Waiting game

On the wall of Sir Bob Kerslake’s spacious office in the four-storey Homes and Communities Agency headquarters in central London is a large poster showing a series of multi-coloured circles. It resembles an astronomical chart, but actually shows how the government spent its £621 billion budget in 2008/09, with the largest circles depicting the biggest chunks of public spending by department. Towards the top is a tiny green blob, little more than a dot, labelled ‘improving supply and quality of housing: £7.3 billion’.

‘When you look at our budget, it’s just this tiny little circle among all these constellations of opportunities, I tell the Treasury. With all these opportunities for savings, we are really too small to bother,’ jokes Sir Bob, chief executive of the HCA.

But the softly spoken former chief executive of Sheffield Council knows this is a critical time for the quango. It was established just 17 months ago to oversee housing and regeneration in England, and now faces questions over its future role in the provision of social housing.

We meet to discuss his tenure as the first HCA boss two weeks before the emergency Budget which this week decided the agency’s financial fate. Today the 55-year-old married father-of-two admits the agency’s finances will be tighter in the future and, as the coalition government cuts Whitehall and its associated bureaucracies down to size, at very best they are unlikely to be expanded.

The HCA has already announced funding cuts of £230 million, threatening the future of more than 7,000 new homes (Inside Housing, 28 May). It has also frozen millions of pounds already allocated to housing developments across England. A further £610 million could yet be withdrawn by the government from its £5 billion annual budget, a move which Sir Bob admits would threaten the future of all uncommitted funds for its kick-start scheme, which aims to breathe life into stalled housing developments, as well as other funding for housing associations and councils.

Sir Bob, who says he is a fan of hip hop veterans The Pharcyde, whose tracks include the homage to smoking cannabis ‘Pack the pipe’,sympathises with the uncertainty created among developers and housing providers by the agency’s decision to freeze allocations. But says he is in the ‘same boat’, being just as uncertain as to how events will unfold.

‘But quite a lot of this year’s spend will continue,’ he says in an attempt to reassure. ‘About 85 per cent of our spend we have already committed to, and we intend to see it through; but the potential cuts do have a significant impact because the projects we were due to do on kick-start [a funding programme for stalled projects] round two were very much the complex regeneration schemes that have more consequences for places.’

Cost cutting

It remains to be seen whether Sir Bob will be able to honour this intention. Recent moves by the HCA give the impression of an agency hoping to curry favour with the axe-wielders: it recently announced the closure of its Victoria headquarters, with up to 200 employees relocating to Milton Keynes, and a reduction in senior staff, to save £2 million.

Sir Bob denies this was a pre-emptive step to cut costs before the government’s axe fell. He insists the agency was always planning to review its top structure, and describes the reduction from two corporate offices (inherited from English Partnerships and the funding arm of the Housing Corporation when they amalgamated to form the HCA) to a single one, as a ‘logical step’.

‘We can see clearly there’s going to be a tightening of public finances, both in terms of investment funds available and operating costs,’ he says. ‘However the election had gone, all of the public sector would have had to look for ways to streamline and get more for less.’

The future of the HCA has been the subject of mounting speculation, with the government pledging to reduce the number of quangos and champion localism, giving local authorities more control over housing budgets. But abolishing the agency entirely is not among the options being discussed in the talks with new housing minister Grant Shapps, reveals Sir Bob.

‘The debate is more about what the agency’s role looks like, the scale of it, and how that sits with tighter finance and the localism drive. We have had initial discussions and these are continuing,’ he says.

Turned on its head

Rather than abolition, Sir Bob sees the HCA’s role being ‘turned on its head’, into one of helping local authorities, handed more control over housing budgets, to shape their own investment priorities. Housing associations would then be commissioned to provide the type of housing and regeneration schemes councils want.

‘We would take our cue from the local authority. We would want a proper debate and would have to see how their ambition sat with the overall resources available; but in the end, the people best placed to know the local priorities are the local authorities themselves,’ says the former council chief.

The new focus is most evident in London, where the HCA has already helped boroughs develop their own local investment plans for housing and has initiated the ‘single conversation’ which has seen councils and the agency discuss housing, infrastructure, regeneration and community activities.

The HCA’s London operation, which will shortly come under the control of London mayor Boris Johnson, is also piloting a model whereby authorities in the capital receive a share of the HCA’s London budget (which totals £5 billion over three years, to 2011) in exchange for pledging to build a specific number of homes with an agreed tenure mix.

‘We are very open to carrying on the conversation about how you continue to give the mayor more direct influence over what we do and, indeed, to look at ways in which what we do can be more closely connected to what’s happening on regeneration,’ explains Sir Bob.

On the morning we meet, there is still more than a week to run before the news that the housing minister plans to scrap the Tenant Services Authority and transfer its job of regulating the governance and viability of housing associations to the HCA (Inside Housing, 18 June).

After the news breaks, he says he will wait for further detail from Mr Shapps before reacting in full, adding little more than ‘we have worked effectively with the TSA since its inception’.

Perhaps instead Sir Bob has been busy concentrating on getting his existing house in order? His agency was criticised earlier this year after 54 out of 136 kick-start schemes fared poorly in an assessment of design by the Commission for Architecture and the Built Environment.

Sir Bob thinks the suggestion ‘that we had somehow lost sight of the importance of quality’ was unfair. ‘We have not,’ he says. ‘It remains critical to us and we are out for consultation at the moment on design standards which seek to strengthen that even further.’

Economic challenges

That is not the only challenge on the horizon. While acknowledging the economic environment is in better shape than a year ago, Sir Bob says the recovery is fragile and uneven, with London and the south east playing a stronger role than the midlands and the north.

With public funds drying up, the agency and associations have to use ‘innovation, determination and collaboration’ to attract new sources of funding. Attracting institutional investment into the private rented sector has been a key focus for the HCA in recent months, with six London sites being offered to investors.

Last week a report from the Building and Social Housing Foundation predicted the number of private renters would eclipse that of social tenants by 2013.

Sir Bob also sees institutional investment in the sector growing from £1 billion to £5 billion over the next few years, and promises to publish a progress report on the private rented sector soon. ‘The sector is growing anyway and what we are trying to do is harness that.’

Sir Bob is passionate about the achievements of the agency to date and believes it has significant advantages over its predecessor the Housing Corporation: that it is better at forming relationships with councils, understands the wider housing market more thoroughly and enables the drawing together of a wider range of funding from different sources.

Ultimately, says Sir Bob, the agency has enabled the funding of housing to be more closely linked to place-making, with the ‘communities’ part of the HCA’s name being as important as homes. ‘Housing does not sit in isolation. It is part of making a place and we always have to put it in that context. It is not just a product but part of a community. There is still a tendency to see it as a hermetically sealed sector.

‘Policy-makers understand this but tend to create programmes that, if they are not careful, end up creating rigidity. We inherited 16 or 17 programmes and we are keen to reduce the number and allow flexibility.’

Sir Bob appears to have a clear idea about the HCA’s future role but admits the short term is uncertain. Like the housing associations and developers waiting to see whether promised funding will materialise, Sir Bob too, will have to sit and wait.

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