Running a housing association is not as much fun as it used to be - the real world is closing in. Like local authorities, housing associations are being brought within the "best value" net, and the Housing Corporation is flexing its regulatory muscles more actively. Everyone has to watch their backs, particularly over "rent influencing" now rent control (or rather, "creating a more coherent pattern of rents") is a reality.
In December, the Government relaxed its proposals a bit - increases will be limited to RPI+0.5% rather than just RPI - but is still insisting on restructuring rents over 10 years based on earnings (70%) and capital values (30%).
Research by consultants suggests that the changes will hit 37% of associations which will need "corrective strategies".
These corrective strategies include mergers, savings (cuts?) on management, repairs and maintenance, and cutting back on non-core activity such as housing plus and regeneration. The last two seem to conflict with other government policy, but that's nothing new.
Most of the associations affected are in the Midlands and North because of low wages and capital values. Associations in the South generally don't have a problem.
Gravy train
The next issue for chief executives will be how to keep their salaries to the levels to which they have become accustomed. Recent figures show that average salaries for those who have been in the job more than a year rose by more than 7% last year - RPI+4%. About 20 earn £100 000 or more when all benefits including pension payments are taken into account. The rest of the staff have had to put up with more modest rises. But they are likely to take a hit when associations start implementing economies to meet the new rent levels. Once you have stripped out interest payments from operating costs, staff costs are the major expenditure - as much as 75% in some cases.
My guess is that all rises will be much lower in future. There will be trouble if staff are expected to make sacrifices while their bosses continue to forge ahead.
And new Housing Corporation chief executive Norman Perry has put a shot across the bows. Associations may be independent, he says, but they exist for a public purpose and salaries are paid out of the tenants' rent.
Spaced out
Associations may have heard it direct from him late in January, as he was down to be the opening speaker at the National Housing Federation's Chief Executives conference.
The second day of the event was due to take a rather unusual format. The brochure described an 8 am "power breakfast", followed by an "open space forum' An explanation followed:
"Assembling in a flat space, seated in a semi circle there will be some leading contributions on key themes?" after which delegates break into self-determined groups. The brochure says "the guiding principles of open space", are: "Engage only with what interests you so that:
You can "float around groups as you wish or even not at all. In Open Space everyone is encouraged to take the time that is needed and let go when there is no more to say".
It sounds a bit like "organise your own conference" - and a prime candidate for Pseuds Corner. The fee was £500 plus hotel bill, though you also got Will Hutton and dinner at top Birmingham restaurant Bank.
I'll report back next month.
New towns?
Before the 1997 election, Nick Raynsford showed some interest in reviving the idea of new towns. Since then I can't remember him mentioning them.
Now John Walker, chief executive of British Urban Regeneration Association and former head of the Commission for the New Towns, has suggested that development corporations should be looked at again. He says they were "extremely effective at delivering large scale holistic change" and the process "embraced many of the concepts currently held in high regard" such as sustainability, mixed use, mixed tenure and putting new ideas into practice. He points out that they were financially successful for Government - what other significant urban policy has paid for itself directly and delivered the desired economic, physical and social objectives, he asks.
His comments, which are well worth a read, appeared in Axis, the journal of Room, the National Council for Housing and Planning.
Source
Building Homes
