Corporation rethink on plans for regulating risk

Controversial plans which would have thwarted the expansionist ambitions of housing associations are to be redrawn after fierce protests.

Criticism from housing associations has forced the Housing Corporation to back down on its plans for regulating risk.

Housing Today can reveal that the corporation is "rethinking" the most unpopular aspect of its paper Regulating Diversity.

The paper defined housing association activity as either 'core' - such as mainstream housing management - or 'non core' and proposed limiting non-core or diversified areas to one third of association's businesses.

Both the proposals are to be reconsidered after provoking fury from housing associations who dismissed the paper as arbitrary and prescriptive and claimed it would hold them back from helping to regenerate communities (Housing Today, issue 124).

After initial consultation on the plans, corporation regulation director Roger De La Mare said: "We will be looking carefully at some of the points made to us, and I think rethinking some of the those issues as a result."

He added: "The key questions that have come back for us are the definitions that we had of 'core' and 'non core' and secondly whether the two-thirds ceiling was appropriate - those are the issues that will be addressed over the coming months."

But he said that the corporation was still anxious to "properly control" the risks of diversification. A formal consultation paper is expected at the end of the summer.

When asked if limits would be scrapped altogether, De La Mare said it was too early to tell. But he added: "That is something we certainly want to go back to the DETR and ministers about."

National Housing Federation chief executive Jim Coulter welcomed the rethink. He said: "Essentially the corporation have recognised that this is vastly more significant in terms of its implications than they had catered for. Diversity is our business, what needs to be regulated is the effectiveness of risk management and finance and governance rather than process-driven approaches which essentially would just add to paper work."

Western Challenge housing group chief executive Wayne Morris said: "If the corporation is giving any hint that it might be prepared to look at this issue on a business case basis rather than arbitrary controls, then that has to be good news."