Pre-nuptials

T his week’s announcement by Ruth Kelly that the government is proceeding with the merger of English Partnerships (EP) and the Housing Corporation to form Communities England, was not unexpected. It has been on the cards for the best part of a year and only the delay in making the announcement, which had been expected last summer, raised doubts about whether or not it would happen.

The original merger plan was driven by the efficiency agenda. Here were two government agencies with their own boards, management teams and administrators, doing work which, while not directly overlapping, was in broadly the same area of public policy. The Housing Corporation is responsible for regulating and financing housing associations and overseeing their contribution to meeting housing policies. EP acquires land suitable for new housing or regeneration. Wouldn’t it be sensible, the argument went, to put the two together, cut overheads and deliver more for the available resources?

But, as the proposal was subjected to more scrutiny, the gains looked less tangible, and the costs of reorganisation began to raise concerns. Although the organisations operate in related fields, their natures are distinct, with only limited scope for synergies.

The conclusion emerged that the agency must be more than just a merger of the two previous ones – it must act as the delivery agency for the whole communities’ agenda.

To do that it must also incorporate several functions currently discharged within the communities department, such as co-ordinating the programmes for housing market renewal, housing growth areas and decent homes, and oversight of the Urban Development Corporations. There were voices calling for the incorporation of the communities department’s neighbourhood renewal functions as well, but that was a bridge too far – dismantling a department that has only just been established is not an attractive option to senior ministers, however logical.

Nevertheless, the outcome clearly indicates that the government wishes to see a powerful agency that is able to provide an integrated response to disparate regeneration and urban renewal challenges. The task now is to ensure that it works.

It is easy for bodies to lose focus, with senior staff becoming preoccupied with their prospects in the new structure

This is more complex than it might appear to those unfamiliar with Whitehall and will take a surprisingly long time to achieve. The Housing Corporation and EP exist through acts of parliament. They cannot simply be merged like companies after a shareholder agreement. The plan is to introduce “paving” legislation, if a slot can be secured in this parliamentary session. Even this can’t be guaranteed, as the parliamentary timetable is already heavily committed.

Assuming the paving bill is introduced and reaches the statute book before the end of this year, work can progress on the merger arrangements, but a further substantive bill will be required in the 2007/08 parliamentary session. That, in turn, is unlikely to become law before the summer of 2008, so the new organisation may only exist after late 2008 or, more likely, April 2009.

Meanwhile, it will be crucial that both organisations continue to keep their eyes on their responsibilities. It is too easy for bodies to lose focus when mergers are in the offing, with senior staff becoming preoccupied with their positions and prospects in the new structure. A long period of uncertainty can be seriously destabilising and the consequences for the delivery of social housing and regeneration programmes could be serious.

Margaret Ford will be chairing the transition team. She is well qualified having successfully chaired EP over the past few years, but she is certainly going to need all her management and diplomatic skills to see through the next two years and ensure that the housing and communities agenda is kept on track. Assuming no unfortunately accidents along the way, she will be well placed to chair Communities England.

As for the chief executive, the options are wider. John Callcutt ruled himself out when he moved on from EP. Jon Rouse, the Housing Corporation chief executive, is rumoured to be ready to throw his hat into the ring. If so, he would command significant support from those who have admired his work at Cabe and in his current role.

Richard McCarthy, the communities director at the communities department, is also thought to be interested in the post. Overseeing a smooth transition over the next two years would clearly further his chances.