Should housing associations use the furlough scheme?

James Tickell, Partner at Campbell Tickell, discusses the furlough dilemma in a recent article for Social Housing Magazine.

These are tough times, and they are getting tougher. We can already see that whole sectors of the economy will be devastated by the effects of COVID-19 – entertainment, travel and hospitality for starters.

We can be certain that, when all is said and done, unemployment will rise for a while, as will hunger, ill health and crime. The tenants of social housing, among others, are likely to be at the sharp end of these changes.

Of course, the post-pandemic world does not have to be relentlessly bleak, but there will be huge challenges for individuals, businesses and government.

Against this backdrop, and like many other businesses, some housing associations have used the government’s furlough scheme, and have laid off various of their (or their subsidiaries’) staff. And they have been roundly criticised for doing so in some quarters.

Unlike, say, restaurants, housing associations still have customers, and most of these are still paying rent, some via the benefits system. True, lockdown has caused a range of difficulties for associations, but all in all, they’re in a better place than many others.

The hornets’ nest of ethics

Why, then, the argument goes, should associations be taking advantage of the furlough scheme, if the government’s money is more needed elsewhere?

That may sound convincing, but not for too long. The converse question is whether it would be right to use tenants’ rents to pay people for whom there is currently no work. That also sounds like an equally convincing ‘no’. So on reflection, we may have kicked something of an ethical hornets’ nest here.

Let’s be clear first of all that housing associations are perfectly entitled to use the furlough scheme. The chancellor went out of his way to state that it may be used by “any employer in the country, small or large, charitable or non-profit”. The objective of the scheme is to keep people at home for whom there is no work during lockdown, so that they can return to their jobs when things get back to the (new) normal.

Let’s also be clear that it isn’t a ‘first come, first served’ scheme, and that those employers taking advantage of it now aren’t taking the money away from others doing the same at a later stage. If government had meant to exclude housing associations, then they would surely have done so.

It’s legal, but is it right?

Back to ethics then. It is evidently lawful for associations to furlough, but is it right for them to use taxpayers’ money in this way? Or indeed any of the other government schemes aimed at helping organisations through the crisis?

As charitable organisations, set up for social purpose, it must at least be correct for them to give the question consideration before acting. Indeed those very discussions have been going on around (Zoom-enabled) board tables in all the UK.

There are some reasonably obvious practical considerations. It wouldn’t be proper to furlough a colleague unless there really were no work possible for them, and redeployment were not an option either. Some associations, rather than furlough, have seconded staff to other employers, such as partner charities or the local authority, which can use their skills. But this will not always be possible or practical.

Staff who are vulnerable – immuno-compromised, pregnant or with underlying health conditions – have been furloughed in some cases for the good reason that they must be ‘shielded’ and simply can’t carry out their duties.

Good employers have been imaginative in terms of rotating furlough between team members – a month on, a month off – so as to better maintain the workplace connection. Many have topped up the pay from the government’s 80 per cent to 100 per cent, so the individuals concerned need not experience financial hardship.

The top question

The top question has to be whether it is in the best interests of the charity – in terms of its ability to do more good in the world – to furlough. Once the immediate crisis is over, whether this year or next, it’s safe to predict that the need for social housing will intensify, as will the need for support to communities and individuals experiencing real poverty, some for the first times in their lives.

The logic for getting into the best possible financial shape to do that is powerful. Our legal friends could easily argue that it would a breach of charitable trust not to take proper advantage of a scheme that ultimately allowed the charity to pursue its objectives more effectively, no doubt at a time of limited resources.

Just as Homes for Heroes in 1918 was the genesis of social housing, so 2021 could be the catalyst for a new beginning in the story of housing associations.

Setting the new narrative

So on reflection, the question is maybe more about narrative than ethics. If you accept the line from Twitter and elsewhere that housing associations have long ago sold out their charitable roots for love of Mammon, then you will want to believe that it’s entirely wrong for them to furlough staff, even if banks and equity funds are doing the same.

The imperative now is for associations to challenge that damaging narrative, and re-establish themselves through their actions as the champions of the poor and dispossessed. By all means furlough, but use a big chunk of the savings for foodbanks, community groups and tenant hardship funds.

If working at home and in the community is the way forward, then use those savings in the same way. Be there for the tenants, the local authorities and the health service.

Show the world that social purpose really does what it says on the tin.

This article was featured in Social Housing.

To discuss further, please contact James Tickell on: james.tickell@campbelltickell.com