"Chavs", "lazy thinking" and Pension investments into Social Housing

A couple of weeks ago Pension Weekly published this useful article on "The risks and rewards of social housing".

I've been a pension trustee (of sorts) for about 16 years and during this time I have asked various property fund managers and professional advisers "why don't we invest in social housing?"

To which I have had a number of different replies, most of which have not been that convincing to be honest.

Why is there this apparent mismatch between  social housing providers who say that there is not enough investment available for them to build while pension funds say there is inadequate opportunities to invest in such long term stable investments linked to inflation?

Usually the first response from a fund manager to my question is a blank look, followed by a little bit of waffle about how their current property portfolio is so good then saying this is a "very good question" and that they will speak to their people and get back to me (they don't).

However, over the years I have been told that there is a "reputational risk" if a pension fund invests in social housing since the fund agents may have to evict residents for non payment of rent etc. Well, Councils for example already evict tenants for non payment of rent up and down the country yet they still run pension schemes?

At a drinks reception after a pension conference (I admit not a reliable source for information) I was told by a property fund manager that  no one invests in social housing because of the risk that "chavs" would turn up at their posh City HQ demanding that they fix their leaking central heating!

Only once or twice have I heard the argument that the return from investing in social housing is not good enough compared to other asset classes.  Now this is a real argument but rather odd since pension funds normally invest in a range of investments with variable returns in order to spread risk. I also understand that the yields from bonds issued from housing associations are far greater than gilts or other bonds?

I am also aware that it may be possible to get a greater possible return from an investment by a pension fund if it was able to share in the capital appreciation of new build social housing stock? Obviously the funds would have to take more risk to get this return but I am informed that it is risk that is currently putting off existing social landlords from making new investments. So why can't Councils and Housing Associations share this development risk with pension funds?

I suspect that the real problem is that property fund managers and advisers are use to what they know. One adviser told me that the excuses put forward by such managers is just "lazy thinking". They are experienced in investing in shiny new retail parks, hotels and warehouses. Investing in Social Housing is outside their comfort blanket. Also Housing Associations are not use to sharing the capital appreciation of their assets either.

We need to sort this out. In other countries I understand that pension funds invest in social housing as a matter of course. They make decent money for their beneficiaries and they build affordable homes for rent. Kick starting the economy with new construction starts is another important consideration you would think. How often do we get a possible win-win-win on such a question?

How the bedroom tax works....

Search the Internet for "bedroom tax" and you will find mind bogglingly awful stories of families facing eviction and hardship because of it.

Steve Hilditch from Redbrick thinks that the Tory coalition may finally be politically vulnerable over this issue since it will impact all MPs constituencies.

Families whose children have died won't be able to pay the rent since their housing benefit will be restricted. They are deemed to be "under-occupying" (it's too big for them) their properties following the deaths of their children.

The mother whose son has joined the Army and is due to go to Afghanistan was told by Tory MP to "get a lodger".

I hope it does.

UNISON members who work in housing management will be placed in an impossible position. They will be expected to evict tenants on housing benefit whose children have left home even if they have been exemplary residents and have lived there all their lives. Established communities will be shattered.

This and the other "reforms" will also cost Councils and Housing Associations millions of pounds in arrears and extra administration. Money better spent on building new homes and kick starting the economy?

Click on picture to bring up details and decide for yourself who has too many bedrooms.

Some good news on housing workers pensions! But...

This is a rather rare title for a post on pensions! However, well done to Housing Association Plymouth Community Homes who have decided to keep their 60th Defined Benefit scheme with the Social Housing Pension Scheme (SHPS) open and absorb the extra costs imposed by the SHPS.

There are still some changes which UNISON members are unhappy about such as move from RPI to CPI and the charging of pension contributions while on maternity leave.  But PCH obviously care about their workforce and take their duties as a responsible employer seriously.

They do not want their employees to retire and die in poverty. Unlike some it would seem who not only want to close their Defined benefit (DB) scheme but replace it with a pittance of a Defined Contribution (DC) scheme. In a recent report by a leading Actuary, in a DC scheme you would need to invest 22.9% of your pay to get 53% of final salary pension (twice as much as a DB scheme!).

Yet some employers are proposing to pay only the new national legal minimum of 3%. This will mean as mentioned above that their staff will not only die in relative poverty in their old age but the taxpayer will also have to subsidise their pensions to keep them out of absolute poverty.

SHPS and its parent organisation, the Pension Trust, tries to justify increases in contributions by pointing to a supposed rise in "liabilities" (the future expected costs of giving members pensions) yet even the Pension Minster, Steve Webb MP, recognises that the way we calculate pension costs is practically meaningless and is destroying perfectly good pensions schemes.  He has committed to change.

Employers need to get a grip and challenge the assumptions being made and the contributions they or their employees are being expected to make. I am not at all convinced that this contribution rate increase requirement by the SHPS is at all necessary and I hope they seriously take this up with them.

I am dismayed that SHPS are not engaging with UNISON's proposals about practical alternatives to contribution rises. The Local Government Pension Scheme is very similar to many SHPF schemes but has been able to avoid increases in contributions for most of its members by working in a partnership with the trade unions and employers. This has brought about radical but thoughtful and intelligent change.

There was no consultation with the trade unions whatsoever by the SHPS before they decided what they wanted to do and no interest shown in any real partnership working.

One of the irony of ironies is that a major reason why some SHPS employers want to close their scheme to existing members is because they have closed it to new members joining. Quite rightly pensions contributions have to be increased if a fund is closed. SHPS have to charge more (I think 3%) since in any closed scheme the investment returns will be lower and the costs higher. This is just madness. Why condemn your staff to a miserable old age for nothing? Cut costs and re-open those schemes to new blood.

Closing your DB scheme does not make it any better, it does not get rid of any deficit (real or otherwise) it just makes it worse. Increase contributions on your staff by too much and they will just walk away from it, the scheme will then fail and the employer will be left to carry the can.

UNISON has recently published an excellent guide on the proposed changes to SHPS and later this week we are holding a national training event in London on it. 

UNISON wins recognition ballot at First Wessex - 80% in favour of voluntary recognition agreement

Good news and well done to South East Region and First Wessex UNISON reps Tara Imber, Vicky Higgins, Wendy Lamont and Stuart Mills (See photo with Wendy and Stuart). Check out report here.

"UNISON national officer for the community and voluntary sector Simon Watson commented: "In recent years, a number of housing associations have misguidedly stopped talking to trade unions.

"This result shows that, when staff get the chance to talk to UNISON reps, they realise we are essential for defending the interests of housing workers."

I would agree with Simon and frankly I am amazed that any Housing Association or Voluntary organisation chooses not to recognise trade unions.

Saying they allow union reps to represent their members at individual formal meetings is not enough. This is an anti-trade union attitude and practice.

Not only are unions good for staff but they are also good for good employers. Only bad employers who have something to hide don't welcome trade unions.

I know for a fact that many Councillors (not only Labour) will privately refuse to have anything to do with organisations that do not recognise trade unions. Either as preferred partners or commissioners.

 

If an organisation doesn't recognise trade unions and denies workers their basic human rights to bargain with their employer then there is something fundamentally wrong with that organisation.

Metropolitan Housing CEO £412k payoff while carers wages to be decimated

I'm on route to Labour Party conference and still fuming from yesterday’s news. Metropolitan Housing Association has announced that its former CEO, Bill Payne, was paid £412,000 last year.  At the same time as its front line care and health workers have been threatened with 30% pay cuts. According to Inside Housing this is the biggest ever payout. He was only in post for 4 years.

Staff who care for the disabled and mentally ill are going to be paying the price for this greed and incompetence. Who on earth agreed these terms? Ironically Metropolitan are also planning to reduce redundancy payments to near the legal minimum. Someone over age 41 on £20k would get say £2000 if laid off, Payne gets £209k. One law for the Directors and another for everyone else.

This is a registered charity that is even planning to sack full time workers in order to employ part timers at rubbish money since they could have their wages boosted by Government tax credits. Such behaviours are simply vile in any organisation but this is not G4S but one which claims to be “socially responsible”. Ed Miliband talks sense about “Predistribution” and increasing the pay of the low paid.  Labour must oppose this race to the gutter.

This is all just unbelievable and shows that some (not all) Housing Associations are completely out of control, ungoverned and corrupted with rotten practises. This is destroying the reputation of the whole sector. Lets fact it, many remuneration committees are just "mates clubs". Advised by consultants who know they have stuff the mouths of their clients (the Senior Management team and Chairs) with money or they will be fired. How can the excuse of always being in the top 25% quartile of pay not be anything but a means to ratchet up SMT pay?

For a while now I have been going to Labour Party conferences and asking first Labour Housing ministers, now shadow ministers, what are they going to do about poor governance and excessive executive pay in Housing Associations?  This year I hope lots of delegates do the same. Enough with the waffle. No government or Council money nor contracts should be given to organisations who act in this way.  We need a commitment to properly regulate and democratise associations by the next Labour Government.

Picture is of Metropolitan SMT on beano.

One Housing "defends" the indefensible

This is the 3rd recent post on Housing Association, "One Housing Group". First was in August this year in response to their plans to "Shape Communities" while at the same time slashing the pay and conditions of already low paid care and support staff.

The second was early this month about this post by Cllr Marc Francis, Tower Hamlets Labour Party, on housing blog "Red Brick" about "One Housing" going back on a deal made with residents about them having a majority on their local housing management board. This deal was in return for their support for an estate transfer.

"One Housing" have now come up with a rather silly defence of their action in this "Inside Housing" report. They attack the previous Board, Tory Cllrs and the local Labour MP and appear to claim that residents are just incapable of running housing services.

Which must be a bit of a surprise to the many successful co-operative housing organisations here and abroad. 

This is just an excuse. They could have compromised and still had an effective Residents Board but have chosen not to do so.

No wonder many attack Housing Associations as being unaccountable with poor or non existent governance, run in the interests of the senior management executives and their advisers, not ordinary residents.  This may be unfair to some but thanks to the behaviour of "One Housing" (and others) you can understand why many residents and politicians think so.

"Isle of shattered dreams" ("One" Housing Group)

Check out this post by Cllr Marc Francis Tower Hamlets Labour Party on Housing Group blog "Red Brick". One Housing Group is trying to get out of an undertaking it made to residents and the last government to have resident led "governance" on the management Board of its subsidy "Island Homes" in the Isle of Dogs, East London.

This attempt to back track on promises is the sort of thing that gives the whole housing association movement a bad name amongst ordinary residents and politicians from all political parties. Good governance in many parts of the whole so called "not for profit" sector is frankly non-existent. Residents, clients and individual staff have little or no power and many very large organisations are run by self perpetuating oligarchies with no effective accountability or oversight.

While there is still many cases of good practise there is a huge difference between being "consulted" (but - we are going to do it anyway) to being part of the actual management process. You need people on Boards who have a real long term interest in the organisation since they live its homes, work for it, receive its services or are local elected Councillors. They are the ones who can challenge and ask the difficult questions that are needed to be said.

Huge amounts of public money has been spent on investment in these bodies and despite the cuts will continue to be spent on benefits and social care.  Who is making sure that this money is being well spent and that Housing Associations are being properly run? The Housing Regulator is now pretty toothless and will only step in when organisations have already failed and are going to the wall.

Unless Housing Associations get their act together and reform their governance practises and become more democratic and accountable to their stakeholders then they have in my view no long term future. While the Tories will try and turn them into quoted companies (even more of a disaster) I am sure a Labour government will one day have no choice but to get rid of them.