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The push to professionalise the sector shows shows the government’s lack of strategy on regulation
Armed with an array of new powers, and against the backdrop of negative press for the sector, politicians are beginning to act a bit like a bull in a china shop, writes Matthew Bailes, chief executive of Paradigm
When this government first assumed power back in 2010, the then Department for Communities and Local Government (DCLG) ministerial team was determinedly anti-regulation. The Tenant Services Authority was shuttered and access to the Housing Ombudsman was made available only to those who had been through a so-called democratic filter. Sober arguments about the case for consumer protection were brushed aside.
Roll the clock forward 14 years and things look very different. The Grenfell tragedy and the death of Awaab Ishak have shifted the debate decisively. Ministers are now adding to regulatory requirements with the missionary zeal that they showed when sweeping them away when they first took office.
This has led to some positive changes, including the reintroduction of consumer regulation and a strengthened building safety regime.
However, armed with an array of new powers, and against the backdrop of negative press for the sector, politicians are beginning to act a bit like a bull in a china shop. There’s lots of frenzied activity, but some of it risks causing more harm than good.
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It seems to me that ministers are making two fundamental errors.
First, the process for deciding regulatory burdens should be a bit like agreeing a business plan. You should look at what you want to deliver, and how it is going to be paid for, in the round. That is the only way you can understand the trade-offs.
What we’ve got is the opposite: a flurry of new regulatory requirements – which have not always been properly costed – but no clarity on the big building blocks (Decent Homes 2, zero carbon and rents).
“The process for deciding regulatory burdens should be a bit like agreeing a business plan. You should look at what you want to deliver, and how it is going to be paid for, in the round”
Meanwhile, housing providers – whose financial capacity has already been eroded by a combination of rent cuts, fire remediation costs and interest rate increases – face further cost increases and too much uncertainty about the future. Unsurprisingly, this has led to substantial cuts in development at a time when the need for new homes is becoming ever more acute.
The second mistake is also a familiar one. It is the belief that politicians and regulators are well placed to dictate not just what regulated businesses should be trying to achieve, but how they should do so. Slowly but surely, what is supposed to be an outcome-focused regime is becoming one that specifies not just outputs, but inputs.
It is very difficult to get this sort of ‘command and control’ approach right. It usually leads to inefficiencies, less innovation and blurred accountabilities.
The recent draft direction on “competence and conduct” illustrates this problem.
It fails the most obvious test of all – which is whether the requirements are clear. Unsurprisingly, in trying to draft something that dictates to businesses of widely varying shapes and sizes exactly how to train their staff, the Department for Levelling Up, Housing and Communities has tied itself in knots. It also risks providers spending a lot of money only to make things worse.
The problem is not the drive towards professionalism in a general sense. That is a good thing. If we are going to improve services, we need to invest in our people.
However, obliging a wide range of staff, regardless of their precise role and experience, to undertake training in housing management does not amount to professionalisation of a sector. For example, it does very little to ensure that providers have the asset management skills they need.
Then there are the unintended consequences.
“Labour will need providers to be motoring on all cylinders quickly if it is going to achieve its housing objectives”
It is inevitable that some experienced staff will leave or retire to avoid spending years in college. The requirements will also create entry barriers to the sector. This is another sign that the government has lost its bearings. The rationale for consumer regulation is that customers have little leverage over near-monopoly providers. Preventing said providers from recruiting staff from sectors that compete for market share is, self-evidently, likely to deprive them of some of the skills they most need.
This approach to regulation will leave an incoming Labour government with a problem. They are likely to inherit a sector spending much of its time, and money, trying to make sense of some poorly thought-through new requirements, rather than focusing on the big-ticket items like investing in existing homes and new supply.
And because, in aggregate, all these new requirements look suspiciously like more state control, they might also inherit a housing association sector that is back on the government’s books, along with somewhere north of £100bn of extra debt.
So, what should a Labour government do?
I don’t think it has the luxury of a lot of time to sort out these problems. Labour will need providers to be motoring on all cylinders quickly if it is going to achieve its housing objectives.
This points to an early top-to-tail review of the government’s strategy for the sector. It would need to include the various directions issued by the current government (which are, after all, expressions of Conservative policy), as well as the role of the ombudsman, future Decent Homes requirements, net zero, funding for new supply and, of course, rents.
Such a review would be a significant piece of work. But the sector needs the certainty that cannot be delivered by an incremental approach. It is time for a more strategic outlook and some long-term thinking.
