Redrawing the map
Local government reorganisation will change everything in Welsh housing, argues Mike Owen
THE REASONS FOR LOCAL government reorganisation are many: a more strategic focus; coterminous boundaries with other public agencies; more efficient use of overheads; and of course the drive to find huge efficiency savings. One of the biggest costs in local government is staffing: there will be savings and for many colleagues in housing they will become the efficiency savings. Looking now from the housing association side of the fence it is hard to believe any further efficiency savings can be wrung out of local authority strategic and housing options side. But they will be found and the impact of new structures and new people will be extensive for tenants, housing staff and housing organisations.
In my previous job at Carrick Housing, I was housing lead on the implementation team for the merger of six district councils (one ALMO, three stock transfers and two direct managed) and one county council into the new Cornwall Council. Though the National Federation of ALMOs, I also linked up with other councils in Durham and Northumberland going through merger.
So what are the things that housing needs to watch out for in local government reorganisation?
1. Long and often stable housing priorities change – even here in Wales, where the Welsh Government drives most housing policy, there are distinct local differences and local priorities. In a merger between two, three or even four organisations transitional arrangements are required and one authority (usually the biggest) becomes the successor authority for legal reasons: contracts, pensions as responsibilities all have to be held somewhere while the new organisation becomes a legal entity and a new political structure is elected. So for housing policy we have transitional arrangements where people plan the merging of policies and process working to the direction of an interim political structure. When the elections take place for the new authority it is inevitable that many an older councillor will retire and a whole new generation of political leaders with new priorities will emerge.
My advice is to keep your eye on the people who are designing and shaping the new authority (probably in a change management or transition team out in a windswept old office somewhere) and make sure they hear the voice of housing. They will have a critical role in preparing the structures so find them and engage with them.
2. Old relationships come to an end. Along with a whole group of new political leaders we will see a new group of local government officers. And while we can but hope we have housing people running strategic housing policy and landlord services, the lessons from England are don’t bet on it. Chief housing officers are now long gone, directors of housing the same and even hoping for a head of housing seems optimistic. Look out for customer services managers (tenants are customers as well) as all landlord front-end services just get merged into call centres and strategic stuff gets pushed into regeneration, neighbourhoods or whatever new title comes up. What it means for RSLs is we have a much harder job getting access to the officers who influence the important policies like the common housing register that fill our empty properties.
My advice is for those on the landlord side of authorities and in RSLs to keep lobbying for a strong housing voice in any new structure.
3. Tenants might lose their seat at the top table. In those authorities where tenants have strong relationships with politicians and officers, places like Caerphilly and Flint, these positions will probably all change as politicians, personnel and structures are redefined. In a council that still owns housing it is often a big player, it might even have a cabinet position, it will certainly have members who champion retained housing, it is therefore important politically. A merger of stock retained and stock transferred authorities brings new dynamics. Councillors who have cut their teeth in authorities that long ago transferred their housing stock will have different views on the importance of tenant involvement. Amid the noise about cuts to education and social services, the importance of a reasonably well funded tenant service will probably be lost.
My advice is that you cannot tombstone in positions of influence and you might need to think of different governance housing structures whilst you still have influence. Perhaps consider autonomous arrangements where decisions other than rent setting are delegated to a tenant board like Cambridge or even look at an ALMO where there is a built in tenant-focused decision structure.
4. Watch out for the redistribution
of HRA recharges. Despite a ring fence on HRA expenditure since the early 90s, every authority recharges differently to HRA. In the local authority merger that took place in Cornwall, the difference between the HRA recharges was as much as £1 million between similar sized housing services. The existing HRAs will merge into a single HRA, there is new self-financed HRA debt to manage and somebody in the new finance service will try and make sense of the recharge structure. The cost of democratic services recharges, grass cutting, neighbourhood offices, ICT, legal, you name it, will all be charged at different rates. And as the new authority will be short of money trying to find impossible cash savings do not expect the recharges to rebase to the lowest figure.
My advice if you cannot seek a more autonomous structure is that you must thrash out these recharges well in advance of merger. Also the HRA and tenants should benefit as much from the proposed back office efficiency savings of the new authority as the council tax payers. Therefore if central overheads are projected to be 40 per cent less in the new authority then recharges to the HRA should be 40 per cent lower. In making these savings projections all income including HRA recharges will probably be counted as static not reducing income – you have been warned.
5. Spending priorities along with policies change. Promises to tenants made by one authority do not wash over into a new authority, even a simple example like a painting programme promise. One authority with a long held promise to paint every five years then mergers with an authority that has not painted for years will find that common sense will want to even out distribution of the painting money. Think of this in terms of very expensive programmes like external wall insulation and the swings in resources from old areas might be more radical.
My advice is get the tenants from each merging area to agree a fair capital investment strategy before the merger. It will be more democratic afterwards when redistribution occurs.
6. Organisational history disappears – who remembers Brecknockshire Council? Not me. But it built today’s equivalent of £50 million worth of housing that MVH now owns on one estate. Is there a drawing anywhere? Of course not. After merger and with a few rounds of redundancies
the people with the cultural history and intimate knowledge of areas and the housing stock will go. Even the best housing systems cannot compensate for this loss of local knowledge.
My advice is don’t let that old guy from the repairs team who knows where every drain is be the first to go.
7. Cosy arrangements for RSLs come to an end. New people, new priorities is the message and some RSLs who have had long-term development plans and sizeable departments based on long-term commitments over the distribution of SHG and sites will have new competition. New boundaries will bring a more competitive edge to the VFM discussions of local authorities over who can deliver the most units for the SHG.
My advice is start building new relationships early and impress the new authority with cross subsidised schemes and sharpen up VFM in your own organisation.
8. Merger mania becomes the order of the day. The Williams Report was not just about local government reorganisation but about rationalisation in the whole public sector. If the argument for merger
is delivering better services at a cheaper price works for local authorities (even if it is never proven) the argument that small geographically focused RSLs need two chief executives will be hard to maintain.
My advice is that it might be time to check my pension fund.
Mike Owen is chief executive of Merthyr Valleys Homes. He writes here in a personal capacity