31 October 2003
Places for People may not sound like a housing association but, in the past few weeks, it has gained the sort of the publicity that should ensure it becomes better known.
A very public bust-up among board members, which included restaurateur Prue Leith and Guardian journalist David Walker, led it to receiving unwelcome media attention.
Five members of the PfP board had complained that decisions were being taken over their heads by chief executive David Cowans and group chair Sebert Cox. Two of the rebels were voted off the board and Walker and Leith later resigned in protest.
But the story did not stop there. Two weeks ago, the Housing Corporation ran out of patience and placed it under supervision. PfP's next board meeting will be attended by two new members, nominated by the corporation.
The row is not just a major embarrassment for Places for People. With the government depending on RSLs to deliver better social housing and other community improvements, the last thing ministers want is for the public to gain the impression they are poorly governed.
Three other RSLs, Shaftesbury, Unity and Redland, have also been placed under supervision by the Housing Corporation in the past month. This is because it is concerned about their governance, financial performance or a mixture of both.
A total of 23 RSLs are under supervision, but this is comparable to the number in the past two years.
Although PfP is the largest English housing association, with 53,000 homes, Norman Perry, the corporation's chief executive, does not see its problems as a sign that the roof is falling in on the sector.
The PfP row may have attracted a few headlines, but nowhere near as many as the Carlton TV fracas which led to shareholders ousting chair Michael Green.
'There are pressures in the corporate plc model, as we saw at Carlton and Granada,' says Perry. 'But nobody suggested that capitalism should be abolished.'
Although many RSLs retain a structure based on nineteenth-century industrial and provident society law, Perry believes most steer a successful third way between the public and private sectors.
'If you ask too precisely the question about who ultimately controls housing associations, you may be driven to make them state organisations or shareholder organisations, and no-one wants them to be either,' he says.
Places for People is a group RSL created three years ago out of eight smaller associations. But it is by no means a novice. Its largest subsidiary – North British Housing Association – was formed in 1965.
Cowans describes recent events as 'growing pains', as well as a clash of personalities. He acknowledges RSLs must cope with changes in the sector, including pressure to raise more private finance, but says being large allows PfP to recruit highly skilled staff.
Last year it made a pre-tax surplus of £13.5m. 'We are trying to strike a balance between the best private sector commercial management and the best in terms of social outcomes,' he said. 'We don't want RSLs to be run by private sector accountants, though we'd make much more money if we didn't do so much good.'
RSL governance will remain in the spotlight long after PfP's problems disappear. Opponents
of stock transfer are unlikely to resist raising the issue during future ballots of council tenants, while also pointing out how pay in the sector is rising, with more than a third of RSL chief executives earning more than £100,000 a year.
The Joseph Rowntree Foundation is considering an invitation from the Office of Public Management to draw up a code of conduct for the sector, while the National Housing Federation is reviewing its code of governance for the second time in four years before the introduction of payments for board members.
Mark Lupton, policy analyst at the Chartered Institute of Housing, says payments will force RSL boards to demonstrate greater accountability.
'Payments will make it clearer what board members are there for,' he said. 'They will be paid for their expertise and it should be more obvious where responsibility lies.'
James Tickell, NHF's deputy chief executive, accepts the new environment facing RSLs is placing some of them under stress, but adds: 'The important thing is to keep it all in perspective. Three or four RSLs have been placed under supervision but that still leaves 2,000 that are not.'
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