IH50 Ruth Cooke

Planning in a world of unknowns

Someone once told me that captive fish were kept fresh by adding a predator to swim amongst them.  This makes the fish keep moving and retain their vitality

It feels a bit like that in the housing sector at the moment.  Granted, the assumptions behind some of the policy announcements feel as though they are largely based on unfair preconceptions and little knowledge of what value we add.  But nevertheless, we find ourselves in a position where  we’re facing fundamental challenges to what we do and how we do it . 

When you have something at stake, whether it is survival, reputation or money it will increase your motivation. Like the fish faced with a predator, this means moving, strengthening  and responding positively – the result is something fresh and healthy.  The trouble is we don’t fully understand what our risk looks like.  The even harder truth is that some won’t be strong enough to survive this unknown.

Leaders across our sector are now reviewing business plans that were set in what feels like a different era.   Something easier said than done.  There is still limited detail on how the new government policies will be implemented and we can only base our thinking on a number of intelligent modelling scenarios, which may change as further details become available.

It is clear that the changes will have a fundamental impact on our business models.  We know we need to adapt, but we are trying to plan in a world of too many unknowns.

The year on year reductions in rents means we will no longer be able to produce surpluses above what we anticipated by 2020. Crucially, it will reduce our capacity to develop desperately needed new homes and services. And although we don’t know the details, we know that the introduction of right-to-buy has the potential to further reduce the stock of affordable housing.

And then there is pay-to-stay. How can you quantify the impact in the absence of customer income data?

Our scenario modelling on welfare reform shows the potential for more tenancies to be swept into the benefit cap, for our younger customers to be affected by the removal of benefits from under 21s, and for those of our customers on tax credits to see significant cuts to their income. It isn’t hard to predict that more customers will experience difficulty in meeting their rent payments. 

What is certain is that the true impact of change will be borne out in the coming months and years. Our shared customer insight and intelligence will demonstrate the real effect of the changes.  Whilst this hard knowledge and understanding will be shared through various consultations, our stakeholders and our customers, let’s not forget that behind every statistic there is an individual, a family, a community.

Different organisations are of course responding differently. Their business response is based on their individual heritage - values that will be driving their strategic and board decisions.

Some are exploring innovative ways to fulfil social purpose, whilst others are gravitating towards a more commercial approach.  These different strategic visions are now emerging in their new operational plans.

And that’s how it should be. It is how it has always been.  We waste time if we criticise each other. It’s a distraction from the true challenges we are facing.  Now is the time for us to focus on adapting to the changes - regardless of how we define ourselves in our business plans - our diversity is there to be celebrated.

We will all need to review fundamentally what we do and how we do it.  For us there won’t be any kneejerk reactions and we will always remember that we need to focus where we are heading on our customers first - both existing and new.

I’m confident that our services will adjust to the new demands. That doesn’t mean starting again. It means reassessing how we deliver and then always making sure we are responding to what is needed by our customers. It won’t be easy, but it is absolutely essential. 

But to move forward we will need more clarity and more certainty to help us build robust plans - based on the concrete evidence arising from the challenge ahead.

Ruth Cooke is CEO of Midland Heart