The social housing sector is braced for the return of inspection in some form. But whether it’s ‘Ofsted-style’ as the government prefers or an extension of the current ‘in-depth assessment’ approach remains to be seen. Either way, organisations need to start preparing now – as Alistair McIntosh explains.

My wife is a director at one of the G15 housing associations and is under a certain amount of pressure at the moment. So, I get how hard people are working. I get how many complaints there are. I get how much political interest there is.

It’s a tough old world to operate in and, unfortunately, with a general election at some point in the next year, it’s only going to get more intense. The level of scrutiny is unlike anything we’ve seen before. And into that comes inspection.

We’ve run a couple of our own pilot exercises and I’ve spoken to many of the regulator pilots. I’ve also spoken to the regulator. We’ve been tracking this pretty carefully over the last couple of years because it’s important that members of HQN, as the name implies, do well at inspection.

There are 200 new staff at the Housing Ombudsman to cope with the incredible backlog of work that they’ve got. Goodness knows if they’ll ever clear it, because those complaints reports they put out, whether you agree with them or not, are certainly very detailed.

We also have 100 extra staff being recruited by the Regulator of Social Housing and that will take them up to about 200 – the old housing inspectorate at its peak had 120 staff, so already this is a bigger operation. And, of course, in those days, the ombudsman wasn’t as active as it is now.

“I have to visit as many estates and talk to as many people as I can. I’ve cycled around the boroughs so much, I should have the calves of Jack Grealish, but, sadly, that’s not the case”

It does beg the question of whether the ombudsman and the regulator will ever come together formally in some sort of merger. As some of you will be aware, the ombudsman is referring cases to the regulator, which the regulator is then duty-bound to investigate. So, they’re already joined at the hip as one organisation to all intents and purposes.

I expect that the social media campaigns we’ve seen over the last 18 months will continue and that the ombudsman and regulator will have to respond to the intensity of those campaigns and the political support they get as we go along.

So, the pressure will continue from both formal and informal mechanisms. And it’s the informal mechanisms that sparked Michael Gove into action.

Gove is especially interested in Grenfell and you wonder if it’s a reflection of the Piper Alpha disaster, which certainly affected Aberdeen where he was brought up in his youth. He’s written extensively about Piper Alpha in the past. Quite a traumatic formative experience. Even in Glasgow, I remember the Grampian police cars coming round in the early hours and that’s how we knew something was amiss.

Gove coined the phrase ‘Ofsted-style inspection’. Interestingly, if you look at Jeremy Hunt’s new book, which is his reflections on the health service, he has a whole chapter on how difficult it is to use targets meaningfully. Too few, too many ‘gaming’, all the rest of it. But his conclusion is that Ofsted-style inspections are the way to go. If the indicators aren’t telling you everything you need to know, then you must go in and inspect the organisation and draw some conclusions on the ground.

Talking to one of the pilot organisations, they were pretty pleased at how straightforward it was but, when they reflected on it, they realised how much they’ve done on assessing their performance against the consumer standards beforehand. I expect it will be more difficult in the future when the inspectors have more experience and more wherewithal, but preparation is the big lesson from that particular pilot.

The housing inspector in the past would rely on short notice inspections to deal with recalcitrant landlords that would perhaps benefit from an ambush. The regulator doesn’t need to bother with any of that. It can downgrade, it can issue notices, it can take action without visiting a single home or going anywhere near you. And you’ve seen that in the past on defects on data and safety.

Know your homes

Now, the regulator isn’t going to be prescriptive, but you’ve got to know your homes inside out and understand what work needs to be done and where the safety issues are. They’re not going to tell you which surveyor to go to, or which method to use, but they will seek assurance that you know the problems across your stock and that you’ve funded plans to deal with those.

Stock survey requirements are changing. In the past, housing associations have asked for stock surveys in order to raise finance. When you’re doing that, it’s perfectly all right to clone properties because it’s purely for the purposes of a business plan and lending collateral. When you are surveying properties to satisfy the regulator that know your onions, you’ve got to visit all the homes and get reliable data on them, preferably vetted by someone independent.

You then need to tie that to information about individual vulnerabilities of households. Time and again, landlords get caught about having folk in poor conditions with damp and mould and they weren’t aware of elderly people, asthmatic people, and children in those properties.

There’s been a recent spate of ombudsman cases that boil down to vulnerable people living in poor-quality homes. The ombudsman then refers that to the regulator. The regulator then writes to the landlord and seeks the relevant information.

Get senior people on complaints early

Complaints handling is a very big deal. The advice I’d give is never to delegate complaints handling to junior people. Complaints handling has to be dealt with at a senior level in the organisation and if you don’t do that, you’ll be caught out time and time again. So, a lot of effort has to go in, even at the stage one complaint stage, to make sure that you really are on top of things and not just relying on processes.

Now, you’re probably saying, that’s all very well, Alistair, but we’re not going to sign a massive cheque; we’re not going to get this stock survey done anytime soon. I agree with all that. You must have some plans in place to undertake a survey, albeit over a period of time.

Housing associations don’t have a leg to stand on because the value-for-money standard that already applies to them has required a granular analysis of stock since the year dot. Local authorities might have a bit more wiggle room.

A lot of landlords are using Microsoft Power BI to identify trends of disrepair and complaints on estates. They then visit these estates and see if there are more similar cases and check that their data is valid and up to date. In addition to this, what we find hugely valuable is listening to the operatives, the call centre workers, area managers, local finance agencies, et cetera. They will tell you where the problems are. It’s not difficult to identify the problem blocks. You’ve also got to listen to tenants and if you do all that, you’ll be there or thereabouts.

So, it’s a bit like building the bridge from both ends. The plan is to get the full survey done, but in the interregnum, working with the people you’ve got, and the information you’ve got, to build up a picture so that you’re not caught out. And of course, learning from complaints is an important part of that.

Self-refer on safety issues

Moving on, if you’re deficient in safety, then you may have to self-refer to the regulator. The system is known as co-regulation. And that means it’s your job to inspect yourself. If you identify shortcomings on safety, you have to assess whether you’ve failed the home standard. It’s your job to tell the regulator. People take different approaches to this. There are a few chief executives out there who self-refer every flipping week. There are others that are perhaps a little bit more recalcitrant, but the key thing is to get across to the regulator any deficiencies you’ve got on safety.

“I read some dross reports from local authorities and housing associations. Let’s lift the quality of those reports. You know what to do. Staff training is an important one. We need to listen, hear and act on what tenants and frontline officers are saying”

Now, local authority people say to me there’s no incentive to self-refer. The way I characterise it is like this: if you self-refer to the regulator, you get ten of the lash. If you don’t self-refer, you get 50 of the lash. They do prefer to be kept in the loop. And don’t forget, it’s not just the property – it’s communal areas too.

In order to get this right, get hold of all the ombudsman reports on record keeping. They’re very important. The regulator knows all the tricks about insufficient sample sizes and all the sorts of weasel words that are put around about the levels of assurance. So, for the love of God, please read your internal audit reports before you send them on to a third party.

So, what information is the regulator seeking from the pilot organisations before it goes in? Well, when they go to a housing association, they ask for all the governance and financial information they would for in-depth assessments because they twin-track the checks on the economic standards and the consumer standards.

For local authorities, it’s somewhat more confusing. The governance standard doesn’t apply, but they’re still looking for assurance from the cabinet or a similar body. So, you’ll have to provide some summary of who gets assurance and how.

And although the viability standard doesn’t apply, I would suggest that because the self-financing settlement made no adjustment for dealing with tower blocks, the government in effect left a few councils in what the regulator would characterise as its lowest financial ratings of V3 and V4.

It’s fair to say, you couldn’t describe the inspections that have taken place so far as ‘Ofsted-style’. We’re aware of the situation where the politicians have been pushing the regulator to go further and faster. The regulator is rightly proud of its role in financial stewardship. The housing associations don’t necessarily want to dilute the quality there, so I think we’re a way off what we’ll ultimately see. But lessons have been learned.

We’ve seen different themes in different pilots. Repairs at one, domestic abuse at another. At the housing association pilots, there’s a lot of focus on board members. One pilot said it’s almost as if the executives have been locked out of the process. So, again, training for board members is important. It’s been a bit more free and easy at the councils and almost thus far, but I think we need to get those folk up to speed.

“With the HQN pilots, we don’t quite lift every rock, but we have to be as thorough as we can. I am working on the assumption that [the regulator] will go in with Kwajo-like intensity”

Data and compliance are the big deals. The pilots have had variable feedback, but the game is on when the guidance comes out on inspection from the regulator, hopefully sometime in the summer.

Diversity is important to the regulator. Rochdale had fantastic stuff on its website about how good they were at dealing with black and brown people. The reality was very different. Transparency is all about how easy it is for the tenants to find out what’s going on and understand how they should be approaching things.

The HQN approach to inspection

With the HQN pilots, we don’t quite lift every rock, but we have to be as thorough as we can. I’m working on the assumption that they’ll go in with Kwajo-like intensity. The regulator has the ability to sample, but we don’t know in advance what that sample will be. They could use intelligence from Power BI; they could use complaints from the ombudsman. They’ll build up experience. Some of the folk at the RSH do know the job very well. They’ve got former housing association chief executives and former audit commission inspectors, so they’re not green.

They’ll be good at this, but I cannot second guess where they’re going. While the regulator may not visit individual homes, they will seek assurance that landlords know them inside out. So, I have to visit as many estates and talk to as many people as I can to check landlord awareness. I’ve cycled around the boroughs so much, I should have the calves of Jack Grealish, but, sadly, that’s not the case.

But we struggle, as does the regulator, in getting beyond the engaged tenants. We always start from the frontline. It’s an awful lot quicker than talking to the board, because people know the blocks, they know the issues. And in the olden days of inspection, we used to make up great scenarios for mystery shopping to test the call centre. Now we just listen to the recordings and they’re brilliantly insightful. I also find with councils that talking to the unions provides great information. They are especially strong on the need for training and the importance of boosting staff recruitment and retention.

And although the value for money standard doesn’t apply to councils, it sort of does. Picture the scene: the regulator comes in, your services aren’t up to scratch. The council says, “Hang on, we didn’t have enough money to spend”. The regulator says, “Yeah, but what about that rent increase you didn’t pass on? What about money you wasted on a local housing company?” And on and on it goes. So, my advice to the local authorities is to work as if the value for money standard applies and have your arguments ready to demonstrate that you truly are short of cash and managing your assets as effectively as possible.

“Local authority people say to  me, there’s no incentive to self- refer. The way I characterise it is like this: if you self-refer to the regulator, you get ten of the lash. If you don’t self-refer, you get 50 of the lash. They do prefer to be kept in the loop”

Now, the problem with councils is I can go in and say, you’re not spending enough on the properties, please fix this. And then the leader or someone else will say, “It’s all very well, Alistair, but what about the folk who are in bed and breakfast or the private rented sector in worse conditions? We’re a council, we have to balance our priorities.” Some very difficult issues there.

The regulator is going to have a tough job inspecting large associations across multiple areas. They’ve properties here, there and everywhere. How do you decide where to inspect and what weight to place?

I read some dross reports from local authorities and housing associations. Let’s lift the quality of those reports. You know what to do. Staff training is an important one. We need to listen, hear and act on what tenants and frontline officers are saying.

And that last point is one that underlines the importance of ensuring boards and cabinet members are totally in the loop. Get hold of those complaints at the start. Get senior folk involved. Don’t let matters fester.