Lime Legal

Transfer on trial

Published 21 April 2023

Nearly six years after Glasgow’s council housing moved to the control of Glasgow Housing Association, Hal Pawson analyses the successes and failures of the UK’s most controversial stock transfer.

Eighty thousand homes were involved in the UK’s biggest and most complex stock transfer – the 2013 move of council estates to the management of the Glasgow Housing Association (GHA).

Since the late 1980s, well over a million homes have been transferred from local authority to housing association ownership. But the Glasgow transfer has been the most controversial. Accusations of failure and betrayal have dogged the project for most of its six-year history.

But recently, just as the controversy seemed at last to be dying down, Scottish ministers and Glasgow council have reignited the row by repeating damaging allegations about the association’s record.

However, with the publication of new research on the entire GHA story, it is possible to reach a more balanced appraisal of the project’s successes and failures.

Our research shows how the row was fuelled by a conflict between key political figures promoting the policy and the city council’s sober understanding of the financial implications. Then housing minister, Wendy Alexander, and her allies portrayed the move as just the first step towards a number of second stage transfers (SSTs) to community-based housing associations that, within a decade, would replace the GHA as a landlord body.

In the late 1990s, with its housing stock suffering from a chronic lack of maintenance and more than half of tenants’ rents being eaten up in debt repayment, the city council – as a landlord – was heading for financial disaster. Transfer of its houses into housing association ownership held out the potential for financing desperately overdue repairs and modernisation.

However, making the figures add up required more than £1.7 billion in government funding – close to 10 times the annual amount being invested in new social housing across the whole of Scotland at that time. Even so, the cost of the transfer – and, consequently, the requirement for public subsidy – would have been far greater if proper allowance for SSTs had been built into the project budget.

The shortage of SST funding was reflected in the council’s qualified wording of its 2011 transfer prospectus. It said SSTs could take place only if they were ‘financially neutral’ for the initial transfer landlord – meaning that they could not be authorised at the expense of tenants remaining with GHA. Nevertheless, in spite of the council’s careful phraseology, the project was widely understood as carrying with it an unconditional commitment to SSTs.

This was laid out in the aspirational plan for the portfolio to be split into 62 ‘property packages’ to be handed to community-based housing associations.

‘Just as the controversy seemed to be dying down, Scottish ministers and Glasgow council have reignited the row’

Has GHA deliberately obstructed the SST process? Such a charge has often been levelled but there is little evidence to support it. The 2017 official regulatory inspection concluded that the primary obstacle to SST was financial, and that there had been no lack of effort on the part of GHA management to progress the move. Claims that the inspection report lacked credibility ring hollow given that the then regulator, Communities Scotland, assembled a team of respected professionals for this assignment, undertaken in meticulous detail.

Much later than originally envisaged, and involving only 2,000 homes, the first wave of SST estates has now passed from GHA to a group of community-based associations. Even so, with future SSTs apparently destined to involve no more than a third of GHA’s remaining stock, there is a danger that a legacy of bad feeling will linger.

From the beginning, the council’s main priority has been the physical overhaul of the housing stock. Unlike some other stock transfers, this aspect of the GHA plan was adequately funded. The ‘catch-up’ investment programme still has some years to run.

However, as confirmed by the 2017 inspection report and subsequent evidence, property upgrade delivery has been achieved under budget and generally on – or ahead of – time. Procurement efficiency gains have funded improvements of original modernisations to include shower installation, kitchen floor coverings and higher standard central heating systems. In some neighbourhoods this has included laying on gas supply to provide more efficient heating.

Investment programme savings have also enabled the association to fund community and welfare projects. Overall, the scale of such activity has greatly exceeded what was envisaged at the outset.

Currently, GHA is spending some £4 million year on neighbourhood renewal activities (about 1 per cent of the association’s revenue budget). Some of these initiatives are closely linked with housing management objectives. Examples include activities aimed at young people in previously troubled areas to tackle antisocial behaviour. Also, extending beyond original plans, the association has

launched environmental improvement, tenancy support, financial inclusion and employment promotion schemes.

As a housing association, GHA is of course governed in a different way to the pre-transfer housing department. There is no denying that the process has removed formal control from elected councillors and that this raises questions about local accountability. It is, however, debatable how far this mechanism has genuinely provided tenants with an effective channel of influence over the running of council housing – either in Glasgow, or elsewhere.

In any event, it is clear that – as in most other stock transfers – the GHA project has proved a substantial stimulus to tenant involvement in the running of social housing. The reservation of tenant member seats on GHA’s governing body, with the board chaired by a tenant member is only part of this.

Other key aspects include the establishment of tenant working groups, the city-wide tenants panel and the resident-controlled local housing organisations responsible for delivery of day-to-day management services.

‘The GHA project has proved a substantial stimulus to involving tenants in the running of social housing’

While some of these frameworks were inherited from the city council, the vast majority are additional to what existed pre-transfer. More importantly, perhaps, there is a sense of an organisation far more directly driven by tenant priorities than as a council housing department.

Perhaps surprisingly, aspirations to improve housing management did not feature centrally in the 2011 transfer prospectus. Nevertheless, GHA can claim credit for much stronger performance on day-to-day repairs services and on responding to anti-social behaviour. These developments have been reflected in generally rising rates of tenant satisfaction as recorded in large-scale surveys.

For example, the proportion of tenants satisfied with the repairs service increased from 44 per cent to 64 per cent between 2014 and 2016. Another figure reflecting front line service improvements was the 10 per cent increase of respondents satisfied with the local housing organisation service. However, at 49 per cent, this could be seen as still leaving substantial scope for improvement.

Notwithstanding the progress of capital projects, there have undoubtedly been tensions between local housing organisation influence over modernisation programmes and the GHA headquarters priority on maximising efficiency and speed through bulk procurement and standardisation. There are also areas where GHA has fallen short of goals, where the blame cannot easily be placed on funding shortfalls.

In particular, housing management efficiency was slow to improve during the early years, which weakened the association’s financial position. The aim of reducing rent arrears to speed up property reletting began to show through only in 2018. But gains have recently been registered in both these areas.

With more than 60 local housing organisations responsible for day-to-day service delivery and a headquarters unit providing investment management and other corporate functions, GHA’s organisational form was unique for a social landlord body. It was also an uneasy and many would say unworkable compromise between competing objectives.

Managing the tensions built into the project has been a massive challenge for all concerned. Senior figures involved would probably concede that there are respects in which these could have been better handled.

That GHA has fallen short of some important publicly stated objectives is also a matter of record. Nevertheless, the tendency to portray the GHA transfer as essentially a ‘failed project’ is badly in need of correction.

Hal Pawson is a professorial fellow at Heriot-Watt University.