ao link
Twitter
Facebook
Linked In
Twitter
Facebook
Linked In

You are viewing 1 of your 1 free articles

Small and beautiful

In the face of ‘mega-mergers’, smaller housing associations are setting out to prove bigger is not always better. Jess McCabe investigates

Linked InTwitterFacebookeCard

Video:

features code

For use in Inside Housing, 13 May 2016

“Small is beautiful.” If you’re talking about a bungalow versus a tower block, or the size of the deficit, you would most likely be in tune with the prevailing political sentiment. But if you’re talking about a housing association, perhaps not.

Last summer, housing minister Brandon Lewis called attention to the sheer number of housing associations (more than 1,700 in England are registered with the Homes and Communities Agency).

Video:

Ad slot

Just a few weeks ago, right after the announcement of the ‘mega-merger’ of L&Q, Hyde and East Thames, Natalie Elphicke, chief executive of the Treasury-approved Housing and Finance Institute and one-woman housing thinktank, snapped a grinning selfie with Hyde chief executive Elaine Bailey. “Hearing all about that fantastic super merger!” she tweeted. Talk to any number of housing consultancies, and they will play the same mood music - the sector’s ripe for more mergers.

 

The implication? Big is better.

Miniature marvels

So where does that leave the small players? And many of those 1,700 organisations are indeed very small, at well under 1,000 homes.

To find out, Inside Housing went to the centre of Liverpool, to a peaceful ‘urban village’ of modest 1980s houses, a few shops and some older people’s accommodation. Made up of 382 homes, this is the Eldonian Village - the entire domain of Eldonian Housing Association. Set up as a co-operative in 1983 in the footprint of economic destruction, Eldonian has just six office staff, as well as a gardener, two repairs staff and two cleaners.

Back in the economic heyday of Liverpool, this area was home to a thriving community, where residents lived in Victorian terraces and tenements, and walked to work on the docks, at the British American Tobacco factory and in the Tate & Lyle sugar refinery. The docks dwindled. Tobacco’s global decline shut that factory. The refinery closed. Many of the more ‘economically active’ left. But the old and young residents remained - and they wanted to keep the community together.

“Everyone has this impression that smaller associations don’t want to develop - but we do. We need to develop, probably more than the larger ones.”

To compress a complicated story, those residents set up a co-operative in 1983, and fought a battle with the militant-led, left-wing council to build what is now the Eldonian Village on the site of the former refinery. Wended through by the canals connecting Leeds and Liverpool, the neat houses are well tended. Although signs of economic distress are still evident - such as empty commercial space - to the casual visitor it is no surprise when its chief executive George Evans says there is a long waiting list to live here.

Mr Evans has a glossy book in hand, full of photos of the public figures who have visited (Prince Charles, Michael Heseltine, Gordon Brown). In 2004, the village won a World Habitat Award, presented by the president of Kenya.

“Derelict and polluted land has been restored to form an attractive and secure living environment, and the community now provides support and advice to other communities worldwide wishing to improve their housing conditions and have a greater say in their future,” the awards enthused.

In other words - like any number of tiny housing associations up and down the country - the Eldonian sees itself as fulfilling a unique need, with a unique purpose.

It’s still building on a modest scale - having just completed eight houses aimed at helping tenants to downsize - as well as encouraging house builder Wimpey to construct some homes for the private market across the road, called Eldon Wharf, and marketed as “close to the world-renowned Eldonian Village”. The association evidently has no desire to be absorbed into a bigger housing association.

Mr Evans has a lot of confidence in the desirability of the association carrying on pretty much as it has - as we talk through the many government policies being introduced and how they will affect smaller associations such as his, the Right to Buy comes up. Current policy suggests that housing associations will be able to reserve certain properties from the Right to Buy, and the tenants could transfer their discount to any other housing association property.

Petite plans

“Let’s be honest, who would buy any other association’s properties rather than ours?” he asks, jokingly.

Right to Buy seems to pose a risk of breaking up small, concentrated communities like the Eldonians - but Mr Evans isn’t panicking yet.

“It could have an effect on us at the end of the day - and there could be a point where the numbers are no longer viable,” he says. “But everyone has this impression that smaller associations don’t want to develop - but we do. We need to develop, probably more than the larger ones.”

“We had achieved our business plan, we were ready to develop. Our ambition was to develop.”

Eldonian is more concerned about the practicalities - given it has a smaller capacity to build, how will the timing work for replacing homes sold under the Right to Buy? What sort of strings will be attached? So far, we don’t yet know the final answer to some of these questions.

Listing the many community activities going on here, Mr Evans says: “Rather than having us up as ducks and trying to shoot us down, people should be looking at what we’re doing well and maybe embracing that.”

It is clear from even a brief conversation that some small associations feel embattled.

Mandy Elliott is chief executive of 400-home Crosby Housing Association in nearby Sefton. “I’ve been in this business and I know George has for over 35 years,” she points out. “There’s nothing that compares to anything like the changes we’re going through now in all of that time. And part of that is this myth around how poor housing associations are, and how they are not good, and how they don’t deliver anything reasonable.”

When we get to the specific impacts of recent policy changes - the 1% rent cut, for example, and the extension of the Right to Buy - both Mr Evans and Ms Elliott’s voices rise noticeably.

The Eldonians will lose £184,000 of income from the rent cut over the four-year period - not a small amount for an organisation of this size (although its surplus in 2014/15 was just over £380,000, so it doesn’t spell devastation).

The cut to rents has hit Crosby particularly hard, because the association has used the last three years to improve its financial stability with the aim of starting to build homes. But lower rents puts at risk its ability to raise funding to pay the mortgage on newly built homes. “We had achieved our business plan, we were ready to develop. Our ambition was to develop,” Ms Elliott says.

At the time of our interview, Ms Elliott had in front of her plans for a supported accommodation project working with NHS England and probation.

Both the 1% rent cut (on rents which Ms Elliott insists are already lower than local larger housing associations), and the uncertainty over funding for supported housing, may mean the project isn’t viable after all.

“What I can’t take the risk of is somebody telling me that the rent loss is £88,000 before we even start - I can’t do it,” Ms Elliott says with exasperation. Subsequently to our interview, Ms Elliott decided to go ahead with this project, albeit with break clauses to mitigate the risks.

But of course the broader context to that exasperation is that the government has made it clear that building should be the primary focus of housing associations, whatever the size.

“If I go in the supermarket I can meet half a dozen tenants while I’m in there. And they’ll tell me what they think.”

Last year, Brandon Lewis told Housing 2015, the CIH conference and exhibition, that: “If housing associations are doing welfare work, as well as building houses, that’s great. If it’s at the expense of building houses, they’re not using their asset base to build houses. I do expect them to start looking at themselves and asking why.”

Partly, the impression that small associations aren’t building is a bit of a myth. Arawak Walton Housing Association in the Manchester area has just over 1,000 homes. But it has almost doubled in size in the last 15 years, its chief executive, Cym D’Souza, points out. “A lot of us are still delivering on growth - just because we’re not delivering 400 units doesn’t mean we’re not doing our bit,” she notes.

Hyper-local

But if ‘smalls’ are not building homes rapidly, or are struggling to make that jump - as with Crosby - some argue it is the result of years of policy decisions. Ms D’Souza traces this back to a decision by the Housing Corporation, which preceded the Homes and Communities Agency as the sector’s regulator, to only distribute grants to build to larger associations. This left small associations with only one option to access grant - joining their wagon to a consortium led by a large player.

“I became a third party to some sort of arrangement that was brought in because they only wanted to deal with larger players. We had a very healthy development programme until that point,” Ms D’Souza notes.

Moreover, there’s genuine frustration at the other half of the housing minister’s statement - the notion that “welfare work” in communities is an add-on.

“If this government can convince me that we’ve solved the vulnerability problem, our job is done, then anybody can subsume us and take whichever bits they feel are the best,” Ms Elliott says passionately. Sixteen per cent of Crosby’s tenants have a mental illness, she notes, and many are vulnerable.

It gets involved in hyper-local issues over the long-term in a way that Ms Elliott argues that larger organisations, more prone to short-term initiatives in a particular community, can’t.

For example, in Sefton, mental health is a big concern. Crosby runs a team funded by the local NHS to help people with mental health issues to sustain their tenancies. The association calculates that, after staff costs, the programme saves the NHS £800,000 a year.

Both Ms Elliott and Mr Evans feel their tenants benefit from the organisations being embedded in the community and concentrating on a small locale.

“I meet [my tenants] in Iceland because we shop in the same shops on South Road, so if I go in the supermarket I can meet half a dozen of them while I’m in there. And they’ll tell me what they think,” Ms Elliott says.

“We can get better value for money. But we don’t have to be part of or merge with a large association to do that.”

“Our offices are in the middle of our communities. We’re part of the community even though we’re employed by them. The fact is I work for them,” Mr Evans adds.

Obviously small housing associations do need to respond, as policies such as the rent cut eat into their margins. There’s not much room to cut back-office costs (otherwise known as staff numbers), as they are already few in number and working on several different priorities at once.

Both Eldonian and Crosby are already part of a local group of 18 community-based housing associations, and expect to make more use of it to save money - called Community Housing Associations North West. “Collaboration is our response to merger,” Ms Elliott explains.

Sharing out the responsibility for procuring services is one way this works - for example, recently 12 of the associations hired a legal partner together. The associations already combine their training budget, putting on conferences for their staff and tenants - much more cost-effective than trying to send staff to a big conference, or for training in London.

Mr Evans suggests that in future the group could do more together - perhaps agreeing a schedule of costs with a local contractor, which could help with repairs and maintenance expenditure.

“We can actually get better value for money, which is what we’re all aiming for here. But we don’t have to be part of or merge with a large association to do that,” he says.

Moreover, he doesn’t see the need. “I’ve got the very height in tenant satisfaction. I’ve got properties that don’t look 25 years old, I manage them well at the end of the day. And I’m still charging one of the lowest rents in the country. Maybe somebody should be looking at the good that smaller housing associations are doing.”

Ultimately, organisations such as these question the value of narrowing the field. Ms Elliott points out she goes to the quarterly meetings for chief executives in the region. “Would it be better if there was one person in that room instead of 10? And he could talk to himself, or she could talk to herself?”


READ MORE

Housing associations and councils sign up for '£50 billion' retrofit schemeHousing associations and councils sign up for '£50 billion' retrofit scheme
Merger critic among housing sector honours
Merger senseMerger sense

Linked InTwitterFacebookeCard
Add New Comment
You must be logged in to comment.