Ujima governance and regulation: lessons for everyone

After something of a wait, the Housing Corporation website today carries the report of the independent Inquiry into the circumstances surrounding the collapse of Ujima Housing Association (pdf available). My first impressions are favourable. It appears to advocate better regulation rather than more recognition.

The report notes:

Ujima’s fate has starkly highlighted issues of governance and regulation that should be salutary for the Board of every registered social landlord, and for the Corporation and its successor bodies, and also contains important issues for the sector’s lenders and for government to consider.

It goes on:

It is not the objective of the Inquiry to seek to attribute blame. But, in our opinion, Ujima’s collapse was the result of bad management and an ineffective Board.

As so often in reports studying the entrails of failed and collapsed organisations (both in the social housing sector and elsewhere such as the NHS and charities), governance problems were found to include board members providing insufficient challenge to management and failing to insist on the provision of proper information sufficient to fulfil their responsibilities. For example, the report notes the limited and “poor quality” financial reports and the lack of risk management information.

These are things that board members at housing associations as well as other organisations need to consider carefully while the Housing Corporation (and its successors) implement the recommendations relating to better communication and earlier, more effective regulatory action.

Ujima and the Housing Corporation: why stricter regulation may not be the answer

Along with the news that Oftenant will be given the catchy title of the Tenant Services Authority, last week's Inside Housing carried a feature on the fall of Ujima (pdf available). The article asked "Why didn't anyone step in?" and set out the warning signals in the run-up to the first housing association to go bust.

The magazine highlighted that over the last five years the Housing Corporation's regulation staff shrank by 31% and its investment (i.e. funding) staff reduced by 26%. This apparently reflected the demands of the Gershon "efficiency agenda" – fewer staff were overseeing the expansion of funding in new social housing.

There are some echoes with the Financial Services Authority’s handling of Northern Rock. As the Economist noted when discussing that case in March: “Writing more rules may do more harm than good if the regulator is unable to enforce them”.

Lessons from Ujima?

The demise of Ujima, the UK’s largest black and minority ethnic (BME) housing association has not had much coverage beyond some discussion in the Guardian and its blog (and, of course, Inside Housing). You might expect it to be bigger news – as Patrick Butler asks “Is this the housing sector's Northern Rock?”

For me Ujima raises three sets of questions:

1) How does this affect the social housing sector in the eyes of lenders? The Housing Corporation says that we do not need to worry. Yet this is the first housing association to go bust. Lenders are looking for safe harbours after the credit crunch. Is social housing as safe as they thought?

2) The related question – how good is regulation? The conventional wisdom (that I share) is that the Housing Corporation’s financial monitoring is generally good. Perhaps we need to check out lessons from Ujima. But we should not fall into the sloppy reasoning of presuming that because something went wrong therefore something was wrong. Bad things can happen even with good regulation.

3) Does this symbolise broader changes in thinking? In particular, why is the BME brand of Ujima being binned? What does this mean for organisational ethos? Over recent years “multiculturalism” has become taboo for much of the political class. Likewise, the discourse of cohesion has shifted towards an emphasis on the problem being inter-cultural ignorance rather than inequality and discrimination. For me, this was typified by the film American film Crash which I suspect was popular with British policy-makers. It seems to me contradictory and sad that when there is so much talk of co-production and community empowerment, black leadership and self-help seems to fallen out of favour.

Any answers?