Loosening the strings

Fiona MacGregor does not have the luxury of easing into her new job.

After being confirmed as the director of regulation at the Homes and Communities Agency (HCA) on a permanent basis earlier this month, she faces a to-do list with several pressing and extremely delicate tasks. Among them, she has to loosen the strings of regulation just enough to take housing associations off the national balance sheet, but not too much to lose lenders’ confidence.

She must then watch over the sector as it steers its way through its first major dose of austerity and figure out exactly what role her organisation is going to play in the voluntary Right to Buy deal, which also includes demands for further deregulation.

Febrile environment

And she must pull this off within the context of expected 30% cuts at the Department for Communities and Local Government (DCLG), all the while continuing to regulate a sector that is currently reimagining itself in a swiftly changing and sometimes febrile political environment.

It’s a to-do list that would intimidate many - but not, it appears, Ms MacGregor, as Inside Housing found out when it met the new executive director of regulation deep in the bowels of the Home Office building which the HCA calls home last week.

It is an odd time to be inside a government department. With the Spending Review a week away, and security in the building on an understandably high alert, the place feels prickly with nervous energy.

Ms MacGregor, however, is calm and at home in the HCA where she has worked since it launched in 2008 and before that in its predecessor the Housing Corporation. She takes this same quality of calmness into her new role.

“It’s a really interesting time in that so much has been changing in the past four months,” she says, when asked what she sees as her most pressing immediate jobs. “And I think that does impact on some of what our priorities have to be.”

Right at the top is the Office for National Statistics (ONS) reclassification. Last month, the ONS decided housing associations belong in the public sector, pointing to the consents over sales regime and the HCA’s powers to appoint board members.

The government now wants deregulation to reverse this decision. This presents a difficult task for the HCA, which must help deliver it without upsetting lenders who see regulation as credit positive.

“There’s a bit of fine art to crafting those changes, particularly as we’re going to do it quite quickly to get it into the Housing Bill, but we will work to try to get that balance right,” she says.  

She adds that the power to appoint board members, which credit agencies have flagged as a key concern for lenders, may not go entirely. “I think what the ONS wants is for the circumstances in which we do it to be more clearly defined,” she says. Indeed, the regulator has signalled this may morph into an administration regime, enforced through the courts.

The ONS aside, another key challenge for the HCA is keeping on top of the impact of the rent cut for associations’ businesses. Refreshed business plans have arrived in its offices from all organisations with more than 1,000 homes and a huge number-crunching job is now under way.

“We’ll do a kind of triage system,” she says. “There will be a lot of organisations where it will be a quick look through and we can be very confident that things are fine and we can confirm our current gradings.”

For others, such as recent stock transfers, the regulator will go back with follow-up questions to check the plans in a process that may run until Christmas. Then, if it still has concerns about any, it will move to in-depth assessments.

This process sounds slow-moving, but as Ms MacGregor points out, time is on the sector’s side with these cuts, which effectively come in steadily over four years as each rent cheque is paid, starting in April.

“The cuts haven’t actually been implemented yet,” she says. “Even where organisations might be saying we’re going to find this quite challenging, there’s no need to panic.”

And how does she expect the HCA to cope with its own cuts, expected at this week’s Budget? The agency has already hunted for every efficiency it can find over the last five years - staff business cards for example have long been deemed an unnecessary expense.

“Once we know both the detail of the DCLG settlement, and what the impact of that might be for the HCA in its widest sense, the approach that we will take is to look at what are the core areas and priorities in terms of our work and ask whether there are areas that might just be slightly less of a priority,” she says.  

Deregulation package

There is also likely to be more deregulation than the immediate issues raised by the ONS on the horizon. As part of its voluntary deal on the Right to Buy, the National Housing Federation proposed a wide-ranging package of deregulation. The government accepted, and while the ONS decision has put it on the back burner, it has not gone away.

“We might end up doing deregulation slightly in two phases,” Ms MacGregor says. “Probably this is not an unhelpful catalyst for us to just review a few things we’re doing and make sure they’re appropriate and needed.”

Alongside this push for deregulation are some key voices in the sector - some overt, and many more muttered at conference bars around the country - that the HCA goes too far in meddling in associations’ affairs. Ms MacGregor says she is keen to engage with these sceptics.

“Regulation isn’t anybody’s favourite subject but it does bring value to the sector as well,” she says. “To people who are a bit anti-regulation I’d say: ‘Give me a bit of help here: tell me what it is you don’t like. If it is something we can do something about, we are very willing to look at that and if we think that’s not right then we will say so’.”

One of the key areas where the sector may start to grumble about over-active regulation is the new regime of in-depth assessments - detailed checks of businesses by the regulator.

Ms MacGregor says she has “semi independently” checked out the feedback to these, trying to find out what associations are saying in private as well as in public. She says the feedback so far remains “genuinely positive”.

“That might change with the first one we try and downgrade,” she adds with a smile. “You would expect push-back at that point - but that’s our job.”

Despite this deregulation, the voluntary deal on Right to Buy will see the regulator take up a new, yet to be fully defined, ‘standard for homeownership’. Ms MacGregor says this will be strictly to monitor what housing associations are doing to assist homeownership, whether via Right to Buy or other measures, by checking things such as sales rates and levels of requests.

“We’re not enforcing Right to Buy because then it wouldn’t be voluntary,” she says. “But the secretary of state can ask us to report to them based on that monitoring data, and then they may choose to publish the outcome.”

Ms MacGregor has experience of working in the sector outside the HCA, having previously served as director of development at LondonlandlordL&Q.

Her old colleagues say she is well suited to her new role. Waqar Ahmed, finance director of L&Q who worked with her at the organisation, says: “Fiona’s got immense knowledge of the sector from a housing association and regulatory perspective. I can’t think of anyone better to take us through the period we’re going into now.”

This development background chimes with Ms MacGregor’s most recent previous role as executive director for programmes at the HCA, responsible, among other things, for dishing out the Affordable Homes Programme grant. This change in roles - the two sections of the HCA are separate - could have been difficult, but Ms MacGregor says she has adapted well.

“My background is partly old Housing Corporation when investment and regulation were one body,” she says. “So I don’t find it as strange as you would if you had no history of working with the regulator over a long period.”

Indeed, this is what the HCA, and the sector, has found in Ms MacGregor. Someone who has a long history in the sector and is not fazed by change - attributes which make her a very good fit for the delicate role she has now been handed.