What does it really mean to be independent? Antonia Forte says housing associations and government alike need to think hard about governance and regulation
One of the more disconcerting aspects of approaching retirement is the suggestion that you may have something of worth to say in parting to your colleagues – as if longevity is a prerequisite for wisdom. Looking back on the past 38 years, it is surprising that whilst so much has changed – devolution of housing policy, the size of the housing association sector, the transfer of stock from local authorities, private finance, diversity of activities, emphasis on energy efficiency – so much remains the same – how to enable tenants to influence service standards, our relationship with local authorities, points or choice based allocations, how to attract effective board members, countering the NIMBY agenda, regulation etc.
The third/ independent sector
One aspect that deserves more airing is the question ‘what do we mean when we say that housing associations are part of the third/independent sector?’ The term independent sector is synonymous with voluntary sector or non- profit, and comes from social sciences, where it closely relates to the term third sector. With the first (government) and second (business or the private sector) it is easy to understand the characteristics of these two categories, but defining what being part of the third sector means for housing associations and community mutuals is overdue.
It has been convenient for government to view us as independent because of the public sector borrowing rules, whilst we tend to insist we are not part of the public sector when we don’t want to do something – like the argument about the proportionality of the Welsh language standards. But rather than see this as a negative (we’re not public sector) we should think about the positive (we are independent), and what this actually means in practical terms. Two areas of current debate could look very different if viewed from a clear affirmation that we are independent organisations.
The first is governance. The robustness of our governance and financial health should be the responsibility of our boards; it is important in ensuring that organisations are socially responsible,
but it is the remit of boards and the membership. I have first-hand experience of what happens when a board ceases to be objective, and becomes a fan club for the chief executive. But is the current debate about the role and function of boards of housing associations a step too far the other way? I have been a member of several boards and committees, in housing and other disciplines, in Wales and elsewhere, and I can’t see how boards made up entirely of non-executives (paid or unpaid) can own and drive the business.
The recent review of governance missed an opportunity to look at the merits of other governance structures, including that of a mix of executives and non-executive boards that has been adopted in both the public and private sectors. The growth of Welsh Government’s expectation of board members, and in particular the chair, is unrealistic and unsustainable – and could result in a professionalised and paid (but locally disconnected) board membership.
I adhere to Tim Blanch’s view: ‘A board is there to stop a chief executive running amok.’ Despite the review, I don’t think we have bottomed out what a board is for.
The second implication is for regulation. Being accountable to Welsh Government for the use of public subsidy (development grant monies) is a legitimate area for audit. However, our rental income is only public money obliquely, because of the tenancy transaction (housing benefit is paid as a subsidy to the tenant to enable his/her to access housing). I’m not sure that the current regulatory process is any more able to drive forward standards than is the influence of consumers (through tenants organisations, local or national) or local trading standards or licencing arrangements.
Regulation
The thorny issue about how to regulate associations has remained a constant throughout the last 38 years. Whilst several attempts at introducing a more appropriate and proportionate approach have been made, the recent review of a system not yet fully implemented demonstrates just how big a gulf there still exists between the expectations of regulator and would-be regulatees. Fundamental to this must be faith in the credibility of those who regulate to understand the business of those organisations they oversee – and therein
lies the rub. Privately, those of us doing the job don’t think that those who tell us how to do it are
as capable as we are, whilst those who are tasked with reviewing us don’t think we are as capable as we think we are! How a better level of respect is achieved, I’m not sure – but I am sure that this is fundamental to any regulatory system that has credibility.
Retirement means I don’t have to justify these thoughts to anyone in a professional capacity – but I hope that they will start a useful debate about what being independent should mean.
Antonia Forte retired as chief executive of Cynon Taf Community Housing Group at the end of the year