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June 29, 2016

Federations can fail

In the aftermath of the EU referendum there have been many calls for Westminster to recognise how out of touch it has become with the regions of the UK and begin to move to a more federal system of government. The implicit assumption is that federal systems are more democratic because decisions are taken closer to the people. But nothing is that straightforward and the argument that federations ‘ necessarily lead to’ the whole being greater than the sum of its parts’ is neatly skewered in this article by Colin Wiles.


Inside housing, by Colin Wiles

What is a Federation? It’s a coming together of individual elements to make a greater entity, based on Aristotle’s “The whole is greater than the sum of its parts.” In a Federal structure individual members are, or should be, treated as equals, regardless of their size, with identical voting rights. In return for giving up some of their independence they enjoy the protection and strength that the unified body brings.

In the great scheme of things the National Housing Federation is a relatively small federation, and it is a trade federation not a political federation, but the principles are the same. Historically, the two largest political federations have been the USA and the USSR. Under the US Constitution laws are made by a Congress of two chambers, a House of Representatives and a Senate.

Members of the House are elected in proportion to the population of each state, but each state also elects two Senators, regardless of population. So California with 39 million people and Wyoming with 600,000 people each send two Senators to the Senate and both states have an equal say. It is a fundamental principle of the US constitution that large states cannot dominate or bully smaller states.

The Constitution contains a number of checks and balances that result in the House, the Senate, and the executive power of the President being roughly in balance with each other. The tenth amendment states, “The powers not delegated to the United States by the Constitution nor prohibited by it to the states, are reserved to the state respectively, or to the people.” In other words, there are limits on the power of the United States, and the states reserve a high degree of independence to themselves. They can decide, for example, whether to kill their own citizens. The United States cannot impose its will on individual states if it is unconstitutional to do so.

By contrast the USSR fell apart because the smaller republics were dominated and overwhelmed by the largest member, Russia, and they sought to become independent. There were no checks and balances to prevent Russian domination.

The National Housing Federation’s constitution, its Articles of Association, states that one of its key objects is to “ the representative, co-ordinating and trade body in England for organisations which provide or manage homes”, and that, “The Federation shall have one class of members.” It confirms the Federation’s “..commitment to fairness of representation, equality and diversity.” When important decisions have to be taken at general or annual general meetings, “..every member present (either by authorised representative or by proxy) shall have one vote.”

 It’s important to emphasise these three key principles in the NHF constitution: one class of members, fairness of representation and one member one vote.

The Right to Buy offer has driven a wedge through all three principles. It’s clear that some members have been consulted more than others to the extent that that it has created at least two tiers of membership. It’s clear that the ballot does not allow for fair representation and it’s clear that one member one vote has been replaced by one home one vote. Using the US analogy it would mean California having 65 times as many Senators as Wyoming.

The process has been a violation of the principles of federalism, and it could be argued that the Federation has breached its own constitution. Many people I talk to take the view that the consituent parts of the Federation have become unbalanced and that the Board and the executive team have been effectively “taken prisoner”by the larger associations, because they pay the bulk of the fees and their withdrawal would destroy its finances. Smaller members have been sidelined. It’s a case of he who pays the piper plays the tune. That is not how a good federation should work.

By its unilateral action, the NHF has certainly created a deep split within the social housing sector. Whether it, the Federation, will survive in its present form is hard to say.