Examination of Witnesses (Questions 320-339)
13 JANUARY 2004
MR A D C GREENWOOD,
MS DEBORAH
FRANCES SHACKLETON,
AND MS
CAROLINE FIELD
Q320 Christine Russell: Can I go on to
ask you about rent restructuring because you made a point of saying
that you feel it could generate problem for housing associations
like your own.
Mr Greenwood: Yes, in the future.
Rent restructuring is good policy in principle; I have no problem
with it at all. It obviously makes sense that the same rent or
similar rent is charged by social landlords, to give them such
a generic term, for the same property in the same area. That is
obviously sensible, it is in the capping of rent increases, that
is where I am worried, because our two major expenses are salaries
and maintenance and we all know how important maintenance is—that
is why we are here. Allowing for future rent increases, it is
important that, in setting the formula, Government recognise that
the rate of increase on our two main headings of expenditure is
above RPI.
Q321 Christine Russell: What about Riverside?
Ms Shackleton: Exactly the same
applies to us although we have an additional problem in that our
rents start at a relatively low level, they are as affordable
in Merseyside and as low as anywhere in the country. So, the target
rent is low, but then the increase has been constrained for six
years running and, although that does help you to achieve productivity
and efficiency savings, if it is applied every year for six years,
at some point, the pips squeak and real cuts in services apply
and we have had to take money out of our business plan over the
next five years which we would have liked to spend on the Decent
Homes Plus Standard—£7 million out last year—because
we do not have the income coming in to fund that spending.
Q322 Christine Russell: In your submission,
you talked about all the added value things that you provide at
Riverside, like community wardens etc. Why do you feel that it
is your responsibility to do that rather than Liverpool City Council
or the other local authorities in the areas where you operate?
Do you think you do it better than they do?
Ms Shackleton: I think we are
rooted in the neighbourhood, so we listen to tenants—our
submission explained this—and acted on some of the things
that tenants had asked of us. The neighbourhood renewal fund is
helping now and it was not in existence when we started in communities.
Because we have a significant asset base in those neighbourhoods
and because we are very close to our tenants, I think we are reflecting
what it is that they need. The truth is that it is a win-win situation
because it is something that they want but it is also something
that helps our business because, if the neighbourhood is sustainable
by our investment in the community, then people will stay there
and pay their rent.
Q323 Chairman: It is a bit of a twist,
is it not? If you live in a private part of Liverpool, you pay
your council tax and you get those same services paid for out
of council tax. In those neighbourhoods that you are managing,
you pay your council tax and you get none of those services provided
and then you pay your rent to have to pay for the services that
you are putting in because the council is not doing its job.
Ms Shackleton: The council does
not necessarily provide the kind of services that we are providing
in those private neighbourhoods you mentioned and we certainly
would not be replicating services that the council provides, that
would be pointless. In fact, we are working in a complementary
fashion, we hope, and are trying to encourage them to bend their
resources into the most vulnerable neighbourhoods, which is where
we are in with other association owned properties, and, if they
do that, that is great. We are simply trying to add value to what
it is that they are doing and our submission indicated that, for
the £2.8 million we spent, we had levered in about £14
million of other spend which includes Liverpool City Council and
other council spend and other Government spend. So, it is trying
to use a small amount of rent to generate a significant amount
of improvement in neighbourhood management where our properties
are.
Q324 Mr Betts: This is a question on
which you have not specifically commented which is the Government's
current view that there should be separation of strategic and
housing management functions in any local authority. Is that something
with which you agree as a matter of principle or do you see it
as the latest fashion for ministers and civil servants who want
to be doing something different?
Mr Greenwood: I would not go as
far as to say that I think it is a matter of principle but I think
it is an eminently sensible split and, if I go back to the Tower
Hamlets Partnership, in that situation, the council are there
as a major partner and we, as a provider, to use jargon, recognise
the civic leadership provided by the elected councillors and the
strategy that they provide and they set. However, in terms of
doing the housing management, as an independent business focused
on housing, I think we have a very good opportunity to deliver
a first-class service which is responsive to residents throughout
the four year period, not just once every four years. So, I think
it is a good split and it is one that, in Tower Hamlets, we are
working towards. Just going back to that previous point, this
is not going to be a situation where additional neighbourhood
services are just provided by one association through the rent.
The aim is that, as a partnership, we work out the needs across
the borough and agree who is the best body to provide that particular
service and to raise the quality of life for all across the borough.
Ms Shackleton: I think they are
very different jobs. I think there is no particular reason why
any one organisation cannot do both, but they understand that
they are very different. At the same time, I think the split is
not a problem either and, in particular, transfer to a local housing
association can have real added value in that it is an organisation
which is wholly focused on housing and neighbourhood regeneration
rather than part of a big whole.
Q325 Mr Betts: Some of us who are more
cynical might conclude that the Government decided that stock
transfer is a good idea for a different reason and therefore concluded
that the split of function between the strategic and the management
fits that model and therefore it is going to be right in all circumstances
because it generally pushes the view of separating management
out of the particular organisation. That does not sit very happily
with the National Audit Office report, does it, which says that
stock transfer means much more expense and much more cost to tenants
than anyone else.
Mr Greenwood: That is not my reading
of the National Audit Office's report. I do not think it is much
more expensive at all. If you look at the issue of housing—
Q326 Mr Betts: That is what they say—"considerably
more expensive".
Mr Greenwood: I would argue that
the Government have been on this programme of separating strategic
vision and enablement across a whole range of services for some
time and housing is but one; it has happened in the school service
and it is happening in social services. I think it is a pattern
which has been going on for probably 15 years. It can be reversed
but, provided the service providers are working together and are
talking to each other the whole time—and that is key—I
think it can and should work.
Q327 Mr Betts: But it does cost more.
The National Audit Office has said considerably more.
Mr Greenwood: On a limited study
on early stock transfers, it costs more in money terms but there
is a point about the additional benefits and the additional—
Q328 Mr Betts: So, really, the tenants
are getting benefits from all these stock transfers and they can
claim all those extra services and benefits and everything, but
they are really only involved because more has been spent because
of more access to funds from the stock transfer organisation.
Ms Shackleton: It is our experience
that, in the very early days of our stock transfer housing associations,
they are more expensive than our traditional association because
they are doing an intense job and I suspect that will be equally
the case if a local authority was allowed to spend as much money
and was allowed to take account of the wider job as our new associations
are doing. Over time, we expect those associations to be at the
same value for money revenue terms as our existing associations
and I think the National Audit Office may be wrong over time.
Q329 Mr Betts: Look at the historic position.
Housing associations in terms of management costs per unit property
has always been more expensive than the local authority.
Mr Greenwood: In Tower Hamlets
last year, the most expensive housing management cost per unit
was the Council and their rents are higher.
Q330 Mr Betts: Tower Hamlets may be the
exception! When stock transfers are undertaken, do you think that
the local authorities actually do enough in terms of consulting
with existing housing association in areas to take on board their
view on the situation before embarking in the process of looking
for a transfer?
Mr Greenwood: The Tower Hamlets
experience, which I think is unique, is that there has been a
huge amount of consultation both with the receiving associations
and with the residents. They have consulted across the borough
with all council tenants and leaseholders and they have selected
16 housing associations from which to choose. There has been a
huge amount of consultation and I hope it succeeds.
Q331 Mr Sanders: Can I ask Riverside
whether housing market failure affects your ability to meet the
Decent Homes Standard and whether in fact the Government are doing
enough to help you.
Ms Shackleton: Yes, they do and,
as I say, about 15% of our properties within the housing market
pathfinder are, in our view, either short or medium-term and we
would not be anticipating making significant investment into those
properties; we think it is pointless. What we need is the pathfinder
assistance to more radically restructure the neighbourhoods in
which those properties are located and some compensation for our
loss of those and selling the plot which they are on which we
can then recycle into Decent Homes. So, the pathfinders are absolutely
great and we are very positive about them. We are disappointed
that so much additional money is going into new properties in
the growth areas and not quite as much into the pathfinders. Nevertheless,
it is a great start.
Q332 Chairman: Do you think pathfinder
in Liverpool is getting a move on?
Ms Shackleton: Yes, absolutely.
It is splendid. We are all working together. It is a strategic
housing partnership across the sectors, across the local authorities.
There is a buzz in the city. There is commitment to the vision
and there is a real opportunity here to make a big difference.
Q333 Mr Cummings: In the private sector,
only homes inhabited by "vulnerable households" actually
come under the target. Does this have any consequences for the
efforts of your associations towards achieving the Decent Homes
target?
Ms Shackleton: Yes, it does because
many of our homes are in areas where we need the private sector
homes to be improved at the same time or it undermines the effect
of those individual Decent Homes on the Decent Neighbourhood.
So, we were pleased to see that the private sector is now being
taken into account, but we think the Government have underestimated
the impact of that and we think that more help is needed for poor
owner/occupiers, perhaps to the same degree that owner/occupiers
are given to as right to buy or as home buy, similar council initiatives
set aside for home improvement grants which are less prevalent
than they were and they need to be applied in order that whole
streets and neighbourhoods can be improved, not just for poorer
owner/occupiers.
Q334 Mr Cummings: It does appear as if
you are agreeing with that.
Mr Greenwood: Yes. Our situation
in Tower Hamlets is that the traditional private sector has almost
gone. Where it is there, it is dreadful. There is a new private
sector emerging which is right to buy flats on flatted estates
and leaseholders and there are issues there with leaseholders
who cannot or will not pay the full amount that is needed.
Q335 Mr Cummings: Bearing in mind current
resource limitations, do you believe that it will be feasible
to bring all dwellings, regardless of tenure, up to the Decent
Homes Standard by 2010?
Mr Greenwood: My view is that
additional resources are needed and, particularly, we need to
have, as I said at the beginning—
Q336 Chairman: How much?
Mr Greenwood: I do not have a
figure.
Q337 Chairman: Are you talking about
large sums of money?
Mr Greenwood: I have not brought
a figure today.
Q338 Chairman: Could you give us a note
with a figure based on your assessment?
Mr Greenwood: I can give a figure
in Tower Hamlets. I think the figure on gap funding in Tower Hamlets
is somewhere in the order of £300 million.
Q339 Mr Cummings: Is it possible that
private landlords in areas of high demand would seek to avoid
"vulnerable households" if the Decent Homes Standard
was actually enforced at local level?
Ms Shackleton: They might and
I wonder if they would use the licensing tool which is a new tool
to . . . If we can use incentives through improvement grants through
licensing private landlords with disincentives to stop them avoiding
that involvement with people, we might be able to avoid that problem,
but I think it is a problem.
Chairman: On that note, can I thank you
very much for your evidence.
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