2nd opinion: Big is not necessarily better

Two years ago, the Housing Corporation tried to tackle the issue of efficiency and whether more mergers between registered social landlords would increase it. A conference was organised, to which only the chairs of the largest 50 associations were invited.

Research was commissioned into the relative efficiency of RSLs; its conclusion was that group structures and mergers frequently made RSLs more expensive and that the most efficient organisations were medium-sized and regionally based. The follow-up seminar was cancelled.

Since then, the rationalisation agenda has proceeded at an increasing pace and we are in danger of tripping up. So let's go back to the beginning and establish the common ground.

We can surely all agree that our leadership challenge is to provide better services more cost-effectively. Most of us would probably go further and accept that if a combination of mergers, accessing underused housing association assets à la Barker and developing an elite club of RSLs to get more money for new developments is necessary to get there, these steps should be pursued. And, if there is a level playing field for developers seeking social housing grant, perhaps that's OK too. But is this analysis correct?

The real question is not "how can we bring down the social housing grant or management cost per unit?" but "are RSLs delivering value against objectives established by the Communities Plan, regional housing strategies and local regeneration agendas?".

Before we rush headlong into a "big is beautiful" agenda, we need to consider the evidence. Lessons from the private sector show how frequently mergers fail. The costs of mergers – the direct costs of reorganisation and the energy-sapping demands placed on boards and staff – are seldom assessed accurately in advance. Organisations can become inward-looking and services can suffer as a result.

David Cowans, Places for People's chief executive, suggested in Housing Today last year that it is not so much whether an association is big or small but whether it is relevant that matters ("When one size does not fit all", 7 February 2003, page 20).

To establish the value an RSL is delivering locally, we must look beyond traditional housing measures. Its contribution to sustainability, neighbourhood and economic regeneration, public health, citizenship and neighbourhood safety must also be considered. This is not as easy as bean-counting, but we must find a way.

Single regeneration budget methodology is too complex. Investors in Communities seems to have stalled. What we need is something that assesses the full impact of an association's contribution locally. Social Audit attempted this, and two years ago the Housing Corporation was funding pilots using this methodology. Jon Rouse might ask where his new organisation has got to on this.

But perhaps there is no need to work up something new. The corporation and the Audit Commission already seek feedback on RSLs' performance from tenants, local authorities and other stakeholders. If the net is widened, the right questions are asked and regulators and inspectors invest in some In Business for Neighbourhoods spectacles, a proper assessment of quality and impact could be made.

That assessment, combined with a view on costs, would really mean something and could be used to drive forward cost efficiency, added value and the In Business for Neighbourhoods agenda.