If housing associations really want to know how good they are, they should give tenants the option to leave, argues Tim Leunig
Should I stay or should I go?
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In all walks of life there are successful and unsuccessful firms. A few years ago Marks & Spencer and Sainsbury’s went through a bad patch and customers began to buy clothes and food elsewhere. General Motors is no longer the world’s biggest car manufacturer, and now Toyota is stumbling too, thanks to its recent recall crisis.
If they are unhappy with products or services, customers of these companies can simply choose to change to another brand. Not so with public services. If the National Health Service is poor, it is expensive to get healthcare in any other way. So too with education, and it is impossible with the police. But at least we can vote for someone else to run them. Democratic accountability is not perfect, but it is a mechanism of sorts to keep providers in check.
Lack of choice
So what about social housing? In the old days of council housing, tenants could vote for a different party to run the council if the council messed up. In reality many areas were ‘one-party states’, so the option was always more theoretical than real. But it was there. More recently if tenants thought the council was not doing a good job of running housing, they could campaign for a ballot with the aim of transferring to a housing association.
But, once tenants transfer to a housing association, they are stuck.
If roads are not swept properly, the council can sack the supplier. But the council cannot sack a housing association because it doesn’t just manage the housing - it owns it. Unless tenants give up their secure tenancy, or are lucky enough to be able to move, they are stuck with their housing association.
Don’t get me wrong, many associations do a good job. But realistically, with housing associations controlling millions of homes across Britain they are not all going to be well-managed all of the time. They are run by human beings, after all. Sooner or later we are going to come across a housing association which offers really poor service.
Perhaps it will have made some bad decisions at the top of the market and got into financial trouble. Or the need to build up reserves means that repairs are not being done quickly and improvements are not happening at the rate that tenants expected. Or perhaps the people at the top just aren’t any good at management, the staff poorly led and poorly motivated.
When this happens to a company like a supermarket or a garage, its customers go elsewhere. This move isn’t costless for the consumer, particularly if they have to walk past supermarket A to get to supermarket B, but they can do it. And this, in turn, gives the supermarket the best evidence possible that something has begun to go wrong.
Housing association tenants can’t switch, and that is bad in itself - since it means that people are trapped - but it also means that associations don’t get the market-share warnings that normal companies get when they do something wrong.
Preventative measures
There are four options. First, we can put our heads in the sand and say that housing associations are never going to be badly run and that tenants will never suffer like this. That seems implausible to me - I cannot imagine any sector this large in which every single provider is well-run in perpetuity.
Second, we can go for the centralising control method - once dubbed ‘targets and terror’. This model, most closely associated with Alan Milburn’s time as health minister during the early years of the Labour government, consists of the government setting detailed targets and then terrorising managers who fall below the standards. Mr Milburn was said to receive weekly reports and to ring up NHS bosses who were in the bottom 10 per cent each week to ask what they were doing to change. There is good evidence that this worked at some level - waiting lists did fall particularly quickly in this era - but I think we would want to question whether in an area such as housing, weekly targets about the things that matter most are possible, let alone desirable.
The third model is to give tenants more choice. Many housing association tenants were balloted about a move from being council tenants to housing association tenants. We should give serious thought to allowing housing association tenants the right to vote to move back, or to move to a different housing association.
There are serious issues here: ballots are not cheap and uncertainty is costly. There would need to be conditions that had to be satisfied before a ballot would be called. These conditions could either be external - poor evaluations - or they could be tenant-led, with a certain number of signatures triggering a ballot. Once that happened, another body would have to be found that was willing to take over. The local council might say that it simply did not have the expertise, and could not do it. At that point a ballot would be about transferring from ‘Housing Association A’ to ‘Housing Association B’.
The fourth option has been proposed for banks in the post-crisis world: so-called ‘living wills’, setting out how depositors and taxpayers will be protected. If the bank gets into trouble, the living will is activated. We could do the same for housing associations: they could, for example, be required to put in place measures (including having themselves taken over) if their service standards slip below a threshold.
Any solution is better than none, but the best solutions mean that senior management and all staff have good incentives to prevent problems getting serious in the first place, and to limit the duration of serious problems when they do occur.
Dr Tim Leunig is an academic in the department of economic history at the London School of Economics
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Readers' comments (44)
karen | 15/03/2010 12:46 pm
"kass | Sat, 13 Mar 2010 12:59 GMT
social housing is the only sector where the bullies and harasser and incompetent get easily to very top of their profession and become and stay chief executives... and let's not mention the rest of directors and managers...
"
Rubbish - the same happens in EVERY industry both public and private.
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Melvin Bone | 15/03/2010 3:22 pm
Kass:'social housing is the only sector where the bullies and harasser and incompetent get easily to very top of their profession'
Nonsense. To say such a thing diminishes the seriousness of bullying in all walks of life.
Anyway about the article: 'Housing association tenants can’t switch' Nonsense Dr Leunig, they are free to give notice on their tenancy and vacate at any time.
This article seems pointless as there is no concrete conclusion.
D minus. Must do better...giving four possible solutions then stating that 'Any solution is better than none' is a conclusion I would expect of a 12 year old.
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ProMan | 16/03/2010 8:56 am
Melvin,
Couldn't agree more, papers like this do little more than fan the flames of ego of the author.
Mr Leunig, you should go.
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kass | 16/03/2010 2:37 pm
karen | Mon, 15 Mar 2010 12:46 GMT
"kass | Sat, 13 Mar 2010 12:59 GMT
social housing is the only sector where the bullies and harasser and incompetent get easily to very top of their profession and become and stay chief executives... and let's not mention the rest of directors and managers...
"
Rubbish - the same happens in EVERY industry both public and private...."
Ok, so I am waiting for you to quote at least 3 or 4 cases or articles of a sector susbisidised with public money like social housing where the chief executives are bullies.
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Bill Caddick | 16/03/2010 2:58 pm
Tim misses the point (as usual some would say) and is a wolf in sheeps clothing - pretening to be a free thinking market economist when he is actually a stalinist. Housing is a very simple issue - its about disposable income and self action. The more you have of each the more choice you have. People are constantly moving about in all sectors of the housing market. People can act and choose to move; they can choose to use landlord and tenant legislation to enforce their rights. What has happened over time is that the State has thought it its place and right to act on behalf of everyone for everything and created a nation of dependency. It's always someone else's fault and "someone else will sort it out for me". What Tim should be doing is stop his anecdotal academia and teach people to rely on themselves.
As an aside the idea of "going to another RSL" is a gold mine for consultants and in reality who, except ego'd CEO's with a love of expansion and themselves, would want some other RSL's toot properties with a disgruntled tenant.
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Joe Halewood | 16/03/2010 3:21 pm
Perhaps if Tim Leunig - who's now a Stalinist? Oh that did make me laugh hahahaha! - had said the judge of a good HA is 'asking' tenants to leave it would have been a better option. Then his convenient love of social housing would see the problem tenants all end up in his real beloved private (the market is great and perfect) housing. Are these the tenants he is seeking the option to leave you think?
No me neither! Then again we should all exercise our free choice and decide not to listen or read any more of his polemic drivel that is just for self-promotion.
Not one of the very diverse views and opinions here has a good word to say about the nonsense above - not from the right, left or anywhere inbetween. How way off the mark does one have to be to not find one accord with the diversity of opinion on here?
Mr Leunig usually has come back here in similar discussions in the past to defend or attempt to clarify hos views. What should we read into that absence now?
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karen | 16/03/2010 9:03 pm
The police, the NHS, the civil service is phenominally known for it (government).
hell the damn Prime Minister is accused of bullying.
In private sector it is common as hell and as I've worked in both I have seen it in action in private a damn sight more than public.
Stop desperately trying to prove that Social Housing is the only employer happy to take bullies - it isnt.
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kass | 17/03/2010 8:44 am
"karen | Tue, 16 Mar 2010 21:03 GMT
The police, the NHS, the civil service is phenominally known for it (government).
hell the damn Prime Minister is accused of bullying.
In private sector it is common as hell and as I've worked in both I have seen it in action in private a damn sight more than public.
Stop desperately trying to prove that Social Housing is the only employer happy to take bullies - it isnt."
I do not need proofs. Just this website will give you plenty of evidence of cheif executives charged og being bullies.
I did ask for specific articles I could check in other sectors where the chief executives have been either sacked or made to leave on charges of harassment and bullying.
You have not given them and keep hiding your claims through senseless gneralities, as you do when you say your organization you work for is fantastic and probably anyone given a chance of checking it will find out it might well be the worst there is.
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karen | 17/03/2010 10:47 am
Oh kass - I could give you a thousand and you would state they "were not the same". Go to google. Search for "public sector bully accusations" and fill your boots.
I'm not going to bother having a sensible discussion as it never goes anywhere other than you insulting me.
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kass | 17/03/2010 11:43 am
"karen | Wed, 17 Mar 2010 10:47 GMT
Oh kass - I could give you a thousand and you would state they "were not the same". Go to google. Search for "public sector bully accusations" and fill your boots.
I'm not going to bother having a sensible discussion as it never goes anywhere other than you insulting me."
You can give a thousands and you refuse to give me 3 or 4 cases i can look into. And what you do instead? Time after time you go on keeping sayings that I am insulting you for asking what you refuse to provide.
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