The document discusses how London housing associations are responding to changes in government policy that encourage more commercial behavior. It finds that while the associations are diversifying activities and increasing profits, this may come at the cost of their social purpose and provision of affordable housing. Specifically, it notes they are building fewer social rent homes, pursuing more profitable activities like market rentals and home sales, and forming complex group structures with less transparency. However, it cautions that prioritizing commercial gains too much could threaten their charitable status and lose focus on meeting a range of housing needs.
2. • Contemporary Policy Context:
Attitudinal Change: Hostility towards the sector
Policy Change: State withdrawal from the sector
• The Research Study
Questions – how the sector is responding
Conceptual framework
Focus – the G15 London Housing Associations
Methods
Emerging Findings
• Preliminary conclusions
Structure of presentation
4. Housing associations’
Performance record
Sector Accounts (2015):
• Surpluses (after tax) = £3 billion (25%
increase from 2014)
• Book value of properties £138 billion
• Debt drawn £63.4 billion (£0.5b from
grants)
• Delivered 46,500 affordable homes p.a. (a
1/5th of total new builds)
• Benefited from favourable macro-economic
conditions
> could do more?
5. Attitudinal Change:
Hostility to the Sector (1)
Media hostility
– ‘True villains of housing crisis’ (Channel 4 News
23/7/15)
– ‘Public sector lethargy and private sector greed’
(The Spectator, 25/7/15)
– ‘Sleeping giants’ (The Economist, 21/11/15)
– ‘High salary, low performance - £350,000 salary
for Britain’s worst housing chiefs’ (The Times,
18/3/16)
6. Attitudinal Change:
Hostility to the Sector (2)
Government hostility
• ‘There has not been much pressure on the sector
to be particularly efficient in recent years’
(Osborne, HoC, 8/9/15)
• ‘Part of the public sector that haven’t been
through efficiencies, haven’t improved their
performance and it is about time they did’
(Cameron, HoC, 15/9/15)
7. Government policy change:
Shake up of the sector
Coalition Government (2010 onwards)
• Steep reduction in grants for new build
• Housing benefit capped
• Help to buy loans (20% of market value)
Conservative government (2015 onwards)
• Extend Right to Buy to sitting tenants
• Starter homes
• Housing Associations to cut social rents by 1% p.a. over next 4
years… (£4.3m p.a. estimated saving to Government’s Housing Benefit bill)
8. Research Questions
• How are The G15 London housing associations
responding to the government’s radical shake up?
- Re-examine business plans
- Re-think overall business purpose
organisational strategies
• Consider the wider implications for affordable
housing provision in London
- Housing providers to whom?
- Meanwhile 1 in 10 on London’s social housing
waiting lists… (Shelter 2016)
9. Conceptual Framework
• Institutional Theory
• Reconciling institutional logics – social and
commercial (Mullins 2006, 2012)
• Organisations face similar institutional pressures
BUT negotiate logics in different ways (Gruis 2008,
Nieboer & Gruis 2014)
• Hybridity and diversification (Blessing 2012; Morrison, 2016)
– Hybrid governance structures
– Hybrid financing
– Hybrid housing products
> To secure long term survival
10. Competing Institutional Logics
(adapted from Thornton, Ocasio and Loundsbury, p.85 )
Institutional
logics
Organisational
practices and
identities
Commercial
orientation
Social
orientation
11. Research methods
• Data analysis – Homes & Communities
Agency’s Global Accounts (2012-15) of G15
registered providers
• Documentary analysis of G15’s Group business
plans & financial statements/press
releases/expert opinions & analysis
• Case studies - in-depth interviews with G15
CEOs, Financial directors and Board members
• Cross-check & verification (Yin 2009)
12. The G15
London Housing Associations
• A2 Dominion (35,399)
• Affinity Sutton (57,000)
• Amicus Horizon (27,892)
• Catalyst (21,350)
• Circle Anglia (64,808)
• East Thames (15,125)
• Family Mosaic (25,406)
• Hyde (41,772)
• Genesis (32,639)
• L&Q (71,700)
• Metropolitan (38,415)
• Notting Hill (30,313)
• Network (18,064)
• Peabody (27,857)
• Southern (28,181)
13. The G15
London Housing Associations
• Own & manage 550,000 homes (21% of sector stock)
• House 1 in 10 Londoners
• Levered £15.5b private investment (33% of sector’s net debt)
• Generate 47% of sector’s surplus
• 16,000 affordable rental homes & 6,400 shared ownership last
3 years
• Chief Executives’ salaries: £155,000 (East Thames) to £300,706
(Affinity Sutton)
• CEO pay per home (£3.69 to £10.25) (Inside Housing (21/3/16) “worth
it?”)
> G15 announcement: Could increase development programme
from 93,000 to 180,000 over 10 years (Social Housing 4/3/16)
14. Move from social logic?
• Reliance on turnover from social housing lettings –
remains core function (Hyde 72% to Family Mosaic 95%)
“Rent reductions remove considerable capacity in business
plans” (G15 response to Budget)
• Surpluses on ‘other’ social housing activities
- Community & economic development programmes
(worth over £40m in total per annum)
- Yet 9 HAs made a deficit year on year
- Pressure to cut discretionary activities & welfare
based services
- Walker (2000) “Housing plus” 16 years on…
Conflicting logic:
Added social value potentially eroded?
15. Re-appraise development programmes
“We are being asked to deliver development with
less spending..” (G15 response to Budget)
G15 announcement (Social Housing 4/3/16)
• Reduced numbers of sub-market rented housing
• Change tenure mix – hybrid housing products
– 29% social housing
– 29% shared ownership
– 28% for sale
– 14% private renting
Affordability in London? (Savills 2015)
16. Tenure Mix of London’s
Estate Regeneration Programmes..
Trend set to continue
(Source: GLA, 2015)
30,431
46 550
3,186
22,135
1,832
7,471
36,163
0
5,000
10,000
15,000
20,000
25,000
30,000
35,000
40,000
Social rent Affordable rent Intermediate Market
Existing
Proposed
17. High profile announcements
“Government policies forced our hand.. No longer build social
housing.. Low income families won’t be my problem.. We should
be looking to redefine why we’re here’ ” (Genesis October 2015)
Yet Genesis Business plan (2014) ‘Socially hearted, commercially
minded’ …
Conflicting logic: ‘social purpose’ compromised
18. Move to commercial logic
• % of total turnover from ‘non-social housing’
activities (Family Mosaic 0.4% to Peabody 14%)
• Diversification activities & varied
performance:
- Supported housing (only Amicus - records deficit)
- Nursing homes (Catalyst & Metropolitan - record deficits)
- Student accommodation (A2Dom, L&Q & Affinity Sutton -
record surplus)
- Market renting (10 undertake & record surplus)
- Properties built for outright sale (7 undertake & record
surplus)
19. Surpluses Made from Non-Social
Housing Letting Activities (G15) (2015) (£,000s)
Sale of fixed assets
Shared ownership
staircasing
Other sales of properties
Market rentals
Sale to other RPs
Properties built for sale
Student accommodation
£131,743
£233,124
£108,146
£16,273
£8032
£20,607
Source: HCA Global Account & Financial statements (2015)
20. Move to commercial logic (cont.)
• HCA global accounts under-records Group’s
commercial activities (e.g Peabody Group building for sale
(132,883) <10 times its Trust (13,858))
• Non-registered off balance sheet activities - not
reported
• YET reflected in increase gift aid surplus to registered
provider
• Pressures to forms complex hybrid group structures
& cross-subsidize core social functions
Conflicting logic: Changing risk profile
level of scrutiny & accountability?
21. G15 Hybrid group structures
** e.g. Notting Hill development ltd/A2 Dominion FABRICA/GenInvest ltd/Family Mosaic Development company ltd/
Peabody Enterprise Ltd/ L&Q New Homes ltd etc
22. Crowding out?
“Commercial subsidiaries have gone
untested….as these operations ramp up, so
do new sources of potential complainants -
including house builders who may see
competition against entities who do not pay
tax as unfair”
23. Gift Aid by G15 HAs
-20000
0
20000
40000
60000
80000
100000
2012
2013
2014
2015
Source: HCA global accounts & financial statements 2012-2015
24. Empire building?
• Merger talks
- Circle & Affinity Sutton to form largest landlord (127,000 units)
- Genesis & Thames Valley HA
- Amicus Horizon & Viridian
• Will mergers increase efficiency?
(Mullins & Bortel 2010 revisited)
– To increase quality of service & free up capacity to deliver more homes
OR remove responsiveness to local needs & accountability
Conflicting logics: increase size & scope in order to
increase power and influence?
Rent seeking behaviour
25. Rent seeking behaviour?
To use resources to obtain economic gain from
others without reciprocating benefits to society
through wealth creation…
Benefits to decision makers & organisation - and not
to maximising benefits to society
“The government has thrown down the
gauntlet…we must review and reconfigure how we
operate as a business and what sort of housing
products we decide to develop” (Genesis, 2015)
26. Beware of Charity Commission’s scrutiny….
“If housing associations want to keep their
charitable status, they must continue to
demonstrate that they are involved in charitable
activities….more difficult to deliver ..as the
commercial arms assert themselves in order to
maximise their profits…” (Social Housing 4/3/16)
27. Preliminary conclusions
• England’s political agenda driving change
- accelerated state withdrawal & hostility to housing association sector
• Can the sector respond to changing institutional logics?
• Face competing social & commercial logics – tough choices
• Evidence London G15 HAs resilience & reinvent themselves
- Adapting organisational strategies YET at what cost?
- profit for purpose or blatant commercialism?
• Debate should not just be about organisations’ long term
survival as businesses
• BUT also duty to meet full range of housing need…
Notes de l'éditeur
Might be better to headline these sections with the wording in red rather than strategy 1 etc.
Total increase in properties from 34,213 to 67,601.