Structures designed to last

If you are a board member or employee of a registered social landlord, why did you come into social housing? Chances are that if you have been in the sector for more than ten years it wasn't to do half the things you do today, no matter how important they have turned out to be. You probably didn't come in to tackle the public sector stock condition problem, to deal with poverty and social exclusion, to enter into PFI deals or to be a dominant force in regeneration or community care. But you may well have ended up doing, or working for an organisation that does, some or most of these.

If you're a board member, you've also had it drummed into you that you and your voluntary colleagues - and you alone - are legally responsible for all this. If you perform your role well, your regulator - in a fit of unbridled hyperbole - will grade your efforts as "satisfactory" or "no cause for concern". If not, you are likely to be well publicised elsewhere in this journal.

But, in all this time, the fundamental structures for owning and managing RSLs have remained unchanged. Indeed, their genesis goes much further back than all of us, reflecting an outdated view of RSLs as just one brand of worthy, but minor, voluntary body.

The National Housing Federation, in its pioneering work on governance in 1995, started to make the "Movement" (as it still then styled itself) think about issues of competence and accountability, the pithy title of the report produced by the federation governance inquiry. The Chartered Institute of Housing, with the financial support of Halifax PLC, has now funded a new publication which I have written called Winning Structures : Registered Social Landlords in a Changing World. The report aims to prompt a new debate on what changes are needed to help RSLs respond to the demands - welcome and unwelcome - that are either upon it or in prospect.

In the report I argue that central government policy and the changing role of local government mean that RSLs will be increasingly entrusted with responsibilities well beyond the traditional role of the social landlord. Many RSLs (particularly the larger ones) are struggling with - but are not keen to shout about - a perceived conflict between the need for accountability to stakeholders and efficiency of management. RSLs have disparate and ill-defined routes of accountability and there is little real accountability to their formal owners (in most cases dormant shareholders). This lack of adequate definition dilutes true accountability and fails to acknowledge the prime role of the statutory regulator. More realistic ways of building accountability to tenants and to local authorities are also needed.

Continuing the long-running debate, I argue that the voluntary board structure is a shaky basis on which to build a replacement for traditional areas of comprehensive public provision. The lack of payment and the constitutional invisibility of paid executives, making many decisions but not sharing legal liabilities, perpetuates a mythical structure and makes it harder to call both board members and managers to account.

Current approaches to tenant involvement in RSLs are, I suggest, often based on fashion rather than an understanding either of what tenants want or what the RSL is practically able to deliver. The confusion between treating tenants as customers or as stakeholders can lead to arrangements that seem irrelevant to tenants or set tenant representatives up to fail. As consumers, tenants have the right to information and to clear expectations of their landlord. RSL tenants also need more and better opportunities, if they wish, to become involved in managing their homes and environment. Tenant board membership may be of varying relevance, depending on what tenants regard as important. Other than in specific settings (like in a stock transfer RSL) involving other stakeholders (like the local authority) may not principally - or usefully - be about ownership or management structure, but rather be better defined in contract.

The report suggests a new future for the sector based on two types of body - Registered Housing Organisations (RHOs) and Registered Social Landlords (RSLs), and proposes the extension of the statutory Right to Manage to RSL tenants.

The twin track approach aims to preserve and build upon strengths within the current RSL governance structure whilst providing further options for RSLs whose work demands new approaches. It enables those RSLs not hampered by current structures to remain constitutionally unchanged but to work within a more flexible regulatory regime than at present. The RHO model is designed to meet the needs of the larger and more complex RSLs that are operating as diverse social businesses often (but not necessarily) over a wide geographical area. RHOs would be freestanding, or parents or lead subsidiaries within group structures. RSLs would be organisations whose role was principally to develop, let or manage social housing and provide associated amenities. RSLs could be free-standing or members of a group.

RHOs board members should unambiguously be selected for their skills and competences, paid accordingly, and held to account for their actions. Skill and competences should not simply cover the traditional professional roles. Most importantly, to ensure that tenants can play a full role on RHO boards, the regulators or the trade bodies could sponsor training and development programmes and provide bursaries to assist tenants to become RHO board members. But RHO tenant board members, like others, would be there as individuals possessing important skills not in an ill-defined representative role or as a cheap substitute for systematic consultation of customers.

"New regime" RSLs would also need competent boards but their lower risk activities mean that using board membership to achieve empowerment and self-determination for tenants would be practicable. RSLs could be free-standing or in groups headed by RHOs. Within an RHO group, subsidiary RSLs could provide more opportunity for tenants to be involved in managing and monitoring service delivery than traditional structures allow. RSLs would not need to be tenant-controlled or tenant-led; most might well remain owned and run by people with commitment and energy who want to do something for the community in a disinterested way, or by a mixture of "constituencies". However, the new definition of RSLs could provide an impetus to the further development of tenant-controlled housing. But some tenants may want more than participation but less than full ownership responsibilities. To bridge this gap, the report proposes an extension of the local authority tenants' Right to Manage to RSL tenants. The Right to Manage gives tenants, subject to a full training programme and consultation process (including a ballot of the affected tenants), to take on part or full management of their homes through forming a Tenant Management Organisation (TMO). Board members of "new regime" RSLs would be able to receive attendance allowances, loss of earnings and (for example, for officers) special responsibility allowances.

For all types of registered body, the report proposes a lightening of central regulation, and a further lightening for RHOs that are able to demonstrate competence. The principal change in the regulatory framework would be the scrapping of centrally determined social housing standards and their replacement with locally negotiated standards, set with the involvement of tenants and local authorities. Other changes in regulation could include loosening the disposals consents procedures. The report floats the idea of "flexible Social Housing Grant" (see chart) to broaden the way in which social housing projects by RHOs are funded.

The report outlines a possible expanded role for joint venture companies, already being developed by several RSLs, particularly where they can generate new funding through equity investment. The concept of a tenant and employee-owned trust is explored, to be a part owner, promoter of projects and as a source of direct or indirect financial incentives to both groups.

The RHO and RSL models are a specific set of proposals designed to illustrate how the issues identified in Winning Structures could be addressed. They are not meant to be prescriptive. But a debate needs to be had, and a way forward found, to make sure that the RSL sector, so much a success story, rises and adapts to the coming challenges.