'Significant mismanagement' to blame for Ujima collapse

Failure by the Housing Corporation to intervene in “significant mismanagement” of a housing association was partially to blame for its shocking collapse, an inquiry has found.

An independent investigation of the collapse of Ujima Housing Association – once one of the largest registered social landlords with 4,600 homes - has found it could have been saved with better intervention by the Housing Corporation.

Ujima was wound up in December 2007 by the Housing Corporation and its assets and liabilities transferred to London & Quadrant in January 2008.

For the two years ended 31 March 2008, its losses totalled £28m, and included a write down of £12.5m on four Ujima developments.

The inquiry found that warning signals at Ujima started chiming in the early 1990s when it was placed in supervision.

Problems persisted through to 2005 and worsened following the launch of an “excessively ambitious” business plan in 2006.

Ujima was awarded £45.4m for 2004-06 to develop 400 homes phased over three years with a number of completions due in 2006-07.

Further allocations the following year took the total awarded to £66m for 613 homes and an allocation for 2006-08 added £48.4m to its coffers.

The inquiry found that although Ujima was assessed to have the financial capability to handle the programme, it lacked the resources and ability to deliver it.

“Ujima was destabilised by pursuing ambitious growth plans without the resources or experience to manage existing services and deliver an ambitious development programme,” the report stated.

“If the Corporation had intervened more effectively during 2006 or even earlier in 2007, it is possible that Ujima might have been able to avoid insolvency, or at least have had more time in which to exercise choice and consult with its tenants and stakeholders in reaching a solution.”

The investigation also found the association was destabilised by a number of high-level staff departures.

It said the Corporation was “over-cautious” in its intervention and battled an un-cooperative Ujima Board.

Housing Corporation chief executive Steven Douglas, who ordered the review, said he had put in place a number of changes since the Ujima collapse.

He said: “We are determined to learn the lessons from this independent inquiry, and welcome the inquiry’s report’s endorsement of the changes we have made to our systems and processes in the light of our experience handling Ujima.”