Examination of Witnesses (Questions 60-79)
MS SARAH
WEBB, MR
JIM COULTER
AND MR
RICHARD CLARK
15 MARCH 2004
Q60 Chris Mole: How does that affect
the investment role? Who should lead on the investment role, should
it be the Boards or the Corporation? Does the Corporation have
a role?
Mr Coulter: I think it has the
role of informing the strategy making. It has a lot of market
intelligence at regional and sub-regional level simply because
of its experience as up to now at least the sole agency operating
in that environment consistently for the last 20 years or so since
major resources started to flow since the 1974 Housing Act. It
can support the strategic market intelligence functions for the
Regional Housing Boards over time, depending on how the Boards
develop and how assemblies may develop. That may change, but that
is three or more years away. In the short term there is a really
important task to make sure that there is no discontinuity in
investment processes across all the regions, particularly since
there is no argument any more that there is a housing crisis out
there and that investment leadershipwhether it is regeneration
or new affordable housingis a very important activity.
Ms Webb: There is also a monitoring
role in relation to investment which is that somebody has to make
sure that all the individual very small housing developments that
are built over a region, when you add them all up, they have delivered
what you thought were your strategic priorities. I think the Corporation
comes in at the beginning and the middle and the end of the process,
performing the strategic thinking at the start as part of a partnership
with the Regional Housing Boards, actually delivering the money
on the ground because that is a very important part. The Regional
Housing Boards, whatever they turn into, are not going to turn
into bureaucratic organisations that administer the delivery of
money. Then it checks at the end that what you first thought of
is what you have actually got when you have added it all up.
Q61 Christine Russell: Moving on to relationships
between associations and local government, there was a very interesting
survey done recently by Housing Today that highlighted
the frustration housing associations have with local authorities
or with forging good partnership working with local authorities.
What role do you see the Housing Corporation have in improving
this working relationship between local associations and local
authorities?
Mr Coulter: I think it is more
than the Corporation. Clearly we would see, as their trade body,
that the Federation has role, the local government association
has a role and the Corporation has role. In 2002 the three organisations
combined to produce a Framework for Partnershipas we called
itwhich set out a comprehensive approach to how at a high
level at least relationships ought to be viewed and managed. It
was not simply focussed upon investment. It is very easy to get
drawn down the investment only view of what housing associations
do. We were very concerned about the overall quality of activity,
neighbourhood management and service performance being part of
the engagement and relationship. I do not read Housing Today
that frequently, I have to confess, so I do not recollect the
detail.
Q62 Christine Russell: I think they said
it was a one-way relationship. There has to be give and take,
but it is all give from the association and all take from the
local authorities. I think that was the gist.
Mr Coulter: That may be true in
the worst of cases and of course bad news makes good news. There
are a lot of partnerships which operate constructively and creatively;
they may need attention and maintenance on a consistent basis.
To go back to a point I made earlier, the way in which the Corporation
looked, for example, at the role of joint commissioning, that
has been extended at least in the investment context quite a long
way since joint commissioning came through in the late 1990's.
That has been a very constructive way in which partnership arrangements
have been seen to be at the centre of successful activity at local
level. I am sure they will want to continue with that line.
Ms Webb: I think it has a clear
role to help do this and part of that is by incentivising associations
that work in partnership with local authorities and there are
some very good examples and there may be some poor examples and
we should always be aiming to stimulate best performance everywhere.
Q63 Christine Russell: We would probably
like to know about those good examples and those bad ones if you
have them. Could you send them to us?
Ms Webb: Yes, certainly. I think
there is also a wider role about the Housing Corporation itself
working better in partnership with the local authoritieswhether
it is individual local authorities or groups of local authorities
or the local authorities through the Regional Housing Boardsto
talk about housing strategy and what is actually needed on the
ground. I would echo Jim's point that the easiest mistake to make
in all of this is to think it is only about investment and the
relationship between the local authority and all of its partners
should be about everything that those partners do, not just about
the small amount of their activity that is to do with building
new houses.
Q64 Christine Russell: It is certainly
the case that many local authorities who have transferred their
housing stock are now receiving thousandsif not millionsof
pounds every year from right to buy sales. What do you think the
Housing Corporation should be doing in order to persuade those
local authorities to spend that money on reinvesting in housing
in their area? Or do you feel the Housing Corporation has no responsibility
in that at all?
Ms Webb: I would not have said
it was primarily the Housing Corporation; they are not the people
who could perhaps exert the greatest influence on local authorities,
but I would agree with you that there is a more general issue
about what local authorities do with their receipts. In some areas
they do not need to spend those receipts on providing new housing
and in some areas there might well be an argument for them doing
that. I am not sure it is a responsibility best placed on the
Corporation to push them to do that.
Q65 Christine Russell: Whose responsibility
is it, do you think?
Ms Webb: I would have thought
that part of the fit for purpose assessment that ODPM make of
housing strategies ought to be exactly that kind of thing. There
is a point beyond that if you are just talking about transfer
which is that you could make what you do with the receipts a much
tighter part of the original transfer proposal, but that is a
very specific point, and then you would not get into that problem
in the first place. It is much more clearly an ODPM matter, followed
up by an inspection through the Audit Commission of local authorities
rather than a Housing Corporation role.
Mr Clark: I would say it has to
be a role for the ODPM because they agreed the original financial
deal with the transfer occurred; it has to be ODPM.
Q66 Christine Russell: The only reason
I am asking is because it is the Housing Corporation who looks
at the business plan of the transfers and agrees whether it should
be a 50/50 split or what the split should be between the association
and the local authority if a property is sold.
Mr Clark: It is primarily ODPM
who agrees that. It is not the Corporation. On the relationship
between the local authority and the associations, for the last
15 years investment priority has been heavily driven by local
authority priorities. As you know, in some cases that has meant
a 100% of allocation nominations going to local authorities and
I think the survey you mentioned was about power relationships
and how associations and local authorities see that. The trouble
is that the power relationship often obscures the outcome and,
for example, a lot of associations have now got concerns about
sustainability because they feel that the nominations are not
assisting sustainable neighbourhoods. I think one of the steps
through these partnership arrangements that needs to be achieved
is much more concentrating on long term sustainable outcomes rather
than who is controlling the day to day.
Q67 Andrew Bennett: Local authorities
have pushed up their performance pretty dramatically in recent
years. Housing associations have not. Why not?
Mr Clark: I do not think it is
correct to say that associations have not.
Q68 Andrew Bennett: The evidence that
you have put in suggests that there has not been a great deal.
Mr Clark: The evidence the Chartered
Institute put in said that. This is the area of evidence where
we disagree with the Chartered Institute. In fact, the performance
information of the last three years shows either stable or improving
performance in most areas. There is only one area where association
performance is significantly adrift of local authority performance
and that is income collection. A very significant proportion of
that problem is linked to housing benefit services but the performance
is improving. We would not defend that it does not need to improve
further and we do think that the Audit Commission inspections
will help that, but also of the 47 reports that the Audit Commission
has published so far 68% of the associations inspected have been
either at a two or three star level or its equivalent. We certainly
would not accept that performance is currently poor.
Q69 Andrew Bennett: That does mean that
32% are not doing very well.
Mr Clark: Not doing as well as
they should. The percentage that are being shown as poor is less
then 10%.
Q70 Andrew Bennett: Who should be cracking
the whip and getting standards pushed up quicker?
Mr Clark: I think enforcement
is certainly the role of the Housing Corporation, without question.
As you probably know, on the back of two or three Audit Commission
inspections associations have been put into supervision by the
Housing Corporation. We would certainly see inspection as a driver
for improved standards.
Q71 Andrew Bennett: Do you think supervision
works?
Mr Clark: Supervision has worked
very effectively over the years and, as you know, has given lenders
very great confidence in the association sector.
Q72 Andrew Bennett: Has it given tenants
the same satisfaction?
Mr Clark: Tenant satisfaction
levels are holding up although they are tending to drift in the
social housing sector generally. It was said earlier on that until
the Audit Commission came in I think there was insufficient attention
to tenant services. I think in the last two to three years there
has been a significant move towards that.
Q73 Andrew Bennett: So the housing associations
are pleasing the bankers but not the tenants.
Mr Clark: No, they are pleasing
both. In 1990's there was a very heavy emphasis on finance but
I think there has been a big shift towards tenant and community
services in the last few years.
Ms Webb: However, you do not want
to try to solve what might be important to the tenants but a relatively
easy to solve problem about a particular aspect of performance
delivery with supervision. I am not sure that I can see how that
is in the tenants' interests. Some incentives and action that
allows the Corporation to help and support specific performance
improvement in specific areas has got to be the way forward rather
than just focussing on the big supervision type approach.
Q74 Christine Russell: Why do we need
2,000 housing associations? Why does Manchester need 73? Do you
think the Housing Corporation should be persuading a few of the
smaller ones to merge together?
Mr Coulter: Manchester has, I
think, less than 73, although the numbers have gone up.
Q75 Christine Russell: We have been told
they have 73.
Mr Coulter: I will perhaps come
to that in a moment. The 2,000 registered housing associations
consist of a very large tail of extremely small housing associations,
about 550 of them are almshouses and, in addition to that, some
of them are entirely voluntary organisations with probably only
one small sheltered housing scheme. The number of active housing
associations is far less. That number represents diversity which,
in its turn, can represent choice. I think that any suggestion
that there has to be a grand plan of rationalisation has to answer
the question: what will that do for choice? (which is the most
important criterion in the context of neighbourhood delivery).
In Manchester, the Housing Corporation, the National Federation
and Manchester City Council together funded some work which was
done for the three organisations on what we called a Rational
Approach to Neighbourhoods where we looked at what I believe to
be 55 housing associations rather than 73but who is arguing
about the difference?and looked at ways in which we could
actually get more coherence and consistency on the ground of service
delivery rather than overlapping services or conflicting services
even of organisations in the same street or neighbourhood. There
is a lot of complexity around structure and I heard some of that
being addressed in the last session that you had with your previous
witnesses. Certainly in the housing market renewal areas that
is increasingly at the top of the agenda of the associations working
locally. In Liverpool, for example, we now have had stock swaps
to rationalise the way in which neighbourhoods operate and interact
with housing associations. In most of the other Pathfinderswith
the exception of Hull; Hull seems to be the exception to most
of the progress being made in the Pathfinders at the momentthere
is a level of engagement between associations and the Pathfinder
board which is looking to get a concept of lead associations in
place so that instead of dealing with structural issues which
take time, which are complex and have transaction costs (as I
think David Cowans said) there is much more attention given to
working together to promote more rational approaches to services.
Ms Webb: I think we would generally
agree with that. The incentives are better directed towards partnership
approaches and increased efficiency on the ground rather than
spending ages being tied up in merger talks which may end up nowhere.
I think there is an argument. We would perhaps go a little bit
further than the NHF in saying that the Corporation has a role
to look at the bigger picture of what it is you get for all the
independent activities of independent housing associations. I
think the other biggest problem with this whole debate is whether
we end up with very large organisations that have moved too far
from local service delivery and we are learning some of the mistakes
of trying to manage in very large organisations that are remote.
It is not impossible to do, but you have to work harder at being
responsive to your local community the bigger you are. That is
the other side of moving towards too much rationalisation perhaps.
Q76 Andrew Bennett: One of the crimes
of the ODPM Department's tradition has been that it has failed
to spend the money that it has had, but the Housing Corporation
has been pretty good at getting its money spent. Do you see the
changes that are going on now making it harder to guarantee that
the money is spent?
Mr Clark: No, I would not say
that. We expect 80% of the ADP will be given to 71 associations
which will not be the whole allocation; 20% will still go a larger
range. We would expect that the larger associations would still
be able to deliver the programme. In a number of cases consortia
of associations have actually bid.
Q77 Andrew Bennett: Is that slowing down
the process?
Mr Clark: Not slowing down the
process because we have not had the allocations yet and that is
certainly a problem
Q78 Andrew Bennett: Is the allocation
becoming more difficult because of the process?
Mr Clark: No, the allocations
have been difficult for years because of land supply and those
sorts of reasons. Associations have shown themselves as very flexible
to react to the framework within which they are given to deliver
the output. I believe they will deliver the output this coming
year.
Q79 Andrew Bennett: Is the quality of
these homes going to hold up?
Mr Clark: I see absolutely no
reason why not.
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