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West Hampstead Housing Association 15
Monitoring and regulating housing associations 17
Regulatory framework of the Housing Corporation 18
Role of the Council in monitoring and supporting regulation 20
Social Housing Partnership Agreement 22
Conclusions on regulation, monitoring and risk 24
Predicting the extent of WHHA’s problems 26
National Audit Office (NAO) 32
Nationwide Building Society 32
National Housing Federation 32
Camden Housing Associations and Co-ops Forum (CHACF) 33
Protecting the Council’s interests 39
Regulatory and inspection framework 40
Housing Corporation and local authorities 41
Housing associations and local authorities 42
More effective working with partners 44
Working with housing associations 44
Working with the Housing Corporation 46
Promoting greater awareness 47
Working with other local authorities 49
Appendix 1: Recommendations 51
Appendix 2: Events chronology – West Hampstead Housing Association 56
Appendix 3: Housing associations operating in Camden 62
Appendix 4: Background papers 65
Appendix 5: Glossary of terms 71
Appendix 6: Acknowledgements 73
I am pleased to present the report of the Regulation of Registered Social Landlords (RSLs) Scrutiny Panel. Since November last year the panel has met ten times and been in receipt of 100 items of written evidence, some very lengthy. We have listened to and questioned a number of witnesses, both from within the Council and from outside.
This has been a complex and technical scrutiny conducted within a limited timescale. We have been dependent upon a large amount of third party information and co-operation. Part of our remit has also been to look into whether events could have been prevented. Understandably this presented challenges thus far unique to scrutiny in Camden. Some information has consequentially been harder than others to obtain.
The panel, and its officers, have therefore had to strive diligently in order to achieve their allocated task and I would thank all panel members for the way in which they have engaged and worked in a mutually co-operative manner. I would pay particular tribute to our co-opted member, Peter Wright of the Camden Federation of Tenants & Residents Associations, whose commitment and contribution have been invaluable.
Our scrutiny officer Paul Dean and committee clerk Vickie Skade have both worked unstintingly throughout. Many of the challenges that have arisen have placed particular burdens upon them. Paul’s efforts in chasing down evidence and Vickie’s comprehensive record of the meetings (to call them minutes does not do them justice) have been absolutely vital. Without their help and support we would have been lost.
We also want to register our appreciation to all those, from wherever drawn, who gave so generously of their time and energy. Full acknowledgements are given in appendix 6. We hope that their insights combined with our own will lead to a brighter future in this key area of partnership working within the Borough. Naturally we hope that our recommendations will be given proper consideration. Nevertheless we trust that the relationships and mutual understanding engendered by this process can be developed and built upon.
During the course of our work issues have arisen, of a particular and general nature, which either fell outside our terms of reference or timescale, or were not within our powers or capacity to investigate. In all cases we have referred these to the appropriate authorities and would expect the results of their investigations to be reported back in due course.
Naturally there are some themes that, given more time, we would have liked to develop further. One of the themes emerging from the majority of scrutiny panels is the desirability of better corporate working within the authority.
Regardless of whether a more joined up approach might have possibly detected that matters were not what they seemed with West Hampstead Housing Association, it is incontrovertible that improved corporate working in our future relationships with housing associations and other related partners will benefit our residents in a wide variety of ways. This is of particular relevance with respect to social exclusion in all its forms.
Within the report there are a number of references to “diversification” within the sector. Whether the council has adapted itself in response to that diversification is a moot point.
It is to be welcomed that the sector is represented on the Local Strategic Partnership. However given the wide number of areas within the Community Strategy that would benefit from a more collaborative approach it is essential that the Council engages on a broader front at all levels.
The ever-changing environment within which we all operate continually presents new risks and approaches to risk, particularly with respect to partnerships. These can never be completely eradicated, but through a more open and adaptable approach, within an atmosphere of mutual understanding, they can be minimised. Thus we can maximise the opportunities that present themselves or create new ones in order to enhance the lives of our residents.
Whilst the bulk of our recommendations are addressed to the Council, some require a collective approach and others are for different audiences. What ever and wherever we trust that they will be received in an open-minded manner.
We look forward to all parties moving to new levels of confidence and commend this report, through the Council’s Overview and Scrutiny Commission, to the Executive in the expectation that they will act upon it.
Councillor John Rolfe
1. There are some 75 housing associations working in Camden owning about 9,000 homes, representing 10% of the borough’s housing stock. Around nine are actively developing and working closely with the Council. Nationally, most housing associations own fewer than 250 properties.
2. Over the last decade, more than 120 new associations have been formed to manage and develop homes transferred to them by local authorities. In the next three years, transfers nationally are projected to grow substantially, with as many as 500,000 more homes likely to be incorporated into the sector. Housing associations are now the primary providers of new social housing.
3. This has meant that over the last two decades local authorities have substantially changed the way they provide and manage both permanent and temporary housing. They have diversified their housing provision to varying degrees and have taken risks in doing so.
4. Before 1988, housing associations were fully dependent on public finance for their core activity of providing affordable social housing. Since then they have become increasingly dependent on private finance and have diversified into a wide range of other activities. This has required them to manage new risks that have also caused problems for the Housing Corporation, as regulator of housing associations, and local authorities as their partners.
5. Partly in response to this new environment and partly in response to criticisms about its effectiveness, the Housing Corporation has recently changed the way it regulates and inspects housing associations. Its new regulatory approach emphasises the monitoring of outcomes rather than processes, and customer focus and continuous improvement in inspection. These developments have been welcomed by the housing association sector.
6. We consider it right that the Housing Corporation is the sole regulator for housing associations since local authorities do not have the resources nor access to the information that would enable them to carry out this function effectively. Local authorities however do have a role to play in monitoring housing associations and can use their influence to encourage better performance.
7. Housing associations are private bodies accessing public money without legal requirements to open their workings to the public. We consider that they should have more of a culture that welcomes public scrutiny and that local authorities have a role in promoting this approach.
8. The Corporation states it is committed to improving communications with local authorities. Local authorities have much experience of working with different inspectorates and so we have made proposals for improved working between local authorities and the Housing Corporation on inspections.
9. One of the high-risk activities being undertaken by housing associations has been private sector leasing. Local authorities such as Camden, that face significant pressures to house people in priority need, have encouraged private sector leasing by housing associations to reduce their temporary accommodation costs.
10. Local authorities need to adopt a balanced approach to managing the risks of working with housing associations. In the long term it may be possible for local authorities to rely on information provided by the Housing Corporation when assessing partnership arrangements. In the short term Camden will have to take additional steps to obtain more information about the housing associations with which it intends to work as development partners, especially where Camden intends to transfer properties and provide social housing grant.
11. In 2000, West Hampstead Housing Association (WHHA), based in North London, faced a serious financial crisis for which Camden Council was unprepared. We conclude that the Council did not identify any problems at WHHA in time to enable it to halt property sales to WHHA or to switch ADP grant allocations to alternative schemes because:
WHHA operated within what we characterised as a blanket cloak of secrecy
The information available to the Council from the Housing Corporation in the lead up to the crisis was not sufficient to alert the Council to the problems at WHHA
It would seem that no WHHA board members were aware of the impending crisis and it was arguable whether even the association’s officers were aware of the full extent of the problems.
12. Perusal of the annual accounts would have made clear the extent to which WHHA had been expanding its private sector leasing programme. In hindsight, further examination of this by the Housing Corporation and the Council may have identified the increased risk exposure. The Housing Corporation is the only body that could access all the information that would have detected a range of problems at WHHA, but Camden was not privy to the Housing Corporation’s early findings. In hindsight, it is apparent that there were many pieces of information about WHHA within the Council, in WHHA itself and in the Housing Corporation which if collated may have helped to predict the crisis.
13. Looking to the future, we consider there should be an enhanced information sharing cycle based around visits of the Housing Corporation to Camden in connection with forward investment planning and inspections. A buoyant Housing Association Liaison Group and tenants’ forum together with internal information from various Council departments could effectively feed issues into these meetings.
14. We consider that if a local authority can show that it has carried out all reasonable prudent checks, then there should be a cushioning of the financial impact upon the authority in the event of a WHHA-type crisis.
15. We consider that there are ways local authorities could promote the strengthening of housing association boards by encouraging housing associations to:
Provide appropriate support and training for board members
Promote strong tenant representation on boards
Develop robust mechanisms to deal with complaints.
16. We consider there are significant benefits of local authority observers being appointed to local housing association boards in helping to ensure a mutual exchange of information.
17. Some housing associations perceive their relationship with Camden to be solely development driven and want to change it. There are significant opportunities for developing improved joint working between Camden and housing associations at a number of levels. Links need to be strengthened and developed. For example, we welcome the Council’s undertaking to work with Camden Housing Association & Co-ops Forum (CHACF) to try to establish a federation of housing association tenants. We consider that there is a great deal of scope for the local authority to learn from housing associations and any future protocols should not overlook this fact.
18. There is scope for improved corporate working within the Council in its relations with housing associations and other local authorities. We recommend that these possibilities be considered in a forthcoming best value review of housing policy, research and quality. We further recommend ways of improving communication on housing association matters within the Council and to clarify decision-making routes. Council members will in future receive detailed briefings on the key issues faced by housing associations and their tenants.
19.Camden Council’s Overview and Scrutiny Commission established the Regulation of Registered Social Landlords (RSLs) Scrutiny Panel in November 2001. The panel was established in the aftermath of a serious financial crisis within a large housing association operating in Camden – West Hampstead Housing Association (WHHA). This crisis had consequential implications for Camden that prompted questions as to whether the Council should have been able to predict the crisis earlier.
20. The panel’s terms of reference in full are:
1) To clarify and assess the respective roles of Camden Council and the Housing Corporation with regard to the monitoring and regulation of RSLs working with Camden, particularly West Hampstead Housing Association (WHHA).
2) To examine the information available to Camden Council regarding WHHA and to consider whether the Council could reasonably have been expected to know the extent of the problems facing WHHA earlier and what lessons can be learnt.
3) To consider how, in future, Camden Council could ensure that any RSL that it supports or is proposing to support (through discounted disposal of property or through Local Authority Social Housing Grant) is financially robust and how the Council can protect its interests following such support.
4) To make recommendations for improvements in policies and procedures regarding regulation and monitoring, and to consider if there are ways in which the Council can work more effectively in future with its partners in these areas.
21.The panel considers its role to be forward-looking rather than seeking to allocate blame for the crisis. Attempting to identify a “culprit” would be both outside the panel’s terms of reference but also impossible given the time restraints, the panel’s limited powers of investigation and while other enquiries into WHHA are still taking place.
22.The panel is an independent lay scrutiny body with nine members – eight councillors and one co-opted member, the Vice Chair of Camden Federation of Tenants and Residents Associations. The councillor membership of the panel is in approximate proportion to the representation of the different political groups on the Council with six Labour councillors, one Conservative councillor and one Liberal Democrat councillor. A Labour member chaired the panel, although the Council’s constitution is committed to the objective of cross-party chairing.
23.The panel sought evidence from a range of individuals and organisations connected with Registered Social Landlords. The panel received:
Oral and written evidence from a range of external witnesses, Council officers and councillors listed in appendix 6 on page .
A range of background documents from external organisations
A range of Council produced papers and documents
24.Registered Social Landlord (RSL) is the technical name for social landlords that are registered with the Housing Corporation. Most RSLs are housing associations, but there are also trusts, co-operatives and companies. Housing associations are run as non-profit making businesses with any surpluses re-invested to maintain existing homes and to help finance new ones. The term housing association is now preferred to RSL and the two terms are used interchangeably throughout this report.
25.Appendix 5, page contains a list of abbreviations and other technical terms used in this report and the background papers.
26.Over the last two decades local authorities have had to substantially change the way they provide and manage both permanent and temporary housing. Increasingly, local authorities are working with a range of external partners, particularly housing associations, partly because on their own they are unable to access the considerable levels of capital funding required to meet the demands for housing placed upon them. This in turn has led to local authorities diversifying their housing provision to varying degrees, and taking different risks in so doing.
27.There are some 75 housing associations working in Camden owning about 9,000 homes, representing 10% of the borough’s housing stock. Around nine are actively developing and working closely with the Council.
28.Some of these associations operate only within the borough whilst others operate across a limited region in north London; a few are large national organisations. Some associations, such as WHHA, have developed from short life provision and manage properties that have not been modernised. The full list of associations in Camden is at appendix 3, page .
29.Larger housing associations have paid staff together with a committee or management board made up of volunteers that has overall responsibility for the work of the organisation. A board often includes tenants, representatives from local authorities, community groups and the business sector. There are more than 30,000 voluntary board members running housing associations throughout England.
30.Nationally, most associations own fewer than 250 properties. However, the largest 7% of associations own 78% of all the sector’s properties. Some associations were founded centuries ago, but many trace their origins to the 1960s.
31.Over the last decade, more than 120 new housing associations have been formed to manage and develop homes transferred to them by local authorities. In the next three years, transfers are projected to grow substantially, with as many as 500,000 more homes likely to be incorporated into the sector.
32.Before the Housing Act 1988 came into force, housing associations were fully dependent on public finance for their core activity of providing affordable social housing. Since then they have become increasingly dependent on private finance and many have also diversified into a wide range of other activities including:
Providing temporary accommodation through private sector leasing
Providing care packages for vulnerable tenants
Youth and community development schemes
Providing employment and training schemes
Developing major regeneration initiatives in partnership with local authorities
Market renting
Large scale voluntary transfers of local authority homes.
33.Housing associations face particular difficulties in developing their activities in inner London, not least the high cost of land. For many years, local authorities have assisted housing associations to develop by disposing of property and land to them, often at a discount, in return for nomination rights, attraction of Housing Corporation funding and other averted costs.
34.Higher land values result in a greater amount of Approved Development Programme grant (ADP – see paragraph ) per scheme being required from the Housing Corporation. In the absence of other sources of funding, any increases in affordable housing in Camden are currently more dependent upon Council disposals of land and property.
35.The diversification of activity in the housing association sector has required housing associations to manage a range of new risks. These risks have also caused problems for the Housing Corporation as regulator and local authorities as partners of housing associations.
36.We received evidence that some housing associations are reducing the scale of their private sector leasing activities because they consider it to be too much of a risk. The Housing Corporation, as the regulatory body, also regards it as a risky activity. This has increased the problems faced by local authorities in meeting the demand for temporary accommodation.
37.The Housing Corporation is a non-departmental public body sponsored by the Department for Transport, Local Government and the Regions (DTLR). It has been in operation since 1964 and has two main functions:
Paying grants to housing associations in the form of Approved Development Programme funding (ADP) to provide social housing, and
Regulating housing associations’ governance, financial performance and their development and provision of social housing in order to protect the interests of tenants and taxpayers.
38.The Housing Corporation states its aims as:
Regulating to promote a viable, properly governed and properly managed housing association sector
Investing for the creation and maintenance of safe and sustainable communities
Championing a resident focus in the housing association sector
Being a modern, customer-centred, forward-looking organisation, encouraging change in the sector.
39.Over the last two years the Housing Corporation has been changing the way it works following a strategic review and the publication of the National Audit Office report: Regulating housing associations’ management of financial risk (April 2001).
40.The Corporation published the circular: Internal controls assurance (October 2001) that sets out the Corporation’s requirements with regard to housing association board assurance on systems of internal control. This circular acknowledges the importance of wider risk-management and aims to ensure that housing association board members maintain effective internal control (by contrast refer to paragraph ).
41.The way forward – our approach to regulation (January 2002) outlines the Corporation’s new approach to regulation and sets out the obligations of housing associations within the new regulatory system. This new approach was published during the lifespan of this scrutiny.
42.Key themes of the new regulatory approach are:
Expecting associations to work towards continuous improvements with an emphasis on self-assessment
Assessing housing associations using a combination of non-financial as well as financial indicators to try to deal with false and/or misleading declarations
Focusing on outcomes rather than processes – recognising that there are different ways to achieve expected standards
Assessing future viability and robustness of housing associations by keeping abreast of the rapidly changing nature of business and risk
Tailoring the regulatory approach to the risks particular housing associations face – some housing associations would receive more regulatory attention than others as necessary
Increasing the number of the Corporation’s qualified staff at various levels to implement the new code and allocating every housing association with more than 250 homes a lead regulator and financial appraiser
Developing new analytical tools with input from a range of external experts
Working more consistently and openly with the key stakeholders: tenants; housing associations; private lenders; local authorities; health and care agencies; regional bodies; and key national organisations; this includes promoting improved flow of information.
43.To increase the chances of identifying problems early, the Housing Corporation intends to use information gleaned from:
A range of financial indicators and non-financial indicators
Performance indicators
Business plans
44.The Housing Corporation states that it is committed to improving communications with local authorities. We consider this is relatively undeveloped at present. There is no formal mention of the role of local authorities within the Housing Corporation’s general remit nor within either of the new publications on regulation and inspection, a point we note with concern and return to later in the report.
45.The Housing Corporation states it is committed to champion a resident focus. It claims to promote the practice of having tenants on housing association boards and says that it is important to involve tenants in inspections. It has recently established a tenant panel with which it consults.
46.However, the Panel heard evidence from WHHA shortlife tenants who consider that, in their experience, this historically has not been the case and that the Corporation has a reputation for ignoring tenant complaints over the last six years.
47.In general, the Housing Corporation says it is unable to deal with complaints from tenants directly and advises them to follow their associations’ complaints procedure and to pursue their complaint to the housing ombudsman if necessary.
48.However, the Corporation claims to consider concerns about the governance of a housing association, or allegations of corruption or malpractice from whatever source. The Corporation says it faces difficulties in separating genuine concerns from the spurious and indicated that there are resource issues because the process involved in investigations is time consuming.
49.Apparently however, due to an oversight, the Corporation is not currently designated under the Public Interest Disclosures Act 1998 that protects people making disclosures in the public interest. We hope that the Government will soon remedy this deficiency. In the meantime we would recommend that the Housing Corporation implement a whistleblowers’ line that will afford protection to informants from within RSLs.
50.We welcome the increasing emphasis on tenant participation in the recent publications on regulation and inspection by the Housing Corporation, and make recommendations on reinforcing this emphasis later in the report.
Recommendations
That the Government be urged to designate the Housing Corporation under the Public Interest Disclosures Act 1998 that protects people making disclosures in the public interest.
The Housing Corporation be urged to implement a whistleblowers line that would afford protection to any informants from within housing associations.
51.The Housing Corporation has also published its new approach to inspection: The way forward: Inspection – our approach (January 2002). This emphasises customer focus and working for continuous improvement within a best value framework. The Corporation intends to inspect all housing associations with more than 250 homes within the next three years and have a small annual programme of inspections for those with fewer than 250. We welcome the proposed use of housing association tenants in the inspection teams contained in the document. However, we consider that Council tenants should also be actively considered for membership of these teams.
52.Council tenants have long experience in monitoring their landlords and are already used by the Best Value Inspectorate, which also uses housing association tenants as part of inspecting local authority housing. A more mixed membership of these teams could also lead to greater synergy and exchange of best practice between the sectors.
53.The Housing Corporation is now able to obtain detailed information on the complaints received and findings of the independent housing ombudsman for any housing association and aims to ensure that this information is available to inspection teams before any inspection takes place.
54.Local authorities have wide experience of inspection functions through links with the Best Value Inspectorate, the Audit Commission, the Housing Inspectorate and other regulatory bodies. We consider that this experience could be of great value for the Housing Corporation as it develops its inspection functions.
55.Local authorities also have a great deal of detailed information concerning housing associations operating in their areas that could be of considerable value as part of a Housing Corporation inspection.
Recommendations
That Camden Council, together with the Association of London Government (ALG) and Local Government Association (LGA), further develop an ongoing dialogue with the Housing Corporation on the development of an effective inspection regime.
That Camden’s housing officers seek to develop the Council’s role as part of the Housing Corporation’s inspection regime using its knowledge of housing associations working in its area and its experience of working with various regulatory bodies.
That the Housing Corporation be requested to consider including Council tenants, in addition to housing association tenants, on its inspection teams.
56.Housing association boards increasingly have to manage very complex businesses. Boards generally comprise a mixture of lay members and members with a professional knowledge of the industry to various degrees. Ensuring that boards have the appropriate skills to manage effectively is crucial. Balanced against this is a need to ensure that housing association officers provide accurate and timely information to boards to enable them to make the right decisions.
57.The Corporation examines board skills annually in a paper exercise. A more systematic approach is now being taken outlined in the Corporation’s document Treading the Boards, a self-assessing guide on board effectiveness.
58.The Housing Corporation has published cases illustrating problems in housing associations where board members have developed a “cosy” and not necessarily healthy relationship with their chief executive. Conversely, problems also occur where boards interfere too much with day-to-day or operational matters.
59.In 2000, West Hampstead Housing Association (WHHA), based in North London, faced a serious financial crisis for which Camden Council was unprepared. The Housing Corporation waived grant recovery on sale of WHHA dwellings; provided partial compensation through ADP (see paragraph ); and provided WHHA with a temporary £4.5m overdraft guarantee. Genesis Housing Group has incurred irrecoverable time and management costs. Camden and other local authorities have been obliged to fill the remaining financial “hole”.
60.If WHHA had been allowed to become insolvent, thousands of tenants could have lost their homes. Since there appeared to be no viable alternative that would not involve even greater losses, Camden reluctantly approved a rescue package in October 2001 that included:
the waiving of clawbacks on some vacant properties to be sold by WHHA that had only recently been purchased at a discount from the Council and already renovated
paying WHHA increased nomination fees for temporary accommodation
providing WHHA an interest-free loan of £300,000 (with loss of interest amounting to approximately £22,000)
61.Other London local authorities have been similarly affected by the crisis, although 44% of WHHA’s permanent stock is in Camden. Camden has also been proportionately more affected as renovated, recently transferred yet vacant stock has been sold.
62.Camden faces further consequential financial and social costs:
Loss of nominations on the WHHA properties that have had to be sold – the net loss could amount to £189,000
Additional extra temporary accommodation costs
Loss of approved development opportunities of £3.6m ADP in 2000/2001; the Housing Corporation has promised an additional £2m ADP for which affected local authorities will have to bid
Council staff costs resulting directly from WHHA issues resulting from the crisis, excluding this scrutiny panel, has amounted to approximately £10,000 as at February 2002.
63.Despite the impact of this crisis, the Housing department argues that these costs must not be seen in isolation from the financial benefits that we have received and continue to receive from using WHHA property. Even in Hackney, Camden has 115 families in temporary accommodation representing a saving of some £50,000 per month compared with using bed & breakfast accommodation.
64.Working with housing associations can involve the investment of substantial Council resources in organisations already in receipt of considerable public funds from the Housing Corporation. The issue of how housing associations are regulated and monitored is therefore key to the panel’s scrutiny as reflected in our terms of reference. It is also relevant to any consideration of how the Council should protect its investment in housing associations now that the WHHA crisis has shown the level and type of risk involved.
65.In this section we clarify and assess the respective roles of the Council and Housing Corporation in monitoring and regulating housing associations working in Camden, particularly West Hampstead Housing Association (WHHA) within the context of increased risk taking and diversification by housing associations.
66.Diversification in the activities of housing associations has brought with it a variety of associated risks. In his evidence to us Mr James Tickell, Deputy Chief Executive of the National Housing Federation outlined a number of the main risks currently facing housing associations: the impact of rent restructuring, supporting people and the potential cash flow problems caused by housing benefit arrears.
67.Rent restructuring proposals and the new £100 rent cap will affect many organisations in London but the full impact is as yet unknown. Some housing associations may need additional grant to reduce rents in line with the rent cap. We are concerned that this would mean that larger family properties are likely to become less feasible for housing associations unless local authorities could make up differences from their own resources or additional grant is forthcoming from Government.
68.Supporting people will be a new regime that may stretch the administrative systems of both local authorities and housing associations. The local authority will be the administering authority entering into contracts with housing associations and others to provide services to vulnerable people. The risks for housing associations will stem from the fact that each local authority will organise this function differently and that it is likely to generate a huge amount of bureaucracy.
69.Local authorities are likely to need an enhanced approach to verification of the financial and operational fitness of organisations that carry out these functions. This needs to be integrated into the general monitoring of organisations’ housing management, repairs, maintenance and customer care functions. The challenge for local authorities will be to ensure 100% effective monitoring because the consequences of failure would have particularly serious consequences for the vulnerable client group involved.
70.Beyond these risks, Mr Tickell considers all other problems experienced by housing associations to be due to “errors of judgement or a failure of governance”. This view was reinforced by Council housing officers who consider a key risk as being the level of a housing association’s competence to carry out its management and finance functions effectively:
Failure here would lead to loss of money and reputation. If the level of competence is so low as to jeopardise a scheme’s future, then that risk becomes, in effect, shared with the local authority that has then to confront the possibility of finding alternative accommodation for the residents.
71.As housing associations have expanded and diversified, many have adopted what is known as a group structure. Large housing associations are split into semi-independent subsidiaries that are responsible for different functions; each subsidiary is accountable to the parent board.
72.The Housing Corporation states that non-social housing activity should not encroach upon social housing functions and a group structure would help housing associations ensure there are no unintentional cross subsidies between functions.
73.Genesis Housing Group perceives that their group structure has:
Provided clarity of responsibility and ensured an appropriate mix of governance skills and experience particularly surrounding the management of risk. The management skills are also appropriately focused on the subsidiary areas ensuring identification of risk through appraisal and appropriate risk management.
74.However, there are other views as to whether a group structure helps to manage or reduce risks. Mr Malcolm Kitchener of the Nationwide Building Society says such a structure would not have protected WHHA’s core stock for example. The National Housing Federation and Mr Mick Sweeney, Chair of the Camden Housing Associations and Co-ops Forum (CHACF), suggest that isolating a risky activity in a subsidiary may offer some protection to other parts of the organisation in the event of problems.
Recommendation
That the National Housing Federation be requested to draw up guidelines on how and when it would be appropriate for housing associations to introduce group structures.
75.We gathered evidence showing the extent to which the Corporation has managed to regulate the housing association sector against this background of changing structures, increased diversification and risk taking.
76.Housing associations are private bodies that access large sums of public money but appear to lack clarity as to how they account for that money. Unlike local authorities, there is no requirement on them to make their board meetings or internal documents open to the public. The National Audit Office (NAO) report that they have experienced difficulties in obtaining information from housing associations as part of their work in monitoring the Housing Corporation.
77.Within this context, there appears to be a general consensus that the Housing Corporation has done a good job, on the whole, in regulating the housing association sector. The NAO report Regulating housing associations’ management of financial risk (April 2001) states:
The Corporation and the sector have a good record in avoiding RSL financial failure. The Corporation has helped to engineer rescues of the few RSLs that have got into serious financial difficulty. As a result, no RSL has become bankrupt and no tenants have lost their homes in the last 10 years. However, the sector is growing and becoming more complex and the risks are changing.
78.However, the NAO report also expresses concerns about local authorities relying on the Housing Corporation, an issue we return to at paragraph .
79.The view of the Mr Sweeney of CHACF, Mr Tickell of the National Housing Federation, and all who gave evidence to the panel is that the Housing Corporation’s new regulatory code and approach to inspection is a potentially welcome improvement on what has gone before.
80.The new regulatory approach is designed to address many of the new and varied risks the sector now faces. The Housing Corporation in its evidence to the panel stated that:
The new regulatory approach means that the Corporation will be better equipped to identify problems earlier than was the case with WHHA. However, the sector and individual housing associations could never be guaranteed to be entirely risk-free.
If a housing association wished to develop into a new area of work, the Corporation would make a judgement on its competency to do it and the financial viability of the proposal. The Corporation has the power to constrain and modify proposed activities. A good regulator tries to predict future activities and risks.
81.As part of its regulatory role, the Housing Corporation requires housing associations to provide it with certain key documents. Some of these it is willing to publish and share with local authorities. Other documents are only available to local authorities from each housing association on application. We welcome the Housing Corporation’s commitment to review its 1998 protocol on information sharing with local authorities.
Recommendation
That Camden, with its partners on the Association of London Government and Local Government Association, becomes actively involved in the review of the Housing Corporation’s 1998 protocol on information sharing with local authorities.
82.In contrast to the Housing Corporation, local authorities have a monitoring, rather than regulatory, role in relation to housing associations. Taking this role seriously is important because Camden has a strategic responsibility in respect of all housing in the borough, both private and public.
83.Just because a particular housing association provides a poor service need not indicate poor financial management, and vice versa. We consider that councillors need to examine both and ensure that the Council exerts a positive influence in working with housing associations.
84.Camden has corporate responsibilities for the welfare of residents regardless of tenure. It arguably has greater responsibility in respect of social housing tenants because they are more likely to be vulnerable. Many housing association tenants have been nominated to their homes from Camden’s housing waiting list. We consider that the Council is in a good position to promote good practice as part of improving its monitoring role.
Recommendation
That the council proactively uses its monitoring role to encourage better performance from housing associations by clarifying the benefits for a housing association of being a development partner and the consequences of poor performance.
85.We also noted the Housing Corporation’s comments about the “halo” effect or “regulatory capture” where monitoring officers may overlook or play down the significance of problems encountered with an association because of previous good performance and relationships. The Corporation comments that it no longer permits a regulatory officer to have responsibility for a particular housing association for more than three years and has separated its regulation and support roles to avoid this potential problem.
Recommendation
That the Council consider ways in which distance can be created between its monitoring role and support functions in respect of housing associations.
86.Until WHHA’s financial problems emerged, the Council was relying on the Housing Corporation’s information on housing associations when disposing of discounted Council properties to WHHA. At that time, the Council only sought full financial information from housing associations when it was proposing to fund them itself through Local Authority Social Housing Grant (LASHG).
87.With the benefit of hindsight, we consider that it was inappropriate for the Council to have relied solely on Housing Corporation information when considering disposals to any housing association because these constitute a form of financial assistance, especially if properties are discounted. Camden therefore should have used the same checks as for LASHG.
88.However, Council officers and Executive member stressed that:
It is uneconomical and probably impossible for the Council to identify all the possible risks of diversification of housing association activities. The new Housing Corporation framework is more sophisticated than before and local authorities should be able to gain reassurance of the regulator’s effectiveness in the long term.
In the short term there is a need to do a belt and braces double check [before property disposals], which is now in place.
89.Nonetheless, we consider that there is a need for Camden to undertake additional risk assessment for housing association partners undertaking development. These need not rely on expensive advice from financial consultants, but can use skills within the Council.
90.A balanced approach to risk is needed as recommended by the Audit Commission publication: Worth the risk (July 2001). Recommendation (page ) proposes that the question of requiring additional information from housing associations be examined as part of a forthcoming best value review of Camden Housing Policy, Research and Quality due to begin in June 2002.
Recommendation
That the Council reassesses the manner in which it evaluates risk assessment with housing association partners; this is particularly in the light of the emergence of new risks such as supporting people. An approach is needed that ensures the resources deployed in risk evaluation are proportionate to the likely level of risk.
91.Since the WHHA crisis, Camden has used the criteria contained in the Social Housing Partnership Agreement (SHPA) for all partnership working with housing associations. There have been delays in the development and implementation of this document and its targets should be reviewed to take account of the latest information and the recommendations in this report.
92.The SHPA provides a framework for the partnership between the Council and housing associations. It explains the role of housing associations in delivering Camden’s housing strategy and “the way in which we will all work together with a common purpose, participating in the wider aims of the Council’s Community Strategy”.
93.On the issue of performance measurement, the SHPA states:
The Council and RSLs will develop performance monitoring of agreed aspects of social housing within the borough. The work relates to best value and so will enable RSLs and the Council to work together to develop compatible quality systems and provide greater transparency in our services. This work will be complementary to the role of the Housing Corporation in regulating RSLs.
94.The SHPA details the selection criteria for housing association partners. Housing officers explained that different selection criteria apply under different circumstances. At the time of its adoption Camden, supported by the Housing Corporation and housing association partners, decided that this was preferable to more formal joint commissioning agreements that some other local authorities had entered into.
95.The Council faces considerable pressure to provide temporary accommodation and has temporary accommodation contracts with a number of housing associations.
96.We have received little evidence about how Camden assessed the risk associated with providing temporary accommodation through housing associations compared to other possibilities. We have examined background data on the savings from private sector leasing compared to bed and breakfast accommodation, but that is not the same. We also note that the Government’s new bed and breakfast unit may restrict the Council’s ability to use bed and breakfast accommodation. This will tend to exacerbate the pressures faced by the Council in accessing temporary accommodation in high demand/high-cost areas.
Recommendation
That in the light of the Government review of bed and breakfast provision, the Council in collaboration with its partners in the ALG lobbies the Government for an increase in subsidy for high-demand/high-cost areas to offset the additional costs resulting from restrictions in the Council’s future ability to use bed & breakfast accommodation in meeting temporary accommodation needs.
97.Whilst the Housing Corporation report on Housing associations and private sector leasing (October 2001) suggests that housing associations should prepare to carry the risks arising from private sector leasing, we received suggestions from Genesis Housing Group that it should be carried jointly with local authorities. If this is to be the case, local authorities have to face up to the management of that risk because of general fiduciary duty requirements if for no other reason.
98.Housing officers consider that the Council could pass as much risk on to housing associations as it wishes, providing it is prepared to pay for it. The balance of risk, they argue:
Will have to be shared with increased openness about the financing of schemes, the identification of risks and issues of performance and competence. The problem in achieving this is that housing associations operate in a competitive environment and local authorities are keen to seek out what seems like the cheapest, most reasonable deal around.
99.We are therefore seeking an assurance that Camden has improved its risk management of temporary accommodation in the light of the WHHA crisis.
Recommendation
That the Council finds out how the Housing Corporation plans to regulate private sector leasing in future and in the light of this undertakes a detailed risk assessment of the Council’s management of temporary accommodation through housing associations.
100.We received evidence showing that some temporary accommodation provided by housing associations was of poor quality and/or poorly maintained. We consider that the local authority ought to ensure that it does not place people in unsuitable accommodation.
101.There may be some scope for Camden to diversify its provision of temporary accommodation. Mr Sweeney of CHACF suggested that the best solution was for housing associations to use permanent accommodation to meet temporary accommodation needs but recognising that high property prices in Camden may limit such a policy. There are good social and economic reasons for this. Permanent accommodation is more easily managed and does not incur the risks of using private sector leasing.
Recommendations
That the Council review the allocations process in respect of temporary accommodation to ensure that people are not placed in unsuitable conditions and that regular inspections and subsequent visits are carried out.
That the Council further investigate the possibility of utilising the grant regime as an alternative to using private landlords in order to facilitate the provision by housing associations of permanent stock for temporary accommodation, if necessary out of borough.
102.As bodies accessing large sums of public money, we consider that housing associations should have more of a culture that welcomes public scrutiny. As local authorities part finance housing associations, we consider that associations ought to be more receptive to local authority scrutiny.
103.The Committee on Standards in Public Life in its 1996 report adopted the term “local public spending bodies” (LPSBs) to describe non elected, not-for-profit bodies whose members are not appointed by ministers. They typically provide public services, often at a local level, and are largely or wholly publicly funded.
104.There are greater public expectations regarding accountability for public money. Housing associations, as LPSBs, however all too often act as wholly private bodies and hide behind a cloak of commercial sensitivity. They need to discriminate and differentiate more between what is genuinely sensitive and what should be in the public domain.
Recommendations
That the Council uses its position and influence to encourage greater transparency and accountability to counter any culture of secrecy it may find with its partner housing associations.
That, as a general principle, housing associations be encouraged to provide information both to the Council and its tenants in an accessible a form as possible.
105.The Housing Corporation has a mixed remit as fund provider and regulator. We consider it has possibly insufficient public accountability as a body that regulates and finances private housing associations using public money.
106.We note the concerns of the Committee of Public Accounts about the manner in which the Housing Corporation is audited by auditors appointed by and reporting to ministers. We agree with their recommendation that the Comptroller and Auditor General should be appointed, with appropriate protocols, as auditor for the Housing Corporation under the provisions of the Government Resources and Accounts Act 2000.
107.We further note that the National Audit Office does not have a statutory right of access to housing associations in order to carry out value for money studies or enquiries into the regularity and propriety of spending. We consider that this access should be given accompanied by an agreement as to how the rights would be exercised.
108.We concur with the view that the Housing Corporation should be the sole regulator of the housing association sector. Local authorities do not have the resources nor access to the information that would enable them to carry out this function effectively. To regulate a national housing association, for example, would require the collation of information across many local authorities, a task that probably could not be achieved by any single local authority.
109.Camden housing officers argued that it would not be cost effective for the Council to consider undertaking such a function given the new sophisticated regulatory mechanisms being proposed by the Housing Corporation. We consider that the Council does need to work with the Housing Corporation within a framework that enables a mutual exchange of monitoring information and feedback.
110.The next section considers the events that led to the crisis at WHHA and considers the extent to which the Council could reasonably have predicted it.
111.This section examines the information that was available to Camden Council regarding WHHA and considers the extent to which the Council could reasonably have been expected to know the extent of the problems facing WHHA earlier.
112.WHHA began its work in the early 1970s by taking over the management of run-down Council properties for which there was no capital available for improvements.
113.The panel assembled a chronology of the events before and after the financial crisis faced by WHHA based upon the written and oral evidence it received. This is detailed in full at appendix 2, page . This chronology suggests four distinct periods:
Period 1 (up to 1997): an early period when Camden was placing both private sector leasing business and permanent homes with WHHA.
Period 2 (1997 – February 2000): a period after that when WHHA was increasing its high-risk business without proper internal financial controls. Camden’s use of WHHA’s private sector leasing activity remained at about the same proportion during this period.
Period 3 (February – October 2000): a later period when the Housing Corporation knew things were wrong at WHHA, but not the extent of the problems. It is not clear that the situation then was materially different from a number of other housing associations in difficulties. However, the Housing Corporation did not tell Camden what was happening and it knew that WHHA was engaged in a large amount of unusually high-risk business.
Period 4 (since October 2000): most recently, when the financial “hole” was recognised as both existent and deep; by this stage, Camden could have done nothing that would have changed the outcome.
114.Camden Housing Department officers told us
Camden did not know that WHHA’s ADP allocation was frozen from January 2000. In June 2000, the Housing Corporation did not inform two local authorities that their chosen London Housing Partnership partner RSL, WHHA, would not be able to spend the allocations immediately as they were frozen. In August 2000, the Corporation did not inform a local authority who submitted an LASHG claim that the Corporation’s ADP allocation was frozen.
The Housing Corporation does not currently see how it can overcome these restrictions on sharing information more openly with local authorities. They are exploring what more can be done and we are discussing with them how this can be achieved. The Housing Corporation have said that they recognise the need to become more transparent but it is expected that there will always be restrictions on what they can tell local authorities and that we must rely on obtaining information from RSLs.
The Council was only aware of the extent to which WHHA had expanded its private sector leasing activity from 1997 onwards anecdotally. Since WHHA had won contracts in other London boroughs; this was seen as a sign of stability. With hindsight, it is clear that WHHA’s management systems could not cope with the rapid expansion. However, there was nothing to suggest that WHHA was uneconomic four or five years ago.
The development of temporary accommodation schemes in areas where there are known housing benefit problems – with a new service provider being introduced and with the direct risk being borne by the RSL – was seen by us as an acceptable risk.
115.Camden Housing Benefits provided us with details of housing benefit payments made to WHHA between 30 April 2000 and January 2002. Camden Housing Benefits told us that the amounts owed by WHHA to the Council in respect of benefit overpayments at any point during this period did not cause any concern for Housing Benefits because these amounts were always substantially less than the ongoing benefit payment amounts owed to WHHA. The Head of Benefits further commented:
We were aware of WHHA' s administrative problems for quite a while i.e. their tenancy records were not up to date, they owed us money for housing benefit overpayments (not unusual in itself) but often said they had cash flow problems. WHHA have never been particularly good at paying back their overpayments and have always been very firm about writing to us to ensure we have followed the letter of the law, even in cases where … there is no doubt they have been overpaid.
Whilst WHHA has been one of the more difficult housing associations to deal with it is not unique. We have never been particularly concerned about WHHA’s ability to repay overpayments. It seemed to us that its administration procedures were not as good as they could have been, but again this is true of any number of housing associations at different times.
116.Camden Environmental Health service officers provided us with annual figures for the number of formal enforcement notices served against the largest 15 housing associations from 1996 to 2001. The figures show a large variation between different associations with WHHA performing at an average level over this period. Environmental Services’ view is that:
housing associations are expanding too fast leading to a deterioration in the effective management of their properties. Some appear to be experiencing a rapid deterioration.
117.Genesis Housing Group took over as managing agents of WHHA in February 2001 and identified a range of historic problems with the organisation:
WHHA was split over two sites (Kilburn and Tottenham offices) resulting in lack of communication and management control.
There was a long voids turnaround, several months in some cases
There was evidence of poor file records, weak financial controls and high rent arrears; mistakes had been made on tenant and landlord rents with some landlords not being paid
The IT system was unable to provide essential management information and was no longer being supported by the provider; the system was adapted by Genesis for short term use but will be replaced entirely in April 2002 by Genesis’ system used for its other activities
There appeared to be low staff morale with a fear of redundancy and mistrust of the management
Relationships were deteriorating with local authorities due to increasingly poor services
WHHA’s scope of temporary accommodation covered 15 local authority areas which was considered too diverse; WHHA did not pay enough attention to detail in the management of this complex area
In all these respects WHHA was considered to face unique difficulties.
118.Genesis view WHHA’s problems as being attributable to a lack of necessary tight management controls in its private sector leasing activity demonstrating a particular lack of wisdom in taking on temporary housing schemes in areas of well publicised delays in payment of housing benefit.
119.Ms Kit Wilby, who has been a board member of WHHA since the early 1980s having begun as a tenant representative, provided us with some valuable information. She is the only continuing member of the board to bridge the periods before and after the financial crisis. She provided us with a useful insight into the management culture of WHHA up until 2000.
120.Ms Wilby informed us that the board was aware of some key problems that they were trying to address including housing management, operational issues and cultural problems.
The board clearly didn’t have a handle on the financial problems. The information that came to the board was not particularly good. There was too much paper and important information would have been buried within it.
A new computer system was introduced about three years ago [April 1999] without a risk assessment. It was a complete disaster and meant that the board did not receive proper financial information.
Board members have no choice but to rely on information provided by the association’s officers. Officers told us not to worry even in July 2000 when the Corporation placed WHHA under supervision. Officers treated this problem as not very serious and put it down to problems with the computer and housing benefit delays amounting to £4 million.
121.Ms Wilby informed us that board members received a letter from the Chair in September 2000 explaining that the first quarter’s accounts and the accounts for the previous financial year were incorrect and that this was likely to result in a loss of grant. The letter acknowledged that this was serious but was not necessarily catastrophic because, it claimed, WHHA had considerable reserves and the skills to take remedial action.
122.With the benefit of hindsight, she acknowledged that there had been warning signals that should have alerted board members earlier, such as the delays in producing accounts for the year ending March 2000; these were not available by the annual general meeting in September 2000.
123.Ms Wilby identified a number of broader cultural problems within WHHA:
A culture of secrecy reflecting an aversion to bad news
Reluctance to tackle problems
Conflicting personalities
Senior management appeared not to have respect for professionalisms they didn’t understand
An unhealthy cosiness between the Chair and key officers.
124.Mr Peter Rutherford, a shortlife tenant of WHHA, was a tenant representative on the WHHA board from 1995 until early 1998. He claims that WHHA expelled him from the board because he contacted the Housing Corporation to complain that WHHA was breaking the regulations. He says that WHHA replaced him with a tenant representative nominated by them rather than elected by a tenant body. He perceives this as being symptomatic of the fact that WHHA was extremely wary of any possible criticism from the Housing Corporation, and was similarly wary of the Council.
125.There were indications that WHHA did not provide adequate support to enable board members to carry out their duties properly. Mr Rutherford claims he asked WHHA for expert assistance to help him understand the association’s accounts but this was refused.
126.There was a Council-appointed board member on the WHHA board until 1998. Ms Wilby’s perception of him was that he was there more to learn and did not make a significant contribution to the board. She considers that such members are not in a position to act as a watchdog on behalf of the Council. We considered that Council member board appointees or observers might often have considerable pressures on their time due to conflicting priorities.
127.The Housing Corporation did not appear to have any significant concerns, apart from the late returns in January and February 2000, until the visits, probably around February or March 2000, which led to the first supervision stage in May 2000 (period 3). Late financial returns are not unusual for housing associations particularly if WHHA was blaming its computer system.
128.The Corporation stated in its evidence to us that
WHHA, like many housing associations, had shown intermittent weaknesses over the years but had normally managed to work itself out of difficulties. Up until September 1999, WHHA was no better or worse than most housing associations in terms of late financial returns.
It is not uncommon for housing associations to be a couple of weeks late with their returns, and this would not necessarily give an overwhelming cause for concern. Although it did show a need for the association to sharpen up.
If prompt and accurate information had been made available to the Board, then any problems should have shown up rapidly. WHHA’s new computer system did not generate the necessary information that the Board should have had.
129.The Corporation has commissioned an independent internal review by HACAS Chapman Hendy to examine the role of the Corporation in handling the WHHA case looking back as far as 1998. That report is due to be completed in March 2002 and may provide further indications as to whether Camden could have been informed sooner about WHHA’s problems by the Housing Corporation. The Corporation has agreed to share the conclusions of this report with Camden. However, the panel feels that a case should be put to the Corporation requesting sight of the full report.
Recommendation
That the Council asks the Housing Corporation to provide us with a copy of the full report of the HACAS Chapman Hendy internal inquiry into the Corporation’s handling of the WHHA case.
130.Of all the witnesses who provided us with evidence, the representatives of shortlife WHHA tenants/licensees were the most critical of WHHA:
Although the crisis at WHHA has come as a shock to many people, it was not a surprise to tenants as can be noted from tenants’ correspondence files held in Camden Council. WHHA demonstrated poor management, untruthfulness and secrecy that would inevitably lead to some sort of meltdown.
131.The tenants alleged that both WHHA and the Council have failed to deal with their concerns and complaints effectively for some considerable time. They claimed that
The last WHHA tenants survey was carried out in 1992. Tenants are not taken seriously by WHHA because we are not deemed professional.
132.The panel asked WHHA’s external auditors, Robson Rhodes, whether they felt the Council could have known earlier about the financial problems at WHHA. Their response was limited by the fact that their formal responsibilities were to report to the members of WHHA on the truth and fairness of the annual accounts, and by regulations on client confidentiality.
133.They signed the audit opinion on WHHA’s accounts for the year ended 31 March 2000 on 6 December 2000. The accounts were not ready for the annual general meeting on 28 September 2000. They resigned as auditors to make way for Genesis Housing Group’s auditors in December 2000. They also add:
The financial position of WHHA was materially and adversely affected by the delays in payment of housing benefit by a number of London local authorities.
134.We noted from the Housing Corporation’s evidence that the housing benefit arrears were largely the responsibility of other local authorities. Indeed, the Housing Corporation stated that Camden was one of the best, if not the best, performer on housing benefit in London.
135.We note that the external auditors of RSLs do not have a reporting responsibility to the Corporation on key aspects of compliance, unlike their counterparts in some other sectors. We understand that the Corporation and DTLR are considering whether to impose this responsibility. We consider this could potentially act as an additional safeguard.
Recommendation
That the Council encourages the Housing Corporation and Government to impose a responsibility on external auditors of housing associations to report directly to the Housing Corporation on key aspects of compliance.
136.The NAO report Regulating housing associations’ management of financial risk (April 2001) outlines a number of concerns with the ability of the Housing Corporation to regulate housing associations effectively. It suggests that local authorities may not be able to solely rely on information supplied by the Housing Corporation in all circumstances.
137.NAO visited WHHA in summer 1999 as part of its investigation into the Housing Corporation’s regulatory role. They stated to us that they did not discover anything to suggest there were particular problems at WHHA.
138.Mr Malcolm Kitchener is a Chief Manager of the Nationwide Building Society, one of the largest lenders to WHHA. The Nationwide received the same quarterly financial returns from WHHA that were sent to the Housing Corporation. It became aware of problems at WHHA in September 2000 when the accounts for the year ending March 2000 had not appeared and the June 2000 quarterly returns were also late. He emphasised that:
Late returns are not unusual for housing associations and are not necessarily indicative of an impending crisis.
139.As for the causes of the financial crisis at WHHA:
WHHA’s officers clearly could not blame the computer system for not managing their core business. A basic trading mistake had been made with costs spiralling out of control whilst income was fixed.
140.The NHF consider that WHHA had diversified well above the levels contained in Housing Corporation policy: Regulating a diverse sector (May 2000). Very few housing associations have been operating outside these guidelines and those that were had special circumstances, none of which appeared to apply to WHHA. Mr Tickell added:
WHHA had to manage the sheer complexity of 1,500 contracts. It is likely that there had been a lack of proper information systems and I suspect that problems had been hidden for several months.
141.Mr Mick Sweeney, Chair of CHACF, views private sector leasing as a high-risk activity for housing associations that should be a relatively restricted part of their overall activity. However, there is a need, particularly in London, for a supply of housing through this means and housing associations are as well placed as any organisation to deliver on it. Notting Hill Housing Trust and Genesis Housing Group have been very successful in operating private sector leasing schemes. He argues that:
There must have been a failure of governance at WHHA. The Board, and not the local authority or the Housing Corporation, was responsible for this. If the Housing Corporation were getting seemingly satisfactory returns from a housing association, it would take some time before problems were identified. If the WHHA board had been doing its job properly, then problems would not have arisen.
142.The panel received no evidence of complaints from WHHA’s permanent tenants. We did however receive written submissions from a number of housing association tenants who responded to our general request for views and information. These indicated potential complaints relating to other housing associations. The record of complaints about WHHA we examined relates almost entirely to shortlife issues, and in particular to a group of properties known as the “Messina 7”.
143.We considered allegations made by two witnesses during the course of the scrutiny. These have been referred to the Council’s monitoring officer for investigation as they fall outside our terms of reference or timescale. We suggest that results of the investigations be reported back in due course.
144.We heard a number of general concerns expressed about WHHA that dated from before 1997. But there was no evidence presented to us to show that these had been taken up through formal channels, with the exception of two specific shortlife issues.
145.We examined a variety of documents provided by Genesis Housing Group relating to WHHA as follows:
WHHA Annual reports from 1996 to 1999
WHHA reports and financial statements 1998 – 2000
Revised financial statement for year ending March 2001
Housing Corporation Programme Delivery Assessment (PDA) for the year ending March 2000
WHHA Performance Assessment and Investment Summary (PAIS) dated 19 January 2000.
146.The representative of the Council’s Controller of Financial Services made the following observations on this information:
The year ending 1999 saw a rapid-growth period combined with a significant reduction in cash; the cash reduction could be explained in hindsight by the expansion of the business, investment in a second office and a new IT system
The accounts for the year ending March 1999 were unqualified and signed off by the auditor indicating WHHA as a going concern
Other information was needed such as a business plan to supplement the financial information
The PAIS indicated no problems with WHHA other than a late financial return for which an explanation was given; however the PAIS states that “any allocations made will be conditional on the receipt of satisfactory FV3 [quarterly financial] returns”
The PDA indicated no problems at WHHA and in fact ended with the following concluding statement:
Overall good performance. WHHA has maintained a good working relationship with the Housing Corporation.
147.Council housing officers further suggested that many housing associations’ reserves have reduced their cash balances over the last few years to fund schemes and as a consequence of benefit delays from other boroughs.
148.Contracts were exchanged in respect of the last property to be transferred from Camden to WHHA on 10 March 2000 (see appendix 2). If the Council had asked for and seen the January 2000 PAIS before the 10 March, then it would have seen the condition stated in it. It could have then had the option of postponing the sale of that property until the Housing Corporation’s concerns had been satisfied.
149.Camden has the highest level of WHHA permanent stock and has thus been the most affected by the WHHA crisis. Haringey and Barnet are both affected to a lesser degree and they responded to our request for information outlining the effects of the WHHA experience on them.
150.Some of the views and experiences of these boroughs are as follows:
We found WHHA OK to deal with, for example on receiving voids reports, and so we were very surprised when the big crunch came.
WHHA explained to us about their financial problems in early 2000 and we paid an increased fee paid for temporary accommodation to protect the scheme.
We need to be wary of recommending that the Housing Corporation increase its regulation of RSLs’ temporary accommodation activity because this may lead to more RSLs curtailing these schemes leaving us with more problems in the long term.
We want to see housing benefit structures and processes simplified to help make temporary accommodation schemes more viable and safer for RSLs.
151.WHHA grew quickly from small beginnings, particularly in recent years, and in so doing had embarked upon a high-risk activity on a large scale very quickly without the necessary assessment and management underpinnings. Whether WHHA was materially worse than other housing associations is unclear. Indeed the available evidence may point to a number of housing associations that currently appear to be experiencing management and customer care problems.
152.Some witnesses alleged the existence of a “special relationship” between the Council and WHHA in the 1980s. It was suggested that this relationship led to the Council overlooking complaints about WHHA and promoting its rapid growth unchecked in the manner akin to the “halo” effect described at paragraph . However, even if this were to have been the case, no evidence was placed before us to suggest that any improper relationship existed during the period under consideration by the panel.
153.Camden was anecdotally aware of the expansion of WHHA’s private sector leasing activity from 1997 onwards (see paragraph ) and the fact that WHHA was operating within boroughs with a poor record on housing benefit processing. The Housing Department did not see either of these matters as giving undue cause for concern.
154.Perusal of the annual accounts would however have made clear the extent to which WHHA had been expanding its private sector leasing programme. In hindsight, further examination of this by the Housing Corporation and the Council may have identified the increased risk exposure.
155.The Housing Corporation is the only body that has the powers to access all the information that could have detected a range of problems at WHHA. Camden, not being privy to the Housing Corporation’s early findings, was not in a position to switch its ADP elsewhere and so lost it.
156.The Housing Corporation has not commented directly on this but has made it clear that it wants closer ties to local authorities in future. We hope that this means that the failure to pass on information is unlikely to recur.
157.The Corporation failed to identify the massive expansion of private sector leasing activity at WHHA as a significant risk worthy of particular investigation. We were concerned that private sector leasing may have previously been excluded from the Corporation’s definition of high-risk activity. This has now been remedied following a report by HACAS Chapman Hendy: Housing associations and private sector leasing (October 2001) that clearly points to the need to regulate this activity.
158.In 1999 it would seem that no board members were aware of the impending crisis and it was arguable whether even the association’s officers were aware of the full extent of the problems. From Ms Wilby’s evidence, the WHHA board were aware of financial problems from about January 2000 onwards. However, during this time, WHHA’s officers repeatedly assured board members that the problems in producing accurate financial information were due to IT difficulties that would be resolved.
159.In hindsight, possibly the board could at least have recognised that WHHA was flying financially blind and been more active in pressing for an earlier review once the inadequacy of the IT system became clear. We consider there is, however, no guarantee that this would have prevented the financial crisis.
160.In 1998 the Council sought the views of housing associations and decided not to seek representation on housing association boards generally. If there had been a Council-nominated board representative at WHHA in the period up to 1999/2000, we consider this would not have provided an early warning of the impending crisis. Furthermore, we consider it unreasonable to place an onus for detecting problems on any individual board member.
161.Some housing associations are not in favour of local authority representatives or observers attending their board meetings. Genesis Housing Group, for example, perceives practical difficulties since housing associations often have a large number of local authority clients, 15 in the case of WHHA. They state:
One [local authority representative] would not necessarily represent all and similarly it would be impractical to have 15 observers for meetings that may contain commercially sensitive matters.
162.We consider however that with 44% of its permanent stock in Camden, a local authority observer on WHHA’s board may be beneficial for both parties. Another housing association, Community Housing Association, asked the Council to provide an observer and that arrangement has worked well.
163.We are therefore satisfied that there may be mutual benefits in having Council nominees on boards of local housing associations including helping to ensure a positive exchange of information. Such nominees would need to be clear about the purpose of their attendance and “duties” expected of them. A strong board should comprise a varied mixture of skills and the following recommendation is designed to forge closer links between Camden and housing associations with which it works.
Recommendation
That the benefits of properly briefed local authority councillors or others nominated by the Council being appointed as observers to local housing association boards be promoted as a means of fostering the relationships between local authorities and housing associations, and helping to ensure a mutual exchange of information.
164.The evidence from shortlife tenants pointed to a potentially poor situation with tenant board members at WHHA. Although there was general lip service to residents nominating and electing Board members who then related back to their electorate, no-one seemed to want to implement such a system. We received little evidence suggesting that good practices of positively encouraging tenant board membership together with appropriate training and support were widespread.
Recommendation
That the Council encourages its partner housing associations to undertake broad based skills audits for their board members and to ensure the provision of appropriate support and training.
165.Tenant board representatives are a requirement of the Social Housing Partnership Agreement. However, the interpretation of this requirement is complicated by housing associations adopting group structures, making implementation difficult.
Recommendation
That housing associations working with Camden be encouraged to include board members who are elected by tenants, responsible to tenants, and who are allowed to share identified non-confidential documents with tenants.
166.The record of complaints about WHHA provides us with no evidence to indicate the presence of serious organisational problems in the lead up to the financial crisis. In any case, we consider that the number of complaints cannot be relied upon as a direct indicator of the financial health of an organisation. This is primarily because many well-run organisations may successfully encourage their clients to complain as a means of improving their services.
167.It is more important to consider the way in which organisations respond to complaints. If a housing association does not respond adequately to complaints then we consider that the Council should review whether or not it continues to work with that organisation.
Recommendations
That Camden’s partner housing associations be encouraged to develop robust policies for handling complaints that involve, for example, an external appeal stage in line with good practice.
That housing associations be encouraged to publish an annual complaints digest, similar to that produced by Camden’s Housing Department, containing action plans to deal with areas that have a prevalence of complaints and examples of where complaints lead to changes to policies and procedures.
That Camden reviews its relationship with any housing association with which it encounters delays or difficulties in obtaining any reasonable information required from the housing association about its activities.
168.We are concerned that many of WHHA’s other cultural inadequacies may be common to a number of other housing associations. During the course of the scrutiny for example we encountered evidence suggesting that many housing associations operate secretly and do not, for example, permit tenant access to board papers.
169.In summary, we conclude that the Council did not identify any problems at WHHA in time to enable it to halt property sales to WHHA or to switch ADP grant allocations to alternative schemes. This is because:
WHHA operated within what we characterised as a blanket cloak of secrecy (see paragraphs and )
The information available to the Council from the Housing Corporation in the lead up to the crisis in 2000 was not sufficient to alert the Council to the problems at WHHA.
170.From the evidence, there were many pieces of information about WHHA within the Council, in WHHA itself and in the Housing Corporation which if collated may have helped to predict the crisis that followed.
171.This section examines how, in future, Camden Council could ensure that any housing association that it supports or is proposing to support (through discounted disposal of property or through Local Authority Social Housing Grant) is financially robust and how the Council could better protect its interests following such support.
172.The panel examined the extent to which WHHA’s crisis may have been unique and the likelihood of something similar happening again.
173.Housing associations are perceived by institutional lenders as being safe investments. Mr Kitchener from the Nationwide Building Society said:
We would never be able to second guess when a housing association was going to go into technical or real default. In the case of WHHA, it had always paid on time previously and there had been no real indication as to what was going to happen.
WHHA was seen as a market leader in private sector leasing and had proved it could operate with a surplus. Even placing this function within a subsidiary would not have changed the outcome.
My personal view is that the situation that arose with WHHA was very unfortunate and is unlikely to happen again. The Housing Corporation’s new regulations should help to ensure this.
174.Nationwide Building Society is not reviewing any of its procedures as a result of the WHHA case because all its investments have been protected by its current procedures. Lenders’ relationships with housing associations are purely commercial whereas local authorities have a much more complex relationship involving trying to achieve broader social strategy and aims
175.Notting Hill Housing Trust appears to successfully operate a large-scale private sector leasing scheme. Unfortunately, they did not respond to our request to explain to us how they manage the risks associated with it.
176.The Housing Corporation emphasises that the new regulatory approach means that the Corporation will in future be much better equipped to identify problems earlier than was the case with WHHA. However, the sector and individual housing associations could never be guaranteed entirely risk-free. It considers that:
WHHA was in some ways unique because of the scale of private sector leasing in proportion to its core work. The scale of the guaranteed overdraft to WHHA [underwritten by the Housing Corporation] was the biggest ever.
Since the early 1990s, there have been fewer financial guarantees [made to housing associations] than before then. There has been a trickle of housing associations getting into potential financial difficulties.
177.The Corporation’s ability to continue to regulate will depend upon it being able to access the necessary resources. It has recently increased its resources for regulation. It maintains that it is now adequately resourced for general housing association work based on the current size of the sector. But there would need to be some reflection on whether these resources are sufficient over the next year as the new regulatory regime sets in.
178.The size of the sector is also set to increase, and the Corporation will need to make a case to Government for any additional resources in future. We did not feel sufficiently well informed to make a detailed recommendation on this but remain concerned that future demands upon the Housing Corporation are likely to increase and that the situation must be monitored carefully.
Recommendation
That the Council monitors the resources used by the Housing Corporation in regulation and inspection and makes firm representations where it considers these resources are inadequate to meet the regulatory and inspection requirements of our partner housing associations.
179.The Housing Corporation states that it will in future:
Require housing associations to provide a risk management strategy annually; and examine current and future activities, the business plan and the general direction of the organisation.
Require housing associations to identify any arrears due solely to late payment of housing benefit and then to clarify the action being taken to collect arrears and manage their cash flow
Examine the profitability of a housing association and its risk management strategy, and assess the ability of the organisation to withstand possible shocks
Inform local authorities as soon as any conditions are put on an ADP allocation
Pay particular attention to housing associations that appear culturally secretive; it would promote openness and would emphasise to housing associations the dangers of hiding any financial or other difficulties
Test the mechanisms that associations have in place to achieve their objectives
Play an important role in identifying and sharing good practice
Publish an annual report on the results of the inspection programme.
180.We welcome the Corporation’s willingness to work with Camden as a pilot authority in developing interfaces with local authorities on the new regulatory code and in developing inspections. The Housing Corporation has indicated that it intends in future to provide local authorities with the following:
Annual regulation assessment of each large housing association
Inspection reports within four weeks (from April 2002)
Information when housing associations are placed under supervision
Currently produced performance indicator information.
181.We considered that the Housing Corporation’s reliance on information provided by housing associations could lead to problems in cases where housing associations provide the Housing Corporation with false and/or misleading information.
182.In the immediate future at least, we consider that the Council cannot rely solely on information available from the Housing Corporation when assessing its development housing association partners. This can only be done when the new regulatory framework has proved its worth. Bearing in mind these caveats, we recommend the negotiation of some kind of early warning system of notification by the Corporation.
183.Particularly in view of the new inspection regime, we consider there is a need for an enhanced information sharing cycle based around visits of the Housing Corporation to Camden in connection with forward investment planning and housing association inspections. A buoyant Housing Association Liaison Group (see recommendation ) and housing association tenants’ forum (see recommendation ) together with internal information from various Council departments could effectively forward issues to this cycle of meetings.
Recommendations
That the Council, working with its partners in the Association of London Government (ALG) and Local Government Association (LGA), promote full and free exchange of information between the Housing Corporation and local authorities by encouraging a declassification of much of the confidential information held by the Housing Corporation about housing associations that impedes the timely release of potentially valuable information.
That the Council promote an information sharing cycle based around visits of the Housing Corporation to Camden in connection with investment planning and housing association inspections; with information being sought from the Housing Association Liaison Group, housing association tenant forums and from Council departments and ward councillors.
That the Council, working with its partners in the Association of London Government (ALG) and Local Government Association (LGA), negotiate with the Housing Corporation a mechanism by which the Corporation would alert local authorities to any potential problems, supervision imposition or imposed grant conditions with individual housing associations as a priority, rather than simply relying on local authorities to identify problems from written reports.
184.The following is a list of items that we would expect a local authority to request from and be supplied with from a housing association with which it is working:
Performance assessments and investment summary (PAIS)
Programme Delivery Assessment (PDA)
Internal audit reports and plans
Management letters from auditors
All Housing Corporation inspection reports
Asset management plans and business plans
Tenant survey results and the minutes of meetings held with tenants.
Risk appraisals
Complaints digest
185.The panel concluded that the Council’s Social Housing Partnership Agreement (SHPA) has not been developed quickly enough to reduce the risks of working with housing associations to a reasonable level. We noted Camden Housing Department’s intention to develop additional financial and risk assessment checks that are dependent upon the new detailed procedures from the Housing Corporation. The Council is also looking to move towards joint commissioning arrangements with preferred partners and we consider that there is a need to review the SHPA to take account of this.
Recommendations
That the Social Housing Partnership Agreement (SHPA) be reviewed to clarify the extent to which the Council should take steps to gather additional information from housing associations directly, or from elsewhere, before the Council agrees to work with the housing association on development or temporary accommodation programmes.
That the SHPA include a clear rationale explaining how the Council decides to work with one housing association rather than another, to include the selection criteria and decision route.
186.We welcome the interim steps being taken by the Housing Department since October 2001 to carry out a full financial check of any RSL to whom the Council proposes to dispose of Council owned property or sites at a discount.
187.We considered whether the Council could require housing associations to limit any stock disposals to “sitting tenant” market values. The Housing Corporation thinks not as the public sector has to take the strain (an implication of the Housing Act 1988) and lenders will not normally provide loans unless their interests are prioritised. Furthermore, if housing associations were to value properties at tenant market values then it is unlikely that housing associations would be able to borrow sufficient money to develop. Nevertheless we recommend:
Recommendations
That the Council seeks to encourage housing associations to minimise the use of open market valuations for underwriting loans as far as practicable.
That the Council investigates the viability of covenants on any sale to an RSL that ensures that any future disposal has to be considered for social housing use.
188.This section examines whether, in addition to our recommendations for improvements in policies and procedures in regulation and monitoring, there are ways in which the Council can develop more effective working with our partners. We also consider what requirements would need to be in place for the improvements to work.
189.This scrutiny panel has been very reliant on external organisations and individuals for evidence. Many organisations and individuals have responded very positively by providing us with relevant information and shared their views with us openly.
190.However, we experienced delays and difficulties in obtaining evidence from some parties, most notably from some housing associations and initially from the Housing Corporation as well as the Council’s Housing Department. In some cases housing associations undertook to provide information to us but then failed to deliver.
191.We have been surprised at the apparent reluctance of some housing associations to come forward, particularly given the opportunity to bring to our attention a range of issues and concerns that could influence our recommendations. This perhaps indicates the need to build greater trust and openness between the different parties.
192.Two separate sections within the Housing service deal with housing associations. The Needs & Access team, and Strategy & Resources team are linked only at Director level. Needs & Access manage the Temporary Housing Group and are under pressure to negotiate with housing associations the most advantageous contracts for the Council to secure accommodation for homeless people. As far as we could tell, they have been successful in this and have not paid much attention to whether tenders are uneconomically low.
193.Housing Initiatives and Regeneration Unit (HIRU) are part of the Strategy & Resources team and are responsible for development, management and commissioning activities with selected housing associations. These two divisions have different and sometimes conflicting priorities that may lead to tensions about how priorities are met. Officers informed us that meetings are held every two months between the two divisions with additional meetings being organised as and when required.
194.Housing associations consider that their relationship with Camden should change, as they perceive it to be solely development driven currently. For example, housing associations should be involved in issues such as safety on housing estates as well as meeting housing need in a particular area. We consider that there is clearly a great deal of scope for the local authority to learn from housing associations; any future protocols should not overlook this fact.
195.There are opportunities for developing improved joint working between the local authority and housing associations at a number of levels. CHACF is directly involved in the Local Strategic Partnership for example; housing associations are involved in regeneration and social exclusion projects. These kinds of links need to be strengthened and developed.
196.The Council has tried to encourage housing associations to establish a federation of housing association tenants but this has largely been unsuccessful. We welcome the Council’s undertaking to work with CHACF to host a meeting to attempt another start. We considered that strengthening the housing association tenant voice is necessary given our perception of the weaknesses in the relationship between the Housing Corporation and residents.
Recommendation
That housing association tenant forums be actively promoted in association with Camden Housing Association and Co-ops Forum (CHACF).
197.Mr Sweeney of CHACF and Mr Tickell of the NHF consider that the current competition framework often encourages housing associations to deploy excessive resources in bidding for contracts that may be uneconomic or unrealistic; a factor that they feel may have caused problems for WHHA. They argue that local authorities need to manage the competition process more effectively to enhance partnership working.
198.Council officers say they are mindful of the need to ensure that competition does not involve an unnecessary level of resources, but they wish to see it effectively controlled. The SHPA specifies different forms of competition with the tender format being used frequently, but this is not always appropriate.
199.Camden Council nominates tenants to approximately 75% of housing association vacancies. This process can sometimes cause problems for housing associations if a local authority fails to provide adequate information about the tenants’ needs, background or problems. Housing associations consider that there is a need for a better flow of information from local authorities. We felt this would require a balance between maintaining client confidentiality with the need to develop and maintain sustainable communities.
200.Overall, we agree that there is an urgent need to defragment the way in which the Council currently relates to housing associations. Closer relationships between the Council and its development partners are needed.
Recommendations
That the relationship between the Council and its development partners be reviewed and assessed with a view to identifying a transparent method of ongoing evaluation of partnership arrangements.
That the review of the relationship under recommendation should address specific issues of concern raised by housing associations including a) the request for the Council to provide adequate information about tenants they nominate to housing association vacancies and b) improved tendering procedures to improve the efficiency for housing associations in bidding for projects.
201.The nature of these relationships could be usefully assessed as part of the forthcoming best value review of housing policy, research and quality due to begin in June 2002.
Recommendations
That the recommendations of this panel be taken into account when scoping the forthcoming best value review of housing policy, research and quality.
That the manner in which the Council resources and manages its housing association functions be subjected to best value principles.
That the best value review be requested to consider recommending an improved corporate approach to the collation of information about housing associations between the two responsible divisions within Housing and other parts of the Council and to promote a more proactive use of amber warning lights in monitoring.
202.The Council has a complex relationship with the Housing Corporation in terms of benefits it receives. The Council’s priorities involve balancing its long-term social strategies with short-term operational needs. It seems likely that the Council will never be able to absolve itself of all liabilities in relation to housing associations suffering financial difficulties. This is all the more reason why we consider that the Council should cultivate its relationship with the Housing Corporation in both formal and informal ways.
203.Council officers informed us that the Housing Corporation has not always responded fully when Camden has raised issues with it in the past. With lead regulators in place, we hope this will change. We also expect that the Council would develop a sufficiently trusting relationship with the Housing Corporation so as to be able, for example, to influence where inspections should be carried out in Camden based on local knowledge.
204.We consider it crucial that the Housing Corporation and local authorities discuss issues around housing associations embarking on new and potentially risky activities in future. For example, there may be scope to reduce risks faced by individual local authorities by joint commissioning. There may be many hurdles to this approach, issues around commercial confidentiality being one.
205.Whilst noting that the Housing Corporation is the regulator of housing associations, we considered the extent to which it ought to be accountable for failing to either detect problems or alert parties to the presence of problems with a housing association. With WHHA, we certainly consider that Camden Council should not have to shoulder the financial burden to the extent we are expected to, and feel aggrieved by the attitude of the DTLR to the Council’s predicament. If a local authority can show that it has carried out all prudent checks, then we consider there should be a cushioning of the financial impact upon the authority in the event of a WHHA-type crisis.
206.The Housing Corporation considers there is a need for local authorities to recognise the enormous pressures faced by housing associations in fulfilling the Government’s agenda and complying with local authority policies. It feels that local authorities ought to develop a greater understanding of housing association business dynamics and restraints, and recognise the dangers of overloading associations.
207.We consider that this works both ways within a competitive environment as local authorities are often competing, particularly for temporary accommodation. The solution is for local authorities to recognise the need to liaise more within this competitive environment.
208.However, we agreed with the Housing Corporation’s view that education programmes are needed for local authority members and officers to increase their understanding of the issues faced by housing associations and their tenants. This would help local authorities to gain a better idea of what information to ask for when they make assessments of housing associations.
Recommendations
That the Council develop protocols covering how nominated Council officers disseminate information concerning housing associations within the local authority to members and other departments.
That a report be submitted annually to the Executive to include a) housing associations performance in Camden, b) the ADP process and actual allocations, and c) comparisons in operations with other London local authorities.
That the role of Council members in decisions on ADP allocations to housing associations in Camden be reviewed by the Executive.
209.We are mindful of the point made by Innisfree Housing Association that local authorities should ensure they have enough competent officers in place who understand the information already provided to them in the context of the business environment, rather than requiring housing associations to produce more new information. They argue this because:
Regulation is important to have but equally important that it doesn’t become such a bureaucratic nightmare that it detracts from our core business – providing homes for people in need.
Recommendation
That the Council ensures there are sufficient resources in the Council, particularly within the Housing Department and Financial Services, to process effectively the information received from and about housing associations.
210.We also consider that Council members need to have a greater awareness of options open to tenants with concerns to enable them to provide advice to constituents who contact them. This would include information about the scope of the independent housing ombudsman.
Recommendation
That Camden’s housing officers provide a briefing to all members of the Council, as part of councillors’ induction, outlining the key issues faced by housing associations and their tenants and the options for resolving complaints, such as referrals to the independent housing ombudsman.
211.The Council’s Housing Association Liaison Group continues to meet on a regular basis but panel members have never been invited to a meeting of it in their experience. We considered this could be an effective way of keep abreast of the issues in the housing association world.
Recommendation
That Council members be informed about the function of the Housing Association Liaison Group and be invited to its meetings in future; group meetings should aim, as a minimum, to involve representatives of the Executive and Overview and Scrutiny Commission.
212.We considered whether or not Camden should stop using temporary accommodation schemes in boroughs with known housing benefit problems. Housing officers argued against this policy because:
Such restrictions would limit temporary accommodation to high-performing boroughs which would result in higher costs
Fewer households would occupy a good standard accommodation and many more would be in poor and high-cost bed and breakfast accommodation
Demand far outstrips supply, so restricting the choice to procuring units where we have access or not procuring and increasing the bed and breakfast bill.
213.The Housing Corporation is unable to carry out systematic monitoring of local authorities’ performance on housing benefit and recommends that local authorities, through the ALG, strengthen the housing benefits officer network to promote the spread of good practice between boroughs. In the light of the successful bid by the London Housing Unit for a London wide resource to improve training in housing benefit administration we recommend:
Recommendation
That the Council, through the ALG, seeks to strengthen the housing benefit officer network to promote the spread of good practice between boroughs and improve inter borough communications on housing benefit matters; and seeks to involve housing associations in the development of the London-wide resource following on from the successful bid to the housing benefit help fund.
1. That the Government be urged to designate the Housing Corporation under the Public Interest Disclosures Act 1998 that protects people making disclosures in the public interest. (Page)
2. The Housing Corporation be urged to implement a whistleblowers line that would afford protection to any informants from within housing associations. (Page )
3. That Camden Council, together with the Association of London Government (ALG) and Local Government Association (LGA), further develop an ongoing dialogue with the Housing Corporation on the development of an effective inspection regime. (Page )
4. That Camden’s housing officers seek to develop the Council’s role as part of the Housing Corporation’s inspection regime using its knowledge of housing associations working in its area and its experience of working with various regulatory bodies. (Page )
5. That the Housing Corporation be requested to consider including Council tenants, in addition to housing association tenants, on its inspection teams. (Page )
7. That Camden, with its partners on the Association of London Government and Local Government Association, becomes actively involved in the review of the Housing Corporation’s 1998 protocol on information sharing with local authorities. (Page )
17. That the Council asks the Housing Corporation to provide us with a copy of the full report of the HACAS Chapman Hendy internal inquiry into the Corporation’s handling of the WHHA case. (Page )
18. That the Council encourages the Housing Corporation and Government to impose a responsibility on external auditors of housing associations to report directly to the Housing Corporation on key aspects of compliance. (Page )
25. That the Council monitors the resources used by the Housing Corporation in regulation and inspection and makes firm representations where it considers these resources are inadequate to meet the regulatory and inspection requirements of our partner housing associations. (Page )
26. That the Council, working with its partners in the Association of London Government (ALG) and Local Government Association (LGA), promote full and free exchange of information between the Housing Corporation and local authorities by encouraging a declassification of much of the confidential information held by the Housing Corporation about housing associations that impedes the timely release of potentially valuable information. (Page )
27. That the Council promote an information sharing cycle based around visits of the Housing Corporation to Camden in connection with investment planning and housing association inspections; with information being sought from the Housing Association Liaison Group, housing association tenant forums and from Council departments and ward councillors. (Page )
28. That the Council, working with its partners in the Association of London Government (ALG) and Local Government Association (LGA), negotiate with the Housing Corporation a mechanism by which the Corporation would alert local authorities to any potential problems, supervision imposition or imposed grant conditions with individual housing associations as a priority, rather than simply relying on local authorities to identify problems from written reports. (Page )
6. That the National Housing Federation be requested to draw up guidelines on how and when it would be appropriate for housing associations to introduce group structures. (Page )
8. That the council proactively uses its monitoring role to encourage better performance from housing associations by clarifying the benefits for a housing association of being a development partner and the consequences of poor performance. (Page )
9. That the Council consider ways in which distance can be created between its monitoring role and support functions in respect of housing associations. (Page )
13. That the Council review the allocations process in respect of temporary accommodation to ensure that people are not placed in unsuitable conditions and that regular inspections and subsequent visits are carried out. (Page )
15. That the Council uses its position and influence to encourage greater transparency and accountability to counter any culture of secrecy it may find with its partner housing associations. (Page )
16. That, as a general principle, housing associations be encouraged to provide information both to the Council and its tenants in an accessible a form as possible. (Page )
19. That the benefits of properly briefed local authority councillors or others nominated by the Council being appointed as observers to local housing association boards be promoted as a means of fostering the relationships between local authorities and housing associations, and helping to ensure a mutual exchange of information. (Page )
20. That the Council encourages its partner housing associations to undertake broad based skills audits for their board members and to ensure the provision of appropriate support and training. (Page )
22. That Camden’s partner housing associations be encouraged to develop robust policies for handling complaints that involve, for example, an external appeal stage in line with good practice. (Page )
23. That housing associations be encouraged to publish an annual complaints digest, similar to that produced by Camden’s Housing Department, containing action plans to deal with areas that have a prevalence of complaints and examples of where complaints lead to changes to policies and procedures. (Page )
34. That the relationship between the Council and its development partners be reviewed and assessed with a view to identifying a transparent method of ongoing evaluation of partnership arrangements. (Page )
35. That the review of the relationship under recommendation 34 should address specific issues of concern raised by housing associations including a) the request for the Council to provide adequate information about tenants they nominate to housing association vacancies and b) improved tendering procedures to improve the efficiency for housing associations in bidding for projects. (Page)
10. That the Council reassesses the manner in which it evaluates risk assessment with housing association partners; this is particularly in the light of the emergence of new risks such as supporting people. An approach is needed that ensures the resources deployed in risk evaluation are proportionate to the likely level of risk. (Page )
11. That in the light of the Government review of bed and breakfast provision, the Council in collaboration with its partners in the ALG lobbies the Government for an increase in subsidy for high-demand/high-cost areas to offset the additional costs resulting from restrictions in the Council’s future ability to use bed & breakfast accommodation in meeting temporary accommodation needs. (Page )
12. That the Council finds out how the Housing Corporation plans to regulate private sector leasing in future and in the light of this undertakes a detailed risk assessment of the Council’s management of temporary accommodation through housing associations. (Page )
14. That the Council further investigate the possibility of utilising the grant regime as an alternative to using private landlords in order to facilitate the provision by housing associations of permanent stock for temporary accommodation, if necessary out of borough. (Page )
24. That Camden reviews its relationship with any housing association with which it encounters delays or difficulties in obtaining any reasonable information required from the housing association about its activities. (Page )
29. That the Social Housing Partnership Agreement (SHPA) be reviewed to clarify the extent to which the Council should take steps to gather additional information from housing associations directly, or from elsewhere, before the Council agrees to work with the housing association on development or temporary accommodation programmes. (Page )
30. That the SHPA include a clear rationale explaining how the Council decides to work with one housing association rather than another, to include the selection criteria and decision route. (Page )
31. That the Council seeks to encourage housing associations to minimise the use of open market valuations for underwriting loans as far as practicable. (Page )
32. That the Council investigates the viability of covenants on any sale to an RSL that ensures that any future disposal has to be considered for social housing use. (Page )
21. That housing associations working with Camden be encouraged to include board members who are elected by tenants, responsible to tenants, and who are allowed to share identified non-confidential documents with tenants. (Page )
33. That housing association tenant forums be actively promoted in association with Camden Housing Association and Co-ops Forum (CHACF). (Page )
36. That the recommendations of this panel be taken into account when scoping the forthcoming best value review of housing policy, research and quality. (Page )
37. That the manner in which the Council resources and manages its housing association functions be subjected to best value principles. (Page )
On better local authority communications and information use, decision making and resources
38. That the best value review be requested to consider recommending an improved corporate approach to the collation of information about housing associations between the two responsible divisions within Housing and other parts of the Council and to promote a more proactive use of amber warning lights in monitoring. (Page )
39. That the Council develop protocols covering how nominated Council officers disseminate information concerning housing associations within the local authority to members and other departments. (Page )
40. That a report be submitted annually to the Executive to include a) housing associations performance in Camden, b) the ADP process and actual allocations, and c) comparisons in operations with other London local authorities. (Page )
41. That the role of Council members in decisions on ADP allocations to housing associations in Camden be reviewed by the Executive. (Page )
42. That the Council ensures there are sufficient resources in the Council, particularly within the Housing Department and Financial Services, to process effectively the information received from and about housing associations. (Page )
43. That Camden’s housing officers provide a briefing to all members of the Council, as part of councillors’ induction, outlining the key issues faced by housing associations and their tenants and the options for resolving complaints, such as referrals to the independent housing ombudsman. (Page )
44. That Council members be informed about the function of the Housing Association Liaison Group and be invited to its meetings in future; group meetings should aim, as a minimum, to involve representatives of the Executive and Overview and Scrutiny Commission. (Page )
45. That the Council, through the ALG, seeks to strengthen the housing benefit officer network to promote the spread of good practice between boroughs and improve inter borough communications on housing benefit matters; and seeks to involve housing associations in the development of the London-wide resource following on from the successful bid to the housing benefit help fund. (Page )
Numbers in brackets refer to the source of the information listed at the end of the table.
19 March 1999
Camden sells 53 Oak Village to WHHA at a discount.
31 March 1999
Camden sells 5 Minster Road to WHHA at a discount.
1 April 1999
WHHA introduces a new computer system. (6)
13 April 1999
Camden sells 14, 16, 76 Messina Road, and 9, 68, 199 Sumatra Road to WHHA at a discount.
August 1999
WHHA fails to submit quarterly financial return to the Housing Corporation for period ending 30 June 1999 on time. (1)
September 1999
The Housing Corporation investigates the financial position of WHHA “following concerns about the reliability of its financial returns”. (5)
Later evidence from the Housing Corporation states “I think at this point we expressed concern to WHHA about the non-submission of financial returns, rather than investigate its financial position”. (12)
12 October 1999
Housing Corporation receives WHHA’s audited accounts for the year ending 31 March 1999 showing “a healthy financial position”. (1)
24 November 1999
Quarterly management accounts tabled at WHHA’s Finance and Staff Sub Committee for period ending June 1999. WHHA’s Finance Director informs the sub committee he is to inform the Housing Corporation about this delay. (11)
15 December 1999
Camden housing officers comment: “At a bids meeting between Camden and the Housing Corporation in respect of 2000/2001, the Housing Corporation assured Camden that WHHA had a clean bill of financial health and specifically, with regard to temporary social housing, that things were going well and WHHA’s performance has improved.” (3)
The Housing Corporation comments: “Nothing was said at this meeting about WHHA's financial health. There is disagreement about who said "things are going well and WHHA's performance has improved". Our view is that the minutes of the meeting, taken in the context of our general approach which is to minute what local authorities say to us rather than what we say to them, support our staff's recollection that this was a statement made by Camden's representative. However, it is impossible to be certain either way, and that it is fruitless arguing about it. What is absolutely certain is that this comment was purely about WHHA's programme delivery, not about its overall performance.” (12)
6 January 2000
Housing Corporation receives WHHA’s quarterly financial return for period ending 30 June 1999 due in August 1999. Housing Corporation feels that this return “does not indicate serious cause for concern”. (1)
19 January 2000
The Housing Corporation issues a Performance Assessment and Investment Summary (PAIS) to WHHA stating that:
The 1998/99 returns have not identified any material areas requiring follow up.
WHHA’s programme delivery performance is satisfactory, but could be enhanced by an improvement in forecasting. Scheme development standards were met.
Due to the introduction of the computer system, the quarterly financial return is outstanding for the quarter ending September 1999, and the return for June 1999 has only just been received.
The Corporation requires the outstanding return to be submitted as a matter of urgency and any allocations made will be conditional upon the receipt of satisfactory quarterly financial returns. (9)
27 January 2000
WHHA’s board meeting discusses the late financial returns. Finance Director reports to the board he is “much happier with the way the computer system is performing and expects future returns to be regular and the end of year reports to be on time”. (11)
21 February 2000
The Housing Corporation issues 2001/02 allocations “conditional upon receipt of satisfactory quarterly financial returns”. Camden Council is not informed of this conditionality. (1)
25 February 2000
The Housing Corporation receives the quarterly financial return for the period ending 30 September 1999 due in November 1999. (1)
February/March 2000
The Housing Corporation visits WHHA, at the end of which WHHA confirms that the most up-to-date estimate of the expected outturn to 31 March 2000 is a surplus of £419,000. (1)
1 March 2000
WHHA’s Finance and Staff Sub Committee meets with Housing Corporation regulator present. Nine-month management accounts show a £1.1m loss. Finance Director explains this is caused by errors in the database. (11)
10 March 2000
The Housing Corporation receives the quarterly financial return for the period ending 31 December 1999 due in February 2000. (1)
Camden exchanges contracts for 21 Westbere Road – the last property to be sold to WHHA. (4)
16 March 2000
WHHA board meeting informed of Housing Corporation concerns about late quarterly financial returns.
5 April 2000
Camden completes sale of 21 Westbere Road to WHHA. (4)
25 May 2000
WHHA board meeting informed about Housing Corporation visit planned for 30/31 May. Board is not told that the Corporation’s response to concerns is to place WHHA under the first stage of supervision. Sets targets and asks for more detailed risk assessment. (11)
May 2000
The Housing Corporation places WHHA under the first stage of supervision but does not inform Camden. (5)
19 June 2000
The Housing Corporation receives the quarterly financial return from WHHA for the period ending 31 March 2000 due in May 2000 (1).
12 July 2000
WHHA’s Chief Executive sends letter to board members referring to Housing Corporation report saying that the main problem is the IT system, that there is no financial problem and that the other problems are minor and in hand. (11)
July 2000
The Housing Corporation has persistent concerns about WHHA’s slow progress in, inter alia, demonstrating long term viability as a result of “a number of investigations and visits over the preceding months”. (1)
The Housing Corporation places five additional conditions on WHHA’s 2000/01 allocations. (1)
24 August 2000
WHHA board meeting agrees action plan and establishes monitoring group.
IT provider withdraws support for the system.
Auditors are still not quite happy with the accounts to March 2000 but think they can be signed off before the AGM in September 2000.
5 September 2000
The Housing Corporation receives the quarterly financial return from WHHA for the period ending 30 June 2000 due in August 2000. (1)
7 September 2000
Camden Council becomes aware unofficially of a problem with WHHA’s finances when a WHHA cheque bounces. (3)
September 2000
The Housing Corporation notes that WHHA’s audited accounts for the year to 31 March 2000 show a surplus for the year of £322,000. However, an independent financial review requested by the Housing Corporation shows “serious impending viability problems”. (1)
Nationwide Building Society is alerted to WHHA’s problems because of continual late financial returns but “late returns are not always unusual for housing associations”. (2)
25 September 2000
WHHA board meeting recognises that funding would almost certainly be withdrawn and anticipated that some fairly drastic work would be needed on the systems and looking at management capability. (11)
29 September 2000
The Housing Corporation decides to remove WHHA’s 2000/01 ADP allocations and “transfer them, where practical, to other associations”. (1)
2 October 2000
The Housing Corporation comments: “The notes of a quarterly liaison meeting with Camden on 2 October 2000 refer explicitly to our suspension of [WHHA's] programme, so clearly Camden officers had been informed of this suspension by or at that meeting. Although the notes of the meeting just refer to Housing Corporation concerns without the notes specifying what those concerns were, it seems to me that the fact of the suspension of Housing Corporation funding indicates much greater concerns than the entry for 4 October below indicates”. (13)
4 October 2000
Camden housing officers state that the Housing Corporation informed Camden that WHHA is “having problems with a new computer system” but does not suggest anything more serious. (3)
Housing Corporation comments “we have no record of any contact with Camden on 4 October 2000, but see entry for 2 October 2000”. (13)
October 2000
At the request of the Housing Corporation, WHHA co-opts two experienced finance directors to its board. (1)
26 October 2000
Housing Corporation informs Camden “WHHA is regarded as an intervention case and has been placed under supervision by the Housing Corporation. The new capital allocations are suspended. This action has been taken due to serious concerns having been identified in WHHA’s governance and finance functions”. (8)
November 2000
The Housing Corporation concludes that WHHA’s intended sales strategy is unlikely to deliver results quickly enough to prevent imminent insolvency. The Housing Corporation makes four statutory appointments to the Board and warns the Board in very strong terms about its position. (1)
The Board resolves to seek a partnership with a stronger housing association as a matter of urgency. (1)
The Housing Corporation secures consent of the DETR and Treasury to offer a formal overdraft guarantee to prevent insolvency and so avoid the immediate threat of eviction of the majority of WHHA’s residents. (1)
One of WHHA’s lenders withdraws its overdraft facility compelling the Board to consider whether to cease trading. (5)
23 November 2000
Housing Today reports that WHHA has been placed under Housing Corporation formal supervision [second stage] because of serious concerns about the RSL’s governance, financial management and financial position.
6 December 2000
Robson Rhodes, external auditors to WHHA, sign their audit opinion on WHHA’s accounts for the year ending 31 March 2000. Their opinion is based upon “the financial position of WHHA at that time represented by the Board and senior management team assisted by HACAS Chapman Hendy. The assessment also takes account of the financial support being offered by WHHA’s lenders and the Housing Corporation”. (10)
15 December 2000
Inside Housing reports the suspension of WHHA’s Chief Executive and Finance Director.
30 July 2001
Housing Corporation commissions HACAS Chapman Hendy to undertake an internal review of the Corporation’s handling of the WHHA case. (6)
Camden and Housing Corporation officers meet to discuss options for funding avenues for WHHA.
August 2001
Housing Corporation produces options paper outlining possible strategies and commenting, “the severity of the problem at WHHA is such that it cannot be addressed through the normal course of business”. (7)
October 2001 – January 2002
In response to representations made to the DTLR by Camden’s Executive Member for Housing and Leader of the Council the DTLR, inter alia:
Puts WHHA’s difficulties down to management failure in respect of temporary social housing and inadequate fees paid by local authorities for temporary accommodation
Rejects the idea of using additional grant as a means of resolving WHHA’s financial difficulties. This is because it would be “at the expense of new social housing and would been seen as rewarding failure by a RSL”
Agrees to waiving of social housing grant when WHHA’s properties are sold
Sources:
(1)Housing Corporation report to the scrutiny panel 28 January 2002.
(2)Nationwide Building Society’s oral evidence to the scrutiny panel 16 January 2002.
(3)Housing officers’ oral evidence to the panel 28 November 2001.
(4)E-mail from Housing officer 15 January 2002.
(5)Press statement by the Housing Corporation in response to enquiries (undated)
(6)Housing Corporation evidence to the panel on 28 January 2002.
(7)Summary of options paper (background paper reference E8 - exempt).
(8)Letter from the Housing Corporation to Camden’s Director of Housing 26 October 2000 (background paper C17)
(9)Housing Corporation’s Performance Assessment and Investment Summary (PAIS) for WHHA 2000/2001.
(10)Letter from Robson Rhodes Chartered Accountants to the Chair of the panel 8 February 2002
(11)Letter from Ms Kit Wilby to the scrutiny panel dated 17 February 2002.
(12)Email from Mr Derek King, Director, Regulation & Best Value, London, Housing Corporation to the Council commenting on the draft of this report dated 22 March 2002.
(13)Email from Mr Derek King, Director, Regulation & Best Value, London, Housing Corporation to the Council commenting on the draft of this report dated 25 March 2002.
Housing Provider/ Permanent units
Abeona Housing Co-op
44
Alcohol Recovery Project
1
Alone in London
5
ARHAG Housing Association Ltd
75
Arlington House
2
ASRA Greater London Housing Association Ltd.
84
Bnai Brith
24
Bridge Housing Association
18
Camden Accommodation Scheme
4
Camden Women's Aid
9
CARA Irish Housing Association
4
Carr-Gomm Society
7
CASA
1
Central and Cecil Housing Trust
580
Centrepoint
15
Circle 33 Housing Trust
1105
Community Housing Association
1940
Coram Family
2
Eaves Housing for Women Ltd
6
English Churches Housing Association
24
Equinox
3
Fairhazel Housing Co-op
127
Family Housing Association
49
Heathview Tenants' Co-op
59
Housing for Women
11
Housing Services Agency
8
Hyelm
4
Innisfree Housing Association
17
Irish Centre Housing Ltd
9
Islington and Shoreditch Housing Association
33
Look Ahead
2
Metropolitan Housing Trust
18
MIND in Camden
4
NACRO
2
Network Housing Association
5
New Leaf Housing Association
12
North British Housing Association
15
North Camden Housing Co-Op
107
Notting Hill Home Ownership
104
Notting Hill Housing Trust
43
Odu-Dua Housing Association
111
Paddington Churches Housing Association
992
Pan-African Refugee Housing Co-op
49
Patchwork Community Housing
14
Penrose
1
Prince Arthur House Ltd
8
Refugee Housing Association Ltd
2
Richmond Fellowship
1
RPS Rainer Housing
1
Rugby House Project
4
Salvation Army Housing Association
1
Servite
6
Single Homeless Project
9
Soho Housing Association
98
South Camden Housing Co-operative
26
St.Marylebone Housing Association
85
St.Mungo's
18
St.Pancras & Humanist
2071
Strutton Housing Association
51
Thames Reach Housing Association
8
The Camden Society
17
The Guinness Trust
25
The Peabody Housing Trust
427
The Simon Community
1
The United Women's Homes Association Ltd
12
Ujima Housing Association
83
Umbrella
9
United Response
2
Warden Housing Association
28
West Hampstead Housing Association
182
West Hampstead Housing Co-op
66
Womens Pioneer Housing Association
24
Young Women's Christian Association
2
Total: 9,016
Item/ Date/ Title,Author/ Description.
R1
April 2001
NAO: Regulating housing associations’ management of financial risk
Financial risks faced by housing associations and recommends a regulatory role for the Housing Corporation
R2
Current
DTLR website
http://www.housing.dtlr.gov.uk/index.htm
R3
Current
The Housing Corporation
www.housingcorp.gov.uk - describes the function of the Housing Corporation
R4
November 2001
Our Regulatory Approach: the Regulatory Code and guidance – Inspection: our proposals (Housing Corporation)
Summary of responses to Housing Corporation consultation about changes to their regulatory framework showing overall support for the proposals with some exceptions
R5
July 2000
NAO: Overseeing Focus Housing association
Outlines the Housing Corporation’s role in the regulation of a housing association experiencing corruption
R6
Current
Housing Corporation: Public Register of social landlords
List of RSLs operating in LB Camden
R7
27 November 2001
Housing Corporation
Statement on WHHA issued to Housing Today
R8
2000/2001
Press reports pack
From March 2000 to November 2001
R9
13 November 2001
Housing Corporation: Risk management topic paper
Quantification of risk for housing associations – a topic paper encouraging best practice in risk management
R10
2 May 2001
Select Committee on Public Accounts – The Housing Corporation: Overseeing Focus Housing Association
Outlines implications of the Focus case (see item R5 above) for the Housing Corporation’s regulatory function
R11
13 December 2001
NHF: The Regulation of RSLs – a briefing paper
Introduction to the work of housing associations, roles and regulation
R12
3 December 2001
Housing Corporation: Public Register of Social Landlords
WHHA profile from the Housing Corporation website
R13
27 November 2001
Group dynamics: Audit Commission website
Explains why RSLs are developing group structures
R14
6 December 2001
Kilburn Times: Interview with Councillor Brian Weekes
Councillor Weekes, Executive Member for Housing, blames the Housing Corporation for the crisis at WHHA
R15
1 October 2001
Housing Corporation: PAIS report for PCHA
Summary designed to assist Housing Corporation in making investment decisions
R16
May 2000
Housing Corporation: Regulating a diverse sector
Outlines how the Housing Corporation will regulate diversity
R17
July 2001
KPMG: An evaluation of pilot inspections
An evaluation carried out for the Housing Corporation
R18
October 2001
HACAS Chapman Hendy: Housing associations and private sector leasing
Reviews the profile and impact of private sector leasing arrangements on housing associations
R19/R33
October 1998
Housing Corporation: Framework for sharing information between the Housing Corporation and RSLs and local authorities
Intended to be used as a basis for discussions with the Housing Corporation about how to make the best use of information to inform and deliver local housing strategies
R20
2000
Housing Corporation: performance indicators for RSLs
Provides a broad performance view of 404 of the largest housing associations in 1999/2000
R21
September 2001
NHF: Consultation response
Responds to the Housing Corporation regulation revolution proposals
R22
January 2000
NHF: Competence and accountability
Code of governance for members of the National Housing Federation (NHF)
R23
December 1998
NHF: A model of accountability
A recommended accountability statement for NHF members
R24
August 1997
NHF: Do the right thing
Guidance on whistleblowing
R25
August 1994
Housing Corporation: Group Structures
Describes the Housing Corporation policy in respect of RSLs setting up group structures
R26
October 1998
Constitutional and structural partnerships
Describes the Housing Corporation’s regulatory requirements for RSLs’ constitutional partnerships with other RSLs
R27
14 December 2001
Inside Housing: Article by Councillor John Rolfe
Outlines role of the Regulation of RSLs Scrutiny Panel and calls for evidence
R28
9 January 2002
Public Accounts Committee (PAC): Regulating housing associations’ management of financial risk
Recommends improvements to the way in which the Housing Corporation regulates the increasingly risky activities undertaken by housing associations
R29
9 January 2002
Press reports: Guardian/ Inside Housing/ Housing Today
Summarises the PAC report on housing associations management of finances
R30
11 January 2002
Ham & High
Publicises the RSLs scrutiny panel
R31
1999/2000
LGC: Letter from Mr Peter Rutherford
Criticises planning issues relating to WHHA and the Council
R32
1999
Housing Corporation: Learning from Problem Cases
Seventeen case studies of what can and did go wrong with housing associations
R34
January 2002
Press reports: CNJ/Housing Today
CNJ: Town Hall blamed for collapse of WHHAHT: Lenders back call for corporation vigilanceHT: Letter: Mr Rutherford: Not yet convincedHT: New code ends tick-box era
R35
31 January 2002
Press reports: CNJ/Housing Today
CNJ: Advert placed by WHHA wanting landlords’ propertyHT: Report of the panel meeting with the Housing Corporation of 28 January 2002
R36
July 2001
Audit Commission: Worth the risk
Management paper on improving risk management in local authorities to develop balances between risks and control
R37
31 January 2002
Press report: Property People
Outlines progress with the scrutiny panel
R38
October 2001
Housing Corporation/HACAS Chapman Hendy: Housing associations and private sector leasing
Examines how housing associations involved in private sector leasing are managing their programmes
R39
February 2001
NAO: Holding to Account: Review of Audit and Accountability
Extract: illustrates difficulties faced by NAO in accessing an RSL’s details
R40
August 2001
Housing Corporation:
Inspection checklist and letter to involve local authorities in inspections
R41
January 2002
Housing Corporation
The way forward: Inspection - our approach
R42
January 2002
Housing Corporation
The way forward – our approach to regulation
R43
28 January 2002
Housing Corporation: Paper
Paper on the new approach to regulation for the scrutiny panel.
R44
October 2001
Housing Corporation circular R2-25/01
Sets of requirements for housing associations’ internal controls assurance
C1
November 2001
Establishing a Regulation of Social Landlords (RSLs) Scrutiny Panel
Report to Overview and Scrutiny Commission that agreed the establishment of the panel
C2
October 2001
WHHA (Council Executive reference to Overview and Scrutiny Commission)
Requests the establishment of a panel. Report asks the Executive to waive clawback clauses for previously owned Council properties
C3
October 2001
Address by tenants of Camden/WHHA shortlife properties
Expresses various concerns about WHHA and suggests issues to consider when assessing RSLs
C4
January 2001
A new Social Housing Partnership Agreement for Camden (HIRU)
Explains the role of RSLs in delivering Camden’s housing strategy and how all parties will work together
C7
July 2001 – January 2002
Correspondence pack
Correspondence between the Council and the Housing Corporation
C8
6 February 2002
Report to the Council Executive
WHHA request Camden to agree to waive clawbacks and nomination rights to allow sales of properties at Messina Avenue
C9
7 January 2002
Email from Environmental Health Service
Historical service enquiry figures received concerning RSL-owned properties (see also exempt paper E7)
C10
6 February 2002
Director of Housing: WHHA proposed sale of flats at Messina Avenue NW6
Report to Camden Council’s Executive of 6 February 2002 seeking agreement to the sale of 2 properties and outlines the measures taken by Genesis to reduce the debt at WHHA
C11
18 February 2002
Housing Finance Manager: WHHA crisis: costs to the Council
Outlines various costs incurred by the Council since WHHA got into difficulties
C12
February 2002
Director of Housing: response to various requests
Outlines issues:- temporary accommodation matters- Levita House- Hackney scheme
C13
February 2002
Housing Department response to various issues
- Tenant consultation- Planning permission- various correspondence- Councillor Rea’s submission
C14
February 2002
Housing Department:
Supporting people issues.
C15
27 February 2002
Housing Department
Further answers to a wide range of questions posed by the panel considered at the panel of 27 February 2002
C16
13 December 2001
Housing Department
Answers to questions raised at the panel meeting of 17 December 2001
C17
26 October 2000
Letter from Housing Corporation to Camden’s Director of Housing
Advises that WHHA has been placed under supervision and allocations suspended.
C18
1992 – 2002
Housing Corporation allocations
Schedule of Housing Corporation allocations to Camden by year and housing association
C19
Various
Housing Department
Correspondence lists re WHHA and Messina and New Court
G1
6 December 2001
Letter from Innisfree Housing Association
Argues for less regulation of RSLs. Supports the Housing Corporation’s new regulation regime.
G2
13 December 2001
Evidence of Mr Mick Sweeney, Chair of Camden Housing Association and Co-ops Forum
Key facts for RSLs in Camden; risks faced by RSLs, on the role of the Housing Corporation; ideas for improving the RSL – Camden partnership
G3
October November 2001
Housing Corporation: 2 press statements
Press statements outlining the Housing Corporation view of the WHHA situation
G4
1998/99
WHHA
Annual report 1998/99
G5
2000
Genesis Housing Group
Publicity booklet
G6
Various
Camden councillors’ casework summary pack 1
Summarises casework experience of Councillors Rolfe and Walker related to WHHA
G7
December 2001
Mr Graham Martin
Argues that large variation in rents between housing associations that may indicate poor performers
G8
1996/97
WHHA
Annual report 1996/97
G9
1997/98
WHHA
Annual Report 1997/98
G10
31 March 1998
WHHA
Report & financial statements
G11
31 March 1999
WHHA
Report & financial statements
G12
31 March 2000
WHHA
Report & financial statements
G13
14 January 2002
Northumberland Park Holdings Ltd
Views of a private sector organisation on how the Council should work with partner housing providers
G14
Various
London Boroughs of Barnet and Haringey
Comments upon their experiences of the WHHA situation
G15
January 2002
Councillor Flick Rea
Statement concerning experiences with WHHA over a number of years
G16
8 February 2002
Robson Rhodes: previous auditors to WHHA
Letter outlines responses to various questions asked by the panel
G17
10 February 2002
Ms Kit Wilby: update to her oral evidence
Letter providing a brief update on:- sub committee structure at WHHA- minute of 28 January- complaints- timetable information
G18
February 2002
A Camden housing association tenant
Outlines views on problems faced by housing associations / regulatory issues / tenant rights
G19
February 2002
Camden housing association tenant evidence: name and address supplied
Describes how problems experienced with a housing association led to conclusions on the ability of housing associations to deal with expanding technical issues / polished publicity covering poor tenant relations
G20
21 February 2002
Councillor Keith Moffitt
Outlines issues around the co-ordination of a consortium of four housing associations working together on Lithos Road Estate
G21
24 February 2002
WHHA
Report & financial statements for year ending 31 March 2001
G22
1 March 2002
Ms Kit Wilby
Chronology of events from a WHHA board member’s point of view
G23
February 2002
Councillor Heather Johnson
Evidence on WHHA from experience since 1994.
G24
December 2001
Members of the Short Life property Tenants Group
Views on WHHA for the scrutiny panel
E1
10 October 2001
Council report re WHHA
Requests Camden to waive clawback clause for previously owned properties. (A public version of this report is listed above at C2)
E2
Various
Camden Housing
Summary of schemes used to provide temporary accommodation for priority homeless households
E3
Various
Camden Housing
Agreement between the Council and WHHA
E4
July 2001
Minutes
Minutes of meeting between Camden and the Housing Corporation outlining proposals to reduce WHHA’s debts
E5
28 August 2001
Letter from Camden Housing to WHHA
Sets out Camden’s position on the rescue package
E6
22 January 2002
Memorandum from Ms Lesley Pigott, head of Benefits
Outlines Camden’s Benefits Service’ experience of dealing with various RSLs
E7
10 January 2002
Email from Environmental Health
Shows numbers of notices served against RSLs with comments about individual RSLs
E8
August 2001
Housing Corporation: Options for deficit funding of WHHA
Outlines key problems facing WHHA; assesses the financial position
E9
21 January 2000
Housing Corporation
PAIS dated 19 January 2000
E10
May – July 2000
Housing Corporation: Performance Review Report for WHHA
Sets out concerns, some serious, about WHHA’s ability to comply with Housing Corporation performance standards
E11
1 August 2000
Housing Corporation: Programme Delivery Assessment
Shows overall good performance with WHHA exceeding the Corporation’s expectations in many areas for year ended March 2000
E12
9 February 2002
Ms Judith Barnes: statement for the panel
Outlines historical concerns with WHHA
E13
December 2001
Housing Department
- Disposals to RSLs 1992 – 2002- Units managed by WHHA by borough
ADP
Approved Development Programme (ADP) provides for public funding to build and renovate homes. The Housing Corporation intends to invest £3 billion over the next three years to allow housing associations to provide around 85,000 new homes.
CHACF
Camden Housing Association and Co-ops Forum. A group representing the interests of housing associations and co-operatives working in Camden. It meets quarterly with Camden’s Housing Department and has recently concluded the Social Housing Partnership Agreement.
DTLR
Department of Transport, Local Government and the Regions.
Housing Association
Housing associations are the main providers of new social housing. There are over 2,000 housing associations in England, currently managing around 1.45 million homes and housing at least twice that many people (see also RSL).
Housing Corporation
Non-departmental public body sponsored by the Department of Transport, Local Government & the Regions (DTLR).
Pays grants to RSLs to provide social housing
Regulates RSLs’ governance, financial performance and their development and provision of social housing.
Its stated key aims are:
To regulate to promote a viable, properly governed and properly managed housing association sector;
To invest for the creation and maintenance of safe and sustainable communities;
To champion a resident focus in the housing association sector; and
To be a modern, customer-centred, forward-looking organisation, encouraging change in the sector.
HIRU
Housing Initiatives & Regeneration Unit (Part of the Council’s Housing Services)
IGP
The Innovation and Good Practice (IGP) grant programme aims to encourage innovation and good practice in housing associations.
LGC
Local Government Chronicle
LHF
London Housing Federation. Regional office of the National Housing Federation (NHF), the organisation promoting, representing and supporting housing associations in England.
LSVT
Large Scale Voluntary Transfer. The scale of LSVT means that RSLs are projected nationally soon to take over from Councils as main providers of social housing.
NAO
National Audit Office: an independent body that certifies the accounts of all Government departments and a wide range of other public sector bodies; it also reports to Parliament on the economy, efficiency and effectiveness with which departments and other bodies have used their resources.
NHF
National Housing Federation – see London Housing Federation
PAIS
Performance Assessment and Investment Summary produced by the Housing Corporation. Publication on the Housing Corporation website is currently under a pilot.
PDA
Performance Delivery Assessment is a Housing Corporation measure of an RSL’s programme delivery performance.
RSL
Registered Social Landlord (RSL) is the technical name for social landlords that are registered with the Housing Corporation. Most are housing associations, but there are also trusts, co-operatives and companies. The term housing association is now returning as the preferred name for RSLs.
They are not-for-profit organisations set up to provide affordable housing for homeless people, people on low income or people with special needs.
SHG/LASHG
Social Housing Grant/Local Authority Social Housing Grant
SHPA
Social Housing Partnership Agreement. A document that sets out the mutual objectives of Camden and housing associations working together.
WHHA
West Hampstead Housing Association
Chair: Councillor John Rolfe
Members: Councillors Julian Fulbrook (Labour), Janet Guthrie (Labour), Dave Horan (Labour), Heather Johnson (Labour), Jane Schopflin (Liberal Democrat), Sybil Shine (Labour) and Piers Wauchope (Conservative).
Co-opted member: Dr Peter Wright.
Panel support officers
Scrutiny Policy Officer: Paul Dean
Committee Officer: Vickie Skade
Camden Council officers who provided oral and/or written evidence:
Richard Clarke, Gareth Hall, Claire Jameson, Neil Litherland, Rhys Makinson, Lesley Pigott, Sue Robertshaw, Christopher Smith, Janet Sutherland, Janet Trench, Joe Tuke and Darren Wilsher.
Camden Council members who gave oral evidence:
Councillors Flick Rea and John Dickie.
Mr Mick Sweeney, Chair of the Camden Housing Associations and Co-ops Forum
Mr James Tickell, Deputy Chief Executive of the National Housing Federation
Mr Malcolm Kitchener, Nationwide Building Society
Ms Kit Wilby, WHHA board member
Ms Diana Hardy Wilson and Mr Peter Rutherford – WHHA shortlife tenant representatives
Mr Derek King, Director, Regulation & Best Value, London, Housing Corporation
Mr Kevin Millgate, Assistant Director, Financial Regulation of Housing Associations (London), Housing Corporation
Mr Patrick Dunphy: Housing Corporation
Ms Elaine Sanders, Acting Director, West Hampstead Housing Association.
Paul DeanScrutiny Policy OfficerTelephone 020 7974 3249Email: paul.dean@camden.gov.ukFax 020 7974 3202.
For a large print version of this report contact: 020 7974 3257.
Scrutiny Team Manager: Tim YoungRoom 201 Town Hall, Judd Street, London WC1H 9JE.Telephone 020 7974 3257.Email: tim.young@camden.gov.uk
Committee Services Team Leader: Jim MitchellRoom 220 Town Hall, Judd Street, London WC1H 9JE.Telephone 020 7974 5642.Email: jim.mitchell@camden.gov.uk
Choices about Financing Capital projects
Tenancy Support for Vulnerable People
School Run Traffic
Tackling the Problem of Drugs
Development of a Camden and Islington Mental Health & Social Care Trust
Uses of the Council’s Commercial property Portfolio
26 March 2002