Social housing: The forced sale of the UK’s largest black-led housing association to a mainstream social landlord has prompted complaints about the housing regulator’s handling of the case.

Herpreet Kaur Grewal

Social housing: The forced sale of the UK’s largest black-led housing association to a mainstream social landlord has prompted complaints about the housing regulator’s handling of the case. Herpreet Kaur Grewal reports.

Earlier this month the assets and liabilities of Ujima housing association – the country’s largest and oldest black-led social landlord – were transferred to housing group London and Quadrant. Social housing regulator the Housing Corporation says that it forced the transfer because it became apparent that Ujima was in such “severe financial difficulties” that it could not sustain an independent future.

The transfer came just three months after the Housing Corporation placed the body under “regulatory supervision” because of concerns about its governance. Ujima, which was formed against the backdrop of the Notting Hill Carnival riots in 1977, had been expanding rapidly by using loans to buy up housing and land. But according to press reports, the housing association’s rental income was insufficient to cover the loans.

This week the Housing Corporation launched an inquiry into the circumstances surrounding the collapse of the organisation (see News, p5). But the way in which the regulator managed the transfer of Ujima to L&Q has caused controversy. The transfer took place after the corporation rejected a number of rescue packages from other organisations (R&R, 4 January, p5). These included a £40 million bid from housing association Places for People, which said its offer “was made in order to give Ujima a choice about its future”. A spokesman for Places for People said the offer gave Ujima the opportunity to retain its identity because it believed “there is considerable value in the Ujima brand, particularly with its customers”. Another organisation that submitted a rescue bid was black-led housing association, Presentation.

At the time Steve Douglas, chief executive of the Housing Corporation, told Regeneration & Renewal that while one of the main objectives of his agency was to support the independent black and minority ethnic (BME) social landlords, its other key aim was to protect public assets. He said: “In the event that those priorities become irreconcilable, the regulator’s first and foremost responsibility is to protect public assets.” (R&R, 18 January, p.9). Douglas added that the situation with Ujima should spur other housing associations to recognise that getting the “best governance” was the challenge for them. He said: “Boards should be analysing the risks and ensuring they don’t over-trade so that they can focus on quality of service to tenants and residents. If they do that, the regulator won’t come calling.”

But others are questioning the way the Housing Corporation has dealt with Ujima. Some critics are asking why the corporation did not step in earlier, claiming Ujima’s governance and financial troubles go back years.

Lord Herman Ouseley, a former head of the Commission for Racial Equality, who started a Save Ujima campaign, describes the Housing Corporation handling of the situation as “scandalous”. He says: “It’s the job of the Housing Corporation to look after the health of housing associations.”

In his view, the corporation “failed to provide the right level of protection that would have safeguarded the housing stock earlier when troubles within the body became apparent.

But a Housing Corporation spokeswoman says: “This is not the case. The extent of Ujima’s financial problems became apparent only after the Corporation’s decision to put Ujima into supervision and make statutory board appointments.”

Ouseley claims that the Corporation also failed to embrace “more imaginative and creative engagement” when reaching its decision and did not sufficiently consider other possibilities. Last month, former Ujima board member Adonis Daniel told the Independent newspaper that he believed the proposed transfer to L&Q was prompted because Ujima was too independent and frequently questioned Housing Corporation regulations.

A source close to Ujima claims that the transfer to L&Q is another part of a government strategy to mainstream smaller, BME groups to encourage integration and discourage separateness. The Housing Corporation has denied the accusation. And according to a Q&A briefing designed to reassure tenants that was posted on Ujima’s website by L&Q, the latter “has more BME residents and staff than Ujima did and we are very confident we will work with Ujima’s former staff to ensure that good quality services are delivered”.

The Housing Corporation spokeswoman adds: “While the role of BME housing associations remains important, it must be remembered that well over 95 per cent of lettings to BME tenants are provided by mainstream housing associations.”

But Ouseley insists that it shows a lack of confidence in BME leadership that another black-led group didn’t take over the running of Ujima, which was considered a trailblazer because it was founded and run by black managers. “No-one’s happy about it,” he says. “I’m not against L&Q, but I believe the Housing Corporation should have considered a black-led housing organisation as one of the options for the management of Ujima’s stock.”

Housing associations nationally have rejected claims that the collapse of Ujima – a major player with 12,000 tenants in 20 London boroughs and Reading and Slough – showed that the credit crunch was biting the housing sector. A spokesman for the National Housing Federation says the Ujima case was “the exception rather than the rule”. He adds: “In 35 years of housing regulation, the financial crisis at Ujima is the first case of its kind and the corporation worked with housing associations to find a solution that, most importantly, protected tenants, and also protected Ujma’s creditors.” He adds that helping Ujima also helped the “sector-wide interest in ensuring that borrowing rates are kept low”.