Fit for the future?

With housing high on the political agenda, rent restructuring and other financial pressures looming on the horizon and changes to the inspection regime kicking in, it is a crucial time for registered social landlords. This survey provides a snapshot of associations' strengths and weaknesses.

Dermot McRoberts, the consultant with Hacas Chapman Hendy who compiled the survey questions, analysed the responses of the 248 chief executives who took part. He says: "Most associations are meeting key governance standards, although a significant minority are falling short of what is required in terms of financial management. Caution and fear of failure are inhibiting innovation in a significant number of associations and skills shortages are a big issue. But overall, RSLs are open to introducing new ideas and seem keen to innovate."

The respondents came from a broad range of housing associations across the country. Half were from traditional housing associations, with the rest from large-scale voluntary transfer RSLs, black and minority-ethnic associations and other organisations. Their portfolios ranged in size from fewer than 500 homes to more than 10,000.

Fear of failure
The survey's findings in the areas of strategy and finance will cause concern at the Housing Corporation. More than one in three respondents claim that fear of failure has prevented innovation; one in six say they do not always set objective success criteria and nearly one in five admit they do not always identify and manage costs and new risks.

On the financial side, one in three respondents admitted that they do not know exactly where surpluses and losses arise in their organisation, although more than half say their strategy has changed in response to financial pressures in the sector.

A tendency to take a laissez-faire approach to financial matters comes from the sector's history of public funding, according to Matthew Gardiner, chief executive of South Liverpool Housing. "There are still places where a grant-dependent culture exists," he says. "Access to public money does not impose the same disciplines as access to money commercially obtained.

"The public sector has historically been less concerned about commercial realities."

The trend for public-private partnerships and an increasingly heavy reliance on private lenders mean RSLs increasingly need sharp business sense. Rent restructuring – which must be complete by April 2012 – means some RSLs can expect a fall in their revenue as widely divergent social rents are brought in line with nationally imposed targets, and there could be more trouble ahead with government plans to pay housing benefit directly to tenants.

Gardiner says: "The real challenge will come from changes to housing benefit – that will be a far more potent discipline. If somebody gets £60 of benefit directly and realises that they can spend £50 and pocket the extra, they will become very sharp consumers indeed."

Getting in with the board
Relationships between board members and executives can be fraught in any sector, and housing is no exception: with the thorny issue of payment for board members high on the agenda, associations are rethinking what makes good governance. But the survey paints a picture of healthy relationships, with more than eight out of 10 respondents saying their board's skills are adequate and nine out of 10 saying their board's contributions are "good" or "mostly good". But a clear majority – two-thirds – believe that paying board members would not help recruitment  X X and retention, although less than half have so far definitely decided against it.

But those who have decided not to pay may have to think again, according to Tony Stacey, chief executive of South Yorkshire Housing Association. He points to the expanded role for board members laid out in the National Housing Federation's guide, To Pay or Not to Pay, and says: "If this guide is right and we introduce virtually compulsory training for members and annual appraisals, it will double the time commitment. If the Housing Corporation is really behind these changes in governance, I think in three to five years everybody will have to pay."

Recruitment
Staffing presents another problem for the sector. More than half of our respondents said recruitment and retention were tough, with nearly four out of 10 admitting skills shortages make it difficult to cope with their workload. However, anecdotal evidence suggests that this is a greater problem in the South, particularly in and around London where unemployment is low and there are higher wages to be had in other sectors.

More than half of our respondents said they did not expect the NHF's rebranding of the sector, launched at this week's conference, to help recruitment.

James Tickell, deputy chief executive of the NHF, says: "The same survey in a year's time should show a very different picture – of a more confident sector, better informed and more innovative."

Innovation
On a brighter note, the sector is open to new ideas and appears willing to learn from other businesses. More than four out of five of the chief executives introduced at least one new innovation in the last three years, with neighbourhood wardens as a popular example. Two out of three have introduced ideas from outside the sector.

However, more than half of respondents felt the sector is over-regulated and several chief executives suggested that they might be more willing to innovate if they were allowed more freedom. The introduction of the Audit Commission as inspector is another concern, with some chief executives fearing that, in practice, they will be regulated twice.

But Tony Stacey believes fear of the regulator should not stop associations making bold moves. Three years ago, South Yorkshire Housing Association set up Safehaven in partnership with Yorkshire Housing, to house asylum seekers being dispersed in the region. It was the first time associations had worked with the asylum system in this way.

Stacey says: "The Housing Corporation is a bit schizophrenic about risk. With Safehaven, they were behind us but, when it came to allocating properties, some of their own rules got in the way. They watch Safehaven closely and spend a lot of time regulating us, but have not stopped us making it a success.

"I think that, as organisations, we have a moral duty to use what we have got to do better for our communities and you can't do that without taking risks."

Overall, the survey shows that most housing associations are willing to do just that, even as it provides a timely reminder that finance and strategy must not be left behind in the scramble to innovate.

Perhaps the final word is best left to Barbara Thorndick, chief executive of West Kent Housing Association: "We're a pretty entrepreneurial lot and we always try to find a way around obstacles. We've got a great future."