Tuesday, 23 May 2017

Cracking efficiency

It’s undisputed that housing must be provided more efficiently, but how best to do it? Inside Housing convened a round table of industry experts to find out. Caroline Thorpe reports

‘We really need to find different ways of doing things, not just talk about it,’ says Bala Mahendran.

Eleven heads nod. To say that the chief executive of Basildon Council has just stated the obvious is an understatement. He, and the 11 other housing leaders gathered for Inside Housing’s efficiency round table debate, supported by Pinnacle, are keenly aware that government spending cuts leave the sector with no choice but to change the way it does things.

As chair Stuart Macdonald, editor of Inside Housing, points out, recent research by auditor Baker Tilly revealed more than a quarter of social landlords have yet to identify sufficient efficiency savings to absorb the impact of the cuts. The old cliché of ‘doing more with less’ seems distinctly anachronistic. ‘Doing more to stand still’ sounds more like it.

‘If we are brave enough to provide the leadership to the sector, to think the unthinkable, then to me that’s really exciting,’ continues Mr Mahendran before alluding to the proverbial omelette. ‘If you want to make things happen, you need to break a few eggs.’

No easy answers

Which eggs to break to make those things happen is precisely the subject of today’s debate. From walking to work to embracing technology, everyone round the table is clear about their personal commitments to efficiency. But when it comes to making their organisations, and the sector as whole, meaner and leaner there are plenty of ideas and examples - but no easy answers. Suggestions as to how to move forward come attached to words like ‘danger’, ‘bravery’ and ‘challenge’.

That housing must be provided more efficiently is not up for discussion. Panel members don’t find it hard to reel off the number of things which require them to trim their activities. There’s the obvious financial squeeze. ‘It may be heresy to say this, but housing’s had it good for too long,’ ventures Brendan Ryan, interim managing director of East Kent Housing, a 16,500-home arm’s-length management organisation.

‘I’ve worked in local authorities for the past seven years and I don’t think I’ve gone through a budget round that’s not had to make staffing cuts… except for in housing because, “it’s the housing revenue account and it balances in 30 years, so who cares?”.’

Until now, that is. ‘Unless the pressure’s there, there’s no motivation to change - and the pressure’s there now,’ Mr Ryan adds, describing the
10 per cent cut to housing staff he had to make last year. With English councils facing 9.9 per cent cuts across the board over the next four years, the affordable housing budget halved to £4.5 billion, the unring-fenced £2.3 billion Supporting People pot under pressure - and we could go on and on - it goes without saying that he’s not alone.

Richard Capie, deputy chief executive of the Chartered Institute of Housing, thinks the rise in consumer choice, fostered by the trend toward more personalised services - thus far most developed in care services and supported housing - demands greater efficiency. ‘With personalisation, you’ve got to be really on top of your game,’ he says.

Regulatory opportunity

Several panel members expect the recent abolition of Audit Commission housing inspections and new ‘light touch’ regulation to prompt shrewder business practices. Mark Henderson, chief executive of Home Group, says he was ‘horrified at regulation in the housing sector’ when the former local authority man arrived to run 51,000-home housing association Home Group almost three years ago. ‘It seemed almost designed to drive out innovation, to prevent risk-taking at all costs. This [reduced regulation] is a brilliant opportunity,’ he says.

Mr Capie agrees, though he warns efficiencies born from housing’s new rulebook may take a while to emerge from some providers. ‘There’s this Stockholm Syndrome - where people are beholden to regulations - and it’s going to take time for some to adjust.’

Time is not a luxury most have. The choice is simple: make savings or run out of cash. Ideas of how best to do the former to prevent the latter are in abundance round the table - but not everyone agrees on which are winners.

Take Phil Gandy and Tom Miskell, chief executives of Symphony Housing Group and Together Housing Group respectively. Both organisations have existed since April this year, each the product of recent housing association mergers; and both bosses say hoped-for efficiency gains were among the reasons to amalgamate.

Strength in numbers

Mr Gandy hopes to achieve leaner back-office operations, and ‘the natural benefits of an extended group of partners working together in a collaborative way’. His goal is to save his £141.9 million turnover organisation at least £40 million during the next five years. ‘I’ll let you know in three or four years if it’s working. If it doesn’t, I’ll be able to let you know from a distance, because I won’t be working there any longer,’ he jokes.

Together’s ambitions are more modest, according to Mr Miskell. ‘The driver [to merge] at first was efficiencies and to enhance services.’ But that changed as the financial landscape deteriorated. ‘It’s very much about delivering to at least keep what we’ve got.’ That said, he adds that the group’s new, federal structure should allow Together to spend less on procurement and back-office functions than the landlord’s three component associations did before the deal. He thinks a new IT system will help ensure, ‘we ain’t having half a dozen ways to do things’.

Mark Washer, finance director at Affinity Sutton, is a merger veteran. He says ‘significant merger is the biggest thing that has helped Affinity Sutton deliver efficiencies over the years’, two major mergers netting the 55,000-home association ‘millions in savings per year’. But, he warns, ‘don’t think merger is easy… it’s all too easy to undertake one and make no efficiency savings at all. You have to be incredibly focused and be prepared to make unpopular decisions.’

Mr Ryan knows all about those. His arm’s-length management organisation is less than three months old - and is the first in the country to cover four local authority areas, it’s four component councils having joined together to share all their services (Inside Housing, 20 May). It’s a move ministers are keen to encourage elsewhere, arguing it’s a surefire route to savings, and there’s much interest round the table in Mr Ryan’s experience.

‘It’s not that easy to deliver shared services,’ is his summary. ‘This has taken us three years of hard work. I don’t think we’d have got there without the housing professionals who have had the tenacity to stay with it… We’re [already] in our first argument with one of the local authorities over what rights they have to control things. And there’s another 30 years of this.’

Still, the panel shares a collective appetite for the principle. ‘It really is a simple one about shared services,’ reckons Mr Miskell. ‘The number of times we go out and cut some grass here and then someone else does is amazing.

‘There’s been a sea change in terms of people willing to move forwards on that - pressure on budgets has driven people to do something.’

Competitive spirit

One of two private sector representatives in the room, Neil Euesden, managing director of Pinnacle, wants things to go much further. He argues that introducing the market to housing service provision is the best route to efficiency - and improved services. He would like to see landlords opening every aspect of their business to competition.

‘That’s a brave decision for most people to make,’ he concedes. ‘But I have no doubt that if [landlords] were to tender those services they’d probably win them [themselves], and rightly so. There’s not a huge market: there should be.’

Jonathan Glanz, cabinet member for housing at Westminster Council, agrees. ‘I don’t think we will have the luxury in a few years’ time of being able to maintain these services independently when we’re effectively providing the same kind of thing,’ he says. Earlier this year, the central London authority entered a ‘tri-borough’ arrangement with neighbouring Kensington and Chelsea and Hammersmith & Fulham, its objective ‘to rationalise services across the piece… to see if we can extract savings for our council tax payers’. He says the council already sells communications services to other authorities and plans to expand that business.

For most housing providers, though, current external collaborations are limited to partnering arrangements with, for example, contractors providing repairs services. But is partnering efficient? Yes, says Jo Boaden, chief executive of the Northern Housing Consortium. ‘The big thing we do in terms of efficiency for our [300] members is our procurement services. In the past three years we have managed contracts of more than £240 million, saving our members £42 million.’

Hannah Miller, executive director for adult services and housing at Croydon Council, says: ‘We have been very successful in working with partners to generate efficiencies. We’ve saved £5 million on our kitchens and bathrooms.’

Mr Miskell says he has also used the model for procurement but complains that private providers aren’t renowned for passing on cost savings. ‘I was a passionate advocate. I’m not now…There’s a big thing there to be stronger as a client.’

That means getting real about what you ask of your partner, suggests Gordon Brockington, executive director at Morrison, a private sector contractor. ‘Short-term contracts stifle innovation,’ he explains. ‘We look at a return on our investment over the course of the contract… We’re throwing a whole chunk of cash up front to mobilise it. Our worst case scenario is a contract of 3+1+1+1+1 [years]. You’re never going to get anything from us because we’re not going to put any money into it. If we’ve got longevity we will innovate and put capital into that project.’

Genuine innovation

Without innovation, it’s agreed, efficiency will not flourish in the sector. And that means improving a patchy record for fresh thinking from within, as well as without. ‘It’s important that we innovate and that we drive ourselves to,’ says Mr Miskell. ‘One of our mottos is “steal with pride” - we’re keen to see what others are doing and, if it’s better, to say “we’ll embrace that”.’

Mr Mahendran and Mr Henderson are among those who say that innovation will not come without leaders in the sector who are prepared to take risks and tough decisions - even around what residents should expect from their landlord.

‘This is a time we should let leadership flourish. We need to invest in our people… that will bring genuine, real innovation in sector,’ reckons Mr Henderson.

‘And we must not crucify people when things go wrong because that will stifle innovation,’ says the Basildon chief.

Time to break some eggs.

Jo Boaden

Chief executive, Northern HousingConsortium
2009/10 turnover: £2.7 million

“When I started my job I knew I’d have to do a lot of driving and I got a very fuel efficient car.”

Richard Capie

Deputy chief executive, Chartered Institute of Housing
2009/10 turnover: £12.3 million

“The Apple iPad is a wonderful bit of kit. It’s very, very helpful. I type my notes in from today, and they just get cut and pasted and sent back to my team.”

Brendan Ryan

Interim managing director, East Kent Housing
Annual budget: £9.1 million

“I used the fast train from Canterbury for first time ever - you get to London so much quicker and it’s so much more efficient than having sat on the train for an hour-and-a-half.”

Mark Henderson

Chief executive, Home Group
2009/10 turnover: £302.5 million

“I’ve given up my office, as have the rest of the executive team. It’s not only more efficient, but it’s hugely improved quality of business in the organisation, culturally as well as physically.”

Neil Euesden

Managing director, Pinnacle
2010/11 turnover: £47.8 million

“I walk to work. Not all the way to work; just from Liverpool Street to Holborn, which is long enough for me.”

Hannah Miller

Executive director, adult services and housing, Croydon Council
Annual housing budget: £100 million

“I’m very good at multitasking which is dealing with social care issues at the same time as housing.”

Jonathan Glanz

Cabinet member for housing and property, Westminster Council
2011/12 housing budget: £21.6 million

“I live and work in London’s West End so my contribution is in shoe leather - I walk to all the meetings I possibly can in the ward.”

Gordon Brockington

Executive director, Morrison
2010/11 turnover: £275 million

“I’ve started using Boris bikes. To my downfall, last time I was here I cycled all the way here, couldn’t find a spot to park it in, and cycled virtually all the way back to find a hole.”

Tom Miskell

Chief executive, Together Housing Group
2009/10 turnover: £128.2 million

“I’m going to the Chartered Institute of Housing conference in Harrogate for two days rather than the week.”

Bala Mahendran

Chief executive, Basildon Council
Housing budget: £53 million

“I’ve had a conversation with the council leader about how many meetings we need to have, and trying to get a life. On that basis I’ve said I’ll meet
him when I need to meet him.”

Phil Gandy

Chief executive, Symphony Housing Group
Turnover: £141.9 million

“Our recent amalgamation doubled the size of the organisation I’m running. I said I’d go into the chief executive role on the same salary
I was on in the previous job.”

Mark Washer

Financial director, Affinity Sutton

‘I’ve made a commitment, because I’m fed up with spending over a hundred quid filling up my car with petrol, to get a smaller one.”

Tough love: why residents must play their part in the efficiency agenda

‘We’ve been guilty of running a nanny state in housing: the idea that the landlord just did everything. We’ve got to work with our tenants to shift that.’ Hannah Miller, Croydon Council

‘Housing professionals will have to say, “we’re not going to give you a three-bed property, you can’t afford it, you can have a one-bed”. The world is changing.’ Bala Mahendran, Basildon Council

‘Customer service in our sector is at a level than many private sector organisations would be very comfortable with. There is a cost to going after the last percentage point in customer satisfaction.’ Mark Washer, Affinity Sutton

Readers' comments (4)

Comments are only open to subscribers of Inside Housing

Already a subscriber?

If you’re already a subscriber to Inside Housing, your subscription may not be linked to your online account. You can link your subscription from within the My Account section of the website and clicking on Link My Account.

Not yet a subscriber?

If you don't yet subscribe to Inside Housing, please visit our subscription page to view our various subscription packages.

Have your say

You must sign in to make a comment

sign in register


Newsletter Sign-up



IH Subscription

Related Files