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June 17, 2009

Glasgow Housing Association heading for trouble

The Glasgow Housing Association (GHA) was created in 2003 as a transitional mechanism to take ownership of Glasgow Council’s housing stock and transfer it to around 50 community owned Housing Associations.  But GHA hatched plans to become a permanent and expanding empire and by over-reaching itself has angered Scottish Government and Glasgow Council

THE board of Scotland’s biggest housing association is set to quit, after a government watchdog accused it of a failure of leadership, The Scotsman can reveal.

Senior officials at Glasgow Housing Association (GHA) are on the verge of stepping down, after the Scottish Housing Regulator (SHR) questioned the organisation’s management and its strategic direction and purpose.

The regulator, which is answerable to ministers, is conducting an audit of GHA, which is due to be completed at the end of this month. It has already informed the syndicate of banks and building societies that provides GHA with a £725 million loan facility that it is prepared to take the strongest possible action.

Such action could plunge Scotland’s largest social landlord into turmoil and begin a process that could effectively end tenant and independent control of the organisation. GHA has 63,000 tenants and 26,000 factored homeowners.

The watchdog has the power to appoint or remove members from the association’s governing body, appoint a manager to provide leadership to the organisation and demand it produce a remedial plan of improvements. It even has the capacity to order a full inquiry, with a final report made to ministers.

Officials could be removed or suspended, and GHA’s land transferred to another social landlord.

The Scotsman has learned GHA officials believe they are the victims of a “political witch-hunt”, after a breakdown with key stakeholders in Glasgow City Council and the Scottish Government.

“They did not play the political game and did not bend the knee enough,” a source close to the bank syndicate said.

The warning of the possibility of statutory intervention was given during a meeting in Glasgow last week between Karen Watt, chief executive of the SHR, and Ian Sillars, of Royal Bank of Scotland and the manager of the GHA funding syndicate.

The source said: “If the purpose of the meeting was to reassure the funders, it had the completely opposite effect.

“In many ways, the regulator has demonstrated either breathtaking naivety or blind arrogance, or both. Any such statutory intervention and its financial implications could, because of the size of GHA and the numbers involved, plunge the entire social housing movement in Scotland into turmoil.”

It is understood that, while the SHR audit will accuse GHA’s board of a “failure of leadership”, it will recognise the continuing and significant improvements made in the quality of services provided to tenants.

As well as statutory intervention, the SHR is also considering whether GHA is able voluntarily to address issues surrounding its stakeholder engagement and strategic leadership. The perceived non-statutory solution would be to “strengthen” the GHA board by co-opting four additional independent directors and to appoint at least one “special manager” to work with the executive team to resolve weaknesses identified by the audit.

The audit – initially planned as a five-day “light-touch” exercise and now in its fifth week – is known to have caused a series of fractious stand-offs between Ms Watt and GHA’s tenant members and heavyweight independent directors.

Both independents and tenant members, including chairwoman Sandra Forsythe, have privately expressed the belief GHA is being penalised and punished for putting the interests of tenants at the heart of decision-and policy-making – instead of “playing the political game”.

The future of GHA has been the focus of much debate. Privately, some in both the Scottish Government and Glasgow City Council are said to be concerned about the power it wields and the way in which it is managed.

SHR began its review in May and will publish its findings in the next fortnight.

Under its guidelines on intervention, the SHR makes clear it looks at several key areas before deciding whether to take statutory action. These areas include financial failure; stock quality and investment failure; governance failures leading to and arising from mismanagement and misconduct; and poor service quality.

The guidelines classify intervention as a way of addressing “serious problems” at a social landlord where the body is “either unwilling or unable to deal with them”. They go on: “Sometimes we may need to use statutory powers to protect and support an organisation in tackling disruptive or hostile elements that threaten its stability.”

A spokesman for the SHR said: “I can confirm that our review of GHA’s progress since our inspection in 2007 is ongoing. We aim to publish our findings at the end of June. We will make no further comment until that time.”

A spokeswoman for GHA said: “The audit has given us the opportunity to demonstrate the huge progress we have continued to make in improving services for tenants and factored homeowners since the inspection report in 2007.

“We expect it will reflect the positive feedback we have received from our tenants on the significant improvements we have made.”

Debts, repairs and contract rows – GHA’s controversial six years

MORE than 80,000 local authority properties were transferred from Glasgow City Council to Glasgow Housing Association (GHA) in 2003.

The deal saw the city’s spiralling housing debts of more than £800 million written off, as GHA embarked on a comprehensive programme of demolitions, repairs, and refurbishments.

However, there has been criticism of the organisation’s management structures, with claims that some of the most deprived communities in Scotland have not been given the sweeping improvements they were promised.

The organisation, which employs around 2,000 staff, has had four chief executives in the space of just five years.

Smaller housing groups have condemned what they see GHA’s reticence to break itself up as part of a promised “second stage transfer” process.

In recent years, however, its relationship with the city council has suffered over its “arms-length” City Building organisation failing to secure maintenance contracts for the GHA after the work was put out to tender under EU rules.

Two years ago, Communities Scotland, the precursor of the Scottish Housing Regulator, gave the GHA a C grade, and urged it to foster improved relations with homeowners.

Tenant members form the largest grouping on the GHA board. On a day-to-day basis, GHA is led by a six-strong executive team, led by Taroub Zahran, who has been chief executive for the past two years.