CHAPTER SEVEN: TENANTS - PROTECTING AND PROMOTING INTERESTS
We put the interests of tenants - current and future - first. Social housing will have no future unless we do - because meeting the changing demands and aspirations of tenants is the key to coping with a society that has changed a great deal and will go on changing in future. The reforms that we propose to make to improve the supply of social housing, to widen the choice that is available, and to raise the standards that are on offer, will all work in favour of tenants' interests.
Despite these initiatives, however, it remains the case that demand for social housing will remain strong for as far as we can see ahead. Allocations policies will continue to be determined by need, rather than individual choice and as a result, social housing will for the most part continue to be rationed. Consequently, tenants in social housing will not have the choice available to those in the owner occupied and private rented sectors.
An absence of choice weakens the ability of tenants to shape their future. It also contributes towards the sense that social housing is separate from mainstream housing. For these reasons, we want to initiate a debate with tenants' groups and landlords about the merits of strengthening the role of tenants, so that they can become more empowered customers of their landlords.
We strongly support the work that is going on across Scotland to strengthen the network of Registered Tenants Organisations. In time, the network will give tenants a strong regional and national voice.
However, an approach that relies only on strengthening existing participation structures will not be enough. Participation does not necessarily bring with it power or a wide-range of choice, particularly over longer-term issues. Recognition of this fact has long underpinned the need for effective regulation of social housing providers.
A regulator can protect the interests of tenants and prospective tenants and compensate for their relatively weak bargaining position vis-à-vis landlords, particularly in terms of improving efficiency or service quality. Other groups that can benefit from regulatory protection are homeless people, Gypsies/Travellers and owners factored by social landlords.
Our decision to abolish Communities Scotland has implications for the regulatory function, as does our desire to stimulate innovation and choice in the provision of social housing. The recently published Crerar Review also has a bearing on how the function is discharged in future.
In due course, we will set out the way in which the Government will respond to Professor Crerar's findings as they might shape the wider landscape for scrutiny. As a starting point, however, it is important to recognise that the way in which regulation works to safeguard and promote the interests of tenants and others, is an important component of a successful future for social housing.
As part of the steps we will be taking to abolish Communities Scotland, we will put in place interim arrangements to ensure that the regulatory function which Communities Scotland discharged on behalf of Ministers, continues to operate at arm's length from Ministers. In the longer term, we will build on the success and strengths of the regulatory function, to make more explicit the way in which regulation serves the interests of tenants - current and future - and others. We outline below the principles that we propose should underpin the modernised regulation of social housing.
A modernised approach to regulation
We believe that the purpose of regulation as it is applied to social housing - should be as far as is practical to protect tenants - current and future - from unacceptable or unmanaged risks. The principal risks that we expect social housing regulation to address (working alongside our other legislative, policy and funding mechanisms) are:
- tenants being poorly served by their landlords and neighbourhoods being unattractive places to live;
- tenants' interests - current and future - being impaired by a landlord's failing properly to maintain stock which has been significantly part-funded by taxpayers; and
- social landlords failing in their obligations to provide tenants with continuing housing services, or to fund housing quality improvements, or to contribute to the development of new supply as a result of poor leadership or financial mismanagement.
The current regulatory function has helped to raise standards of practice and has led to intervention where performance is weakest to secure improvements. It has commanded significant confidence amongst the financial community and enabled housing associations - that rely significantly upon private finance to provide the huge majority of new affordable housing in Scotland - to enjoy advantageous rates on borrowing. This has greatly benefited tenants, landlords, and the taxpayer. We want to protect this significant measure of confidence. High standards of long-term financial sustainability are vital to the provision of new social housing.
We also believe, however, that reform is needed in the following areas to reflect the changing policy context, to strengthen the focus of housing regulation on the things that will matter most in the future, and to make regulation more effective:
Focusing on current and future tenants: In the current Regulatory Code of Practice for Communities Scotland, Ministers have set out a range of objectives for the regulator. We propose that social housing regulation should be more explicitly focussed on regulating for the benefit of consumers of housing and related services, with an explicit duty to promote their needs and interests. So, we propose that the modernised arrangements should give greater prominence to the regulator's purpose in promoting and protecting the interests of current and future tenants and other consumers of housing services. This would require the regulator to build on its current engagement with these consumers and their involvement in its scrutiny processes.
Greater independence: Crerar suggested a number of core principles for regulators. These include independence from Ministers, the freedom to make judgements about service delivery and to report on these publicly and the ability to decide on their own how to discharge their functions. While Communities Scotland currently acts with operational independence and freedom in its regulation function, it is still exercising powers on behalf of Scottish Ministers. We propose that the modernised arrangements should include the attributes outlined in the Crerar Review.
Separating standard setting and measurement: Within the framework that Communities Scotland operated, it set performance standards (in partnership with the sectors it regulates) and measured landlords against these standards. But this can lead to a lack of transparency and accountability because only Government, with its accountability to the Scottish Parliament for housing policy generally, can set a strategic direction on standards. So, we propose that the modernised arrangements should include a greater separation between standard setting and measurement. Central government should set out the strategic direction and standards for social housing. The regulator should hold landlords to account on compliance or performance against these standards and, where appropriate, set out more detailed operational standards and timescales for required compliance. The regulator would provide advice to Ministers
in setting standards.
Reducing regulation and inspection burdens: We are committed to reducing the regulatory burdens on social housing providers and propose that the modernised arrangements build on changes already being made by Communities Scotland in its more risk-based and proportionate approach, so that regulation operates on the basis of the following principles:
- There should be a clear recognition that responsibility for meeting standards, improving performance and achieving value for money rests with housing providers. In particular, responsibility rests with governing bodies and elected members through their own internal scrutiny and performance management arrangements. Therefore, self assessment by housing providers should, in most circumstances, form the starting point for any decision about the need for further scrutiny by the regulator.
- There should be no cyclical programme of inspections of social landlords, and once the current round of baseline inspections of local authority landlords is completed, routine inspections of this nature should cease. Inspections or investigations will still have a role to play in improving housing services. But they will be triggered by performance concerns and be targeted, risk-based and proportionate; or follow particular themes to seek out sector wide improvement or to assess the impact of policy changes.
- There should be lighter touch regulation for the better performers.
- The regulator should gather consistent, reliable performance information from housing providers that is used and useful, in a cost effective way. This should be aimed at making sound risk assessments (to focus attention on poorer performers), giving key information to relevant stakeholders, and helping tenants and others to be better informed about housing providers. This information should include material on costs and efficiency, as well as financial viability.
- The regulator should play a lead role in terms of assessments and performance information in relation to all social landlords and this should be relied on by other scrutiny bodies, to avoid duplicative information requests and over-regulation. It should also be used to inform funders when a housing provider is not a suitable investment partner.
Take account of the developments in the relationship with local government: We want to set our proposals for social housing regulation within broader developments in performance management and assessment frameworks for local government as they develop. In this respect, for example, a reformed approach needs to recognise that local authorities themselves will be important customers for regulatory activity in exercising their strategic place-making, housing and neighbourhood management functions. For this reason they may want to trigger regulatory attention on a particular issue or landlord where there are concerns about its responsiveness to strategic housing or community issues.
More proportionate and targeted intervention: Intervention should be at the minimum level necessary to secure the desired outcome or improvement and should be proportionate to the issue being tackled. And organisations should have the opportunity to put things right themselves before the regulator takes action. The current statutory intervention powers that Communities Scotland exercises on behalf of Scottish Ministers are relatively severe and intrusive. We propose to review and modernise these intervention powers to provide a broader range of possible enforcement and intervention measures that can be escalated and exercised in a more graduated and proportionate way. These "lower level" interventions could include information requests, a right to inspect or investigate, publicising a failure, an improvement or enforcement notice, fines or compensation, and rent capping. These powers could be exercised in relation to any social landlord.
Protecting tenants and promoting their interests: equitable protection
Our proposals to create an independent regulatory function with the statutory duty to promote the interests of existing and future tenants is critical in ensuring that tenants are well served by their landlords.
Building on the approach we have already proposed in this paper, we also propose to review the more significant intervention powers available to the regulator. Our starting point is that tenants in social housing should be given similar levels of reassurance and protection whoever happens to be their landlord. The principle of equitable protection is consistent with our view that the interests of tenants - current and future - must be to the fore.
Our proposals for modernising regulation cannot be implemented in full immediately as some aspects will require primary legislation. We will seek an opportunity to introduce legislation to achieve these changes, taking account of Professor Crerar's independent review of the scrutiny landscape in Scotland and containing enough flexibility to ensure that the new arrangements can respond effectively as policy develops over time.
Protecting tenants and promoting their interests: Glasgow
The twin aim of protecting and promoting the interests of tenants and taxpayers is at the heart of our approach to the challenging issues seen in Glasgow. We want to see tenants being given a greater say in the management of the houses and their neighbourhoods, including through second stage transfer where that is what tenants want and where it is sensible and financially achievable. We want to see major and sustainable improvements in the quality of the housing stock; continuously improving services to tenants (and to owners affected by improvement works); and transformational regeneration in the city which includes a high proportion of the most deprived communities in Scotland. And we want to see the funds that are provided by Government being used in a transparent and accountable way to support these objectives.
33. Do you agree with the features and principles we have set out here for a modernised regulation framework?
34. How would you like social housing regulation to be organised? (For example, should it be a separate organisation or part of a group of other regulators?)