Select Committee on Office of the Deputy Prime Minister: Housing, Planning, Local Government and the Regions Minutes of Evidence


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 leadership—whether it is regeneration or new affordable housing—is 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 Partnership—as we called it—which 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 authorities—whether it is individual local authorities or groups of local authorities or the local authorities through the Regional Housing Boards—to 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 thousands—if not millions—of 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 73—but 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 Pathfinders—with the exception of Hull; Hull seems to be the exception to most of the progress being made in the Pathfinders at the moment—there 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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