Examination of Witnesses (Questions 40-59)
MS SARAH
WEBB, MR
JIM COULTER
AND MR
RICHARD CLARK
15 MARCH 2004
Q40 Chairman: Good afternoon and welcome
to the Committee. Would you introduce yourselves, please.
Mr Coulter: I am Jim Coulter,
Chief Executive of the National Housing Federation.
Mr Clark: I am Richard Clark.
I am Chair of the National Housing Federation and Chief executive
of Prime Focus Regeneration Group.
Ms Webb: I am Sarah Webb. I am
the Director of Policy at the Chartered Institute of Housing.
Q41 Chairman: Is there anything you would
like to say by way of introduction or shall we go straight to
questions?
Mr Clark: I would like to say
a few words, if I may. First of all, thank you very much for the
opportunity to present our evidence. We are particularly pleased
because we see housing as being back at the centre of public policy.
As you will see from our memorandum of evidence we have stressed
the need for a clear policy framework, better strategic collaboration
between the different institutions and we are strongly supportive
of all-round service improvement by all those involved. We certainly
hope that the various reviews which are going on at the moment
give greater clarity to future directions and hope that our In
Business for Neighbourhoods sector change programme will support
those various policy and service improvements.
Q42 Christine Russell: Would you actually
like to see the Housing Corporation develop perhaps a more strategic
approach for affordable housing which is more independent of government?
Mr Coulter: The Corporation has
broadly three functions in this area. Regulation must be independent
if it is to be credible and I cannot see how anyone could argue
with the concept of independence for the Corporation in that context.
Certain principles have been laid down by the Better Regulation
Task Force which the Corporation by and large follows. The Better
Regulation Task Force challenged all regulators to adopt them
by April of this year and I am assuming that that will be done
by the Corporation and by others and, as you heard from the previous
witnesses, there are plenty of others in this particular field.
On investment I think the core problem is the way in which the
rather loose framework for establishing the Regional Housing Boards—or
the guidance to the Boards—was set up in the first instance.
We have a potential conflict between national priorities of ministers
and the priorities which emerge from the ground which the Regional
Boards themselves would articulate. It is clear that the Government's
vision of the Corporation and, as a result of that, the Corporation's
vision of itself, is to lean towards the national rather than
to the regional priorities. That needs reconciliation and that
is clearly something which we and others—the Chartered Institute
and ourselves—have been trying to get the Government to
address. The third area which is probably the most difficult one
for the present time and the future is the policy development
function of the Corporation. The management statement which the
secretary of state gave to the Corporation (he gave it in 2001
after the last Finance Management and Policy Review) is very clear
in its formulation that the advice that the Corporation gives
to the Government is not independent; it does not, as it were,
make it up itself, it is within the general context of government
policy. That is all very well as long as that is confidential
advice to ministers. When the Corporation's role in other policy
development—as in market renewal or in the work supporting
Regional Housing Boards—comes along, you have potentially
got a conflict set up there so there are potentially problems
in the policy development role which, again, to stress the point
which Richard made at the beginning, we are certainly looking
to various review processes taking place just now for clarity.
It is clarity rather than policy change or strategy change that
is needed most in the housing area.
Q43 Christine Russell: I accept what
you are saying about clarity, but do you feel the emphasis needs
changing too, that the Corporation should be more focussed on
leading the housing association movement rather than implementing
government policies?
Mr Coulter: It is not the Corporation's
job to lead the housing association movement. If it is anybody's
that is the trade association which we represent (at least the
two of us of the three sitting here) so we would want to put them
back in their box if they ever decided that they could do our
job. I do take the point that from your perspective there may
be too great a proximity between the Corporation and ODPM. I think
housing associations and the Federation are not that bothered
about that; we simply want some clarity that we when we are in
conversation with either ODPM or the Corporation we are getting
broadly similar answers and broadly similar directions in order
that we can actually move forward.
Q44 Christine Russell: Can I ask you
to expand on a point you were making in your evidence which says:
"the Federation seeks a funding, regulatory and inspection
regime which encourages entrepreneurial activity". What change
exactly would you like to see to make that possible?
Mr Clark: First of all we think
that associations have been pretty entrepreneurial over the last
10 years. Earlier on you heard some of the things which they have
done, but a whole range of diverse opportunities have been developed.
I think there are two specific changes which would in increase
the rate of innovation and entrepreneurialism. One is that the
Corporation introduced in 2002 a new regulatory code based on
risk and I think that that code has not been implemented as rapidly
as it might have been and had it been then associations would
be able to move forward far faster. There is still quite a strong
emphasis on process by the Corporation which is inhibitive to
an entrepreneurial approach. Secondly, in terms of investment,
I think that investment decisions still tend to be pragmatic and
short term. That is actually across all the agencies, it is not
just a Corporation problem. The more long term investment decisions
and strategies you have the more entrepreneurialism and the more
innovation you will get. I think if we add those two things together,
which the Corporation can certainly control in the first instance
and contribute to in the second, we would see a lot more entrepreneurial
behaviour.
Q45 Andrew Bennett: Moving on to regulation,
is it a shambles in the industry?
Mr Coulter: No. What is the evidence
for it being a shambles?
Q46 Andrew Bennett: There are a fair
number of conflicting regulators, are there not?
Mr Coulter: There certainly are.
We have regulation directly from the Corporation as the statutory
principal regulator. We have the inspection function which sits
alongside it and we have a range of other regulatory activities.
We would certainly want to see much more coordination of the regulatory
relationships.
Q47 Andrew Bennett: Are you telling me
that there is no coordination at the moment?
Mr Coulter: There is not sufficient
coordination at the moment.
Q48 Andrew Bennett: How often does it
happen that one regulator is demanding one thing and different
regulators are demanding something that actually contradicts that?
Mr Coulter: If I give you a general
view of the relationship between how regulation and inspection
operates—and that separation has only been effective for
a year now since the decision was taken by the Government in 2002—there
are a range of activities which the Audit Commission has proper,
appropriate and legitimate focus on in local government (say,
the Decent Home Standard) where that is the best method of getting
local authorities to account for their performance. For housing
associations the Decent Homes Standards have been a regulatory
requirement conducted through the Housing Corporation's system.
The Audit Commission's recent consultation document on changing
the inspection framework proposes that it should look at Decent
Homes Standards, so you have an example there, were it to come
about, of two organisations colliding, doing the same thing, which
would be a waste of at least one of their times and certainly
a waste of the time of the regulator or inspector entity. There
are a number of examples like that where better care is needed
in the design to make sure there is complementarity of the two
regimes.
Q49 Andrew Bennett: What about the quality
of the regulators within each of those regimes? It has been put
to me that sometimes Housing Corporation staff move relatively
quickly and one group is demanding one thing and the next group
who come along demand something different.
Mr Coulter: I think it is certainly
the case that you would get housing associations and therefore
the Federation arguing that there is a greater requirement for
consistency of approach across the country.
Q50 Andrew Bennett: By implication, if
you are saying there is a greater need for coordination, you are
actually telling us there is a lack of coordination at the moment.
Mr Coulter: No, I am saying that
there is a risk of a lack of coordination which is not the same
thing as there "is" a lack of coordination. I think
there is equally a risk of lack of consistency which is why we
are very keen to see the approach to regulation move further and
faster. I cannot really trail for you the subject of the end to
end review report that the ODPM itself is doing directly.
Q51 Andrew Bennett: You could tell me
what you think would be a good result.
Mr Coulter: I think what would
be a good result is for nobody to rewrite the draft that the project
board agreed at the last meeting which basically said that the
Government has a huge responsibility—ODPM has a huge responsibility—to
make clear, as we have described it in our evidence submission,
what it is commissioning from the different entities with which
it engages in the context of the regulation aspect.
Q52 Andrew Bennett: So you are saying
that the ODPM should make it clear what it wants.
Mr Coulter: Absolutely.
Q53 Andrew Bennett: Rather than that
all of this function should be given say to the Housing Corporation
or to the Audit Commission.
Mr Coulter: Absolutely.
Q54 David Clelland: On what you referred
to as the confusion between the roles of the Housing Corporation
and the Audit Commission, how could the different roles be clarified?
What improvements do we need?
Mr Clark: We need to ensure that
the guidelines around which the Audit Commission and the Corporation
work are perfectly clear and, for example, the policy area clearly
belongs to the regulator, the governance area clearly belongs
to the regulator, whereas the service inspection role clearly
belongs to the inspector. As we heard earlier on, what we want
to avoid at any cost is the creep into dual regulation. What we
believe is that there is a clear distinction between regulation
and inspection and there is no reason why the two organisations
cannot function successfully. The other thing that I think needs
to be said at the moment on inspection is that there is a very
narrow focus around services and, as we have said before, our
concentration as a sector is on improving neighbourhood sustainability.
I think what we have to watch is that we are not being driven
down a very narrow agenda when we should be attacking a very broad
agenda about the long term health of the communities as well as
straightforward issues like whether tenants believe that repair
standards are adequate. I think there is a danger that in the
clarification of roles you also get an over simplification of
the agenda and I think we need to watch that. It needs to be clear;
it also needs to be sophisticated.
Ms Webb: I do not disagree with
any of that, and I think the other major distinction is between
which organisation is responsible for action when things do not
quite go right and that is one of the things you could quite easily
clarify. The inspectors are there to tell you whether you are
doing it right or not. The responsibility for supporting organisations,
taking action when things are not, is with the regulator.
Q55 David Clelland: Are you saying that
the Audit Commission has the power to inspect but not the power
to enforce? Does the Housing Corporation need new powers in order
to ensure that the recommendations of the Audit Commission are
enforced?
Ms Webb: We have said yes, specifically
in relation to service delivery because at the moment there is
a bit of a blunt instrument in terms of the Corporation's current
powers to take action where service delivery is weak. The only
mechanisms are quite heavy handed ones about the organisation
as a whole so there would be scope for improvement in that area.
Q56 David Clelland: Do you think it is
necessary that investment and regulation need the rest of the
same organisation?
Mr Clark: We think it is absolutely
essential that they are co-located. If you want to get coherent
delivery you need to link them together. The effect of separating
them would have a lot of downsides in terms of the delivery of
the agenda that the Government wants to see.
Ms Webb: We would agree with that
and I think you can see in recent years that the direction of
resources towards organisations that, through the regulation process,
are seen to be delivering the right kinds of things is much better
now than it was a few years ago. I think we would change that
at our peril.
Mr Clark: Coming back to the general
point about the level of change that has occurred around housing
associations, housing and the Housing Corporation over the past
five years which is enormous, the emphasis should be on getting
the outcomes delivered effectively rather than on organisational
change. We could all find what are theoretically better solutions,
but in fact we believe that the clarity, the strategic thinking
and the processes need to be sorted out so that the agencies which
have been empowered to do a job can do it, rather than a sort
of sense that organisational change is achievement. I think we
did list in our submission the changes that occurred and they
are absolutely legion; it is not in the interests of delivering
outcomes which the Government and all parties wish to see.
Ms Webb: I think we would we agree
with that in the sense that we could spend a long time talking
about all of the organisational structures. When we came in your
previous witnesses were making a similar point. You can get obsessed
with structures at the expense of looking at strategy in terms
of what it is that we all agree that we need and we can make any
structures work with any other structures, but what we need is
some strategic vision.
Q57 Chris Mole: I think we heard from
the Federation that the Corporation's focus leans towards the
national, following the establishment of the Regional Housing
Boards. CIH said in their evidence that the Corporation's first
priority was to central government. Is that how you think it should
have gone or what do you think should have happened following
the establishment of the RHBs?
Ms Webb: I think the Housing Corporation
was put in a very difficult position. I am not sure how else it
could have reacted, to be honest with you. It had national priorities
that it was tasked with delivering, not least key worker accommodation
and nobody said to it, "We don't want you to care about those
priorities any more" and in relation to the whole Regional
Housing Agenda there are some genuine tensions about where national
policy priorities collide with regional, collide with sub-regional,
collide with local, which we have not collectively resolved. I
think the Corporation were caught in the middle of that.
Mr Coulter: I would agree with
Sarah that there was that gap in how the Regional Housing Boards
were first established. They are there to present a strategic
picture of regional needs and if you look underneath how they
have done that at this stage at least of how they operate, you
could not easily translate regional housing strategies into specific
investment decisions. I think that is where the local and regional
strength of the Corporation can play perhaps a greater role than
has been done in the Regional Housing Boards up to now. The sense
of co-production which could be achieved by the skills of the
different statutory bodies who are taking part in them could be
better brought to bear.
Q58 Chris Mole: So the Corporation should
better engage in supporting the work of the Regional Housing Board?
Mr Coulter: Indeed.
Q59 Chris Mole: What is necessary to
make that happen?
Mr Coulter: I think greater clarity
about the balance between what central government wants and what
real freedom there is for Regional Housing Boards to specify and
therefore earmark resources out of what is allocated between the
different regions for investment programmes longer term. Secondly,
more emphasis on how the Corporation—which historically
has strong relationships with local authorities—has operated
its joint commissioning work between those partners in order to
make sure that the investment chain of strategy, resources, delivery
is more secure perhaps than it is observed to be in the first
year of operation.
Mr Clark: Can I give you a specific
example of where I think this could be substantially improved?
Market Renewal Pathfinders are nationally driven priorities. I
believe in the regions in which they occur they are identified
as priorities for the Regional Housing strategies, but the way
they are translated into priorities for housing associations and
the Housing Corporation is uneven between those strategies and
when Jim was asking for clarities that kind of thing, where the
things are not translated in an effective way across the regions,
we need to see that improve and the policy context is made clear
from all parties on what is expected. There is no reason why this
cannot occur, but at the moment it is quite a grey area.
| 
