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The idea that "Big is beautiful" is now embedded in Housing Corporation thinking. The number of developing associations will reduce significantly over the next few years and the clear implication of this is that the biggest associations will get bigger and smaller associations will stagnate or merge. But this trend appears to conflict with four key policy objectives of the government – effective management, sustainability, stock rationalisation and "new localism".

As the latest performance indicators show, smaller associations are better managers and have more satisfied tenants (see table 1). But there are staggering variations within size bands (table 2). Smaller associations can achieve levels of performance that large associations can only dream of. No large association can achieve a tenant satisfaction rating above 90%, but 26 associations in the smallest group can. Yet I guarantee that every association in the 10,000+ group will continue to develop, which effectively means that poor managers will be rewarded and good managers penalised.

Second, unplanned association growth has created an inefficient archipelago of stock ownership across the country. I am certain that the total annual staff and contractor mileage per property for larger associations with dispersed stock is significantly higher than for smaller associations with concentrated stock. Yet the transport and environmental impact of remote stock raises barely a mention in the corporation's sustainability strategy.

"Big is beautiful" is also at odds with "new localism". This concept, fast becoming a cornerstone of new Labour thinking, involves giving greater autonomy to local people and local institutions, reviving old Labour notions of mutualism and cooperation. Chancellor Gordon Brown has said " this new localism moves us forward from an old Britain weakened by centuries of centralisation towards a new Britain strengthened by local centres of initiative, energy and dynamism".

Development and management are separate processes. Few associations are very good at both. The corporation should be prepared to play to our strengths

But "big is beautiful" leads inevitably to remote and unaccountable decision-making, remote call centres, absentee landlords and lower standards of service. New localism is a negation of "big is beautiful" and it seems to me that the contradictions between the two will come into conflict at some point.

The problem is that the corporation tends to view development, ownership and management as a seamless process. But is there any reason, other than a pursuit of the numbers game, why bigger associations cannot develop and then pass on ownership or management to local managers? Development and management are separate processes. Some associations are very good at one but few are very good at both. The corporation should be prepared to play to our strengths and develop a new framework that requires developers to seek local owners and/or managers when they build outside their core areas.

Everyone can gain from such an approach – the developer gets the work, the local manager gets the business, the tenants get a better service, the pattern of ownership and management is rationalised, the environment suffers less and the principles of new localism are upheld.