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nefficient housing associations face less funding and more regulation, the chief executive of the Housing Corporation warned this week.

Jon Rouse said the quango might not be able to 鈥渏ustify investment in associations that appear expensive鈥�.

Writing in Housing Today two weeks after the corporation released its first efficiency league table for registered social landlords, Rouse responded to critics of the exercise by asserting that the high cost of services was not a guarantee of their quality.

He added that, as the corporation refined its approach, he would be looking for examples of RSLs that 鈥渕aintain high quality and satisfaction at lower costs鈥�.

Rouse鈥檚 comments are likely to cause concern among RSLs unhappy with their position in the table and the criteria that were used to assess efficiency.

The chief executives of several large RSLs said they doubted the accuracy and fairness of the table, which ranked housing providers according to how well their actual costs came out against those projected for them by consultants.

Ealing Family Housing Association was ranked 188th out of 192. Rod Cahill, chief executive of Catalyst Housing Group, which includes Ealing Family, said: 鈥淸The table] fails to take into account some distinguishable factors.鈥�

The index ignored the higher costs of residential care and nursing homes at Ealing Family, he said. 鈥淎bout 33% of our operating costs went to 6% of our units, but the index is averaging and doesn鈥檛 consider activities that are high cost.鈥� Any RSL with high-cost operations was bound to be near the bottom of the league table, he added.

Darrell Mercer, chief executive of Acton Housing Association, ranked 189th, said: 鈥淭here鈥檚 a fundamental flaw in the index calculation.

鈥淎bout 40% of our operating costs are payments to private sector landlords for leasing for homeless families. [Researchers] have considered the additional staff time involved in this type of activity, but haven鈥檛 looked at the direct cost of rental payments.鈥�

He estimated Acton spent 拢12.5m on rent to private landlords over 2002/3, the period of the survey.

A corporation spokesman responded: 鈥淭he researchers [who compiled the index] looked at specialist services and applied them to the model.鈥�

But Cahill said this was insufficient. 鈥淭he model doesn鈥檛 recognise the high costs and distorting factor of services such as care homes. The model built in an allowance of 拢5.6m for our supported services. The actual figure was 拢12.2m.鈥�

The corporation spokesman said the index was intended to stimulate debate. 鈥淚f there are cases in which RSLs feel a issue should have been factored in we would take that into account before taking further action.鈥�