The governance of change: Procurement of social housing in

Northern IrelandPlease do not quote from this material without the permission of the authors

Jenny Muir, Queen’s University Belfast

David Mullins, University of Birmingham d.w.mullins@bham.ac.uk

Housing Studies Association conference, York

18th – 20th April 2012

Contents Introduction to the research

Context: Housing need and social housing provision in Northern Ireland

Theory: Network governance and hybrid organisations

Policy:

Drivers for change in NI’s social housing procurement

The UK social housing response to public procurement requirements

NI’s Social Housing Procurement Strategy

Findings: Implementing the Northern Ireland strategy

Conclusions

Introduction to the researchThe case study is part of:

(i) A wider study on Third Sector Partnerships for Service Delivery, led by the Third Sector Research Centre, with four main themes: Partnership working: third sector, public and private sector organisations Partnerships, strategic alliances and mergers within the third sector Innovation and learning from partnership working Evaluation of third sector partnerships

(ii) A scoping phase of research into partnerships in housing and housing-related support services in Northern Ireland, study funded by NI Housing Executive)

Literature review and semi-structured interviews with key actors

Interview themes: policy context, drivers of and barriers to partnership; process and organisational changes; impact and outcomes of partnerships; engagement with funding reductions

Context: Housing need and social housing provision in Northern Ireland (1) In Northern Ireland, existing social housing is managed by the NI

Housing Executive (75%) and by housing associations (25%)

New housing is built by housing associations only: 2,418 in 2010-11

Social housing waiting list: 39,891 (March 2011)

Homeless acceptances: 10,443 (2010-11)

NI Housing Executive new social housing requirement to meet need: 2,000 units p.a.

NI Executive Programme for Government 2011-15 housing targets: 6,500 units of social housing 1,500 units of affordable housing

BUT…. Further cuts may occur Policy commitment from Assembly to protect Health spending Need may rise further due to economic climate and welfare reform

Context: Housing need and social housing provision in Northern Ireland (2) Change is under way for NI’s social housing providers

Housing associations: Currently 30 housing associations in NI Social Housing Procurement Strategy 2008: mandatory procurement

groups (culture shock) Regulatory issues: seven HAs suspended from development 2010 Political pressure on HAs to merge

Northern Ireland Housing Executive: Fundamental Review early 2011 Included Strategic Housing Authority, social enterprise landlord and… New Housing Regulator for both the new social landlord and housing

associations Assembly election May 2011 New Minister has not yet decided on final structure

Social housing governance in Northern Ireland Basic structure = providers, regulation and policy/ strategy:

Department of Social Development sets policy; more policy ownership in 2007-2011 Assembly period; regulation

Northern Ireland Housing Executive: strategy, most implementation, still manages most social housing

Housing associations: new build and management; governance concerns, some HAs suspended from development

Providers Regulation Policy/ Strategy

Current 33 registered housing associations (new build); NIHE existing housing

DSD all social housing

DSD policy, NIHE strategy

PWC review 2011

Housing associations unaffected; Social Enterprise landlord (tenant majority on Board)

New arms length organisation, for all social housing

DSD policy; new Strategic Housing Authority

Minister’s response (ongoing)

Housing associations unaffected; NIHE new (ordinary) housing association

DSD DSD policy and strategy

Theory: Network governance and hybrid organisations (1) Housing associations as hybrid organisations:

Hybrid organisations take on attributes of other sectors whilst retaining ‘principal ownership’ of one sector (state/market/third sector) (Billis, 2010)

HAs hybrid organisations operating between state, market and communities with a mix of commercial and social objectives

‘Not a super blend but a balancing act’ (Blessing 2012)

Third sector – ‘principal ownership:’ (historically voluntary sector) Independent, self-governing, non-profit organisations with a social purpose,

grounded in non-monetary value, with origins in specific communities

Public sector characteristics: Public bodies under 1998 Human Rights Act (Weaver case) Public body for EU procurement and in NI for equalities legislation Regulation and inspection as in receipt of public funds

Private sector characteristics: Need to remain attractive to private lenders (credit rating) May use commercial strength to accumulate surpluses to reinvest (Robin Hood!)

Theory: Network governance and hybrid organisations (2) From Government to Governance: (Rhodes 1997, Kickert et al 1997)

Involvement of a wide range of organisations e.g. public, private and third sectors; state ‘steers’ rather than provides, including regulation

Power is seen as de-centered from the state to trust based networks Power is dispersed - no-one has sufficient power to achieve their aims without the

co-operation of the others, leading to multi-agency strategies and partnership working, and the need for negotiation.

Networks seen positively as unlocking ‘third space’ for empowerment (Deakin & Taylor 2002) re-inforced by trust e.g. through Compacts (Zimmeck 2010)

BUT this has been challenged – Stoker (2011) Davies (2011) claims In practice (according to empirical research) network governance often does not live

up to the claims made for it as inclusive, transparent and deliberative – actually reverts to hierarchies and ‘instrumental closure’ (excluding those without resources), and reproduces inequalities

Partnerships attempt to establish ‘trust based consensus’ but in reality, when interests align, they do so to the benefit of the most powerful stakeholders

Failed to recognise value of ‘hard power’ (Stoker 2011)

Theory: Network governance and hybrid organisations (3) Research on network governance and inter-organisational relationships in

service delivery partnerships in UK reveals: Dichotomy between competition and collaboration, especially where former is

externally imposed Co-existence of market, network and hierarchical forms of co-ordination within

partnerships Partnership rhetoric often masks the reality of hierarchically imposed

relationships between principals and agents and within supply chains Inequalities of power, limited trust and collaborative capacity, and lack of

legitimacy can occur Despite a decade of attempts to evaluate partnership outcomes, the evidence

of effectiveness is thin (Rees et al, 2012a)

Housing associations operate as hybrid organisations within network governance and face many of the tensions described above

Long history of group structures and full mergers in England But many small HAs retain independence and change not unilinear

Drivers for change in NI’s social housing procurement European Union Procurement Directives (enacted into UK law):

Most recent 2006; procurement is a devolved matter but negotiations with EU take place at UK level

UK: Focus on efficiency in construction from Latham (1994) and Egan

(1998) onwards Public sector efficiency agenda (Gershon, 2004) English HA policy and practice: greater regulation, investment

partnering, mergers

NI: Public Procurement Policy and Achieving Excellence for NI initiative

(2002): HAs included in 2005 Concern about efficiency and standards in HA sector (BUT n.b. Outputs

targets have been met for past few years)

The UK social housing response to public procurement requirements

Programme Grouping required? Other comments

England Affordable Homes Programme (3 years)

No, but voluntary investment consortia are common as response to concentration of funding on small number of ‘Investment Partners’

Must qualify as Investment Partner with the Homes and Communities Agency. Councils and private sector bodies may also bid for development funding

Scotland Affordable Housing Investment Programme (Annual)

No, but some procurement groups exist

Councils may also bid for development funding. 3 –year programme being introduced for 2012-13

Wales Social Housing Grant Programme (Annual)

Yes, six development consortia, from 2005

Northern Ireland

Social Housing Development Programme (Annual)

Yes, four (now three) procurement groups, from 2009

Driving serious consideration of mergers and group structures for the first time

NI’s Social Housing Procurement Strategy Introduced in 2008 by the Department of Social Development:

All HAs must be in a procurement group (PG) to bid for development funds – four groups were initially formed, 5 – 10 HAs in each; now three

PGs to develop framework agreements, initially for new social housing (contractor and consultants frameworks have been drawn up to date) but hopefully later for capital works and other purchasing

PGs prioritise bids from their members and send them to the Housing Executive to be assessed: first year of operation was 2009-10

Process has been made more complex by some HAs being suspended from development by DSD due to poor performance

HAs continue to manage their own projects but do not select their contractors themselves – contract for services from the supply teams

Aim was to cut costs by 10% over 4 years Performance judged against an Achieving Excellence ‘maturity matrix’ Strategy due to last until 2011 but has not been updated

Findings: Implementing the Northern Ireland strategy (1) Drivers of/ barriers to partnership:

Main driver has been mandatory nature of PGs, initially for development but plan to roll out to repairs and maintenance and general purchasing

Also public policy driver to reduce number of HAs and HA performance issues (not in general shared by HA movement)

Main barrier has been tradition of previous organisational independence Also interaction with regulatory issues especially 7 HAs suspended from

development

Impacts of partnership and collaboration: Very limited opportunity for service users to influence structures,

operation or outcomes Efficiency savings achieved but in context of competitive construction

market; delays in moving towards repairs & maintenance frameworks Organisational Change: Pressure from one PG to move towards single

development teams

Findings: Implementing the Northern Ireland strategy (2)Respondent 1 : This housing association guide which we refer to is very

descriptive, certainly in terms of area of design, so called area bands,

performance standards in terms of sustainability. It’s code level 3, it’s where

our current guide would be at. Secured by design, lifetime bonus, those

standards are built in. And I think there’s a fairly wide recognition that the

overall standard of social housing in Northern Ireland is maybe better than

most, within a UK context.

 

Q. And that will be checked back with the tenants would it, whether it’s a

design that meets their needs kind of thing?

 

R1: I don’t know if there’s any plans initially to do that.

 

R3: We’re not doing – as a department we’re not doing any…

 

Findings: Implementing the Northern Ireland strategy (3)

What has been learnt by collaborating? ‘Competing institutional logics’ (Mullins, 2006) revealed due to externally

imposed process (although HAs could choose their partners): ‘culture eats strategy for breakfast’ (Carter and Britnell 2011)

Clear winners and losers – one PG has embraced new culture, others accept that ‘PGs are here to stay’, one PG could not work together and disbanded

Idea of mergers being taken more seriously: two HA mergers during 2011; new question is do HAs have to be within same PG to merge

Umbrella bodies have also had to adapt to PGs – a new intermediate organisation; how to represent?

Debates around process: (i) public sector procurement to meet EU criteria in PGs vs. ‘intelligent commissioning’ as used for Supporting People (ii) independence of HAs: ‘politicians still want to have the benefits of private finance, but they want to have the control with it as well’.

Distinctive Features of NI Case Study within UK partnerships study The most extreme example of a hierarchically imposed form: directive stance to

formation, constitution and functions rather than outcomes.

Discontinuities with organic forms of procurement partnership that had been developing in the sector.

Conflict between the public procurement agenda and measures to increase third sector involvement in public service delivery through trust and equality of partnerships (//s to Work Programme example)

Involvement of service users even lower than the level found in most other partnership examples

Early evidence that might lead to fundamental changes in the organisational landscape; e.g. through merged development teams within PGs, full mergers between HAs within PGs, challenges to sector umbrella bodies

Implications for Theory Hybridity

Evidence of tensions and trade-offs of hybrid model Principal Ownership Drift: if third sector identities are not actively asserted the

risks of ‘capture’ by other logics and forms of organisation Main risks in NI associated with public sector capture rather than privatisation

Network Governance External Resource dependence leads to hierarchical control But some examples of limited network autonomy/agency

Trust Significant challenges to maintaining trust and legitimacy with imposed form

and new sector structures

Power – strong evidence of ‘hard power’ but also competing influences

Hard Power : but competing influences ‘There’s talk that this single development team may

become mandatory... they do have to drive that and that’s one way to do it. So then if they provide a business plan for five years. So it’s thought that at the end of the first five year period they may make it mandatory. If it hasn’t evolved naturally by that time they may make it mandatory’. (Case Study interview, August 2011)

But competing influences from Concordat and wider policy change in NI – watch this space!!

Housing associations as hybrid organisations within the case studies Limited alignment of HAs to wider third sector in NI

Wider third sector umbrella body reported very limited alignment of HAs to wider third sector in NI that despite origins as ‘voluntary housing movement’

Housing umbrella body had not mobilised around third sector compact and concordat debate

A good case supporting NIAO view that the principles of the Compact are ‘not widely or consistently applied’ (NIAO, 2010).

Procurement groups: Problems appear to be arising because HAs are being treated as public

bodies (scoping interview) rather than independent, value-driven organisations e.g. pressure for mergers

The absence of the private sector from the partnership means there is no focus on the need for HA independence for lending credibility

Third sector identity not exploited

Conclusions Key points:

PGs imposed; accepted by HAs with varying degrees of enthusiasm Unstable policy environment: bedding down of PGs, regulatory issues,

political drive towards fewer HAs, review of NIHE. Lack of trust Lack of user input and feedback

Network governance and hybridity: The PG process was hierarchical rather than a partnership; state very

much in control via access to SHDP funds The status of HAs as third sector organisations was not acknowledged

by others, who saw them as public sector

Questions for the future: Are PGs in NI a transitional stage towards HA mergers? Is the future of NI’s HAs as independent social economy organisations

or quasi public sector bodies? Or a fragmented sector including both? What is the best way to commission/ procure social housing?