Something is awry

A series of heavy-handed investigations by the Scottish Housing Regulator (SHR) has resulted in the departure of key staff and long-serving local committee members from some of Scotland’s best-performing Housing Associations (HAs) and racked up six-figure consultants’ bills to be met by Glasgow’s poorest tenants. As one HA manager put it: “Hundreds of thousands of pounds are being spent on usually fatuous, unnecessary enquiries and investigations instructed by SHR, carried out by ridiculously expensive consultants … and paid for by tenants, amongst the poorest in society.”

All of which might be fair enough if the investigations uncovered evidence of shocking malpractice, woeful mismanagement or sky-high rents. But generally speaking, they haven’t.

Twelve Housing Associations have had intensive SHR involvement in the last five years and all are community-led organisations, prompting the suspicion that the regulator has a mission to professionalise the unique tenant-led associations that exist in Glasgow and beyond.

One SHR intervention began in 2017 when allegations prompted the suspension of an HA director and a nine-month investigation. After he was able to present evidence in his own defence, the regulator (via HA solicitors) offered him one year’s net salary for “loss of office”. The SHR refused to deal with him directly, key members of the volunteer committee resigned and now the majority are “parachuted in” regulator appointees. The bill for intervention by London-based consultants is estimated, by the regulator, to be over £100k.

The former director, who has 40 years involvement with the housing movement and wants to remain anonymous, said: “In my final years in charge, we had some of the lowest rents, lowest rent increases, best and quickest repairs, most professional care services and highest levels of tenant satisfaction in Scotland. There were no risks of any significance, but tenants must pay the price of regulator intervention. Our tenants did not need protection by the SHR, they needed protection from it.”

Another community-led Glasgow-based HA spent two years trying to comply with an “over-exacting” SHR. Their director also wants to remain anonymous and said: “We were looking to refinance and needed consent from SHR. At their insistence we commissioned a consultant to carry out a governance review who rated our performance as good. SHR wouldn’t accept that consultant’s report and wouldn’t explain why. The issue has gone backwards and forwards with slow responses from them. Eventually they stated there was ‘material non-compliance’ to regulatory standards but wouldn’t give details. Then the Covid lockdown kicked in, and now we’re stuck. We’ve spent £100k on regulation over the last two years – money that could have been spent on new kitchens. We feel there’s a desire to professionalise committees – to have accountants and lawyers. We see that as unhealthy because with unfamiliar ‘experts’ present, there’s a danger governance gets deferred to them. It seems local people aren’t trusted any more.”

Yet another Glasgow-based HA director told me: “If you look at our engagement plan on the SHR website, you’d think our Housing Association is a basket case. But amongst 150 RSLs (Registered Social Landlords) we have some of the lowest rents, lowest costs per unit, no debt, 96% tenant satisfaction and we met energy-efficient standards a year early. Still the SHR criticised us for ‘widespread failures’.”

Bizarrely, it was complying with SHR guidelines that first brought them to the regulator’s attention: “They queried our relatively high number of new committee members. But we did that because SHR had urged HAs not to have folk on committees for life.”

Not surprisingly, these disputes finally bubbled into the public domain.

In January 2020, an editorial in the specialist Scottish Housing News talked of “considerable disquiet” within the sector and “heavy-handed interventions” by SHR staff with “one common theme: bullying”. The paper reported allegations that “the style of work employed by the SHR is aggressive, over the top and frightening”.

BRUCE Forbes, director of Angus Housing Association for 24 years, told Scottish Housing News upon his retirement: “The SHR is tearing apart some housing associations for relatively minor errors or indiscretions that could’ve easily been resolved by constructive dialogue.”

In February, a Freedom of Information request was lodged which found that only one in 12 of the decisions to take statutory action in HAs had been sanctioned by the SHR board. The rest were taken by regulator staff.

In April, SNP MSP James Dornan, convener of Holyrood’s Local Government and Communities Committee, wrote to George Walker, chair of the SHR, asking how the organisation audits the impact of inspections on RSLs and tenants. Around the same time, the Scottish and Glasgow Federations of Housing Associations started consultations, prompted by complaints about the SHR by their members.

So what’s happening?

All the Housing Associations under investigation are small, hyper-local and community-led, with “volunteer” boards composed of local tenants rather than lawyers, accountants and professionals who live elsewhere. Some think there’s an agenda to encourage mergers in the (unproven) belief that big is beautiful and to install more middle-class professionals in place of savvy, local, working-class volunteer committee members.

Others think a big factor was the chill that went through the whole sector after the 2008 banking crash when the SHR was created. That context could have prompted an over-zealousness by regulator staff who, according to HA directors, also lack management experience in the sector. The regulator disputes this, saying “a number of staff have direct experience of working in social landlords as officers and board members”.

Nonetheless, it seems ironic that small, volunteer-led RSLs must comply with every aspect of 90 regulatory requirements, while the SHR itself is exempt from the more exacting standards expected of larger regulatory organisations, because of the “small body” provisions of the Code of Audit Practice.

Still, there’s no denying the Regulator has uncovered some big problems. At Ferguslie Park HA, £533k was paid to staff in severance payments. As a neighbouring housing director put it: “Staff had gripes and instead of dealing with them, the HA decided to pay them off. The SHR had its fingers burnt. But problems like that are few and far between.”

It’s true, too, that some local residents have gripes with HA performance. When Brenda Wilson, a former committee member of Glasgow’s Thistle Housing Association, revealed £500k had been spent on fees for SHR-approved consultants (money that must be found by tenants), the Toryglen Residents’ Blog was instead outraged that Thistle’s improvement work on local houses is still ongoing, despite a promised completion date of 2016.

THE SHR says organisations which need interventions have, “complex, significant and deep-rooted weaknesses, a failure of leadership”, and workplace cultures which left them “vulnerable to poor behaviours and incompetence”. It says board approval is only needed when a landlord’s homes might be transferred to another RSL and intervention is used “as a last resort, when there has been significant failure by a landlord … to protect the interests of tenants”.

SHR was unable to give a total cost for their interventions but referred to individual reports, one of which put the cost of an external manager for 15 months at £118,722.15 excluding VAT, adding: “These costs were partly offset by wider savings in staffing levels and substantial improvements in performance.”

Housing Association directors argue that complex, time-consuming engagements with the regulator demand vast amounts of staff time.

The SHR says the vast majority of engagements with the 186 social landlords it regulates are “positive and constructive”, and cites the following quote from Gordon Laurie, chair of Dalmuir Park Housing Association: “Dalmuir Park has been transformed since the regulator’s intervention. The expertise and knowledge of the statutory manager and appointees have been invaluable. By supporting the committed, locally elected members and a talented, enthusiastic staff team, real and lasting improvements in governance, performance and financial viability have been achieved.”

One housing sector – two very different accounts of SHR intervention.

So, what’s the solution?

Even the SHR’s fiercest critics believe a regulator is necessary and few argue for “regime change” as the first option.

Instead Housing Associations want the SHR to trust the general capacity of community-led housing associations, recruit folk with operational experience of running RSLs and start with quiet words of helpful advice instead of expensive interventions.

Would that be so difficult?