Regulator proposes using Sector Scorecard to assess value for money

At the Social Housing Finance Conference in London today, Julian Ashby, chair of the Homes and Communities Agency Regulation Committee, announced the regulator will launch a consultation into the Value for Money Standard “shortly after the election”. It will propose using a “limited suite” of metrics drawn from the 15 which a working group of housing associations have drawn up.

Currently housing associations assess their own efficiency in a process known as self-assessment, which would be scrapped under the plans, Mr Ashby added.

Inside Housing revealed the regulator was eyeing the metrics as a basis for regulating associations’ value for money performance in January.

The Sector Scorecard aims to create an agreed set of metrics for housing providers to compare their performance and check they are providing value for money. It has been backed by government and the National Housing Federation.

The 15 metrics include operating margin, number of units developed, investment in new housing and customers’ value for money satisfaction.

Mr Ashby said more than 200 associations are piloting the scorecard and the working group “has achieved a great result” in coming up with its own metrics.

The new standard will still require a strategic approach to value for money, encourage investment in housing and improve the transparency of reporting, he said.

Mr Ashby also revealed the regulator will consult on a value for money code of practice with the aim of helping associations to better understand the standard. He conceded that “greater clarification” of the Value for Money Standard could have been “helpful” in the past.

Mr Ashby also touched on the commercial activity of housing providers. He said more than 90% of the forecast surpluses from market sales over the next five years come from “just 20” housing providers.

He added: “What our analysis suggests is that a relatively small number of providers will be carrying out the overwhelming bulk of non-social housing activities, whether that be outright sale, market rent or any other non-social housing activities.

“For the most part we find that reassuring, rather than the reverse. If non-standard activities are being carried out by experienced specialists, in particular those who are large and financially strong, then they have good prospects of managing it competently and of coping with unexpected market conditions or other adverse circumstances.”

However, he also warned the regulator is not as “reassured” by a “small number” of medium to large associations that have, or plan to have, “substantial non-housing activities, particularly relative to their size” after tracking this activity against the providers’ financial strength.