“Great expectations” of delivering VFM

Our Non-Exec Director, Gordon Perry will be speaking at the National Housing Federation Board Members conference in February next year on “Driving greater value for money from the board perspective”.

In advance of this session he has written a festive blog on the “Great expectations” of housing associations to deliver VFM:

With the Charles Dickens classic ‘A Christmas Carol’ playing at many theatres this Christmas season, it’s interesting to note that few are producing one of his other great works, ‘Great Expectations’, which illustrates the gross injustice of poverty and social inequality, and importantly the real value of caring for and supporting others.

As your kids and grandchildren may have ‘great expectations’ of their Christmas presents, what are the ‘great expectations’ of the housing sector?

The Regulator of Social Housing (RSH) and our customers – be that tenants, leaseholders or home purchasers – all want value for money (VFM), although it isn’t in the news as much as the need for more homes to be built. In my view there is the only one real measure the Government is concerned about for the housing sector – how many new homes we build.

Given the dire shortage of affordable homes to rent or buy it’s understandable that all we hear from the Government is “build, build, build”, but who for? It’s a bit rich for the sector to be challenged about not building enough social homes when the vast majority of government grant is still aimed at subsidising various forms of home ownership. So, whilst the Government will be monitoring housing associations’ development programme delivery closely, tenants will increasingly be checking if their rent payments are being well spent and their services are delivering great VFM. They will also be increasingly scrutinising if we are investing sufficiently in their existing homes and not reducing standards to either meet the rent cuts or support new homes development programmes.

These are some of the reasons why delivering VFM is one of a board member’s key responsibilities, for which there are ‘Great Expectations’. We will be held accountable by our customers, the RSH and the Government. Following the Grenfell tragedy some commentators blamed the ‘race to the bottom on cost’ for the specification of the cladding, which is said to have contributed to the subsequent tragedy and loss of life. There are serious consequences of getting VFM right for which board members are accountable.

VFM is important for any business, whether driven by profit or social purpose. Given the increase of ‘profit for purpose’ ventures by housing associations moving into more risky commercial activities, it’s more important than ever that boards have the skills and experience necessary to develop and deliver that strategy. We have given significant attention to this at both the housing association boards I am a member of, as we also recognise the significance the RSH give to it too. They may have dropped the VFM self-assessment requirement but don’t be fooled, it’s not off the agenda.

Let’s remember that at the centre of all of this are our customers, our tenants, leaseholders, shared owners, outright purchasers and potential customers, who increasingly demand and deserve VFM. As housing associations, we can do more of whatever our vision and purpose is if we deliver this. That’s why it’s so important that boards give this high priority, have ‘Great Expectations’ of themselves, and get it right.

A regulatory downgrade can lead to a suspension of a housing association’s development programme. This isn’t usually linked explicitly to a VFM failure, but given the new Sector Score Card and suggestion of the introduction of housing association league tables (as the Welsh Assembly has recently introduced), will the RSH become more interested in VFM delivery? I say, yes, they will!

We at ARK Consultancy work with dozens of housing associations on VFM strategies, which support their active asset management, procurement, and development strategies. It’s these big VFM issues that deliver big impacts on business plan bottom lines and our customers’ experiences. Getting these right makes a big difference, not only to a housing association’s bottom line, but to customer service and experience.

There are ‘Great Expectations’ of housing associations delivering VFM. Whilst the Government and regulator will demand it, our customers deserve it. That’s why it’s a key issue for board members to debate at the Board Members’ Conference on 1- 2 February 2019.