Stretching the pennies
As the sector awaits the falling axe, Inside Housing convened a round table debate to discuss how leaders are getting to grips with efficiency savings. Lydia Stockdale reports. Photography by Simon Brandon.
It’s crunch time for housing - at least that’s the impression the 13 leaders from across the sector give as they gather for Inside Housing’s efficiency-themed round table event, sponsored by Morrison, at the Park Lane Hilton in London.
Chair Stuart Macdonald, editor of Inside Housing, opens up the debate by recalling a recent conversation he had with a senior civil servant. The mandarin had expressed ‘concern that housing isn’t doing as much as it could be to be efficient’. On which note, Mr Macdonald launches into his first question:
What does ‘efficiency’ mean to the leaders gathered around the table?
‘It’s important to distinguish efficiencies from cuts,’ begins Ian Wright, director of performance and practice at the Northern Housing Consortium, a membership organisation that represents social landlords in the north of England.
‘Efficiency savings will only be generated if productivity doesn’t decrease. I haven’t seen anything [to come out of the government] that is anything other than a cut,’ he argues.
Elaine Elkington, strategic director of housing at Birmingham Council, the largest stock-owning authority in the country, says she feels Total Place - an initiative introduced by the previous government in March which looks at areas as a whole rather than at individual public services in isolation - has ‘fallen by the wayside’. Birmingham was one of 13 local authorities to conduct a Total Place pilot, an effort Ms Elkington feels has gone to waste. ‘We’ve done all of this work with different partners - and [the government has] gone back to absolute silo thinking,’ she says.
‘There’s a difference between short-term efficiency and medium and long-term efficiency,’ states Mark Johnson, director of property services at arm’s-length management organisation Nottingham City Homes. He argues that leaders in the social housing sector have to make a case for the long term - concentrating solely on the here and now will lead to increased costs in the future.
Ms Elkington agrees: ‘If you take 20 per cent here, you’re actually going to spend 40 per cent in the criminal justice system because this person is going to be homeless or that person has to move and can’t get to work,’ she says, referring to the coalition government’s cuts to housing benefits and housing allowance - the subject of Inside Housing’s What’s the Benefit? campaign.
So what have the leaders learned through making their own efficiency savings?
‘It’s not just ticking a box saying a project has been achieved - it’s about making a hard-nosed business case based on cashable benefits,’ answers Lawrence Gardner, head of information and computer technologies consultancy at Shropshire housing association Wrekin Housing Trust. ‘Regulation of the housing sector focuses on outputs,’ he says. ‘Inputs have never been recognised.’
‘I could say, “We’re more efficient than you because we’ve completed 97 per cent of repairs on time”- but that should be coupled with the question, “What have you spent to achieve that?”,’ he says.
In response to this, Roy Irwin, director of housing at the Audit Commission, concedes leaders in the sector are ‘not so good at reporting value [for money]’. ‘We’re thinking about how we help people work out the value,’ he adds.
The civil servant Mr Macdonald referred to may have had a point, chips in Lindy Morgan, director of the Sovereign Development Consortium, an alliance of 11 housing providers in the south and west of England. ‘There are organisations out there that are fat and lazy,’ she says. ‘We need to support those organisations to put their best foot forward.’
This will involve sharing best practice with other social landlords and not being ‘precious’ about who came up with an idea, Ms Morgan argues.
If chief executives are going to be asked to make savings of up to 40 per cent when targets are announced in the government spending review in the autumn, what should leaders’ priorities be?
Paul Kennedy, chief executive of business consultancy CEL Group, says that in his experience housing providers want to be ‘landlords’. ‘Costs would be taken out of business’ if they cut the various other services they offer, such as schemes to tackle worklessness.
Tim Wood, head of property procurement at Home Group, which manages 52,000 properties across the UK, argues that customers simply want their repairs and maintenance work to be done - and then they want to be left alone. ‘Residents only want to see us once or twice a year - they don’t want us continually bashing their down the door,’ he says.
However, Hugh Broadbent, chief executive of First Choice Homes Oldham, which is due to be the first arm’s-length management organisation to transfer its stock out of local authority ownership, makes the point that as public spending cuts kick in, other agencies will leave areas and residents will increasingly rely on the social landlords for wider neighbourhood services. ‘We’ll be the last man standing,’ he says.
What decisions do leaders face when it comes to driving down repairs and maintenance costs?
‘We are investing very heavily in an asset management model which will tell us which homes will cost what over the next five to 10 years, so we can see where the pressure points are coming from and whether other people will make a better fist of managing what we’ve got,’ answers Simon Dow, chief executive of the Guinness Partnership, a housing association which owns and manages a total of nearly 60,000 homes.
Ruth Cooke, finance director at Birmingham-based housing association Midland Heart, says it has ‘done the easy stuff - doing the same thing in a different way - the next step is to be doing something different.’ She suggests that a possible next move would be to sell the properties in its portfolio that cost the most to maintain. ‘If we could sell them, we’d release cash, but we’d also release liabilities,’ she states.
‘That’s a very narrow, short-term argument,’ counters Birmingham Council’s Ms Elkington, who says that ‘transfering your worst stock into the private sector creates problems for the local authority - we then have to deal with a bad landlord and the vulnerable people [they house].’
Social landlords should transfer housing management to private sector firms, says Gordon Brockington, business development director at Morrison, which manages 400,000 houses and public buildings across the UK.
Home Group’s Mr Wood says his firm has reduced housing management costs by 9 per cent by awarding ‘lifetime contracts’ to contractors. ‘You build it, you maintain it,’ he explains. ‘It leads to a higher quality build and higher levels of customer satisfaction.’
Do the leaders around the table think it’s important to consult staff when making efficiency savings?
John McPeake, director of design and property services at the Northern Ireland Housing Executive, which owns 90,000 homes and employs 3,500 people, answers that the problem with consulting employees is they ‘quickly learn that whenever they’re able to do things more efficiently, it generates spare capacity, and that possibly means job reductions.’ Leaders therefore need to learn how they can ‘properly engage the staff in a way that’s not threatening to them,’ he says.
And how about discussing efficiency savings with residents?
Social housing tenants have no investment in their landlords’ organisation. Therefore, housing providers can’t say to customers: ‘If we did things this way, you’d be two quid a week better off,’ states Mr Dow. ‘Landlords could consider introducing a system in which the tenants who pay their rent and do not cost their landlord any money are rewarded,’ answers Mr Irwin. ‘There’s nothing to say you can’t give them something back.’
Housing leaders often feel they can’t work beyond boundaries that have built up within the sector - they say they ‘can’t’ do things, which in actual fact, there’s nothing stopping them.
Now’s the time for innovation, says Mr Irwin. ‘There’s a general and genuine belief that you’re not allowed to do anything other than what you’re already doing,’ he says. ‘But a lot of those boundaries are only placed there by history - not by law.’
Ideas that could drive efficiencies are often dismissed because landlords say, ‘our organisation’s regulations won’t allow it,’ he concludes. On which note, over to you, the readers: it’s the leaders of organisations who make the rules - it’s up to them to change them.
Meet the round table panel
Source: Simon Brandon
- Hugh Broadbent, chief executive, First Choice Homes Oldham
- Gordon Brockington, business development director, Morrison
- Ruth Cooke, finance director, Midland Heart
- Simon Dow, chief executive, Guinness Partnership
- Elaine Elkington, strategic director of housing and constituencies, Birmingham Council
- Lawrence Gardner, head of information and communication technologies consultancy, Wrekin Housing Trust
- Roy Irwin, director of housing, sustainability and economic development, Audit Commission
- Mark Johnson, director of property services, Nottingham City Homes
- Paul Kennedy, chief executive, CEL Group
- John McPeake, director of design and property services, Northern Ireland Housing Executive
- Lindy Morgan, director, Sovereign Development Consortium
- Tim Wood, head of property procurement sourcing and supplier performance, Home Group
- Ian Wright, director of performance and practice, Northern Housing Consortium