Paul Hillard, Managing Director of Irvine Housing Association, part of the Riverside group, reflects on the current state of the social housing sector.
When asked to produce something that’s titled a “View of ….” anything it’s tempting to drift easily into clichés about changing times and how extraordinary our current operating environment is. And it’s true that Brexit, with all its associated economic and political uncertainty, and the horrific wake-up call that is the Grenfell Tower tragedy, are once in a lifetime events. Of course, we all need to take account of these external factors when ensuring the strategic fit of our plans and ambitions, but, whatever the “extra-ordinary” issues are at any time, it feels like they always come back to requiring one key strategic objective from our businesses – do more for less.
Like many housing associations we at Irvine are grappling with the challenge of trying to achieve a trinity of outcomes.
Firstly is rent affordability. As a sector it’s unacceptable for us to keep increasing rents above inflation, and to have business plans assuming that we can do this in the long-term. The vast majority of our tenants will not have incomes that keep pace with inflation over the coming years, so seeking to charge them more is ethically wrong and makes no business sense – tenants who are struggling to sustain their tenancies end up requiring more resources from us. Continued ‘inflation plus’ increases will also ultimately mean our homes are unaffordable, we will be ceasing to genuinely provide social housing and, ultimately, we will face falling demand.
Secondly is the quality of our homes and services. We all want to provide the best services we can and the reality is that in terms of the physical quality that means investing more. Meeting EESSH can only be a positive thing for our tenants and for us as landlords, but we all know it comes at a cost. Modernising our service offer, however, presents a fantastic opportunity to improve services and drive cost reductions. With a few notable exceptions, we lag way behind other sectors in how we use new technology. Digitalisation can allow us to bring our service offer into the 21st century through self-service and agile working. This also presents the opportunity to cut the cost of basic transactions, after a period of initial investment.
Thirdly is building new homes. As housing associations we have been given the opportunity to step up to the plate on new supply with the generous grant rates now offered by the Scottish Government. We should grasp this opportunity to help meet unmet housing need. We have a track record in delivering great new homes and we offer something unique in the personalisation of our services. However, even with the generous grant rates, we still need to borrow c. £75K for each new home we provide and this comes at a cost to our business plans and balance sheets, particularly in the early years.
Meeting that trinity of outcomes therefore brings us back to doing more for less. Keeping rents affordable means constrained income in the future. Investing in our existing homes and building new ones means spending more. Modernising our services, through digitalisation, gives the opportunity to close the gap between these conflicting pressures. However, we need to be honest with ourselves about the implications.
We are all aware that the transaction cost of a tenant reporting a repair or paying rent on-line is pennies whilst doing it face to face in an office is pounds. We also know that we should optimise how staff are deployed – for instance not using our highly skilled staff to do simple processing, but focussing their time on intensive work with tenants who need more support. But how do we get at that efficiency? The hard reality is that this is done either by materially increasing the number of homes to which we provide services, with the same staffing resource, or by employing fewer people whilst at the same time improving our processes. Even for organisations with large development programmes the reality is it’s more likely to be a mix of both.
Reducing the number of staff we employ is not the only way of making savings. Procurement efficiencies, reducing offices and leaving defined benefit pension schemes can also make significant contributions, but controlling staffing costs is, perhaps, where the biggest contribution can be made. Saying it is easy – doing it is difficult. Introducing strategies and making decisions that we know will ultimately be painful for staff, many of whom will have been providing great service for many years, is an extremely difficult and challenging one for Boards, Management Committees and senior management.
At Irvine Housing Association we are just coming to the end of a phase of reorganisation as we move towards delivering a new operating model. The model is based on a service offer that will be digital in the first instance, and that will have agile and empowered front line housing and asset staff spending most of their time with customers and in communities. And from being part of Riverside, we have also been able to benefit from using shared services through our 24 hour customer service centre and streamlined processing centres.
We are convinced that moving to this model will ultimately deliver a better, modern, service for our tenants which combines speed and efficiency for simple transactions, and targets our staff towards face to face contact with those tenants that need additional services to sustain their tenancies.
There is already evidence that implementing this model has reduced our costs, most notably our staffing bill which has fallen by over 17%. Irvine Housing Association employs less people. And whilst we have made these changes as sensitively as we can, through being part of a wider group, we have been able to offset some of these staff reductions – Riverside has created new jobs by basing two teams in Irvine, providing shared services across both Scotland and England. The introduction of the model was a tough decision for Board to make, a hard one for the senior team to implement, and even harder for some of the staff members effected. But it was essential for us to deliver that trinity of outcomes: keeping rents affordable; investing in our assets and services; and building new homes – doing more for less.
As featured in Housing Scotland, November 2017