All about the money
What are social housing providers doing to use their resources in the best way? Martin Hilditch reports from Inside Housing’s efficiency round table in Manchester
Neil Townsend has a dilemma.
‘Local authority colleagues are expecting us to jump into their size 10 boots. Is it right for us to do that?’
The sympathetic glances around the table reveal that Mr Townsend, divisional director at Riverside Housing, is not the only one struggling with this issue. It’s a problem for which many of the housing leaders gathered at Manchester’s Hilton hotel, for Inside Housing’s efficiency round table, supported by north west social housing procurement consortium Procure Plus, would clearly love a simple solution.
The gist of their concerns is that while social housing providers are busy trying to make their own efficiency savings, local authorities are slashing services such as anti-social behaviour teams and homelessness prevention. The implicit expectation, they suggest, is that housing providers will step in and keep vital services going - or at least pick up the pieces. Should landlords simply do this to help protect vulnerable people, limiting the fallout for councils and central government of unpopular decisions, despite the cost implications for their businesses?
‘The age-old issue is that the landlords turn up with a briefcase full of money and put their money where their mouth is,’ Mr Townsend adds. ‘But other organisations do not.’
Sharon McCambridge, chief executive of Six Town Housing, says she thinks that by constantly jumping in and volunteering to help out, landlords actually increase the chances that they are ‘taken for granted’. And in cash-strapped times being taken for granted is not a good thing.
‘If you are more reticent you are more often invited to the table and you are in a stronger negotiating position,’ she suggests.
Mike Brogan, chief executive of Procure Plus, says it is dangerous for landlords to try to take on services that are really not their responsibility.
‘Everything is nothing,’ he states. ‘If you try to do all these different things you will get nothing done.’
Paying for services
Instead, landlords should ‘think the unthinkable’, he says. And that means making it very clear to local authorities that there is no such thing as a free lunch. ‘Do you get paid for it?’ he adds. ‘[It shouldn’t be] the landlord coming to the table with a suitcase full of cash. It should be the other person paying the landlord to provide those services - instead of expecting somebody to do something for nothing and they don’t value it.’
It’s interesting that while the assembled landlords, contractors and consultants litter their talk with phrases such as ‘challenging times’, ‘efficiency problems’ and ‘it’s been painful’ there is also something of a bolshy mood in the room. Rather than simply looking to slash services, many of the leaders are instead looking at how they can create efficiencies by growing certain areas of their business.
Kevin Scarlett, chief executive of Salix Homes, says that if providers cut too far too quickly there is a point at which ‘you actually become very inefficient’.
‘If you are generating efficiencies and better value you have got opportunities to invest those and use that better value in other ways,’ he suggests.
What could this involve? Our panel have plenty of examples. Mr Townsend cites buying a repairs and maintenance company as something that will bring long-term savings to Riverside.
‘We were so impressed with the repairs company that we bought it,’ he smiles. ‘It’s a commercial repairs and maintenance company with loads of benefits for value for money around hard cash, but also around the service offer to tenants.’
Andy Kippax, senior manager for strategic housing at Stockport Council, says with its arm’s-length management organisation Stockport Homes it is looking at providing management services for private sector landlords - ‘for a fee’.
Mr Brogan says this type of behaviour should be considered a vital part of the efficiency agenda.
‘You can talk about cutting costs all the while but there is a limit to how far we can go,’ he says.
Thus far, he implies, landlords have not been searching hard enough for alternative funding streams that could reduce their need to cut back on service provision.
‘There is a lot of money out there that we are not receiving,’ he states. This isn’t idle talk, either. Mr Brogan says he is currently talking to both the Cabinet Office and the Treasury about how the sector can gain access to funding to run employment and training programmes.
‘That is income to the business rather than cheese paring what you have got,’ he adds. ‘[Work out] which department is benefiting from your efforts. Then go knocking on the door.’
Some landlords are potentially thinking even further outside of the box. ‘We have doubled our surplus,’ says Tom Manion, chief executive of Irwell Valley Housing Association. ‘We are spending it on things like reindeer. We purchase them and rent them out for Christmas. They cost £1,500 for three hours to rent.’
A member of our panel, who shall remain nameless to protect his dignity, asks if this is true.
‘We haven’t bought any yet,’ Mr Manion deadpans. ‘The board refused it. It was almost a resignation issue.’
Jokes aside, Mr Manion is clearly something of an iron man of efficiency when it comes to his own organisation. Overall, 99.3 per cent of his staff come to work every day, he states. Absence rates are at record lows. This is no accident.
‘I check five things every week and the first thing I check is sickness,’ he states. ‘If they don’t ring us [and say they are ill] by 9am it is a disciplinary offence. We used to have 3.9 per cent sickness levels and it was costing us £350,000 a year. If sickness levels in the public sector came down to the levels we have, the government would save £17.4 billion over the duration of the parliament.’
Irwell Valley has its own doctor, Mr Manion adds, who will confront staff if they are suspected of skiving or if they are ill because of lifestyle choices. Mr Manion says the doctor will tell people if they are ‘too fat’ or that they ‘smoke or drink too much’.
All of this said, it is clear that many of the organisations in the room have been through painful times in the past year - and in some cases cuts have affected services to tenants.
Ashely Crumbley, chief executive of Wigan & Leigh Housing, says it has had to find savings from its general fund and Supporting People budgets in the past year.
‘We took about 45 per cent out of the sheltered housing service last year,’ he admits. ‘That has impacted on the customers. They have missed not having a resident warden onsite. But if you look at outcomes in terms of the performance of the service, that has improved.’
The cuts so far are just a taste of things to come, Mr Crumbley adds.
‘We expect more bad news to come out. Inevitably those general funds and Supporting People services will have to trim again.’
That could lead to some services being lost entirely, he suggests. Landlords are going to have to make really tough decisions just to protect their businesses. Wigan & Leigh Housing is ‘at the position’ where further cuts to its sheltered housing funding from the local authority will mean ‘that is a discontinued service’, he states.
Cutting staff pay probably isn’t an option though. ‘What we pay staff is lower than many of you,’ Mr Crumbley admits. ‘We are about 20 to 30 per cent below the social housing market [regionally]. There is a consequence. We do struggle at times to recruit.’
Salix Homes’ Mr Scarlett has also had to cope with the impact of the reform of the housing subsidy system, which saw councils take on a share of £29 billion of historic housing debt - in return for greater long-term financial certainty.
‘It is quite challenging times,’ he admits. ‘Most local government is having it quite tough. We are right in there in terms of needing to be efficient, particularly in terms of managing the housing revenue account. Self-financing works for a number of organisations, but it doesn’t work for us. So that is adding to our efficiency problems.’
Partly as a result of this Salix is looking at the way it operates, and whether better use could be made or its resources. It is currently considering whether it should change the job description of some of its housing officers, for example, by giving them more responsibility for working with troubled families on estates.
‘What is the role of a housing officer?’ Mr Scarlett adds. ‘The work that we have started to do is beginning to examine that in a fundamental way.’
Ms McCambridge agrees that the ‘easy pickings on efficiencies have gone’. Six Town Housing restructured last year, she adds, and more staff have been moved to mobile working. Now, like many of those in the room, she says her organisation is looking to generate more income.
Some of our leaders take a very different approach, however. Karen Mitchell, chief executive of Southway Housing, is bullish about the current state of the sector and feels others should be too.
‘I believe housing associations are financially strong in an environment where not many organisations are,’ she states. ‘We have got to recognise that we have been relatively protected.’
The question associations should be asking, she thinks, is how do they want to use their relative strength? Should they involve themselves strongly in community budgets, pooling budgets with public sector organisations to maximise the impact that resources have in different areas? Or do they borrow against their asset base to build as much new affordable housing as possible?
‘We have got some really big choices to make,’ she adds. ‘What are we going to use it [our financial strength] for? The housing management and the care we do as a given. It is the other stuff we have got to get our heads round.’
One option that housing leaders could consider is a bit of light theft, according to one of our panel.
‘I will steal anything with pride,’ admits Tom Miskell, chief executive of Together Housing Group.
Before anyone calls the cops, however, Mr Miskell is not the type for housebreaking. It might be more charitable to say that he is keen to borrow ideas both from other landlords, but, just as importantly, from outside the sector.
‘We went round Hallmark Cards the other week,’ he says. ‘We looked at what they do in terms of customer insight. I think we think we have a monopoly on good ideas as a sector and we don’t look outside enough.’
With all the talk of efficiency and driving savings, you might expect one of our number today to be looking somewhat nervous. As a contractor, after all, Jay Finley, operations director at FT Finley & Co, is the one who will be asked to cut his margins and deliver more for less. Far from getting a cold sweat, however, Mr Finley says builders and contractors need to embrace the challenge.
‘Some people [clients] are really at the cutting edge in terms of improving efficiency,’ he states. ‘Others just don’t push you in any way. They just accept what they’ve got.
‘From a contractor’s point of view we do need a bit of a nudge every now and again. You can’t just rest on your laurels. We have got to be listening to what everyone wants.’
Resting on laurels is certainly the last thing on our panel’s minds. If there is one thing that everyone in the room agrees about it is that everyone has a responsibility to find new and better ways of working that will maximise the impact of resources.
‘It comes down to how we do things,’ Mr Crumbley adds. ‘Nothing being sacred, I think, is the bottom line.’