When the prime minister and the chancellor both take a swipe at the work you do within the space of a week, you know you have a bit of a problem. Housing associations, once the favoured partners of government to develop new housing, are – we are told by David Cameron and George Osborne – not efficient enough or dynamic enough at producing the homes the country needs.
All of which must come as a bit of a surprise to David Montague, chief executive of one of the biggest housing association developers, L&Q, which manages 72,000 homes across London and the south-east and recently unveiled plans for 50,000 more – all to be delivered without government grant. The £12bn decade-long programme will be the most ambitious the housing association world has ever seen. It’s a far cry from the little charity launched 52 years ago by a south London vicar and a group of local businessmen with a share capital of just £64.
“If you look at the way the sector has responded since the 2008 crash, we are building more homes than we ever have,” he says. “As a sector we’ve doubled production in the space of one year from 25,000 to 50,000 homes in the face of a 65% reduction in capital grant [from government]. That seems like pretty good value for money to me. There is more we can do but this sector changes the place where people live, and up and down the country housing associations do extraordinary things.”
Montague this month became chair of the G15 group of London’s biggest housing associations, which together house one in 10 Londoners. They’re a diverse bunch of organisations, he says, but united by a commitment to “make the world a better place”.
Will that unity of purpose last? The government focus on promoting home ownership, including extending the right-to-buy to housing association tenants, coupled with the announcement in the last budget that social rents will be cut by 1% a year, means change is on its way. One of L&Q’s peers in the G15 group, Genesis, was the first to announce it would be concentrating on developing homes for sale rather than for rent to poorer people. That’s a move Montague says his organisation considered – but rejected.
“A small number of associations are saying we are not going to do rent, we are going to focus on home ownership, and I completely understand why they would do that because it’s not easy to get affordable rent to work,” he says. “With reducing rents, with little or no grant, with all the incentives going towards home ownership, you have to question why you would invest money in a product which is arguably no longer viable.”
But the reason L&Q decided not to shelve its work providing new homes for rent is simple, he claims. “We are a housing charity and the crisis is now, not tomorrow. We have an absolute responsibility to do something about it and, as much as we believe in home ownership, we also believe in affordable housing for rent. Our average resident has an income of £13,000 a year – even with a £100,000 discount they are not going to exercise their right to buy – and there are 380,000 people on housing waiting lists in London. We are not going to turn our backs on those people.”
Montague’s thinking is reinforced by his background. Brought up on a council estate in Eltham, south-east London, by a dad who was a waterman and then a captain on the Woolwich ferry and a mum who was a dinner lady, he says council housing gave his family security and the chance to achieve. “We did all the things families did and we could do that because we had a secure, good quality, affordable home. I really believe passionately in the importance of social housing,” he explains. “Social housing plays such an important role in the quality of life for so many people and it saddens me when people think it is part of the problem.”
When he went to secondary school – a grammar school off the estate – Montague first saw the negative perceptions that often surround social housing. “All my friends’ families were homeowners, and I was the kid from a council estate – and it was at that point I realised there was a stigma that comes from social housing and it can affect your life chances,” he says. “So I see part of my job as doing something about that stigma. I want to create places where people want to live, where they can be proud to live and where they can have the same opportunities as anyone else.”
Montague, 52, has been with L&Q for 27 years, working his way up through the ranks of the finance department to chief executive. Since the crash and the big cut in government investment in housing, his organisation has created what he describes as a “compelling and sustainable” model for developing homes at “genuinely affordable” rents through more commercial activity. Half of the 50,000 homes in development will be for sale to cross subsidise social housing. To that extent, he claims, austerity has offered fresh opportunities.
“Back in 2007, we only saw housing through a lens of capital grant. Government was our main customer and they funded our future,” he says. “When the recession came along and took that lens away, we made the decision to fund our own future. The world became a much bigger place. I don’t underestimate the challenges that many of our residents and local authority partners face [from austerity], but for us as an organisation it really has been liberating.”
Yet that very drive among housing associations to become more commercial means they face criticism from many politicians and communities alike: whether it’s over gentrification fuelled by the high price of some of the homes they are selling; the money they are making; or the salaries their chief executives are taking home. L&Q’s surplus last year was £209m – a record for the housing association sector. Montague insists “every penny” will go back into more affordable homes, and to the critics he says: “Where would you rather those profits went – to shareholders or back into affordable housing? Because that’s what we do. We build homes for sale because people want to buy and because we believe in mixed communities – but above all because we want to finance more affordable housing.” His salary and pension package of £268,800 is, according to L&Q, a reflection of the organisation’s success in outperforming financial and growth targets and “continues to offer excellent value for money” compared with his chief executive peers.
Montague concedes associations have to do more to show value for money. Suggestions that housing associations might be taken on to the government balance sheet, paving the way, potentially, for a sell-off, make that challenge even more pressing. “£76bn worth of private investment, 2.5m homes – housing associations are doing a pretty good job but we must engage in a more constructive, positive way with government and demonstrate our worth,” he says. “The way that we meet these criticisms is by providing a great service, improving our efficiency and building more homes and there’s not a single housing association in the country that wouldn’t sign up to that.”
He’s encouraged, he says, that housing is now such a hot issue. “There is a lot to be positive about. This housing crisis is greater today than it was when L&Q was created to fix it, but I see real determination across the sector – we must do more, but I think there is a will to do so.”
Curriculum vitae
Age 52.
Lives Eltham, south-east London.
Family Married, three children.
Education Colfe’s Grammar School, Greenwich.
Career 2008-present: group chief executive, L&Q; 2000-08: group finance director, L&Q; 1988-2000: various finance roles, L&Q; 1986-88: finance officer, London residuary body; 1984: administrator, GLC campaign headquarters; 1979: clerical officer, Ministry of Defence.
Public life chair of the G15 group of London housing associations, CBE for services to housing in London, National Housing Federation board member.
Interests music, running, spending time with family.
