Reforming the Housing Executive could open up new opportunities for social enterprises and create new avenues for funding social housing, according to its Chief Executive John McPeake. The Housing Executive’s major priorities are set out in its three-year corporate plan.
“One of these priorities is to maintain and improve our own housing on behalf of our 90,000 tenants,” McPeake explains. The Housing Executive is investing about £160 million annually on its own stock, and when investment in new build and private sector grants are included the total expenditure grows to almost £300 million annually.
“This money is going into the construction sector, which has a very big and positive impact on the local economy,” he continues. “But, as public body, the programmes and services delivered by the Housing Executive are publicly funded, and looking forward, it is clear that there are more demands than there are resources to meet these demands.” Change is clearly required in order that Northern Ireland’s housing needs can be sustainably met over the years ahead and without placing an unacceptable burden on public finances. This is why Minister McCausland’s proposals for reform of social housing provision are so important, McPeake says.
On this fundamental review, the Housing Executive “very much” welcomes Nelson McCausland’s announcement in January. “The department engaged with us throughout the review period, so there was nothing of a surprise to us in the report,” McPeake says “We also welcome the assurances that the Minister has given regarding working closely with our tenants and staff on the proposed changes.
“We do think that change in social housing in Northern Ireland is both necessary and, in many respects, inevitable. This is because there is simply not enough public money to go around and there is a tried and tested alternative model in the form of housing associations.”
Taking the housing landlord side off the government balance sheet and turning that function into a social enterprise or a series of social enterprises can substitute “quite significant levels” of private funding for public funds. Replacing public money with new privately sourced funds will generate new options for the use of the available public finances and, at the same time, enable the new landlords to fund a wider range of activities.
“We welcome the review but it is not without its challenges,” he adds.
The Minister outlined four major changes. Firstly, the Department for Social Development will concentrate on policy and strategy. This is welcomed and will provide greater clarity moving forward.
Secondly, the Minister wants to create a new regional body to deliver non-landlord services e.g. funding the new build programme, providing grant aid to private sector households, and delivering the Supporting People service for the most vulnerable householders. “It makes sense to have a regional body delivering those services,” McPeake says. “The working assumption is that it will be the staff of the Housing Executive delivering those functions and simply moving across into a new body.” This will allow for a dedicated focus and a genuine strategic approach to the wider housing market.
However, the landlord side of the Housing Executive’s work is “slightly more tricky in the sense that significant changes are needed, including a cultural change which is never easy.” The Housing Executive has the legal right to borrow but is not permitted to do so as those funds would count as public money.
“If there was a way that the public sector landlord role was restructured to become a social enterprise model, or a series of housing associations, then it would allow for the access of private funds,” he comments. “That is quite an exciting opportunity because it would allow for some of the things we currently cannot do as a public body to be done in the future, but it will also mean a more commercial approach will be required in the delivery of landlord services.”
It is still very early days but many commentators have speculated that the reform programme will lead to the creation of several new landlords. However, in the reform programme there are no preconceptions on this issue and the final decision will be a matter for the Northern Ireland Executive following detailed analysis, option appraisal and consultation. He remarks: “We welcome the Minister’s commitment to fully engage with the Housing Executive’s board, our staff and our tenants as part of this consultation process.” That said, McPeake hopes that these new landlord bodies would be formed from the Housing Executive and become new ‘off-the-balance-sheet’ bodies such as housing associations.
Finally, the Minister has suggested the creation of a new rent panel and a stronger regulatory regime. The Rent Officer for Northern Ireland, Josephine Gardner, currently sets maximum rents for unfit dwellings and certain other tenancies but the new rent panel will have a much wider remit and “should go a long way” to providing existing and prospective tenants with assurances over future rent levels.
On the regulation issue, “our view has always been that regulation should be independent from the government department,” McPeake comments. “We accept that it is not the only option that exists and ultimately it will be, again, a matter for the Northern Ireland Executive to decide but we think having independent regulation, at least
arms-length regulation, protects the landlords [as] private bodies rather than being public bodies.” He adds: “If regulation is too tightly controlled by the public service, there is a risk that the bodies you create end up being reformed public bodies which would defeat the purpose of the whole exercise.”
Social enterprise model
As well as bringing in funding, the social enterprise model would also allow the Housing Executive’s reformed landlord role to be more innovative and to develop new services.
McPeake gives three examples. “We are a big spender in Northern Ireland. I think that in this reformed role, we could use that spending power much more creatively,” he remarks.
With more flexibility that comes from not being a public organisation, the new landlord bodies would be able to make decisions about how they use their funds. This could, for example, include investing in the creation and fostering the growth of community-owned businesses in housing estates and looking at how to procure services from these businesses, thus generating local employment opportunities.
His second point relates to maintenance.
“If you walk around the Housing Executive estates,” he contends, “you can by-and-large spot the properties that are not owned by us because more often than not they are the ones who have not had their gutters cleaned out in several years or they haven’t had double-glazing installed.”
The new social enterprise landlords could sell commercial services to private property owners on the estates at marginal prices and then reinvest the profits in supporting community development.
The third issue is the growth of predatory lending on housing estates, which is “giving us increasing concern at the moment.” McPeake explains: “We have many people living in poverty on our estates and I don’t mean that to be in any way disrespectful; it is simple statement of fact. For example, we have about 90,000 tenants and in four out of five households, there is no-one in paid employment.”
As these people tend to be unemployed, elderly or are otherwise at the economic margins, their budgets are often tight and they do not have the same access to high street financial providers that are available to the more affluent. “They are increasingly going to predatory lenders, often paying 4,000 to 5,000 per cent in interest rates,” he relates. “Some of these tenants, unable to pay, are being forced into criminal behaviour. I think as a social enterprise model, one of the things we should be looking at actively is creating a micro-finance solution where we step into that space, in partnership with others and we become the responsible lender of last resort.”
A social enterprise model would therefore give the landlord “a bit more flexibility, innovation and commercial outlook, without losing the public heart we have as an organisation.” Values matter in housing and throughout the change process, the Housing Executive wants to keep the values that have underpinned its work and make sure that these are “preserved and embedded in the new structures.”
Openness and fairness, objectivity and transparency stand out to McPeake. “We have an excellent record when it comes to treating people fairly,” he says in conclusion, “and we want to make sure, given the history of housing in Northern Ireland, we do not lose that.”