The Role and Effectiveness of the Housing Corporation (HC 401-i) ODPM Committee 15 Mar 2004

Evidence given by Mohni Gujral, Chief Executive and Arun Misra, Director, Corporate Affairs, Presentation Housing Association, Charlie Adams, Chief Executive, Hyde Housing Group, Consortium of Associations in the South East/G15 London Housing Associations, and David Cowans, Group Chief Executive, Places for People Housing Group; Sarah Webb, Director of Policy, Chartered Institute of Housing , Jim Coulter, Chief Executive, and Richard Clark, Chair and Chief Executive of Prime Focus Regeneration Group, National Housing Federation; Richard Kemp, Vice Chair, LGA Housing Executive Committee and Cabinet Member for Housing, Liverpool City Council, and David Thompson, LGA Housing Unit, Local Government Association, Derek Martin, Head of Housing Strategy, Manchester City Council.

Q4 Mr. David Clelland: Some of the submissions we have had have suggested that the Government has burdened the Housing Corporation with too many initiates. Is that your view and, if so, what should the Corporation do about it?

Mr Gujral: Having worked for the Corporation in a previous incarnation, I can certainly agree with that view that there are many, many initiatives being developed and sometimes that does take you away from the core of your activity and the focus of your activity. Quite rightly, there are occasions when the Corporation should be given additional responsibilities but there also needs to be a recognition that if you are given additional responsibilities then resources need to be matched. That has not always been the case. I would say the answer to that question is yes, it has been burdened with too many initiatives and it needs to be looked at in a wider policy context in terms of what other agencies are involved in the process of engagement, what other agencies are involved in actually regenerating the neighbourhoods that we are all interested in and what responsibilities could be shared and developed together.

Q5 Mr. David Clelland: Presentation has said in your submission that the Corporation is too focused on outputs without looking at the impact of its work in creating balanced and cohesive communities. How should it change?

Mr Gujral: Absolutely right. I think if you look back at all of the studies that have been done over the past 40-odd years, study after study shows that there has been too much of a concentration on the physical regeneration and not enough concentration on the social and economic regeneration of communities. There must be, at some time soon, a fundamental shift of that balance because unless that happens we are not going to be able to develop the kind of society that we are all aspiring towards. I think urban renaissance over the last 40 or 50 years has failed in terms of the poorest neighbourhoods that we are involved in. That, in itself, is a testimony to the fact that simply looking at outputs in the physical sense does not develop the kind of society that you want to develop, nor does it develop the people who live in those communities in the way that they want to be developed and are quite capable of developing themselves. What they need to be given is the capacity; they need to be given the resources to be able to make decisions for themselves so that they can determine what their future should be. I think that is why we made the assertion in the submission; it has been far too driven to outputs.

Q6 Mr. David Clelland: In terms of creating better balance and cohesive communities, would you say that that would be better achieved by the agencies on the ground having more power rather than the Corporation itself doing it, or the housing association or local authority regional boards? Would that be a better approach?

Mr Gujral: Absolutely. I think it has an enabling role; it has a role of being a catalyst in developing agencies on the neighbourhood model that Charlie spoke about earlier on. We are very strong advocates and proponents of local neighbourhood agencies that are based on self-help because through self-help we will actually realise our aspirations and the communities will realise their aspirations. Therefore I think the Corporation needs to acknowledge that and accept that that is a fundamental aspect of the building blocks of successful sustainable, cohesive communities.

Q7 What is the role of the Housing Corporation going to be once the Regional Housing Boards are properly established?

Mr Adams: I will attempt to answer that question, but it presupposes that I understand what the Housing Boards are going to do and I am not entirely sure about that. If I can take a historical perspective here about the role of the Housing Corporation, I think the Corporation has given away over the years a number of its core functions and I think that has been to the detriment of the housing association movement. Some of the reasons it has done that are as a result of government initiative, but from time to time it has done it of its own accord for a variety of reasons. Some local authorities have distinguished track records in supporting housing associations and voluntary agencies of one sort or another at a local level. However, unfortunately not all local authorities are like that; they are inevitably subject to change, they are subject to political change, financial change, changes in policy and changes in fashion. All housing associations, whether they are large ones or small ones, have experience of suffering from local changes and as a result of which can be damaged by processes over which they have no control. It seems to me therefore that the Housing Corporation must continue to have an important role which is the support of housing associations irrespective of the changes which are occurring at a local level to ensure that there is a degree of continuity. It seems to me that the Housing Boards will have a strategic role in determining where funding will be orientated. Having said that, in terms of fostering and supporting local organisations, the Corporation has a very important and continuing function irrespective of whether the Boards expand their role or not.

Mr Cowans: I would support that, but the other thing for me is, whatever one's view is about regional agencies, there needs to be a role for someone to have an overview of the whole housing market and to relay best practice between regional agencies, otherwise one can inadvertently create ossification as regions do not learn from each other. Hopefully that would not happen, but it might. There is an important role for the Corporation in that sense. There is also a major issue about the allocation of resources between regions and how does that get dealt with? Clearly everyone - including me - would argue for a particular regional position where nothing overlaps. That is entirely right; that is the basis of regionalism. But who handles the allocation of resources issue? The third big area for me is that there is just a possibility that without some sort of national agency that tension and debate about where one goes, where the future is, what the new approaches might be, might not be as robust as it could be. I think those sorts of relationships are the ones I would see developing in a vision that might just be in my mind about how Regional Housing Boards might develop. The last thing for me is that any regional agency can do with a bit of support now and again. It perhaps is not as strong as it ought to be; it perhaps needs some help with staffing or ideas or resources sometimes and if one has a role for the Housing Corporation in that regard as well, it might then actually have a very powerful and needed role to help Regional Housing Boards develop to their potential.

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Q26 Mr. David Clelland: There are a plethora of organisations with a regulatory role over housing associations. What should the Housing Corporation be doing about that?

Mr Adams: We did a calculation at Hyde to work out what the cost to Hyde was - my own association - of coping with the regulatory regimes of which there are many. We worked out that it was about £800,000. This is an organisation with a turnover of just short of £90 million. We thought that was an excessive amount of money and I would entirely agree that there are far too many organisations with a different regulatory role. You will see from one of the submissions that we have made - the G15 submission - that the G15 believes that the decision to split the inspection function away from the Housing Corporation and give it to the Audit Commission was wrong. There are all sorts of positive elements to that but fundamentally we disagreed with it because splitting the responsibility of the housing management away from regulation and investment seemed to us to be inappropriate. It is very hard for the Corporation to argue the case because it is only one of a series of bodies which is responsible for regulation, all of which have equal status within the constitution (if I can use that phrase): there are the Registrar Friendly Societies, there are the Charity Commissioners, there is obviously the Audit Commission; there are local authorities who do a lot of inspection work particular for those of us involved with supported housing. All the Corporation can do is to argue that the regulatory burden should be reduced but fundamentally it is government that has to take the relevant decisions.

Q27 Mr. David Clelland: Presumably the burden could be reduced by clarifying the system, but do you think the number of regulatory organisations ought to be reduced?

Mr Adams: The two things are inter-related. One has to say this is true for the audit systems within housing associations as well. There are several different audit systems which apply irrespective of the role of regulatory bodies. If you can streamline those then you can considerably reduce the amount of regulation. This is difficult enough for a large housing association; it must be terrible for a smaller association. If you are an association with only a hundred units or even smaller than that, having to cope with the regulatory regime must be extremely difficult.

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Q37 Mr. David Clelland: Should housing associations be made more accountable to the large variety of stakeholders and, if so, how? Or should their main line of accountability be to the Housing Corporation?

Mr Adams: I think the problem with accountability is that it tends to mean whatever you wish it to mean. It is one of those ill-defined terms. The fact that housing associations are not democratically accountable makes them very conscious of the fact that they need to be accountable. I am not saying it is true of all housing associations, but certainly I think it is true of the bulk of those receiving public finds, that they find a huge variety of ways of trying to be accountable, including to their local communities, including to the local authorities where they work, particularly - and increasingly - to their residents and stakeholders. There are a whole variety of ways in which they are attempting to be accountable, but are very conscious of the criticism which is often made of them that they are not, and I think that is what makes them try so much harder to be so.

Q38 Mr. David Clelland: But you think there are some weaknesses there. You told us they are doing it in a voluntary sense; they are trying to be more accountable because that is what you would like them to do but there is no obligation on them.

Mr Adams: I think there is an absolute obligation on them to do so. The Corporation is consistently saying to housing associations that they must constantly seek to be accountable and there is a very lively debate between the Housing Corporation amongst housing associations as to how to create that accountability structure. The argument is hardly ever settled because there are a whole variety of different forces at work.

Mr Gujral: I think it is also worth recognising that accountability is any given moment in time. The operating environment that we all function in is a constantly changing environment. Opportunities develop over a period of time and I think we are very much, as a sector, at the leading edge of how we can be accountable and make sure that there is a transparency in our actions. I think Charlie is absolutely right in terms of what he is advocating. Clearly there is a very strong onus upon us to be transparent and clear in terms of what we are doing. I think increasingly the sector is rising to that challenge and will continue to do so.

Mr Cowans: And increasingly trying to be accountable in the right way to the right grouping, so there are these whole layers of accountability starting from what you do with the individual who lives in a property right through to those communities, the local authorities and they all require different levels and different forms of accountability. The accountability process is quite sophisticated and there are many layers of it. It is always moving, developing and changing which, for me, is one of the key notes of real accountability that is changing because you are listening to what people are telling you.

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Q54 Mr. 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 Mr. 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 Mr. 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 with 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.

This is an uncorrected transcript of evidence taken in public and reported to the House. The transcript has been placed on the internet on the authority of the Committee. Neither witnesses nor Members have had the opportunity to correct the record. The transcript is not yet an approved formal record of these proceedings.