The Governor - September 2013 by HQN Limited

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Governor the

HQN'S MagaziNE foR BoaRdS, ExEcuTivES aNd lEadERS

SEPTEMBER 2013

Who Will come out on top in the pRS WaRS?

The housing association and institutional giants or plucky private landlords? Governance under fire

Nick Atkin

Changing landscape

The rise of the co-op

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Complaints Can we really management aﬀord social housing? How to be an eﬀective panel member

The Residents’ Network Annual Conference 2013

Tuesday 15 October 2013 London

Thursday 5 December 2013 London

Our trainers:

The perfect opportunity to ask questions, get answers and network with other organisations.

Rafael Runco, former Deputy Housing Ombudsman, and Sue Farrant, HQN’s co-regulation lead, deliver this practical training that will: • Improve your knowledge and understanding of the role of a complaints panel member • Sharpen the skills needed for eﬀective complaints management.

Covering: • What value for money really means • How value for money impacts on the work of tenants involved in co-regulation • A recap of what’s happened in 2013 • Looking ahead to 2014/15 • What the future holds for co-regulation.

Speakers include: Who it’s for:

Alistair McIntosh, HQN Chief Executive

• Members and prospective members of designated tenant panels

Involved residents from the London Borough of Croydon

• Residents and board members of internal complaint review panels

Ian Parker, HQN’s ﬁnance expert.

• Members of boards and of scrutiny panels

Special oﬀer!

• Other involved residents who want to know more.

Sue Farrant, The Residents’ Network Lead

£99 + VAT per resident, councillor or board member £175 + VAT per member of staﬀ

Special oﬀer!

Each member organisation of The Residents' Network receives one free resident place.*.

Prices start from only £99 + VAT per person.

For further information visit our Events page www.hqnetwork.co.uk/booking_form.php?selected_id=1856

For further information visit our Events page www.hqnetwork.co.uk/booking_form.php?selected_id=2115

Rockingham House St Maurice’s Road York YO31 7JA

Telephone 0845 4747 004 Fax 0845 4747 006 Internet www.theresidentsnetwork.co.uk Email theresidentsnetwork@hqnetwork.co.uk

*Offer available until Friday 1 November 2013.

the residents’ network

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BluRREd lINES As the nights start to draw in I always look forward to the NHF conference. Eric Pickles tried to ban all these shindigs but I’m pleased he failed. His latest campaign is to stop all lobbying. He has no chance of shutting housing associations up. They will always say what they think. That’s a big part of their appeal. But they have a lot of thinking to do these days. Will they all stay as housing associations? Could some of them turn into private landlords? Some associations are eager to try their hand at the private side of the landlord business. They are already renting out homes on the open market. If any association wants to build homes at all these days they need to think about asking for higher rents for shorter lets. And when tenants leave it’s time to consider whether to let at a social or higher rent level. At the same time the PRS is changing. Big institutions are entering the market. Lots of the smaller players are cleaning up their act. More and more councils are taking action to boost standards in the PRS. It looks like a blurred line between the associations and the PRS doesn’t it? Who is going to win the greatest share of the market? I will go out on a limb here and predict that associations will do well against the institutions. They are just as hidebound by red tape as the regulated HA sector. But it’s the small landlords who could carry the day. To take just one example, a small landlord will do their own books or ask an accountant above a scruffy shop to do them. The big boys will put the audit out to tender. But they will ask other big boys to do it so will end up paying huge sums to PwC, KPMG and the like. The same principle will apply to legal advice and so on and so forth. They will fall for the economies of scale argument and opt for a large maintenance firm. Who do they think pays for those teams that fill in tender forms? A small private landlord will do the job himself or ask a local tradesman. The small guy will get the mower out while we will spend a six-figure sum on a grounds maintenance procurement exercise. Are you getting the picture? PRS specialist David Lawrenson put it really well. The big players will offer hotel-like standards. But they won’t get anything like hotel-type rates in return.

contentS 3

Blurred lines Comment by HQN Chief Executive Alistair McIntosh

Soap opera Governance under fire at the BBC and the housing regulator

The hot desk Halton Housing Trust’s chief exec on his very non-traditional approach

The landscape of the future Providers needs to gear up for a very different future

Your caring, sharing co-ops The rise of the housing co-operative

up to speed Should the government be prioritising housing over HS2?

don’t bury your head… The ostrich approach to running an HA just won’t work

Wild, wild west MPs launch an attack on ‘cowboy’ lettings agents From the press Our regular round-up from the world press’s view of governance

Generation strains Age concern To pay or not to pay? Service with(out) a smile

How will these big players cope with higher rates of turnover? Private tenants move about for work. Look at what associations pay to sort out voids today. Associations can struggle to deal with shared owners. A lot of tenants in market rent schemes will be young professionals too. They will want high standards at the lowest possible cost and will twitter you to oblivion if you screw up. So this isn’t easy money. And the HCA will be watching like a hawk. They have seen plenty of brilliant new business ideas end in tears thank you very much. What’s my advice? Learn from the pros. A book called Successful Property Letting sets out all the ins and outs of being a private landlord. David Lawrenson wrote it and he is an experienced landlord. He does what you want to do but for a fraction of the cost. This is the manual your real rivals will be using. Why not get it and use all the tips that you can. That way your association will enter this new market with its eyes wide open.

Alistair McIntosh Chief Executive, HQN

All articles in The Governor were written by Kate Murray unless otherwise stated. designed by Paul Miller Print management

Prontaprint Scarborough

Turnstone Media & PR (www.turnstonemedia.co.uk)

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Soap

oPERa

It’s not often governance grips like a soap opera. But the inquiry into the pay-offs at the BBC has unfolded with more accusations, cutting words and plot twists than most TV dramas. And it’s governance which has been at the heart of the story. Take this, from Public Account Committee chair Margaret Hodge at the close of one of the sessions: “At best, I think what we have seen is incompetence, a lack of central control, and a failure to communicate for an organisation whose business is communication. At worst, we may have seen people covering their backs by being less than open.” Or this from her committee colleague Stewart Jackson MP to former BBC boss Mark Thompson: “Under your leadership, there was weak governance on this issue and poor process management, and that in this narrow respect you were leading a dysfunctional organisation.” Or, most colourfully, this from Richard Bacon MP to current BBC Trust chair Lord Patten: “Do you remember what Stanley Baldwin said in the 1931 by-election in St George’s ward about Rothermere and Beaverbrook? I think it was that they had ‘power without responsibility – the prerogative of the harlot throughout the ages’. I hear in what you say that you would like to give it another go… But surely the case has been overwhelmingly proven, hasn’t it, against having this form of divided responsibility and accountability?”

a new political mood on the thorny issue of regulation? The BBC Trust was set up to separate – and distinctly separate – it as the body responsible for governing the BBC from the executive with responsibility for implementation. But the fallout over executive pay-offs could well, it’s now being suggested, end up with the trust being scrapped and regulation handed over to Ofcom. According to one government source quoted in the national press: “It is clear the trust, which is both a cheerleader for the BBC and its regulator, does not work. There are contradictions.” Beyond who said what to whom as the pay-offs were agreed, wider issues are raised by this spotlight on the corporation’s governance. Firstly, there are interesting questions about how – in any organisation – the right structures, processes, challenge and scrutiny arrangements need to be in place. In the BBC’s case, Lord Patten suggested sometimes problems in organisations were just down to individuals and that better relationships would take the organisation forward. And it’s true that we’ve all seen, in the housing sector as well as others, good organisations undermined by a stormy relationship between a chair and chief exec. But Margaret Hodge’s response is telling. “If any structure depends on the relationship between individuals it is not sustainable over the longer term,” she said.

Thorny issue less red tape This month’s DCLG select committee report on the financial viability ratings given out by the Homes and Communities Agency may not have had quite the same national profile as the BBC inquiry. But do they both reflect

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Then there’s the wider question of the way other organisations which receive a slice of public money are regulated. Commentators are already talking about how

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The civil war at the BBC has put governance and regulation in a very public spotlight. And now the housing regulator has taken its own share of criticism from MPs any move to change the way the BBC is regulated might fit with the government’s wider aims of slimmed-down regulation, fewer quangos and less red tape. Could we see other targets if and when the entire job of regulating the BBC is handed over to Ofcom? There is an argument that the way regulation in housing has evolved means that it would be entirely feasible to pass the core of the Homes and Communities Agency’s regulatory work – the oversight of housing providers’ finances – to the Financial Services Authority’s successors, with serious detriment issues looked after by organisations like, say, the Health and Safety Executive and fire authorities and consumer protection by perhaps the housing ombudsman. Certainly the DCLG committee’s view is that under the current system, the regulator seems to see consumer regulation merely as a ‘distraction’ from the main job of economic regulation. According to the committee ‘serious questions’ need to be asked of the HCA. “The committee was surprised to find that what purported to be an assessment of the financial viability of housing associations was no such thing. As it stands, if a housing association was in serious financial difficulty, nobody would have a clue,” committee chair Clive Betts said. “The current approach of using governance ratings to signal concerns about financial viability lacks openness and is confusing. It is unfair to expect tenants, taxpayers and lenders to understand and decipher the regulator’s coded messages. “Serious questions must be asked of a regulator unable to use his statutory powers or provide a frank assessment of providers’ financial viability. If the sector knows he will not use his formal powers the regulator’s

position and effectiveness are undermined. The regulator must find answers, and he must do so quickly.” Mixed messages Hardly a vote of confidence then – indeed the committee said the HCA should not only provide answers on the financial side, but should be subject to an annual external evaluation of its consumer regulation role. It’s a significant move following a recommendation made to the committee by the Residents’ Network. The committee has pledged to examine the work of the regulator again within this parliament. Whether it recommends wholesale change may well depend on how the regulatory landscape in housing evolves in the months and years to come. But right now, many in the sector might be forgiven for feeling they are getting mixed messages. On the one hand, the government clearly has its eye on their surpluses to help fund more new homes. There’s a pressure to go into new areas of business, to develop for new customer groups and to cross-subsidise their affordable homes. Yet on the other hand, they are seeing organisations which have taken some risks run into trouble with the regulator for overstretching themselves. It all makes for a challenging environment – and one in which, if things go badly wrong at any stage, both regulator and regulated could come under further pressure. Housing may never have seen public recriminations around governance and regulation on anything like the scale of what’s being played out over the BBC. But is it just a matter of time?

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THE hot DeSK He was once the lead housing inspector in the north – but Nick Atkin isn’t ticking the traditional boxes as a housing association chief executive. He explains why it’s not business as usual for his employees and residents 6

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New starters at Halton Housing Trust might get a bit of a shock when they find out that the man they’ve been casually chatting with on the next desk is their chief executive. For Nick Atkin is not big on hierarchies – and as part of his organisation’s hotdesking policy, he doesn’t even have a designated desk, let alone his own office. For Atkin, it’s all part of an approach to running a housing business which goes much further than a few hard-won concessions on flexible working. “The traditional working approach does not treat us as human beings,” he says. “It treats us as robots and assumes that everyone works from 9 to 5. But some people work much, much better early in the morning and some people don’t start functioning effectively until mid-afternoon.” Making waves At Halton, then, staff might find they’re challenged not on why they’re out of the office – but on why they’re in the office too much, when they should be out and about engaging with residents. They’re equipped with IT kit which allows them to connect directly to all the information they need wherever they are. And there’s innovation in some of the other practices too, such as Atkin’s decision, which made waves in the housing sector when it was first announced, to end the use of internal email by 2014. It all adds up to an organisation that’s a far cry from the organisation set up in a stock transfer eight years ago. “People say it’s like nowhere else they have worked before in terms of the flexibility and grown-up approach,” he says. “Too many organisations are too paternalistic and treat their employees like children and then wonder why they act like children.” He adds: “Nothing that we do is on its own particularly revolutionary but when you put it all together there are very few organisations that do all we do.” The set-up at Halton is popular with staff – and with outsiders like the IIP assessors who, Atkin says, told him they had rarely seen an organisation with a better culture of trust. But it’s also a significant money-saver, with £125,000 a year trimmed from office rental costs because of hotdesking. Empowerment And then of course there’s the effect on services to residents. “What we are doing not only improves to offer to employees in terms of what it’s like to work here, but it empowers them to work in a different way and that means our customers benefit,” says Atkin. His sees his career at Halton so far as being divided into three phases: first transforming the organisation immediately after the transfer; then bringing up services to a consistently good level; and more recently innovating to be able to deliver even better for residents. But in this new regulatory landscape, how does the former head of housing for Audit Commission in the north view the task of ensuring performance doesn’t slip without the discipline of inspection?

According to Atkin, inspection made a big difference across housing. “Inspection brought a minimum standard,” he says. “It had its critics but what it did was drive up service delivery standards to a consistent level across the sector.” Yet times have changed and he welcomes the new regime for the flexibility it gives organisations to focus on their own local priorities. “The sector is in an interesting place,” he says, but adds: “My concern is that the regulatory focus – for understandable reasons – is predominately around governance and viability. That means there is a risk that if you wanted to as an organisation you could dilute the focus on customers. I am not saying that is happening but if you chose to do that, there are very few people other than your own customers who would pick that up.” The real world For Atkin, the new flexibility may allow some organisations to focus on new markets. But for an organisation like Halton in the north west, the most pressing priorities are issues like the bedroom tax, and more widely continuing to meet the needs of those in most need of affordable homes. And while it’s more difficult to do that given the constraints on public funding, that’s the tougher reality housing associations have to live with. After all, as Atkin points out, those in the commercial sector have long envied some of the things housing organisations take for granted, like high demand for their product and a big chunk of government guaranteed income. “Housing has just started to enter the real world,” he says. “Welfare reform changes the dynamic particularly with the roll-out of Universal Credit as a huge chunk of our income is going to be placed at risk. Without doubt that’s a significant challenge we need to rise to. But it’s only what most businesses face day in day out, which is how to get the money in from their customers for your services. ‘I don’t dispute that we are in a riskier environment but let’s face it we have gone from a very safe environment and are now moving into an environment that the rest of the world would recognise as the norm. This creates some challenges but some fantastic opportunities. The housing sector has got more freedom and flexibility as well as more challenges than any time in my career.” As a result, Atkin says, housing organisations will need to be more responsive and more fleet of foot in the years to come. At his own organisation, a more adult relationship with employees goes hand-in-hand with a more adult relationship with residents too. That takes in everything from the way repairs or minor reports of neighbour disputes are handled to the way the organisation handles its communications. “We need to recognise that both our customer base and employee base are changing very rapidly,” he says. That’s why he’s so enthusiastic about the potential of social media like Twitter. And again it comes back to removing some of those traditional structures and barriers. “We are having conversations with people we never normally had conversations with. We have removed the hierarchies that used to exist and given a voice to people who didn’t previously have a voice. Once that genie is out of the bottle, you can’t put it back in.”

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The housing landscape is changing fast and providers need to gear up for a very different future. The debate on that future is likely to get a whole lot louder very soon As the old saying goes, if you want to get to your destination, I wouldn’t start from here. You could be forgiven for thinking something similar when you’re asked to ponder the challenges that will face the housing world in 10 or 20 years’ time. The current pressures on housing are so great – and the issues just over the horizon are potentially so difficult to tackle – that it’s tempting to let the more distant future take care of itself. Yet it would be short-sighted not to start some of those conversations now. Demographic change, economic cycles, shifting public priorities and technological advances will mean a very different world for housing providers in the decades to come. Organisations are already taking very different approaches to meeting housing need and developing their businesses. As this divergence continues, what will different housing providers look like? Will there even be a housing sector as we know it a few years down the line? Does that matter, as long as we have better housing for all? How could a

radical shift in business models help providers to do more? Do we need more market-driven solutions – or a more collective, publicly-funded approach? How do tenants and communities have a say in all this change? Is it possible to get back to a model of genuinely affordable housing for those who need it most? Policy-makers, thinktanks and individual housing providers have been grappling with some of these big questions. Now the debate looks set to widen, with the National Housing Federation launching its HotHouse initiative to think about the future and to come up with a new vision for the future. The federation says it wants to hear bold, game-changing ideas, ones that might be considered to be politically off limits, but which nonetheless need to be addressed. It’s an interesting time for the debate to be had. The current environment creates new risks and new pressures. But if it also creates new opportunities, then we might very well get to where we need to go from here after all.

the lanDScape of the 8

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TakiNg HouSiNg foRwaRd: SoME PERSPEcTivES ”Orbit recognised the world had fundamentally changed and sought to understand the future and respond to it through the Orbit 2020 programme. I see a future with fewer but larger 'housing organisations' operating across markets, sectors and national boundaries. There will be smaller providers operating as hyper-local social enterprises embedded in neighbourhoods. I see digital having transformed our organisations, with flatter management structures, new customers and staff with broader skills. Housing in 2033 will be more like Google than a local authority in its orientation, culture and commerciality. Our outputs will be more philanthropic than social provision.”

”A key question is who is involved in the debate. We are not talking to tenants any more – or at least it seems some housing organisations aren’t. There is a real danger of tenants’ voices not being heard. The sector often likes to do shiny and new things because they are shiny and new but we need to continue to talk to tenants about what their priorities are. The whole debate nationally, politically and in the media has been very successful in dehumanising people who live in social housing. The sector is really good at talking about numbers, but really bad at talking stories – we don’t talk enough about the people whose lives are changed for the good or bad depending on where they are housed.”

Boris Worrall, executive director Futures, Orbit Group

Alison Inman, independent director, TPAS and board member, CIH

”A One Nation Housing Strategy [could rest upon] a systematic but gradual rebalancing of the housing subsidy system towards economically productive bricks and mortar activity and away from subsidising private landlords and financial institutions. This might take at least one Parliament, possibly two, so that the housing benefit bill can be brought down. A faster pace could be achieved with rent restraint negotiated with the social and private rented sectors.” Towards a One Nation Housing Policy, Compass ”Radical liberalisation of the planning system has the potential to drive massive economic growth, drastically reduce housing costs for the badly-off, and give millions more a chance to own property of their own.” Sam Bowman, Adam Smith Institute

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co-ops and mutuals have, over the last few years, seemed like an idea whose time has come. From the Conservative Co-operative Movement, established to promote the co-op ideal among Tories, to the Open Services White Paper promising support for a huge wave of mutuals to spin out from the public sector, it looked like the co-operative vision had the backing it needed to boom. Yet more recently there have been doubts. Progress on creating new mutuals has been slow. And critics have claimed that Conservative support for cooperatives – often in practice a push for ex-public sector employees to take a stake in new mutual enterprises – is merely a means of detoxifying their brand.

Real support for co-operatives, some within the co-op movement have claimed, would have seen much more explicit moves to put co-ops at the heart of policy. That holds true for housing as much as it does for finance or energy. In particular, there was disappointment that a private member’s bill which would have created a distinct form of tenure and so encouraged more co-op housing did not make it onto the statute book. new dimension Co-op housing has always made up only a tiny part of the wider housing sector. Yet, with the creation last year of Rochdale Boroughwide Housing, a unique tenant and employee mutual, co-op housing suddenly took on a whole new dimension.

YouR caRiNg, SHaRiNg

co-opS Interest in co-ops has been growing – but the co-op housing sector remains small. Its advocates want to encourage more co-ops to flourish – and for the values at their heart to take root in the mainstream

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According to a new report from the Human City Institute, co-op housing can offer higher levels of performance and more effective ways of building social capital than mainstream social housing. Report author Dr Chris Handy, Head of the Matrix Housing Partnership, said: “The good news is that we have seen more interest in co-operative and mutual housing in the UK than at any period since the 1970s. Politicians of all hues are supporting the sector. “Our research illustrates that mutual housing organisations can be more efficient than equivalent social landlords, that co-operating in housing management improves the wellbeing of tenant cooperators through what we term the ‘asset effect’, and that co-operators make good citizens.” Self-esteem This asset affect, explained HIC director Kevin Gulliver, is responsible for a rise in self-esteem and social capital in the communities involved. In one scheme, for example, one in three of co-op residents were also school governors. But despite these benefits – and some government support for new co-op housing schemes – the co-op housing sector, at under 1% of the total housing stock, is far from the 5% to 15% of stock in other European countries. Co-operatives UK secretary general Ed Mayo said in response to the HCI report that housing co-ops were still underdeveloped in the UK. “I welcome the report’s recommendations to create a national tenants’ mutual to tackle and financial exclusion and to fund growth in social housing and community infrastructure generally and to promote co-operative development specifically.” If we’re unlikely, at least in the short term, to see the big rise in the number of homes managed co-operatively

that the HCI report calls for, many argue that the ethos at the heart of co-op housing has much to offer the housing sector as a whole. As Kevin Gulliver put it: “No matter how good housing associations are at resident engagement, very very few give any real control of housing and budgets although true engagement can really improve wellbeing.” Linda Wallace, the new chief executive of CDS Co-operatives has an interesting perspective on the issue, having recently joined the co-op sector from her senior role in mainstream housing as managing director at Notting Hill Housing Trust. She said the issues for co-ops were similar to those in mainstream landlords – rent collection, repairs, ensuring community safety, for example – but it’s the ‘way into’ those issues which is different. “The fact that the people who are providing the services are also the recipients of the services gives it a different tone,” she said. “Working for a mainstream organisation providing services for someone else, you are always having to think yourself into their position.” Greater than the sum of its parts She said co-op housing should not be seen a something ‘terribly hippyish’ where everyone is nice to each other, but rather as a model which allows for people in a scheme to see more quickly what works or doesn’t work in their neighbourhood – and allows them to do things more effectively together. “It’s about enabling people to come together and do things they wouldn’t be able to do alone – it’s something that is greater than the sum of its parts,” she said. “What’s exciting for me about co-ops is that it’s more than just housing, or more than just selling food, it’s that community element to being a co-op.” And maybe that’s where the interest in co-op values can bear fruit, both in encouraging more co-ops and beyond. As Ms Wallace said: “There are many ways of using the concept and ﬁnding the right level to give people more say.”

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aﬃnity Sutton chief executive Keith Exford summed up how much of the housing world feels. “We are perfectly happy to sink a fortune into High Speed Two without fully understanding the economic benefits of it,” he said. “We seem as a society somehow to accept transport is a good thing and housing isn’t – we have to change that narrative. High speed housing will provide much better value than High Speed Two.” The high speed rail project is not getting a smooth ride so far. According to the Public Accounts Committee, which published a report on the project earlier this month, the plans are unrealistic – and based on ‘fragile’ numbers and out-of-date data and assumptions. “The Department for Transport has yet to present a convincing strategic case for High Speed 2,” said committee chairman Margaret Hodge. “It has not yet demonstrated that this is the best way to spend £50 billion on rail investment in these constrained times, and that the improved connectivity will promote

growth in the regions rather than sucking even more activity into London. The pattern so far has been for costs to spiral – from more than £16 billion to £21 billion-plus for phase one – and the estimated benefits to dwindle.” Grand folly? It’s the latest blow for a project which has already faced fierce criticism. Free market thinktank The Institute of Economic Affairs says the scheme is poor value for money compared with other investment in transport infrastructure and is being pursued for political rather than economic reasons. The Institute of Directors has branded HS2 a ‘grand folly’ and has called for it to be scrapped. So if the case for investment in the high speed project is weak, and the costs spiralling, could the housing sector spend the money any better? Housing did of course feature in the infrastructure package announced this summer as part of the spending

uP To SpeeD The government plans to sink billions into a new fast rail link to the midlands and the north. But many argue that high speed housing would be a much better investment than high speed rail

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review. But the announcement, which promised a further 165,000 homes over the three years to 2018 hardly heralds a housebuilding programme of historic proportions. Treasury secretary Danny Alexander may have hailed what he said was the biggest housebuilding programme for 20 years. But the housing sector wasn’t convinced. National Housing Federation chief executive David Orr called the £3 billion announced by the government ‘a further disappointing cut in subsidy’. “It won’t deliver the ambitious house building programme we need,” he said. “The lack of investment in housing is now acting as a brake to growth in other parts of the economy.” Growing pressure The Federation had called for £2 billion a year to deliver 55,000 to 65,000 new affordable homes. Some have argued for even more. But the government’s response is small-scale in comparison to overall investment spending. It seems that while the government accepts the need for some capital investment to help deliver affordable homes, the case for a

really significant housebuilding programme to spearhead economic growth still hasn’t been made. Instead, with new homes being developed at higher rents, the pressure continues to grow on the housing benefit budget. Shadow housing minister Jack Dromey claims his side of the house is listening at least. He claims that no government over the last 30 years has put housing where it should be – centre stage. But he says Labour is now convinced, not only because of housing need, but also because of the economic argument for upping investment, that housing should be at the forefront of investment plans. “Our starting point is an utter determination to put housing centre stage,” he has said. “It’s the spirit of 1945 but also of Harold Macmillan where there was a determination that Britain would build on a grand scale and that was driven through. We are utterly determined to do that again.” Whether that commitment will be followed through should Labour come to power perhaps depends on whether the case for housing continues to be made.

High-speed housing vs high speed rail: making the case RAIL

HOUSING

the beneﬁts to society: Cutting journey times and expanding passenger capacity. Growing numbers are using the railway and the government says even on moderate forecasts the West Coast mainline will be full by the mid 2020s.

the beneﬁts to society: Meeting housing need. Housing is in short supply, while the number of new households is soaring. More and more people are priced out of the housing market and homelessness is on the rise. Tackling inequality and improving health and education outcomes.

the economic argument: The project will create between 100,000 and 400,000 jobs and will provide, the government says, some £50-billion-worth of economic benefits for the economy. “HS2 is a once-in-a-generation project that can be an engine of growth for the whole country.” transport secretary patrick mcloughlin “We’ve said all along that HS2 is not just a transport project, it’s an economic growth project. The extra capacity HS2 brings is far more important than the speed and this capacity will be a real engine of growth for the country, bringing our major cities closer to each other, and to mainland Europe. It will create jobs, boost productivity and help the nation compete globally.” Sir Richard leese, manchester city council leader “The Department has not conducted a detailed study looking at whether local infrastructure projects might deliver additional rail capacity into London, improve connectivity and assist with regional economic growth sooner and more cost-effectively than High Speed 2.” public accounts committee

the economic argument: Every £1 invested in construction generates nearly £3 of economic in the wider economy. “Few other sectors can boast such a high economic multiplier effect, or can deliver new infrastructure at speed. Less than 8% of the construction industry’s materials are imported, so the benefits of construction activity are retained by the UK economy and not lost abroad. “Public financial support for investment in housing and construction offers excellent value for money with 56p of every £1 invested returning to the Treasury.” the chartered institute of housing “The government has recognised that housing drives growth with a speed and effectiveness that few industries can match. It has a crucial role to play in this country’s economic recovery. “The statistics speak for themselves – the macroeconomic benefits of investing in affordable housing are enormous. Every affordable home built creates 2.3 jobs in England and generates an additional £108,000 in the wider economy.” the national housing federation the Governor SEPTEMBER 2013

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Being a board member is tougher than ever. There’s more to do – but greater risks in doing it. How do you provide the homes your communities desperately need without running into trouble?

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The ostrich approach to running a housing association may look appealing. Investment in new housing has fallen dramatically and associations are being expected to make up the gap. But going into new business areas brings new risks – at a time when income streams are at risk as never before from welfare reform. Is the best option just to hunker down and wait for the worst to pass?

combination of new business risks on top of threats, for example, from welfare reform or the tougher environment for care and support business, is proving to be a real challenge for some boards. But others are thriving – and their experience may help other boards which need to up their game.

For many associations of course that’s just not an option. When so many are in need of an affordable home there’s an imperative to deliver. And more than that, associations want to continue to be thriving businesses with a social purpose, able to support, engage and inspire their residents and communities when so many are struggling.

Shared board objectives are key. Progress against those objectives needs to be carefully monitored. Board members need to have good information to challenge effectively. They need to know what the real impact of new projects might be – and weigh those against other financial pressures on their organisation. And they need to take a long hard look at their own board’s performance. Is everyone contributing well? Does the board have the right mix of skills? Is there too much detail and not enough strategy in board discussions? Is the board too large to function effectively? Honest answers to these questions and more will be crucial if boards are to successfully negotiate the testing months and years ahead.

So how best, then, to meet the new challenges? Much of the answer of course lies with associations’ boards. It’s with them that the decision lies on how best to manage their risks in the face of those opposing pressures to do more, while not putting their existing assets at risk in the process. A look at recent regulatory judgements shows that some are struggling in the tough environment. The

The good, the bad and the ugly… key messages for boards in HQN’s new governance toolkit the good. the best boards: Have good people with lots of experience. They have been over the course before Are in markets where it is possible to be successful. Some activities in some areas will never work Spot problems in their organisations before anyone else does and take action to sort things out early. the bad. poorer boards are seeing their organisations downgraded by the hca for: Botching mergers Losing money on new business like student housing, PFI and management contracts Failing to understand the terms of loans Managing development poorly Making over-optimistic assumptions about the returns from sales of new homes.

the ugly. contributory factors to poor board performance include: Poor quality reporting to the board, late alerting to problems, inadequate or broken-down financial reporting systems Lack of scrutiny and oversight of treasury function – of deals being made, lack of examination of alternatives. Lack of oversight of development function. Failure to challenge officers Inadequate internal audit (or none at all), with lack of demand for one from the board Lack of external input to reviews of board effectiveness and appraisal – not matching skills and expertise to current demands and activities, lack of succession strategy Groupthink: failure to follow own code of governance, board members serving too long, payment of board members, size of board, frequency of appraisal Collective optimism: Issues oversimplified, ‘rudimentary sensitivity analysis’, use of complex financial tools without full understanding.

and the one most likely to bring the hca to the door: Failure to provide adequate assurances of competence to the regulator, lack of transparency, late notification of problems. for some boards, it’s the distraction caused by big change, or a combination of issues, that causes the problems: A board can get distracted by the process of merger and fail to control the future direction of the new organisation An organisation rushes for development without a proper examination of the risk on cross-subsidy from sales A threat to growth aspirations from uncertain future grants comes at the same time as other pressures such as the loss of LA contracts Ambitions for growth are not underpinned by proper assessment New contracts and growth opportunities are taken on without a strong strategic framework and with limited existing capacity.

HQN’s new governance toolkit includes worksheets designed to get board members thinking about key governance issues, particularly in the light of the problems raised in recent regulatory judgments. The toolkit is available at: http://www.hqnetwork.org.uk/governance-toolkit the Governor SEPTEMBER 2013

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MPs have launched an attack on ‘cowboy’lettings agents. Should social housing providers ride to the rescue?

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pReSS Poverty doesn’t just hit your health – It can affect your brainpower too, according to a study in the journal Science. The research, which focused on low income Americans and poor farmers in Tamil Nadu, found that the stress of worrying about money can have a negative impact on cognitive function. So rather than, as conventional thinking might have it, it being bad choices which make people poor it could be poverty that often

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makes people make bad choices As a write-up of the study on Slate put it: “The strain of constantly worrying about money is a substantial barrier to the smart decision-making that people in tough circumstances need to succeed. One of the best ways to help the poor help themselves, in other words, is to simply make them less poor.” A new battle is looming over the future of our cities – but this time it’s not the planners vs the people divide of the 20th century, but the technology giants versus the people, says The Economist. It says ‘smart city’ projects – doing everything from monitoring crime to finding a parking space – have the potential to transform urban living around the world. But a lack of resources, an overcautious approach and, of course, concerns about ‘Big Brother’ are hampering progress.

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agents. It’s a call so far dismissed by the government, which is to introduce a redress scheme but is shying away from what housing minister Mark Prisk calls ‘excessive’ regulation of the private rented sector.

It’s the Wild West of the property industry. That’s how MPs on the Communities and Local Government select committee described the lettings agency industry when they published a report on the private rented sector this summer.

So how bad is it out there? HQN does a lot of work on the private rented sector. Our mystery shopping of agents shows that the fees they charge are both high and confusing and that many of them refuse to take on people on benefits. Yet the private rented sector is growing fast. It’s the only real option for many people. It’s not surprising then that more housing providers are starting to wonder whether they should help out by starting an ethical lettings agency to offer an alternative to the cowboys.

‘Unreasonable fees and opaque charges are not confined to a few rogue agents,” said committee chairman Clive Betts. ‘Many well-known high street agents are just as guilty. Agents must make tenants aware from the outset of the fees they intend to charge. All property listings - on websites, in print or in agents’ windows - must be accompanied by a full breakdown of fees.’ The committee called for tougher regulation for lettings

So what questions should a council, association or ALMO ask if it is thinking about setting up an agency? Here are some to start with: Do you need to do it? Are there good agents in the area already? Rather than set up a new agency from scratch, could you help some existing agents to up their game? Who are you trying to help? If rents in your area are too high for people on benefits an agency can’t bring them down by itself. But you might be able to help workers on low wages. You could do away with hidden fees and re-signing charges What will it cost to set up the agency? What fees are you likely to get? Can you get your own team to do repairs for private landlords? Are they cheaper than the people agents already use? Does the business plan stack up? How do you know? Will you win the work? You might not like the agents that work in your area. But I’ll bet some of them are ruthlessly efficient. They will have seen off competitors before.

The lack of career obstacles for incompetent men could be a much bigger problem than the glass ceiling preventing women getting top jobs. That’s the fascinating argument put forward by Tomas Chamorro-Premuzic in an article for the Harvard Business Review. The piece, headlined ‘Why do so many incompetent men become leaders?’, argues that we are fooled by the over-confidence that’s more common in men than women into thinking that they make the best leaders. Yet the characteristics it takes to get a top job are not those needed to do a top job well. “Most of the character traits that are truly advantageous for effective leadership are predominantly found in those who fail to impress others about their talent for management,” the article says. “This is especially true for women.”

How do you market your agency? Lots of agents say they are ethical these days. What is different about what you do? You will have to be competitive on cost to get landlords to pick you. Is this your Achilles’ heel? Commercial agents won’t have the same terms and conditions for staff as you do. They could be making people work longer hours for less pay and fewer days off. There will be no final salary pension scheme How do you manage any conflict of interest? It could be tricky for a council to take action against an agent that is a competitor Have you done your research? Talk to others that have tried to set up a new style of letting agency. There is a lot to learn from those that have succeeded and those that fell by the wayside.

Are you linkedIn yet? Do you see it, it the words of its creators, as a tool ‘to connect the world’s professionals to make them more productive and successful’? Or rather, as a piece in Baffler magazine puts it, as an ‘irksome ritual of digital badgering’? LinkedIn has some 187 million users worldwide – but, the article says, it’s sometimes tough to work out exactly what it’s for. A good networking tool to connect with colleagues, ex-colleagues and contacts it may be. But linking up with people you’d like to connect professionally with, but don’t already know, can be trickier. A bit like conferences, the article says. “LinkedIn merely digitises the core, and frequently cruel, paradox of networking events and conferences. You show up at such gatherings because you want to know more important people in your line of work – but the only people mingling are those who, like you, don’t seem to know anyone important. You just end up talking to the sad sacks you already know.”

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govERNaNcE RounD-up gENERaTioN

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There’s more evidence this month of shrinking support for the welfare state. As we reported in the last issue of The Governor, the Joseph Rowntree Foundation has been looking at public support for spending on the most vulnerable members of society. Now, a report by thinktank Demos and pollsters MORI shows just how sharp the decline in support is, particularly among the younger generation. Support for more government spending on the disadvantaged has halved since 1989, from 60% in favour to just 28%. Older people, born before 1948, remain the most likely to support higher spending on welfare. Young people from so called Generation Y – born after 1980 – are much less impressed, and only a quarter see the welfare state as one of Britain’s proudest achievements, compared with 70% of the older generation. Interestingly, younger people are much more in favour of

spending on pensions than unemployment benefits, despite high levels of youth unemployment. Almost half of them placed pensions as one of their top two priorities for extra government spending, but only 16% felt the same about Jobseeker’s Allowance and similar out-of-work benefits. As housing organisations put more effort and resources into supporting struggling residents, they may well need to think about winning more support from the wider community. For, as the report, entitled Generation Strains, makes clear, declining support for welfare needs to be addressed if the welfare system is to remain sustainable. And that means decision-makers need to ‘engage with public opinion, not simply to construct more persuasive arguments, or to correct misperceptions, but also to learn about where the system is not meeting people’s priorities and why’. http://demos.co.uk/files/demos_Ipsos_Generation_ Strains_web.pdf?1378677272

aGe coNcERN Board members are often, to put it politely, a somewhat mature bunch. According to the Charity Commission, the average age of a charity trustee is 57, with two-thirds aged 50 or more. And just 0.5% of trustees on charity boards are aged between 16 and 24.

people with no experience of sitting on a charity board. Of those who had trustee experience, more than 80% rated it positively and just 2% negatively, while 85% of those with no experience said they would consider applying in future.

Yet those youngsters who do get involved love the experience, as a new survey of young trustees demonstrates. Those who don’t might just be waiting to be asked.

So what can organisations do to encourage the board members of the future? According to Nicholas Fryer, who carried out the study, young people believe charities should be trying to increase awareness and understanding of the role of a trustee and advertising and promoting positions. Many also feel they should be doing more specifically to target young people and to show they ‘recruit for diversity and energy, not just experience’.

The study for the Young Charity Trustees group, which encourages young people to get involved in running charities, surveyed both young trustees and young

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to payoR NoT To PaY? the wider charity sector may be looking to housing associations for evidence as the debate over paying trustees rumbles on. This month, the government rejected calls for large charities to have the automatic right to pay trustees. At present, charities that wish to pay have to make a case to the Charity Commission. But, in an echo of the arguments made in the housing association sector before payment to HA board members was allowed, some argue that easing the rules for charities would help attract higher-calibre applicants. The government has yet to be convinced. In its response to two reviews on charity law, it said there was ‘insufficient evidence that paying trustees would result in more effective governance’. The government response, which comes after reviews of charity law by Lord Hodgson and by the Public

Administration Select Committee, has also ruled out creating a definition of public benefit and introducing a charity ombudsman. “We agree with both the [public administration select] committee and Lord Hodgson that charities should take more responsibility for resolving complaints and internal disputes, or risk damage to the sector’s reputation,” it says. And in an area which will interest housing associations facing charging for regulation, the government says it has no plans to introduce fees for Charity Commission oversight. “Charging would not support our policy to make it easier to set up and run a charity, social enterprise, or voluntary group,” it says in its response. It does however support recommendations for easing the burden on charities which are also companies, by no longer requiring them to file annual returns to both Companies House and the Charity Commission. The issue is being explored further. http://www.official-documents.gov.uk/document/cm87/8700/8700.pdf

SeRvice More than a third of those who complained to public sector organisations over the last year say their complaint went unresolved, according to a survey. Only credit card providers perform worse than the public sector on unresolved complaints, those behind the report say. Half of the UK citizens interviewed for the survey, commissioned by software providers Aspect, said even when their complaints to public sector bodies were dealt with, they were dissatisfied with the result. As the company commissioning the survey provides technology for contact centres, it’s perhaps not surprising that it says the results show public sector

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organisations are falling down in the way they engage with their customers and that need better tools for the job. But particularly interesting is the perception gap suggested by the results. While more than half said they were either satisfied or extremely satisfied with the public services they receive, only 5% felt the public sector offered the highest standards of customer service and just 3% could point to a good customer experience with a public sector organisation over the past year. Is the real problem that customers are getting a good deal from the public sector – but it’s just not service with a smile? It’s worth considering too that while public sector organisations are waking up to the power of social media, more than half of respondents wouldn’t consider contacting a provider in that way because they wouldn’t be confident of getting the response they wanted.

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