Licence to regulate
She aspired to be James Bond but there’s nothing top secret about the way Kay Blair plans to regulate social landlords in Scotland. Martin Hilditch kicks off our special issue by arranging a rendez-vous with the chair of the new housing watchdog
‘I was invited to become a spy.’ We’ve just sat down for lunch in a small, modern-looking café attached to a small, modern art gallery in the centre of Kay Blair’s home city of Edinburgh and it’s already apparent the conversation will be an interesting one. Ms Blair, it quickly transpires, knows how to tell a good story.
She’s here to talk about her role as chair of the Scottish Housing Regulator, the new ‘does exactly what it says on the tin’ organisation set up to keep a watchful eye on the country’s social landlords. Ms Blair is in a relaxed mood, considering I’m speaking to her in the week the SHR published its final framework, which sets out exactly how it will regulate the sector from 1 April. But then, as Ms Blair’s spy story reveals, she has always been up for a challenge.
It turns out she rejected the offer of a career in the secret service - an approach was made by the Ministry of Defence after she studied Russian (and economics) at university in St Andrews - because ‘I wanted to be James Bond. This wasn’t going to be James Bond’. Rather, she suspected, the role would involve a stuffy desk job - an idea which failed to offer even a quantum of solace to a woman who proudly admits she has ‘never ever’ lived a ‘Monday to Friday, nine to five existence’.
MI5’s loss was journalism’s gain, however, as the Financial Times happened to be ‘looking for someone with Russian and economics’.
‘There weren’t many of us around,’ Ms Blair says with a smile. ‘So I joined the Financial Times.’
How, though, has she moved from her early flirtation with Her Majesty’s secret service and a career in journalism to chair Scottish housing’s watchdog? And does she think Scottish landlords are ready for 1 April or should the fast-approaching changes be scaring the living daylights out of them?
The quick answer to the first question is provided by Ms Blair herself. ‘I really like new challenges.’ Her CV certainly elaborates on this, including four years at the FT in London, before she returned to Scotland and a stint as deputy editor of the Scottish Business Insider. After this she moved into corporate communications, setting up her own company, Business Perceptions, advising clients largely in the financial services sector.
She then became involved in an appeal to help build a new hospital unit in Edinburgh, which ultimately led to a role as a non-executive director of a National Health Service trust for sick children in Edinburgh, ‘which started me off in my non-exec career’. This has seen her at various times act as a non-executive director of the Scottish Ambulance Service, The Scottish Legal Aid Board, and become the Scottish independent council member of the Royal Pharmaceutical Society of Great Britain.
She is currently a non-executive director of NHS24 - a health advice service - and vice chair of the insurance stakeholder group of EIOPA, the Frankfurt-based supervisory authority which focuses on pensions and insurance. The SHR, then, is the latest in a long line of new challenges for the tireless Ms Blair (who, in typically all-action style, lists skiing as one of the ways she likes to relax).
Six years ago she joined the consumer panel of the Financial Services Authority - which regulates banks in the UK - and is now its vice chair. It is this last role that perhaps gives the greatest insight into her likely approach at the SHR. Ms Blair, of course, was representing consumer rights as part of the FSA panel during a period where the banking industry went through its biggest crisis in generations - and it is clear this now informs her approach to regulation.
‘It was a good lesson for me,’ she says, ‘because I think the regulator was very comfortable with the industry [before the credit crunch]. I think light-touch regulation largely didn’t work.’
This then would seem to be an indication that the 186 social landlords in Scotland cannot look forward to the rather more cosy-feeling regulatory regime that their English counterparts by and large enjoy (see box, below: North-south divide). Ms Blair, who is paid £20,000 a year for her role at the SHR, freely admits that a year ago she was an ‘unknown quantity’ to the social housing sector. This, though, she feels, is a strength. ‘I do not have a background in social housing,’ she says. ‘I see that as an advantage. I won’t go in with any pre-conceived ideas.’
The SHR, which took over regulation from the abolished agency Communities Scotland, has certainly ruffled a few feathers with its initial approach. Its draft framework for regulation, published last autumn, led Loreburn Housing Association to say the inspection proposals sound ‘more like a “Spanish Inquisition” than an attempt to work constructively to improve service standards’ - an accusation Ms Blair laughs off.
It is noticeable, however, that the final framework, which was published last week, contains some significant differences to the draft version. Ms Blair emphasises that she has toured the length and breadth of Scotland over the past year, meeting landlords and tenants so the regime can be both effective and as reflective of their needs as possible.
One area that has changed, following strong lobbying from landlords, is a requirement outlined in the draft framework which said housing associations board members should step down from their posts after six years. It sent shockwaves through a sector that has long relied on the loyal service of long-serving volunteers. The final framework instead insists only that members who have been in post for nine years and are re-applying for a future three-year term need to ‘demonstrate their continued effectiveness’.
A fresh approach
‘I suppose, from my background, constant renewal and refreshing of boards is always a part of good governance,’ Ms Blair states. ‘I think the longer people stay on boards, there is a danger, and I am not saying this is happening, that you get too comfortable with the executive [management] team.’
Source: Martin Hunter
Her work over the past year, however, impressed upon her that many voluntary board members in social housing were full of ‘commitment and passion’ and talented people ‘who have devoted huge amounts of time to the sector’.
‘I think there were a lot of misconceptions flying around about our proposals,’ she adds. ‘I think they thought as of 1 April we would be asking people to step down from their posts who had been there for years.’
It is clear this is an area Ms Blair still believes deserves some scrutiny. When pushed about whether she thinks boards should be refreshed more regularly, she pauses before stating: ‘I think I have felt, because it inspired so much anxiety and concern, that we would still reflect the need for effective governance, but we would ask registered social landlords to make sure that their election process is transparent. That is not lessening our desire for good governance. We are not going to lessen our vigilance.’
Landlords’ other chief concern with the initial framework seemed to be over a requirement to produce individual reports to the regulator outlining their performance against the Scottish Housing Charter, published by the Scottish Government, which will also go live from April.
When the regulator launched its three-month consultation in September, the government’s charter contained a mind-boggling 71 different outcomes and standards that social landlords needed to meet - although this has since been cut down to a more manageable 16. Landlords were concerned that producing individual reports setting out their progress - on top of existing annual returns to the regulator - would be too costly and time-consuming.
This requirement has now been dropped - so, while landords do have to tell tenants about their performance against the charter objectives, they are not required to send a charter performance report to the regulator. Ms Blair wants it left in no doubt, however, that landlords will have to report clearly how they have performed against the charter.
‘We are introducing a consistent methodology so we can compare [performance],’ she states. ‘We are very keen that tenants can look at the charter outcomes and look at how their own landlord is performing and hold them to account. I have concerns when landlords say “this is all too difficult for us”.’
Another area that the new watchdog might sink its teeth into is the issue of remuneration. The framework gives it the power to ‘hold an RSL to account’ and ‘take regulatory action if we consider, with regard to industry standards and set scales, that an RSL has made excessive payments’. Judging from Ms Blair’s response to questioning on this subject, however, this is not an issue that should keep too many chief executives awake at night - at least initially.
‘I think the whole value for money thing [around salaries] is really quite interesting,’ is as far as Ms Blair will be drawn. ‘We want to make sure that everything gets done in a transparent and responsible way.’
One thing that is more likely to be the focus of greater scrutiny is the activity of housing association subsidiaries. Ms Blair mentions the issue unprompted a couple of times in the interview - could it be that subsidiary activity, such as development and the financial risks that subsidiaries take on, will be the subject of one of the early ‘thematic inspections’ that the SHR intends to carry out?
Ms Blair doesn’t quite promise this, but her warning is clear. ‘I am concerned that attention is diverted away too much from the core business and from our core objective, which is to protect tenants’ interests. I am very keen that we can identify emerging risk. Look at some of those subsidiary activities - they are quite complex.’
Landlords now have less than a month to go before they are hit by a thunderball of a new rules and regulations. As the interview draws to a close, Ms Blair indicates that she and the regulator will work tirelessly to make sure the new system beds in quickly and helps make sure service standards remain strong in the sector.
While landlords might be nervous, there is no sign that the strain is getting to Ms Blair - quite the opposite in fact. Setting up the regulator and engaging with the sector has been ‘great fun’, she says. ‘I firmly believe that everything I do should be fun.’
With that, the meeting draws to a close and the indomitable Ms Blair is off to take on her next challenge.
North-south divide: regulatory differences
Main objective: to safeguard and promote the interests of current and future tenants
Regulatory approach: risk-based, based on monitoring, assessing and comparing landlords
Buzz words: tenants, intervention, scrutiny, holding landlords to account
Chair’s thoughts: ‘Our powers and tools will enable us to be both firm and bold, able to intervene at an early stage’
Main objective: economic regulation of private registered providers
Regulatory approach: co-regulatory, emphasis on boards taking responsibility
Buzz words: value for money, co-regulation, standards
Chair’s thoughts: ‘It is up to the sector to manage these opportunities and risks. But it is also incumbent on the regulator to keep pace with the sector and manage risks where it needs to’