Corlan Housing Association (Hansard, 7 March 1991)

§ Mr. Nicholas Bennett

On 25 May 1990, and exercising its powers under section 28 of the Housing Associations Act 1985, Tai Cymru asked the Housing Association Consultancy and Advisory Service (HACAS) to conduct an inquiry into the affairs of Corlan housing association. Tai Cymru had already established by that date that Corlan faced significant difficulty. The HACAS report expresses concern in four main areas. First, it points to instances of what appear to have been overvaluations of site work and premature claims for housing association grants. Secondly, the report suggests that Corlan's internal administrative and other arrangements were not sufficiently robust to ensure that a development programme of the scale and nature undertaken by the association could be managed with appropriate care and thoroughness. Thirdly, shortcomings in the management of development projects were apparently compounded by deficiencies of financial control. Lastly, it is suggested that the association allowed uncertainties to arise over establishing the delegated responsibilities and development control mechanisms essential to good management in any organisation.

The report concludes that the committee of management believed that management mechanisms needed to be consolidated and were making efforts to bring this about. It also makes it clear that the Committee was completely unaware of any overvaluation or overclaiming—and would not in any circumstances have approved if such proposals had been put to it. The inquiry found no evidence to suggest that any individual staff member had sought to benefit financially from what occurred. The report has been prepared for issue by Tai Cymru, notably to chairmen and committees of management; and I understand that copies are being placed in the Library of the House.

With the help of Wales and West housing association, Tai Cymru was able to devise arrangements to secure the position of all Corlan's tenants, and to retain the association's housing stock, including those sites under development. Tai Cymru also set out to ensure that the relevant lessons had been learnt from what took place at Corlan. Following its creation in April 1989, Tai Cymru had already taken steps to introduce performance monitoring procedures for housing associations of greater 236W breadth than those associated with conventional financial audit. After it became clear that Corlan faced serious difficulties, Tai Cymru took the following further measures. In addition to submitting audited annual accounts, all housing associations were required to present management accounts, balance sheets and 12-month cashflow forecasts on a quarterly basis. Special arrangements were made to scrutinise these new submissions from housing associations: as an additional safeguard, Tai Cymru made it clear that grant payments could be automatically suspended if the submissions were not returned to timetable. The procedures for validating grant claims and for preventing overclaiming were strengthened. New technical guidance was issued on the treatment of valuations. In addition, and following detailed discussions with the Welsh Federation of Housing Associations, a fixed charge is to be applied to all new schemes in order to provide additional security for public assets.

As for committees of management, Tai Cymru is to organise a programme of seminars this year to help members in tackling their financial and management responsibilities. In the light of discussion at those seminars they will make recommendations on whether any other support, such as the provision of special training, might be of assistance to members. Officials of Tai Cymru and the Welsh Office will set up a joint working group to review those new measures and consider whether any additional steps need to be taken in the light of what happened at Corlan. I am confident that the measures already taken by Tai Cymru will strengthen the capacity and performance of housing associations in Wales to the considerable benefit of the movement, now and for the future.