Pay jobs and services under attack in Circle Housing
Circle CEO Mark Rogers
Circle Housing: redundancies, pay cuts and lower quality services
Members of our branch at Circle Housing are facing the threat of hundreds of redundancies and attacks on their pay and terms and conditions as management plan to make cuts of £50 million.
Blaming the government
Circle, and a number of other housing associations, are blaming the government’s planned 1% cuts to social rents for their actions. Circle makes large surpluses and is financially particularly robust - the argument that they have no alternative does not stand serious scrutiny. It is true that the Institute for Fiscal Studies estimate that the rent cut will mean that associations get £2.5bn per year less in rent than they were expecting.
Housing associations booking record surpluses
Even if this was the full story, housing associations have been booking record surpluses year after year so it would not be clear that they needed to make drastic cuts. In fact however, a number of other government proposals will actually increase their income.
For example, the government estimate that its ‘Pay to Stay’ proposal will generate an extra £1bn per year in rental income. An association such as Circle, operating in high value areas, can actually expect to benefit from this more than average. Greater ‘freedoms’ to change tenure and rents is also expected to increase income. Circle staff say that the cuts were in fact planned before the government rent proposals were announced; it appears that Circle are simply using the changes as a convenient fig leaf.
Quality of services will suffer
Alistair McIntosh, chief executive of consultancy Housing Quality Network, is quoted (Inside Housing, 29 October 2015) as saying that cuts of 10% to housing management costs and 15% to maintenance costs would be the “plimsoll lines” below which most landlords would not go. He warns quality of service could suffer if cuts are too deep. Unite would oppose all cuts to jobs and valuable services, but Circles proposal to cut 17% would clearly be deeply damaging both for its staff and for the communities it serves.
Anger and desperate worry
A series of Unite members at Circle have approached our branch to express anger and desperate worry for their future, and for the services in which they work.
One told me she had never worked anywhere where the staff worked as hard yet were so undervalued by senior management. Many are angered by the proposal to increase the official working week saying they already have to work much longer hours, unacknowledged and unpaid. Others say they are being forced to decide whether to take redundancy or stay when they do not know the details of the new job they might get if they stay. Many complain about the money that is spent on expensive consultants while staff are undervalued. A worrying number talk of bullying management and high levels of stress. And many say that the restructure and cuts will make services more remote from tenants and leaseholders.
Executive team out of touch
A common concern is that the executive team is out if touch, not really understanding the operational realities of the organisation, while rewarding themselves handsomely. The basic salary of Chief Executive Mark Rogers is £230,345 per year with a car allowance of £8,764. Proposed changes to terms and conditions include pensions so it has not gone without comment that Mr Rogers is paid £63,345 toward his pension.
Surplus of £45 million last year
Management claims that Circle is heading towards making a loss unless they press ahead with drastic cuts stand in contrast to its surplus of £45million this year. The HCA, which regulates housing associations, gives Circle its highest rating for financial viability, although notably governance is not so highly rated. Sir Robin Urquhart Young KCB the Chair of the Circle board said “These results show the group is financially secure with a stable surplus and strong liquidity position.”
Circle Housing's executive director of resources Robert Kerse
The ability of an association to raise loan finance at good rates is taken as a good measure of the financial standing of associations and Circle has arranged deals in recent months at notably good rates. Trade Risks, the consultants who negotiated the most recent deal commented, “This is an incredible result for Circle in the face of the regulatory pressures and challenging environment for housing associations in the UK. The transaction demonstrates that there is still appetite for funding housing associations at an affordable spread”.
Unite is committed to supporting members in Circle and will support any action they decide to take.