I am privileged to be working with a group of people in Liverpool on a project to bring empty homes back into use. On this 50th anniversary of Cathy Come Home, it is called Coming Home. At our first board meeting recently we spent some time discussing our values and principles. We recognised that once agreed they would stay constant, the foundation stones upon which the organisation would be built. I have said before that having strong values make hard decisions easier to make.
The custodian of values and social purpose in housing associations is the board. It is responsible for making the difficult decisions on strategy and policy in the current climate based upon those values. If you read most of the housing media, attend conferences or listen to housing leaders you could be forgiven for thinking that it is the executive’s role to decide the future direction of a housing association. Obviously executives have an important part to play but ultimately non-executives are responsible for these decisions.
I cannot remember a time when the role of non-executives has been more difficult. At every board meeting we are being faced with issues that balance the financial needs of the organisation against political directives and social purpose. Should we continue to develop a programme with is based upon the ideological obsessions of the government? Should we introduce ‘pay to stay’? Should we allow groups and individuals to be excluded from our homes because of benefit changes and government policy? These are just a few of the debates that have taken place at many housing association boards recently. At least I hope they have taken place. Such decisions cannot be left to the whims of an executive, however principled.
One of the most difficult things to say at a board meeting is ‘no’. But that is exactly what board members should do if decisions like the ones above compromise our social purpose. In my career the development juggernaut has always been the most difficult to stop. We are now being told that we must develop according to the government policies even though they do not provide homes for people in housing need on low or no incomes. It is suggested that building anything in a housing crisis fulfils our social purpose and values. Then there is the threat that if we don’t build the government will take the money away and withdraw their support. This is rubbish. In making decisions about development we should ask two questions. Does it make a financial return based upon our viability assessments, and does it make a social return based upon our values and social purpose? There are other questions of course, but these are the most crucial. If the answer to them is no, then we should not proceed.
Many associations have failed because they made poor investment decision in the past. Often where boards have not acted as a brake and moderated the over-ambitious plans of a chief executive. Boards should check carefully the claim that investment in other tenures or areas will continue to fulfil social purpose by making a profit. Some years ago my own association made such a decision to invest in commercial development. To date this has cost the association over £15m in write-offs and impairment. Social housing has paid for these poor decisions. We should remember that it is often social housing that provides the financial foundation for many investments today.
Post-Brexit, the chances of failure have increased and the risks are greater. It is no surprise that private builders and developers have reduced their exposure. In the past housing associations have developed more in these circumstances. But that was in a time of higher grants when most development was for social rent. With low or no grant, and in a fluctuating housing market, the risks are increasing. Hence the downgrading of some credit ratings.
Almost everyone but the government now realise that this is the perfect time to invest in social rent homes. Such investment would boost the economy in so many ways and allow housing associations to see a social return on their investment. Until then I would urge caution. Just building to fulfil the government’s obsession is risky and will not fulfil our social purpose. Yes, it is a hard decision to make, and adds pressure to the role of board members. But to paraphrase a leading politician, real pressure is not having a home or a job. Real pressure is not being able to afford to pay the rent or to eat. Boards should be working to reduce this pressure by calling for the investment in homes that people can really afford. It is after all written in our values and social purpose.