John Giesen talks about what we spend and why

John Giesen talks about what we spend and why

There has been a lot written in recent weeks about housing associations and a lot of it has been pretty damning. I thought that my latest blog therefore should address some of the “facts” that have been raised over these weeks.<

We spend too much on ourselves?

Our management cost per unit is £1140 per annum. At first glance this appears high perhaps, but it’s worth pointing out what is included in this amount:

So for us this includes nearly £500,000 spent on community and individual’s development. This £110 per unit has seen over 600 local previously unemployed people into work over the past 2 years, which will have saved the public purse a conservative £6Million in benefits a year. Additionally we have helped residents with training to be ready for work. Some of these have achieved NVQ qualifications where they previously had none and some have gone on to degrees. We have helped our communities prosper by supporting local voluntary groups many of whom would not survive without our support. Our support of the CVS helps them encourage over 360 local groups many of whom provide vital local services and save the public purse.

Our Customer Contact Centre and some housing management services cost approximately a further £51 and £23 per property respectively and our Residents Involvement service another £27.

This means that £212 per property of our so called “back office” expenditure is actually providing direct services to our residents and communities.

Our Governance costs are £128; which includes things such as; Audit, Treasury and Professional fees.

So the real “management” cost is actually £800 per property per annum. This isn’t saying that we should be complacent and we always look for value for money savings but I believe it is important to understand before you criticise and I’m not always sure people take the time to do that.

We’re not building enough

It is also worth pointing out that we were not primarily established by the local authority in 2006 to build homes but rather to improve services to our residents and to invest in our communities and residents. Nevertheless we have built or acquired more than 400 homes and we have another 300 plus in the pipeline. Our aim is to have completed 1000 by 2020.

Our limit here is not ambition to build but rather the constraints of availability of land at the right price and our limits on borrowing more money. We have actually already increased our borrowing over the last 10 years from c£70M to c£150M and the majority of the additional amount has been to enable us to build more homes. Over the same period the amount of public subsidy to help make the homes affordable has been cut and we now get c50% of what we did. Nevertheless we plan to continue to build or buy homes to help our local authority partners meet their statutory housing duties. To date the total amount of public subsidy is c£9M.

Our costs are too high

It has been stated that developers can build homes more cheaply than we can, which I am sure is true. They work on a scale which is difficult to emulate and will also control the flow of their programme to ensure they maximise the profit to their shareholders. It was said that developers can build at £90K per dwelling whilst for housing associations it is closer to £150K.

But it is worth noting that for us nearly 75% of what we “build” is delivered through S106 planning agreements where we actually purchase the homes from the developer direct. On recent schemes in our area the cost of such developments has been £147K in one location and more than £187k in another. This represents about 60% of the open market value in both cases but also goes to show that averages can be misleading and that given we get a “discount” on the purchases the developers are not building homes for £90K.

On sites we acquire or own the build costs have been between £150K including costs and £198K where we acquired land.  This does rather suggest that we are competitive with the private sector where we can acquire or own the land. 

Our performance

So what does this all mean for our customers? Well, since 2006 we have spent around £65M improving our homes: This includes new bathroom; new kitchens; the major regeneration of a number of our estates and other major works such as external wall insulation to improve thermal insulation, new boilers and rewires.

And looking at some of our performance measures we see that nearly 99% of our customers were happy with our service when we completed a recent repair; 88% are happy with our overall service.

83% are happy with the place they live and when we ask the reason for those not happy it is often about the wider area or neighbourhood. These levels have traditionally been similar to the wider community in the areas we operate including owner occupiers. This is why it's so important for us as a Placeshaper to work with other local partners, both the local authorities and voluntary sector, and support them in improving both the place and perceptions of place. It's not simply about building housing but places where people want to live.

We run a business with a £24M turnover of which £22M relates to social housing provision. In terms of managing our business we see that our rent arrears equate to c1.4% yet we have only resorted to eviction in a handful of case. We believe that this statistic is valid proof if needed that our approach to community development pays dividends. We have many residents who have benefited from our approach and are now both in work and safe in their homes as opposed to being out of work and at risk of losing it.

Nevertheless we realise that we don’t always get it right and we therefore actively welcome complaints and so far this year around 30 formal complaints have been made (we received 34 compliments in the same period) and we agreed that 60% of these were justified so we set out to learn from our mistakes how to improve our services.

We don’t always get it right; we wouldn’t be human if we did but I hope that some of the above facts give a balance to what has been said about us in the press.