Public, Private or Third sectors which is the best?

First published in Inside Housing in March 2011

A couple of weeks ago I was on a panel with David Orr when the perennial question came up, “are RSLs public sector or private sector?” Obviously the answer given by David was more erudite and learned than mine but we came to the same conclusion – it’s more complicated than that!

I’ve always believe that housing associations have a private sector form but a public sector heart. Plus Dane, the RSL that I chair has always believed the same. Of course we have private sector agility and the ability to borrow on private markets. But and it’s a big but we know that we don’t have a mandate to effect long term changes in the areas where we are stock holders. The mandate is held by the local council and we work closely with the council in the areas where we are strong to help them develop and deliver their mandate in such a way that it improves life for our tenants and the neighbourhoods in which they live.

Questions about sector are more relevant than ever as the Government tries to move RSLs more formally into the public sector. Mr Shapps is very keen on transparency and overseeing the salaries within the sector. I have no problem with transparency it’s just the way that the government wants to do it is crass and already proving to be ineffective. So RSLs will have to publish details of all invoices over £500 if they want development money. Council experience shows that very few people look and that it costs little to process the information. The problem then comes afterwards with a stream of well meaning but usually ill informed questions and comments that waste the time of staff.

True transparency flows from the way that an RSL or council conducts its day to day business. We should interact strongly and publicly with a range of partners, above all our tenants. We should be challenged by any of them and always ready to go the extra mile to explain why we do things and how we do them.

I have no objection to the government challenging the salaries of staff in any sector which relies on public money but it should be done across all such sectors. For example the highest salaries in what I would regard as the public sector are taken by University Vice Chancellors with arguably much easier jobs than Council Chief Executives.

But it isn’t only the minor glitterati of DCLG who are asking questions about sectors but there is an astonishingly naive view coming from Mr Cameron. The PM obviously believes that the private sector is best – presumably at everything – and wishes to have an automatic right of challenge for the private sector to be able to bid for work currently done by the public sector. There are two problems with this:

Firstly, the assumption that the private sector is always best is tosh. The LGA recently convened a meeting of leading public, private and third sector players which unanimously agreed that all sectors had inherent advantages in doing some things and inherent disadvantages in doing others. We agreed that the best way forward was the development of intelligent and adaptive relationships between all three sectors to maximise delivery and enhance innovation. Often an analysis of the private sector reveals that they are cheaper not because they are more efficient but because they choose to reduce the amounts paid to lower level staff that were already poorly paid within the public sector.

Secondly, the PM’s ideas would cost a fortune. Continually tendering and advertising would disturb delivery mechanisms, inhibit long term investment and create needless tensions within sectors and within local operations.

Frankly councils and RSLs are far more sophisticated than Mr Cameron. We well understand the strengths and weaknesses of each sector and would like changes in the law to enable us to procure more intelligently and develop long term and rewarding partnerships.

15 years ago I did some work with 5 RSLs for the Joseph Rowntree Foundation and I said then that the only organisations with a long term commitment to our troubled communities were the council and the investing RSL. I argued then that relationships between the two sectors needed to be strengthened and that the air of suspicion between councils and RSLs needed to be changed. Too often I still find that there is no meeting of minds. RSL leaders believe that councils are stodgy bureaucrats and Council leaders believe that RSLs are part of a rapacious private sector. This is amazing when you consider that almost all large RSLs have at least one councillor on their Board who should be acting as the link between the two.

This is an ideal time for RSLs to show true leadership within and to the public sector. With strong roots within all 3 sectors we could be the pivot around which innovation takes place and the new relationships are formed. As I look round I have little hope that this will be done. In the face of cuts all sectors are retreating to the bunker to defend their territory. We need to be going ‘over the top’ into new territory where we can innovate and provide new solutions to people whose services might otherwise be cut. Of course it’s about money but more importantly it’s about attitude. Are you up for change? I certainly hope so.


About richardkemp

Leader of the Liberal Democrats in Liverpool. Deputy Chair and Lib Dem Spokesperson on the LGA Community Wellbeing Board. Married to the lovely Cllr Erica Kemp CBE with three children and four grandchildren.
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