Is it time for a new job?

The debate over the two corporation papers on regulating diversity has highlighted many of the problems which the corporation faces in trying to adapt a regime based on allocating substantial public funds and monitoring processes, and the restlessness of many housing associations within that regime.

What it has failed to articulate is a wider vision for the future of the regulatory regime.

The sector which the corporation regulates has moved a long way from the "movement" of small scale, principally public funded bodies. It is not just the use of private finance, the growth of registered social landlords and the additions to the sector of transfer bodies, but the wide diversity of services now provided and the fact that for many RSLs social housing grant meets only a limited proportion of their development activity. This has meant the regulatory framework having to attempt to encompass an organisation like North British housing association, with over 30,000 homes, the self defined regeneration agency Focus housing association, with 11,000 homes, a successful transfer body such as Penwith housing association, with 3,500 homes as well as dealing with associations with a few hundred homes in one area or indeed an almshouse charity.

The sense of this being one sector with one regulatory regime is further eroded by the different market situations which are emerging, characterised at the extremes by genuine choices for tenants and regeneration priorities in areas where demand has reduced and the continued need for building and rationing to meet needs in high demand areas. The increased number of local partnerships which RSLs are entering into with other services and programmes to meet their diverse activities also makes a form of top down regulation based on national standards less sustainable.

The proposals in Regulating a Diverse Sector are still based on the premise that the corporation maintains its overarching role as regulator. The corporation does however seem to point to a different possibility in suggesting a "second stage" based on regulating activities rather than organisations. This is understandable as in this changed situation the corporation cannot possibly have sufficient information to be prescriptive and it is impossible for the corporation to determine what a "good" RSL would look like, and proscribe regulations to achieve this.

Regulation of the sector is still vital both in terms demonstrating accountability for the substantial public sums invested and to give private lenders confidence. It is also something that RSLs use to give new partners confidence in them, particularly tenants in transfer situations. The danger with focussing on activities is that this may lead to a shift away from governance and financial scrutiny of organisations. It may also maintain a continuing emphasis on process in the prescribed activities

Social landlords need the ability to be flexible and dynamic, to diversify and take measured risks if they are to meet needs, understand and respond to market changes and be able to meet their customers changing and increasing expectations within a regime where rent increases are restricted. Clearly defined, rules and process based regulation do not provide the discretion and autonomy that is needed to ensure that RSLs are able to make decisions themselves to react to the changing environment in creative ways.

Consideration needs to be given to a shift to a more sophisticated form of regulation which takes a more strategic approach, which is more goal based than prescriptive and reinforces a value led ethos. Such an approach would look to rely more on setting general objectives, on encouraging relationships with stakeholders and developing formal and informal ways of evaluating outcomes rather than ticking boxes to show that minimum standards had been met and that the right processes are in place. This approach would be more vigorous in that the onus would very much be on RSLs to improve themselves and demonstrate that they are doing so.

The RSL would therefore have to demonstrate that it had a clear vision and a robust set of objectives which gave first priority to the sustainability of its stock and the aim of "know your customer". They would have to demonstrate that they had effective risk management strategies, and were following good business and financial practice, with the business planning process being clearly aimed at meeting the core objectives.

In terms of service delivery the social housing standard could be replaced with a regime which was based more on a best value approach, but which put the emphasis on RSLs to produce there own analysis of and responses to meeting objectives. Sustainability would therefore involve having clear asset management strategies in place which included analysis of housing markets and economic conditions in the areas in which they worked.

Rather than follow a particular line on customer involvement, RSLs would have to demonstrate that they had a culture which was geared to listening to and meeting their tenants needs. It should however be one that suits their overall culture not one which fits into a national system. There is a real danger of trying to force organisations who are independent social businesses and not democratic public bodies, into formal structures of tenant involvement which just leads to tokenism rather than a real change.

The difficulty is that even though low demand is forcing many RSLs to look hard at how they are to attract and keep customers, the "market signals" of customers views available to RSLs are limited. There would therefore be a need to give tenants clear rights to be involved in the decisions that affect the management and maintenance of their homes and the monitoring and review of service delivery. This should be accompanied by placing on RSLs the duty to report regularly to their tenants and the regulator as to how they are meeting these rights. In this context RSLs must be able to demonstrate that they have developed beyond a narrow consumer approach by using such techniques as localised surveys, focus groups, consumer panels and citizens juries and/or are involving tenants more directly in the decision making processes of the organisation.

RSLs should have performance monitoring frameworks which would include them being members of benchmarking clubs and reacting to the information they received there and from their tenants to define and change the service provided.

In terms of other stakeholders, particularly local authorities, there is a danger of focussing on accountability in terms of representation on boards rather than developing partnerships and contracts aimed at delivering outcomes. RSLs will need to have partnering arrangements in place with other stakeholders, including the possibility of local scrutiny committees and a wider use of social audits.

This would need a significant change in the culture of the regulators, and need the strengthening of the skills and scope of the lead regulator role at the expense of the traditional focus on scheme and administrative procedures. In this context the setting up of the "A team", a central regulator section with the possibility of secondments from RSLs by the Housing Corporation is a positive development. This could be used as the opportunity to introduce or at least pilot a different form of regulation along the lines laid out above.

Such an approach may not suit all associations, particularly smaller ones, Teresa Graham who sits on the better regulation task force said recently that smaller businesses often have problems with goal based approaches and often "do not want to think about how to do it and therefore they are more inclined to accept more prescription".

This raises an interesting question. Many RSLs talk about wanting more freedom, but would they be really happy with the responsibilities that this involved? Are not many associations attenuated to a culture that lays rules down from the centre and gives them a certain level of security? The corporation has considerable regulatory powers, and RSLs may well feel comfortable if they can see and demonstrate that they are doing what the regulator wants, and know precisely what the regulator expects.

Some RSLs may not be able to move to this level of responsibility and we may therefore be looking to move to a two tier structure of regulation. This could also link to a potential modernising of the structures available to RSLs, still mainly based on inappropriate models designed for very different purposes, which is something the CIH will be exploring in its forthcoming publication Winning Structures.

The diversity debate has shown that many RSLs are now moving on from the somewhat ambiguous attitude they have had to the corporation resenting its detailed regulation and what is often characterised as a nannyish approach, while at the same time hiding behind its skirts when the dangerous wider world threatens.

Perhaps those RSLs are now ready to become adults, and perhaps it's time the government and the corporation let them.