1. The W5 of social housing regulation Seminar: The future of rent policy, scrutiny and regulation in Northern Ireland's social housing Dr Jenny Muir 29 th September 2014

2. Contents  What is regulation? What is the purpose of social housing regulation?  Why do we regulate?  Who should be regulated? And who should regulate?  Where and when should regulation take place?  Final thoughts Plus two ‘reference’ slides

3. What is regulation?  To regulate: ‘Control or supervise by means of rules and regulations’ (Oxford Dictionaries online)  But I prefer….. Regulation = measurement + consequences

4. What is the purpose of social housing regulation? ‘Our statutory objective is to safeguard and promote the interests of current and future tenants, homeless people and other people who use services provided by social landlords’ (Scottish Housing Regulator, 2014: 4) - ‘other people’ including Gypsies/ Travellers and owners (who receive factoring services) Cave Review (2007) three principal objectives: To ensure continued provision of high quality social housing To empower and protect tenants To expand the availability of choice of provider at all levels in the provision of social housing

5. The purpose of social housing regulation (2) CLG (2010) Review of Social Housing Regulation: No ‘competitive pressures’ (market mechanisms) to ensure good services – regulation as substitute for the market The presence of ‘substantial public subsidy’ – use of public funds The private sector lends to housing associations on the basis that they are regulated – supporting a mixed funding regime.

6. Why do we regulate? (1)  Nature of the housing system: We have a fragmented and financialised social housing system Fragmented: multiple social landlords, needs consistency between providers in the interests of social justice Financialisation: lenders need assurance  Accountability: Of various kinds: political, to the public in general (use of public funds and a public asset), to tenants and other service users, to lenders, to professions (ethics and competence)  Wider community impact: The consequences of poor housing management can have a wider detrimental impact on a neighbourhood

7. Why do we regulate? (2)  ‘Choice and ‘voice’ for tenants: A fundamental principal of tenant involvement in general: less choice should mean more voice as the price of an exit option is high How much choice do tenants have? Very little if any choice of landlord on allocation; transfers hard to get - BUT Cave (2007) lists: o Choices over where they live o Choices over how services are provided o Choices over different types of service, at different prices o Choices of over how to progress to ownership o Choices over management and governance [final slightly changed]  Finally…. to act on the results of regulation: Regulation and poor performance: various tricky options Regulation and policy: how often do the results of regulation result in policy change?

8. Who should be regulated?  Social housing: Common regulation for all social housing providers? HOWEVER..... Differences according to financial structure? These are covered in English and Scottish approaches – greater emphasis on financial management for RSLs  Low cost home ownership?  Private sector ‘affordable’ housing?  Private rented sector?  What is the basic criterion? – use of public funds? Viability for lenders? Service standards?

9. And who should regulate?  Organisation: DSD – with or without independent advisers Arms length statutory body, appointed Board Contract out to private sector? [ad hoc or whole operation] Cave (2007) argued against CLG regulating social housing because: It would needlessly ‘politicise’ the process It would add to regulatory risk as perceived by lenders It would cast doubt on the current ‘private sector’ classification of housing associations (this has also been an issue in Scotland)  Who should be part of a regulatory team? Civil servants? great and good –appointment system? Role of tenants: part of co-regulatory structures in England and (recently) in Wales; statutory duty to involve tenants and other service users in Scotland; one of 4 principles in Irish Republic’s new system

10. Where and when should regulation take place? (1) i.e. the type and frequency of regulation  Risk-based regulation – ‘risk-based and proportionate’ is a common phrase: Risk to whom or what? o Viability of the organisation (England) o Risk to the interests of tenants and other service users (Scotland) o Acknowledgement of collective risks e.g. to the sector, to particular communities, which the new regulatory system will take into account (Wales) – current NI process includes thematic inspections/ risks o Irish Republic thinking in terms of financial risk as they are in the process of introducing private finance to the social housing system How is risk assessed? And by whom? What if risky behaviour is missed? Role of whistle-blowing

11. Where and when should regulation take place? (2) – Cave’s approach ‘The review concluded that no single approach was capable of dealing with the regulatory problem of social housing. There should instead be a combined approach based on:  eliminating unnecessary regulation  encouraging co-operative activities by providers, such as voluntary benchmarking  having providers supply data to the regulator, which can investigate further following a risk-based analysis, and then apply a graduated scale of regulatory interventions  maintaining a quick response capability to deal with emergency situations, where tenants are at serious risk or if a provider is financially endangered’ (Cave, 2007: 12-13).

12. Where and when should regulation take place? (3)  Co-regulation: England: ‘self-regulation plus tenant scrutiny’ (Smedley, 2012) for HCA consumer standards; regulator will only intervene in cases of ‘serious failure’ against these standards – but the regulator can commission inspections from the ‘open market’ Wales: also appears to include the working relationship between HAs and the Regulatory Board The term is not used in Scotland or the Republic; the Scottish system has a statutory obligation to involve tenants and other service users in the process – including regulation of the Scottish Social Housing Charter  The resource implications of co-regulation: shifting the costs from government to provider, or making better use of what should be done anyway?

13. Where and when should regulation take place? (4) ‘Under the new regulatory framework [in England], self- regulation implies transparency, sharper internal accountability and a power shift away from the executive to governing bodies and tenants. For all but the most progressive providers this is likely to represent significant cultural change which needs to be understood and managed’ (Smedley, 2012: 6) Is Northern Ireland up to this challenge?

14. Final thoughts  Regulation = measurement + consequences  Regulation should protect the public interest that we all have in a functioning social housing system  Regulation is necessary and important at least partly due to the nature of our housing system (fragmented and financialised) but also for accountability and for tenant and service user ‘voice’  The results of regulation need to inform policy and strategy (as well as taking action against poor performers)  The approach of ‘risk-based’ regulation raises many questions and requires careful definition  Is co-regulation a progressive new way to give Boards and tenants more power; or merely a cost-cutting exercise?

15. ProvidersRegulation England‘Registered providers’: HAs, private organisations, councils, arms length management organisations Homes and Communities Agency ScotlandRegistered Social Landlords including HAs and councils Scottish Housing Regulator; must consult Accounts Commission for LA landlords. Scottish Social Housing Charter = additional safeguard WalesHAs and councilsWelsh Government (HAs) and Wales Audit Office (councils) – and Regulatory Board for Wales oversees new regulatory framework NI current26 registered housing associations; NIHE DSD all social housing; NIAO and RQIA NI PWC review 2011 Housing associations; Social Enterprise landlord (tenant majority on Board) New arms length organisation, for all social housing NI SHRP (future) Housing associations; NIHE replaced by new (ordinary) housing association(s) DSD etc all social housing (??) Irish Republic Local councils; HAs and co-ops (several large, most very small - Approved Housing Bodies) LAs: DECLG; AHBs sanctioned by DECLG; Housing Agency to run Voluntary Regulation Code and statutory system from 2016

16. References Cave, M. (2007) Every Tenant Matters: A review of social housing regulation, London: DCLG. CIH (2012) How to prepare for regulatory reform: Tenant engagement and scrutiny, Coventry: Chartered Institute of Housing. CLG (2010) Review of Social Housing Regulation, London: Department for Communities and Local Government. DECLG (2013) Building for the Future: A voluntary regulation code for Approved Housing Bodies in Ireland, Dublin: Department of Environment, Community and Local Government. DSD (2006)Revised Regulatory Framework for Housing Associations in Northern Ireland, Belfast: Department for Social Development. DSD (2011) Review of the Northern Ireland Housing Executive: Summary of the strategic review of options for future service delivery, Belfast: Department for Social Development. DSD (2014) Research and analysis undertaken by the Department for Social Development of the potential reform of social housing structures in Northern Ireland, Belfast: Department for Social Development. HCA (2012) The Regulatory Framework for Social Housing in England from April 2012, London: Homes and Communities Agency. PriceWaterhouseCoopers (2011) Review of the Northern Ireland Housing Executive: Strategic review of options for future service delivery Belfast: Department for Social Development. Scottish Housing Regulator (2012) Regulation of Social Housing in Scotland: Our Framework, Edinburgh: Scottish Housing Regulator. Scottish Government (2012) Scottish Social Housing Charter, Edinburgh: Scottish Government. Smedley, S. (2012) Co-regulation: a briefing for housing associations, housing authorities and ALMOs, Coventry: Housemark. Welsh Government (2013) Improving the implementation of the Regulatory Framework: a risk based approach to regulation, Cardiff: Welsh Government.