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)
kass | 12/03/2010 10:41 am
I greatly welcome this article which touches on the very essence of what is required for tenants to have any self-respect and dignity, as without having real choice we will remain second class citizens for ever no matter what else it's being done in the name of so-called choice.
But I would like to add my proposal to the options Dr Leuning has listed.
What about having a board directly accountable to the tenants?
I mean, the HA boards would be elected by the tenants themselves every four years exactly as as any election, with one tenancy one vote as I have been saying for years? It seems to me the least fussy and the most democratic way for tenants to really have a say.
After all why should we tenants be put through all the hassle of having to switch here and there, from almo to housing association to back the council, when we could just kick out useless boards or ineffective board members and chief executives using the oldest and still most popular system of democratic control of elections?
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Johh E Pallister | 12/03/2010 10:45 am
Hi,
This have been a contenious issues of mine for a few years, since council tenants had a choice of landlord, but not RSL's.
As you point out, it would make RSL Landlords think about keeping their services to their residents in good order, in case they became dissasitfied and considered a transfer.
Cheers
John
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Harry Lime | 12/03/2010 11:45 am
It's just soundbites - interesting Kass to see there is right wing ideology you agree with. What good does it do with some tenants changing who they pay their bills to when often it won't matter a jot. If you have maintenance issues and live in a block of flats, how on earth would it make sense to have a couple of tenants transfer to association x, when association y are still in charge of the block. Equally would the new association allow you to switch if they knew oyu lived in a block that needed a £2m refurb that they would not be controlling themselves but would contribute to.
How about ASB, would your new association devote serious time to one or two residents on an estate largely controlled by another RSL? It's all kite flying, "wouldn't it be nice", "if I ruled the world" ideology, not based in the real world, but sounds good to discuss in the run up to an election. Wonder If Dave C might "borrow" elements of this on the hustings.....
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Jack Davies | 12/03/2010 1:18 pm
Social tenants also have the choice to remain of course and enjoy the far greater security of tenure in the social sector compared with the private one, so beloved by Mr Leunig.
And they can then keep the 63% cheaper rents too and all the other benefits they enjoy of being a social tenant.
Strange how Mr Leunig fails to mention the size of the private rented sector isnt it? You know the one that costs us all in HB terms more than the RSL sector - yes that one!! Could it be that an eminent professor at the LSE has simply overlooked such a matter. No - it just reflects his hatred of the state at play and its involvement in housing wrapped in a very very convenient argument of choice? (As well as his own self-promotion of course!)
So what choice do private tenants have? More or less than social tenants - far less. So what rights do private tenants have over social tenants? Less - far less. Choice and accessibility for any sort of tenant involvement? Far less.
Do private tenants paying - whether themselves of through HB - have more chance of climbing the social ladder to the great zenith of home ownership Mr Leunig and his ilk crave? No they dont they have far far less as Mr Leunig well knows and conveniently ignores in his polemic above.
His strategy like so many of his fellow travelling thinkers is so passe. Mention the word choice - that great right-wing panacea - and the sheep will follow and believe in its superficial nonsense. "Right" is another term they employ with alarming frequency - right to buy, right to move, increasing choice etc - well their rightist market simply cant deliver the same quality of housing, security of tenure and efficiency of cost that state-led and inspired 'social' housing delivers. So they nit pick and nit pick away at the comparatively small failings of that system that delivers so much more and better than their private ideals.
Compare Mr Leunig's stated failings of the social housing market with its major competitor - the market led private sector rented market beloved by Mr Leunig - and it becomes obvious which model best serves tenants. The article is shameful and risible and Mr Leunig knows that too, he just cant admit it
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martin haddelsey | 12/03/2010 3:12 pm
this seems to me to be a re-run of the Conservative Party's "Tenants' Choice" of the 1980s, which enabled local authority tenants to vote for a change of landlord (i.e. a housing association, thus reducing cost to the taxpayer). There was precious little take-up. Moreover, the assumption here is that failing organisations should be allowed to 'die', when a more productive approach - and certainly one which would cause less disruption and job losses for blameless staff members - would be to support the organisation to improve, and/or sack ineffective senior managers.
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Len White | 13/03/2010 12:40 pm
At last the 'barmy boffin' has written something where I half agree. Too many housing associations are almost totally unaccountable with self-selecting boards - or even worse chief executive-selected boards - where tenants' issues scarcely get a look in. There is hope that the TSA and the development of tenant scrutiny will have an impact but a lot of houisng associations will wriggle out of that.
I think a reserve power of being able to switch landlords is a good idea, but it is hugely complex and long-winded and not a solution in most cases. I don't think democratic elections to the main board is the answer because the main board has other major issues to be concerned with, like development and care services.
I think the answer lies in applying the ALMO or TMO model to housing associations over a certain size, where housing management is delegated, under an agreement with clear control over budgets, from the main board to a management board which would have a majority of elected tenants plus some main board people and independents. This would create a clear and accountable structure within the association that would be strongly accountable to tenants.
But I agree with Leunig that the current arrangements are unacceptable and encourage complacency and something has to be done.
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kass | 13/03/2010 12:59 pm
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... and if, agasint al lthe impossible odds to prove them so, they are caught the yare given fat pensions and pay offs... On tenants money, therefore One tenancy one vote is the only way to get rid of the rot.
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people deserve support | 13/03/2010 2:35 pm
Sounds like free-market ideology. If we introduce the market into social housing then choice will solve all of the problems. Problem is that time and again this is all great sound bites that do not work.
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kevin mcconnell | 13/03/2010 9:20 pm
Tenants have number of options available to them should they feel dissatisfied with services, including the withholding of rent and generally making the HA staffs life very difficult - and this is happening every day.
By increasing choice i.e. balloting for a new association or tenants taking over the board is not only a bad idea but an expensive, dangerous one at that. Organisations are in place to ensure performace levels are kept in check and in the main do a pretty good job. The only thing that will result from this is an further unnesseary framentation of an already over complicated system.
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kass | 15/03/2010 9:26 am
"kevin mcconnell | Sat, 13 Mar 2010 21:20 GMT...
....Organisations are in place to ensure performace levels are kept in check and in the main do a pretty good job. The only thing that will result from this is an further unnesseary framentation of an already over complicated system."
I am afraid this mantra works only for the social housing professionals telling themselves the yare doing all right. You won't find many tenants who believe a single word of this.
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