Tuesday, January 30, 2007

A mixed economy in housing: "for-profits", housing associations and ALMOs

Today the Housing Corporation announced that Pinnacle PSG had become the first private sector organisation to be accredited under its housing management accreditation scheme. Although I strongly believe that housing associations should remain not-for-profits, I don’t have a problem with other providers of social housing to be “for-profit”.

In any mixed economy in social housing, there is the interesting issue of whether council-owned Arms Length Management Organisations (ALMOs) should be allowed and encouraged to diversify beyond managing council housing.

Last week a housing expert at Heriot-Watt University found that ALMOs continue to perform well. On Thursday, the Audit Commission gave another ALMO three stars – Carrick Housing joins about a dozen other ALMOs with an “excellent” rating. (The number of housing associations with three stars is far fewer.)

In my own experience ALMOs have a real commitment to continuous improvement. In my last job, we ran free seminars on lean thinking for housing organisations – ALMOs were always well-represented among gthe attendees.

In the current issue of Roof, the financial editor of Social Housing magazine proposes that ALMOs should manage stock for housing associations (and even come to own this stock as part of stock rationalisation). I do think there is a strong case for this where ALMOs can manage stock better.

Monday, January 29, 2007

Public Administration Committee review of the 3rd Sector - please don't overlook governance

With so many politicians speechifying about the Third Sector, it is reassuring to learn that the House of Common's Public Administration Select Committee has launched an inquiry to scrutinise how the public sector is buying goods and services from the community and voluntary organisations of the Third Sector.

I strongly support an increased role for Third Sector organisations in the NHS and elsewhere - they facilitate benchmarking, spread good practice, promote innovation and often allow for new forms of accountability to communities and users, patients, residents, etc.

However, there are issues. In particular, some voluntary groups have poor governance - poor internal controls, cases of unjustifiable pay and patronage. I have seen this at first hand. Research has shown this too. I hope the Committee review addresses these issues.

The Committee is calling for interested organisations and individuals to submit evidence to the inquiry.

Saturday, January 27, 2007

More NHS patient choice - but voice too please

It was good to read last week’s announcement by the Department of Health that there would be a major extension of patient choice. (An analysis is available on the website of the think tank Reform.)

NHS patients needing “elective” treatment like a hip replacement can currently choose from four local hospitals, 34 foundation trusts and 15 independent sector providers. The Department of Health’s roll-out of choice means that by the summer there will be over 200 hospitals and treatment centres on offer to patients. Then by the end of 2008, patients will be able to choose from any hospital which meets NHS standards and costs.

The Department of Health is also creating a new website that will bring together information on all hospitals and treatment centres to empower patients to make more informed choices than ever before on their healthcare. This is vital to make choice informed and meaningful.

Linked with Payment By Results, these changes mean that the best providers will be encouraged to expand and shorten waiting lists. It’s a shame that these changes have come in so late and after so much money was injected in the NHS.

Having said that, as I have argued before, there is still a need for patient choice to be supplemented by voice – particularly in the areas where there are fewer hospitals. This can be seen from a map below from the Centre of Market and Public Organisation’s study of Choice: Will more choice improve outcomes in Education and Health Care (pdf available).

Friday, January 26, 2007

Housing associations - Is self-regulation by the NHF enough?

This week's Inside Housing reports that National Housing Federation wants housing associations to self-regulate through new codes of conduct.

I believe that the regulatory burden should be eased - with more reliance on (rigorous) self-regulation and with more focus on outcomes (rather than processes). However I have some concerns about the NHF approach.

I doubt that self-regulation and codes of conduct will be enough to satisfy lenders - they place reliance on the current regulatory regime (and the lower perceived risk results in cheaper borrowing for new and improved homes).

I value the NHF as an organisation (and I am looking forward to next week's Board Members' Conference). However, I fear that they will be accused of self-interest. The self-regulation may look like (and be) a closed shop - with new power and resources for the organisation.

To be fair to NHF, the article does not report any of the NHF's thinking about enhanced accountability to residents in self-regulation. (The role of residents' scutiny panels is mentioned in passing in the editorial.) This is a crucial element.

Tuesday, January 23, 2007

Public sector reform - Downing Street on choice, competition and contestability

If you have a spare half an hour, I would recommend that you read the Prime Minister’s Strategy Unit’s paper on Public Services. It was published last week but the media seemed to treat it (and the other three papers) as a footnote to the saga of the Prime Ministerial succession.

In fact the Policy Review paper sets out clearly the thinking in Downing Street (certainly No 10 – maybe not No 11) – although it is "not a statement of policy".

The papers rehearses the achievements and sets out the context (demographic, social, economic, etc). Then more interestingly observes:

But there are downsides to an over-reliance on top down performance management and funding alone, and so a new phase of public service reform has evolved

This seeks to:

- Combine top-down approaches of inspection, regulation and targets

- With horizontal pressure from competition and contestability

- And bottom up incentives of choice and voice

- Supported by improvements in capability and capacity

…to create a “Self improving System”

The paper links these to changes in the NHS and elsewhere. It makes a convincing case for choice, competition and contestability. It goes on to give examples from Sweden and other countries of where such reforms have (generally) worked.

It is noteworthy that in the paper there are hardly any (maybe no) examples of where inspection and regulation have managed to improve public services.

E-government: Directgov or Directionlessgov

At a client today, I saw a member of staff looking at the Learning & Skills Council website. I muttered that I could never find anything on there. It was reassuring to learn that “everyone said that”. (I had feared it was just me.) Generally I use google to find LSC documents rather than the searching the labyrinthine LSC website.

Apparently to help us connect with public services, the government is placing increasingly emphasis on directgov for connecting the citizen to the public sector.

Is this faith misplaced? Sadly in the Guardian’s Public magazine directionlessgov was website of the month in November rather than directgov. The people behind TheyWorkForYou.com and FaxYourMP.com appear to have put together a better vehicle (linked to google) for searching public sector websites.

If you put in “LSC funding guidance” into directgov, it hasn’t a clue. In contrast directionlessgov takes you straight there. (In fact, the LSC website’s search function did a pretty good job too so perhaps its not completely useless.)

The world of e-government is a strange world. Text voting is on the near horizon - yet last month I was told by my tax office that they could not communicate by email. So much for "innovation" and "transformation".

Sunday, January 21, 2007

Regulation in housing - HAs, councils and accountability

I would recommend this week’s Inside Housing. In particular, the interview with Professor Martin Cave who is reviewing the regulation of social housing. (PDF available)

I was interested in the comments on regulatory frameworks – especially as its unclear whether the regulatory role of the Housing Corporation will move to Communities England. (I think there is a strong case for keeping regulation independent of this super agency.)

‘I think it is very unlikely that you would want a one-size-fits-all solution for providers of social housing,’ warns Professor Cave. ‘We’re exploring and looking forward to receiving evidence on the appropriateness of having a uniform system of regulation across local authorities, arm’s-length management associations, not-for-profit housing associations and other suppliers, including for profit organisations.

‘Clearly there are major differences in the underlying governance structures of those bodies. In the case of local authorities you have a democratic process that may make it less appropriate for an independent regulator to intervene in the process.’ But since, after all, the business of any landlord is providing services to tenants, there will be some regulatory consistency across the sector. ‘The resident in local authority housing or in housing association housing is basically interested in the same things and that suggests that there should be some degree of commonality in the regulatory arrangements to which those two types of services are subject to.’

While there is a need for flexibility rather a rigid “one-size-fits-all”, I don’t think that reliance on “a democratic process” when council tenants are in an electoral minority is necessarily adequate.

I certainly hope that the Cave review will place strong emphasis on tenant-driven accountability (both voice and choice - and in all the sectors of social housing) in reducing the need for external regulation.

Thursday, January 18, 2007

Communities England - housing associations and the transition

So the Department for Communities and Local Government has announced that Communities England is to take over the role of the Housing Corporation (the funder of affordable housing and regulator of housing associations) and English Partnerships (the national regeneration agency) plus some responsibilities of DCLG for Decent Homes, Housing Growth, housing PFI, Housing Market Renewal and urban regeneration.

This is not unexpected - it was so well trailed and obvious that it was in my predictions for 2007 last week.

I don't have strong views for or against the creation of this super agency with a budget (Comprehensive Spending Review willing) of £4billion. I do note that housing professionals welcome the new agency.

The devil will of course be in the detail. It looks like we will have to wait for the Cave report before we can see what kind of regulatory future English Communities heralds.

My concern is with the transition. Housing Corporation Chairman Peter Dixon promises: “In this interim period we will keep our foot firmly on the pedal in driving the delivery of the affordable housing investment programme and maintaining effective regulation of the housing association sector.” Lets hope so.

I can remember the problems experienced by further education colleges when the Further Education Funding Council and the forty plus Training & Enterprise Council's were brought together in 2001 with micro-management thrown in too. (Now that the Learning & Skills Council has climbed up a steep learning curve, it is being regionalised – what should have been the approach six years ago.) Lets hope housing associations don’t go through that.

Tuesday, January 16, 2007

The NHS, EU competition rules and social enterprises

I had mixed feelings reading in the Financial Times that NHS services procured by PCTs etc are likely to become subject to EU single market and competition rules.

This should ensure that competition and contestability inject more innovation and value-for-money into our NHS. On the other hand, I would be disappointed if these rules prevented the Department of Health providing support to not-for-profit social enterprises run by professionals (and ideally with accountability to patients and communities).

Social enterprises are developing new and novel models of managing provision - they need support when up against BUPA, Nuffield etc.

Sunday, January 14, 2007

NHS pay - the need to shed pounds

David Walker musing that “Money can’t buy you love” in the Guardian, Nick Cohen noting on how the government has failed to stop medical wage inflation in the Observer and the front page of the Independent yelling ”Sick pay” in relation to “Massive rise in GPs' salaries worsens NHS cash crisis”.

This cartoon at least (from the Society Guardian) amused me:

Roof and stock transfer - two contrasting perspectives

The Jan-Feb issue of Shelter’s magazine Roof carries a couple of interesting and constrasting articles on stock transfer.

Frank Dobson reviews Defend Council Housing’s new "The Case for council housing in 21st Century Britain" (pdf available). He makes a number of arguments against stock transfer. He complains about the very term – “millions of homes and the people in them are looked on as ‘stock’”. I don’t think that is so – but if anyone has a better name for describing tenants of councils becoming tenants of housing associations, answers on a postcard.

Dobson more seriously argues that where council’s have opted for retention, this is because tenants want “democracy” and “whatever their doubts about council landlords, [tenants] want to be able to influence rents, tenancy agreements and management standards”. Do council tenants really have that influence? Do council tenants exercise control through the ballot box? Maybe when about half of all voters were also council tenants. Arguably, ex-council tenants have more influence on housing associations boards where typically one-third of board members are tenants. (Ex-council tenants have even more clout in the tenant-controlled community gateway associations – set-up in Preston and being considered in Braintree and elsewhere. I know I have mentioned these development before but I see them as significant and exciting applications of co-operative principles to social housing.)

Generally housing associations are increasingly focused on responding to their tenants – their customers – with the Housing Corporation and Audit Commission requiring evidence of tenant involvement.

Two academics from Cardiff University, Kevin Morgan and Bob Smith, give a very different perspective on stock transfer from Wales. They see stock transfer and the associate funding for a major improvement programme to be a “once-in-a-lifetime opportunity for a triple dividend – to improve the lot of tenants, create new employment opportunities and enhance the quality of the built environment”.

The recent “yes” votes in Monmouthshire and Rhondda Cynon Taf suggest that tenants want to seize the opportunity. Its now for the new housing associations – created as community housing mutuals - to deliver.

Saturday, January 13, 2007

What will 2007 hold for the public sector

I am not fan of the Times but this week it carried an interesting brief article on “What the year will hold for the public sector”.

Personally I believe that as well as the huge and obvious issue of the NHS, social housing will be a big issue in 2007: the birth of Communities England out of the Housing Corporation and English Partnerships (and maybe the death of Communities Scotland if the SNP win the May elections); the Cave report on regulation and the Hills report on social housing; the ongoing issues of affordability and shortage etc.

At least housing isn’t being forgotten.

Wednesday, January 10, 2007

Competition and public services: sin, prisons and the third sector

John D. Rockefeller once suggested "Competition is a sin.". It is certainly a dirty world for many people when it comes to public services. Therefore, it is particularly welcome that the Guardian Society section today carries an excellent article by Martin Narey – the former director-general of prisons and now chief executive of the children's charity Barnardo's.

Narey describes how he was converted from campaigning against private sector involvement in prisons to the recognising how competition can oblige providers of services to raise their game - or get replaced by those who can deliver.

He also makes a convincing case for the Third Sector’s potential in delivering public services and ask policy-makers for “a level playing field, a transparent tendering process, and to be given work when we can demonstrate that we deserve it”.

Sunday, January 07, 2007

A leaner NHS - efficiency, waste and pens

This evening's "In Business" on Radio Four reviewed the use of "lean thinking" (based on Toyota's manufacturing techniques) to strip out waste from the NHS processes. The programme is available on Listen Again.

This is a more fruitful approach to dealing with the NHS's financial problems than cutting training budgets and other short-term measures.

While "lean" can generate impressive savings (and improve services), as seen in pilots in social housing, be careful. Pick your consultants with care or they may tell you where to put your pens as reported in some newspapers last week.


Saturday, January 06, 2007

Housing Association plc?

Yesterday I was disappointed to see on my doormat the Inside Housing headline – “Landlord explores flotation”. Places for People - England’s largest housing association with 58000 homes - has discussed with the Housing Corporation to possibility of becoming a public limited company and floating on the stock market.

As Inside Housing notes, this would herald a fundamental change to the nature of housing associations. (Interestingly the possibility was not mentioned in the report on the Future Shape of the Sector Commission.)

While I have no objection to for-profit organizations owning and managing social housing and no objection to housing association using the stock exchange to raise new finance (17 housing association are considering the use of a Real Estate Investment Trust to finance market renting, key worker and similar accommodation) – I think flotation of a housing association is a bad move

I worry about this for two reasons:

1) The housing association movement was conceived as a not-for-profit movement –
and it generally works well as this.

2) If any housing association moves from the third sector to the private sector – it will give the claims of "privatization” made by the opponents of stock transfer credibility for the first time. (In fact, Defend Council Housing already use the musings of Places for People’s Chief Executive in 2002 on flotation for their own purposes.)

Lets hope the legal, regulatory and other complexities involved in flotation will kill this idea.

Wednesday, January 03, 2007

Reality TV, changing mindsets and NHS reform

I am no fan of Reality TV. But I am looking forward to next week’s Can Gerry Robinson fix the NHS? In the series broadcast on three consecutive nights from Monday January 8, the ex Granada CEO trouble-shoots at a hospital struggling to get its waiting list down.

The series has already caused a stir. “Business boss blames weak managers and 'collective inertia' as he attempts to transform a struggling hospital” reported the Observer. While we have all met one or two uninspiring “leaders” in (or from) the NHS, the series is about more than leadership issues.

In an interview with Open University, Gerry Robinson comments on the ease of changing NHS mindsets:

Oh much more difficult than it would have been in any commercial organisation because there is a sense in a commercial organisation of a commercial, you know, imperative. People know what the object of the exercise is, and by and large people working in commercial organisations, have worked all their lives in commercial organisations, and they know that you need to make things happen and you need to make it happen now, otherwise in business you run the risk of dying on the vine. The Health Service, you’re very protected, so you can take your time, you don’t have to change, it’s all very casual and very, very different; much, much slower than it would have been in almost even the worst run commercial organisations.

I would suggest that this points to the need to think about the environment that NHS organisations work in. In fact, increasingly hospitals have to adjust to a more “commercial” imperative – with patient choice and Payment By Results as well as competition from the independent sector. This is painful but I welcome a move from the old command-and-control bureaucracies. The NHS must become more responsive to patients and communities – rather than constantly directed by politicians and bureaucrats.

On a similar theme, the think tank Reform have published their latest survey of the NHS. There has been a lot of media coverage of the suggested debt write-off. But the report also stresses the need for continuing reform - using patient choice and competition to redesign services around the needs of patients. A message not inconsistent with Gerry Robinson experience.

Mourning the death of social housing? The future of HAs

In the latest issue of the Labour Housing Group newsletter, a non-LHG member Angela Pinter asks “What future for social housing?” Sadly this article is not on the internet as it does raise interesting issues. (I've a pretty poor scanned version - I can be contacted at info @ deed-consulting.co.uk.)

Ms Pinter suggests that the government is hostile to social housing. She also points out that the Conservatives want a new right-to-buy – a rent-to-mortgage “route to buy”. She sees the death of social housing – and she’s not bothered let alone mourning. To quote:

Whatever happens to social housing in its present form has no future and should be brought to an end in an orderly way.

I agree with her that some of the most promising and “social” developments are in housing co-ops, tenant management, etc. But co-ops currently own or manage less than 20,000 homes. In comparison, housing association account for two million homes. Realistically there won’t be a reversal of this situation in the foreseeable future although we will see more tenant-controlled "community gateway" housing associations and other housing mutuals.

I certainly don’t agree that social housing is past its sell-by date. Ms Pinter says:

It is time to face reality. Arguing for more social housing for the economically inactive is not going to work. The old social housing model by local authority or RSL [registered social landlords ie housing associations] is also obsolete.

Social housing has a vital role for some of the most disadvantaged in our society as well as contributing to regeneration. Moreover, the increasing role of housing associations in offering shared ownership and other flexible options make home ownership at least slightly more affordable.

Ms Pinter's comments about housing professional are somewhat provocative. I am sure that some are arrogant and self-serving - but not the entire profession. I would certainly praise the work that the Chartered Institute of Housing has done on the “community gateway” model. Similarly the National Housing Federation's sponsorship of the Tenant Involvement Commission.

I do see a future for social housing and housing associations although it is likely to be very different from its past.