board Members are appointed by the Secretary of State, normally for fixed terms of three years. Terms may be extended at the discretion of the Secretary of State. Board Members’ time commitment was 3 days per month in 2019/20 and 2020/21.
Audited remuneration information
The following information provides details of the remuneration and pension interests of Board Members and Key Managers in their capacity as employees of Homes England for the year to 31 March 2021. Sections that are subject to audit are listed as such.
| 2020/21 £’000 | 2019/20 £’000 | |
|---|---|---|
| Chair | ||
| Peter Freeman (from 23 October 2020) [1] | 42 | n/a |
| Simon Dudley (Interim from 14 August 2019 to 22 October 2020) [2] | 34 | 44 |
| Sir Edward Lister (to 6 August 2019) [3] | 2 | 18 |
| Board Members | ||
| Keith House (to 31 October 2020) [4] | 15 | 25 |
| Stephen Bell [5] | 42 | 42 |
| Simon Dudley (from 23 October 2020) [2] | 11 | 12 |
| Teresa O’Neill | 25 | 25 |
| Duncan Sutherland | 25 | 25 |
| Olivia Scanlon (from 22 July 2019) [6] | 25 | 17 |
| Mark Rennison (from 22 July 2019) [7] | 33 | 20 |
| Richard Blakeway (to 31 August 2019) [6] | n/a | 10 |
| Ceri Smith (to 12 March 2020) [8] | n/a | - |
| Andy Hobart (from April 2020) [9] | - | n/a |
1 Full year equivalent emoluments in 2020/21 were £95,000.
2 Simon Dudley was a Board Member until his appointment as the Interim Chair from 14 August 2019 to 22 October 2020. Full year equivalent emoluments were £69,000 for this role. From 23 October 2020 Simon resumed his duties as a Board Member. Full year equivalent emoluments for this role were £25,000.
3 In 2020/21, Sir Edward Lister received £2,400 in relation to an underpayment of salary from 2019/20. Full year equivalent emoluments in 2019/20 were £69,000.
4 Full year equivalent emoluments in 2020/21 were £25,000.
5 In addition to being a Board Member, Stephen Bell is the Chair of the Audit and Risk Committee. He is also the Agency’s representative on MHCLG’s Audit, Risk and Assurance Committee (ARAC).
6 Full year equivalent emoluments in 2019/20 were £25,000.
7 In addition to being a Board Member, Mark Rennison is the Chair of the Investment Committee. Full year equivalent emoluments for 2019/20 were £33,000.
8 Ceri Smith, Director of UK Government Investments (UKGI), was appointed to the Board as MHCLG’s shareholder representative member from 1 November 2018 to 12 March 2020. He did not receive a salary for his duties.
9 Andy Hobart, a Director at MHCLG, was appointed to the Board as MHCLG’s shareholder representative member from 30 April 2020. Although Andy’s term completed on 31 July 2020, he will be staying in the role until a new appointment is made. He did not receive a salary for his duties.
Chief Executive’s emoluments (subject to audit): single total figure of remuneration
| Salary received in 2020/21 (£’000) | Salary received in 2019/20 (£’000) | Bonus payments 2020/21 (£’000) [7] | Bonus payments 2019/20 (£’000) [7] | Benefits in kind (to nearest £100) 2020/21 | Benefits in kind (to nearest £100) 2019/20 | Pension benefits (£’000) [*] 2020/21 | Pension benefits (£’000) [*] 2019/20 | Total (£’000) 2020/21 | Total (£’000) 2019/20 | |
|---|---|---|---|---|---|---|---|---|---|---|
| Nick Walkley (to 28 February 2021) [1] | 290-295 | 215-220 | 20-25 | nil | nil | nil | 63 | 46 | 375-380 | 260-265 |
| Gordon More Interim Chief Executive Officer (from 1 March 2021) & Chief Investments Officer (to 28 February 2021) [2] | 210-215 | 210-215 | Nil | 15-20 | nil | nil | nil | nil | 210-215 | 225-230 |
Key Managers’ emoluments (subject to audit): single total figure of remuneration
| Salary received in 2020/21 (£’000) | Salary received in 2019/20 (£’000) | Bonus payments 2020/21 (£’000) [7] | Bonus payments 2019/20 (£’000) [7] | Benefits in kind (to nearest £100) 2020/21 | Benefits in kind (to nearest £100) 2019/20 | Pension benefits (£’000) [*] 2020/21 | Pension benefits (£’000) [*] 2019/20 | Total (£’000) 2020/21 | Total (£’000) 2019/20 | |
|---|---|---|---|---|---|---|---|---|---|---|
| Harry Swales, Chief Investments Officer (Interim from 8 March 2021; Permanent from 14 June 2021) & Director of Markets, Partners & Places (from 3 February 2020 to 7 March 2021) [3] | 165-170 | 20-25 | nil | nil | 5,200 | 6,200 | 55 | 4 | 225-230 | 35-40 |
| Stephen Kinsella Chief Land and Development Officer | 200-205 | 200-205 | nil | 15-20 | 5,200 | 6,300 | 38 | 39 | 245-250 | 260-265 |
| Amy Casterton Chief of Staff | 115-120 | 105-110 | nil | 10-15 | nil | nil | 24 | 24 | 140-145 | 140-145 |
| Lynda McMullan Chief Finance Officer (from 30 June 2019) [4] | 165-170 | 125-130 | nil | nil | nil | nil | 37 | 29 | 205-210 | 155-160 |
| Lou Downe Director of Service Design & Transformation (from 28 June 2019 to 30 November 2020) [5] | 115-120 | 95-100 | nil | nil | nil | nil | 19 | 22 | 135-140 | 115-120 |
| Paul Kitson Interim Director of Markets, Partners & Places (from 8 March 2021) [6] | 5-10 | n/a | nil | n/a | 8,700 | n/a | nil | n/a | 15-20 | n/a |
| Christopher Kinsella Interim Executive Director of Markets Places & People and Help to Buy (from 15 July 2019 to 3 April 2020) | 0-5 | 250-255 | nil | nil | nil | nil | nil | nil | 0-5 | 250-255 |
| Tracie Langley Interim Corporate Services Director (from 25 February 2019 to 20 December 2019) | n/a | 140-145 | n/a | n/a | n/a | n/a | n/a | n/a | n/a | 140-145 |
| Tom Walker Deputy Chief Executive and Executive Director of Strategy (to 30 June 2019) | n/a | 30-35 | n/a | nil | n/a | nil | n/a | nil | n/a | 30-35 |
| Mark Gray Chief Risk Officer (from 25 February 2019 to 31 March 2020) | n/a | 215-220 | n/a | nil | n/a | nil | n/a | 40 | n/a | 255-260 |
* The pension benefits figure is an actuarially assessed calculation. It attempts to reflect the benefits earned by the employee during the year from the scheme and is impacted by salary fluctuations and length of service.
1 Remuneration received during the year includes unused holiday entitlement (£20,000-£25,000), a pay award for the period 1 July 2020 to 31 January 2021 (£10,000-£15,000) and a payment in lieu of notice of £55,000-£60,000. The bonus received in year related to 2018/19, having been approved by the Secretary of State in June 2020. The notice period foregone covered 3 months from the date of departure. Full year equivalent emoluments for 2020/21 were £230,000-£235,000.
2 Gordon More was appointed Interim Chief Executive Officer on 1 March 2021. Prior to this appointment he was the Chief Investments Officer. His full year equivalent emoluments for 2020/21 for both roles were £210,000-£215,000.
3 Harry Swales was appointed Interim Chief Investments Officer on 8 March 2021 which became permanent on 14 June 2021. Prior to this appointment, he was the Director of Markets, Partners & Places. His full year equivalent emoluments for 2020/21 for both roles were £160,000- £165,000. Remuneration received during the year includes a backdated salary adjustment relating to 2019/20 of £0-£5,000. His full year equivalent emoluments for 2019/20 were £160,000-£165,000.
4 Full year equivalent emoluments for 2019/20 were £165,000-£170,000.
5 Remuneration includes a payment in lieu of notice of £30,000-£35,000. Full year equivalent emoluments for 2019/20 and 2020/21 were £125,000-£130,000.
6 Full year equivalent emoluments for 2020/21 were £130,000-£135,000.
7 Bonuses disclosed relate to amounts paid during the year.
Salary
Basic salaries are determined by taking into account each individual’s responsibilities, performance against agreed objectives and experience together with market trends. Salary includes base remuneration and overtime. It may also include a London Weighting allowance, additional responsibility allowance or a market pay supplement if applicable.
The Secretary of State determines the Board Members’ emoluments.
Performance related pay
The Agency complies with the direction from the Secretary of State on eligibility of a performance related bonus. The Chief Executive and Key Managers benefit from a performance related pay scheme whereby any bonuses are determined with reference to performance against agreed objectives during a performance year running from April to March. The bonus cannot exceed 10% of salary and is the only element of pay that is performance related.
The Chair is not eligible for performance related payments or other taxable benefits as a result of his appointment.
The Chief Executive has an entitlement to an annual performance related bonus based upon the achievement of targets agreed by the Nominations and Remuneration Committee. The Committee reviews performance against targets and recommends a performance related bonus for approval by the Secretary of State.
Benefits in kind
The monetary value of benefits in kind covers any benefits provided by the employer and treated by HM Revenue and Customs as a taxable emolument. They are in respect of lease cars.
Pension benefits (subject to audit)
Chief Executive and Accounting Officer
Nick Walkley was appointed as the permanent Chief Executive on 1 March 2017 until 28 February 2021. He was a member of the Homes & Communities Agency Pension Scheme. Gordon More was appointed as the Interim Chief Executive on 1 March 2021. He is not a member of any of the Agency’s pension schemes.
Key managers
| Accrued annual pension at 31 March 2021 (£’000) | Real increase in accrued annual pension (£’000) | Accrued lump sum at 31 March 2021 (£’000) | Real increase / (decrease) in accrued lump sum (£’000) | CETV 31 March 2021 (£’000) | CETV 31 March 2020 (£’000) | Real increase/ (decrease) in CETV (£’000) | |
|---|---|---|---|---|---|---|---|
| Nick Walkley [1] | 10-15 | 2.5-5 | 35-40 | 10-12.5 | 392 | 233 | 100 |
| Stephen Kinsella | 5-10 | 0-2.5 | 25-30 | 5-7.5 | 282 | 174 | 63 |
| Amy Casterton | 0-5 | 0-2.5 | 5-10 | 2.5-5 | 93 | 37 | 39 |
| Lou Downe [2] | 0-5 | 0-2.5 | 5-10 | 2.5-5 | 68 | 31 | 26 |
| Lynda McMullan | 0-5 | 0-2.5 | 10-15 | 5-7.5 | 123 | 45 | 60 |
| Paul Kitson [3] | 15-20 | - | 55-60 | - | 631 | 615 | - |
| Harry Swales | 10-15 | 2.5-5 | 35-40 | 7.5-10 | 417 | 239 | 91 |
1 Nick Walkley left the Agency on 28 February 2021. Pension figures have been calculated to the date of departure.
2 Lou Downe left the Agency on 30 November 2020. Pension figures have been calculated to the date of departure.
3 Paul Kitson was appointed as a Key Manager on 8 March 2021. However, he was an employee of Homes England prior to this and therefore pension figures above cover all periods of employment with the Agency.
The Chief Executive and Key Managers are eligible to participate in the Homes & Communities Agency Pension Scheme, which is a multi-employer defined benefit scheme. The Chair is not entitled to be a member of any of the Agency’s pension schemes. With the exception of Gordon More, who is not an active member of a pension scheme, all Key Managers in post at 31 March 2021 are active members of the Homes & Communities Agency Pension Scheme.
Accrued pension at 31 March 2021
The accrued pension entitlement is the pension which would be paid annually on retirement, based upon pensionable service to 31 March 2021.
Cash Equivalent Transfer Value (CETV) 31 March 2021
The transfer values are the actuarially assessed capitalised value of pension scheme benefits. It is an amount payable by a pension scheme or arrangement to secure pension benefits in another pension scheme or arrangement when the member leaves a scheme and chooses to transfer the benefits accrued in their former scheme. The figures shown relate to benefits that the individual has accrued as a consequence of their total membership of the pension scheme and not just the service in a senior capacity to which disclosure applies.
The real increase in CETV reflects the increase in CETV that is funded by the employer. It does not include the increase in accrued pension due to inflation, contributions paid by the employee (including the value of any benefits transferred from another pension scheme or arrangement) and uses common market valuation factors for the start and end of the period.
Termination payments (subject to audit)
Termination payments to Key Managers in 2020/21 were £nil . They were also £nil in 2019/20.
Staff costs (subject to audit)
| Staff costs: permanent staff employed directly by the Agency | 2020/21 (£’000) | 2019/20 (£’000) |
|---|---|---|
| Salaries and wages | 66,378 | 52,445 |
| Social security costs | 7,558 | 6,038 |
| Other Pension costs | 25,578 | 21,606 |
| Sub total | 99,514 | 80,089 |
| Temporary staff | 9,520 | 6,120 |
| Seconded staff | 557 | 545 |
| Less staff costs capitalised: Land and Property | (7,153) | |
| Less staff costs capitalised: PPE and intangible assets | - | (9) |
| Less staff costs transferred to programme costs | (2,010) | - |
| Total net costs | 100,428 | 86,745 |
Redundancy costs are disclosed within administration expenditure in note 9 to the Financial Statements. An analysis of exit packages is shown below.
Staff composition (subject to audit)
The average number of staff employed by the Agency (full time equivalents) over the course of the year is as follows:
| 2020/21 Number | 2019/20 Number | |
|---|---|---|
| Permanent UK staff | 1,088 | 914 |
| Fixed term UK staff | 81 | 69 |
| Temporary staff | 80 | 55 |
| Seconded staff | 4 | 4 |
| 1,253 | 1,042 |
The number of staff (full time equivalents) by salary pay band, using an average for the year, is as follows:
| 2020/21 Number | 2019/20 Number | |
|---|---|---|
| £0 - £25,000 | 95 | 115 |
| £25,001 - £50,000 | 450 | 397 |
| £50,001 - £75,000 | 505 | 397 |
| £75,001 - £100,000 | 129 | 73 |
| £100,001 - £125,000 | 42 | 25 |
| £125,001 - £150,000 | 21 | 17 |
| £150,001 - £175,000 | 6 | 9 |
| £175,001 - £200,000 | 1 | 2 |
| £200,001 - £225,000 | 3 | 6 |
| £225,001 - £250,000 | 0 | 0 |
| £250,001 - £275,000 | 0 | 0 |
| £275,001 - £300,000 | 1 | 1 |
| 1,253 | 1,042 |
Gender analysis
The gender of current Key Managers and employees can be analysed as follows:
| 2020/21 Number | 2019/20 Number | |
|---|---|---|
| Key Managers – Male | 5 | 6 |
| Key Managers – Female | 2 | 2 |
| Key Managers – Non-binary/ Other gender non-conforming | 1 | 1 |
| Key Managers | 8 | 9 |
| Other employees – Male | 644 | 526 |
| Other employees – Female | 601 | 507 |
| Other employees | 1,245 | 1,033 |
| 1,253 | 1,042 |
The HMRC definition of gender has been used for this analysis so that it is aligned with our Gender Pay Gap report. This requires us to categorise our colleagues as male and female. At Homes England, we recognise that gender identity is broader than simply male and female, and we know that some of our colleagues do not identify with either category. Whilst we must report in this way, we value, welcome and celebrate colleagues of all gender identities at Homes England, and are looking at ways in which the way we report on gender in the future can be improved.
At March 2021 our mean gender pay gap was 13.2% and our median gap was 7.9%. This is a positive improvement from March 2020, where our mean pay gap was 16.9% and our median gap was 15.3%.
Our full gender pay gap report will contain a more detailed analysis on the reasons for our gap, and why we have seen an improvement. We will also set out our commitments on closing the gap further.
Median salary (subject to audit)
Homes England is required to disclose the relationship between the remuneration of its highest-paid director and the median remuneration of its workforce.
The banded remuneration of the highest-paid director in Homes England, Nick Walkley, in the financial year 2020/21, was £310,000- £315,000 (2019/20: Christopher Kinsella £250,000-£255,000). This figure includes remuneration earned during the year of £290,00-£295,000 plus a non-consolidated bonus of £20,000-£25,000. The mid-point of this band was 5.8 times (2019/20: 4.8 times) the median remuneration of the workforce, which was £53,419 (2019/20: £52,455).
The increase in the ratio from 4.8 last year to 5.8 this year relates to the increase in the remuneration of the highest paid Director. Specifically, Nick Walkley received a payment in lieu of notice of £55,000-£60,000 and a payment for unused holiday entitlement accrued to the date of departure of £20,000- £25,000. Excluding these other payments, the median pay ratio for the year was 4.4.
Remuneration ranged from £15,000-£20,000 to £310,000-£315,000 (2019/20: £15,000- £20,000 to £250,000-£255,000). In 2020/21, no employees (2019/20: nil) received remuneration in excess of the highest-paid director.
Total remuneration includes salary, nonconsolidated performance-related pay and benefits-in-kind. It does not include severance payments, employer pension contributions and the cash equivalent transfer value of pensions.
Exit packages (subject to audit)
Redundancy and other departure costs have been determined in accordance with a voluntary redundancy scheme approved by MHCLG, Homes England’s sponsor department. Exit costs are accounted for in full when the departure has been approved and terms agreed. There have been no Exit packages made in 2020/21.
Voluntary exit costs accounted for in the year can be analysed as follows:
| 2020/21 Departures agreed Number | 2019/20 Departures agreed Number | |
|---|---|---|
| £0 - £10,000 | - | - |
| £10,001 - £25,000 | - | - |
| £25,001 - £50,000 | - | - |
| £50,001 - £100,000 | - | 2 |
| £100,001 - £150,000 | - | - |
| Total number of exit packages | - | 2 |
| Total cost of exit packages (£’000) | - | 188 |
Loans to employees
The Agency has provided travel season ticket loans and cycle scheme loans to employees during the year. The total amount outstanding in respect of these at 31 March 2021 was £19,863. There were no other loans to employees.
Staff turnover percentage
Staff turnover for 2020/21 was 5.85% (2019/20: 10.14%). This can be split between voluntary staff turnover (where staff have left the Agency for a role elsewhere or have retired) and involuntary staff turnover (where staff have left the Agency due to the end of a contractual period or dismissal). Voluntary staff turnover was 4.01% (2019/20: 6.5%). Involuntary staff turnover was 1.84% (2019/20: 3.64%).
Expenditure on consultancy
During the year, the Agency incurred expenditure of £498,588 (2019/20: £173,199) on consultancy, as defined by the Cabinet Office. This is due to vacancies in our operating model. The increase in expenditure this year relates to the additional costs incurred in connection with the preparation of the Annual Business Plan and the Spending Review. The Cabinet Office definition of consultancy can be found at https://www.gov.uk/guidance/ consultancy-spend-controls#definitions.
Apprenticeship Levy
During the year, the Agency contributed £303,000 to the apprenticeship levy to support apprenticeship training and assessment (2019/20: £245,000). The Agency makes use of this Scheme by employing apprentices across teams, creating opportunities for apprentices to forge a career path with Homes England. Apprentices gain real ‘on the job’ experience and are supported through professional qualifications. During the year, the Agency claimed £32,000 from the levy to support apprenticeships.
Off-payroll arrangements
In accordance with the requirements of the Government Financial Reporting Manual (FReM), the Agency is required to publish details of their highly paid and senior offpayroll engagements. The Agency uses off-payroll arrangements for specialist or technical contractors and consultants to address urgent scarce skills gaps.
Temporary off-payroll worker engagements at 31 March 2021
| 2020/21 Number | |
|---|---|
| No. of existing engagements as of 31 March | 66 |
| of which: | |
| No. that have existed for less than one year at time of reporting | 30 |
| No. that have existed for between one and two years at time of reporting | 25 |
| No. that have existed for between two and three years at time of reporting | 4 |
| No. that have existed for between three and four years at time of reporting | 1 |
| No. that have existed for four years or more at time of reporting | 6 |
All temporary off-payroll workers engaged at any point during the year ended 31 March 2021
| 2020/21 Number | |
|---|---|
| No. of off-payroll workers engaged during the year ended 31 March 2021 | 178 |
| of which: | |
| No. determined as in scope of IR35 | 171 |
| No. determined as out-of-scope of IR35 | 7 |
| No. of engagements reassessed for compliance or assurance purposes during the year | 5 |
| Of which: No. of engagements that saw a change to IR35 status following review | 5 |
| No. of engagements where the status was disputed under provisions in the off-payroll legislation | - |
| Of which: no. of engagements that saw a change to IR35 status following review | - |
Off-payroll engagements of Board Members, and/or, senior officials with significant financial responsibility, between 1 April 2020 and 31 March 2021
| 2020/21 Numbe | |
|---|---|
| No. of off-payroll engagements of Board Members, and/or senior officials with significant financial responsibility during the financial year | 1 |
| Total no. of individuals both on and off-payroll that have been deemed ‘Board Members and/or senior officials with significant financial responsibility’, during the financial year | 19 |
Christopher Kinsella, who left the Agency on 3 April 2020, was off-payroll and was considered to have significant financial responsibility.
He was employed on an interim basis whilst permanent recruitment took place. Details of his remuneration, start and end dates and positions held, are included within the Key Managers emoluments table above.
Employee matters
Equality and diversity in employment and occupation
As a Government Agency, Homes England must comply with the Public Sector Equality Duty, which supports good decision-making by ensuring public bodies consider how different people will be affected by our activities, helping us to deliver policies and services which are efficient and effective, accessible to all, and which meet different people’s needs. Further information on how we are meeting our Public Sector Equality Duty can be found in our first annual Equality Diversity and Inclusion report. However, we know that meeting our statutory obligations is not enough and we are going beyond compliance to ensure that equality, diversity and inclusion are engrained into all that we do.
We know that advancing all elements of diversity and inclusion (D&I) plays a part in our wider ambitions to challenge outdated norms and stereotypes throughout the Agency and the sector. We are on a journey of building belonging together and creating an environment where individuality of all kinds are valued. In July 2020 we launched our first Annual Equality, Diversity and Inclusion (ED&I) report, setting out our commitment to create an inclusive organisation and sector that reflects the communities we serve.
The report sets out five key objectives that we aim to collectively achieve by 2024. Our objectives are ambitious and cover the whole reach of our impact, aiming to deliver systematic organisational and cultural change, as well as positively impact the industry and our communities.
We’re focusing on the following five core areas of change:
- Objective 1 (systems focus) – Create a more inclusive colleague experience.
- Objective 2 (internal focus) – Work together to create acceptance and build an inclusive culture.
- Objective 3 (leadership focus) – Leadership commitment and action.
- Objective 4 (external focus) – Work with our partners and suppliers to help create a more inclusive industry.
- Objective 5 (customer focus) – Deliver homes for the communities we serve.
Since the publication of our report in 2020, progress has been made against all objectives, and full details of our progress and our priorities for the next year will be published in our next Annual Equality, Diversity & Inclusion Report.
We are committed to ensuring equality of opportunity for all disabled people who work or apply to work for us. We are a Disability Confident Employer. The Disability Confident scheme aims to help Homes England successfully employ and retain disabled people and those with health conditions. The scheme requires employers to meet several commitments regarding the employment, retention, training and career development of disabled employees. As we make clear in our job application process, we offer disabled people who apply for a post a guaranteed interview provided they meet the minimum criteria for the post.
We have a Disability and Carer’s network and a Neurodiversity network to support, develop and challenge the organisation to increase the number of disabled people employed and address the wider workplace challenges facing disabled employees.
In the event that any employee becomes disabled whilst employed by Homes England, the Health and Safety and Facilities teams, supported by our Occupational Health provider, will make all reasonable and appropriate changes and adjustments to the workplace and working arrangements.
This year we have launched our Workplace Adjustment Passport, which is the culmination of a lot of hard work from our Disability and Carers Network and is something that will be a great support to colleagues with disabilities and their line managers, enabling them to have meaningful conversations and access to the support that they need.
We have made it our mission to make sure that everyone at Homes England is treated fairly and with respect and that opportunities are open to all. We remain committed to creating an inclusive culture, valuing, and supporting diversity of backgrounds, enabling everyone to reach their full potential and ensuring that we stand out as an employer of choice.
Sickness absence
During the year, 1.08% (2019/20: 1.6%) of working days were lost to sickness absence. According to the Office of National Statistics, in the UK labour market as a whole, 1.8% of days were lost due to sickness absence, split 1.6% private sector and 2.7% public sector.
Health and Safety
Home England’s safety performance has remained strong through 2020/21 and its key achievements are set out below.
For the third year running, the Accident Incident Rate (AIR) for reportable injuries under the Reporting of Injuries, Diseases and Dangerous Occurrences Regulations 2013 (RIDDOR) was zero per 100,000 employees as there were no RIDDOR reportable injuries to employees in 2020/21. The AIR for all accidents involving employees was calculated at 143 which is below national Labour Force Survey (LFS) AIR rate of 2,160 injuries per 100,000 employees for 2019/20.
Homes England sets annual corporate health and safety targets for completing risk assessments, training and site inspections and audits. Out of the 20 targets set, 15 were met or exceeded and 5 were missed. Three of the targets that were missed were due to COVID-19 restrictions and the two other targets missed were due to three new employees not completing their health and safety induction training within the required timeframe.
This financial year saw the introduction of social distancing measures to tackle COVID-19. Homes England responded swiftly to protect employees by mandating working from home with immediate effect. The following measures were also introduced:
- We made sure that our employees had access to the necessary workstation equipment, guidance and training at home so they could work safely and comfortably;
- Introduced a permit system to allow employees to leave the home environment to carry out essential work on site or in the office or for genuine wellbeing reasons;
- Made our offices COVID secure through the introduction of one-way systems, signage, screening and desk booking systems to facilitate safe working in the office; and
- Provided ongoing support to colleagues through the wellbeing hub and other initiatives, such as, the employee assistance programme (EAP) and our network of mental health first aiders.
Looking forward to 2021/22, the priorities for Homes England centres around the safe return to the office following the lifting of national restrictions introduced in response to COVID-19.
There will also be continued focus on construction health and safety in our supply chain, not only for projects where we are the client but the wider development, investment and grant portfolio of projects.
Employee engagement
Homes England previously participated in the annual Civil Service people survey, until 2020, when the Civil Service restricted participation. This enabled us to pilot an alternative provider and utilise a digital solution that compliments our Digital First strategy across Homes England. The survey pilot provided us with the opportunity to baseline questions to the areas of focus from the 2019 survey. The new survey approach gave us the opportunity to move to a digital solution and the autonomy to determine the length, frequency, timing, themes and question structure of our survey. We have secured budget approval for a twoyear contract with an engagement partner.
We have taken the decision to measure colleague engagement through the employee Net Promoter Score (eNPS). The eNPS was +14 which is in the range of typical/normal. This equates to an average ‘score’ of 7.6 and is slightly higher than the engagement score of 64% in 2019.
This will be a measurement that we will seek to improve over the next two years. We engaged widely with leaders and supported leaders with the results through presentations from our partner provider and engagement tool kits for leaders and Directorates. Each Directorate will deliver their own action plan focused on a few core areas of priority. We will be reassessing our overall employee engagement strategy in 2021 and making the transition to shorter, more focused surveys that enable us to hear and respond to feedback in a more ‘real-time’ approach to continually improve the colleague experience.
Trade union relationships
Homes England formally recognises three trade unions – Unite, PCS and Unison – with whom the organisation consult over pay, policies and procedures, working conditions and related issues. Regular meetings take place between management and elected union representatives, called Joint Negotiation and Consultation Committee meetings, on a cycle of approximately six weeks.
As a public sector body with more than 49 FTE employees, Homes England are required to make a number of disclosures regarding Trade Union Facility Time. This information is set out in the following tables:
Relevant union officials
| 2020/21 Number | |
|---|---|
| Number of employees who were relevant union officials during the relevant period | 7 |
| Full-time equivalent employee number | 7 |
Percentage of time spent on facility time
| 2020/21 Number | |
|---|---|
| 0% | - |
| 1 - 50% | 7 |
| 51% - 99% | - |
| 100% | - |
Percentage of pay bill spent on facility time
| 2020/21 Number | |
|---|---|
| Total cost of facility time (£’000) | 39 |
| Total pay bill (£’000) | 64,959 |
| Percentage of the total pay bill spent on facility time, calculated as: (total cost of facility time ÷ total pay bill) x 100 | 0.06% |
Paid trade union activities
For the period 2020/21, there were no (0%) paid facility time spent on paid trade union activities.
Parliamentary Accountability and Audit report
Losses and Special payments (subject to audit)
In accordance with the provisions of the Accounts Direction, the Agency has summarised all losses and special payments requiring disclosure, recognised during the course of the financial year, as follows:
| Cases 2020/21 | £’000 2020/21 | Cases 2019/20 | £’000 2019/20 | |
|---|---|---|---|---|
| Total of all losses and special payments | 26 | 3,615 | 77 | 54,338 |
| Cases over £300,000: | ||||
| Loans written off or impaired | 2 | 2,517 | 6 | 53,447 |
Under International Financial Reporting Standard 9: Financial Instruments (IFRS 9), the Agency is required to consider whether a financial asset investment meets the definitions of a basic lending arrangement in order to establish whether the investment should be measured at Amortised Cost or at Fair Value.
For assets which are measured at amortised cost, a write-off amount is recognised in the financial statements when it is considered that there is no realistic prospect of full recovery.
There are also a number of loan investments which are managed operationally in line with the Agency’s loan management processes, however, from an accounting point of view are measured at Fair Value Through Profit or Loss. Where it has been assessed that there is no realistic prospect of full recovery for such loan investments, these have also been disclosed in this note. This is aligned with the FReM requirement to disclose losses in this note for the attention of Parliament at the earliest point at which a loss is expected.
For assets measured at Amortised Cost, the Agency is required to consider the effect of discounting future cash flows (to reflect the present value of the anticipated recovery) in order to determine the required write-off allowance for accounting purposes. The losses recognised here include an element of this discounting effect, which will subsequently be unwound in future years as interest income on the impaired balance.
During 2020/21 there were two cases of loan losses recognised where the amount writtenoff or impaired for accounting purposes was in excess of £300,000. The table below details these losses. There were no write-offs of Loans measured at FVTPL which exceeded £300k.
Accounting write-offs or impairments / reversals in 2020/21 (£’000)
Loans measured at Amortised Cost: 1,794
The Agency provided infrastructure loan funding under the Home Building Fund, which included funding for land assembly, infrastructure works and s106 obligations, to support delivery of 5,750 homes. There were initial delays experienced in the programme and, following a revised valuation undertaken in 2019/20, this indicated there had been a significant decrease in the market value of the site. As a result, a loss of £32.0m was recognised in 2019/20. During the year, the Agency corrected its approach to accounting for deferred income recognised as a result of fees recharged to borrowers. This is now fully unwound and written-off at the point of an initial write-off being recognised against the investment with the carrying amount then being adjusted to reflect the recoverable amount of the investment. An additional £1.8m was written off in relation to this investment at 31 March 2021 mainly as a result of this change. As at 31 March 2021, total losses recognised were £33,809k.
Loans measured at Amortised Cost: 723
The Agency provided long-term infrastructure loan funding under the Home Building Fund, to support the development of 3,000 homes. A series of delays on site were experienced which impacted on timescales for delivery of the project. Following the entry into liquidation of the investment fund owning the borrowing entity, the various options available regarding the site were analysed during 2019/20 and an estimate of the expected loss was calculated based on available market data. As a result, a loss of £15.5m was recognised in 2019/20. During the year, the Agency corrected its approach to accounting for deferred income recognised as a result of fees recharged to borrowers. This is now fully unwound at the point of a write-off being recognised against the investment, with the carrying amount then being adjusted to reflect the recoverable amount of the investment. An additional £0.7m was written off in relation to this investment at 31 March 2021 mainly as a result of this change. As at 31 March 2021, total losses recognised were £16,237k
Total write-offs and impairments
Total write-offs and impairments recognised on Loans and Receivables which exceed £300k were 2,517.
Included in the 2020/21 accounts are further write-offs of loans measured at Amortised Cost totalling £374k, further impairments of loans measured at FVTPL of £315k, and losses on trade receivables of £253k, which individually are below the reporting threshold and therefore have not been included in the table above. In addition to this, the 2020/21 accounts reflect the reversal of previously disclosed losses totalling £203k during the period.
The contractual amount due on loan investments for which amounts have been written off or impaired, and which are still subject to enforcement activity was £109.8m at 31 March 2021.
Fees and charges (subject to audit)
Regulator of Social Housing
Homes England and the Regulator of Social Housing (RSH) are party to a Service Level Agreement (SLA) under which Homes England provides services to RSH. Services provided may include, but are not limited to, the provision of accommodation or facilities, the provision of staff time and expertise and the provision of technical resources. Service income charged to RSH during the year was £1,123,000.
Other fees
Additionally, Homes England may, from time to time, charge a fee for services provided to other entities. Where applicable, services are charged at full cost and therefore result in no attributable surplus or deficit. During the year, Homes England provided legal and professional services to other parties totalling £211,000. This is included in Other Operating Income.
Other fees include £50,000 charged to the Homes and Communities Agency Pension Scheme for the annual provision of accommodation, staff and professional services, and £50,000 charged to the Department of Business, Enterprise, Innovation and Skills for the provision of professional services in connection with the administration of three science parks.
Remote contingent liabilities (subject to audit)
Homes England is required to disclose each of its material remote contingent liabilities, and where practical, estimate the financial effect. Homes England does not have any material contingent liabilities other than those disclosed in the Financial Statements.
The Accountability report is signed on 14 July 2021by Gordon More, Interim Chief Executive and Accounting Officer.
The certificate and report of the Comptroller and Auditor General to the Houses of Parliament
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