ASLEEP at best, negligent at worst. That's the corruscating verdict of Conservative MP Rob Wilson on the Housing Corporation's handling of the collapse of Ujima Housing Association.

In what must be some of the harshest criticism of the sector ever heard at Westminster, the MP for Reading East described in a Westminster Hall debate yesterday how he was first alerted to the situation by an email from the Corporation at 4.00 on New Year's Eve.

'Perhaps I am being unfair, but the fact that the e-mail had been sent on new year’s eve made me think that there might be a little more to the matter than the Housing Corporation was letting on, and I asked myself whether late on new year’s eve was perhaps a good time to bury bad news,' he said. 'I decided to dig deeper into the matter, and I quickly found a series of whistleblowers who felt that the whole episode had, at best, been handled incompetently. I found fraud and corruption on a sizable scale within Ujima, as well as considerable incompetence. The Housing Corporation’s management were asleep at best, and negligent at worst.'

As Inside Housing reported last month, Wilson called in the police to investigate in January and he said in parliament that three arrests have been made on suspicion of money laundering and conspiracy to defraud Ujima. He also listed a catalogue of areas where he believed fraud and corruption had taken place - in far more detail than has been revealed so far given that the Corporation has yet to publish the interim findings of its own investigation.

'If only a tenth of the allegations are true, it is jaw-dropping that the problems were not spotted and stopped,' he said. 'But, of course, many of them were spotted—by Ujima’s committed, hard-working and loyal staff.'

He also had warnings for other associations who may think this is purely about Ujima and the Corporation. He highlighted evidence that the Ujima affair has - on its own and regardless of the effects of the credit crunch - increased the cost of loans to other associations and quoted a CML briefing note circulated to MPs saying is 'no certainty housing associations will be able to raise the estimated £15 billion private finance needed to meet government house building targets'.

And he revealed: 'I have been alerted to the fact that a number of other housing associations are failing to get best value on deals for land development sites, thus failing to get full value for taxpayers' money.'

But it is his series of questions about the Corporation's role that will make for the most uncomfortable reading at Maple House, including his references to its 'so-called independent inquiry' and the perception in the sector that it would be a 'whitewash'.

'Despite the investigation taking place, I believe that the minister must launch a full departmental investigation into the actions, or indeed lack of action, of the Housing Corporation in response to Ujima,' he said.

The response of junior communities minister Parmjit Dhanda may not come as much comfort either.  'It has been claimed that the corporation has seen viability as the overarching objective of regulation and has paid insufficient attention to quality of service to tenants,' he said. 'Without criticising the corporation, it is clear that many hon. Members have agreed with that view over the years.'

He continued: 'The new social housing regulator, Oftenant, will be established at arm’s length from government and separated from investment panels. It will be focused on the activities of registered social landlords and on what they have to offer to tenants. The Bill gives the regulator new powers to secure improvement in management and new measures that are more responsive than the nuclear options that are now available to the Housing Corporation.'

Posted by Jules Birch, May 7

Posted in Housing associations, Office for Tenants and Social Landlords

THE NATIONAL Housing Federation [NHF] has come out fighting ahead of this week's committee stage of the Housing and Regeneration Bill by dubbing it 'the greatest threat ever to the independence of housing associations'.

A bulletin issued to members today [download PDF here] identifies eight key threats to associations including their ability to raise private finance, create neighbourhood services, and manage their own affairs plus the imposition of additional responsibilities, red tape and costs. The NHF has been lobbying ministers since the second reading of the Bill in late November but, according to chief executive David Orr, it has got nowhere: 'I have had a number of conversations with ministers, and CLG  officials, and told them plainly what the threats in the Bill are – but they seem unwilling to alter the damaging clauses.'

The NHF is speaking out now because the committee stage of the bill starts on Thursday. The bill creates the new Homes and Communities Agency (HCA), with a powerful brief to drive through government housebuilding plans, and the Office for Tenants and Social Landlords (OFTSL), with a brief to improve accountability to tenants.

On one level, it's not hard to see why the government is sticking to its guns. Those are both key government objectives - so why shouldn't it legislate to push them through? And why shouldn't organisations that have benefitted from billions of pounds worth of public subsidy through social housing grant and housing benefit be expected to fall in line?

For the NHF though, the bill will give the secretary of state powers to direct OFTSL to set standards for associations. This amounts to 'policy passporting' that would compel 'associations to act as agents of the state'. OFTSL would have the power to regulate non-housing activity, which would stifle innovation. It will be able to intervene when a new standard is not met as opposed to just in cases of mismanagement and misconduct, leaving associations vulnerable to sanctions 'for mere failure to follow central government policy'. All this and they will be expected to pay £20m a year to fund OFTSL at the same time as private developers competing for housing grant pay nothing.

The nub of the issue though is associations' status as private organisations. That is what has underpinned the last 20 years of government housing policy and enabled associations to raise billions of pounds in private finance. The worry is that if they are forced to follow government dictats so closely sooner or later they will be seen as part of the public sector - and unable to raise funds outside of public borrowing constraints.

That ambiguity has always been there. Associations have always been quasi-private for financial purposes and quasi-public for political ones. The Housing Corporation has always had the power to intervene in associations' affairs (just ask anyone involved with Ujima). However, the crucial difference in the bill appears to be that OFTSL will give the government a direct chain of command rather than the last ability to intervene as a last resort. 

It's not exactly clear how any reclassification of associations as public bodies could be triggered - though the government statistics service is newly independent - but that would be such a disaster for government housing policy that is is hard not to see a compromise being reached. It is hard too to imagine that a standing committee packed with housing experience - including former housing minsters Nick Raynsford and Sir George Young, who raised many of the same concerns in the second reading debate - will not find a solution that will satisfy everyone.

Posted by Jules Birch, Jan 8   

Posted in Housing associations, Politics , Homes and Communities Agency, Office for Tenants and Social Landlords