Tough calls

“I’d rather concentrate on the future” is something Stephen Howlett, chief executive of the Peabody Trust, says a lot.

It appears to have become his mantra after four months at the reins of possibly the best-known, most venerable registered social landlord in the country. He’s got another one, too: “Our immediate priority is improving customer service.”

His emphasis on these two points gives a clue to the pressure Howlett is under at Peabody. He came into the job at what was one of the difficult periods in the trust’s 140-year history. A string of bad news had dented its illustrious image, from cost overruns on one of its flagship developments in December 2003 (HT 9 January, page 7) to a scathing inspection report in May 2004, and it emerged that the trust may have more trouble meeting the decent homes standard than many people in the sector had expected: two-fifths of its 17,000 homes are currently below par.

A man who is genial and animated on the whole, Howlett looks genuinely pained when talking about the troubles he inherited – hence his preference for focusing on the future. But it’s clear that he has studied recent history very closely, for he is now advocating a solution. Under his charge, Peabody will go back to basics, concentrating on meeting the decent homes standard and improving basic services for tenants.

It’s clearly a response to the Audit Commission’s inspection report. “Too much emphasis has been directed to developing cutting-edge and innovative designs that don’t meet the housing need of tenants,” said the report. “This focus has detracted from the real issues of modernising the greater proportion of traditional blocks.” Under Howlett’s predecessor Richard McCarthy – now director-general of sustainable communities at the ODPM – Peabody’s reputation as a trailblazer grew thanks to developments such as the pioneering BedZed estate in south London, famous for its environment-friendly features. But the commission judged the trust’s services overall to be “unimpressive compared with its peer group”.

Cost overruns on BedZed – some £10.6m on a budget of £14.1m – contributed to the decision to make 51 people redundant

(HT 19 December 2003, page 7). Another factor was that Peabody faced – and still faces – having to raise more than £200m to bring its homes up to its own, more demanding, decency target. With income constrained by the government’s rent restructuring policy, which aims to bring RSL rents in line with the lower ones generally charged on council homes, that was never going to be easy, particularly given the cost of working on the trust’s 7000 or so pre-1900 properties.

“The Victorian properties are a fantastic legacy,” says Howlett, who was “moved” when he saw the estates Peabody has maintained in central London. “But they have their challenges. There’s no public money and we can’t raise rents though ours are £20 a week below the government’s affordability target.”

Falling behind Hugh Boatswain, the Audit Commission’s lead housing inspector on the Peabody inspection, has some sympathy for the trust’s predicament, but maintains that it had fallen too far behind in terms of maintaining decent homes. “Our concern was that they hadn’t sufficiently addressed the problem,” he says.

Howlett says the scale of the decent homes backlog was no surprise. The board had been aware of the level of investment needed several years ago, he claims. Regardless, the harsh reality of meeting the decent homes standard means that Peabody must sell some of its stock, and Howlett is now considering which land or properties could be sacrificed. “We don’t have much choice,” he says, although “some things have come to the end of their useful life”. Current projections indicate that 650 properties – 3% of the trust’s total stock – will have to be sold to raise the £156m required to meet the basic decency standard. More than 1000 must go in order to meet the advanced standard.

Howlett tries to put a positive spin on the prospect of disposals. Contrary to the public perception of Peabody’s stock as large, homogeneous estates, it actually owns a lot of individual street properties that can be sold when they fall vacant; doing so will promote mixed communities as well as raise cash, Howlett says somewhat blithely. But despite the smile, one gets the sense that the prospect of the sales genuinely upsets him.

More painful decisions await in terms of personnel and Peabody’s numerous local offices. Last year the trust’s operating costs were cut by £4m out of a total spend of £75m; the staff budget came down by £1.5m to roughly £20m. Howlett admits he will have to try to cut costs even further.

“I’m committed to this organisation running cost-effectively,” he says. That may mean some of the Peabody’s 32 estate offices closing down, too: the Audit Commission didn’t think they provided value for money, and Howlett is partly inclined to agree.

“I want to ensure housing staff are freed up from administrative things so they can really focus on our customers,” he says. “And having so many local offices means the small teams are stretched just to keep them open. We’re in talks with residents about how we can provide a better service as cost-effectively as possible, because the present service doesn’t work as well as it should.”

Meanwhile, the trust has “lots going on” in development, says Howlett. He is adamant its “spirit of innovation will retain its sparkle”, and projects in the pipeline include a 15-unit scheme in south London in which Peabody will continue its experiments with off-site manufacture. BedZed, argues Howlett, “achieved real results” and he remains convinced that modern methods of construction will one day be more time- and cost-effective than traditional ones. But in the mean time, “every scheme will be judged on its merits and, in each case, its economics”.

He’s no stranger to pushing through change. Having worked in London housing for 17 years, he became chief executive of Swale Housing Association in Kent in 1992, when it was a struggling post-transfer association. Howlett helped get Swale out of supervision and improve the quality of service. Later, as chief executive of Amicus Group, he helped turn round Hastings-based subsidiary 1066 Housing Association, which was also under supervision.

The Peabody job was one of the few that could have lured him from Amicus, he says, “because Peabody is special – it has a sense of history”. The evidence is all around him: above his desk is a letter from Queen Victoria to George Peabody, the trust’s founder; paintings of the trust’s famous estates of the 1900s hang on his office walls and a grand marble bust of its founder overlooks the hall.

A Londoner for the past 30 years who studied plenty of Victorian social history during his degree, Howlett is well aware of the contribution charities such as the Peabody Trust have made to tackling poverty in the capital. The next chapter in its history will be Howlett’s. Although there’s no knowing yet what it will say, it’s bound to be quite different from what’s gone before.