Keeping it simple
Tim Blanch calls for a Made in Wales approach to housing associations and community mutuals
I first started working in the housing association movement in the mid 1970s. At that time the sector was very split in its philosophy and approach. In those days housing associations roughly divided into three types:
• the long established philanthropic associations like Peabody
• younger more commercial associations which had often started as co-ownership societies and which tended to see themselves as filling a purely landlord role
• the new community associations that had grown out of Shelter campaigns, the squatting movement and church groups, which saw their role as focusing on community regeneration, fighting against the demolition of family homes, supporting special needs groups, developing tenant co-operatives etc. Their development was directly dependent on high levels of social housing grant after the 1974 Housing Act, which compensated for their weak financial position.
Over the years the differences have diminished as associations have become more diverse. In particular stock transfer has created a new group of large financially strong associations that see their role as explicitly supporting community regeneration.
However, 40 years on, we now face a similar split to that of the 70s. In England the market view is that as a result of very low grant rates and rapidly increasing rents, only the largest and financially strongest associations will be able to develop new housing.
Essential compromise
In this analysis there is a conflict between either a focus on supply, economic efficiency, large-scale procurement and cost efficiency, or a focus on sustainable communities, neighbourhood renewal, welfare reform, and local capacity building. Most associations try and achieve the community aims through clauses in procurement contracts for local labour
and community benefit. The problem with this essential compromise is that, while supporting local employment, it can actually undermine local enterprises.
I would argue that this is a false dichotomy driven by a market view of social housing provision. Wales has the opportunity to embrace a different approach from that of England, to ensure that we can deliver a longer-term sustainable system.
My view is influenced by ten years experience of introducing ‘systems thinking’, or ‘lean’, into my own organisation and the impact that has had on how we work. Fundamentally, the actual work of housing association staff on the ground remains much the same as 40 years ago. For those organisations that have gone down the systems thinking route, older staff regularly comment that it feels like returning to the old days, because the concentration is on carrying out the work, and not on strategy and policies and procedures.
Economies of flow
What we have found is that there are more savings from economies of flow than scale, by having simple systems that enable staff to deliver what a tenant wants with the minimum of complexity. To get there means understanding the work as a system and studying it from beginning to end from a customer point of view. While savings from bulk purchase may sometimes be cheaper on a unit basis, they often make the system as a whole more expensive because of added complexity and delay. When economy is in flow, the size of the association becomes less important. In fact large size, particularly when geographically dispersed, can cause dis-economies because of separation from personal contact with the customer.
Other changes in the business environment are supporting this change of perspective. For example, organisations used to have to be large to afford expensive IT to manage complex operations. Now these economies of scale are on the Internet rather than within organisations. It is possible to buy the equivalent of Microsoft Exchange for £3 to £4 a month per user with no expensive set-up costs, and the spread of smart phones and apps means that the cost of software and hardware is falling fast.
An organisation designed around this model starts to look very different. It will have simpler contractual arrangements, place less emphasis on compliance and put more emphasis on the work and relationships. The reduction in complexity releases the time of senior staff, and improves governance since it is easier for the board to have a rounded view of the performance of the organisation as a whole.
The English model for housing associations will produce more supply in the short term. However, the capacity to develop will be used up relatively quickly by gearing and security constraints. What will be lost is the role of associations in supporting the communities they work in.
There can be an alternative vision for housing associations in Wales. This vision places an emphasis on associations:
• becoming local enablers
• replacing globalisation with direct involvement with local people
• employing local people directly or through local firms and suppliers
• providing housing for a wide spectrum of the community
• creating ethical investment opportunities for people via local bonds.
Local people will then clearly see what impact the housing association is having, both on the local economy and on providing jobs and homes for their children and grandchildren
England is firmly committed to a market- based approach to housing provision, where only large national associations will thrive. In Wales we have the opportunity
to support housing associations and community mutuals in developing their role as social enterprises, sustaining local communities, supporting local employment, and engaging the wider community in their activities. In the long run that will not only be cheaper, but will be a better solution for people and communities.
Tim Blanch was formerly chief executive of Coastal Housing Group. He can be contacted at tim.blanch@tidalconsulting.co.uk (http://www.tidalconsulting.co.uk)