The stakeholders of a typical Registered Social Landlord Essay

The Housing Corporation is the principle regulator of housing associations, trusts and companies. It operates a comprehensive regulatory regime and has a very full range of general and specific powers which it can employ. In contrast to some other regulators, for instance the utility regulators, the Corporation is responsible for regulating registered social landlords as organisations and not simply the product of social housing.

The Housing Corporation was established by Parliament in 1964 to promote voluntary non-profit making housing associations and co-operatives. The Corporation is a non-departmental public body sponsored by the Office of the Deputy Prime Minister. The Corporation regulates and funds registered social landlords (RSLs) in England. Since 1974 the Housing Corporation has been the major provider of capital finance for RSLs, using the Approved Development Programme (ADP) which is the chief mechanism for this funding (ODPM 2003).

We Will Write a Custom Essay Specifically
For You For Only $13.90/page!


order now

Many commentators have all too easily described the housing policy of the years from 1979-1997 as a period for the transfer of resources from democratically elected local authorities to unaccountable housing associations. The growing role of housing associations over that period has led to a shaper focus on accountability. In recent years the issues of accountability have moved quickly up the agenda for both academics and practitioners. The aim of this essay is to identify the various stakeholders of a typical registered social landlord and to discuss how these may be accountable. The essay will explore the concept of registered social landlords, accountability and discuss the issues surrounding stakeholders. A good starting point therefore is to define each of these concepts.

The term registered social landlord was introduced in 1996 under Section 1 of the Housing Act. Previously known as registered housing associations they were first created following the Housing Associations Act 1985.

Registered social landlords are diverse, independent, not for profit sector organisation. Since the late 1980s almost all new social housing has been provided by RSLs. In addition, local authorities were given the option of transferring their stock to RSLs. One of the main reason for this is that RSLs, being in the private sector, can raise private finance for new schemes and for investing in stock transferred form local authorities outsider the constraints of Public Expenditure control and the Public Sector Borrowing Requirement.

There are currently over 2,000 RSLs in England managing around 1.45 million homes and housing at least twice that many people. It is estimated that 5% of all housing stock is owned by RSLs, and they raise private finance, which is combined with public grant to maintain and develop this stock. RSLs submit bids for the Social Housing Grant to the Housing Corporation Regional Offices in a competitive bidding round. The Corporation approves schemes that meet local housing needs at affordable rents and that offer good value for money in terms of the public subsidy required and the quality of homes delivered (Housing Corporation 2003).

Interest in the term accountability has been coming from many different directions in recent years. Tenants, local authorities, members of Parliament, regulators and funders are all demanding that registered social landlords should demonstrate effective accountability. Many parts of the public sector have been privatised and other parts have been put into executive agencies. The voluntary sector has seen its role expanded as a core service substantial provider.

According to the Housing Corporation accountability is about being answerable for the exercise of power within a relationship. It is what makes the exercise of power acceptable. Where this relationship is evenly balanced then accountability is usually not a problem. Accountability can operate in many different circumstances and with varying strength. There is accountability between a chief executive and a board, between a housing association and a regulator.

The accountability of RSLs is an important issue because of a combination of four circumstances. RSLs now have a substantial role in the provision of a core human service and received the benefit from public spending. Further the tenants of a RSL have very limited consumer choice and existing accountability mechanisms are perceived to be weak.

Over the ten years up to the 1997 General Election, RSLs came to replace local authorities as central government’s preferred organisations for the provision of new social housing. Both before and after the election, there have been incentives for local authorities to consider transferring their stock to new RSLs. Over 200,000 homes have moved out of the public sector. The election of a new Labour government in May 1997 brought a stronger emphasis on local and regional accountability. This has thrust all RSLs firmly into the political limelight. Many now argue that what is now required is a fundamental reassessment of the role of the RSLs, with a need to redefine their missions as accountable, innovative and diverse social investment agencies, working for neighbourhood and community renewal in close partnership with tenants and residents.

Accountability is not seen as such a key issue across most of the private sector because market choice offers a powerful sanction to consumers. If you do not like one organisation, product or service you can simply choose another. The tenants of RSLs have fewer choices this is because often access to social housing is limited.

According to Donaldson and Preston 1995, stakeholders can be defined as organisations or individuals with an interest in the activities of an organisation and the outcomes of those activities. They are identified as people who have an interest in the organisation, whether or not the organisation has an interest in them. Different stakeholders play different roles in the activities of RSLs. Balancing the various interests involved is a tricky business for most of them, particularly where the interests are often different and conflict with each other. RSLs have five main groups of stakeholders – tenants, local authorities, local communities, other partners and shareholders. The relationship between RSLs and this wide range of stakeholders can be mapped as part of a chain of accountabilities from taxpayer to tenant.

In many of the key issues that effect these different groups of stakeholders, independent social landlords are often the messengers rather then the decision makers. Each stakeholder will be trying to extract accountability from other stakeholders directly and not just from RSLs. In effect all of the stakeholders form a web of multiple relationships that demand multiple accountability. If there can be conflicts between those to whom RSLs are accountable, there can also be conflicts between accountability and other wider objectives.

Independent social landlords use a wide range of mechanisms for delivering accountability to their stakeholders. These can be divided into five categories – information and consultation, participation, contractual or statutory relationships, operational practice and organisational influence and control.

One of the most important aspects of accountability for an RSL is the involvement of their tenants. Today the vast majority of the larger RSLs have at least one tenants association within their housing stock. Tenant participation has become an established part of service delivery and tenant committees and board membership is an important indicator of good governance (NHF 2003). Involving tenants is now part of the normal way in which most RSLs carry out their day to day business.

This growing emphasis on the involvement of tenants has its roots in the development of a more consumer oriented culture over the past two decades. Housing is an important part of people’s lives and therefore expectations about how it should be provided and managed have increased. RSLs in the main have responded positively to this social trend by increasing the role tenants play in their activities. Tenant participation has become more popular in recent years although this does not necessarily always deliver greater accountability.

Virtually all RSLs collect information from tenants about their satisfaction with the quality of the services they provide. They also provide packages of information to tenants about their performance as a landlord, most commonly through their annual reports and regular newsletters. However to ensure a quality service and greater accountability on a daily basis, many RSLs have front line staff setting standards and targets. In some instances front line staff are able to provide compensation for a failure to meet these targets. RSLs often carry out regular customer surveys as part of the wider care package. Introducing a more service oriented approach to social housing is seen by many RSLs as more important in terms of accountability than issues of control, representation and participation (Ashby, Duncan & Underwood 1997).

Whether or not tenants should be represented on the boards of RSLs is another accountability issue on which opinions have been divided. Some organisations are reluctant to bring tenants on to their boards, preferring other ways of delivering accountability to them. Indeed the view of the government has been that tenants on boards can provide good governance but by itself is not an effective mechanism for accountability.

The relationship between RSLs and local authorities is undoubtedly one of the most important but often one of the most difficult to get right. Local authorities are still the main providers of publicly financed rented housing although their role has changed dramatically over the last two decades.

Until recently the provision of new housing by local authorities was effectively terminated and local authorities’ ability to fund both their own housing activities and those of other organisations was severely constrained. Their housing stock management was put out to competitive tender and parts of their stock sold off to the private sector or RSLs. Unable to spend money from the sale of council houses, their ability to maintain their own stock has depended to a large extent upon competitive bidding for diminishing central government resources. It could be argued that the role of the local authority has become one of a strategic enabler (NHF 1995).

It could be argued that RSLs were one of the main beneficiaries of this change with many of them involved in all the operational activities previously within the remit of local authorities. There has been a noticeable switch of resources by central government, which has left local authorities increasingly dependent on social landlords for meeting housing needs (Day ; Klein 1996).

The election of a Labour government in May 1997 began to tilt the balance back towards local authorities once more. The release of capital, linked to increased investment in the publicly rented stock, the abandonment of compulsory competitive tendering and an approach to resource allocation which strikes a better balance between needs and competition. This is bound to impact on the relationship between local authorities and RSLs and will inevitably raise questions about accountability.

From a local authority perspective, only they have a democratic mandate and represent the interests of local communities. They are accountable to central government for their activities and expenditure. Tenants have an opportunity to challenge their landlords through elected members. Most local authorities have detailed codes of practice and there are some well established complaints systems.

From this point of view RSLs can be seen as being run by unelected boards, frequently operating over a wide geographical area, finding it difficult to represent the interests of local communities and be accountable for their activities. RSLs argue that the nature of their organisation and activities are quite different to local authorities and therefore require a different approach to accountability. In particular they must offer some measure of accountability to a range of stakeholders, including local authorities but the geographical pattern of much of their work prevents formal accountability to anyone organisation or stakeholder (NHF 1995).

Partnership with, rather than formal accountability to, local authorities is seen by many as the key to a successful venture. Many RSLs now have a range of partnerships with different local authority departments not just housing. Although they often deliver successful projects, whether they deliver effective accountability is more contentious.

RSLs enter into a wide range of contractual relationships with local authorities. They are accountable to them for planning, building and environmental health matters and most have nomination agreements which enable the local authority to secure homes for waiting list applicants.

The relationship between local communities and RSLs is becoming increasing important. RSLs are now a major stakeholder themselves in many communities and local support for their activities is often a crucial factor in the successful implementation of development strategies. Despite this importance most RSLs generally do not have a good track record on accountability with local communities. The competitive environment in which they work and their steady geographical spread has often lead to situations where many of them are working side by side in one community. Multi landlord estates are now quite common but this does not always benefit local communities. These issues are now of growing benefit for many RSLs and have already prompted national debate. An important quote on the subject is by Barlett 1995;

Housing associations are a big business. In some areas they are the most significant investor. Their impact on the local community is considerable…because of their size and local significance they have an obligation not only to be answerable to the local community, but also to contribute positively to its development.

There is a danger of housing associations becoming less accountable exactly at the time when local authorities and their successors, become more accountable. A gulf will be created as housing associations become more regional and national, but local authorities become local, setting up organisations with minority local authority shareholding and resident membership.

Ken Barlett, Joseph Rowntree Foundation: Much in evidence –

selected submissions to the Governance Inquiry, NFHA, 1995

Not all RSLs would agree with this statement, some see themselves as housing organisations and nothing more, others view investment programmes as simply an extension of an existing service rather then an mechanism for accountability.

Accountability to local communities is not just about providing a broader, more proactive service. RSLs exert considerable influence over neighbourhoods simply through the ownership and management of a large proportion of the housing stock. They can strengthen or undermine communities by the way they provide and manage the tenancies they create. Accordingly to the National Housing Federation some RSLs have found themselves in conflict with local communities when trying to meet local housing needs through new provision. Bringing representatives of local communities on to the boards of RSLs is one way in which both parties broaden their skills and experience; this can in turn improve accountability practice. This method can only usually be applied for those RSLs with a relatively small community base in terms of area.

RSLs are increasingly working in partnership with a broad range or agencies to deliver their housing programmes and secure the effective management of their stock. Partners include health authorities and trusts, special needs agencies, care organisations, social services departments, voluntary organisations, private developers, suppliers and consultants. In some cases accountability to partners can be delivered exclusively through performance of the terms of a contract however, often less formal mechanisms are required (ODPM 2003).

Although working in partnership has been standard practice for many organisations, the accountability aspects of multiple relationships is less well developed. Often RSLs can be the lead partners in these arrangements. They usually bring with them major funding and hold a key part to the success or failure of individual projects. Large national organisations have a very broad range of relationships with their partners but can find it difficult to deliver accountability to them in practice because of their wide coverage. On the other hand they often have the resources which the smaller organisations lack. Smaller RSLs tend to focus their relationships withy partners mainly on contractual arrangements (Ashby, Duncan ; Underwood 1997).

There has been much debate in recent years about the role of shareholders in RSLs. Views presented by various bodies have ranged widely between those keen to retain and expand it, to maintain a vital support base and a democratic structure and those who feel it should be abolished because it is largely irrelevant to the way associations are currently controlled.

Those which are keen to abolish shareholding membership or at least limit it to a small number of committed individuals selected from the board often raise concern about the domination by sectional interests. Those arguing for retention and expansion of shareholding membership argue that all shareholders have specifically signed up as supporting the aims of their RSL.

In practice those RSLs which promote open membership on their boards have rarely encountered any problems of domination by sectional interests. The real issue should be concerned with whether or not RSLs should be democratically accountable to their members. Malpass 1997, states that some large numbers of tenant members achieve a higher high percentage turn out than in local authority elections. It could be argued that shareholders receive better participative accountability than the representative accountability of local authorities.

As well as the main stakeholders discussed in this essay, there are others who have a direct interest in accountability issues. These include staff, funders and regulators. The role of these stakeholders is discussed briefly in the following paragraphs.

In most RSLs paid staff undertake the majority of tasks required to deliver the objectives of the organisation. Staff can have considerable influence on the RSLs performance and image. Ensuring a role for them in organisational planning and decision making makes good sense. Consultations through staff councils, trade unions, staff newletters, independent opinion surveys, individual appraisals and more informal exercises are now frequently practised by RSLs.

Staff have contractual arrangements with their employers. A small number of chief executives also hold places on their boards, tying them into legal responsibility for their actions. This practice can raise problems of accountability and conflict of interest.

RSLs have close working relationships with the organisations which fund and regulate them. Regulators mainly the Housing Corporation dictate good practice and require information to monitor organisation performance. Funders enter contractual relationships with organisations involved in development. Accountability to funders and regulators is entirely prescribed either within a loan agreement or by statute.

The accountability of registered social landlords has been in the public spotlight for some time. As I have demonstrated different stakeholders play different roles in the activities of registered social landlords. Each stakeholder group may have different expectations and demands. Balancing the various interests involved is a tricky business for the most of these stakeholders, particularly where they conflict with each other. There are therefore no simple templates to ensure accountability. Although RSLs inevitably need to pay close attention to the requirements of their funders and regulators, who hold the ultimate sanction over their activities, many of them also need to build and maintain effective relationships with the local authorities in which they work and bring tenants and local communities closely into their operational practice.

The effectiveness of a RSLs accountability practice as a whole may well depend as much on the interrelationship between its different stakeholders as it does on the range and depth of their involvement as individuals or groups. To achieve wide accountability is not enough for an RSL to have the appropriate mechanisms and policies in place. It is vital that an RSL should be widely seen as being accountable by all interested parties. This involves actively promoting the organisation and its accountability in a positive way.

In order to ensure the correct mechanisms are in place to deliver accountability to each group of stakeholders RSLs need to ensure they find solutions to the challenges presented by each individual distinctive group.

Reference List

Ashby, J, Duncan, P ; Underwood, S (1997) Action for Accountability

Davis, H ; Spencer, K (1995) Housing Associations and the Governance Debate, University of Birmingham

Day, P ; Klein, R (1996) The regulation of social housing, NHF

Malpass, P (ed) (1997) Ownership, Control and Accountability; the new governance of housing, CIH

Mullins, D (1997) From Regulatory Capture to Regulated Competition: An Interest Group Analysis of the Regulation of Housing Associations in England, in Housing Studies Vol.12 No.3 1997

National Housing Federation (1995) Competence and Accountability, NHF

Tickell, J (1999) Mapping the Maze: The regulation of RSLs, NHF