Housing Executive under review

The future of the Northern Ireland Housing Executive remains uncertain in the light of negative reports and the Minister’s intention to set out a vision for new housing structures in September.

“Urgent change” is needed within the Northern Ireland Housing Executive, according to Social Development Minister Nelson McCausland.

The housing body has come under increased scrutiny since former Minister Alex Attwood’s governance review was announced in October 2010, arising from concerns about the relationship between the executive and developers.

Attwood’s governance review (carried out by PwC) found that not all land sales were being presented for appropriate board or Chief Executive approvals and that internal audit teams had repeatedly given limited and unacceptable ratings to land and property services. It recommended greater use of the Housing Executive’s repairs inspection unit and reviews of the risk management and key performance indicators measuring the performance of contractors. In April 2011, the Housing Executive decided to cancel its maintenance contract with the Red Sky group after it was found to have overcharged the public agency by £500,000 for work which had never been carried out. The Housing Executive is currently taking legal action on the full recovery of this money as the Red Sky group went into administration the same month.

The PwC review recommended:

• a new social enterprise with landlord, community cohesion and safety responsibilities. This would be mutually owned by tenants and would have a leasehold ownership of the stock (i.e. would not own the stock outright);
• a new housing regulator with independent responsibility for inspection, governance and the economic performance of housing associations and the new social enterprise; and
• a new strategic housing authority to take on the current strategic roles of the executive.

At the time, Nelson McCausland was criticised by Social Development Committee Chair Alex Maskey for making “wholly inappropriate” interventions by asking the Housing Executive to overturn its Red Sky decision. When he became Minister, McCausland called for a forensic examination of a sample of Housing Executive contracts (conducted by chartered accountancy firm ASM Horwrath). The draft report of that forensic examination gives him “great cause for concern”.

In addition, the Northern Ireland Audit Office has released a critical report revealing that the Housing Executive allowed public land to be sold-off to “favoured” private developers at millions of pounds below the market value.

Between 2004 and 2010, 27 land disposals were found to have shown favouritism towards buyers in off-market sales, no exceptional circumstances were given to justify the off-market approach and disposals were carried out without proper valuations or board or Chief Executive approval, the audit report found.

Auditor General Kieran Donnelly also voiced concern that advance payments had been made to contractors and poor maintenance work carried out. The Housing Executive spent £55 million in response maintenance and £107 million in planned maintenance during 2011-2012. However, the poor management of the work of contractors led to wall units not being securely fixed to walls, smoke detectors being claimed and paid for but not fitted, cistern overflow warning pipes not piped externally or securely fitted, and glass being fitted inside-out to a front door.

He notes: “While each of these examples are not individually significant, it is the number of these type of issues that are being found coupled with the fact that they were not identified through Housing Executive inspections before the work was paid for, that is particularly concerning.”

Donnelly is undertaking a value for money review of the Housing Executive’s management of response maintenance contracts which will be published in a report to the Assembly in September 2012.

McCausland told the Assembly on 3 July that the draft report showed “many poor workmanship issues” e.g. charging for paving a garden that did not exist. The Minister believes that the Northern Ireland Housing Executive “has, to date, failed to demonstrate the required response to known shortfalls in contract management in a manner that either recognises the importance and significance of the issues or demonstrates an unequivocal determination to address the matters with the necessary pace and urgency.”

In response, the Housing Executive said it recognised that there had been problems. “Over the last 18 months we have been working with the Department for Social Development to improve governance arrangements and will continue to do so,” a spokesman said. He added that it has “completely reviewed the provision of maintenance contracts and this will see more effective contract management.” A new internal monitoring process is in place and will be “crucial”. Housing Executive Chairman Brian Rowntree resigned on 2 July and is said to have cited in a memo to staff his “challenging” relationship with DSD.

McCausland intends to implement “special accountability measures” to increase the department’s oversight of the Housing Executive. These include a comprehensive work plan dealing with actions stipulated by the Minister, fortnightly reports to be given to the Minister and monthly accountability meetings between the Housing Executive and the department. He will set out his vision for “new housing structures” when the Assembly returns in September.

On claims by the TUV’s Jim Allister that he is “introducing a form of direct rule of the Housing Executive by his department”, McCausland said that his findings were the same as those of the Audit Office and its own internal reviews (which “sat on desks … for six or seven months”). It was important he takes action “at the earliest opportunity”, he said.

When asked by Sinn Féin’s Housing Spokesman Fra McCann, to guarantee that he will not take “a political or sectarian approach,” the Minister responded: “The same issues that apply in one area apply in another, and the same issues that arose with [Red Sky] have arisen with others … We are being open and frank about this.”