TSA: The case for the defence - Peter Marsh Exclusive

Since being appointed Housing Minister back in May, Grant Shapps has made it clear that the Tenant Services Authority is one of the housing ‘quangos’ destined for the chop under the Coalition Government.

After publicly stating that the TSA ‘is toast’, Mr Shapps has now announced a full review of the social housing regulator with the findings expected in the Autumn.

Amidst all the mud-slinging and public debate, the TSA’s Chief Executive Peter Marsh has maintained a watchful silence throughout – until now.

In his first in-depth interview since the announcement, Mr Marsh talks exclusively to Jon Land about the TSA’s successes and failures, the future of social housing regulation and offers a robust defence against the Housing Minister’s criticisms.

How has the news of the Government’s ‘review’ of the Tenant Services Authority gone down with your staff? Is it a case of business as usual?

Institutional change is very much a matter for the Government.  Everyone understands that against the background of the fiscal deficit and Spending Review the Government wants to take a hard look at all its arms length bodies and we appreciate it was elected on a platform of reducing the number of quangos.  For us, we’re interested in what regulation is for and the value it provides tenants, taxpayers, providers and lenders – we are not precious about organisational form or the name above the door.  We are committed to working with the Government as it assesses the best way forward.    

But the Board and I fully appreciate that staff are facing uncertain times.  Although the news did not come to them as a complete shock, when it was seen in print it did cause some anxiety as many staff understandably want to know what the future holds for them and their roles.  We’ve worked hard to keep staff fully up to date with developments and I’m really pleased that despite the uncertainty our staff have remained fully committed to ensuring we continue to focus on the job in hand. 

I wrote to all providers on 1 July about the review of regulation and what we expect of providers. Pending any new arrangements coming into force following the review, we remain very much open for business – and providers still need to meet the outcomes for their tenants we’ve set out in our standards.  The Minister has emphasised his support for these standards. I am pleased that all the providers I talk to are working very hard to achieve this. 

Do you accept Grant Shapps’ criticism that the TSA has wasted a ‘scandalous amount of money on massive marketing programmes and lobbying government ministers’?

Setting up the TSA was a challenging task because we had to do it during the midst of the worst financial crisis in decades and ensure that no association went under, no tenant lost their home and no lender lost their money.  Just like the HCA we went live 4 months ahead of schedule. We did buy in services for some other activities to help with the set up. 

There is some misunderstanding about how much we spent on set up.  The Government approved a set up budget of £14m as part of its Regulatory Impact Assessment for creating the TSA.  Our 2009/10 Accounts show that transition costs were £7.5m in total.  The biggest element of cost was £4.4m on restructuring and redundancy costs.  We also spent £397,000 on Tenant Engagement i.e delivery of the National Conversation.  This was the first time that housing regulation had focussed on tenants as consumers and we considered it important to involve them in identifying their key priorities.  As consultation on this scale was outside of our experience, we bought in private sector experience to help us. This paved the way for the sector to develop with us a whole new framework for regulation that has cut red tape, puts the focus on good governance effective involvement, sets standards in the areas that tenants and landlords care about the most and is underpinned by the delivery of local offers and transparency of reporting to tenants -  not the top down targets and tick boxes of the past.  We’ve put trust in people to aspire and achieve, not prescribe how they should do things. 

Having delivered the transition stage 50% below budget we have since gone on to operate below each of our subsequent year’s budgets and have now cut the base running costs of regulation by over 20% in 2010/11 – whilst doubling our regulatory reach to cover Local Authority homes.

Do you think the Government’s new vision for regulating the social housing sector is workable?

We support the principle of tenants being at the forefront of influencing the services that affect them and agree that it’s for landlords and, where necessary, the Ombudsman to deal with individual complaints.  We’ve set out in the Involvement and Empowerment Standard our requirement for providers to “provide tenants with a range of opportunities to influence how (they) meet all of the TSA’s standards and to scrutinise their performance against all standards and in the development of the annual report”.  In light of this requirement we are keen to support the Minister’s desire to build effective local scrutiny arrangements and to explore how they can work alongside the local democratic channels.  But let me be clear that what matters ultimately for us is not the name of the regulator and whether it remains in its present form – but the benefits regulation delivers for tenants, providers, lenders and the taxpayer.

In any institutional change, we need to be mindful of the anxieties in the sector about the independence of the regulatory functions, which enable housing associations to build new homes with private funds - and the credibility of basic protections for tenants because although many landlords provide excellent services this is not universally the case and in a market where tenants options to move are severely limited there remains an important role for regulation to protect tenants.  Often it is just the potential of regulatory intervention that provides the spur to landlords to sort problems out.

Are you pleased that the Government plans to retain the TSA’s standards framework?

This would be welcome news to the sector.  The standards were achieved with widespread consensus among tenants, providers, local authorities and lenders.  Many are working hard on putting them into practice and they welcome the certainty this brings.  The fact that the sector feels they ‘own’ the standards and it has realigned the central relationship to be between landlords and their tenants, not landlord and regulator, is a real sign of success.  We must also bear in mind that the sector has had four years of uncertainty since the Cave review started and having now developed the standards really welcomes a period of stability and certainty so it can focus on delivering excellent services.  

Do you regret using the iconic pink van for the National Conversation exercise?

The camper van was just one element of a wide reaching consultation process.  I actually think it was pretty good value for money – we covered 9 towns and cities right across England and the £17k we spent covered the hire of the van, driver, the film crew and the you tube voxpops.  If we’d only done the more traditional regional events and questionnaires we probably wouldn’t have grabbed the attention in quite the same way.  Whatever you think of the van, it certainly got people talking, and shaping a set of standards that covers the things that matter like repairs and maintenance, like neighbourhood management, and how tenants can hold their landlords to account. 

It was through the direct engagement with tenants and landlords that we were able to nail some home truths.  For far too long repairs and maintenance contracts were driven by priority response time targets.  Tenants told us getting the job right first time and dealing with them with fairness and respect mattered more than a contractor turning up within the allotted time – especially when that time might not be convenient for the tenant. 

Critically, this consultation also paved the way for a system of regulation based on local offers developed between landlords and tenants, not national one size fits all targets prescribed by the regulator.

What does the future hold for the TSA?

The honest answer is we don't know yet what will happen to the TSA.  We know at present there is a review of the role and purpose of the TSA and best the framework for regulation.  Given the Government’s desire to reduce the number of quangos and cut public spending, it is unlikely that the TSA will exist in the same form as today but the big question is which of our regulatory functions should continue, not the name on the door.  

What’s your message to social landlords at this present time?

Carry on focussing upon delivering excellent services and ensure good governance and strong finances.  Whatever the outcome of the review, these universal principles are enduring for the success of landlords and the sector.  However, in terms of regulation, we’re continuing to regulate on the basis of our standards framework and expect all registered providers to operate on this basis too.  Providers should continue to prepare their annual reports for tenants and develop plans for local offers by 1 October, and have local offers in place by 1 April 2011.  Providers must continue to respond to any regulatory requests made by the TSA and submit financial and other data returns on a timely basis.

How do you think new affordable homes will get built in the future?

The challenge is to find ways in which affordable homes can be funded in a world of constrained public spending and without risking the financial viability of organisations. 

Regulatory levers can help this and get new homes built.  Although it would be for the Government to decide the policy, more funding for new homes could be introduced by allowing providers to re-let some new homes at rents higher than social rents - either pitched for an intermediary rented market or rented at market rates.  If larger landlords had the flexibility to do this for just 1 in 4 of their re-lets, we’ve calculated that around an additional 10,000 homes a year could be delivered without recourse to public capital grant.  Or another option could see landlords taking those properties that fall vacant every year and looking at those which are located in very high capital value areas, and having a targeted programme of sales which could produce three new social homes for each one sold.  And part of this new approach could see the investor and regulator agreeing an efficiency programme with the provider which unlocks further resource for refurbishment and new build as part of a negotiated development grant package.  Of course options are not without their trade offs and are not for every provider, but those that already operate efficiently and deliver good services to tenants are in a very strong position to develop.

What criteria do you believe should be applied to the review of the TSA?

We need to await the publication of the terms of reference before we can comment on this in detail.  But I would hope the underlying rationale for regulation will be considered as this provides the justification for what regulatory functions should continue or be changed.  We need to restate who regulation is for – government, landlords, tenants, lenders ?  Until the TSA was established the regulator traditionally focused on governance and viability and we’ve created a new framework that ensures Boards are clear that we care just as much about involvement and delivering a fair deal for tenants.   There are some tricky areas to navigate as part of the review – such as the need to preserve the independent status of housing association debt, the need to preserve the independence of financial regulation to give assurance to institutional investors and the need to make sure that there are effective mechanisms for tenants to have a say in the services that they receive and to be able to hold their landlord to account.

I’d like the review to look at each of our regulatory functions and subject each one to challenge – do we still need to do this, could it be done differently and where is it best placed in the future.  How regulation should be organised should then follow on from this – form following function.