Our Sector - Did You Know?
By Suzanne Muna (Branch Secretary) and Paul Kershaw (Branch Chair)
Information is power and readily available information on the housing association sector provides an abundance of ammunition for housing workers and activists wanting to resist the race to the bottom.
The Social Housing Regulator (SHR) helpfully provides us with three weighty reports each year. Taken together, they tell a tale of a healthy and thriving sector, but this is most emphatically not the message that you’re meant to hear if you are a tenant or employee of a housing association.
Facing tenants and workers, housing associations will wring their hands. They will plead poverty and hardship. They will tell us that there have never been so many challenges and risks to income streams. They point to the mandatory 1% rent cut for social housing, and hold up spreadsheets showing how welfare reforms have lost them money too. They even bewail the need for pay rises to bring staff up to the National Minimum Wage (when a decent employer would be ashamed at such low pay). With heavy hearts, they tell tenants and residents that they are forced to cut major repairs and support services, and increase service charges. Staff are expected to work harder for less pay and reduced pension provision. They are put under ever increasing performance pressures, and are of course expected to be grateful that they have a job at all.
The EU Referendum result has to some extent had a negative impact on UK economic forecasts, and this in turn has affected the housing sector. In the main however, the risks and uncertainties faced by HAs derive from the increasingly complex and precarious business models that many large providers have chosen to adopt (5). They have moved their activities steadily away from providing the affordable and accessible rented housing that many people need, in favour of developing homes to be sold on the more volatile open markets (10).
Not all HA chief executives acknowledge this as the root of the problem. Genesis housing’s CEO Neil Hadden, for example, complained bitterly about being downgraded by credit rating agency Moody’s. The downgrade reflected Genesis Housing’s increasing reliance on sales income. But rather than admit that the board and executive of Genesis had gambled away security in favour of potentially higher returns, Hadden accused the agency of failing to understand its business . It remains the fact however that associations wishing to mitigate risks could do so simply by adjusting their business models to focus on more traditional and reliable activities, and could return to more conventional funding structures. In other words, wage rises and service costs are neither the cause of economic uncertainty, nor is cutting them the solution.
In absolute terms, the sector has never been more financially healthy, and this is the narrative HAs emphasise when speaking to their private investors. The image that associations want to project to this audience is that of a large, thriving and profitable sector, with yet another year of growth and record breaking surpluses behind them. They point to their stock of almost 3 million housing units, worth almost £139 billion, and surpluses of £3 billion in a single year. There is a further £88 billion of fixed assets. They insist that this is a sector which represents a safe investment opportunity with predictable returns and one where financial failure is almost unheard of.
Thus, while the challenges that associations point to are real enough, the negative impact on their businesses overall are minimal. They do not justify pay cuts, pension cuts, job losses and work intensification that associations inflict on their staff. Such actions are both opportunist and ideological.
And the sector’s financial health and autonomy from central government also means that it is strongly placed to resist the Housing and Planning Act 2016. While much of the Act is mandatory for councils, there is a larger degree of discretion for housing associations. Providers in this sector to do not need to implement Pay to Stay, they do not need to offer Right to Buy, forcing their local council to foot the bill for the tenant discount, they do not need to evict struggling tenants with rent arrears, and they could continue to offer security of tenure through automatic renewal of tenancies.
So click on the link below to see the facts of the matter and arm yourself for your campaign – whether you’re a housing worker with a pay claim or a housing activist fighting the introduction of Pay to Stay, you will find information that will be useful to you.
See also ...