Newport Housing Commission
Meeting the Welsh Housing Quality Standard is a challenge facing all social landlords. The problem of increasing investment in the housing stock while operating in a restrictive financial arena is currently taxing local authority decision-makers throughout Wales. This feature will examine the approach taken by Newport City Council to find a sustainable solution to the Welsh Housing Quality Standard funding issues.
Background
Newport City Council Housing Revenue Account (HRA) Business Plan 2004 painted a picture that will be familiar to many local authorities, a major capital shortfall, in Newport’s case £158 million. The Council needs to invest £240 million in the years before 2012 to bring the stock up to the required standard, but only anticipate resources of £82 million. The Business Plan also showed an increasingly worrying revenue position, with continued Right to Buy sales leading to the loss of economies of scale and resulting in a deficit position in the next few years. It was clear to Newport City Council that major issues had to be addressed to ensure the sustained delivery of high quality housing services.
The process
To address these crucial issues relating to the future sustainability of the housing service Newport City Council established an independent Housing Commission. The Commission consisted of nine members – four tenants, four independent experts and an independent chairperson. All members of the Commission had equal status. There was no pretence that the four tenants were a representative sample of tenants and the Commission remained determined that the participation of the wider tenant population in the process was vital. The tenants were, however, able to provide their insight and experiences of being tenants of the City Council. The role of the independent experts was vital in the process advising fellow Commissioners on issues such as housing finance, regeneration etc. Although established by Newport City Council, the Commission remained fiercely independent of the Authority throughout the process.
Newport City Council set five objectives for the Commission:
- to study all options for securing sufficient capital resources to achieve the WHQS and other identified housing objectives
- to recommend a course of action for achieving the WHQS and other identified housing objectives
- to develop an action plan to deliver the desired course of action
- to analyse the corporate impact of all long-term funding options/li>
- to explore the impact and benefits of the regeneration of council housing on the wider community and economy
The Commission set itself the task of addressing these objectives in a structured and comprehensive manner. The objectives were the driving force that shaped the work of the Commission. Right from the start, the Commission was determined that the exercise would be tailored to the unique challenges presented by the investment conundrum in the City of Newport. The tailor-made approach became a theme during the whole Commission process.
The Commission devised a work programme with the goal of ensuring that the correct information would be collated to ensure that the Commission objectives could be met. The work programme was flexible so that the Commission could change it or expand it as the process progressed.
The Commission received the evidence using various methods. Twelve evidence meetings were held in public at various locations around the City of Newport. In addition, six sub-group meetings were held including study visits. To consider the evidence and prepare the final report, two consideration days and four editorial meetings were held.
The Commission process attempted to be open and transparent. Meetings were held in public at numerous locations throughout the city. The Commission used a variety of methods to elicit different views. The Commission received verbal and written representations, undertook study visits and authorised its own research. To ensure that all issues were addressed and the correct conclusions reached, the work of the Commission had to be comprehensive. The Commission remained determined that answers would be sought for all questions and the report would provide the Authority with confidence that the recommendations were correct for the tenants, the council and the City of Newport.
The evidence
The Commission was determined that the evidence at its disposal would be comprehensive. To gain an understanding of the policy framework representations were made by the Welsh Assembly Government, Shelter Cymru, Welsh Local Government Association and Chartered Institute of Housing.
One of the main duties of the Commission was to find a funding solution that would enable the long-term provision of high quality housing services. To ensure that the financial data available to the Commission was correct, independent consultants were procured to verify the HRA Business Plan and to complete an independent funding option assessment. The Commission also undertook its own assessment of the stock condition.
To study the potential impact of different funding options, the Commission heard evidence from other social landlords including a study visit to a Powys County Council who are confident they can achieve the Welsh Housing Quality Standard through existing funding. The Commission also visited V2C, the only total stock transfer in Wales. Submissions on funding options were also provided by the trade unions and Defend Council Housing.
The potential capital investment of over £400 million in the thirty year life of the Business Plan represents a major regeneration opportunity. The Commission maintained the regeneration agenda as a core issue within the process to ensure that the potential offered by such huge investment is not wasted. Sheffield Rebuild (social enterprise building company) and Whitefriars Housing Association were identified by the Commission as good practice organisations and were consulted.
The Commission was determined that the views of all stakeholders would inform the process. Tenant groups made representations to the Commission and were also provided with training and resources to undertake their own independent survey of the views of the wider tenant population. City Council housing staff organised their own conference and submitted the output from this process as evidence to the Commission.
The Matrix
Faced with the monumental task of ensuring that the findings of the Commission were fully informed by the large amount of evidence that had been collated, the Matrix was designed. A colourfully designed chart, the Matrix allowed the Commission to consider the role of all potential funding options against key outcomes that had been designated by the Commissioners. Through the evidence collecting stage of the process, the Commission identified nine potential funding mechanisms. These fell into two broad categories: stock retention and stock transfer. The retention opportunities included: existing funding, prudential borrowing and the Private Finance Initiative. The stock transfer mechanisms included: transfer to an existing Registered Social Landlord (RSL), a newly created RSL and transfer using the Community Housing Mutual Model.
The Commission assessed the impact of each of the nine funding options against fourteen predetermined desired outcomes using the Matrix. These included legal and financial considerations including the need to achieve the Welsh Housing Quality Standard and maintain financial viability. Stakeholder outcomes that were considered to be important included the impact of each funding option on the right of tenants, the rights of staff and the quality of service. The Commission also assessed the impact of the various funding options on wider objectives such as community and economic regeneration and external considerations such as accountability and the impact on the local authority.
Findings
The Commission concluded that the only way to be able to provide sufficient resources to achieve the Welsh Housing Quality Standard and provide a sustainable high quality service would be through transferring the stock to a RSL. The different financial operating rules for RSLs including, the write-off of over-hanging debt, the freedom to borrow private finance and the availability of dowry funding, mean that it is the only funding mechanism that can provide sufficient capital and long-term financial security.
The Commission recognised that the level of investment that a transfer RSL could attract would result in an unprecedented level of investment in housing with huge potential benefits for the wider community. To ensure that the acquiring RSL delivers on the expectations of tenants and is a catalyst for economic and community regeneration, the Commission recommended the creation of a tailor-made RSL. Called The Bridge, this new ownership vehicle would be tenant focussed with a flexible constitution to allow for the increase in tenant influence as tenants dictate the level of their own involvement. The Bridge Model would also place a constitutional responsibility on the landlord to contribute positively to the local community through policies that provide training and employment opportunities to residents and potential business for local companies.
However you approach the issue of meeting the WHQS, you will find that social housing finance is a confusion of irrational bureaucratic rules that even Franz Kafka would have found too far-fetched and illogical to use as a sub-plot. In spite of this, the Commission was determined to produce a sustainable output from the process. The high quality output produced by the Commission demonstrated:
- the thoroughness and inclusiveness of the process
- the comprehensiveness of the evidence received, and
- the skill of the Commissioners to apply the facts to the operating environment
The Commission reached unanimous conclusions and the final report was presented to the Council in October 2005. The Commission has provided the Authority with a deliverable solution to the funding issue based upon a thorough and robust study. The City Council has decided to allow sufficient time to consider the findings and consult on the recommendation with stakeholders before making an informed decision in March 2006. Newport City Council will have to take up the challenge of meeting the WHQS and tenants’ expectations.
A full copy of the report can be found at www.newport.gov.uk.
The views expressed in this article are the personal views of Chris John and Tony Hawrot, members of the Commission support team, and not the views of Newport City Council.