Finance: driving change in social housing: helping UK housing associations to perform a delicate balancing act.
| Author | Clarke, Paul |
In the UK, housing associations are private, non-profit making organisations that provide low-cost social housing for people in need of a home. There is massive change under way in the sector as government spending cuts come into force.
This article is about how finance staff can step beyond their traditional accounting roles and become proactive drivers of change, an evolution that will be necessary if housing associations are to survive the changes intact. It is a personal reflection from the director of financial services at the Network Housing Group (NHG), based in north London, who is championing the sort of changes needed, and a management consultancy (Develin Consulting) that is helping to equip NHG's finance staff for the task ahead.
A double whammy
There is a significant shortage of good-quality social housing. Housing associations (HAs) do much of the building and have traditionally funded it through capital grants from the UK government, the financial markets and their own trading surpluses.
However, capital grants are being reduced. To compensate, HAs have been given permission by the government to lift the rent they charge on new properties - and those that have been recently occupied - to what is known as an "affordable rent" (80 per cent of the open market rent for the property).
Unfortunately, feedback suggests that fewer tenants are likely to be able to afford this increase than was first assumed. Also, a significant number of tenants receive benefits, which from April 2013 are being capped. A family might, for example, receive [pounds sterling]200 per week less. Those HAs affected may have little choice other than to reduce rent levels significantly, or risk having to evict tenants who can no longer afford these units. As a result, trading surpluses will be squeezed.
Strategy for survival
Survival for HAs depends on solving two problems: how to pare costs down while keeping essential services to the customer intact, and how to increase revenue without driving up costs.
These problems are not new. Commercial organisations have defined and refined techniques based around improving the efficiency and capacity of business processes under banners such as "value chain analysis", "kaizen" and "lean". Each method brings its own language, approach and set of priorities, and each requires an investment in the time required from staff.
But experience of championing change in commercial organisations tells us that, before reaching out...
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