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So we’ve been given the funding – what do housing sector leaders do now?
How the sector responds to the Spending Review will shape the next decade, writes Julian Paine, director in the governance, risk and regulation team at Savills Affordable Housing Consultancy
Julian Paine is a director in the governance, risk and regulation team at Savills
How the sector responds to the Spending Review will shape the next decade, writes Julian Paine, a director at Savills Affordable Housing Consultancy #UKhousingThe months of waiting, the endless discussions, wish lists and rumour mill are over. We now have the headlines for what Rachel Reeves, the chancellor, and her colleagues have planned for social housing providers, giving the sector far greater certainty about the government’s ambitions and commitment than for many years.
The Spending Review creates a huge opportunity in England to invest in new homes through the £39bn earmarked for a new 10‑year Affordable Homes Programme.
The commitment to a 10-year, Consumer Price Index + 1% rent settlement means long-term financial planning for existing homes and services is possible, particularly combined with the redesignation of Homes England as a financial lender at preferential rates.
And bringing social housing into the remit of building safety remediation funding is something the sector has long called for.
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Yes, there’s still some uncertainty on key issues such as the Housing Strategy (now expected later in the summer), the long-awaited new Decent Homes Standard and local authorities’ ability to retain Right to Buy receipts. But the overall message is positive: a big vote of confidence in providers of social and affordable housing.
The impact will be determined by the collective response of the sector. Is your organisation ready to rise to this challenge? What should boards and senior council leaders do now? It’s time for providers to consider what the Spending Review means for their organisation.
The “biggest cash injection in 50 years” will shift attention to housing associations, local authorities and for-profit providers to ensure the much-needed new homes are delivered. This is a huge opportunity for housing providers to demonstrate their value to the public and politicians after years of adverse publicity, but also a significant reputational risk if the sector’s response is underwhelming.
“Is your organisation ready to rise to this challenge? What should boards and senior council leaders do now?”
If housing providers choose the latter path, imagine writing the headlines in five or 10 years’ time, or drafting the housing sector’s ‘offer and ask’ to the (next) government, including asking for more money.
Decisions made in the coming months will set in motion a chain of events which determine the housing sector’s fate for the next decade.
Every housing provider is different. Witness the significant differentials in financial metrics across the housing association sector and the struggles of many local authorities’ Housing Revenue Accounts, or the different profiles of homes and market conditions in each locality.
Developing new homes is easier in some parts of the country than in others. Some housing providers have significantly reduced or even stopped developing; others are looking in new funding directions to secure their pipelines. Building safety remediation and stock investment remain priorities, especially in London and other large cities.
The chancellor also talked about signs of the “age of insecurity” being everywhere. Yes, there may be much-needed certainty about government funding, but the operating environment hasn’t changed. And it is unlikely to change any time soon, given the wars in Ukraine and the Middle East, the unpredictability of US policy, and a sluggish economy, to name but a few factors.
“Yes, there may be much-needed certainty about government funding, but the operating environment hasn’t changed”
The Spending Review demands a strategic and considered response from boards and council leaders. Don’t rush at this. Set time aside to consider these questions:
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How will the Spending Review play out in your area of operation? How will local market conditions affect opportunities and risks?
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What might be the impact of the proposals around devolution and lessons for your relationships with mayors and combined authorities?
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Does it alter your strategic priorities?
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Does the Spending Review introduce new risks and opportunities?
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Is your business plan where it needs to be? Are the assumptions still realistic?
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Could your organisation deliver more, or with less risk, through partnerships with others?
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What trade-offs are there? How will investment in existing homes and customer services be affected?
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How will customer views influence your response?
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How well is the organisation demonstrating value for money?
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What impact will Spending Review decisions on issues such as local government and police funding have on your ability to deliver for the communities you serve?
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Are your governance arrangements aligned with your strategic priorities and the risks you face? Do you have the right people on your board and committees? And are you having the right debates?
In short, take the time to reflect on what the Spending Review is telling your organisation. Some decisions will have a far-reaching impact on the priorities, trade-offs and risks faced.
Get this right now, and your organisation and the housing sector will be best placed to deliver for the communities you serve and demonstrate the value of your organisation to key stakeholders, including the government.
Julian Paine, director in the governance, risk and regulation team, Savills Affordable Housing Consultancy
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