The recently published housing merger code has been getting a rough ride in the sector and the press, mostly unfairly in my view. It aims to give a platform to best practice in the often-misunderstood sphere of mergers. However, some providers are reportedly unhappy and this seems to be the narrative making most of the headlines.
I was encouraged by the NHF’s decision to make guidance available, but the reaction, so far has seemed all too familiar in light of many of my own conversations with people in the sector. At the larger end, Sanctuary complains that the code is redundant and burdensome, while smaller organisations fear that the code is some sort of charter for predatory behaviour (and some mid-sized organisations are worried about both at once).
I’ll start by saying it is understandable that the larger associations might react this way – some, though still far from all, are experienced with mergers and have established practices. Perhaps counterintuitively, we tend to find that in a 1,700-strong sector with a pyramid-like proliferation of small providers at the bottom, most mergers tend to occur between a few well-known associations at the top, as we noted in our 2014/5 Good Merger Index recently.
However, it is the many small associations that most need to seize the opportunity to make efficiencies and face the future on the best possible terms. The vast majority are under 1,000 units and with the rent cap, RTB and welfare changes, these organisations face huge financial pressures. The merger code can, I believe, empower small associations that find themselves in this position. The code seeks to try and mitigate and balance issues of independence and identity with sensible objectives to develop and maintain services for the future. Merger might not be your solution but can’t we at least all agree on a sensible framework for evaluation without retreating to a default position of mistrust from the off.
The code gives a framework to operate from when looking at collaborations, ensuring that managers and boards are diligent and focused on social outcomes. As Radian CEO, Lindsay Todd has rightly noted, many organisations are unique and cultural fit often gets overlooked in a hurry to merge, but I’d argue that the code gives you the framework to evaluate approaches with these as considerations – the idea that it’s a charter for predators just doesn’t wash.
Even if the result of a rigorous discussion is a decision not to merge, all housing associations are in a stronger position if they can restate why independence is still the best course for the beneficiaries they were founded to serve – services and social mission should be at the core, not just institutional ‘sustainability’. As it stands, approaches are often thrown out after a quick conversation between CEO and Chair, which is simply poor governance. And if the decision is to merge, these are best achieved by being proactive and on the front foot with an evaluation framework agreed and already in place.
However, I do suspect timing is part of the reason for the negative reaction to the code. The sector as a whole, and smaller community-focused HAs especially, are already feeling unloved and undervalued, facing a battle over the value of rented accommodation as opposed to affordable to buy on top of a cocktail of changes, regulation and potential threats. In this climate, the NHF’s announcement has perhaps been perceived as just another unwelcome intervention. We must strive to reassure managers that this is a vital tool that will strengthen their organisation and enable them to best fulfil their founding missions, not just another thing to be feared.
Matt Knopp is a board member at Trident Social Investment Group, Chair of Reach Trident and Director of Eastside Primetimers.