The dilemma

It is 4.07pm on Friday 2 October, and in 53 minutes’ time, a decision will have been made that will change the housing association sector forever.

At the fourth floor offices of Peaks and Plains Housing Trust, on the doorstep of George Osborne’s constituency of Tatton, the board has assembled for an eleventh-hour emergency meeting. Their task: to vote on an offer to government by the National Housing Federation (NHF) on behalf of its 1,584 housing association members to voluntarily extend the Right to Buy to their tenants.

The stakes have never been higher. If enough associations vote in favour of the deal — “option A” — then the NHF says they will benefit from “independence, a new relationship with the government, and the best deal on compensation and flexibilities”.

“We are forced to take that decision with a bit of a gun to our heads in terms of the timescale.”

Tim Pinder, chief executive, Peak and Plains Housing Trust

If they vote against the deal — “option B” — then the government says it will use legislation to “compel” associations to extend the Right to Buy to their tenants anyway. NHF chief executive David Orr has warned there is “a very high probability” housing associations will be reclassified as public sector bodies if associations choose option B. This poses a much-feared existential threat that the government might then privatise the sector in a Network Rail-style sell-off. The vote has therefore been pitched as battle to retain independence, if not for survival.

The sector was given just eight days to meet the impending 5pm deadline. In all likelihood, 5,000-home Peaks and Plains is the last organisation to cast its vote.

A day earlier, chief executive Tim Pinder had confided to Inside Housing that his board would probably join the 75% of associations planning to vote for option A. It seemed like the lesser of two evils, or as the NHF described it, “the very best possible compromise achievable for the sector”.

But since then, things have changed. “It is not looking quite so open and shut,” he explains over the phone. Just over three hours later, seated alongside seven board members and three executives, the reasons for this become clear.

Late afternoon sunlight spills in through the blinds that have been lowered so NHF proposals can be seen on a projector screen. The board reflects varying experience: two members are older and have served eight and nine years respectively, while another is young and brand new to housing. Arms are folded and fingers are being chewed. Conscious of time, Mr Pinder kicks off, spelling out the gravity of the task in hand.

Tight timescale

“We are forced to take that decision with a bit of a gun to our heads in terms of the timescale. We have only had a week. The option open to us is a voluntary agreement or legislation. So this isn’t about avoiding Right to Buy, it’s just how it is brought in.”

He reiterates the full context of the proposal and then, at length, outlines the specific benefits of the deal the NHF has tabled: retained independence, financial compensation and fending off the possibility of reclassification. But then he paints an alternative view on the deal.

“It comes down to whether you believe or not that the stakes are so high on us being re-designated as public bodies. There is a counter argument to this voluntary agreement that says the exemptions are not enshrined in this agreement, that there’s not enough detail, and government still has the opportunity to come back and amend those or even take them out completely.

“There is a school of thought that what is attractive to the government about the agreement is that it avoids House of Lords scrutiny of the bill.”

Tim Pinder, chief executive, Peaks and Plains Housing Trust

“This counter-argument suggests that a legislative approach, rather than a voluntary one, may well end up with more exemptions. There is a school of thought that what is attractive to the government about the agreement is that it avoids House of Lords scrutiny of the bill. And that there is a view, that should it go through House of Lords, it may well improve the provisions.

“Part of that school of thought says that while the government has an absolute democratic right to enact legislation as it sees fit, is it right that housing associations should be in a position of voluntarily doing their dirty work for them on Right to Buy?”

There is much nodding on this point. Over the past day, critics have lined up to accuse housing associations, led by the NHF, of selling local authorities, which will be forced to sell assets to pay for replacement homes, down the river in a “back door”, “grubby” deal. And it’s not just Labour councils that are leading the attacks.

“Boris Johnson doesn’t like it. Zac Goldsmith doesn’t like it. London councils definitely don’t like it,” observes one board member. Debate on Twitter is mentioned. Another board member, who attended the NHF annual conference in Birmingham where communities secretary Greg Clark delivered a well-received pitch a week ago, observes that the process felt “stage-managed”: “I came away feeling like option A was really the only option. Now I’m starting to think legislation might not be such a bad idea.”

Mr Pinder points out that Mr Clark has since been at pains to reassure Tories that a voluntary deal will not water down the terms of Right to Buy. “I have to say, I think that has been slightly over-sold. I think the proposals in this voluntary agreement are very similar to what would be likely to come through legislation.”

But the biggest point is yet to be addressed.

“Irrespective of whether it is a voluntary deal or a legislative one, it is actually a good financial deal for the trust,” says Mr Pinder. “So there’s an issue about pragmatism versus principle.”

Positive outlook

Greg van Enk-Bones, resources director at Peaks and Plains, lays out some approximate calculations about how Right to Buy would affect the trust, confirming that, as long as homes can be replaced swiftly to fill the missing rent, the deal is positive. “It is financially beneficial — depending on scale — but what we don’t know is how many people will be able to afford to see this offer through,” he says. “If there were very many, that would leave a hole in the income before we can replace and that would be a shock that we couldn’t manage.”

The terms of replacement are scrutinised and found wanting. “There’s not enough detail to make an informed decision,” complains one board member. “There’s too much ambiguity,” says another, querying whether proper process is being followed with the agreement.

“You’ve got to have trust on both sides and we are not going to be able to trust these people,” says tenant board member Don Ellis.

Trust in the government is in short supply. Only the previous week, Mr Pinder wrote to his constituency MP flagging to Mr Osborne the impact of his decision to cut social rents just one year after having agreed a 10-year rent settlement. The association is losing £9m over four years and may have to make 24 redundancies. “What is to stop the government changing its mind again?” it is asked.

“The analogy that pops up for me is someone on a playground saying ‘If you give me your dinner money then I won’t have to hit you and take it’.” David Gooda, chair, Peaks and Plains Housing Trust

Long-standing chair, David Gooda, interjects. It is his last-ever board meeting, so perhaps legacy is on his mind. He questions whether the board should be “colluding” on a policy that could impair its charitable objective: “The analogy that pops up for me is someone on a playground saying ‘If you give me your dinner money then I won’t have to hit you and take it’… I don’t feel we should be rail-roaded. My initial feeling on Monday morning was there wasn’t really any choice with this. It was inevitable. I no longer feel that way.”

The unimaginable outcome of voting for legislation suddenly is imaginable. And the 5pm deadline is looming.

Mr Enk-Bones chips in. “I know that I said it is financially beneficial, but… our charitable purpose is that we are meant to have as many homes as possible because people need them.”

The arrival of a missing board member with 10 minutes remaining swings the dynamic back towards pragmatism. A tense debate ensues about whether it’s self-defeating to vote against an agreement that will almost certainly be passed. One or two board members look as though they could waiver. But Mr Gooda is resolute.

“I feel quite strongly,” he states. “We have two larger concerns: one that we shouldn’t be acting against our charitable objectives and by voting for this we will be. And secondly we feel that legislation is a more appropriate process to make a decision of this magnitude. So I am going to propose that we take option B.”

Mr Pinder stands by the door clutching his mobile phone.

Mr Gooda continues: “OK. So, I am going to ask for a show of hands for option A.”

There is just one.

“And the votes please for option B.”

There are seven.

“Abstentions?”

None.

“There we go, option B.”

With just six minutes until the 5pm deadline, Mr Pinder informs the NHF that Peaks and Plains Housing Trust will not support its offer. In doing so, the organisation joins a slender minority of 6% of the NHF’s members that vote against voluntarily extending the Right to Buy to housing association tenants.

A further 39% of members either abstain or choose not to respond. With 55% of NHF members who vote for option A, managing 93% of housing association homes, David Orr heralds the outcome as a “resounding yes” from the sector.

Those that rejected the deal — such as Peaks and Plains — must now wait and see what impact, if any, their ‘no’ vote has on their futures.