Our Housing Crisis: a tale of broken trust

Complaints to the Housing Ombudsman are on an inexorable rise, revealing a festering issue at the core of housing organisations. These repeated failures have seeped into the national consciousness, catching the attention of both the media and concerned citizens. Even politicians, typically ensnared in their own agendas, have been forced to take notice. We yearn for housing to be a central theme during this general election - a #planforhousing that couldn’t be ignored. And the public? Well, they’ve noticed too. Over the past few years, a relentless stream of reports has flooded in, painting a grim picture of subpar living conditions.

In this financial year alone, the Housing Ombudsman has censured 48 social housing organisations with the allegation of severe maladministration. The Secretary of State has taken notice, penning stern letters to each offender.

But this crisis didn’t emerge overnight. Yes, factors like right-to-buy policies, chronic underfunding, aging housing stock, and the obsession with new build play a role. Yet, we mustn’t underestimate the corrosive impact on social housing’s reputation. Without a credible recovery plan, housing providers can’t rely on the new government for support.

The question echoes: How did management boards allow this debacle to unfold? Do they lack concern for tenants? Are they oblivious to the nuances of customer care? With over 15,000 social housing board members in the UK, surely not all are inept.

Guidance on effective non-executive directorship helps, but it’s not the whole solution. The failure runs deeper - a systemic ailment that demands a broader perspective.

At the heart of every social housing organisation lies a board. This single entity, with its sub-committees and subsidiaries, comprises a mix of executive and non-executive directors. Their mandate: oversee management, set strategic direction, and ensure legal and ethical compliance. But here’s the rub, our corporate governance model mirrors the Anglo-Saxon approach. This private-sector model hinges on capital markets as the primary control mechanism. Share trading and shareholder votes dictate approval or disapproval. Maximising shareholder returns reigns supreme, treating investors as the ultimate owners. Short-term profitability becomes the obsession, often at the expense of long-term investments and social considerations.

Could this borrowed market governance style be the root cause of our housing woes? Perhaps. But there’s an alternative - the Continental model. Widely adopted in European countries, it diverges from the shareholder-centric Anglo-Saxon norm. For an example, take a look at not for profit housing organisations in the Netherlands.

A two-tier board system: the Management Board populated by the executive team, responsible for day-to-day operations, working under the watchful eye of the Supervisory Board. This body oversees management and strategy. It includes representatives from a wider group of stakeholder groups - local representatives, tenants, employees (via worker representatives), the local authority and sometimes influential banks.

The difference lies in the constitutional arrangements. Instead of a paternalistic invitation, tenants have a formal role in planning the future and monitoring performance. Others too, are enabled to influence.

This focus on stakeholders ensures that long-term value creation takes centre stage. It’s not just about finance; it’s about nurturing relationships, sustainability, and societal impact.

So, as we grapple with our housing crisis, perhaps it’s time to rethink our governance compass. The Continental model beckons - a path where stakeholders matter, and lasting value transcends fleeting gains. Where success is measured not by the number of handovers but by satisfying the interests of all involved parties.

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This Ole House

Published in Inside Housing: https://www.insidehousing.co.uk/comment/this-ole-house-42273

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Housing: creative solutions

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