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Alistair McIntoshAlistair McIntosh is one of the social housing sector's most respected and best known personalities.
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Yellowhammer proves the true Brexit risks are not going to be found on spreadsheets
Housing associations have been busily running Brexit scenarios through their business plans. But what if the real risks are something entirely different? asks Alistair McIntosh
We could be weeks away from a no-deal Brexit. How bad could it get? Take a look at the government’s Yellowhammer paper.
You can see the risks they are planning for if it all turns sour. First of all, the timing isn’t great as it clashes with the October half term and folk could struggle to get in and out of the country with new border controls.
How will you cope if some of the staff you rely on are stuck in Benidorm? That’s why lots of firms have cancelled all leave for key people. There’ll be congestion around ports, airports and train stations. How will your staff get around?
We’ll run out of medicine and brace yourself for price hikes and shortages of food and fuel. That will hit the poor worst. It seems we are heading for a hard candy Christmas. And to top it all, we might get so angry that we start fighting with ourselves. So the police will be busy.
Yellowhammer packs a lot into its five pages. The dangers of flu get a couple of mentions. Why is that? According to influenza expert John Oxford, “the impact of a flu pandemic in Great Britain would be the equivalent of blowing up a nuclear power station”. This is scary stuff. Are you ready for it? Or have you just been just worrying about the financial side of Brexit? We might find out that cash is not king after all.
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Landlords are using the Bank of England’s stress tests to plan for no-deal. That’s what the Regulator of Social Housing (RSH) told us to do in a letter sent out on Valentine’s Day this year. But let’s hope that’s not all you’ve been doing.
The bank looks only at financial tests. Perhaps the clue is in their name. What you might call the human costs of Brexit that you see in Yellowhammer are absent from the bank’s tests. This is an easy trap to fall into.
When we face trouble, we can get into our comfort zone. We have lots of people who are great at modelling all sorts of financial scenarios. So that’s what they do. They got plenty of practice at it after the credit crunch. It does look reassuring to see graphs that show you can get through a financial crisis come what may.
“This is scary stuff. Are you ready for it? Or have you just been just worrying about the financial side of Brexit? We might find out that cash is not king after all”
Everyone I go to see is ploughing through the bank’s scenarios and working out how to survive them. But what if Yellowhammer calls it right and other risks are a bigger deal? Your plans will be in tatters.
We need to get out from the spreadsheets and talk to the tenants a bit more. You can get the balance wrong. We have form here. After the credit crunch too many landlords pulled up the drawbridge to cut costs. Many of us stopped talking to tenants, so we heard only our own voices.
That’s what started the shift to social media campaigns. Residents had nowhere else to go. When he became an MP, Kit Malthouse just couldn’t believe how many complaints about associations he was getting. Why did we leave this barn door open?
Then there was the near miss at Cosmopolitan. Suddenly everyone became an expert on covenants. But it was a struggle to get boards to think beyond that. All that mattered was having enough money left over for a rainy day.
In the blink of an eye the world turned again. Associations were bringing in mountains of cheap money through bonds and using it to snap up new homes left, right and centre. They thought they were getting a good deal.
That’s about when the Grenfell Tower tragedy hit. So landlords checked over every flat they owned to make sure it would not happen again. And it is not a pretty sight. We are seeing rotten work and safety problems in lots of new homes.
“Don’t take too much comfort from spreadsheets – get out there and find out what your no-deal Brexit risks are and sort them out”
How on earth did these get through our quality checks? These ‘bargains’ have turned out to be very expensive in the long run. They’re going to cost a fortune to make safe. It turns out you do have to look a gift horse in the mouth. We are seeing associations sell off fantastic new homes to pay for repairs to unsafe ones bought in haste.
How come it has taken so long for us to realise that the safety of people comes first?
The answer lies right at the back of Dame Judith Hackitt’s review of building regulations and fire safety. She finds that only 0.02% of fires led to multiple fatalities. That means that until Grenfell, not many people had seen a fire like it. So it wasn’t in their mind when they were buying or fixing blocks of flats. But it’s there now.
In a similar vein, Yellowhammer is looking at the human impact of Brexit in a way that the Bank of England simply ignored. According to the RSH’s latest quarterly survey, associations have piled up lots of cash to get through Brexit. So they can sail through the bank’s tests.
But that’s not what the government is worrying about today. Can you get through the risks of riots, shortages and disruption set out in Yellowhammer? That could turn out to be the true test.
Don’t take too much comfort from spreadsheets – get out there and find out what your no-deal Brexit risks are and sort them out. They might not happen, but Grenfell shows what can happen when you drop your guard.
Alistair McIntosh, chief executive, Housing Quality Network