Blog Post

Housing Green Paper consultation on consumer regulation: the sector response will make or break the government’s proposals

The government’s Social Housing Green Paper fails to meet its promise to be a ‘fundamental rethink’. But it contains a number of U-turns in policy towards the sector and its tenants. One welcome change is in the approach to consumer regulation. In this post, two of the key players in the delivery of consumer regulation under the last Labour government, Ross Fraser* and Roger Jarman*, consider the direction the government is now taking.

By Ross Fraser and Roger Jarman

Prior to the 2010 election, social housing tenants were beginning to see the fruits of Labour’s commitment to consumer regulation of social housing.   Audit Commission housing inspections, focused on service quality, had been part of social housing since 2000.  A new consumer-focused regulator The Tenant Services Authority (TSA) had been set up in 2009 and was beginning to have an impact.  A National Tenants’ Voice (NTV) had been set up to enable that ‘voice’ to be heard in national policy development.

Then, as one of the first Tory-led coalition government housing policies, Secretary of State Eric Pickles and Housing Minister Grant Shapps conducted a ‘bonfire of regulation’, winding up the Audit Commission and the National Tenants’ Voice, abolishing the TSA and transferring its regulatory powers to the Homes and Communities Agency whilst reducing its scope for consumer regulation to a minimal level.  Then came the Grenfell Fire and now, in direct response, the Government’s new Green Paper exhibits a complete policy U turn and proposes a new regime of consumer regulation and the creation of a national voice for tenants.  In other words, the government is proposing to replicate the Labour government initiatives which Pickles and Shapps scrapped with such haste and enthusiasm.

Although the Green Paper has generated much discussion in the housing media, not a single commentator has noted the quiescence of the sector in 2010 and 2011 at the ‘bonfire’ of consumer regulation.  No local government or housing trade body contested its abolition – indeed much of the sector was only too glad to see the back of (we paraphrase) ‘over-prescriptive consumer regulation that paralyses innovation and imposes excessive burdens on landlords’.

Post-Grenfell, there is a renewed recognition that social landlords need to raise their game on resident engagement and standards of service quality.  The Local Government Association (LGA) is working hard on a guide for councillors on the benefits of tenant involvement and how councils can learn from the best local authority and Arms Length Management Organisation (ALMO) practice.  The National Housing Federation is going even further and plans to issue a formal ‘offer to tenants’ at a national level, underpinned by ‘local offers’ by individual housing associations.  Both initiatives are welcome – and by implication raise the question of the balance of responsibility between government and the sector in terms of embedding a lasting and workable model for consumer regulation.  This is important as without the wholehearted support of the sector, this iteration of consumer regulation may not succeed either.

So what does the Green Paper’ propose?   Key suggestions include:

  • Improving and speeding up how complaints are resolved
  • Empowering residents by giving them access to comparative data on landlord performance
  • Enabling the Social Housing Regulator to intervene where registered providers (a term that primarily covers housing associations but also includes council landlords) are providing a poor landlord service
  • Potentially extending consumer regulatory scrutiny to Tenant Management Organisations (TMOs) and ALMOs
  • Reviewing and improving current consumer regulation standards – including a new approach to defining Decent Homes
  • Linking access to Social Housing Grant and future government/sector strategic partnership funding to landlord performance on key comparative performance indicators related to ‘issues of key importance to residents’
  • Enabling residents to have their voice heard more effectively at a national level
  • Giving tenants more choice about who delivers landlord services and how they are delivered

Undoubtedly these are vital issues to be addressed and we discuss them in more detail below.  However, the proposals focus entirely on the delivery of management and maintenance services and the quality of resident involvement.   What the Government has yet to recognise that tenants want a more effective say over the policy decisions made by social landlords.  Two examples will suffice.

One of the biggest decisions that social landlords have to make today is over the balance of expenditure between building much-needed new homes and the maintenance and improvement of their existing housing stock.  When, after the 2015 election, the Tory government introduced the ‘4-year 1% rent cut’ much of the sector sought to protect development programmes by cutting back on, or delaying, planned maintenance and other capital works programmed for coming years.  Most landlords didn’t tell their tenants they were doing this, let alone consult and seek to persuade them that this was the right policy decision.  Equally, tenants are increasingly concerned about social landlord rent levels, lack of landlord research into local rent affordability and the abhorrent practice of converting social rent relets into new ‘affordable’ (sic) rents.   There is nothing in the government’s Green Paper that will empower residents to challenge landlord decision-making in these areas.   A key litmus test of the forthcoming LGA and NHF initiatives will be whether they tackle these issues.

Returning to the government’s proposals, some are eminently sensible.  The Government proposes a single housing ombudsman (subject to a specific separate consultation) and to speed up and simplify the current complaints process.  This is a good plan.  Also welcome is the proposal to empower the Social Housing Regulator to intervene where there is systemic failure of the landlord service, with the bar set higher than the current lamentable ‘serious detriment test’ which focuses solely (and not very well) on health and safety.  Reviewing current consumer regulation standards – especially the Decent Homes standard – is right and essential.  Enabling residents to have their voice heard better at a national level – presumably (although the Green Paper isn’t specific) through a reconstituted National Tenants’ Voice – is imperative and no time should be lost in making this happen.

Other proposals, whilst well-intentioned, need to be carefully designed if they are to have any impact.

Tenant access to comparative landlord data is essential – as charges to tenants and leaseholders comprise 95% of social landlord income, they have a moral right to know how well their landlord is performing.  Tenants and their representative or support bodies like TAROE Trust, TPAS and a National Tenants’ Voice could use this information to challenge landlords to improve and regulators to act where they don’t.

But, as TPAS CEO Jenny Osbourne has pointed out, until tenants are able to exercise choice over their landlord, there is a limit to the empowerment that performance league tables can achieve.   This is undoubtedly true but the only time that any government has sought to enable this, via the Tenants’ Choice scheme in 1988, the initiative was quickly dropped due to sector opposition and tenant frustration with the complexity of the process.  Instead, in the Green Paper, the government floats the options of tenant-initiated, stock transfer to community-based housing associations or (subject to a review of the model’s effectiveness) TMOs or increased deployment of other tenant-self-management options.   But what if tenants don’t want that responsibility and just want a better landlord?  Most would likely prefer regulatory intervention as the means of securing that goal.

Linking landlord performance to access to grant or strategic partnership opportunities will certainly focus the minds of housing providers.  Most will redouble their efforts to improve.  However, as was evident to the Audit Commission housing inspectorate, others will focus effort on ‘gaming’ the data – and poor performers will complain that everyone else cheats and they are the only honest brokers – and it will need great rigour in data collection, validation and challenge if accurate clean data is to become the norm.  Landlords will have to increase their staff resource – and vastly improve their IT systems – if good quality data is to be provided, inevitably increasing costs. Which, in our view is a good thing and not something to complain about.

Then there is the technical issue of what performance indicators to collect and how to measure them.  A particular issue arises where data is drawn from complex and extensive surveys – either of property and tenants.  How can this data be validated by an external body?  Will all surveys need to follow a set model, or will the data validator have to check the methodology of every survey?  How will performance on health and safety be monitored, especially given the confusion between the government, the sector and suppliers as to what – post Grenfell – constitutes adequate protection against fire?

Who will collect, validate and publish the data?  The assumption in the Green Paper is that the Social Housing Regulator will undertake this role.  The Green Paper references the excellent work of the Scottish Housing Regulator in this respect.  In our view – and we admire what Michael Cameron and his Scottish colleagues have achieved – this would be a mistake.

The first thing that any poor performer does – and we know this from experience – is to challenge the technical basis of the KPIs and the validation methodology.  It will be far easier to rebut this criticism (whilst responding positively to constructive challenge) if the data used by the regulator is collected and validated by the sector itself.  And in sector institutions like HouseMark and HACT already lies the skills in developing data collection systems and and validating landlord performance data.   HACT is developing common data standards for the sector, now with HouseMark support, and these will be vital in raising the quality of data collected. There is no merit in spending public money in replicating existing sector initiatives.  Even more important, social landlords need to ‘own’ this data and use it for sector-generated improvement.

The Social Housing Regulator should have the power – on an exceptional basis – to audit the systems used by providers to derive data on their performance.  This will ensure that the sector knows that ‘gamed’ data will be subject to official checks – with false performance data resulting in the regulatory sanctions that currently apply to inaccurate financial returns.   If the sector cannot demonstrate a commitment to accurate performance data monitoring, then – and only then – should the Social Housing Regulator step in and impose its own system.

It’s time for the sector to stand up and demonstrate its commitment to transparency.  And by the sector we mean both councils and housing associations.  Any suggestion that the ‘transparency deficit’ is solely a housing association issue is both wrong and ideologically-driven.

Another issue is what triggers regulatory intervention.  The former chair of the Social Housing Regulator Julian Ashby has sensibly suggested that the regulator should focus on ‘systemic or serious failures’ of landlord services with the Housing Ombudsman tackling individual complaints.  But how do we define ‘systemic or serious failures’? Will tenants have a powerful say in developing this definition and monitoring the regulator’s execution of this responsibility?

Clearly, the culture of the Social Housing Regulator will need to change. The Green Paper suggests some new and appropriate appointments to its Board.  Presumably, new executive staff with expertise in resident engagement will be recruited to an already high-quality regulator.  However, if tenants are to have confidence in consumer regulation, the whole process will need to be completely transparent.  For any regulator – not just the SHR – this will be a major cultural change.

Finally, the Green Paper asks whether the regulator’s remit should be extended to ALMOs and TMOs, whilst recognising that this might cut across local democratic accountability as expressed in the council’s role as client.  In our view this is a real problem but a fixable one.   Protocols can be established between the SHR and trade bodies such as the LGA, ARCH and the NFA.  The example of how the Audit Commission Housing Inspectorate certified ALMO performance – using data collected by a sector body (HouseMark) and with regular and transparent engagement with the LGA – seemed to work quite well in securing the release of over £20 billion in decent homes funding approvals between 2003 and 2010.

In short, consumer regulation will only work and command broad support if it is a partnership between MCHLG, the Social Housing Regulator, the sector and tenants.   In designing a new system, the views of tenants and their representative and support bodies should be the prime consideration.  Policy making in social housing has rarely taken this form in the past.  Let’s make sure it happens now.

*Ross Fraser was Chief Executive of HouseMark between 2001 and 2016

*Roger Jarman was Head of Housing at the Audit Commission Housing inspectorate between 2000 and 2010