Pinnacle launches report challenging English social housing sector to embrace contestability

RSLs could potentially save between £227m to £780m, while local authorities could save an additional £771m by introducing contestability throughout social housing in England, says a report published by Pinnacle today.

Pinnacles Empowering tenants, improving quality and reducing costs: the case for contestability in English social housing report also states that performance improvement and empowering tenants were vitally important benefits of effective commissioning.

John Swinney, Pinnacles Chief Executive, said: The shape of public policy is changing. The historic delivery of uniform public services by public bodies to a grateful and passive public is no longer acceptable.

Todays approach is focused on outcomes, a recognition of the contributions made by diverse organisations and providers, the engagement and empowerment of customers and communities, the personalisation of services, and much greater transparency and accountability. Other public sector providers are already actively embracing these new ideas, however housing is lagging behind.

Ian Keys, Pinnacles External Affairs Director who prepared the report, based on publicly-available information, added: The new Tenant Services Authority (TSA), created by the 2008 Regeneration and Housing Act, is set to address many of these issues, particularly those identified in the recent Hills and Cave reviews.

Tenants and the new regulator want landlords and managers to be fully focussed on delivering both quality services for tenants and value for the public purse. This report shows that, through contestability, this can be achieved.

The report highlights three arguments for introducing contestability to be extended in social housing, particularly in management, in both the RSL and Local Authority sectors. They are:

FINANCIAL

RSLs
There are potential savings of between £227m (from procurement alone) through £554m (from housing management) to £780m (from procurement and housing management) per annum.

However, the impact of the adverse tax regime on services provided to RSLs (but not to local authorities) means that some of this potential saving would be lost in VAT payments to external suppliers before finding its way back to the public purse.

Local Authorities
Potential savings of £771m per annum are possible on housing management with no VAT complications.

PERFORMANCE IMPROVEMENT

RSLs
Generally the quality of RSL social housing management service is uninspiring and in many cases poor affecting not just the quality of the properties, but also the quality of community life.

With the number of properties under RSL ownership continually increasing and at a time where community engagement and communities generally are moving up the policy agenda, there is an opportunity for RSLs to influence both individuals and communities towards their being more pro-social in their behaviours. With this agenda, the RSL tendency towards complacency could be reversed.

Local Authorities
The quality of local authorities housing management services (direct and ALMO) is varied, although there is evidence of improvement over the last 7 years or so. The principal issue, though, is that housing performance is lagging behind the substantial improvements seen in other local authority services over that same period.

The reasons for this go to the heart of the very real separation between housing and other departments that most councils still have in place and which has been exacerbated by the ALMO programme. Separation means different agendas, speeds of improvement and duplication, particularly in the community-facing front-line areas.

Of course, these things go in cycles, with housing, perhaps, being managerially ahead of its council compatriots in the 1980s and 90s, but today it is being left behind as something of a backwater. ALMOs have made the problem a little better, but at a higher cost.

MEETING CITIZEN, COMMUNITY AND CUSTOMER NEEDS

There is evidence that most tenant satisfaction surveys are affected by their being carried out by landlords as the picture that emerges from in-depth independent satisfaction surveys (for example by the National Consumer Council) is far less rosy.

There has also been limited innovation across the social housing sector and there is far to go before we can say the sector is really addressing todays issues. However, the scope to transform peoples lives is enormous - from 24/7 services to the integration of housing and worklessness projects, for example. The key question is whether the sector has the managerial capability and incentives in place to deliver the changes required in the time the government and people want.

The 30 page report is available to download on Pinnacle's website