Written evidence submitted by Rochdale Boroughwide Housing [RTB 123]
- Introduction
1.1. RBH is the UK’s first tenant and employee co-owned mutual housing society, with 13,700 homes across the Borough of Rochdale.
1.2. Our homes were transferred to RBH from Rochdale Borough Council in 2011, following a 2011 ballot of tenants, 76% of whom voted “yes” to transfer. We became a separate organisation in March 2012 and, following a confirmation vote of our tenant and employee members, our mutual status was confirmed at the end of the transition period in June 2013.
1.3. Membership of RBH is free and is available on an opt-in basis. Our membership has grown steadily and has reached 4,500 in summer 2015; over 25% of our tenants and 80% of employees have chosen to join.
1.4. Through membership of RBH and mutual ownership, we believe that our model allows all our tenants to own a real stake in their community, including those who – for a variety of reasons - may have difficulty saving for individual home ownership. We’re proud to be part of Rochdale’s pioneering tradition; as we are place-based, this also ensures that our members, tenants and employees retain an affinity with our society, and ensures that our society is well-placed to understand the needs of the communities we serve.
- Proposals on the right-to-buy
2.1. As our homes only transferred from Rochdale Council in 2012, over 9,000 of our tenants already have a preserved right-to-buy. For this reason, the impact of any extension to the right-to-buy on our business plan would be lessened.
2.2. We will not be able to understand the full impact on our business plan until further details are released, in particular how the reimbursement of the discount will work in practice. Should the policy not provide for full and timely reimbursement then this is likely to present a further challenge.
- Summer budget: the underlying impact on RBH
3.1. The changes proposed in the summer budget will have a profound impact on how RBH runs as a mutual housing society in the future, and we have had to fundamentally reassess our business plan which was based on the ten-year rent deal which allowed for rent increases of CPI+1% from April 2015 until 2025.
3.2. We recognise that the rent reduction will be beneficial for many of our tenants. However, the reduction will mean a deficit against our existing business plan of over £8m per annum by the financial year 2019-20. In addition to this, we expect that the further proposed changes to the benefits system are likely to lead to small increases in income lost through empty homes and through non-collection of rent.
3.3. This shortfall in income is unsustainable, and to continue as a viable society in good financial health will require significant changes to our society and the services we deliver.
3.4. We have taken some immediate steps to save money in anticipation of the future income reductions, including seeking to negotiate a reduction in our loan facility. The most significant initial saving involves a reduction in our development programme. We note from the PlaceShapers submission (paragraph 3.3) that many housing associations have taken a similar approach. We are very proud of our new-build programme which is delivering new homes across the Borough, including the first Extra Care facility in the area. The reduction in income will make it more difficult to increase the number of new homes we provide over the coming years.
3.5. Our wider response to this developing financial situation is two-fold; working to maintain our viability, and deciding on our future purpose in line with our values. We believe that our mutual governance model puts RBH in a stronger position to respond to the challenges posed by the summer budget. We recognise that difficult decisions will be required and that the reduction in income is likely to lead to significant changes, but we are determined to ensure that our tenant and employee members play a key role in shaping those changes.
- The RBH mutual model
4.1. Our governance is provided by a Board of Directors and our Representative Body. The Board is responsible for the overall management of the society and delivery of services, while the Representative Body set the strategy and direction for our mutual RBH.
4.2. The RBH mutual model puts our tenant and employee members at the heart of our decision-making process, and we know that our ability to continue to provide excellent services for our communities in the light of the difficult decisions ahead relies on support and input from our members.
4.3. At the centre of this is our Representative Body, which is comprised of 15 elected Tenant Representatives, eight elected Employee Representatives, three appointed Representatives from each of our Tenant Management Organisations, two Representatives appointed by Rochdale Council and three appointed Representatives from external organisations.
4.4. All our tenant and employee members are entitled to vote and stand in the Representative Body elections. We have a high level of member engagement, and the 2014 election saw a turnout of over 60% for employees and 50% for tenants, notably high figures for housing association elections.
4.5. The Representative Body set our strategy and policy framework within which the Board of Directors implements policy. They also appoint (and remove) our Non-executive Directors, monitor progress, feed into planning future services and strategy, communicate with members, and receive the annual report and accounts.
4.6. Our Mutual Future, our corporate strategy, was developed through a series of discussions with our Board, Representative Body and the wider membership. These discussions formed our vision of people succeeding together to offer great services and places to live and work. To do this, Our Mutual Future outlined that we need to:
- get our core services right
- support people and places
- build a strong membership
- maintain our income streams to support our investment in neighbourhoods in a challenging time
4.7. These objectives, developed by our membership, put us in a stronger position to make the difficult decisions required to survive and thrive as a society in the current financial situation.
- Facing the future together: our mutual response to the summer budget
5.1. Through their Representatives, our tenant and employee members will be at the heart of our response to the challenges posed by the summer budget. Through their effective scrutiny and ultimately approval of key strategic decisions including the creation of an in-house grounds maintenance team and the acquisition of Rochdale Council’s statutory homelessness functions, we know that our model is robust and will deliver results.
5.2. Our Board and Representative Body will meet on 30th September to jointly approve a revised business plan.
5.3. In the lead-up to this meeting, we will be giving all our members a number of opportunities to contribute to the discussion to ensure that our Board and Representative Body members are able to make an informed decision. All employees and engaged tenants attended a briefing early in the process, a newsletter to all tenant and employee members is being produced, and all members will have the opportunity to ask questions at a special session organised as part of our Annual Members Meeting on 5th September, to which all members are invited and welcome to attend and take part.
5.4. We know that we will still have a shortfall of £6million per annum by the financial year 2019-20. To maintain viability we know that this will require some potentially painful and difficult decisions. However, by being open and honest, working together as tenants and employees, and retaining our links with the communities we serve, our unique mutual model will allow us to make informed decisions and deliver the RBH that our customers want within the resources we have available.