October 2014

Social housing
transformations

Alex Marsh
School for Policy Studies
University of Bristol
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Social housing transformations
Introduction
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These are challenging times for social housing. Troubling times.
Some of the parameters of the social housing world turn out to be variables. Some things
that were taken to be part of the foundation upon which social housing organisations could
build their strategies have, since the Coalition government came to power in 2010, turned
out to be much less stable than we had come to believe. The government has made changes -
to the funding for new development, to the nature of tenancies, to the nature of revenue
subsidy, to regulation that mean the game is now being played by different rules.
This is a period of profound change both within and beyond the social housing world. And
it is a period characterised by innovative responses from social landlords, individually and
in collaboration.
In this paper I want to consider four distinct topics associated with current and future
developments affecting social housing. The paper comprises the following four sections:
Innovation; The squeeze; Narratives; and Marginal voices. The focus is primarily upon
housing associations, but some of the discussion is about broader policy developments
affecting the sector.
Innovation
As pressure on budgets intensifies the need for social landlords to maximise efficiency
continues to increase. The need to deliver value for money becomes ever more urgent.
Streamlining existing processes and ways of working will offer many landlords some scope
for reducing operating costs. But at some point that strategy runs out of steam. The only
option then is to contemplate a more fundamental rethink of the way in which business gets
done. Wholesale re-engineering may be required coupled with a reimagining of the
relationship between customer and supplier.
It seems a reasonably safe assumption that many organisations will be looking to digital as
the spine that holds together these new ways of working. These ways of working will need
to deliver value for money for the organisation, and by implication the consumer. They will
also contribute to meeting customer expectations. Social housing does not exist in a
vacuum. Customers form their perceptions of what constitutes acceptable customer service
in terms of availability, accessibility and user-friendliness from their interactions with a
myriad retailers and suppliers, many of whom are in the private sector. It is a reasonable

1
This is the text to accompany my presentation to the HACT/Northern Housing Consortium
Conference Next Generation Solutions: Housing Transformation, Blackfriars, London, 23/10/14.
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working assumption that they expect the services from their housing provider to be as
convenient and intuitive as those they rely in other areas of the economy.
There is a challenge here for social housing organisations across at least three dimensions.
The first is leadership. Where is the drive for business transformation coming from? Where
within the organisation are the champions for change located? Are they in the organisational
mainstream? Or are they lone voices in the wilderness? Has the Board and the senior team
grasped the potential of digital? Are they not just supportive of change, but on board with
its importance? Most profoundly, have they grasped the fact that the future of service
delivery is very unlikely to look like the organisational past? There is a need to invest not to
stay ahead, but to stay relevant.
The second dimension of challenge is organisational competence. Procurement of ICT
information and communication technology is notorious for being a minefield. The
catalogue of projects that fail to deliver on their requirements, let along their potential, is
extensive. This is always costly. When we are talking about tech aimed at underpinning new
organisational futures the cost is multiplied.
Before diving into digital an organisation needs to be honest about its preparedness to take
the plunge. Many ICT projects fail to deliver because organisations dont put themselves in
the position of being expert consumers. The result is that the organisation doesnt, for
example, know the right questions to ask to assess the suitability of new systems. Or it cant
draw up a tight enough specification for the system its seeking to procure. As a
consequence organisations are all too often outmanoeuvred by tech suppliers. The end result
is finding oneself landed with a new system that just doesnt deliver what was sought. Or it
does deliver the desired functionality, but only if no more than a few users try to do
anything at the same time. Or it works alright in its own terms, but doesnt communicate
well with any other organisational system. And so on
The final area of challenge is to retain a firm hold on the human dimension of change. The
area of tech investment always runs the risk of succumbing to what we might call gee
whizzery. Everyone becomes over-excited by the possibilities of the tech and forgets that
ultimately the success of change will be determined more by the humans in the system
both staff and customers. Change needs to be sensitive to the way which technology will
disrupt established patterns of working and interactions with customers. It cant be assumed
that the arrival of new technologies in business processes will be welcomed by everybody.
Indeed, it could be prudent to start from the opposite assumption. Technological change can
be perceived as threatening and alienating. This disruption and resistance has to be actively
managed.
While the possibilities that digital is opening up are organisationally disruptive, they are not
unmanageable. Many social housing organisations have, of course, already passed through
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significant organisational transformations over time. From area housing offices to a greater
reliance on call centres, for example. Or the introduction of mobile working and automated
stock control for a Direct Labour Organisation. Digital will present new challenges, but there
is no reason to think that these cannot be overcome, if handled carefully, and result in a
beneficial outcome.
It is also important to recognize that while the future is likely to be characterised by great
organisational innovation, so is the present.
There is a lot going on already, although this may not be focused on digital. Social housing
organisations are increasingly varied in their portfolio of activities branching out in many
different directions in response to perceived needs and availability opportunities.
The HCAs sector risk profile for 2014 places considerable emphasis on the need for Boards
to understand the implications of these more diverse portfolios of activity for organisational
risk profiles.
It is vital to successful innovation in a context of increasingly constrained resources to be
reflexive and agile, at both the organisational level and the sector level.
Organisations need to be monitoring whats working and what isnt. They need to be willing
to reprofile their activities in the light of emerging intelligence. They wont have the luxury
of being able to persist with activities that arent demonstrably delivering business benefits.
At sector level reflexivity and agility is about whether effective practice or lessons learned
are being captured in a timely manner and shared. Knowledge of what works in delivering
value for money or business improvement is knowledge that can be of wide benefit. If it is
treated as private or proprietary then that will miss out on an important social benefit. In
tough times it is going to be important to pull together.
The squeeze
Where are we heading politically?
If I were discussing this issue six months ago then I might have explored the implications of
the current policy trajectory and then considered the potential for disruption of that
trajectory, including reflecting on what alternatives might look like. As the General Election
2015 is rapidly approaching we might ask whether it constitutes a critical juncture that will
set policy off on a different path.
But Im not sure it is a question that is particularly worth asking right now.
On the one hand, the political economy is horrible for rented housing. The mainstream
political parties are almost entirely gearing their agendas towards the interests of older
home owners because it is older home owners who are more likely to vote. The concerns of
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renters social or private or those who are entirely excluded from participation in the
housing market are not so pressing as to demand a substantial response from politicians. On
the other hand, all the parties are signed up to a very similar fiscal policy and, for all the
talk of housing crisis, spending serious money on housing doesnt really feature very
prominently.
That is not for want of ideas. The NHF in its Ambition to Deliver report, for example, made a
decent case for what would need to change to get things moving. But Im not sure anyone in
the Westminster Bubble is really listening yet.
Six months ago we were still waiting on the outcome of the Lyons Housing Review. Many
were hoping that when it appeared it would chart a new course for policy on housing
supply at least. Now we have seen that Sir Michael has to say. While the report contains
some very sensible recommendations to address the problems of housing supply its overall
thrust does not represent a radical departure from the current policy trajectory. The overall
aspiration is relatively modest. A target of 200,000 new dwellings per year by 2020 carries
with it the implication that, even if the aspiration is realised, housing supply will still be
falling short of the level required to meet housing need. Excess demand for housing in high
pressure housing markets is likely to continue. That implies that affordability problems will
continue for a while yet.
The Lyons Review contained much interesting and important material. Yet, it has the
peculiarity that it does not have the courage of its own convictions. For example, the report
develops a solid argument for a need to swap housing support from funding housing
benefit to returning to bricks and mortar subsidy. But it then doesnt argue that more
investment in housing is a priority. Here, presumably, the report is constrained by the
requirement to adhere to Ed Balls overall spending plans.
In contrast, elsewhere it hints at something rather more radical. In particular it resonates
with the sorts of statements about housing association independence that weve read in
Boriss housing plan for London or that Nick Boles was inclined to make while planning
minister. That is, Lyons clearly has his eye on the assets of housing associations and the
scope for further leveraging those assets to fund borrowing for new construction. Lyons is
keen to see housing assets currently in the hands of those who are risk averse come under
the control of those with a greater risk appetite. The economic and financial logic of the
current policy direction, which Lyons effectively endorses, is one of greater consolidation,
mergers and acquisitions, and increased financial sophistication.
The risks of this approach to both associations and the government are reasonably well-
known and well-rehearsed. But I do think that if policy is to push further down this path
then we need to attend more closely to systemic, as opposed to idiosyncratic, risk.
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The only party proposing a step change in relation to housing supply is the Liberal
Democrats. Their policy aims to increase new housing supply to 300,000 per year, although
it isnt clear how this will be achieved. The policy at least has the virtue of possessing
ambition commensurate with the scale of the problem. But it is debateable whether this is
going to be of any great relevance post-May 2015.
So Lyons has come and gone and is not proposing a radical policy departure. We can be
reasonably confident that, barring some major unforeseen development, policy is going to
be continuing in a broadly similar direction for a while yet. In saying that we also need to
recognise that how current policy is playing out differs substantially across local housing
markets. The consequences of welfare reform, for example, are very considerably different
between the English regions.
If this is the case then it is a future characterised by higher leverage and housing providers
pursuing mixed portfolios of development which are, overall, closer to the market. It means
that social housing supply is likely to reinforce the pro-cyclicality of housing development
rather than acting as a form of counter-cyclical stabilizer to the volatility of the speculative
housebuilding industry.
When were thinking about the squeeze we need to recognise that we really aint seen
nothing yet. The cuts in public spending to come are at least as great as those we have
already witnessed. If there was any fat in the system then that has already gone. Future cuts
are likely to be much more painful. A reduction in the overall benefit cap to 23,000, trailed
by David Cameron this week, and benefit uprating inadequate to keep pace with inflation
mean that the effects of welfare reform is likely to be felt ever more sharply.
We also need to understand what is happening beyond the housing world. In particular, we
need to look at what is happening in the health service and the local authority sector. The
travails of the health service are high profile. What is happening in the local authority sector
is rather less well understood. Many local authorities are in a lot of trouble as a result of the
budgetary cuts imposed by central government and the further constraints imposed on
raising additional revenue locally.
Local authorities are going through similar thought processes to those occurring in many
housing associations. But they are compelled by circumstance to do so with a greater sense
of urgency. They are looking to shed non-statutory services. They are looking to capture
savings in operating costs from increasing digital service delivery. They are exploring the
scope for co-production of services with service users. They are looking to build capacity in
civil society so as to foster greater self-reliance and self-help, because the local authority no
longer has the resources to provide those services.
You could argue that David Camerons Big Society was a failure as a political slogan and a
political project. It never really got off the ground. And you dont hear much talk of it any
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more. But as a result of the swingeing cuts to local authority budgets it is coming anyway.
Local authorities in collaboration with local populations have to come up with new solutions
that move beyond local authority provision, or services and support will simply disappear.
It is very much a case of necessity being the mother of invention.
You will find in the academic literature discussions of the concept of place-based leadership.
Part of this argument is that leadership of place may come from the statutory sector, but it
need not. It can emerge from another sector locally. Clearly, many housing associations are
organisations with deep roots in particular areas and a commitment to the success of those
areas. They are already showing leadership as they seek to help residents in their
neighbourhoods improve their quality of life and increase their levels of well-being. In doing
so housing associations find themselves engaged in a whole range of non-housing activities
for community benefit.
The point is that as local authority capacity becomes increasingly curtailed further gaps are
going to appear; further opportunities are surely going to present themselves. Are these
opportunities that will appeal to housing associations? Are housing associations willing and
able to move into positions of stronger place-based leadership? Will they do more to
facilitate community capacity building before, potentially, stepping back and allowing
greater community self-organisation and self-reliance?
If housing associations do go down this route then how is this greater role going to be
rationalised? And how is it going to be funded? If it is to be funded internally through cross-
subsidization because support from grant funding is increasingly scarce then what sort
of account can be given of the virtues of this approach? Whats the narrative?
Narratives
The issue of convincing narratives is one of broader significance. The HCA, in its report on
the sector risk profile, flags up the issue of reputational risk for individual organisations and
for the sector as a whole as increasingly important. What is on the HCAs mind is, I think,
the risks associated with a housing association engaging in more complex and exotic
financial manoeuvres in order to finance development only to find that it has misunderstood
or inadequately assessed the risks and therefore gets into difficulty. This could damage the
sectors reputation as a relatively low risk investment opportunity.
That is undoubtedly a risk. But I think the issue of reputational risk is broader than this and
enters the picture earlier.
The current direction of policy is to encourage associations to leverage up and to push rents
higher in order to service larger loans. It carries with it the implication that housing
associations are seeking tenants with the financial firepower to cope with higher housing
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costs. It very possibly carries with it the implication that housing associations are less
inclined to house benefit-dependent households because they are perceived as higher risks.
There is a danger that, for all their arguments about being not-for-distributed-profit or about
making profit for reinvestment with a social purpose, housing associations come to be
perceived as seeking to extract as much as they can from the slightly less vulnerable in order
to fuel their ambitions. There is already negative talk about the size of the collective surplus
being made by the sector.
Last year I took part in one of the NHF HotHouse events held as part of the consultation
process that led to the Ambition to Deliver report. One of the housing association CEOs who
was speaking alongside me stated that by 2033 the time horizon the NHF was working to
housing associations would be perceived as part of the problem not part of the solution.
That was, no doubt, hyperbole. But it got me thinking.
If the current policy trajectory is pursued to its seemingly logical conclusion there will come
a time when housing associations will mostly be charging high rents to middle income
households, and housing the relatively poor very much as a subsidiary activity, if at all. As
housing associations offload relatively valuable property or property in high value locations
in order to build new property in lower value neighbourhoods, in the name of good asset
management, they contribute to the realisation of the Conservatives aspiration for
increasing social segregation and the banishment of poorer people from established urban
neighbourhoods. Associations may protest that they are doing the best they can, given the
harsh financial and regulatory constraints they have to work under. The big boy made me
do it. But that point is likely to be lost when viewed from the outside and in retrospect;
when viewed from the perspective of the consequences such moves have for our cities.
In that respect it is quite plausible to see housing associations becoming increasingly
constructed in the media and popular opinion as a part of the problem. Unless they can do a
better job of explaining what it is they do and what it is they are trying to achieve.
One of the most intriguing recent developments in the housing policy debate is the advent
of the term genuinely affordable housing. It appears that some have concluded that the
sort of housing that is now delivered under the label affordable housing is anything but.
With its Affordable Rent programme the Government has done so much violence to the
term affordable as to render it meaningless without further qualification.
This seems to me to represent a hazard for housing associations. Unless they can keep in
touch with the concept of genuinely affordable housing they may find themselves on the
wrong side of the argument about who can deal effectively with the housing crisis.

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Marginal voices
Earlier I said that in the run up to the General Election 2015 the political economy is pretty
horrible for rented housing. But I think the outlook over the slightly longer term is much
more interesting and much more positive.
The political economy of housing is undoubtedly changing. Starting from a position of
relative obscurity organisations like Generation Rent and Priced Out, though still small, have
now become prominent voices on the national housing policy stage. In part this has been
facilitated by social media and the greater ability of grassroots organisations to coalesce. But
it is also a product of structural change in the housing market. The proportion of households
in long-term renting creeps up, seemingly inexorably. More importantly, the types of
households renting long-term is changing. Renting is touching the lives of those who
previously would have felt their destiny lay elsewhere. The pressure for change is building.
But it is not only the articulate middle-classes in private renting who are increasingly
finding their voice. A striking characteristic of the British housing scene is that opposition to
the increasing marketization of housing policy has, to a large extent, lacked a rallying cry. In
other countries opponents of mainstream housing policy have explicitly drawn on
Lefebvres concept of the Right to the City and translated it into a Right to Housing. These
concepts have been deployed in a critique of gentrification, be it state-sponsored or
otherwise. For a long time this sort of discourse has been largely absent from housing
activism in Britain, although it has been prominent in certain corners of the academy. Yet it
would appear that resistance to predominant strands of housing policy are increasingly
finding its organising concept in this type of thinking. For example, it is a very clearly part of
the way the Radical Housing Network which secured national attention through its recent
disruption of MIPIM makes sense of what it is seeking to achieve. We can find similar
types of argument being offered by the Focus E15 protestors.
Mainstream housing policy has embraced, at a rhetorical level at least, the desirability of
self-build, off-site manufacture, or kit building as a means of improving housing
affordability. It has been less clearly supportive of self-help housing. Yet this is another
important, and arguably emerging, strand to the story. HACT has done recent work
supporting capacity building in the self-help sector and there are initiatives around the
country. In Bristol, for example, a community organisation called Abolish Empty Office
Buildings has just bought its first property.
It is not difficult to see that if mainstream policy fails to make a significant dent in housing
affordability problems and housing shortage then the appeal of self-help and mutual aid
will grow. I wouldnt be at all surprised if someone decided it would be a good idea to set
up a terminating building society.
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Perhaps we are destined to rediscover some of the lessons of the past through action, as
communities go back and replay the origins of some of todays well-known housing
organisations.
But are these initiatives that we see as existing beyond todays social housing movement;
possibly even in competition with it? Or are they initiatives that more established social
housing organisations can and will support on a significant scale? Are they part of social
housing 2.0? Or do they represent social housing 3.0?
This returns us to questions of scale. The financial imperatives facing housing associations
push them towards scale. We have known for a long time that the efficient scale for
financing is larger than the efficient scale for management, at least when management is
based on patches or area offices. But it is also likely to be in tension with the appropriate
scale to deliver place-based leadership and community capacity building. Whether it is
possible for housing organisations to reconcile this tension and operate simultaneously at
both scales is an unresolved question. The alternative is a future in which the sector
bifurcates: much of the housing is supplied by huge landlords faceless and efficient - that
interact with most of their tenants digitally, while much of the community support is
provided by smaller organisations with a human face.
Conclusion
The future for social housing organisations is likely to be characterised by the need for
innovation; more radical innovation than many will have experienced up until now. If
housing organisations are to thrive in an era of constrained resources and demanding
consumers then they are going to need to be reflexive and agile.
The squeeze occurring in neighbouring policy areas and bearing down on the organisations
with which housing associations collaborate is likely to open up gaps and opportunities.
Over the life of the next parliament we can expect quite a few local authorities to be taking a
big step back from significant areas of service provision and support as funds run out.
Whether housing associations sense that it is their destiny to play a stronger place-based
leadership role is a question we are likely to find answered relatively quickly.
In the short term the political economy of housing is not favourable to rented housing, but
the pressure building in the system means that in the longer term it is likely that politicians
will have to attend to urgent new voices. At the same time it seems almost inevitable that
new solutions some of which are relatively old solutions will gain greater appeal. And
perhaps we shouldnt be too hasty in ruling out the possibility of revolutionary new answers
to perennial problems.
In future will housing associations see it as a greater part of their role to help others to house
themselves?
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Finally, the financial and regulatory constraints upon housing associations are real. But to
assume there is no room for manoeuvre would be unduly pessimistic. The social housing
sector is shot through with local innovation. The question is whether that can be harnessed
more effectively. Can lessons be captured in order to deliver broader social benefit and to
reshape and expand housing opportunities for the many disadvantaged?
The future is not given but made.

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About the author
Alex Marsh is Professor of Public Policy at the University of Bristol. He has been Head of the
School for Policy Studies since 2007. Alexs research and writing has encompassed a wide
range of topics in the fields of housing studies, public policy and regulation. He is currently
on the Advisory Board for the Joseph Rowntree Foundation Housing and Poverty Programme.
Between 2005 and 2009 Alex has been managing editor of Housing Studies, the leading
international academic journal in the field. He continues as a member of the journals
Management Board. He is a trustee of the Housing Studies Charitable Trust.
Alex worked part-time as a Visiting Academic Consultant to the Public Law team at the Law
Commission between 2006 and 2010. His work with the Commission addressed compliance
issues in the private rented sector and systems of redress against public bodies.
Between 2004 and 2012 Alex was a trustee of Brunelcare, a Bristol-based charity providing
housing, care and support for older people. For six years he chaired Brunelcare's Audit and
Scrutiny Committee. In October 2013 he joined the board of Curo Group as a Non-Executive
Director.
All views expressed here are personal. They should not be attributed to any of the
organisations with which Alex is associated.

www.alex-marsh.net



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