Blog 20th April 2018

Blog 20th April 2018

In this week’s blog, I refer to: Impact Housing Association; the Riverside Group; the Regulator of Social Housing; the Ministry for Housing, Communities & Local Government; Rory Stewart MP; the Cumberland & Westmorland Herald; Winston Churchill; Local Housing Companies; seminars; and training.

I have written previously in this blog about the planned takeover of Impact Housing Association by the Riverside Group. I am a former Chair of the Association and continue to be a shareholding member.

Shareholding members have now been told that there will be a general meeting on 4th June 2018 that will be asked to approve changes to the rules that would be required for the proposed takeover by the Riverside Group to take place. It seemed to me that this appeared to conflict with the statement that the Board had already entered into a binding voluntary undertaking to merge with another housing association that was an irrevocable commitment to the Regulator of Social Housing. At the recent briefing meeting for shareholding members, one of the members asked what would happen if they did not approve the rule changes but was not given an informative reply. I therefore decided to follow up this issue outside the meeting.

I am grateful to Impact’s Acting Chief Executive, Geraldine Kay, who has answered my questions with an informative explanation of the situation as follows:

Q1 - In what way is the voluntary undertaking binding?

“The voluntary undertaking is binding in that it has been formally agreed by the Regulator. In doing so, the Regulator has made an assessment as to whether or not the terms of the voluntary undertaking were satisfactory to meet its concerns.

“Impact is subject to formal and regular regulatory engagement to monitor the progress towards meeting its voluntary undertaking and by which the Regulator assesses whether Impact is honouring the voluntary undertaking in the agreed timeframe.

“We are mindful that the existence of a voluntary undertaking may not prevent further enforcement activity. This can include circumstances in which the Regulator considers that the progress against the voluntary undertaking is unsatisfactory or insufficient to resolve the problems or where urgent or immediate action is necessary.

“Finally, the Regulator states that it is likely to exercise its intervention or enforcement powers where the provider has failed to honour a voluntary undertaking to the satisfaction of the Regulator.”

Q2 - What would happen if the shareholding members voted against the merger / proposed rule changes?

“I cannot be specific about what would happen in such circumstances of shareholding members voting against the grouping as it is highly likely that Impact would then be subject to the further requirements of the Regulator. As I have noted above, the Regulator states that it is likely to exercise its intervention or enforcement powers where the provider has failed to honour a voluntary undertaking to its satisfaction.”

If I understand these answers correctly, the shareholding members can expect to be told that they must either approve the proposed rule changes; or place Impact in a position where it could be ‘taken over’ by the regulator with unpredictable consequences. I don’t think this is satisfactory. I still think that the Board should have called a general meeting at an early stage to make a full report to the shareholding members and to seek their approval before making the binding voluntary undertaking. Indeed, on my reading of the rules of the association the Board has exceeded its authority as it should have been up to the shareholding members to decide whether to enter the binding voluntary undertaking.

In a previous blog I have expressed concern about some of the statements that Impact have made in their tenant consultation that I think may be misleading. I therefore asked the regulator if they were satisfied that the consultation was accurate and balanced. I am grateful to them for providing me with the following interesting response:

“The removal of the constitutional consents regime as part of de-regulatory measures which came into force in April 2017 means that non-profit registered providers no longer need to seek the regulator’s consent before changing their objects, amending their governing document to make provision about the distribution of assets to members, becoming or ceasing to be a subsidiary or associate of another body, or restructuring.

“The Regulator of Social Housing does not have a role in approving the consultation materials and so has not done so.”

I have two thoughts about this:

• There appears to be a conflict between the information provided by Impact that suggests that the regulator is very ‘hands on’ and the information provided by the regulator that suggests that they are very ‘hands off’. What is the reality?
• The Board, despite having been found unfit for purpose by the Regulator and despite there being more positions vacant than filled, now appears to be accountable to no one and has no constraints on what it can do. This doesn’t seem right to me!

It appears to me that someone in the Ministry for Housing, Communities & Local Government and / or the Regulator of Social Housing should look at how housing association mergers are managed in England with a view to ensuring that there is more transparency and better governance.

My Member of Parliament, Rory Stewart, wrote an interesting piece in last week’s ‘Cumberland & Westmorland Herald’ in which he concluded that:

“We cannot build a contemporary politics of nostalgia for Athens, Rome, revolutionary France or even 19th century Britain. We cannot build optimism from a culture which we no longer honour, or which is no longer alive. Our challenge, therefore, is to settle on a truthful, living modern identity and build from that foundation a real purpose which can energise our politicians and mobilise our nation. Or we will be condemned to an ever-emptier politics seasoned with a diet of books and films about Winston Churchill.”

I find this especially interesting as it appears to me that most contemporary politicians, including most in government, are leaving the real world to wallow in jingoistic nostalgia.

I am currently putting together our seminar on ‘Local Housing Companies and Development’ that will be held in London on 8th May 2018. This seminar will explain and examine why and how local authorities are setting up local housing companies and other delivery vehicles. It is proving popular, but we still have a few places available. For further information or to make a booking, please click HERE

Next week I will be provided an in-house session on Local Housing Companies and Development for staff of a London Borough Council. For further information about in-house training on local housing companies and development, please click HERE

Our next seminars will be on:

• All You Want to Know about Service Charges in Social Housing
• All You Want to Know about Scottish Social Housing Finance

For information about all our seminars, please click HERE