Rochdale’s former arm’s-length management organisation has transferred ownership to tenants and employees. Alex Turner reports on how the pioneer landlord is going about making history
Localism has been a news fixture since the coalition government came to power - but there’s nothing groundbreaking about the idea of communities taking decisions for themselves.
The co-operative movement, which emerged in the late-19th century, saw workers banding together to provide goods and services in a self-governing fashion. One of its wellsprings was in Rochdale, where the Rochdale Society of Equitable Pioneers formed in 1844 to sell food workers would not otherwise be able to afford.
These days, former arm’s-length management organisation Rochdale Boroughwide Housing is drawing on the Lancashire town’s long history of co-operative principles as the 13,700 homes it manages on behalf of Rochdale Council are transferred to an organisation owned - and guided - by tenants and employees.
Everyone involved in the transfer, which took place in March, is billing it as the revival of the spirit of those Rochdale pioneers, and Gareth Swarbrick, chief executive of RBH, believes the organisation’s past as an ALMO will stand it in good stead. Nevertheless, the practicalities of the process, which will see £169 million invested in stock improvements over the next five years, cover uncharted territory.
Housing mutuals in Wales have put tenants at the heart of governance for a decade now, but this is the first time staff have seen a share of the action.
Housing minister Grant Shapps approved the move last October. ‘The department [for Communities and Local Government] is willing to look at all forms of transfer, especially those offering tenants and employees involvement in the delivery of services,’ says a CLG spokesperson, ‘but the cost to the taxpayer also has to be considered.’
So why did RBH decide on this action and what are its aims?
‘A couple of years ago we and the council started looking at options for a sustainable service,’ explains Mr Swarbrick.
‘Under housing revenue account reform there were issues around the pattern of investment over 30 years [owing to debt caps placed on local authorities],’ he says. Rochdale Council’s HRA debt was £241 million, which was reduced to £117 million following HRA reform earlier this year. RBH has paid £25.5 million for the stock, and the remainder - £91.5 million - has been written off by the CLG.
If the organisation remained under council ownership, ‘for the first 25 years the level of investment wouldn’t be there, and by 2017 we’d fall from 100 per cent decent homes to 30 per cent non-decent’, Mr Swarbrick adds.
Councillors, tenants and ALMO board members appraising options realised that transfer was financially the best. But concerns remained around how assurances could be given that a stock transfer organisation would be accountable to the community and how it could address the borough’s wider needs.
Creating a constitution
A panel of staff and tenants developed the RBH constitution (see box: Healthy constitution) with the aid of Mutuo, an organisation that promotes and advises on co-operative models. Seventy-six per cent of tenants (on a 57 per cent turnout) voted in favour of the transfer in December.
‘Employment, health and fuel poverty were issues identified during the transfer process,’ says Terry Linden, housing cabinet member for Rochdale Council, which will retain a one-third stake in RBH until the mutualisation is completed in June 2013.
‘The offer document commits RBH to addressing these issues via support services such as help with money management, skills and training and energy-efficiency measures.’
Mr Swarbrick, who will remain the organisation’s chief executive, is confident that RBH’s experience as an ALMO will provide a useful launch pad when it comes to meeting these new objectives. ‘ALMOs have been place-based. That’s integral to our model,’ he says. ‘They have concentrated on delivering core services and listening to tenants. This was driven by needing a certain star rating to get funding.’
But things are less clear-cut than they were. As reported by Inside Housing last month, changes to how banks lend to social housing providers mean RBH has only been able to negotiate a 10-year loan from its backers Santander and the Royal Bank of Scotland. Mr Swarbrick says RBH’s 30-year business model is ‘robust’.
‘When people have 30-year funding packages in place, on average they’re refinancing between years six and seven,’ he concludes. ‘We’ll just have to look at options earlier - in three years’ time - and we’ll see how the land lies when we get there.’
Pioneering spirit is alive and well in Rochdale.
While ALMOs count tenant representatives among their directors, Rochdale Boroughwide Housing’s board will have its working parameters set by a body including 15 tenants and eight employees, elected every three years by members.
For a year the body will operate in shadow form, exploring what its training representatives will need and how its theory of governance will play out in practice. Those involved in the commission that set up the constitution are enthusiastic about the future.
‘It was important employees be part of governance,’ explains Andrew Johnson, one of the tenants concerned. ‘There was no sense of “this is a tenant issue, this is an employee issue”.’
‘We had the same aims,’ concurs neighbourhood housing manager Phil Cole. ‘Employees went through an election process to go on the commission; as meetings progressed we were all supporting each other.’
Around 400 staff (two thirds of the workforce) and 1,800 tenants have become members of the new mutual since April - this is free, with the commitment of a nominal £1 ‘on demand’.
‘I’ve a greater sense of being part of the organisation and being able to have a say,’ says Mr Johnson. ‘As a tenant member you’re not just there to receive a service, you can help develop how they are delivered.
‘Employees can now get involved in how the company is run,’ adds Mr Cole.
‘It’s like a big club - we can all make things better.’