Social Housing Speed Read – unions threaten strike action
7th March, 2016
We take a look at unions threatening strike action over rent reductions restructure.
Previously, social housing rents could increase by 1% more than inflation – a formula set by the Chancellor, George Osbourne, in 2013 and it was intended to last for 10 years.
As we know, in July 2015 the Chancellor announced, as part of the budget, that social housing tenants would see their rent reduced by 1% a year for the next four years. This was introduced in an attempt to address the ‘staggering’ rent increases in the social housing sector which he argued had risen by 20% since 2010.
Although the cut was supported by tenants as their rent would be reduced, the impact on the housing sector was severe. The huge reduction in income would inevitably make it more difficult to build new homes.
Following the Chancellor’s announcement The National Housing Federation chief executive David Orr said: “At the very least, 27,000 new homes will not now be built, though that figure could be much higher. The right to buy for housing association tenants further compounds this.”
The Government’s argument was that operating surpluses should protect Registered Providers’ ability to build new homes by implementing coping strategies.
A number of housing associations have undertaken large scale restructuring plans in order to protect the long term viability of their organisation whilst maintaining their social purpose.
Where are we now?
One high profile example of a Registered Provider which has adopted the aforementioned approach is Circle Housing Group (CHG). In October 2015 CHG started an organisation-wide restructure named ‘Fast Forward Circle’ which has resulted in unions threatening one of the largest industrial actions in the sector’s history.
The plan involves reducing operating costs by 17% a year to enable it to cope with the social housing rent cut, which CHG estimates has reduced its income by £50 million a year. The first phase will see 60 compulsory redundancies, centralising of services and the removal of subsidiary boards. It also seeks to change 12 terms and conditions of its employees, including; alteration to hours, the way salaries are calculated, pensions and leave and redundancy policy.
The proposed changes were set to commence on 1st April, however, on 18th February the unions (Union, Unite and GMB) requested an urgent meeting with Mark Rogers, chief executive, to discuss a ‘counter-offer’. Mr Rogers responded that there was “no firm viable counter-proposal from the unions”.
The unions additionally called for the restructure to be put on hold until CHG has completed its merger with Affinity Sutton, the concern being that otherwise staff could be affected by a second restructure if the merger takes place.
CHG has stated that the restructure is a completely separate process. The dispute is not currently resolved and the threat of industrial action is looming.
It is difficult to predict how this dispute will progress, however, it is a stark illustration of the profound and far-reaching effect that rent reduction is having on the social housing sector.
The ability to adapt is a key feature to survive in an industry subject to far-reaching political interference. However, when a business implements change it brings with it inherent risks.
Robert Melciou, GMB convenor for CHG, said that approximately 40% of the 2,300 workforce are members of unions and due to this unforeseen action, alarm bells have begun ringing to any employer of a unionised workforce in the sector.
If you have any questions in relation to industrial action or concerns regarding restructuring please contact our experts in the employment team.
Additionally, should you have any questions regarding the above or generally, please do not hesitate to contact me or a member of our expert Social Housing Team.
Please note that this briefing is designed to be informative, not advisory and represents our understanding of English law and practice as at the date indicated. We would always recommend that you should seek specific guidance on any particular legal issue.
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